ASSIGNMENT ON

CASE-STUDY OF AL-KARAM

Name; Dure Laiba Saleem

Roll No. 190
Section; D
BBA (hons)
Session; 2019 - 2023
Subject; Cases and exercises
Submit to Sir Junaid
 CASE STUDY
Al-karam Textile: Overproduction Challenges
what are the main factors contributing to the issue of
overproduction at Al-karam Textile?
How does inaccurate demand forecasting impact the level of
overproduction?
What steps can be taken to improve demand forecasting
accuracy?
For Effective Production Control who must to work together
collaboratively?

Executive Summary
The Al-Karam Established in 1986, Al-karam Textile is a renowned Pakistani textile
company known for its exceptional quality fabrics, garments, and home textiles. With a focus
on innovation, design, and customer satisfaction, Al-karam has become one of the largest
vertically integrated textile manufacturers in the country. The company operates its own
spinning, weaving, processing, and stitching units, ensuring meticulous attention to detail at
every stage of production. Al-karam offers a diverse range of products, including a variety of
fabrics, ready-to-wear apparel, and home textiles, catering to the needs of both domestic and
international markets. With a commitment to sustainability and a strong retail presence, Al-
karam Textile has earned a reputation for excellence in the textile industry Over the years,
Al-karam Textile has established a strong presence in both the domestic and international
markets. The company has a widespread retail network, including its own flagship stores and
franchises across Pakistan. Additionally, Al-karam Textile exports its products to numerous
countries, serving a global customer base. But alongside the Al-karam Textile is facing
overproduction challenges, The three key individuals within the organization have
contributed to the problem, and make worse the issue. Production Manager: Mr Maqsood
Ahmed the production manager plays a critical role in overseeing the manufacturing
processes at Al-karam Textile. However, in this case, the production manager's lack of
effective planning and coordination has contributed to the overproduction problem. Their
failure to accurately assess market demand and align production levels accordingly has led to
excess inventory. Additionally, a lack of clear communication with other departments and
stakeholders has hindered the flow of information necessary for efficient production planning
and inventory management. The other person responsible for overproduction is Sales and
Marketing Manager; Mr Asim Ali and Mr Ghaffar at Al-karam Textile the sales and
marketing Manager is responsible for understanding customer preferences, analysing market
trends, and effectively communicating the company's products to potential buyers. However,
in this case, the sales and marketing Manager insufficient collaboration with the production
department has resulted in overproduction. A lack of accurate sales forecasting and timely
feedback regarding market demand has contributed to the misalignment between production
levels and actual customer needs. This dis-connect between the sales and marketing team and
the production department has hindered the company's ability to optimize production
processes and prevent overproduction.
Overproduction results in the inefficient use of resources, including raw materials, labour,
energy, and time. This wastage affects cost efficiency and sustainability efforts at Al-karam
Textile. Moreover, the need to reduce excess inventory through clearance sales or discounts
can erode profit margins and diminish overall profitability for the company. These price
reductions required to sell through surplus inventory have a direct impact on Al-karam
Textile's financial performance.
The consequences of overproduction at Al-karam Textile have had a detrimental impact on
the company. Excessive inventory incurs additional costs, including storage expenses and
holding costs, negatively affecting profitability. The accumulation of unsold inventory also
ties up a significant amount of working capital, limiting the company's ability to invest in
other crucial areas such as research and development or marketing.
The main individuals responsible for production controls blames each-other;
Sales and Marketing Manager's Perspective: The sales manager Mr Asim Ali argue that
they provided accurate sales forecasts and communicated customer demand to the production
team. They might blame the marketing manager Mr Ghaffar for ineffective promotional
campaigns or insufficient market research, resulting in lower-than-expected sales. The sales
manager claim that they did their part in estimating demand, and any overproduction is a
result of the production manager's Mr Maqsood Ahmed failure to align production levels
accordingly.
Marketing Manager's Perspective: The marketing manager defend their efforts by stating
that they developed compelling marketing strategies and executed promotional campaigns as
planned. They could argue that the sales manager Mr Asim Ali is failed to convert the
generated leads and inquiries into actual sales, leading to a discrepancy between anticipated
demand and actual sales figures. The marketing manager may believe that overproduction is a
consequence of the sales team's inability to meet projected targets.
Production Manager's Perspective: The production manager contend that they relied on the
sales and marketing teams to provide accurate demand forecasts and communicated the
production capacity accordingly. They might point out that any overproduction is a result of
inflated sales projections or ineffective marketing efforts, which created a false sense of
demand. The production manager argue that they followed the information provided to them
and cannot be held solely responsible for the overproduction.

CENTRAL ISSUE
The central issue in this case study is the problem of overproduction at Al-karam Textile. The
company is producing more goods than there is demand for, resulting in excessive inventory,
increased costs, and potential risk of obsolescence. The issue is likely caused by inaccurate
demand forecasting, lack of coordination between sales, marketing, and production teams,
and other contributing factors. Resolving this issue is crucial for Al-karam Textile to optimize
resource utilization, reduce costs, and improve overall operational efficiency.

Q1; what are the main factors contributing to the issue of

overproduction at Al-karam Textile?

The main factors contributing to the issue of overproduction at Al-karam Textile include
inaccurate demand forecasting, lack of communication and coordination between
departments, seasonal fluctuations, sales target pressure, inefficient production processes,
lack of demand visibility, and ineffective inventory management. Inaccurate demand
forecasting leads to ordering or producing more goods than necessary, while poor
communication and coordination result in imbalances between production and actual
demand. Seasonal fluctuations and sales target pressure can also lead to overproduction.
Inefficient production processes, lack of demand visibility, and ineffective inventory
management further contribute to the issue. Addressing these factors requires improving
demand forecasting accuracy, enhancing communication and coordination, streamlining
production processes, and implementing effective inventory management strategies.

Q2; How does inaccurate demand forecasting impact the level

of overproduction?
Inaccurate demand forecasting significantly impacts the level of overproduction within a
company. Overestimating demand leads to excessive inventory, tying up valuable resources
and affecting profitability. Increased costs arise from manufacturing and managing excess
inventory, while the risk of obsolescence looms as products may become outdated. Inefficient
resource allocation and missed opportunities for investment further exacerbate the
consequences. To address this issue, companies should improve their forecasting methods,
leverage data analytics and market insights, enhance communication and collaboration
between departments, and implement effective inventory management practices. By aligning
production with actual customer demand, companies can mitigate the impact of inaccurate
forecasting, optimize resource utilization, and enhance operational efficiency.

Q3; What steps can be taken to improve demand forecasting

accuracy?
To improve demand forecasting accuracy, companies can take simple steps such as analysing
historical data to identify patterns, engaging with customers to understand their preferences,
monitoring market trends, fostering collaboration between teams, leveraging technology for
advanced analytics, considering external factors that impact demand, regularly reviewing and
adjusting forecasts based on actual sales data, and seeking feedback for continuous
improvement. By implementing these steps, companies can enhance their ability to predict
customer demand accurately, reduce overproduction, optimize inventory management, and
improve overall operational efficiency.

Q4; For Effective Production Control who must to work

together collaboratively?
For effective production control, various stakeholders within a company need to work
together collaboratively. These include:
 Production Managers
 Operations and Supply Chain Teams
 Sales and Marketing Teams
 Cross-functional Collaboration
 Quality Assurance Teams
 Information Technology (IT) Department