BAHRIA UNIVERSITY

MANAGEMENT SCIENCES

TOTAL QUANTITY MANAGEMENT

FINAL REPORT

MURREE BREWERY
Instructor:

Prof. TahirMasood
Submitted by:

Danish Sultan(mark 56) +92 312 51100 56 accounting354@gamil.com

Tuesday, 7 June 2011

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CONTENTS
ORGANIZATION ...................................................................................................................... 5 HISTORY................................................................................................................................... 5 INDUSTRY (MONOPOLY OF MURREE BREWERY) ............................................................ 6 MANAGEMENT ....................................................................................................................... 6 HIERARCHY ............................................................................................................................. 7 PRODUCTS ............................................................................................................................... 7 1. 3. 4. 5. BEERS............................................................................................................................. 7 NON ALCOHOLIC BEERS (NAB)................................................................................. 8 CARBONATED SOFT DRINKS (FIZZY DRINKS) ....................................................... 9 FRUITY MALTS ............................................................................................................. 9

BRANDS .................................................................................................................................... 9 a. b. TOPS ............................................................................................................................... 9 MURREE GLASS ......................................................................................................... 10

VISION STATEMENT ............................................................................................................ 10 MISSION STATEMENT.......................................................................................................... 10 FUTURE OUT LOOK .............................................................................................................. 11 FINANCIAL OVERVIEW (2010) ............................................................................................ 11 SUPPLY CHAIN ...................................................................................................................... 11 QUALITY ADMINISTRATION .............................................................................................. 12 QUALITY COUNCIL .............................................................................................................. 12 OPERATIONS ......................................................................................................................... 13 CUSTOMERS .......................................................................................................................... 13 EMPLOYEE INVOLVEMENT/EMPOWERMENT................................................................. 13
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QUALITY vs. QUANTITY ...................................................................................................... 14 PROCESS FLOW ..................................................................................................................... 14 SUPPLERS PARTNERSHIP................................................................................................... 15 PROCURMENT PROCESS (RAW MATERIAL) ................................................................ 16 PRECONDITIONS OF SELECTING A SUPPLIER ............................................................. 17 PERFORMANCE MEASURE ................................................................................................. 17 QUALITY COST ..................................................................................................................... 17 BENCHMARKING .................................................................................................................. 18 QUALITY FUNTION DEPLOYMENT ................................................................................... 18 STATISTICAL PROCESS CONTROL .................................................................................... 19 RECOMMENDATIONS .......................................................................................................... 19 ACTION PLANS...................................................................................................................... 20 CONCLUSION ........................................................................................................................ 21 BIBLOGRAPHY ...................................................................................................................... 22 Interviwes by ......................................................................................................................... 22 Websites ................................................................................................................................ 22 ANNEXERS ............................................................................................................................. 23

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Table of Figures Figure 1: Horizontal Hierarchy of Murree Brewery [Source: Interview conducted] ..................... 7 Figure 2: Official logo of TOPS .................................................................................................. 9 Figure 3: Official logo of Murree Glass..................................................................................... 10 Figure 4: Supply Chain of Murree Brewery (Alcohol) ............................................................... 11 Figure 5: Hierarchy of Quality Council (Central Lab) [Source: Interview conducted]................ 12 Figure 6: Operations are focused on Quantity, whereas Quality Council is focused on Quality. [Source: Interview conducted] .................................................................................................. 14 Figure 7: Production Process of Beer [Source: Interview conducted]......................................... 14 Figure 8 Working of the Procurement Department [Source: Interview conducted] .................... 16 Figure 9 QFD Beer (Hypothetical) ............................................................................................ 18

ACKNOWLEDEMENT Of conducting this project we would like to thanks Mr. Kashif (AD) Mr. Waqas(Quality Dep.), Mr. Umair(Distiller), Mr. Musarat Shah (Distiller), Mr. TanveerKazmi (HR Manager), and Mr. Mushtaq for their kind assistance and cooperation.

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MURREE BREWERY (ISO 14001 Certified Company)

ORGANIZATION Established in 1860, the Murree Brewery is Pakistans oldest institution. At the time of its creation, the brewery in GhoraGali in Murree was one of Asias first modern beer breweries. Having undergone many changes in management and location due to both natural calamities and bureaucratic interference, the Murree Brewery managed to overcome all such challenges and emerged stronger under the late MinooBhandaras masterful leadership. After Mr. Bhandaras unexpected and tragic demise, the onus of running the brewery lay with his son, IsphanyarBhandara, who had been working at the brewery for almost a decade before his fathers untimely death and was thus familiar with the operations and intricacies involved in running a brewery in an otherwise officially-declared dry country like Pakistan. Apart from the alcohol division, Murree Brewery has two other subsidiaries: Tops Food and Beverages, and Murree Glass; both of which function independently and as successfully as the brewery itself. HISTORY To meet the beer requirements of British personnel (mainly army), the Murree Brewery was established in 1860 and incorporated a year later at GhoraGalli, near the resort town of Murree. Between 1885 & 1890 the Company established Breweries in Quetta;a distillery and brewery was also established Rawalpindi. The Murree Brewery at GhoraGalli was therefore among the first modern beer breweries established in Asia. By 20th century, the name "Murree" was famous in British India. Murree Beer was awarded product excellence at the Philadelphia Exhibition in 1876, and numerous awards. By the 1920s, brewing was mostly transferred to the Rawalpindi brewery but malting continued at GhoraGalli till the 1940s, when this property was sold. This historic brewery built in Gothic style architecture was burnt during the partition riots of 1947/48.
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It was the principal residence and head office of the company till 1959, when it was taken over by the Government of Pakistan to house the office of the President of Pakistan. It remains an office of the Head of State of Pakistan from 1960 till the present day. The Rawalpindi brewery is blessed with deep aquifers of good water. A railway siding was extended to the premises in the 19th century, which is now derelict. INDUSTRY (MONOPOLY OF MURREE BREWERY) Murree Brewery Co. Ltd. continued to dominate as a monopoly due to restrictions on importing alcohol. The economies of scale it enjoyed over the review period and the restrictive regulatory and social environment for alcoholic drinks in Pakistan deterred other local start-ups. MANAGEMENT Mr. M.P. Bhandara Late Chief Executive Mr. IsphanyarBhandaraChief

y y y y y y

M. Javed -General Manager, Murree Brewery Co. Ltd. Major (R) Sabih-ur-Rehman-Special Assistant to Chief Executive Fakher-E-Mahmood-Technical Manager M. AdbullahZafar-Marketing Manager Malik TalatYaqoob-General Manger (Tops Food & Beverages) Zaka-ud-Din-Plant Manager (Murree Glass Division)

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HIERARCHY D CEO GM TM B M(BA) AD AB A (BA)

Figure 1: Horizontal Hierarchy of Murree Brewery [Source: Interview conducted]

CEO= Chief Executive Officer GM=General Manager TM= Technical Manager D= Distiller B= Brewer M(BA)= Manager (Big Apple) AD= Assistant Distiller AB= Assistant Brewer A(BA)= Assistant (Big Apple) PRODUCTS The Murree Brewery produces a wide variety of Beer's, Liquor's and non alcoholic products. Premium products include Murree's Millennium Beer, Murree's Classic Beer, Lite Export Pils, Eight and Twelve years old Single Malt Whiskies, Vintage with a blend of a Scotch Grain Whisky, Silver Top Gin, Bolskaya Vodka and Doctor's Brandy. 5 main groups of products are:

1. BEERS Murree-Beer An all time favorite since 1860. Alc. contents 4.5% v/v. Brewed from imported two row barley, malts and Bavarian hop products. Has a distinctive taste and flavor. Murree's Classic Lager Premium beer, inputs identical to the millennium Beer. Alc 5.5% v/v. A real Classic. Smooth on the plate. Taste and flavor close to Classic European lagers.

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Murree's-Millennium Flagship beer 8% alc. v/v. Brewed from highest grade Australian malt and Hallertaua German Hop products. The millennium is celebration brew for special occasion.

2. LIQUORS Murree's Matured Malt Whiskies

Murree's Premium Malt whiskies are brewed from a Barley Malt mash,distilled on traditional pot stills and matured in imported oak wood casks & vats for guaranteed periods specified on respective packaging.
BLENDED WHISKIES All time favorite of consumers demanding a light whisky A blend of special grade of alcohol to provide a soft taste.

BOLSKAYA VODKA & SILVER TOP GIN Produced under arrangement with Bols International B. V. Netherlands

MURREE-GINS Tower of London Gin is rich in juniper flavor extracted from the juniper berries of the world famous Ziarat juniper forest near Quetta.

3. NON ALCOHOLIC BEERS (NAB) Malt 79 & Cindy malt drinks are brewed from golden barley malt and hops. Once you get the taste of real grain beverages rich in natural sugars, you will never look back to synthetic colas. Non alcoholic malt drinks are recommended by Doctors for a variety of ailments. Non alcoholic Malt drinks are genuine earth drinks.

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4. CARBONATED SOFT DRINKS (FIZZY DRINKS)

5. FRUITY MALTS

BRANDS Two famous brands of MurreeBrewrey are: A. TOPS

Figure 2: Official logo of TOPS

Tops produces processed and packed; Tops Juices,Fruit cocktails, Tops Vinegar, Tops Squashes, Tops Orange Marmalade & Mixed Fruit Jam, Tops Chili Sauces and Tomato Ketchup under strict hygienic conditions using state-of-art technology.

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Figure 3: Official logo of Murree Glass

B. MURREE GLASS Murree Glass, a division of Murree Brewery Co. Ltd., is dedicated to the manufacture of quality glass containers since 1974. Pioneers in lightweight, quality controlled glass bottles.

VISION STATEMENT Our office is in the market MISSION STATEMENT We the people of Murree Brewery Co. make personal commitment to firstunderstand our customers requirement then to meet & exceed their expectations,by performing the correct tasks on time and every time through: Continuous improvement Alignment of our Mission & goals Responsibility and respect of our jobs and each other Educating one another

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FUTURE OUT LOOK The management is conscious of the fierce competition in the industry and is hopeful to retain its market share. In order to achieve targets the company is continuing its policy of balancing and modernization and costs reduction. FINANCIAL OVERVIEW (2010) Gross turnover for the year at Rs.3,243 million shows an increase of 27.63% from the previous year at Rs 2,541million. Gross profit of the company for the year at Rs.629million is 24.0% higher than in the previous year. Profit after taxation of Rs: 216 million is 10.20% higher than the previous year. Earning Per Share:Earning per share for the current year is Rs 16.45 against Rs.14.93 last year. Dividend / Bonus Shares: The Board has recommended cash dividend @ of 50% and bonus shares in the ratio of 1 for 10 (wealth generation for investors). SUPPLY CHAIN

Figure 4: Supply Chain of Murree Brewery (Alcohol)

Raw Material: Sugar-cane+ Barley etc. Supplier:ShahTaj Industries Manufacturer:Murree Brewery Distributors: Hotels for Alcohol (Contractors for Non-Alcoholic) Customers: RetailerConsumers: End Users

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QUALITY ADMINISTRATION Murree Brewery makes the personal commitment to first understand customers requirements, then meet and mostly exceed their expectations on time by: y y y y y y y Continuous improvement in all areas of product Quality objectives Reduction of customer complaints Ensure modern techniques on analysis Ensure quality of raw material as per AMS system. Ensure proper calibration of instruments for accurate analysis Ensure standardization of chemicals (according to ISO 9001).

QUALITY COUNCIL

TM

AC

GM

QCM

QCO

Figure 5: Hierarchy of Quality Council (Central Lab) [Source: Interview conducted]

The quality council is referred to as Central Lab in this organization. The Central lab which is also concerned with Research and Development Division (which is most active nowadays while innovating their product line and bringing a whole new range of non-alcoholic beverages in market). The primary job of the central lab is to ensure the quality of products and keep a constant watchful eye on the manufacturing of the products.

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GM (General Manager) and TM (Technical Manager) work in collaboration and are at the core decision-making positions.The QCM(Quality Control Manager) is the person who overlooks all of the production from raw-material to storage and later on production.AC (Assistant Chemist) ensures that the chemical ingredients of the product are contact so as to create the optimal output. The AC along with the QCM has the authority to stop the production at any point in time if they see that the raw material was somehow damaged or the production is effected by any externalities. QCO(Quality Control Officers) fill in MBO sheet (assuring measures and standards) after every 45minns to ensure the quality of the production. OPERATIONS Every day at 12pm there is a Production meeting in which Quality and Quantity issues are discussed. The brewery works 24 hours and has 3 shifts of 8 hours each a day whereby QCO (Quality Control Officer) and other lower management changes whereas the distiller or the filling halls has 2 shifts of 8 hours each (may vary upon changes in demand). The production of Alcohol is 6000 liters per day. To minimize the initiation of unwanted bacteria and to maintain quality, Sodium Fluoride is added to the raw material.BS (Bottling Superintendent) manages the production. The card-punch system is maintained which records the time of an employee entering or leaving the premises. CUSTOMERS The major customers for the alcoholic drinks are the hotels like Serena, Best Western, and PC who provide foreign customers with these products. The non-alcoholic drinks are sold in local markets as well as exported internationally. Furthermore, sometimes hotels also forward a customers request to brew certain special type of combination of raw materials to provide them with a required form of alcohol. Customer satisfaction has been the priority according to the representatives of the firm. EMPLOYEE INVOLVEMENT/EMPOWERMENT Low level workers are restricted and are not allowed to take any significant decisions. BS (Bottling Superintendent)is authorized to take immediate decisions in case of any problem/issues. Otherwise the issues are addressed by TM (Technical Manager).Employees are

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kept in strict parameters within the working environment as the firm is producing alcohol which is a regular attention of critics. QUALITY VS. QUANTITY

Quantity BS -Bottling Superintendent

Quality QCM-Quality Control Manager

Figure 6: Operations are focused on Quantity, whereas Quality Council is focused on Quality.[Source: Interview conducted]

PROCESS FLOW As there are many products produced simultaneously, but the primary product is Beer.

Barley

Store

Malt House

Screening

Steeping (24 hrs)

Mashing (6070C)

Grinding

Malt Formation

Killining (24 hrs @120C)

Germination (5-7 days @15C)

Boiling (3hrs @120C)

Brew Formed (@85C)

Chilling of Brew (@ 810C)

Fermentatio n (6 days @ 10-14C)

Maturation

Market

Filling

Filteration

Figure 7: Production Process of Beer [Source: Interview conducted]

The brewing process begins when the barley grain is soaked in water, thereby facilitating

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germination, and then drying and curing the grain through kilning. The barley has now turned into barley malt. The mill uses steel rollers to crack the grain open before it enters the mash tun. After the mixture of malts are cracked open by the mill they are mixed with warm waters in the German built mash tun. The mash is then pumped sparged (sprayed) with hot water; this helps extract all the sugars from the malt as possible. The base of beer, or "wort", is then pumped into the brew kettle where it is boiled, concentrated and clarified.The wort is now cooled before it is moved to a fermentation cellar where it will become beer. In order to speed the cooling process it is passed through a heat exchanger (Whirl pool). After the wort is cooled it is pumped into a fermentation tank located in the tun room, where especially cultured yeast, Saccharomyces cerevisiac, is added to induce fermentation at 20-21 C over the next 48 to 56 hours.After the beer has been cold cellared and matured in the fermented it is passed through a filter. Murree Brewery's bottling line is made up of several components. At the heart of the system is counter-pressured filler which is capable of filling 15000 bottles per hour. SUPPLERS PARTNERSHIP Molasses are stored in enormous holding tanks as (sugar-cane etc.) are seasonal products and that is why stores are filled up to 8000 metric tons of material in a single point in time to avoid any supply shortage. Molasses supplier ShahTaj sugar industries (MandiBahauddin) are amongst the oldest supplier of the company and are preferred from local sugar mills due to old relations and second reason is that the sugar extracting machines in ShahTaj are out dated and are unable to extract all of the sugar from sugarcane, leaving a good content of sugar in the molasses, which increases the quality of the alcoholic products.

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There is a huge tank present in the parking area of the factory where the supplier deposit the liquid chemicals required for the production. Before this tank suppliers had to enter into the factory and unload in the different tanks in the factory causing pauses in the production line. There are various supplier of the liquid and chemicals of the company, depending upon the production requirements. A warehouse is maintained in the brewery to store the barley. 50% of the barley is from local market of Pakistan (rich in sugar contents but light in flavor) and 50% of it is from Australia (rich in flavor but low in sugar contents). They are mixed in a specific ratio during malt formation. There is no fix supplier in the local market; barley is taken according to the requirement upon mutually agreed price, whereas imported barley is brought from West Australia. Bottles are provided by MG (Murree Glass). PROCURMENT PROCESS (RAW MATERIAL)

Advertising for tender

Receiving quotations from the suppliers

Examination of the quotations (Procureme nt dep.)

Short listing and sample collection

Analysis

Approval

Figure 8 Working of the Procurement Department [Source: Interview conducted]

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PRECONDITIONS OF SELECTING A SUPPLIER y y y y Prices and availability is examined. Molasses or other samples are send to Lab for analysis of contents and quality. Percentage of slug and other bi-products is checked. (Must be less than 8%). After the agreement there must be no delay or shortage of the material. (Supplier will be held responsible.) PERFORMANCE MEASURE Murree Brewery assessed working of different departments (such as Whiskey, Beer, Non-Alcoholic etc.) using the performance measure of Bottling. Using this technique for more the 150 years, company measures every department in terms of bottling output. Managers (Distiller and Brewer) at the production plants are quite satisfied with this performance measure. QUALITY COST Like all standardized production plants Murree Brewery incur a heavy cost to maintain the quality of its products. There are many cost associated such as Prevention/ Precautionary cost, Internal/ Production line failure cost, External/ Supplier/ Distributer failure cost. But the most significant is the Appraisal Cost in fact it is a complete system in the reputed organization, a system of check and balance is conducted for every product. From Central Lab to Production line each and every step is directed towards the quality assurance of the products, and are compared with international

(alcoholic) products in terms of quality. There are lots if issues (political, economic etc.) and blockages (mechanical, electricity short-fall etc.) in production lines but in its long history of successful business Murree Brewery production plant (Rawalpindi) have never incurred a major shut down.

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Idle time of the machinery and plant is utilized in maintenance whereas the idle time of the employees are consumed in other department. BENCHMARKING Standards are maintained at each level of production, and as a bench mark all the products of the company are compared to the competitor or other related products. For non-alcoholic drinks products are compared to local market and alcoholic drinks are benchmarked according to the international market and standards (for example: Whiskies produced by Murree Brewery are benchmark with Scottish Whiskies). Benchmarks are constantly monitored and are changed upon the customer and market demand changes such as shape of bottles, labels, designs etc are edited but quality levels and benchmarks are maintained even at high cost. QUALITY FUNTION DEPLOYMENT Segmentation strategy (segmenting alcoholic and non-alcoholic markets) is the tool exercised in the organization for understanding and defining customer needs and turning them into products requirements. KEY Strong: O Average: A Weak: X

56 Figure 9 QFD Beer (Hypothetical)

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Mouth feel: is the perception of body in the beer and is caused by the residual proteins and dextrins in the beer. Flavor: By far the most important and enjoyed element of drinking a beer is its flavor. Finish: (Also called after-taste.) The lingering sensation after a beer has been swallowed is called the finish. Bouquet: Hops alone determine the bouquet of a beer. STATISTICAL PROCESS CONTROL As mentioned earlier Murree Brewery is inline with the traditional method of production therefore Check/ Tally Bars Sheets are used for the process control. Although this is an out dated technique but still employees prefer this technique as it is in line with the history and tradition of the organization is easy to understand as compared to new and complex methods. RECOMMENDATIONS As Chris Everson said, "Nobody is perfect in this world; everybody has their faults."Murree Brewery has no such problem areas in terms of quality, as each and every product is approved after rigorous lab test and analysis, and every batch under production is inspected after few minutes by the quality department. There has not been a single major issue regarding the quality of any product in the history of the company. Testing of the products is done up to international research level. But there were some recommendations that can improve the quality and productivity structure of the company. y As mentioned earlier the company is keeping its old classical manner of production in practice, but employees feel that updating the plant and equipment (not the infrastructure) will improve the quality standards as well as make the production more efficient and operator friendly. y In the area of suppliers partnership it is observed that Murree Brewery has enormous amount of supplies and finished goods storing capacity but the company is experiencing immense cost in Storing Expenses (both in terms of land and cash). It is recommended that if the company maintains a common warehouse with its suppliers for raw material and a common warehouse with its distributor for finished goods it will reduce a huge
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amount of sum in the expenses and will provide vacant area in the factory that can be used for the expansion of the business. y Performance measure Bottling is outdated because during the visit it was detected that a lot material (such as glass bottles) were damaged and wasted during the production. It is suggested that if the company updates its performance measures or edit the current it will give a true picture of the efficiency of the production line (department). Instead of just relaying on the output, company must focus on comparing its input to its output (productivity theory) than the company can get a true picture of the performance of different departments. y According to a senior officer, Murree Brewery is on the top in terms of quality because of two reason one is the traditional production techniques and second is the HR, but in the previous years company is neglecting its most valuable asset i.e. HR. Although company pays special attention towards the managerial level employees by sending them for training scions abroad (in other breweries and distilleries) but front line employees are uncared. If they are provided with special training programs and refresher courses, than indeed this will take the quality of the products to a new level. Compensation can also be helpful in improving employees motivation. ACTION PLANS y Latest and the most efficient beverages plants must be searched in the international market. Engineers must replace the old plant and machinery in such a way that this process of transformation does not cause any damage to the building and its classic looks. In short bringing innovate technology in the vintage building. y Murree Brewery must create common warehouses with its suppliers (and distributor, if possible) to increase the element of supplier partnership. Factory has many store rooms and humongous containers for the purpose of storage. One way of this is that they can use this warehouse in corporation with the supplier. The supplier can store finished goods in those warehouses and the company can use them for obtaining raw material according to the demand. Both the supplier and company can divide the expenses of the warehouse. y Company can keep its traditional method of performance evaluation intact i.e. bottling but they can upgrade it to productivity bottling. Instead of just focusing on the amount
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of bottles given as output by a department, the organization can compare the amount of material given as input in the department and then compare/match it with the output to evaluate properly. y Murree Brewery needs to take care of all the employees regardless of their position in the organization in terms of educating and training for quality. Defiantly it will be not possible for the company to send all the employees abroad on visits to other factories/ training scions but they send their senior/mangers level employees. The company can arrange tutorials for the low level work force by those officials who have successfully completed their tour. CONCLUSION Working with this organization has indeed been rewarding for us, it is not just a factory but a centuries old tradition which is still alive. Each and every wall of Murree Brewery is a museum in itself. This a was true

defiantly learning

experience.

All the employees are proud of their

organization, although the factory but want looks the to

outdated employees

keep it intact because in their mind they are safeguarding heritage which is spread over an era longer than a millennium. There is no company in this country that can match Murree Brewery in its rich history and keeping it energetically progressing in the market with its methods and techniques that some may argue are out dated. Weather it is the beer, whiskey, non alcoholic beer or even a simple apple drink (Big Apple) many big companies tried to make a similar product but unfortunately they were unsuccessful. Only Murree Brewery is the company which is not facing any direct competition in the market in its products and is maintaining its monopoly for more than 150 years. 21 | P a g e

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BIBLOGRAPHY All the presented data was collected from 15th March 2011 till 02nd June 2011, through interviews and organizational visits. INTERVIWES BY Mr. Kashif (AD) Mr. Umair (Distiller), Mr. Musarat Shah (Distiller), WEBSITES y y y y murreebrewery.com bluechipmag.com (http://www.bluechipmag.com/bc/content_detail.php?content=364) euromonitor.com (http://www.euromonitor.com/alcoholic-drinks-in-pakistan/report) alabev.com (http://www.alabev.com/taste.htm)

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ANNEXERS
http://murreebrewery.com/accounts/audited0910/10-13.pdf http://www.murreebrewery.com/3/List.pdf http://www.murreebrewery.com/accounts/0607/firstquarter/Directors%20Report%20to%20The%20Shareholders.pdf ppts are also available

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