Running Head: HALEEB FOODS SUPPLY CHAIN

Hina Qaiser
Maheen Chaudhry
Manezhe Imran
Muhammad Faizan Ur Rahman
Nabeeha Zubair
Yamina Khaled

Ms. Mehreen Rehmani

Supply Chain Management, A
April 9, 2013
Lahore School of Economics

Haleeb Foods Supply Chain

Contents
Contents...................................................................................................................................... 2
Introduction.................................................................................................................................. 3
Company Overview.................................................................................................................. 3
Corporate and Supply Chain Strategy..........................................................................................4
Achieving Strategic Fit..............................................................................................................5
Distribution................................................................................................................................... 8
Distributor Storage with Carrier Delivery .................................................................................8
Supplier Selection Process..........................................................................................................9
Milk Procurement Process......................................................................................................... 11
Facility Location......................................................................................................................... 11
Markets They Serve............................................................................................................... 13
Mode of Transportation.............................................................................................................. 14
Transportation Network Design..................................................................................................14
Direct Transportation ............................................................................................................. 14
Transportation directly via a Central Distribution Center.........................................................16
Transportation and Inventory Holding Costs...........................................................................16
Tackling Risks ....................................................................................................................... 16
Pricing Strategy......................................................................................................................... 17
Information Technology............................................................................................................. 18
Supply Chain Coordination at Haleeb........................................................................................20

Haleeb Foods Supply Chain

Introduction
Pakistan is the fourth largest milk producer in the world. About a third of the total milk produced
in rural areas, flows out to urban consumers and processing industries. In urban areas, milk is
available to common consumers in two ways: loose/unprocessed milk and packed/processed
milk, usually packaged and treated by modern milk processing treatments like UHT treatment.
With the added requirements for safe and hygienic food products, demand of processed milk is
growing at 20% per year. This has created a growing market for milk and dairy companies to
provide safer, processed and packaged milk to urban consumers. In addition to packaged milk,
the demand for dairy liquid, tea whiteners and anything other than whole milk is also increasing.
Such products are mostly catered to lower income brackets, especially SEC C and SEC D. This
situation has led to the processed and packaged milk industry to have increasing competition
among a few players like Nestle, Engro, Shakarganj and Haleeb all contributing to an
oligopolistic nature of market.
Company Overview
Haleeb Foods Ltd. was incorporated on July 1st, 1984 with a capital of Rs. 46 Million under the
name of Chaudhry Dairies Limited which was renamed as CDL Foods Limited and now it is
known to be Haleeb Foods Limited. At the time of inception, the company had a capacity of
producing 80,000 / liters of milk per day having total area of 32 acres. Initially 150 people were
employed at the plant. The production process started with UHT liquid milk and was one of the
pioneers in the then latest processed milk technology. In order to provide the best quality
products to its consumers, HFL has a well-developed supply chain infrastructure. It has heavily
invested in a vast network of company operated milk collection centers across the country.
Haleeb was the market leader in the processed and packaged milk industry before 2005, when
the company faced some testing times and was over taken in market share by companies like
Nestle and Engro. The company had the lion share of the market and in 2002 the company
contributed 54% to the country's packed milk market. However, amid quality concerns over its
products and adulteration claims, the company lost out on market share to other companies such
as Nestle. With almost half a decade of losses and decreased sales, Haleeb Foods undertook
crucial changes that would help the company revive its fortunes.

Haleeb Foods Supply Chain

Corporate and Supply Chain Strategy

With a change in strategy, another key element was the optimization of its supply chain, and to
align the supply chain strategy with its corporate strategy. The company has gradually taken
steps that are aimed to increase over all supply chain value and profitability. Such steps are
critical for the company to compete as reduced costs would help Haleeb in regaining market
share as competitive pricing is coupled with greater quality products.
Haleebs corporate strategy in recent times has been to delve Deeper in the Pyramid (DiP). This
is a term coined by Tetra Pak in its annual report on the dairy industry, known as the Tetra Pak
Dairy Index. In the Index, Tetra Pak has identified consumers that earn two to eight dollars a
day, but account for 38% of liquid dairy product consumption in the developing world. With a
huge potential market to serve in Pakistan, Tetra Pak has modeled its corporate strategy to focus
on DiPs by promoting TeaMax, a tea whitener, as one of its key brands. Furthermore, the
company also competes with the market leaders by offering competitive pricing. In order to
achieve such corporate strategies, Haleeb has to achieve cost optimization, and in this regard, a
key area that manufacturing concerns can focus on to achieve such strategies, is increasing their
supply chain profitability.
To achieve success, any company must have competitive and supply chain strategies aligned in
order to achieve what is known as the strategic fit, which is the consistency between customer
priorities of competitive strategy and supply chain capabilities specified by the supply chain
strategy.
Haleeb has thus adopted supply chain strategies that focus entirely on driving costs down, in
order to achieve profitability. The company uses the mottos, Sell more, Sell Right, and Cut
Cost, Grow Fast. In order to achieve the competitive strategy of selling at prices lower than
competitors, the management has to squeeze margins by being cost efficient. As such, at
Haleeb, costs are scrutinized in detail at every step. All this has to be done while making sure
bottom line is not affected.
In order to achieve higher supply chain profitability, all elements of supply chain must be
optimized for cost. To achieve this, the company has first started off by cutting costs in
procurement. By cutting out delivery systems like Hilux Delivery System and Strategic Milk

Haleeb Foods Supply Chain

Services, two key elements of procurement in old times, the company has managed to achieve
higher quality inputs and better prices. The companys Milk Collection and Dairy Services
(MCDS) department ensures that procurement takes place from the best quality milk sources,
which are from reliable sources and at lowest costs. The company has ventured far away from
urban cities in order to procure milk from places further away from urban society, where costs of
procurement are cheaper. Furthermore, the company provides advisory services to farmers to
improve dairy farming and give back to the community.
Furthermore, Main Centers for milk collection and treatment have been reduced from 16 to 8, in
order to achieve strategic fit. The company also lay off 250 employees in order to reduce payroll
costs, and achieve greater efficiency levels with a smaller, more manageable workforce. The
number of Stock Keeping Units (SKUs) has also been decreased from 40 to 12, in order to
simplify Haleebs product portfolio. Such steps have helped remove the obstacles to cost
optimization and thus help the company achieve a strategic fit between its competitive strategy
and supply chain strategy.
Achieving Strategic Fit
If the three step process to achieve strategic fit is considered, the first would be to analyze the
demand uncertainty. Haleeb would have a low implied demand uncertainty as it has a fairly
predictable supply and demand. Forecasts for demand can be fairly accurate as Haleeb has been
operating in the dairy industry for over two decades. Furthermore, there is a focus on key brands
by Haleeb which has reduced the number and variety of products. The company also has
restricted the number of channels it procures from, leading to lower implied demand uncertainty.
Following is Haleebs placement on the demand uncertainty spectrum:

Haleeb Foods Supply Chain

The next step requires the company to understand its supply chain and whether it is responsive or
efficient. The second step requires that the company should map itself on the responsiveness
spectrum. The companys focus on cost optimization and relentless pursuit to drive down costs
would place it between highly efficient and somewhat efficient. The reasons for the companys
pursuit to become efficient in terms of cost have been listed in detail above. However, a certain
level of responsiveness is also required in outbound logistics and post distribution. The company
needs to manage inventory at retail stores as shelf life of milk products is not very long. Thus,
the need for responsiveness and the companys outbound logistics work would grant Haleeb a
place as a somewhat efficient company in terms of its entire supply chain. The following shows
Haleeb on the responsiveness spectrum:

Haleeb Foods Supply Chain

The third step is to achieve strategic fit. The companys supply chain focus areas can be seen in
the table below:

Haleebs Supply Chain

Primary goal

Lowest cost

Product design strategy Min product cost

Pricing strategy

Lower margins

Manufacturing strategy High utilization

Inventory strategy

Minimize inventory

Supplier selection
strategy

Focus on cost

Transportation strategy Emphasis on reduction of

freight

Thus, we can deduce that Haleeb has managed to achieve a strategic fit with relatively low
implied demand uncertainty and an efficient supply chain. The following graph shows Haleebs
placement on the Uncertainty/Responsiveness map:

Haleeb Foods Supply Chain

Distribution
Distribution is defined as the steps taken to move and store a product from the supplier stage to a
customer stage in the supply chain. Haleeb Foods sells the milk as per orders to the distributor
who re-sells it to the retailer. Haleeb being the manufacturer has only two warehouses, one in
Karachi and the other one is located on its main plant in Bhai Pheru. Even though the distributor
is responsible for providing the final product to the retailer, constant checks are made and all the
transportation and movement of the product is done under the supervision of a team member of
Haleeb.

Distributor Storage with Carrier Delivery

The distribution design for Haleeb is distributor storage with carrier delivery, as it deals with the
final customer through an intermediary; the product passes through many hands before it finally
reaches the final customer. The distributors do not keep any inventory as the product to be stored
in inventory is perishable and has a shelf life of only 90 days. Though the inventory kept is low
but the distributor never runs out of stock as the information for demand is sent back to the main
office by the team member monitoring the outflow of Haleebs milk products.
Though the manufacturer is only responsible for making deliveries to the distributors, the
transportation cost incurred by the manufacturer is greater than the distributor as the
manufacturer has to make small regular deliveries to the distributor. As Haleeb exports its milk
products to Afghanistan as well, the transportation route taken by Haleeb is through Peshawar
Ring Road. Mr. Arsalan Cheema mentioned in the interview that Haleeb does not go beyond this
point because that calls for making use of illegal ways and engaging in black markets.

Haleeb Foods Supply Chain

Information flows to the main office on daily basis by the team member of Haleeb as he gives
daily reports on the demand for the milk products so the department heads can plan and forecast
accordingly. Since they have their sales team members working along with the distributors, they
do not have issues regarding matching the demand with their supply.
When the deliveries are made by Haleeb to the distributor and from the distributor to the retailer,
the quality and the quantity of the products is inspected. QADs inspects each batch being
dispatched and is placed in incubation for 3 days and under observation for 5 days in case of
major discrepancies in product behavior.
Haleeb also makes use of e-business while dealing with its major supplier, Tetra Pak. All the
orders and payments are done online which saves time and cost for Haleeb and improves
response time.
Supplier Selection Process
At Haleeb, since raw milk is the key input, it is collected from eight milk collection centers
located in Punjab where milk is collected from reliable sources on lowest landed costs. South
Punjab is really rich in milk and costs lesser than milk from other areas so Haleeb buys milk
from various suppliers from South Punjab.
Haleeb has different suppliers that are direct farmer, progressive farmer and commercial farmer.
Direct farmer is a milk man who has one or two cows. Every day after taking the milk for his
own use he gives the extra 3-4 liters per day (LPD) to the collection centers of Haleeb.
Progressive farmer is a milk man who has 5-6 cows and 10-15 LPD of milk are collected from
his farm in a chiller and then taken to Haleebs collection centers. Commercial farmers are the
largest and provide the best quality milk. They have a proper commercial dairy farm with about
3000 cows making around 25000 LPD of milk. However they charge a premium and hence are
the most expensive source of milk.
Then there is the village milk collection model where there is one person who travels on motor
cycle collecting milk from the entire village community. This is the quality threshold. After this
the quality of milk supplied is the worst. However, just to mention, there are more sources under
this called the mini contractor, Hilux contractor, and the strategic milk supplier. But Haleeb has
banned these sources due to adulteration in milk by these sources and really bad quality.

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10

Haleeb provides advisory services to farmers, at their doorstep, for improved dairy farming since
it does not have a structured method of selecting suppliers and assessing them. However Haleeb
does chose suppliers on a very basic assessment criteria i.e. supply quality, pricing terms,
inbound transportation costs and supplier viability and reliability.
As mentioned before that Haleeb uses good quality milk and has quit the sources that adulterated
milk. Like any other company costs are very important to Haleeb, so Haleeb buys milk from
sources that give a good price and are affordable. Furthermore, Haleebs collection centers are
located in Punjab, hence it chooses suppliers that are nearby to avoid freight charges and
transportation costs.
Supplier viability and reliability is an important concern to Haleeb. They like suppliers who stick
to them through thick and thin and hence they are very devoted to their commercial farmers who
provide them consistent supply of good quality milk even in the lean season.
There are no formal contracts in the milk section. However, with commercial farmers they do
have annual contracts about the price rate, minimum volume of milk needed and a consistent
supply throughout the year. Some contracts also exist with progressive farmers at times. There
are no revenue sharing contracts but informal quantity flexibility and buy back contracts do exist.
Haleeb buys back from retailers, packets of milk that have been expired and gives them their
claim. Haleeb also allows its retailers to choose what quantity of milk they require at each
replenishment time.
Haleeb does not share the retailers revenue. In fact it pays the retailer to display its products and
also gives them a retailers margin of 6.5%. With its key accounts and international chain
accounts, that includes big stores such as Makro, Metro, Al- Fatah it has contracts that they give
them further discounts on their products.
Mr. Arsalan Cheema said that for products other than milk there is a proper supplier assessment
and selection process that includes assessment criteria such as; replenishment lead time, on time
performance, supplier flexibility, delivery frequency etc. along with the criteria mentioned before
for milk suppliers. He gave the example of skimmed milk powder that Haleeb imports. For such
products Haleeb is registered on international trading websites and portals where they find

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11

suppliers and then form contracts with them. They even suppliers for these products by
participating in trade shows and through the contacts of the procurement team
No auctions are held for choosing suppliers for both milk and other products. However, Mr.
Cheema said that even for milk we like to stick to suppliers who we have been working from the
past.
Milk Procurement Process
As mentioned before Haleeb procures best quality milk from reliable sources at lowest landed
cost available. The procurement process of milk at Haleeb is unstructured. It starts with a sales
order, the production planning team calculates the quantity of milk needed and then the
procurement department procures milk. However for other products the procurement process is
as follows;

Receive, review and process demands placed by end users (various departments).

Arrange offers, prepare bid analysis of rates received against demand and communicate
to end users for evaluation.

Negotiate prices and other trade terms with vendors.

Maintain strong follow up with vendors and ensure supplies are received as per agreed
terms and conditions.

Work on establishing new competitive vendors to generate cost savings for the company.

Provide support for purchase related activities to all departments at Head Office and
Factories.

Mr. Cheema said that they have never really faced a shortage of supply in milk as they maintain
safety stocks. In other products they have faced shortage a few times due to delay in production
or strikes of transport containers etc. Once however, they faced a plant shutdown due to a delay
in shipment of skimmed milk powder that is an ingredient in the packaged milk as well.
Facility Location
Haleeb Foods has various divisions in which it operates. The milk division has a supply chain of
its own which starts off from the milk collection and ends with the milk distribution.

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12

According to Mr. Arsalan Cheema, Haleeb initially had two plants; one is in Rahim Yar Khan
and the other one is in Bhai Pheru. Haleeb used to enjoy low costs in that location but due to the
physical distance, between the plant and the urban settlements, the freight costs were quite high.
Haleeb has another plant at Bhai Pheru in Northern Punjab. The plant in Rahim Yar Khan is not
functional anymore, solely due to the fact that costs were minimized if only the plant at Bhai
Pheru was utilized. The driving force behind shifting to this plant was the tradeoff between
freight costs and human resource costs. Southern Punjab is a platform for high quality human
resource availability. However, the Bhai Pheru plant is near most of their sales regions
(identified below) benefitting transportation and reducing freight costs. The benefits of the plant
in Rahim Yar Khan include:

Southern Punjab is very rich in milk,

Milk in this location is quite inexpensive, yet maintaining quality,

Hence, for the purpose of minimizing costs, the plant at Bhai Pheru was fully utilized.
Since the facility is located close to the manufacturer, Haleeb is said to be focusing on the lowcost strategy. Although it is close to manufacturers, Haleeb is still quite customer responsive as
well. This is pivotal for Haleeb in order to retain its customers and build up good will and
customer loyalty.
Haleeb has eight Main Centers under which there are thirty to forty sub-centers. The collection
capacity of the 8 Main Centers is 170 K Liters (Gross Volume). One collection center is at Bhai
Pheru where the plant is located as well. The seven other Main Centers are at Ellahabad, Haveli,
Minchinabad, Chishtian, Arifwala, Jhang, and Bhowana.

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13

Markets They Serve

Haleeb serves cities and rural areas spread out in Pakistan. However, its main eight sales regions
are the following:
1. Lahore
2. Karachi
3. Faisalabad
4. Gujranwala
5. Peshawar
6. Islamabad
7. Sukkur

Haleeb Foods Supply Chain

14

8. Multan
Every area has a regional sales manager, followed by an assistant sales manager and finally a
territory sales manager. These territory sales managers are assigned to individual distributions of
the respective areas. (A. Cheema, personal communication, March 27, 2013)
Haleeb also exports milk and vegetable cream to Afghanistan. Although they incur a very high
cost, they also sell it to them at a very high price so they are unable to re-sell it in Pakistan and
reap advantages. Haleeb takes responsibility of delivery only up to the Peshawar Ring Road.
From there on, it is the responsibility of purchasers in Afghanistan because of the sole reason
that delivery further ahead involves engagement in black markets.
Haleeb exports milk produced in Pakistan; it does not have a facility in Afghanistan though this
sort of expansion is under consideration at Haleeb (A. Cheema, personal communication, March
27, 2013).
Mode of Transportation
The mode of transportation utilized by Haleeb is truck. As milk is a perishable item that is
temperature-specific, using trucks is beneficial for Haleeb as it guarantees shorter delivery time.
As mentioned earlier in the report, milk is transferred from sub-centers to the main centers and
from there to the plant, where the milk is then processed. During this time, the milk goes through
numerous quality checks; first at the sub-centers and followed by intense checks at the Main
Center. Any batch that is not up to the mark in terms of quality is rejected immediately.
Transportation Network Design
There are two sides to a supply chain; the suppliers side and the buyers side. The distribution
network at Haleeb is different for both the sides depending on the requirements.
Direct Transportation
All the aforementioned suppliers, including the farmers and VMCs, transport milk directly to the
sub-centers of Haleeb from where it is sent to the Main Center and then to the plant at Bhai
Pheru. The suppliers transport milk themselves to Haleeb (the buyer). Haleebs only provides the
trucks, apart from that, the transportation is outsourced. Various suppliers, mentioned in detail

Haleeb Foods Supply Chain

15

above, are responsible for transporting the milk to the plant, eventually. The routing of each
shipment is specified and the supply chain manager only needs to decide on the quantity to order.

This depends entirely on the demand and the sales of the company. The reason why this is
different from a milk run is that the routing is specified. There are 2 3 routes to reach the Main
Center and they are pre-determined. Once the quantity has been decided, the transportation
begins. Planning of the demand and production is carried out at the start of every month;
however, it is not possible to decide the exact amount to be ordered 20 days in advance as the
company is not as mature yet considering the last four years of continuous losses they were in.
Forecasting is conducted on the basis of various factors such as consideration of the

Last month sales,

Haleeb Foods Supply Chain

Industry Condition,

Experience of the last couple of years.

16

(A. Cheema, personal communication, March 27, 2013)

Transportation directly via a Central Distribution Center
Once the milk has been processed and is ready to be marketed, a different transportation network
is used. Mr. Arsalan Cheema quotes There are two modes of selling; one is Order-Booking and
the other one is Spot Selling. At this point, in Lahore, order booking is the only mode of selling.
In places like Gujranwala and other cities as well as rural areas, spot selling is more effective.
As explained by Mr. Arsalan Cheema, the order booker goes out from the distributor, visits 40
odd retailers, and takes orders from them, followed by an invoice. Every distributor has a couple
of order bookers and a territory sales manager; and one van and sales man is assigned to every
pair of order bookers. Once the order has been taken, it is dropped off at the distribution center
the very next day. Haleeb sells the milk to this distribution center and from here, the sales man
along with the van assigned, goes to the retailer and sells it there, fulfilling the orders promptly.
(A. Cheema, personal communication, March 27, 2013)
Transportation and Inventory Holding Costs
Mr. Arsalan Cheema states Haleeb does not keep any inventory as such; the milk is transported
from one place to the other as soon as the required process (of quality checks or UHT treatment)
has been undertaken. The only inventory it keeps is the sample of the each batch that has
undergone quality checks. Also, the transportation costs are relatively low as compared to the
time when the plant was in Rahim Yar Khan. This is due to the shorter distances. Hence, Haleeb
enjoys low costs of transportation and no inventory holding costs.
Tackling Risks
Haleeb runs numerous quality checks, eliminating the risk of presence of hazardous chemicals in
the milk sold. However, one of the main problems that exist is of the expiry and shelf-life of
milk. Due to the likelihood of the milk reaching its expiry date, it is supposed to have a shelf-life
of not more than 90 days. In this case, the sales team and the distribution network play a
significant role. As the product is near its expiry date, the sales team is informed of the slow

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17

progress of sales in particular stores. To cater to this problem, a new distribution is undertaken
where these milk cartons or packets are rotated and placed in high-selling stores.
Another option they have is of selling it as open milk 3 4 days before expiry. However, Mr.
Arsalan Cheema pointed out that if the milk expires, it is brought back to the company.
Pricing Strategy
Haleeb strives to optimize its supply chain by prompting early sales ordering. They want to have
approximately 20 odd days of early ordering which will facilitate production planning and ease
in getting suppliers such that Haleeb will have a better bargaining power in terms of cost. Mr.
Arsalan Cheema gave the example of PepsiCo stating that:
What PepsiCo does is they incentivize their distributors to give them sales orders in advance,
something like 20 odd days in advance. This gives them a huge benefit in optimizing their
resources.
However, Haleeb is not mature enough as yet to completely implement this strategy.
Haleeb employs a combination of pricing strategies to best suit its needs and resource utilization.
When Mr. Arsalan Cheema was inquired whether Haleeb indulges in differential pricing, his
response was affirmative. He stated that there is no differential pricing at the customer end
except if compared to competitors. However, at the supplier end, pricing is generally determined
by the demand i.e. how much of milk do we require, when we require it and what is the prevalent
season. The fact that commercial farmers are generally paid a higher price rate than the other
supplier tiers supports this claim. This differential pricing exists because commercial farmers
milk supply is of a higher quality and infrastructure is better developed. Additionally, it is also
based on the amount the commercial supplier can provide in flux and lean months respectively.
Commercial farmers show consistency in low supply, lean periods and hence form another
reason to be paid higher rates.
Moreover, milk procured near cities is always of higher cost while its cheaper as you move to
the rural settings.

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18

On the other hand, dynamic pricing is involved when selling off rejected milk from the plant.
The price decreases as the quality and grade level of milk decreases. It is sold to a third party
contractor at a reduced rate depending on the level of rejection. This milk is usually used for
sweet manufacturing while some of it is shipped to cities and sold via Gawala or milkman at
lower rates.
As far as the seasonality is concerned, Mr. Arsalan Cheema quote is self-explanatory:
When cold month starts, prices across the industry generally start to fall in raw milk
procurement because availability is high.
Mr. Arsalan Cheema further elaborated by describing their experience of a recent price increase
due to change in season and a demand for a greater quantity in minimum time span by Haleeb.
He specified that increasing quantity required at a steady pace is easier and does not lead to rise
in price. However, since Haleeb took the contrary approach, it had to face an increase in costs.
Further on, milk is also bought in off peak season for a relatively lower cost. It is converted and
stored in powder form and later on reconstituted into milk when required. However this process
has a significant factor of working capital. Cash rich companies who have sufficient capacity and
ability to hold that level of inventory, However Haleeb, facing financial constraints currently
does not employed this strategy in recent years.
On the other hand, although overbooking does not apply in its core sense to Haleeb, it applies in
the context of supplier back outs. Still the phenomenon of overbooking is not applied to counter
this potential shortcoming. Mr. Arsalan Cheema was of the view that if they foresee a decrease in
supply demand fulfillment, they use differential pricing to attract and/or break some suppliers
form Nestle and/or Engro.
Information Technology
Mr. Arsalan Cheema provided very detailed information about the use of IT in Haleeb. He
articulated that several information systems are in play at Haleeb. The core enterprise resource
planning (ERP) employed is Oracle which is used for its financials and several other business
aspects.

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19

As far as distribution system is concerned, Haleeb has an application for that called Distribution
Management System, (DMS). This software is implemented at your distributions where daily
sales are being incurred and Haleeb can follow up on how much is being sold at each shop.
Haleebs sales team monitors the productivity of each order booker. However this is not at a very
mature level as yet because shop level entries are only taking place in Lahore region while there
are only distributor level entries taking place in all other regions. There is still some for
improvement and Haleeb is working on it to improve and expand DMS, especially on shop level.
Milk Procurement System or MPS is another IT system where an account is made for every
single supplier of Haleeb and record is maintained for the amount being purchased by each
supplier, the quality and other such factors. Mr. Arsalan Cheema quoted, Even a guy who is
supplying us only 4 or 5 liters of milk is told to open a bank account where their weekly
payments are transferred online by Haleeb. Here also. There is no knowledge at the suppliers
end since majority of the suppliers are not well educated and all the system handling and
operation is done at Haleebs end.
MPS is solely for monitoring purposes i.e. what is happening where, how much milk is being
procured and from where?
In Addition to these, Haleeb indulges in pure e-business with Tetra Pak for packaging and with
other major suppliers for spare parts etc.
Haleeb also has an online complain portal by the name of CARE, where regional teams and
customers can go online and register their complaints.
Similar portal e-approval.com is operated within the organization for managerial purposes. It is
a pre-approval system. Haleeb has a limit to authority manual and whenever you want to do
something or procure something, you insert your request in the system. According to Mr.
Arsalan Cheema, there are different specs; if you want to procure an entirely new thing than
the last, or if it is a rapidly price changing item, e-approval is recommended to the employees.
Employees throw in your case and set up a hierarchy of people whose approval is needed. Mr.
Arsalan Cheema gave an example of an existing request which has been approved by all other
levels and is only left to be approved by the CEO. Haleeb tries to eliminate paper work with this

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20

initiative. It also eradicates wastage of time and manpower by physically transferring the file to
respective departments for consideration and signatures of the authorities.
Supply Chain Coordination at Haleeb
Haleeb has its own sales team that works in collaboration with its distributors and keeps track of
its sales. Any changes in demand are therefore monitored by the Sales force members. There are
8 sales regions Lahore, Karachi, Islamabad, Multan, Faisalabad, Gujarat, Peshawar and Sukkur,
each with its own territory sales manager who supervises sales of milk SKUs and record of sales.
The managers duty is to forward the collected data to Haleebs main office. The information for
demand is presented by the sales manager at a meeting held on daily basis where all department
heads discuss production plan and future market expectations. Hence there is collaborative
forecasting and planning and a single-stage control of replenishment.

Since they have their sales team members work along the distributors they do not have issue
regarding matching the demand with their supply. There are no bullwhip fluctuations for the
company leading to zero boom and bust cycles. However, there is a period of three months from
February to April where the supply of raw milk is high. During this duration the demand for the
processed milk remains low. The company in these months buys as much as its production
facility can handle and process it into dry milk. This dry milk is than further used for production
of liquid milk when the supply of raw milk falls short.
As far as inventory is concerned since the product is perishable and has a 90 days shelf life
inventory is kept low. Moreover since the demand for milk is higher than the supply there is no
issue of accumulating high inventory levels of finished goods. The inventory has though a high
volume of powdered milk that the company requires because of shortage of supply of lose milk
in the domestic market.
The company does not give incentives to its distributors nor is its financial position strong
enough to indulge in such inducements. Because no incentives are offered supply chain members
cannot manipulate sell-in and the sales team is vigilant to keep track of the demand. Moreover,
the company would be in trouble if more milk is supplied than required because theyll have to

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21

pay for return inwards too. The SCM manager highlighted that there exists a market for expired
milk too. When the milk goes bad it is processed again and sold in the bazaar.
Recently the company faced an issue at the end of its supply chain that occurred when they cut
the price of Tea Max, the companys vegetable based tea whitener. The initial price was Rs.12
which was cut to RS.10 but retailers kept on selling it at the old price. To combat it the company
changed its packing which highlighted the new price.
All milk processing companies need to fight for suppliers. Since there is a high demand for milk
but there is limited supply, suppliers have higher power relative to companies. This often leads to
switching and shifting of suppliers between companies. So Haleeb faces trust issue. Moreover,
there are no formal written contacts. The relationship is built around helping small scale milk
sellers by providing animal drugs, expert advice, veterinary doctors etc.