Pakistan Tobacco Coddmpany

FEBRUARY 2005
BAT Head Office
Asia Pacific Regional Office
British American Tobacco plc

Globe House,
4 Temple Place
London WC2R 2PG
Tel: +44 20 7845 1000
Fax: +44 20 7240 0555
British American Tobacco, Asia Pacific

Region Ltd
21/F, One Pacific Place, 88 Queensway,
Admiralty, Hong Kong
Tel: +852 2918 2888
Fax: +852 2918 1138
Asia Pacific Regional Project Office
End Market / Operating Company
British American Tobacco GSD (Kuala Pakistan Tobacco Company,

Lumpur) Sdn Bhd
Evacuee Trust Complex
Technology Park Malaysia
Agha Khan Road, Sector F-5/ 1
L4-E-1B, Enterprise 4, (4th Floor)
P.O. Box No. 2549
57000 Bukit Jalil
Islamabad 44000
Kuala Lumpur, Malaysia
Pakistan.
Tel: +603 8996 6155
Tel: +92 51 20832000
Fax: +603 8996 5255
Fax: +92 51 2278376
Table of Contents
Table of Contents
Contents
Page No.
Executive Summary
03
Section 1:
1.1:
1.2:
1.3:
1.4:
1.5:
1.6:
1.7:
1.8:
General Information & Project Complexity

Name of the Organization
Organizational Unit
Mission & Product Lines
Award Category
Submission Span
External Supply Chain Partners
Internal Functional Organizations
Contact of Supply Chain Partners
06
07
10
11
11
19
21
22
Section 2:
2.1:
2.2:
2.3:
2.4:
2.5:
2.6:
2.7:
Processes
Reason for the Supply Chain Initiative
Duration of the Project
Completion Process
Challenges & Resolution
Metrics Used
Cost & Performance benefits
Supply Chain efforts & Org. Objectives
24
31
31
33
38
39
46
Section 3:
3.1:
3.2:
Transference
Lessons sharing
Likely candidates
48
49
Executive Summary
Executive Summary
Supply chain management is an integral part of the strategic intent. In order to
respond more effectively to changes in the market place, a dedicated Supply Chain
Function has been set up to gain competitive edge. The objective is to deliver the
correct product, to the correct place, at the correct time, in the correct condition,
packaging and documentation to the correct customer. It is all about optimizing the
resources from Seed to Smoke.
To help achieve these objectives more professionally, we embarked upon SCOR
Model application to our Supply Chain Processes. After a detailed review of existing
As-Is Processes, we selected seven ideas/ projects across our Supply Chain for
our detailed To-Be phase.
Action plans with deadlines and responsibilities were agreed, not only to look into
Process Improvement but also to deliver financial benefits.
The Projects selected for To-Be phase with their actual top line benefits are:
Plan:
Collaborative Planning, Forecasting and Replenishment (CPFR)
Above Operating Company (Op Co) Opportunities
Actual Benefits:
In parallel with the period of the SCOR Pilot Project (Project verification phase), we
also managed an increasing market demand. On some SKUs, the variance was
more than 40 % in a month. With the help of above two initiatives, we were able to
meet the market requirement every time. On cumulative basis, we managed around
12 % increase in the total market requirement.
The better planning enabled us in more effective negotiation on prices & stocks with
our Wrapping Material suppliers leading to a saving of Rs. 65 Million.
Source:
Farmer Clustering
Supplier Collaboration (dealt with along with CPFR)
Actual Benefits:
We have one Tobacco Crop per year and there was acute shortage this year. With
increased consumption of tobacco due to increase in the actual sales, we were in a
Executive Summary
very tight situation. The enhanced in-the-field presence lead to higher farmer loyalty
giving us the competitive advantage and ensured that we achieved our
procurement requirements.
We were also able to reduce our overall Raw material inventories releasing cash to
the business and saving on Inventory Carrying cost to the tune of Rs. 6.4 Million.
Make:
Lower Manufacturing Cost
Reliable Make Process
Actual Benefits:
We were able to reduce our Tobacco and Leaf Wastages much below our targets
due to the initiatives highlighted in the above projects. The saving achieved is Rs.
10 Million.
Further more, we rationalized 296 Machine Crew (Targeting Benchmarking Crew).
This helped us in reducing the cost base in manufacturing from Rs. 51.03 per Mille
(1000 cigarettes) to Rs. 47.98 per Mille, a reduction of 6% and a saving of Rs. 8
Million.
Furthermore, the enhanced marketing requirement was met due improved reliability
in the Make process and reducing the Overtime cost by Rs. 2.4 Million at the same
time.
Deliver:
Forecasting & Demand Management
Distribution Model
Actual Benefits:
After the price increase in Mid 2004 in the Federal Budget, we observed an
abnormal trend in sales as compared to our past experience. Contrary to past
experiences , this time around, the impact of price increase was not noticeable in
sales (as the sales continued an upward trend). We adjusted our forecast to meet
the growing trend with full support from our distribution partners. We also
rationalized our distributors from 389 to 360 and optimized finished good stocks in
the total supply chain pipeline. The objective being to focus the effort where it was
needed the most.
Return:
Product Integrity & Traceability
Actual Benefits:
Specific focus tracking across the complete Supply Chain lead to improvement to
Level 3 on the BAT overall internal Company Road Map (Scale from 1 to 4, 4 being
Executive Summary
the highest). Market returns/ rejects and write-offs were maintained below the target
by Rs. 13 Million. This is an area we will be continuing to focus on.
Overall Financials:
On annual basis, a saving of Rs. 71 Million ( 0.68 Million) was estimated due to
these projects which is 5.4 % of the Company Underlying Operating Profit ( 12.7
Million). However, the actual benefits achieved are Rs. 104.8 Million (1 Million)
which is 7.9 % of the Company Underlying Profit.
Section 1. General Information and Project Complexity
Supply-Chain Council Awards for Excellence

Section 1. General Information and Project Complexity (20 points)
(1) Provide the name of the submitting organization (corporation, service, etc.).
British American Tobacco
British American Tobacco (BAT) Group, Head Office located in London UK.
British American Tobacco is the worlds second largest quoted tobacco group.
With more than 300 brands in our portfolio, we make the cigarette chosen by one in
seven of the worlds one billion adult smokers. We hold robust market positions in
each of our regions and have leadership in more than 50 of the 180 markets where
we do business. The Group has 85 factories in 65 countries, processing some 650
million kilos of leaf and producing some 800 billion cigarettes in a year. Our
companies, including associated companies, employ more than 85,000 people
worldwide.
The figures provide some sense of the scale of our organization, but like any
company, we are much more than a set of statistics. What characteristics and
qualities do we feel help to define our company?
We have not sustained a significant global business presence for over 100 years by
accident. By 1912, just a decade after our business was founded, we had become
one of the worlds top dozen companies by market capitalization. We believe we
retain many of the qualities that put us in that league table so soon after starting
out.
We are committed to building value for our shareholders, and we believe there is
real value embedded not only in how we run our business but in how a company is
put together; in its ability to see the world as it really is; in it's ability to pick and
retain talent; to build relationships of trust with consumers, suppliers, distributors
and partners, and to manage high quality brands. Perhaps above all in todays
economy, there is particular strength in the ability to root local businesses in a vast
range of different cultures around the globe.
The flexibility, new thinking, financial strength and long term vision that have given
us sticking power for a century will continue to drive us forward in search of
continuing success.
(2) Identify the organizational unit responding (site, function, etc.).

Pakistan Tobacco Company
Pakistan Tobacco Company was incorporated in 1947 immediately after partition,
when it took over the business of the imperial Tobacco Company of India
operational in the subcontinent since 1926. The company is part of the worldwide
British American Tobacco (BAT) Group, which employees over 85,000 people with
operations in around 180 countries. It is a market leader in more than 50 countries
selling over 300 brands. In 2004 the group sold and produced over 15% share of
the world market of cigarettes.
Initially, a pilot production plant was set up in a warehouse in Karachi Port with a
monthly production of 30 million cigarettes, which has now grown to two fully
equipped factories manufacturing over 2.5 billion cigarettes per month at the two
plants combined (one each at Akora Khattak and Jhelum). Karachi factory was
closed in 1992.
Pakistan Tobacco Company has come a long way from being just a single factory
operation to a company which is involved in every aspect of cigarette production,
from tobacco cultivation to packaging. But what is really significant about these fiftysix years is the tremendous impact that Pakistan Tobacco Company has made in
the country. By spearheading the campaign for modern agricultural and Industrial
practices, we have been instrumental in the development and progress of the
agricultural & industrial sectors in the Country.
Pakistan Tobacco Company has been a leader in innovative marketing/ advertising
campaigns, which brought a whole new competitive edge to Pakistans business
world. We are also firm believers in returning to the nation our debt, in the form of
various altruistic activities. Over the last half-century we have been supporting &
donating to various causes of national interest, educating growers in the latest
techniques & technology in agriculture and afforestation. These are a few examples
of our good corporate citizenship. These efforts have borne fruit in the form of
transforming us into a company strong and flexible enough to go through thick and
thin with the country. It makes us proud to claim that we are responsible for
generating a lot of economic activity and introducing innovative ideas and
breakthroughs within Pakistan.
Today, Pakistan Tobacco Company is the largest revenue generator (outside the oil
sector) in the country, paying more taxes than the entire textile sector, which is the
largest industrial sector in the country.
Pakistan Tobacco Company cares for its consumers which are depicted in its
mission To transform PTC to perform with the speed, flexibility and enterprising
sprit of an innovative, consumer focus company.
Pakistan Tobacco Company is a world class Company with world class people,
processes and tools. We are the first Company in Pakistan which was awarded
Class A status, as part of the international total business excellence Programme,
MRP II version 5, audited by the internationally renowned consultants Oliver Wight UK.
Both the factories and the Leaf areas are ISO 9002 and 14001 certified proving
once again the world class standards of the Company.
We are continuously investing our resources in improving the quality of our
products/ brands.
We are proud of our reputation for manufacturing high quality cigarette brands,
which are enjoyed by millions of adult smokers. Our portfolio of brands caters to
diverse consumer preferences since the last fifty six years with such popular
international brands like Benson & Hedges, John Players Gold Leaf, Wills, Gold
Flake, Capstan and Embassy.
Employee empowerment has been the key in this journey with the annual Company
plan previously for the eyes of Senior Management only, now shared with all the
employees, including our Unions and Valued Business Partners (VBPs). The
objective being to give a clear understanding of where the Company is going, the
goals we have set for ourselves, how would all of us contribute in achieving and
working together as one team.
As a testimony to open culture and exemplary industrial relationship, both factories
house joint management worker canteens. Seminars, Symposia and Social gettogethers are a regular feature whereby Pakistan Tobacco Company builds a
healthy working relationship not just amongst its employees but also with our
Valued Business Partners.
Special Training Sessions are conducted for employees, farmers, retailers and
distributors imparting knowledge and skill, adding value to business. That is why
over 12,000 farmers, over 2,000 employees and thousands directly or indirectly
depend on Pakistan Tobacco Company for their livelihood.
Pakistan Tobacco Company is always mindful of its wider role as a responsible
corporate citizen. We are committed to building constructive partnerships for
change, to listening to our stakeholders, to deepening our understanding of what is
expected of us, and to defining and demonstrating responsible behavior.
Pakistan Tobacco Company is a complex, multi-site organization with two

manufacturing plants and a head office, an employer of more than 2,000 high
qualities, talented and diversified (6 nationalities) team players. The suppliers base
ranges from local to import and the customers spread through out the country.
The country population (over 150 Million) is widely spread (over 800, 000 square
Kilometers) ranging from deserts, mountains to plains geography. Communication
infrastructure i.e. road, aerial, telecom, etc is still evolving.
Also, we face the challenge of a local competition (who is market leader in terms of
total sales) along with tax evaded segments. Being part of a Multinational Group,
we follow strict business and ethical standards without any compromise. However,
the rest have their own rules with lots of flexibility.
Guiding principles:
Our Guiding Principles describe key characteristics of our organization, which we
aim to nurture.
Strength from Diversity reflects the cultural mix within the Group and a working
environment where employees individual differences are respected and enjoyed. It
also reflects our aim of harnessing diversity - of people, cultures, viewpoints,
brands, markets and ideas - to create opportunities and strengthen performance.
Open Minded reflects openness to change, opportunities and new ideas, including
ways of addressing regulatory issues and the changing expectations in society. We
seek to be active listeners, genuinely considering others viewpoints and not
prejudging.
Freedom through Responsibility reflects the devolved nature of the Group and
our belief that decisions should be taken throughout the organization at the
appropriate level, as close to the consumer as possible, and that decision makers
should accept responsibility for their decisions.
Enterprising Spirit has been a characteristic of our business through a century of
operations. It is reflected in our ability to grow our business and its value within
many challenging environments, through the confidence to seek out opportunities
for success, to strive for innovation and to accept considered risk-taking as part of
our way of working.
We are committed to building value for our shareholders, to pick and retain talent;
to build relationships of trust with consumers, suppliers, distributors and partners,
and to manage high quality brands.
Today, Pakistan Tobacco Company is the largest revenue generator (outside the oil
sector) in the country, paying more taxes than the entire textile sector, which is the
largest industrial sector in country. In 2004 alone, Pakistan Tobacco Company paid
the government over Rs. 14.5 Billion (GBP 138 Million) in taxes. This amounts to
over Rs. 45 Million (GBP 429,000) per working day.
(3) Provide a brief mission description of the overall business objectives, product
lines, and mission of the organization.
BATs goal is to gain and sustain leadership of the global tobacco industry. For us,
that means leadership in two ways: quantitative leadership in terms of delivering
the numbers and qualitative leadership in terms of meeting stakeholders
expectations of how a responsible tobacco company should be run in the 21st
century.
In the last decade, we have delivered total shareholder return of 13.3 per cent per
annum, compared to 6 per cent for the FTSE 100 as a whole. Its been a great
decade for our shareholders, for our consumers in terms of enhanced choice of
high quality brands, and for our employees in terms of growth and morale.
Since British American Tobacco (Private Limited Company) listed as a stand-alone
tobacco business on the London Stock Exchange in 1998, we have delivered a total
increase in earnings per share of 51 per cent. In the five years to end 2003, we
have delivered total shareholder return of 15 per cent per annum compared to
minus 3 per cent for the FTSE 100. We have notably grown our margins - our
profit per thousand cigarettes in those same five years and have grown the
volume of our global drive brands by over 40 per cent.
We have greatly narrowed the volume gap between ourselves and the current
global market leader, both through organic growth of our brands and growth from
value-adding mergers, acquisitions and deals. The No.1 position is within our grasp
and we have the capability to take it.
We have been very proactive in defining what corporate responsibility now means
for a business like ours one where the products are legal, enjoyed by about a
billion adults, yet pose risks to health. We are working actively to live by the high
standards that we set for ourselves, and which we openly publish. Stakeholder
dialogue is giving us new and better ways to engage and listen, and our
stakeholders internationally tell us were on the right path.
Likewise, Pakistan Tobacco Company cares for its stakeholders, which is depicted
in its vision 1st Choice for Everyone. Total Company is aligned to achieve its
mission To transform PTC to perform with the speed, flexibility and enterprising
10
sprit of an innovative, consumer focused company. The mission is supported by

four Must Achieve Objectives (MAOs):
Level playing field for all the players in the cigarette market
Sustainable volume growth
Improved trading margins
Winning as One
Pakistan Tobacco Company is a world class Company with world class people,
processes and tools, being the first Company in Pakistan to be awarded Class A
status, as part of the international total business excellence Programme, MRP II
version 5, audited by the internationally renowned consultants, Oliver Wight - UK.
Both our factories (including Green Leaf Threshing Plant) and the Leaf areas are
ISO 9002 and 14001 certified.
We are continuously investing our resources in improving the quality of our
products/ brands and are proud of our reputation for manufacturing high quality
cigarette brands, which are enjoyed by millions of adult smokers. Our portfolio of
brands caters to diverse consumer preferences since the last fifty six years with
such popular international brands like Benson & Hedges, John Players Gold Leaf,
Wills, Gold Flake, Capstan and Embassy. The total number of SKUs produced by
PTC is 28.
The annual Company plan is shared with all employees, including our Unions and
Valued Business Partners (VBPs), so that all have a clear understanding of where
the Company is going, what are the goals that we have set for ourselves, how all of
us would contribute in achieving and work together as one team.
(4) Indicate the award category of submission. (Operations, Academic, Technology
winners in these categories will automatically advance to Global).
Operations SCOR Application Excellence Award
(5) Provide a brief description of the supply chain and the processes the submission
spans (e.g. Plan, Source, Make, Deliver, Return).
Our submission spans all the five processes, i.e. Plan, Source, Make, Deliver and
Returns.
11
Plan:
Focus
Strategic
Scope
Global
Planning
Cycle
Yearly
Strategic
Regional Quarterly
Tactical
End
Market
Monthly
Planning Horizon
Global
Strategic
Process
Co. Plan Cycle
Regional
Strategic
Process
Co. Plan Cycle
Reviewing
Performance
& Implement
Strategy
Unit
S&OP
Process
M3
Setting
Strategy &
Shaping
Future
M12
M24
2.5 yrs
10 years
For long term, strategic business need we follow an Annual Process of 10-Years
Plan and 2.5 Years Company Plan which focuses on Current Plus next two years
trends, requirement and financials.
Our Short to Medium term business is run through the Monthly Sales & Operations
Planning Process which is explained as follows:
Purpose and Scope:
Sales & Operation Planning Process provides the management a means of control
to manage the business effectively, set attainable objectives, see consequences,
evaluate alternatives, communicate approved plans, measure performance and
achieve predicted results.
Inputs from business plans and conversion into detailed sales and production plan
are the activities that surround the Sales & Operational Planning process. None of
these work well individually unless a combined team effort is made to make it a
success.
12
S&OP Objectives:
Support the Business Plan
To determine every month if our original financial expectation, current sales plan
and production plan are in line with the business plan and plan corrective action
to bridge the gap if necessary.
Ensure Plans are Realistic and Processes Integrated
All key members/ process owners fully participate in arriving at a plan, which is
realistic and integrated with each other.
Effectively Manage Change
S&OP ensures that company becomes proactive to the changing market
scenario.
Inventory Management / Control Cost
Maintain right level of inventory to release money for the business.
Measure performance
Measure sales and production performance versus the target and identify
reasons for corrective actions.
Build team work
Each department participates to the overall planning process by sharing their
goals towards the spirit of a strong team work
The Prerequisites for a good S&OP process are as below:
1. Understanding of Sales & Operation Planning
How it works & what it is designed to achieve
Sharing of information
Work jointly towards achievement of the Co. Objectives.-Team work
2. Commitment of people
Good homework/ pre-work, issues resolved to help make this process a
success.
Religious participation in the process, timely feed back of information and
seriousness to ensure that plans are realistic.
3. Planning Horizon
How far ahead, we establish our plans. In our case it is 24 months rolling.
Need to perform what ifs or risk analysis.
Effectively manage change
4. Time Fences
Guidelines, when changes to plan are feasible.
Short term- Special sales promotion exercises
Long Term- Changes with our capabilities
Long term- Permanent enhancement of capabilities
13
Main Sub-Processes which provide input to Pre-S&OP:

1. Demand Planning (Brand Cycle Plan)
2. Supply Chain Planning (Leaf, Wrapping Materials & Capacity Planning Meeting)
3. PDT ( Product Development Team/ New Product Introduction)
Pre S&OP
1. Inputs from above processes
2. Financial Review of plan
3. Recommendations to S&OP
4. Implementation of plan
5. Improvements
S&OP
1. Critically review the Business Assumptions/ Environment
2. What if scenarios & sensitivities of Sales forecast, Capacities and Capital
Expenditures
3. Strategic Direction to Pre-S&OP
4. Firm up of operational plan
5. Outstanding issues.
Current Method Of Operation:
Brand Cycle Plan (Demand)- 6th Working Day
Supply Chain Planning Meeting (Supply)- 7th WD
PDT (9th working day of the month)
New Products / Current product changes
z
Pre S&OP - 11th WD
z
S&OP 12th WD
z
Demand / Production Review Meeting- As & when required (Informal)
z
z
z
14
Process Flow
Start
CUSTOMER
s
Sales Estimate
Trade Marketing
Current Product
Plan
New Product Plan

Innovation
Demand Review
BCP
PDT
Realistic
N
Recommendation to
Pre-S&OP
Y
Sales Plan for
24 months
Pre -SOP
Meeting
Recommendation
to P re-S&OP
END
Recm Sales
t
&
Operation Plan
Shipments as
per Demand
Supply Chain
Planning Meeting
Capacity Review
by Factories
Execution
Y
Recommend to
S&OP
Materials
Requirement
Planning
Rough Cut
Capacity Plan
S&OP
N
Y
Company
.Plan
Approved Sales
& Operations
Plan
Master
Production
Scheduling
DRP (Regionwise and

Customer-wise)
15
Source:
PTC sources Green (raw) Leaf from 12,650 farmers through 14 Leaf Buying points
and Wrapping Materials through 13 local and 14 international suppliers. Some
percentage of the processed leaf is also sourced from outside the country. All
imported raw materials come to the country through our Southern most city / port of
Karachi, which is at a distance of around 1800 KMs from the manufacturing units.
The scope of our Source activities is huge which is evident from the following Geo
map:
Source Geo map:
Field Depots
S1, D1
FARMERS
D1
AKF- PMD & SMD
S1, M1, D1
SR1, DR1
PLWH AKF
FGWH AKF
FARMERS
D1
S1, D1
SR1, DR1
PLWH AKF(LM)
S1,M1,D1
S1, M1, D1
S2, M2, D2
S2, M2, D2
PLWH JF
SR1, DR1
Akora -GLTP
JF-PMD & SMD

S1, M1, D1
FGWH JF S2, M2, D2
S1, D1
S2, D2
SR1, DR1
SR1, DR1
LAHORE
LOCAL
WRAPPING
MATERIALS
D2, D3, DR1
LOCAL
WRAPPING
MATERIALS
D2, D3, DR1
KARACHI POE
KARACHI
IMPORTED - WRAPPING MATERIALS

SUPPLY (WMS),
D2
Through SCOR, we highlighted areas under Source and have been working with
both our farmers and Wrapping Materials suppliers.
Make:
There are two manufacturing units, 200 KMs apart from each other. Head Office is
located, roughly in the centre of both units. The factories are specialized, to a
greater extent, for product range (SKUs). The Leaf Processing Unit (Green Leaf
16
Threshing GLT) is associated with one of the Manufacturing Units (AKF: Akora
Khattak Factory) and processed leaf is then provided to the other unit (JF: Jhelum
Factory) based on the requirement, storage capacity and local regulation.
Deliver:
Total area of the country is approximately 800,000 square Kilometers, with
population density varying from region to region. The Main Highways are the only
feasible means for transportation of Finished Goods. The 450,000 retail customers
are serviced through 4 regions, 19 area offices, 13 warehouses, 360 major
distributors and 7,000 Wholesalers. The average monthly consumption of our
brands is 2.3 Billion sticks.
Deliver Geographical map:
* Rationalized
PESHAWAR
DISTRIBUTORS(19)
Customer
FGWH AKF
PLWH AKF(LM)
ISLAMABAD
DISTRIBUTORS(46)
EXPORT FG
JHELUM
DISTRIBUTORS(46)
AFGHANISTAN
Customer
Customer
FAISALABAD
DISTRIBUTORS(32)
QUETTA
DISTRIBUTORS(21)
Customer
FGWH JF
Customer
MULTAN
DISTRIBUTORS(41)
Customer
Customer
Customer
Customer
ROHRI
DISTRIBUTORS(46)
GUJRANWALA
DISTRIBUTORS(31)
Customer
Customer
SAHIWAL
DISTRIBUTORS(40)
BAHAWALPUR
DISTRIBUTORS(24)
DUTY PAID FGs

WAREHOUSE (14)
S1, D1
SR1, DR1,
DR3
Customer
Customer
KARACHI
DISTRIBUTORS(2)
HYDERABAD
DISTRIBUTORS(45)
DISTRIBUTORS (394)
S1, D1
SR1, DR1, SR3, DR3
Customer
EXPORT FG
KARACHI POE
* DP W/Hs rationalized to 13
and Distributors to 360
NIGERIA
S2, D2
17
In the Deliver area we are working on involving distributors in our Forecasting

process to reduce fluctuation in the process and critically review our Distribution
model for effective utilization of the Duty Paid ware houses Vs distributors.
In urban Pakistan, PTC is the market leaders. Our brands are skewed towards
urban as major portion of our business is from High and Medium priced brands
(where we do not have any local competition). Penetration in the rural areas
requires greater resources which are in focus to gain market share there as well.
The total distribution model is being reviewed under Distribution Excellence (DX)
Programme.
Return:
We pay excise on finished goods at exit from the manufacturing sites. Therefore
Product once left is legally not allowed return to the factories. Any damage to the
product due to any reason is handled at the Duty Paid Warehouse level. Consumer/
Trade returns due to quality reason are replaced and entered into the Company
Database, available to all concerned.
Similarly, processes are in place for Leaf and WMs returns due to quality/ other
reasons.
Traceability of the product is available in the supply chain. Further efforts and
investment are in the plan to make it more effective.
PTC Supply Chain Network

(Lower level 9 triangles)
Supplier
PTC
Customer
PLAN
PLAN
DELIVER
MAKE
SOURCE
RETURN
PLAN
DELIVER
RETURN
RETURN
DELIVER
SOURCE
RETURN
FG
Export
WM
WM
Leaf
D
DR
D
Karachi
POE
RETURN
Distributor
Production
Leaf
S M
SR
S M
DR SR
Marketing
DR SR
DR
SR
D
DR
18
SCOR projects were selected across the complete Supply chain. The
specific ones are listed in the boxes below:
Plan
CPFR
Above OpCos opportunities
Make
Source
Farmer clustering
Supplier Collaboration
(CPFR)
Lower
manufacturing cost
Reliable make
process
Deliver
Forecasting and
Demand Management
Distribution model
Return
Product Integrity and Traceability

One set of numbers
Effective S&OP
(6) Provide the names of the supply chain partner organizations (external) involved
in the project. Indicate the number of people involved from each partner
organization and the functional category of each.
Mr. Humayun Kabir
Key Accounts Manager,
Packages Private Limited
Regional Office
GD Arcade, 2nd Floor, 73-E Fazal-ul-Haq Road
Blue Area,
Islamabad
Ph. +92 51 226768, 226765
Fax.+92 51 2829411
E-mail: humayunk@packages.com.pk
Mr. Kobayashi Takeshi,

Marketing Manager,
Daicel Chemical Asia Pte Limited
15A Senoko Way, Singapore 758037
Ph.+65 67562811
Fax +65 67523780
E-mail: tk_kobayashi@daicel.co.jp
Note: Daicel - Japan is supplying us Acetate
Tow and Till Box for our entire Filter Rods
requirement.
Note: Packages - Pakistan is supplying us all

printed materials, e.g. Hinge Lid Blanks, Outer
Reels, and Cartons.
19

Mr. Francois Gandilhon,
Marketing Manager,
Papeteries De Malaucene
BP 34/29393 Quimperle Cedex,
France.
Ph.+33 0298 062000, 062247
Fax +33 0298 062010, 062040
E-mail: fgandilh@swm-eu.com
Mr. Christopher Low

General Manager,
New Toyo Aluminium Paper Product (Pte) Ltd.
16 Soon Lee Road, Singapore 628079
Ph.+ 65 6265 6882
Fax + 65 6265 8939
E-mail: tclow_ntap@newtoyo.com
Note: PDM - France is supplying us Cigarette

Paper and Tipping Paper
Mr. Chua Boo Han
Marketing/ LAN Manager,
Ph.+ 65 6265 6882
Fax + 65 6265 8939
Mr. Toh Ai Tee

Production Manager,
Ph.+ 65 6265 6882
Fax + 65 6265 8939
Mr. Husnain
Allied Marketing (Pvt) Ltd.
21-A Main Market Gulberg II,
Lahore - Pakistan
Ph: +92 42 5754724, 5753336
E-mail: ampl@nexlinx.net.pk
Note: New Toyo Singapore is providing us Foil

for our Cigarette Packs.
Mr. Asif
Asif & Co.
Shop No. 3
Civic Centre
Melody Market
Islamabad - Pakistan
Ph: +92 51 2820440, 2828966
E-mail: nida@isb.paknet.com.pk
Note: Allied Marketing is our Major distributor in

Lahore Metropolitan.
Mr. Ayaz A. Abbasi,
Managing Director,
Abbasi Traders
Plot No. 110, Street No. 10,
Sector I 9, Industrial Area,
Islamabad Pakistan.
Ph: +92 51 4435423
Fax: +92 51 4433008
E-mail: atlogistics@hotmail.com
Note: Abbasi Traders are our 3rd party Logistics
partners who distribute our Finished Goods from
Factory Shipping Warehouses to all 14 Duty
Paid Marketing warehouses, throughout the
country. They have dedicated transport with online tracking system.
Note: Asif & Co is our Major distributor in

Islamabad Capital.
Mr. Norbert Pfleger
Marketing Manager
norbert.pfleger@wattens.tbggroup.com
Ms. Jasmeen Peer
Marketing Assistant
Jasmina.Peer@wattens.tbggroup.com
Gesellschaft m.b.h
Ludwig-Lassl-Strasse 15
A-6112 Wattens
Austria
Phone +43 5224 595510
Fax +43 5224 52474, +43 5224 595250
Note: Wattens - Austria is supplying us Cigarette
Paper and Tipping Paper
20
(7) Provide the names of the functional organizations (internal) involved in the
project and indicate the number of people involved from each functional
organization and the functional category of each.
Function
Overall
Leaf
Production/ Supply Chain
Marketing
Finance
IT
Asia Pacific Regional Supply Chain

Project Office
iCognitive (External Consultant)
People Involved
Managing Director/ CEO (Sponsor)
Leaf Director (Project Board)
Head Of Leaf Operations
GLT (Green Leaf Threshing) Manager
Leaf Operations Planning Manager
Leaf Technology Manager
Production Director (Project Board)
Head Of Supply Chain
Factory Manager Akora Khattak Plant
Factory Manager Jhelum Plant
Logistics Manager
Planning Manager
Demand Manager
Wrapping Materials Planning Manager
Wrapping Materials Procurement Manager
Factory Supply Chain Manager AKF
Factory Supply Chain Manager JF
Secondary Manufacturing Manager AKF
Secondary Manufacturing Manager JF
Primary Manufacturing Manager JF
Marketing Director (Project Board)
Head Of Trade Marketing
Trade Marketing & Development Manager
Brand Manager
Area Managers (2)
Finance Director (Project Board)
Operations Finance Manager
Factory Financial Services Manager AKF
Factory Financial Services Manager JF
Marketing Finance Manager
Head Of IT
Business Support Manager Supply Chain
Business Support Manager Marketing
Supply Chain Program Manager
Supply Chain Project Manager
Supply Chain Project Office Support
Managing Director Core Facilitator
Business Support Facilitator
21
(8) Provide a point of contact for each supply chain partner (name, mailing address,
commercial telephone number, DSN, and e-mail address).
Supplier :
Mr. Humayun Kabir
Key Accounts Manager,
Packages Private Limited
Regional Office
GD Arcade, 2nd Floor, 73-E Fazal-ul-Haq Road
Blue Area,
Islamabad
Ph. +92 51 226768, 226765
Fax.+92 51 2829411
E-mail: humayunk@packages.com.pk
Mr. Christopher Low
General Manager,
Ph.+ 65 6265 6882
Fax + 65 6265 8939
Mr. Francois Gandilhon

Marketing Manager,
Papeteries De Malaucene
BP 34/29393 Quimperle Cedex,
France.
Ph.+33 0298 062000, 062247
Fax +33 0298 062010, 062040
E-mail: fgandilh@swm-eu.com
Mr. Norbert Pfleger

Marketing Manager
norbert.pfleger@wattens.tbggroup.com
Ms. Jasmeen Peer
Marketing Assistant
Jasmina.Peer@wattens.tbggroup.com
Gesellschaft m.b.h
Ludwig-Lassl-Strasse 15
A-6112 Wattens
Austria
Phone +43 5224 595510
Fax +43 5224 52474, +43 5224 595250
Internal (Pakistan Tobacco Company) :

Mr. Jeremy Pike
Managing Director and CEO
P.O. Box 2549
Islamabad 44000
Pakistan.
Ph. +92 51 20832000
Fax: +92 51 2278376
E-mail: Jeremy_Pike@bat.com
Mr. Ahmed Zeb

Production Director
P.O. Box 2549
Islamabad 44000
Pakistan.
Ph. +92 51 20832000
Fax: +92 51 2278376
E-mail: Ahmed_Zeb@bat.com
Mr. Zahidul Islam

P.O. Box 2549
Islamabad 44000
Pakistan.
Ph. +92 51 20832000
Fax: +92 51 2278376
E-mail: Zahid_ul_Islam@bat.com
Mr. Amjad Ali

Logistics & Planning Manager
P.O. Box 2549
Islamabad 44000
Pakistan.
Ph. +92 51 20832000
Fax: +92 51 2278376
E-mail: Amjad_Ali@bat.com
22
Customer :
Mr. Husnain
Allied Marketing (Pvt) Ltd.
21-A Main Market Gulberg II,
Lahore - Pakistan
Ph: +92 42 5754724, 5753336
E-mail: ampl@nexlinx.net.pk
Mr. Asif & Co.

Shop No. 3
Civic Centre
Melody Market
Islamabad - Pakistan
Ph: +92 51 2820440, 2828966
E-mail: nida@isb.paknet.com.pk
Mr. Ayaz A. Abbasi

Managing Director,
Abbasi Traders
Plot No. 110, Street No. 10,
Sector I 9, Industrial Area,
Islamabad Pakistan.
Ph: +92 51 4435423
Fax: +92 51 4433008
E-mail: atlogistics@hotmail.com
23
Section 2. Process
Section 2. Process (70 points)

(1) Describe the reason that the supply chain initiative was undertaken and how it
was selected.
Key reasons for undertaking the Supply Chain Initiative:
o Over the years, the Tobacco industry has been operating at comparatively high
margins making it a cash rich business. This has in itself been hiding
inefficiencies that are becoming evident as the pressure on these margins is
increasing.
o Customer requirements in terms of more customized / specific demand as well
as enhanced legislation from the Government to fulfil, and have considerably
increased the complexity in terms of greater SKUs. This is bound to increase
further.
o With the advancement in the Global e-business coming the opportunity for
enhanced and faster Internal & External collaboration. However it is key to
synchronize processes first and only then e-enable them.
Building on these fundamental points, our Asia Pacific Supply Chain project (Project
Cadena) aims to unlock the trapped value throughout the entire Supply Chain by
managing it as a single process to:
Improve availability and customer service to drive revenue growth.
Reduce inventories to release cash which funds market share and
volume growth.
Reduce supply chain costs to improve earnings
This project is based on SCOR (Supply Chain Operations Reference model) which
provided us a comprehensive methodology to improve our overall supply chain
operations. The basic foundation of the model is the five major processes: Plan,
Source, Make, Deliver and Return.
Plan:
Pakistan Tobacco Company is not the only Cigarette Manufacturer in the Country.
We have a very strong local competition, whose sales, in terms of stick quantity, is
greater than us. They are 40 % of the total Market where as PTC Market share is
38 %. The remaining 22 % market is mainly unorganized/ tax evaded segment.
However, we have dominance in the Premium, High and Medium Priced brands.
This has a very positive impact on our Value share. Today our value share is 52 %
as against the competition of 35 % and the rest with small manufacturers & illicit
trade. Hence, this S&OP forum needs to be very proactive in taking decisions. Also,
with the implementation of International Marketing Standards (imposing more
restriction on our industry) our brands remain the critical source of communication
with our customers. Under all these circumstances there is a dire need to have
24
Section 2. Process
collaborative planning with our Suppliers as well customers to deliver faster than
the competition.
CPFR (Collaborative Planning, Forecasting and Replenishment) is one of the
Projects identified under SCOR. The way forward for CPFR is as under, focusing
on integration with our suppliers & customers:
Collaboration
Planning
Forecasting
Replenishment
Communication
Communication
Supplier
Farmer Clustering
SLAs with Suppliers
PTC
S& OP
Communication
Customer
Forecasting Process
SLAs with Distributors
Collaboration
Due to the effective planning both internally and externally, we responded to the
growing market requirement, from an initial annual plan of 25.4 Billion to 26.8 Billion
(actual).
Source:
Tobacco Leaf is a strategic ingredient in our product and we need to constantly
improve its quality for customer satisfaction. We have one crop per year so we have
to procure, process and store our full year requirements once a year.
Farmers Clustering:
Farmers in the country are mostly illiterate and widely spread in the far flung, less
developed areas. Communication and implementation of best practices requires
huge investment in terms of manning and time. Clustering a group of farmers into
one team will facilitate effective cascade of best practices and there will be a
healthy competition amongst different groups, enabling good quality crop. With the
25
Section 2. Process
improvement in leaf quality, we would be in a position to replace costlier imported

tobacco with the locally produced tobacco grades.
Domestic leaf supply

Depot Location No. of Farmers
Khawaza Khela
2000
Tindo Dag
800
Chakdara
300
Daggar
700
Chamla
650
Shergarh
850
Takhat Bhai
650
Azimabad
650
Firdousabad
650
Yar Hussain-1
850
Yar Hussain-2
650
Mansehra/Bherkund
1900
Gujrat Kunjah
2000
Total 12650
Customer
FARMER
Customer
Khwaza Khela(2000)
DEPOT
Tindodag(800)
Customer
MARDAN
STORAGE
Daggar(700)
Chamla(650)
Chakdara(300)
Mansehra/ Bherkund
Mandani
Shergarh(850)
(1900)
Umerzai
Roshanpura
Azimabad(650) Takhat Bhai(650)
Firdousabad
Firdousabadi(650)
Yar Hussain-1(850)
Mardan Storage
Yar Hussain-2 (650)
Foujun
Sharifabad
Khanpur Point
GLT
Based on Capacity Vs
purchases and
consumption in GLT,
the leaf may go
directly to GLT from
the depots or to
Mardan Storage.
GLT AKF
Gujrat Kunjah
(2000)
Phalia
Okara
Depot
AKF & GLT
Storage
In 2004, one critical type of tobacco crop, FCV (Flue Cured Virginia which is the
major ingredient of a cigarette) was short by 7 Million Kilos than the total Industry
requirement. Since we were already there in the field with the farmers, we were
able to purchase our requirement, leaving other cigarette manufacturers with
purchases less than their requirement. This enabled us to deliver to the enhanced
marketing requirement (11.6 % more than our initial forecast).
Following is the analysis:
Company
PTC
LTC & Walton
Mardanwalas/
Others
Total
Anticipated
Purchases
(Figures in
Million Kgs)
19.1
28.5
8.8
56.4
Actual Purchases
Crop 2004
NWFP
Dev.
Total
Plains
Areas
10.55
8.1
18.65
21.8
3.15
24.95
5.33
37.68
0.37
11.615
5.70
49.30
% achieved
of
Anticipated
Purchases
98%
87.5%
65%
26
Section 2. Process
PTC: Pakistan Tobacco Company, LTC: Lakson Tobacco Company

We also anticipate a shortfall of almost 11 Million Kilos of this variety in 2005. We
estimate that with our concentrated efforts with the farmers we will be able to
increase the crop size by 20% which by any means is a huge task. Again, we are
confident that we will achieve our requirement because of our proactive
involvement in the field.
Variety/ Area
FCV Plains
FCV DEV. AREA
MANSEHRA
BUNER
TOTAL DEV. AREA
TOTAL FCV
2004
Actual
Purchases
37.7
2005
Crop
Estimates
46.0
5.8
5.8
11.6
49.3
6.4
6.8
13.2
59.2
Var %
Anticipated
Industry Demand
(Million Kgs)
22%
55.5
10%
17%
14%
20%
7.0
7.7
14.7
70.2
Also, due to Best Practices and technologies dissemination, the farmers improved
their asset utilization (improved output per hectare) and in return improved their
living standard. The total revenue paid to the farmers is 1million.
Suppliers Collaboration:
Similarly, imported Wrapping Materials consumption is 50 % by value and we are
carrying almost 2 months (one month on hand and one month in transit) stock of
imported WMs. The agreed SLAs (Service Level Agreements) with imported WMs
Suppliers and VMI (Vendor Managed Inventory) with our major local WMs Suppliers
provides us flexibility by shifting some of our on-hand inventories to the Supplier
premises.
We released Rs. 368 Million ( 3.50 Million) from inventories and a profit of Rs. 70
Million ( 0.7 Million), and invested it into our brands.
Make:
We are in the process of replacing old vintage machinery with comparatively new
generation equipment and at the same time have to manage the volatile market
demands, keeping focus on enhanced technical training and improved maintenance
systems.
As compared to our local competition, our operating cost is comparatively high. We
have highlighted projects in the SCOR and are working on improving machine
utilization (thereby reducing over time cost to meet any upsurge in demand),
effective shop floor control on wastages and employees rationalization (utilizing
27
Section 2. Process
Time & Motion Study, deployment of best employees on High Speed newly
inducted machines: the target is to have benchmark crew on our floor).
We reduced our cost base by 6% giving a saving of 0.1 Million.
Deliver:
Due to deteriorating law and order situation, there were 20 incidents of theft and
hijacking worth Rs 65 million (GBP 620,000) during 2000-02. This forced us to
deploy armed guards with the Lorries carrying high value stocks. Cost impact of
deploying guards in 2002 was Rs 0.23 per Mille (1000 Cigarettes) while for 2003
and 2004 it was estimated to be Rs 0.29 per M and Rs 0.31 per M respectively.
During 2002-03, we switched primary transportation (Factories to Warehouses)
from multiple small sub- contractors to a single dedicated transport Company with a
tracking system for quick and safe transportation of stocks. We have also extended
this dedicated fleet arrangement further down the line into the secondary
transportation i.e. Warehouse to Distributors.
Since then, we have avoided any risk of hijacking our Finished Good containers
and on two occasions, recovered our stolen product within few hours.
This arrangement has also added to our Product Integrity as these containers are
purposely built for our product and hence our product is not contaminated with any
thing else during transportation.
Geographic
Map PTC Distributors
FIELD
PLACEMENTS
Factory (2)
DP Warehouse (14)
Distributor (394)
Peshawar (19)
* Rationalized
AKF
Islamabad (46)
JF
19 Area Managers
* DP W/Hs rationalized to 13
and Distributors to 360
Jhelum (46)
Faisalabad (32)
80 Trade Marketing Officers
Gujranwala (31)
Quetta (21)
930 Distribution Reps
Sahiwal (40)
Multan (41)
Bahawalpur (24)
Sukkar (46)
Karachi (2)
Hyderabad (45)
28
Section 2. Process
We managed to make available enhanced requirements with an OTIF of 99.8%,

and also giving a saving of 0.1 Million in the logistics cost. Furthermore, we
converted our secondary logistics to dedicated transportation and no-hijacking
incidence.
Return:
We believe that our survival is in delivering the highest product quality with optimum
cost. We are investing in our materials, men, machines and methods to be able to
have better product for our customers. The material we receive must be defect free
as we are maintaining optimum inventories at our factories and can afford any
stoppage due to material out of specification.
Similarly, the product that leaves our premises is of added value (as we pay huge
excise at the exit of our factories) and we continue to reduce our market complaints/
returns. And, if a complaint is received it must be traceable to the starting point so
as a corrective/ preventive measure could be taken.
All these efforts will bring confidence in our customers about our product besides
reducing wastages of efforts/ money in returns and write-offs.
With concentrated efforts in this area, we saved 0.1 Million.
Information Technology :
During the last two years banks have invested in IT infra-structure to improve their
e-commerce capabilities. These technological advancements provide us an
opportunity to reduce VBP ordering cost and improve customer service with positive
impact on our companys cash flows. During the plan period, we will review the
sales collection process to reduce distributors ordering cost with improvements in
cash flows.
The basic IT infrastructure in PTC (on-line links connecting 14 sales points to the
two factories and the head office) has been put in place in the beginning of 2002
This has enabled us to implement Sales Order Processing in our central ERP
system (CS-3 , Accounting House UK) and now real time information can flow
across the supply chain. As a further improvement, Distribution Requirement
Planning in CS-3 was implemented during Q-3 of 2002. This has improved the
visibility across the supply chain resulting in improved responsiveness to demand
and reduction in end to end order cycle time.
We have now shifted to SAP to have more Regional/ Global synergies within our
processes and information.
29
Section 2. Process
PTC Supply Chain at a Glance

Leaf > 12,000 Farmers, 14 Depots,
19 W/ Hs (GL & PL)
(> Rs 2 Bln/ Annum)
Factory
Warehouse - 2
Shipping
Warehouse - 2
Distributors - 360
Retailers
450,000
GLT Factory - 1
Cig. Factory - 2
End market
Warehouse - 13
(> Rs 25 Bln/ Annum)
Wholesalers -7,000
Wrapping Materials
Local Suppliers: 13
Imported Suppliers: 14
(Rs 2.5 Bln/ Annum)
Information Flow
In-bound
Materials
Manufacturing
Green Leaf Ex
Warehouse
-Country
Warehouse Docking
GLT
In-Country
Docking
Warehouse
Trade Marketing & Distribution

Wholesalers
Factory Prized
Leaf Warehouse
GLT Outbound
Prized Leaf
Warehouse
Factory
In-factory FG
Warehouse
Distributors
FG Warehouse
(External)
Sales
Branches
Indirect
Material
s
FG Warehouse
(Imported)
In-factory
Warehouse
Spares
Direct
Materials
(Local)
In-factory
Bonded
Warehouse
In-Country
Docking
Warehouse
In-Country
Docking
Warehouse
Retailers
C
O
N
S
U
M
E
R
S
Direct
Materials
(Imported)
ExCountry
Docking
Warehouse
Primary Supply Chain
e
5 Different Transfer points for Leaf upto the Factory
5 Different Transfer points for Materials upto the Factory
Secondary Supply Chain

7 Different Transfer points from Factory to Consumer
30
Section 2. Process
PTC was part of the first group (Pilot) in the Region to undertake the Project. Based
on our success the methodology is now being extended to the other BAT Operating
Companies in the region, as per plan.
(2) Indicate the duration of the project. Note if the project was a pilot that is being
rolled out. Note if the project is ongoing / still in process.
The project started in Oct. 03 and went through its first evaluation checkpoint in
End Oct. 04. PTC and BAT Sri Lanka were pilot projects for the Asia Pacific region
of the BAT Group. Based on the success the Project has subsequently been
implemented in BAT Malaysia in the 2nd half of 2004.
Plans for implementation in the main remaining Operating Companies (Australia,
Singapore, New Zealand & Indonesia) are being firmed up for 2005. BAT
Bangladesh is confirmed to commence in the 2nd half of March 05 while South
Korea is to start in the 2nd half of April 05.
(3) Describe, in detail, the process used to complete the initiative.

The project is following the recommended SCOR Road Map for implementation, i.e.
SCOR Implementation Approach

SCOR Project Roadmap
Implement
Educate
Oct. 03
AS-IS
modeling
Build
Scorecard
and basis for
competition
Oct. 03 -------------- Jan. 04
Design TOBE model
Develop
prototype
Jan. 04 ----------- May 04
Verify
Oct. 04
Oct. 04 On..
ReRe-configuration
31
Section 2. Process
The deliverables of each stage of the Project Roadmap are as follows:
Education:
o Senior Managers, including key functional directors were given full
briefing on the SCOR Methodology.
o 35 cross functional managers were trained on SCOR Terminology
and process through a 3 days workshop.
o Another 30 business support officers / executives (Process owners)
were briefed on SCOR.
o 4 Key Project core team members under went 2 days SCOR Impact
on Finance workshop.
After the education session, a Cross functional Core Team was formed. A
project board was established comprising of Company Top team i.e.
Production Director, Leaf Director, Marketing Director and Finance Director.
The project was sponsored by the Managing Director. A detailed Project
Plan was made to carry out the activities on time, with quality.
As-Is Modeling:
o Geographic mapping done for domestic, imports & exports of Leaf,
Wrapping Materials & Finished Goods.
o Level 1 - 3 process mapping documented.
o All the associated Enable processes were also recorded.
o Detailed data collection done for the
Financial flow analysis
Resource allocation analysis
Cycle time study
o Blueprint of all As-Is processes (Level 1, 2 & 3) loaded into our
corporate e-Blue-Print tool MEGA.
Build Score Card & Bases for Competition:

o Benchmarking (Regional & Within Country) done
o SCOR card developed
o Competitive performance requirements analysis for different product
segments done with Marketing
o Supplier profile analysis done with Leaf & Materials functions
o Top line Disconnects identified
o Specific Level 1 to 3 Disconnects identified
Design and Develop TO-BE Prototype:

o All disconnects reviewed in focused groups along with Brain Storming
ideas for the TO-BE, assuming Green Field for the business. Based
on the identified disconnects , 98 different ideas across the Supply
32
Section 2. Process
Chain recorded, out of which 7 major ones were agreed as the Final
TO-BE Projects to build the Prototypes for .
o Additionally All Level 1 - 3 processes and Transactional Analysis were
reviewed identifying Metrics and ERP expectations. Supporting
Organizational structure was proposed and agreed with the Board.
Verify TO-BE Prototype:

o The proposed prototypes were implemented and tracked to verify their
validity.
o The Key deliverables of the project were reviewed on monthly basis
through the SCOR Dashboard.
o The results were shared with the Project Team and the Project Board.
Implementation:
o Most of the Prototypes have been successful and are now being
rolled out fully with the benefits being tracked on a monthly basis.
SCOR Dashboard for monthly tracking of projects:
(4) Identify significant challenges encountered, the process for resolution, and the
solutions. Identify best practices employed / developed.
During the Pilot Project a Cross functional Team was formed to assess the current
position, develop and agree the required modification and implement the new /
modified processes.
33
Section 2. Process
Best Practice:
o Essential to establish a Project Board with Company Top team
members
o Cross Functional team buy-in & involvement is key
Along the way a number of challenges were encountered. They are:
Geographical location:
PTC is a multi-site organization with two manufacturing units, oppositely situated
from the Head Office. Leaf crop is available in only one part of the country, at 180
degrees from the Port of Entry. All these variables add to the complexity of the
Supply Chain.
Best Practice:
o Analysis of cost base for the two Manufacturing sites. The Local (Incountry) Benchmarking was done based on the SCOR metrics. Data for
competition was acquired through annual reports as well as Market
intelligence.
Legislation:
Local legislation and revenue targets for the Government authorities pose another
challenge to the Supply Chain simplification. Any consolidation may lead to double
taxation and hence extra cost to the organization.
Best Practice:
o CORA (Corporate & Regulatory Affairs) Department involvement in the
team helped emphasizing the impacts of taxation on Company
performance. Serious and concentrated efforts are in place with the
Government to minimize the instances of double taxation.
Skill Base:
Due to three Voluntary Separation (Golden handshake) Schemes in the recent
past, skill base has depleted and rigorous efforts are required to educate/ upgrade
the skill level where Supply Chain can deliver effectively.
Best Practice:
o The technical & training staffs were part of the process to structure the
process of filling the skill gap.
New Machinery Induction:
We are in the process of replacing old generation, slow speed machinery with
comparatively high speed, advanced machinery. Floor lay out is changing and
proactive training for the operatives is required to handle these machinery. At the
same time, machine crew is becoming surplus and is affecting moral of the
employees. Yet, we have to deliver to the volatile market. In the process, we
separated another 296 employees from one of our manufacturing plants to have
bench mark crew on our newly inducted machinery.
34
Section 2. Process
Best Practice:
o Skill based analysis of the employees with their training needs is always
available. Proper training is imparted before the machine is inducted on
floor.
o Proper evaluation of all employees based on Will Skill Grid carried out
and identified employees were counseled for separation, purely on merit.
Illicit Trade:
Higher tax rate on Cigarette Industry and ineffective control across the borders are
the major reasons for increase in the illicit trade from 13 % in 2001 to 22 % as at
now. Counterfeit is another outcome of such loose Government controls.
Best Practice:
o Serious and concentrated efforts are in place with the Government to lay
down rules and effectively implement them to discourage counterfeit
manufacturing.
o CORA (Corporate and Regulatory Affairs) function re-organized within
the Company with more focus on the Illicit Trade/ activities.
Distribution Infrastructure:
Approach to rural population is still way behind and requires a lot of effort for
distributing any consumer goods. IT infrastructure is also in the preliminary stages.
Low margins on Cigarettes make it difficult to invest for distribution penetration into
the Rural Market. Our main competition, being strong in the low price segment, has
achieved substantially stronger penetration in the rural market purely on account of
shear numbers of personnel and vehicles.
Best Practice:
o One to One contact with rural as well as urban consumers initiated which
will not only improve the distribution of our focused brands but at the
same time will further enhance our relationship with them. Under the
increased restriction on Cigarette advertisement, these contacts are
becoming more critical and necessary.
o We are involved in globally accepted best practice of Distribution
Excellence (DX) Programme which will further facilitate SCOR Project
recommendations.
ERP Migration:
During the period of SCOR Project, we were utilizing CS/3 as ERP System and
were in the process of migrating to SAP. It was, therefore, key to ensure complete
linkage of our physical processes & SAP.
Best Practice:
o It is key to Blue-Print the To-be processes first and then e-enable it
o A direct link was developed between the SAP implementation Team
and the SCOR Project Team. The ERP expectation as outlined in the
SCOR Blue-Print have been agreed/ incorporated in the SAP Project.
35
Section 2. Process
We streamlined the processes first and now the ERP system will be
providing the facilitation to deliver.
o A total of 300 To-be processes were reviewed for current Vs what is
available thru SAP. An example of such analysis is:
o
Supplier
Karachi
POE
Buying
Depot
GL WH
GLT
ERP
Needed
P1
Leaf buying
& production
Leaf Imported
Planning
P4
P2
P4
P2
P4
L&OP
Green
Leaf
Logistic
Plan
P2
P4
P5
P2.1
P2.2
P2.3
P2.4
ERP
Needed
P2.1
P2.2
P2.3
P2.4
P3
P4
P5
P4.1
P4.2
P4.3
P4.4
P5.1
P5.2
P5.3
P5.4
To Demand/ Brand
Cycle Planning
PL
planning
P2
WM WH
P4
P3
ERP
Needed
P3
To SMD,
PTC
Shipping
WH
Capacity
Planning
P1
P2
P5
P2.1
P2.2
P2.3
P2.4
ERP
Needed
P4.1
P4.2
P4.3
P4.4
P1.1
P1.2
P1.3
P1.4
GLT
planning
P2
PMD
Pre S&OP,
S&OP
P1
P2.1
P2.2
P2.3
P2.4
ERP
Needed
P4.1
P4.2
P4.3
P4.4
PL WH
ERP
Needed
P3.1
P3.2
P3.3
P3.4
P2.1
P2.2
P2.3
P2.4
P3.1
P3.2
P3.3
P3.4
ERP Must
P4.1
P4.2
P4.3
P4.4
P3.1
P3.2
P3.3
P3.4
P1.1
P1.2
P1.3
P1.4
P1.1
P1.2
P1.3
P1.4
ERP Must
ERP Must
ERP Must
And, a detailed process by process example is:
36
Section 2. Process
Similarly a Gap Analysis was done comparing our requirements (for all the 584
Level 3 processes) versus the SAP offer. A summary example is as follows:
S. No.
01
Process
Overall
Structure
CS/3
9
SAP
9
02
Purchasi
ng
03
Inventory
Manage
ment
(WMs,
Prized
Leaf,
R&RS,
SemiFinished
and FGs)
9/ 8
Gap
In SAP there will be only two companies
in the system. i.e. PK01 for Pakistan
Tobacco Company
All the companies in CS3 other than
Phoenix (an inactive manufacturing
unit) will be dealt as a single company
in SAP under the Company Code of
PK01 and PK02 for Phoenix (pvt) Ltd.
In CS3 there are 87 ware houses in
total whereas in SAP the ware houses
are being replaced by the plants and
storage locations, there will be 19 plants
in total that would cover the two
factories, head office, 14 marketing
ware houses and 2 bonded plants.
The other storage locations would sit at
a level below the plant ,e.g. the wm
store in AKF would sit as a storage
location in PK02 (AKF) plant
The Indirects procurement will not be
dealt in SAP until SRM (Supplier
Relationship
Management)
is
implemented except for BSS, which will
be covered in SAP to the point up till
where it is covered in CS3 presently.
The approval process for WMs & Leaf
will remain the same in SAP as it is in
the present system i.e. will be
authorized by the planning managers
manually on the hard copy.
For Machinery Spares the Purchase
Orders for AKF & JF will be authorized
by the respective Factory Engineers
and for SPM (Spare Parts Manager)
office will be authorized by the Chief
Engineer in the system.
Stock counting will be practiced for
R&RS
SAP
9
Add. to SAP
Customized
Customized
Reports
Customized
Reports
37
Section 2. Process
o Our SAP went live, successfully, on the 3rd of January 2005. Total
Company is now fully utilizing SAP.
o We are the 1st multi-site operating company in the BAT world with
SAP as the ERP module.
(5) Indicate the metrics used to measure (a) progress and (b) success.
A number of key metrics were selected for the project following a number of
sessions with all the key process owners.
Benchmarking Analysis was also done to gauge our current performance and
incorporate the areas of improvement in our SCOR Action Plan.
Following is an illustration of our performance viz-a-viz the benchmarking exercise
(based on 2003 Actuals). We identified certain metrics as areas for improvement
(highlighted by Red Arrow marks):
One point is worth mentioning that we are maintaining high Leaf Inventory (a
strategic component of our Product). The major reasons for this inventory are: 4-5
months aging (maturity) period and one crop per year (we have to procure our
requirements once every year). Furthermore, due to local legislation, we have to
buy surplus crop as well. This component is reflected in a number of metrics. We
are working on a number of ways and means to maintain a balanced crop and keep
optimum inventory levels.
P e rfo rm a n c e V e rs u s
B e n c h m a rk P o p u la tio n
Customer-facing
P e rfo rm a n c e
A ttrib u te
SC O R Level 1
M e tric s
A c tu a l
M e d ia n
B e s t-in
c la s s
D e liv e ry
R e lia b ility
D e liv e r y
P e rfo rm a n c e
99 %
60 %
90 %
R esponsiv e n e s s
O rd e r fu lfillm e n t
le a d tim e
F le x ib ility
Internal-facing
Cost
B IC
1 3 d a ys
7 d a ys
1 day
7 3 d a ys
6 9 d a ys
4 5 d a ys
38%
C o s t o f g o o d s s o ld
(w ith o u t ta x e s )
67 %
77 %
56 %
16%
C o s t o f g o o d s s o ld
(w ith ta x e s )
88 %
12 %
6 %
25 %
1 9 d a ys
B IC
S u p p ly c h a in
re s p o n s e tim e
T o ta l S u p p ly
C h a in C o s t
A s s e ts
G aps
8 %
92%
D a ys o f S a le s
O u ts ta n d in g
3 .5 d a ys
4 8 d a ys
In v e n to ry D a ys o f
S u p p ly
2 3 3 .5 d a ys
6 9 d a ys
D a ys o f P a ya b le s
O u ts ta n d in g
6 4 .9 d a ys
3 7 d a ys
9 d a ys
86%
C a s h -to -C a sh
C yc le T im e
1 7 2 .1 d a ys
8 1 d a ys
8 d a ys
96%
2 .6 tu rn s
2 .1 tu rn s
5 tu rn s
92%
A s s e t T u rn s
2 5 d a ys
90%
38
Section 2. Process
Referring to our External Mid 2003 Supply Chain Review that was conducted, the
following Top-line opportunities had been highlighted. These were confirmed and
addressed through a more focused approach as part of our SCOR Project.
12 month
average Days
460.9
Reduce to Days
Release of
Capital Rs.
Ongoing
Saving Rs.
365
442.8 million
44.3 million
WMs
29.75
11
97.6 million
9.8 million
FG NDP
12.32
10.5
19.70 million
2.0 million
FG DP
6.81
3.5
135.2 million
13.5 million
8.8
48.2 million
4.8 million
743.5 million
74.4 million
Prize Leaf
FGs Distributors
Total
Note: WMs: Wrapping Materials, FG NDP: Finished Goods Non Duty Paid,
FG DP: Finished Goods Duty Paid.
Note that the savings are on Annual basis.
(6) Document and quantify cost and performance benefits, which should include the
Return on Investment of the Project and changes in the value of one or more of the
SCOR Level 1 Metrics (not all metrics are required to be captured / reported).
The initiatives taken under SCOR have a direct positive impact on the highlighted
metrics which is evident from the following example taking into account one of the
Metrics:
Performance Versus
Benchmark Population
Customer
-facing
Performance
Attribute
SCOR Level 1
Metrics
Actual
Median
Best-in
class
Gaps
Delivery
Reliability
Delivery
Performance
99 %
60 %
90 %
BIC
Responsiveness
Order fulfillment
lead time
13 days
7 days
Flexibility
Supply chain
response time
73 days 69 days
1 day
92%
45 days
38%
Collaboration with suppliers (SLAs)

Source cycle time reduction
New targets
2004, 13 + 50 = 63 days (Rs 40Mn)
2005, 13 + 45 = 58 days (+Rs 20 Mn)
2006, 13 + 40 = 53 days (+Rs 20 Mn
Note that Order Fulfillment Lead Time in our case is 13 Days, out of which 10 days
are Product Maturity Requirement. From Stock (MTS), our Order Fulfillment Lead
Time is 1 Day.
39
Section 2. Process
Performance Versus
Benchmark Population
Customer-facing
Performance
Attribute
SCOR Level 1
Metrics
Actual
Median
Best-in
class
Gaps
Delivery
Reliability
Delivery
Performance
99 %
60 %
90 %
BIC
Responsiveness
Order fulfillment
lead time
13 days
7 days
1 day
Flexibility
Supply chain
response time
73 days
69 days
45 days
38%
Cost of goods sold

(without taxes)
67 %
77 %
56 %
16%
Cost of goods sold

(with taxes)
88 %
Internal-facing
Cost
Assets
Total Supply
Chain Cost
8%
12 %
Days of Sales
Outstanding
3.5 days
Inventory Days of
Supply
92%
6%
25 %
48 days
19 days
BIC
233.5 days
69 days
25 days
90%
Days of Payables
Outstanding
64.9 days
37 days
9 days
86%
Cash-to-Cash
Cycle Time
172.1 days 81 days
8 days
96%
2.6 turns
5 turns
92%
Asset Turns
2.1 turns
Global benefits
Reduction in Production expenses of
Rs 62 Mn
(Cash Release)
FG reduction of Rs 50 Mn
RM reduction of Rs106.5Mn
Inventory carrying cost of Rs 7.65Mn
Cash to cash cycle time = [inventory
days of supply + days of sales
outstanding - days of payables]
From FY 2002 figures
Inventory days of supply reduced by 10
days (233.5 to 223.6)
Cash to cash reduced by 10 days (172.1
to 162.2)
Furthermore alignment with the benefits mentioned earlier:

Reduce imported
Proposal
reduce imported
leaf inventories
leaf inventories
by 1 month (5 months to 4 months)
Cash release = Rs 43 Mn (estimate based
on Co. Plan 2004), savings = Rs 2.15 Mn/
annum inventory carrying cost
12 month
average Days
Reduce to Days
Release of
Capital Rs.
Ongoing
Saving Rs.
Prize Leaf
460.9
365
442.8 million
44.3 million
WMS
29.75
11
97.6 million
9.8 million
FG NDP
12.32
10.5
19.70 million
2.0 million
FG DP
6.81
3.5
135.2 million
13.5 million
Distributors
8.8
48.2 million
4.8 million
743.5 million
74.4 million
Total
Current lead-time(max) local is 15 days,

imported is 60 days
Proposal reduce imported by 10 days,
local by 1 day
Cash release = Rs 40 Mn, savings = Rs 2
Mn
2004 plan is to reduce to 7 days.
Savings = Rs 40 Mn
Proposal reduce duty paid inventory by
1.8 days (5.8 to 4 days)
Cash release = Rs 50 Mn, savings = Rs
Rs
2.5
2.5 Mn,
Mn, inventory
inventory carrying
carrying cost
cost
Proposal reduce inventory to 6 days.
Reduce distributors working capital = Rs
160 Mn
40
Section 2. Process
Projected Financials (Cash Release and Saving) of the Projects initially

targeted were:
Collaborative Planning Forecasting

and Replenishment
Supply Chain
PTC
Suppliers
Farmer clustering
Supplier collaboration
Leaf
WM
Financial
Leaf Rs 24Mn (savings) by

substitution of imported leaf
with domestic
Leaf Rs 43Mn (cash release),
Rs 2.15Mn (savings) by
reducing imported leaf
inventory by 1 month
WM Rs 40Mn (cash release),
Rs 2Mn (savings) through
reduction of inventory by 10
days
Above OpCo opportunities Rs
2.5 Mn (savings) by
rationalization of Cig. Paper,
Poly prop
Summary
of the Financial
One set of figures
Customers
S&OP
Responsiveness
Flexibility
Cost
Asset utilization
Lower manufacturing cost and

waste reduction Rs 62Mn
(savings)
Customer relationship
development
Distribution model
Forecasting accuracy
Financial
FG inventory Rs 50Mn (Cash

release)
Inventory carrying cost Rs 2.5
Mn (savings)
Reduce distributors working
capital = Rs 160 Mn
Impact / targets identified at the start were:
Total cash release = Rs. 133 Mn ( 1.27 Mn)

Total savings = Rs. 71 Mn ( 0.68 Mn)
(Rs. 105
= 1)
Rs 133 Million Cash Release (Full Year Impact)

High Probability:
Rs. 90 Million
Medium Probability:
Rs. 43 Million
Rs 71 Million Saving (Full Year Impact)
High Probability:
Rs. 18 Million
Medium Probability:
Rs. 8 Million
Low Probability:
Rs. 45 Million
With the Total Underlying Operating Profit of the Company at 12.7 Million, the
target savings on account of the SCOR initiatives were to be about 5.4% of the
UOP.
41
Section 2. Process
Summary of the Financial Benefits

Actual Results:
Profit ( Million)
Cash Release ( Million)
Initial Target
0.68
1.27
Actual
1.00
3.50
Detail split of the Financial Benefits, (First checkpoint) Oct.' 04 & Year-End
2004 are as follows :
Cash Release:
Target:
Actual:
Jun Oct
Rs. 133 Million
Rs. 322 Million
Jun - Dec
Rs. 133 Million ( 1.27 Million)
Rs. 368 Million ( 3.50 Million)
Overall actual performance exceeded the target by Rs. 235 Million (Year-end).
1.
Leaf Inventory:
Target:
Actual:
Jun Oct
Rs. 43 Million
Rs. 269 Million
Jun - Dec
Rs. 43 Million
Rs. 295 Million
Leaf Inventories remained below the Target due to various initiatives by the Leaf
Team, with no stock issues for manufacturing. Also, consumption of leaf increased
due to enhanced Sales in 2nd Half' 04 as compared to the original Forecast/ Co
Plan.
2.
Finished Goods Inventory:
Target:
Actual:
Jun Oct
Rs. 50 Million
Rs. - 27 Million
Jun - Dec
Rs. 50 Million
Rs. -10 Million
Overall Finished Goods Inventories remained higher than the target. As per the
latest Approved S&OP Forecast 2004/ 2005, there is an increase in Gold Flake
Family and shift towards 10 HL variants.
3.
Wrapping Materials Inventory:
Target:
Jun Oct
Rs. 40 Million
Jun - Dec
Rs. 40 Million
42
Section 2. Process
Actual:
Rs. 80 Million
Rs. 83 Million
Overall WMs inventories remained lower than Target due to effective stock/ supplier
management.
Saving:
Target:
Actual
Jun Oct
Rs. 8.29 Million
Rs. 13.12 Million
Jun - Dec
Rs. 11.6 Million ( 0.11 Million)
Rs. 18.9 Million ( 0.18 Million)
Saving is higher by Rs. 7.3 Million from the target (Year-end).
Effective Shop Floor controls resulted in the following:

Jun Oct Performance:
1.
2.
3.
4.
Overtime Cost:
Target = Rs. 0.67 Million,
Leaf Wastages:
WMs Wastages:
Impact of Reduced Inventories:
Actual = Rs. 1.56 Million

Actual = 4.03 Million
(estimated @ 3%)
Jun Dec Performance:

1.
2.
3.
4.
Overtime Cost:
Leaf Wastages:
WMs Wastages:
Impact of Reduced Inventories:

(estimated @ 3%)
Additionally, we also achieved the following savings:

Rs. 65 Million due to effective collaboration & negotiations with the Wrapping
Materials Suppliers
Rs. 8 Million due to lowering our Manufacturing cost
Rs. 12.9 Million in managing our returns and write-offs.
Thus, total saving achieved is Rs. 104.8 Million (1 Million) which is 7.9 % of
the Company Underlying Profit of 12.7 Million. The total amount invested in
the project from training till validation is around 80,000 only. It means that
the Return On Investment of this project is more than 10 times.
43
Section 2. Process
We also delivered to abnormal sales trend during the period through integration
within the Supply Chain Function (Re-organization and another right sizing
separation of 296 employees) and improved collaboration with our Suppliers and
Customers (CPFR).
Here is an example of integrated Planning Function, which is now in place in the
organization as a result of the SCOR initiative:
Procurement Manager
Planning and Logistics Manager
Factory Supply Chain Managers
Procurement Manager - Indirects
Production Planning Manager
WMs Planning Manager
Procurement Manager - Directs
Demand/ Secondary Logistics Mngr.
Leaf Logistics Manager
Primary Logistics
Custom Clearance & Imports
Leaf Operations Planning Mngr.
And, attached below is the SKU-wise performance, showing how effectively an

integrated Supply Chain Function delivered to fast growing sales trend:
Brands
Co-Plan
Million
Cigarettes
B&H 20HL Lights

B&H 20HL
B&H 10HL Lights
B&H 10HL
B&H Family
Jun To Dec' 04
Actual
Variance
Million
Cigarettes
Million
Cigarettes
6.9
82.0
3.7
27.1
119.6
2.2
19.6
0.0
9.3
31.1
-4.6
-62.4
-3.7
-17.8
-88.5
-68%
-76%
-100%
-66%
-74.0%
Gold Leaf 20HL

Gold Leaf 10HL
Gold Leaf 20HL Lights
Gold Leaf Family
2172.1
712.0
35.0
2919.1
2103.8
889.5
0.0
2993.2
-68.4
177.5
-35.0
74.1
-3%
25%
-100%
2.5%
Capstan Int. 20HL

Capstan Filter
Capstan 10's HL
Capstan Family
1317.2
266.8
453.9
2038.0
1200.3
246.6
758.7
2205.7
-116.9
-20.2
304.8
167.6
-9%
-8%
67%
8.2%
Wills Kings 20HL
120.8
76.5
-44.3
-37%
44
Section 2. Process
Wills N/C
Wills Kings 10HL
Wills Int. 10HL
Wills Int. 20HL
Wills Family
0.0
0.0
103.0
173.9
397.7
40.8
0.0
122.1
134.2
373.7
40.8
0.0
19.1
-39.7
-24.0
100%
19%
-23%
-6.0%
Gold Flake 20SC

Gold Flake 20HL
Gold Flake 10 HL
Gold Flake Sup. 20HL
Gold Flake Sup. 10HL
Gold Flake Family
1122.4
2585.8
768.7
231.7
49.8
4758.3
919.0
3455.4
1692.5
29.0
6.2
6102.2
-203.3
869.6
923.8
-202.7
-43.5
1343.9
-18%
34%
120%
-87%
-87%
28.2%
Embassy Filter 10SS

Embassy Kings 20HL
Embassy Kings 10HL
Embassy Family
1993.3
802.5
0.0
2795.9
1884.9
940.5
13.8
2839.2
-108.4
138.0
13.8
43.4
-5%
17%
100%
1.6%
Sub-Total
13028.6
14545.1
1516.5
11.6%
Gold Leaf (PNS)

Capstan (PNS)
Spl. Crested Vir.
Sub-Total
3.9
5.4
0.8
10.1
3.7
6.2
0.7
10.6
-0.2
0.8
0.0
0.5
-5%
14%
-5%
5%
Total
13038.6
14555.7
1517.1
11.6%
20HL
10HL
20SC
10SS
7538.1
2118.1
1122.4
2260.2
7972.2
3492.1
919.0
2172.4
434.2
1374.0
-203.3
-87.8
6%
65%
-18%
-4%
Summary of the Intangible Benefits

1) Supply chain maturity improvement
The overall knowledge across the supply chain improved in terms of SCOR
methodology and supply chain concept.
2) Supply chain collaboration and team work
Different functions and processes both internally and externally are now fully
shared with the issues and expertise.
3) Common platform
SCOR provides us a common platform where we can effectively communicate
and compare with other BAT Operating Companies.
45
Section 2. Process
4) Benchmarking techniques
Since the supply chain is now fully configured on SCOR framework, efforts and
metrics can be shared within BAT Operating Companies and other FMCGs. The
entire company is now confident to share the results with the communities and
the Best Practices.
5) ERP migration
Since we mapped the processes on SCOR methodology and eliminated the
non-value added activities, we are able to smoothly migrate from the previous
ERP (CS3) to the new SAP.
(7) Outline how the success of this effort supports the organizational objectives
described in Section 1, Item 3.
The success of these efforts, taken under the SCOR Project, directly supports the
Company mission To transform PTC to perform with the speed, flexibility and
enterprising spirit of an innovative, consumer focused company. And, also the four
Must Achieve Objectives of the Company:
Level playing field for all the players in the cigarette market
o Through the initiative of CPFR we are communicating effectively with our
valued business partners which is in turn limiting the access of illicit trade
to the market resulting in growth in the legitimate sector.
o In 2004, there were significant improvements noticed which contributed in
capturing a good portion of volume by PTC. We were able to procure our
entire tobacco leaf requirement due to our efforts under Farmer
Clustering. Since there was acute crop shortage (and we anticipate a
crop short situation even this year) and none of the small manufacturers
(most of them in the tax-evaded segments) were able to procure their
tobacco. This has provided us an opportunity to further boost our reach in
the market through our quality products.
o With better planning , weve been able to give better visibility to our local
Wrapping Materials Suppliers giving them the confidence to plan better
and at the same time reducing their surplus capacity available to offer to
our competition.
Sustainable volume growth

o With enhanced visibility and flexibility with our Suppliers and Customers,
we will be in a better position to respond quickly to the market
requirement and gain any opportunity which appears.
o In 2004, we not only achieved the enhanced sales requirement
(Company plan estimate was 25.3 Billion, whereas our actual sales were
46
Section 2. Process
26.8 Billion) but we also saved Rs. 65 Million in effective negotiation on

their cost base and inventories.
o Even this year, we started with an annual sales forecast of 27.1 Billion.
Our performance in Jan. 05 was excellent and we are now confident to
achieve higher sales, to the tune of 29 Billion (2.2 Billion more than
2004). This year on year growth in the volume is delivering us profits, part
of which will be invested back in our brands, people and processes to
sustain this excellent performance.
Improved trading margins

o All our efforts in releasing the cash and capturing the saving will facilitate
improvement in the trading margins.
o 2004 was a record year for PTC. We achieved highest ever profits in the
Company history. We were not only able to reduce our cost base but also
released considerable amount of cash from our inventories to be invested
in our brands.
o We still need to upgrade our machinery and processes which require
huge capital expenditures. With enhanced sales this year, we estimate
even higher profits.
o Reduction in our Raw Materials costs reduces the total Product cost,
enabling us to invest more behind our brands.
Winning as One
o Our effective Sales & Operations Planning Process and initiative of CPFR
directly address this area.
o Based on the excellent results of 2004, all employees were awarded 12
weeks bonus which is the highest ever.
o We are also involved in the Community welfare activities and extending
health care facilities to them. We are also actively involved in educating
other industries on the Environment, Health and Safety aspects of the
business.
o With government, we are the Industry preferred consultants on major
issues related to good governance, social responsibilities and tobacco
regulations
47
Section 3. Transference
Section 3. Transference (10 points)

(1) Describe the efforts to share lessons from this effort with other internal
organizations.
All Operating Companies with in BAT Group utilize our Internal Intranet which we
call the BAT Interact share and communicate information. All deliverables of our
SCOR Project as well as the MEGA Blue-Print have been posted onto this portal
for sharing by our Regional Team. The Asia Pacific Regional Project Team has
been highly supportive of this Project and serving as the means of sharing the
learning & outcome with other Operating Companies, and the Regional Top Teams.
We have been sharing the SCOR update on monthly basis with the cross functional
team and all stakeholders.
The Project implemented in BAT Malaysia took into account all the learning from
our Pilot Project and with the help of the Regional team were able to implement the
Project at an even more fast-tracked manner.
BAT Bangladesh is sending over a small team, including their Project Manager for
SCOR, to PTC for 4 weeks to understand our implementation process and the
learning weve had before commencing their implementation in March 2005.
In PTC, we will be focusing on the sustainability of supply chain processes and
identify further opportunities by deploying SCOR sustainability roadmap in phase 2.
Phase 1: Initial SCOR deployment Roadmap
Phase 2: Deployment of SCOR project for

SUSTAINABILITY
SUPPLY CHAIN STRATEGY ROADMAP
FOR SUSTAINABILITY
Education for
Sustainability
Design for
Sustainability
Operate your
Supply chain
for
Sustainability
Measure and
Monitor your
Supply Chain
progress for
Sustainability
Adapt your
Supply Chain
for
Sustainability
48
(2) Indicate how this initiative can be transferred to other organizations, and specify
the likely candidates for transference.
With in the Asia Pacific Region of the BAT Group, plans are in place for SCOR
Model application to their Supply Chain during 2004 - 05. They include BAT
Malaysia, BAT Singapore, BAT Australia, BAT Indonesia, BAT New Zealand, BAT
Islands, BAT Bangladesh, BAT Taiwan and BAT Hong Kong.
Also, few of our material suppliers have also shown their interest in the SCOR
Model and we are constantly supporting them in providing the basic know-how.
In summary we would emphasize the following;
o Basic SCOR Education including the Opco. Top team as a start up
o A Regional / Central Team facilitation is a great help
o External Consultancy on SCOR is needed for an Operating Company
to begin with
o SCOR provides a platform to consolidate all business projects/
processes under one umbrella
o It also provides balanced set of metrics and thus facilitates in
benchmarking
The SCOR methodology and implementation progress within BAT Asia Pacific
Region is quarterly reviewed by Regional Steering Committee, comprising of the
Asia-Pacific project manager, and all the General Managers/CEOs. The work done
by Pakistan Tobacco Company was specifically appreciated in Jan. 05 Meeting
and an extract of an e-mail from the Asia-Pacific project manager summarizes what
we have achieved and what we plan for:
49
Mr. Amjad Ali

Logistics & Planning Manager
P.O. Box 2549
Islamabad 44000
Pakistan.
Ph. +92 51 20832000
Fax: +92 51 2278376
E-mail: Amjad_Ali@bat.com
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Pakistan Tobacco Coddmpany

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Pakistan Tobacco Coddmpany

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FEBRUARY 2005

BAT Head Office

Asia Pacific Regional Office

British American Tobacco plc

British American Tobacco, Asia Pacific

Asia Pacific Regional Project Office

End Market / Operating Company

British American Tobacco GSD (Kuala Pakistan Tobacco Company,

General Information & Project Complexity

Section 1. General Information and Project Complexity

Supply-Chain Council Awards for Excellence

Section 1. General Information and Project Complexity

(2) Identify the organizational unit responding (site, function, etc.).

Section 1. General Information and Project Complexity

Section 1. General Information and Project Complexity

Pakistan Tobacco Company is a complex, multi-site organization with two

Section 1. General Information and Project Complexity

Section 1. General Information and Project Complexity

sprit of an innovative, consumer focused company. The mission is supported by

Section 1. General Information and Project Complexity

Co. Plan Cycle

Co. Plan Cycle

Section 1. General Information and Project Complexity

Section 1. General Information and Project Complexity

Main Sub-Processes which provide input to Pre-S&OP:

Section 1. General Information and Project Complexity

New Product Plan

DRP (Regionwise and

Section 1. General Information and Project Complexity

JF-PMD & SMD

IMPORTED - WRAPPING MATERIALS

Section 1. General Information and Project Complexity

DUTY PAID FGs

Section 1. General Information and Project Complexity

In the Deliver area we are working on involving distributors in our Forecasting

PTC Supply Chain Network

Section 1. General Information and Project Complexity

Product Integrity and Traceability

Mr. Kobayashi Takeshi,

Note: Packages - Pakistan is supplying us all

Section 1. General Information and Project Complexity

Mr. Christopher Low

Note: PDM - France is supplying us Cigarette

Mr. Toh Ai Tee

Note: New Toyo Singapore is providing us Foil

Note: Allied Marketing is our Major distributor in

Note: Asif & Co is our Major distributor in

Section 1. General Information and Project Complexity

Production/ Supply Chain

Asia Pacific Regional Supply Chain

Section 1. General Information and Project Complexity

Mr. Francois Gandilhon

Mr. Norbert Pfleger

Internal (Pakistan Tobacco Company) :

Mr. Ahmed Zeb

Mr. Zahidul Islam

Mr. Amjad Ali

Section 1. General Information and Project Complexity

Mr. Asif & Co.

Mr. Ayaz A. Abbasi

Section 2. Process (70 points)

improvement in leaf quality, we would be in a position to replace costlier imported

Domestic leaf supply