TAPAL TEA Private Limited

April 11, 2020

To: The CEO/President

Subject: Evaluation of Business Model & Improving Overall Performance

Prepared by: Tamoor Ali Sidhu

About the Company, its Operations & Products:

The concept of TAPAL dates back to the year 1947 when the founder Adam Ali Tapal laid the
inspiration of TAPAL TEA as a non-public corporation. TAPAL TEA laid the inspiration of a
completely novel tea blend, later called family mixture which eventually became the most
important selling brand. The corporate began to innovate and introduce a variety of tea brands
to suit every taste which were sold from its retail outlet in Karachi, Jodia Bazaar. They continued
to thrive and grow under the management of Fazullah A. Tapal, who started tea distribution to
stores round the city for the convenience of the people. Innovating its way through its 60 years
of history. TAPAL TEA is currently the most important 100% Pakistani owned tea company within
the country. It did set current caliber for contemporary tea blending and packing factories,
warehouses equipped with state-of-the-art equipment and a team of dynamic professionals
headed by Aftab Tapal himself, owner and CEO of the corporate, joined Tapal in 1977. TAPAL TEA
remains a premium member of Pakistan Tea
Association (PTA). TAPAL TEA is additionally the primary national tea company to export tea to
UAE, Canada and also the United States of America.

Brands of TAPAL TEA:

 TAPAL DANEDAR
 TAPAL TEZDUM
 TAPAL FAMILY MIXTURE
 TAPAL SHADES OF GREEN
 TAPAL MEZBAN
 TAPAL INSTEA
 TAPAL ICE TEA
 TAPAL TEA BAGS
 TAPAL GREEN TEA
Supply Chain Mechanism:

The supply chain mechanism at TAPAL TEA is divided into two basic types:

1. Tea Supply Chain Department

This department is responsible for the following work areas.
 Purchase of raw material (tea)
 Quality Control
 Warehousing
 Blending of tea
The purchase of raw material (tea) is done from around 18 to 20 countries worldwide including
Indonesia, Rwanda, Kenya, Sri-Lanka and green tea from China. Their common tea grades
include:
D (Dust)
D1 (Dust 1)
BOP (Broken Orange Pekoe)
BOPF (Broken Orange Pekoe Fennings)
PD (Pekoe Dust)

2. Supply Chain
Except tea all major and minor purchases are done by this department
including.
 Purchase of Engineering items
 Purchase of General items
 Purchase of Packing material
 Maintenance, Repair of Capital Equipment
 Warehousing
 Production Planning
 Logistics
 Transportation
 Purchase of Promotional items

Purchasing Procedure
On each Wednesday the suppliers collect samples in order to test them and if they get
approved, these are finally purchase via an auction. Tea samples are tested through laboratory
tests as well as sent to Pakistan in order to check the atmosphere and environmental effects on
the type of tea.

Packing Material
Packing material is supplied by the local supplier.
 Saima Packages
 Rehman Packages
 Best Packages
 Packages Ltd
 Trans Pak
 Dexion
Managing Inventory and Warehousing
In inventory management and warehousing there are three processes.

1. Receiving
Products that are received through the department of production undergo a substantial
physical count. Various quantities have various parameters that can be gauged and collected
in inventory system by the supply chain department.

2. Storage
When it comes to the storage process, there exists a lot and a locator system,
identification and traceability where FIFO is the key monitor. They have racking system with rack
number allotted. For example, if received the request from the sales department they have to
send the specific product to the distributor from the pallet location that can be find easily via the
code that is assigned which could be entered into the system so that the exact location of the
product can be traced without hassle.

3. Delivery/Issuance
Eventually, product is issued and delivered to the distributor after stock list check.

Distribution
The distribution network is divided into two divisions.

 South Division (Karachi, Hyderabad and Sukkur)

 North Division (Raiwind, Multan and Islamabad).

Mode of Transportation

TAPAL TEA uses four basic modes of transportation.

 By Air
 By Road
 By Train
 By Sea

TAPAL TEA is a highly professional and leading Pakistani company, is constantly working to
improve
quality in all its functions. They are using TIMS (Tapal Integrated Management System).

International Best Practice Identified (SIX SIGMA)

Overview

Six Sigma is basically a standard for measurement which may be traced back to the 1920’s when
Walter Shewhart demonstrated that three Sigma is that the point where a process requires
rectification. within the early 1980s, Motorola engineers decided that the standard quality levels
didn’t provide enough granularity. Instead, they wanted to live the defects per million
opportunities. Motorola mad this new standard and created the methodology and required
cultural change. Six Sigma assisted Motorola realize powerful bottom-line ends up in their
organization – of course, they documented quite $16 Billion in savings as a result of our Six Sigma
efforts.

How Six Sigma Works?

Six Sigma comprises of various elements as mentioned:

 Focus – A staunch trail of continual business process improvement

 Philosophy – Process results are resolved and managed by process inputs
 Measure of Success – 3.4 errors per million opportunities
 Approach – also called as DMAIC or (define, measure, analyze, improve and control)
 Fuel – This scheme is guided by individuals with a thrive for continuous success.

Six Sigma’s Belt System Provides Structure

Six Sigma’s greatest strength is the way it organizes people. Six Sigma’s greatest asset in
coordinating and managing the people who employ it may be its belt system.

The belt system establishes a chain of command among employees with Six Sigma training. Belt
rankings help employees understand the role they play on project teams and what is expected of
them.

Several roles in Six Sigma belt ranking:

 Champions – These individuals typically come from upper management. Champions act
as leaders to conduct and implement Six Sigma projects. Being member of the leadership
team, Champions assist to remove hurdles and obtain resources for Six Sigma project
teams.
 Master Black Belts (MBB) – Such individuals acquire more Six Sigma training and
experience than any other member of the organization. MBBs maintain a close
relationship with upper management and provide counsel regarding Six Sigma.
 Black Belts – These are full-time Six Sigma professionals. They assist to acquire Six Sigma
projects and prepare project charters. They train team members and help design
experiments and analyze data. They are responsible for communicating progress to
Champions.
 Green Belts – Green Belts are part-time Six Sigma practitioners who spend 25% of their
time on Six Sigma projects. Green Belts choose project team members and give training
on the basics of Six Sigma. These communicate progress to Black Belts and Champions as
the project advances.

Two Different Approaches to Six Sigma

Six Sigma may improve new or prevailing processes using defined methodology.
  DMAIC – This method improves existing processes. The abbreviation stands for various
stages of define, measure, analyze, improve and control. It demands teams to appear
objectively at problems and use factual statistical analysis to search out ways to boost
them.
 DMADV – It can be used to create a new product or service or to redesign a process that
has reached its threshold. This model compels project teams to identify and transcribe
customer needs into product or service that may allow for customer satisfaction.

Six Sigma Success Story

City of El Paso: Parks and Recreation

Permitting Process
City of El Paso settled to convey exemplary services to support a high quality of life for residents,
businesses and visitors. One of their strategic goals is to set the standard for sound governance
and fiscal management along with create innovative recreational, and cultural programs.

 The Situation

Undertaking a park and recreation outdoor space permit was taking a long time, affecting cost
and customer satisfaction.
The average time to process a park and recreation permit was 16 days and the cost associated
with it was $214. The process commenced with a customer requesting a permit either via email,
fax or in person and ended with the customer getting the permit.

For the City of El Paso, customer’s voice is priority, so they decided to involve their most frequent
permit applicants (customer) to the project to provide feedback and to be part of the solution.

The Solution

Applying the Lean Six Sigma methodology led to more than a 93% reduction in processing time

The dedicated team was tasked with reducing the processing time which was successfully
achieved. A few of the tools used by the DMAIC process were the SIPOC map, statistical data
analysis, detailed process maps, time studies, cause and effect diagram. The team analyzed the
causes of the problem allowing them evaluated solutions ideas. The solutions included:
eliminating unnecessary steps in the process, development of specific site maps with identifiable
rental areas, designate areas for park rentals, a new online application.

After fully implementing the solution, the time for processing a permit substantially decreased
from an average of 16 days to only 1 day, and in as a result the cost reduced from $214 per
permit to $13.40, realizing an estimated annual saving of $32,165.
Implementation on the Company

Six Sigma shows business as a “whole complicated process”, comprising of various sub-
processes. This concept of Six Sigma approach makes possible the achievement of the company’s
main objective. Achieving the company goals is done through the shortening the cycle of idea
origination through its experimental realization, production implementation, production and
marketing and through the human resources management. The objective of the experimental
implementation is to study the possibility of using the Six Sigma approach in the conditions of
TAPAL TEA, and to evaluate the benefit of its implementation. The manager of the company can
form a team. The team may include the manager, the consultant and the leading specialists of
the company. The primary objective of the team will be to get acquainted with the Six Sigma
concept, to determine the strategic priorities, goals and aims of the company, and to select the
projects leading to their realization. A chart of the process may be made, giving an overall view of
the
business of the company. In order to correctly define key processes influencing the
customer satisfaction, the team managed by the consultant shall conduct brainstorm sessions.
The objective is, by using the company’s previous experience and the knowledge of
the team members, to select these processes, which must be analyzed and if it is needed
improved.
During the brainstorming sessions, the following questions may be asked:
 Do the products of TAPAL TEA satisfy the requirements, demands and expectations of
the customers?
 What are the most common reasons for defects in the products of TAPAL TEA?
Based on this the team may formulate several projects:
 A procedure for buying the products of TAPAL TEA.
 Choice and management of suppliers.
 Customer service improvement
 Improvement and renovation of the equipment and facilities of TAPAL.

Due to the experimental implementation of the Six Sigma approach in the

TAPAL TEA the following conclusions can be made that this approach includes alternative
strategies and defining the processes which are key towards increasing the value of product for
the customer.

Financial Improvements
1. Increase in Revenue
The apparent advantage of the six-sigma project would be an increase
in revenue. This could be due to many factors. With efficient processes, the company may be
able to produce goods more cheaply than others and hence sell more increasing revenues. Or
with the assistance of six sigma projects, the firm could increase the quality of products which
can increase customer loyalty and add to revenues.

2. Avoided Costs: The company can ignore many costs in the form of regulatory,
penalties, expansion costs etc. if its processes are efficient. Assume that the
factory manufactures 100 tons of tea. If by efficiently redesigning the
processes, the factory can now manufacture 120 tons, then the fixed costs of
manufacturing those 20 tons have been avoided. Governments sometimes
 penalize inefficient behavior in companies. For example, if the company does
not pay its taxes on time, it has to pay penalties. Six sigma projects enable
efficient processes and avoid extra costs for the management.

3. Reduced Costs: The operating costs of the company can be efficiently reduced

with the help of six sigma projects.

Non-Financial Improvements

There are many non-financial merits that accrue to the firms as well. In many instances these
transcribe into indirect financial benefits. However, since they cannot be precisely measured,
they must be called non-financial. Common examples of such benefits are as follows:

 Increased customer satisfaction

 Increased employee satisfaction
 Improvement in the reputation of the firm.

Existing Business Structure (Hierarchical System)

The Existing Business Structure of TAPAL TEA is such that there are the Board of Directors under
whom come the Chief Executive Officer and the Chief Financial Officer. Then come the General
Managers Sales, Operations, Administration, Human Resources, Marketing, Supply Chain
Management, Tea Supply Chain, Finance, Information Services. The management structure at
Tapal Tea is at its core a vertical management system which allows for top-down management
strategy. Such a system is centralized in the sense that it cares less for employee autonomy and
focuses more on management decisions from the top authority.

Importance of Responsibility center and how they help organization.

The method to assign responsibility center inside TAPAL to assist achieve the organizational goals
through segregation to every manager little doubt helps in achieving delegation and
control besides tracking the performance that tends to perform as a motivational boom.
However, it becomes important for management to appreciate that one mustn't be too focused
or be process-oriented that will cripple out the initial objects set. By doing so a
corporation is possibly to sabotage itself when it focuses on the hierarchical scheme of things.
Results might not be achieved and targets may become numbers to frown on.
Management of responsibility centers need generation of segment reports. Each segment report
reflects the performance of a specific responsibility center. One kind of segment report could be
a segment statement. A segment statement will show revenues, expenses, and profit for the
chosen segment. When there's responsibility attached to every segment, each and
each individual is aligned and directed towards a purpose with the responsibility that's in line
with their roles. The individual or department are traced and no one can shift the responsibility
to anybody else if anything goes wrong.
Following are the ways during which these is helpful to the organization.
  Improves Performance:  Knowing that the company’s performance will be tracked and
reported to the top management, the departments and persons involved will try their
utmost to give in their best performance
 Delegation and Control: The assignment of responsibility center with roles being assigned
to various segments assist the organization in bringing about and achieving the purpose
of our company goals.
 Helps in Decision Making: Responsibility centers aid the management in decision making
as the information gathered from various centers aid them in planning all of the future
actions.

International Best Practice

Considering the nature of business and the model suggested above i.e. Six Sigma the
following business structure shall be followed by TAPAL as shown in the figure.

 Champion: These individuals typically come from upper management. Champions act as

leaders to conduct and implement Six Sigma projects. Being member of the leadership
team, Champions assist to remove hurdles and obtain resources for Six Sigma project
teams. In TAPAL, the Champion can be usually the Board of Directors.
 Master Black Belts (MBB) – Such individuals acquire more Six Sigma training and
experience than any other member of the organization. MBBs maintain a close
relationship with upper management and provide counsel regarding Six Sigma. In our
company these can be the CEO
 Black Belts – These are full-time Six Sigma professionals. They assist to acquire Six Sigma
projects and prepare project charters. They train team members and help design
experiments and analyze data. They are responsible for communicating progress to
Champions. In TAPAL, these can be the General Managers for various departments in the
 company like Sales, Information Services, Administration, Human Resources, Operations,
Supply Chain, Finance, Marketing.
 Green Belts –– Green Belts are part-time Six Sigma practitioners who spend 25% of their
time on Six Sigma projects. Green Belts choose project team members and give training
on the basics of Six Sigma. These communicate progress to Black Belts and Champions as
the project advances. These can be the Managers for the departments like Sales,
Information Services, Administration, Human Resources, Operations, Supply Chain,
Finance, Marketing

Financial Improvements
1. Increase in Revenue
The apparent advantage of the six-sigma project would be an increase
in revenue. This could be due to many factors. With efficient processes, the company may be
able to produce goods more cheaply than others and hence sell more increasing revenues. Or
with the assistance of six sigma projects, the firm could increase the quality of products which
can increase customer loyalty and add to revenues.

2. Avoided Costs: The company can ignore many costs in the form of regulatory,
penalties, expansion costs etc. if its processes are efficient. Assume that the
factory manufactures 100 tons of tea. If by efficiently redesigning the processes,
the factory can now manufacture 120 tons, then the fixed costs of manufacturing
those 20 tons have been avoided. Governments sometimes penalize inefficient
behavior in companies. For example, if the company does not pay its taxes on
time, it has to pay penalties. Six sigma projects enable efficient processes and
avoid extra costs for the management.

3. Reduced Costs: The operating costs of the company can be efficiently reduced

with the help of six sigma projects.

Non-Financial Improvements

There are many non-financial merits that accrue to the firms as well. In many instances these
transcribe into indirect financial benefits. However, since they cannot be precisely measured,
they must be called non-financial. Common examples of such benefits are as follows:

 Increased customer satisfaction

 Increased employee satisfaction
 Improvement in the reputation of the firm

Some key responsibility centers which can be established are as under:

An expense center may be a responsibility center including only expense items and creating no
direct revenue from the sale of products or services. Example will be the upkeep Department or
Accounting Department at TAPAL. Managers of expense centers are held responsible just
for specified expense items.
A profit center comprises of both revenues and expenses. The manager of Sales at TAPAL must
have the authority to control selling price, sales volume, and all reported expense items. In order
to correctly determine performance, the manager must have power over all of these measured
items and decisions.
An investment center comprises of revenues, expenses, and an investment base. When a firm
assesses an investment center, it looks at the rate of return on its investment base. The
managers of product planning can be part of such a center.
 Assignment of Role and Responsibility: When there's responsibility attached to
every segment, each and each individual is aligned and directed towards a purpose with
the responsibility that's in line with their roles. The person or department are tracked and
no-one can shift the responsibility to anybody else suppose anything goes wrong
 Improves Performance: The idea of getting to assign tasks and responsibility to a
selected person would stand to act as a motivational factor. Knowing that their
performance is going to be tracked and reported to the highest management, the
departments and persons involved will try their best to offer in their best performance
 Helps in Decision Making: Responsibility centers help the management in higher
cognitive process because the information disseminated and picked up from various
centers helps them in planning all of its future actions.
 Helps in Cost Control: By having a segment-wise breakup responsibility centers help the
highest management in having to assign different budgets for the varied centers thereby
achieving cost control as per the necessities.

References
https://texasleansixsigma.com/city-of-el-paso-parks-and-recreation/
https://www.managementstudyguide.com/measuring-financial-benefits-of-six-sigma.htm_
https://www.wallstreetmojo.com/responsibility-center/
https://courses.lumenlearning.com/sac-managacct/chapter/responsibility-accounting-in-
business-environments/

Tamoor Ali Sidhu