Essay: Craft International Private Limited Company

Executive Summary
The objective of this report is to critically analyze the operations and production of Craft International. It deeply studies the integration and linkage of several departments of the company with the production department. The company belongs to the textile sector of Pakistan and is in the business of embroidery, doing it commercially, and under its own brand as well.
As the culture of the company is very informal like local businesses in Pakistan, all the documentation is done manually and there is no proper track record of several important transactions made by the company. During our research we found out different potential problems in the company and applied several quantitative techniques in order to logically evaluate and eliminate the problems.
The data used for calculating different quantitative measures to evaluate the operations of the company were gathered from various departments such as accounts, production, designing, production planning and controlling, etc. As the company doesn’t have formal or systematic data, raw data from several departments had to be linked together in order to find out reasonable information to improve the current system of the company. ‘
Table of Contents
About the Company 4
Process Flow Diagram 5
Backstage Process Flow 5
Gate Management 6
Commercial Fabric Store (Warehousing) 7
Production Planning and Control Department (PPC) 7
Inventory Management 8
Elegance Fabric Store 9
Production 10
Recommendations 11
Appendix A 12
Appendix B 14
Gantt chart: 14
MS Project Process Flow Diagram 15
Appendix C 16
Appendix D 21
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About the Company
Craft International was established in 2003, by two directors Mr. Sheikh Bilal Ahmed and Mr. Khawar Ali Shah. Craft belongs to the embroidery sector of Pakistan and is one of the top notch embroidery firms of Pakistan. It is currently operating commercially as well as privately for its own brand under the name of Elegance.
Commercially it provides service of embroidery to different textile groups of Pakistan including MGB, Nishat and Amina Arts. Apart from that the company has its own outlets in different cities of Pakistan and Dubai under the brand name Elegance where the company sells its own products. The company is private limited and is ISO certified. The production facility is located in Lahore while the head office of the firm is in Multan. There are numerous departments and operations in the company which are processed from the creation of need of product to the sale of the product. Different departments have different functions which are discussed in detail along with all procedures chronologically in this report.
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Process Flow Diagram
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The above diagram shows different tasks in the chronological order in which they are performed. Each task is entitled with the time taken by that particular task to complete. The total throughput time of the process is 500 minutes assuming 100 meter (one Thaan) of fabric embroidered.
Throughput time = 10 + 10 + 15 +30 + 60 + 300 + 60 + 5 + 10 = 500 minutes
Lead time = {1 day (Ordering time)} + 500 minutes = I day and 8.3 hours = 32.3 hours
Backstage Process Flow
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Gate Management
Gate management of Craft is conscientious for maintaining dissimilar but interlinked functions. Different activities such as purchasing, selling and other activities have to be recorded in gate office along with the attendance of the general staff and labor staff. For recording transactions the system is entirely manual, based on human resource and is informal. The typical transaction recording system is used in this office. Gate office mainly deals with four departments which include Craft, Elegance, Stitching, and Administration. Each and every transaction regarding these departments are recorded and entered in the data base of gate office. Gate office is mainly regulated by Mr. Ahmed Din and Mr. Aman Ullah. The different types of transactions which take place in the company are recorded unconnectedly according to nature of transaction in their particular recording books. There are mainly two types of transactions which take place in routine activities which are the following:
‘ Purchasing which is recorded in Goods Received. (GRN)
‘ Returnable Goods, which comes back to company and are normally sent out of the company for maintenance, repairing or value addition purposes.
These are the main activities which are recorded in the gate office.
‘ Product purchased
‘ Concerned department
‘ Time of purchase
‘ Purchaser/ Employee
‘ Seller or Supplier
The second type of transaction takes place for returnable goods. These are the goods which are sent out for some maintiance, repairing or value addtion purpose. For example a printer sent out for repairing has to come back which would be initally recorded in the returnable goods register and would be given gate pass to be sent out and then lastly would be recorded in GRN and the same returnable goods register when it will come back to the company. Similarly fabric sent out for dying purposes would go through the same procedures.
Commercial Fabric Store (Warehousing)
The subsequent department after gate store is the fabric store in which the fabric of different parties or companies is initially stored, checked and sent for embroidery. This department is the key department in the whole process because the fabric is moved in and out from the fabric store. There are different functions which are performed in the fabric store which are the following:
‘ Storage of fabric
‘ Quality assurance of fabric
‘ Measurement of fabric quantity
‘ Developing job cards
‘ Generating sales invoices.
‘ Dispatching the finished products.
Initially the fabric from different parties comes in the company and is stored in the commercial fabric store. After storage the workers check the quality and measure the quantity of the fabric. Before sending the fabric to the production department, the fabric store develops different job cards shown in appendix C, figure 1C, which specify the designs, fabric quality and types of embroidery which needs to be done. After the job cards are developed the fabric is sent to the production department from where it is moved to the quality control department for quality assurance and lastly it comes back to the fabric store. Here then the finished product is stored and lastly it is dispatched to its respective customers by generating a sales invoice
Production Planning and Control Department (PPC)
PPC is accountable for production planning which includes giving plans for all machines so that the flow of production should carry on and secondly controlling the production. PPC is very much affiliated with the fabric store because as soon as the job cards are developed they are sent to PPC and then PPC makes different plans for different machines and gives out to the production department. PPC makes sure that each machine is working, producing right fabric and every machine has a production plan. The machines of the company are in process for 24/7 which cannot be stopped so for that a production plan is developed minimally a day before the prior plans have to finish.
The job cards come in PPC. The PPC manager inputs each data in the computer to have proper records and files. This data includes the design, lot number, fabric quality, and fabric amount and design number. After this the manager gives out the plan for different machines according to the job cards and designs of the fabric because every design cannot be produced on every machine.
Once the production plans are given to the production department, the production gets started. Now PPC manager has to go to the production department every now and then to check the status of production because there might be some issues that the production may get late or the designs are not properly produced. After that the manager goes to quality control department to check the amount of finished goods that are coming for quality check. So these are the activities which are performed by the PPC department.
Inventory Management
Thread store deals with inventory management. Every inventory item except fabric, which comes in the company, is sent to the thread store. Apart from that thread store is responsible for maintaining the records and bills of every item that is demanded and purchased by the factory. There are different books in which different type of transactions are recorded. Initially different departments demand certain products by the approval of their department head from the thread store. An IR (Internal Requisition) is then generated for making the demand. After that if the products are available in the thread store, are sent to the respective departments or else are purchased from the market. In case of purchasing, a GRN is issued on the gate and then recorded in the Thread Store. There are different books which are maintained in the thread store which are the following:
I. (Purchase Order) PO Book
II. (Good Receive Note) GRN
III. (Internal Requisition) IR Book
Elegance Fabric Store
Elegance fabric store is same as the commercial fabric store, but the difference is only that it deals exclusively for the brand Elegance. The procedures of Elegance fabric store are a bit different from the commercial fabric store. Initially the designs are made and punched in the research and development department and then the job cards are sent to the fabric store along with the type and color of fabric they need. Then the fabric store purchases that fabric from the supplier and sends it to the production department once the sample gets approved by the Research and development department. After the production takes place, the fabric is sent to QC department where the quality of the finished good is checked and after approval it is sent to the fabric store again from where the fabric is dispatched to the outlets of the company. Once the fabric is purchased the quality and measurement of the fabric is checked and it is also adjusted according to the need of design sample and production.
Economic order quantity (Q model) Reorder point
Qopt = ‘2DS/H
= ‘2(118,800)(10,000) /(5000)
=689.3
Annual Demand (D) = 118,800
Ordering cost (S) =Rs 10,000 per order
Holding cost (H) = Rs 5000 per unit R=dL
R=325.5*3=976.5 units
Average daily demand (d) =325.5 units
Lead time (L) = 3 DAYS
‘ Inventory Policy: When the inventory position drops to 977 units, place an order for 689.3 units.
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Production
Production is the integral department of the company as the production takes place in this department. In production two main types of production takes place, one for Elegance and one for commercial customers. Initially when the designs and fabric are selected and finalized by the fabric and designing departments, a sample is made on the single head machine shown is appendix C, figure 1C, to test the outcome of the designs and the accuracy and quality of production. Production department has to deal with two main productions, one for the commercial fabric and, second for the Elegance fabric. The commercial department brings in order from different commercial customers who provide fabric for embroidery and are charged for the embroidery cost. For production of Elegance the fabric store purchases fabric and than sends it to the production department for production. In this whole scene the most important role is played by the production planning and controlling department. The production department has different halls and different masters who are the head of their respective halls and below them are the shift in charge workers and then the local labor. The role of masters is to get a production plan from the PPC department which actually allocates machines and time to different production plans to manage the production and to fulfill the demand of all customers within the given period of time.
Bottleneck task Production Department (300 min)
Blocked task Measurement quality and check, PPC department and production department
Starved task Quality control and packaging
Cycle time of process 300 min (Bottleneck time)
Hourly capacity 0.2 Thaan/hour
Once the sample is accepted then the production takes place on the multi head machines. In craft international there are different types of machines based on the number of heads, based on the number of colours one machine can manage on the production, and the distance between two simultaneous heads. There are different machines such as 330, 300, 580 and 162 all with different specifications and different production capacity per repeat.’
Recommendations
The company has to imporve in alot of areas to maintain the sustainable growth which they have during the last few years. There has been a lot demand, due to which the company has grown but now as the market is getting intense from the perspective of competition, several improvements are required in order to sustain the growth for long term.
‘ The bottleneck of the operations is production department. Despite of the huge capacity the company is unable to meet 30% of its demand. That is because of the informal system they have incorporated from the inception. Lack of production planning leads to poor utilization of the machines. Designers know that the machines with 9 needles which can make the most critical designs are 5 in number, yet they keep on making the designs with 9 colours. This creates a lot of trouble for the prodcution manager because those designs cannot be made on rest of 95 machines.
‘ Since last 7 months, 3 PPC managers have left the company. The job of PPC manager is very critical as he has to schedule all the production plans according to the machines. It requires at least 3 months to understand the entire production system. But, since there has been very huge employee tunrover for this post, the company faces a lot of problem in production planning. The core reason for this problem is the amount of salary they pay to the PPC manager. The company current pays Rs. 16,000 to the PPC managers which should have been increased to Rs. 35,000 because that person is the strongest link between meeting demands and utilizing all the resources for production.
‘ The company needs to reduce its lead time by doing the task of colour scheming before the fabric comes to the company and after the customer places the order. There is a whole day gap between the ordering time of customer and the time when customer sends his fabric. In that time the colour scheming can be done which can have a lot of impact on the lead time and throughput time of the company.
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Appendix A
Total Number of Average Stitches per day 1,000,000.0
Price Per Stitch (Rs.) 1.1
Cost Per Stitch (Rs.) 0.4
Total Number of Machines 100.0
Labor Force 350.0
Working Hours Per Day 4,200.0
Number of Hours per Day 24.0
Number of minutes per day 1,440.0
Average Salary of a Labor Person (Rs.) 12,000.0
Total Labor Cost Per month 4,200,000.0
Total Revenue Per Month 31,500,000.0
Machine Cost Per Stitch 0.3
Thread Cost Per Stitch 0.1
Total Machine Cost Per Month 9,000,000.0
Total Thread Cost per Month 3,000,000.0
Total Cost of Production 16,200,000.0
Profit Per Month 15,300,000.0
Table 1A
Capacity Utilization 100%
Daily Stitches per Machine 10,000.0
Monthly Stitches per Machine 300,000.0
Stitches Per Minute 694.4
Daily Stitches Per Person 2,857.1
Total Cost Efficiency 51.4%
Efficiency of Machine is terms of cost 28.6%
Labor Cost Ratio 13.3%
Table 2A
Tasks Time (Minutes)
Gate 10
Fabric Store 10
Measurement and Quality Check 15
Production Planning and Controlling Department 30
Colour Scheming 60
Production Department 300
Quality Control 60
Fabric Store (Packaging) 5
Gate 10
Throughput Time 500
Lead Time 1,940
Table 3A
Tasks Cycle time (Minutes) Capacity (thaan/hour) Capacity utilization
Gate 10 6 3.3%
Fabric Store 10 6 3.3%
Measurement and Quality Check 15 4 5.0%
Production Planning and Controlling Department 30 2 10.0%
Colour Scheming 60 1 20.0%
Production Department 300 0.2 100.0%
Quality Control 60 1 20.0%
Fabric Store (Packaging) 5 12 1.7%
Gate 10 6 3.3%
Table 4A
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Appendix B
Gantt chart:
Figure 1B
Figure 2B
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MS Project Process Flow Diagram
Appendix C
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Figure 3C: Job Card
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Figure 5C: Punched Design
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Figure 6C: Commercial Fabric Store
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Appendix D