|PAKISTAN TOBACCO

COMPANY
OPERATIONS & PRODUCTION MANAGEMENT
|PAKISTAN TOBACCO COMPANY
OPERATIONS & PRODUCTION MANAGEMENT

PHASE – I & II

|PAKISTAN TOBACCO COMPANY |

4
 Contents
CONTENTS....................................................................................................................... 3
INTRODUCTION................................................................................................................... 4
FACTORIES..............................................................................................................4
JHELUM.................................................................................................................4
AKORA KHATTAK..................................................................................................5
CORPORATE STRATEGY..............................................................................................5
KEY OBJECTIVES................................................................................................... 5
OPERATION STRATEGY.......................................................................................................6
PROCESS MANAGEMENT.............................................................................................7
PHASE (I)................................................................................................................. 7
LEAF THRESHING DEPARTMENT.........................................................................................7
PHASE (II)................................................................................................................8
PRIMARY MANUFACTURING DEPARTMENT............................................................8
SECONDARY MANUFACTURING DEPARTMENT......................................................8
PROCESS CHOICES.................................................................................................. 9
MANAGEMENT OF TECHNOLOGY..............................................................................10
INFORMATION TECHNOLOGY..............................................................................10
MECHANICAL TECHNOLOGY..............................................................................10
TOTAL QUALITY MANAGEMENT.................................................................................11
PHASE - II.................................................................................................................. 14
CAPACITY......................................................................................................................14
CAPACITY PLANNING: ......................................................................................................15
CAPACITY STRATEGIES.....................................................................................................16
EXPANSION.................................................................................................................16
LOCATION...................................................................................................................... 17
JHELUM FACTORY...........................................................................................................17
AKORA KHATAK FACTORY.................................................................................................18
|PAKISTAN TOBACCO COMPANY |

TEAM WORK................................................................................................................... 19
................................................................................................................................ 19
LAYOUT........................................................................................................................ 20
CONCLUSION................................................................................................................... 21
RECOMMENDATIONS...........................................................................................................22
ACTION PLANS................................................................................................................ 23
BIBLIOGRAPHY.................................................................................................................24

3
 Introduction
Pakistan Tobacco Company (PTC) is one of the leading multinational companies of
Pakistan. It has the privilege being the first multinational company of Pakistan. PTC is the part of
trans-national British American Tobacco (BAT) Group which has been in this business over 100
years now. BAT has its operations in about 180 countries with more than 300 different brands.

Tobacco industry is one of the most important sectors of the economy of Pakistan. PTC has
become the major player in the industry by keeping thousands of people employed and by
contributing to annual GDP of Pakistan through large amount of taxes paid on cigarette
manufacturing and sales.

PTC started its operations 1947 right after the partition of sub-continent, by taking over the
business of the Imperial Tobacco Company that was incorporated in subcontinent since 1926. In
the beginning a channel production was setup in a warehouse in Karachi which has capacity of
producing 360 millions sticks per annum. Then after a certain period PTC started its fully
equipped factories in Jhelum and Akora Khattak.

Currently PTC has the capacity of producing about 35 billion sticks per annum. During 2006
PTC showed 12.8% growth in sales volume by selling 34.54 billion sticks. PTC is the largest
excise tax generator in the private sector in the country. In 2004 alone, PTC paid the government
close to Rs.16 Billion in excise and sales taxes.

FACTORIES
|PAKISTAN TOBACCO COMPANY |
Currently there are two factories that are performing there operations under PTC. These factories
are named as Jhelum and Akora Factory.

JHELUM

PTC established Jhelum Factory in 1956 which started its operations in 1957. Jhelum is located
100 kilometers in south from Islamabad. Initially the Jhelum factory was working on single shift.
Then in 1961 and 1970 it started working on second and third shifts respectively. Currently there

4
 are 426 employees working in Jhelum Factory. Jhelum Factory has capacity to produce 20
billion sticks per annum.

AKORA KHATTAK

Akora Factory started its operations in 1976. Akora Factory is situated 100
Kilometers in North from Islamabad. A special thing about Akora Factory is that
tobacco leaf is also processed there. Akora Factory fulfills the requirement of local
tobacco. It is also working in three shifts same as in Jhelum Factory. Akora Factory
has capacity to produce about 20 billion sticks per annum.

CORPORATE STRATEGY
PTC’s corporate strategy is to gain market leadership in terms of the following three aspects:

1. Growth: The focus on competing in terms of their volume share that is the amount of
cigarettes being manufactured.

2. Productivity: In terms of productivity they believe and focus on effective utilization of

the given resources and reducing their waste.

3. Responsibility: PTC believes that it is their prime duty to carry out their business
activities ethically and morally keeping in mind the interests of all. They give high
priority to community services and health and safety issues.

KEY OBJECTIVES

To regain volume and value leadership by positioning variable brands in all consumer related
|PAKISTAN TOBACCO COMPANY |

segments of the market. The focus is on the light segment, ASU 30(adult smokers under 30
years), and premier brands.

• The established leading positions in markets where it is not already strong.

• To drive world class standards in products process and services through passionate
skilled and confident people

• To meet stakeholders expectations.

• To be seen as a responsible company in a controversial industry.

3
 • To meet these objectives, PTC is taking the following initiatives

• Establish a focused segments and differentiated brand portfolio

• Create a winning cooperate culture with focus on vision, mission and values.

• Restructure PTC,s cost base to become competitive locally and globally

VISION
“First choice for everyone”

“Transform PTC to perform with the speed, flexibility and enterprising sprite of an innovation,
consumer-focused company”

The vision of PTC is to become number one company in terms of quality and quantity and to
become the first preference for all its stakeholders.

Operation Strategy
The operation strategy of PTC is linked with their corporate strategy which is to maintain their
company with speed and flexibility to become the number one cigarette manufacturer therefore
in terms of operations they believe in producing with the least possible cost and are continuously
working on findings ways to further reduce it without compromising on their quality in order to
gain a competitive edge over its competitors. The strategies of PTC are driven from Central
Headquarters. PTC is fully integrated. Following are the departments in operations which are
inter-linked with corporate strategy: Security Department, Material Management Department,
Engineering Department, IT department, Green Leaf Threshing Department, Primary
Manufacturing Department, Secondary Manufacturing Department, Filter Rod Department, and
Quality Control Department. |PAKISTAN TOBACCO COMPANY |

Order of ranking for the competitive dimension:

1. Quality(due to tax issues, smuggled item available the cost cannot be reduced therefore
the compete with their competitors on the basis of quality)

2. cost (PTC believes in smart spending and aim to gain value addition from each penny
spent)

3. Time

4
 4. Flexibility

Operations Strategy which result in competitive edge:

• It’s a global company with 180 markets and have a huge area to share ideas and
experiences

• They have the opportunity to learn from the success and failures of other markets

• The company BATC is very well integrated

• Diversity and Global integration is the biggest advantage.

• Their strategies are driven from the center.

PROCESS MANAGEMENT
PHASE (I)
Leaf Threshing Department

“Process and deliver quality tobacco satisfying customer demands at minimum supply chain
cost.” Although tobacco is grown throughout the country, the primary source of this integral raw
material is the NWFP where soil and climatic conditions suit tobacco cultivation the most. The
province has been the focal point tobacco-related activities and produces around three-fourths of
the tobacco leaf grown in the country. The province grows the three most widely used types of
tobacco namely, Flue Cured Virginia (FCV), Burley and Nicotiana Rustica (White Patta).

Pakistan Tobacco Company, as the largest cigarette manufacturer in Pakistan, has a special
|PAKISTAN TOBACCO COMPANY |

relationship with the land and people of the NWFP. The fruit of these activities is that in just 30
years Pakistan became the 5th largest tobacco producer in the world and 4th in highest yield.

In 1948, PTC pioneered the cultivation of Virginia tobacco in Pakistan with an average yield per
hectare of 861 kg. Through continuous efforts and the hard work put in by our contracted
farmers, the yields have increased significantly to 2,400 kg/hectare. Prior to that native varieties
like Jati & Motihari were cultivated mainly in the eastern part of Pakistan (Bangladesh). All the
Virginia tobacco was imported from the USA & India.

3
Flue Cured Virginia tobacco is now the most widely grown and widely used type of cigarette
tobacco in Pakistan and the total production of this high value commodity has increased from
23.8 million kgs in 1967-68 to 66 million kgs in 2007. Pakistan is now the 7th largest producer
of FCV in the world.

The current tobacco production in the country exceeds 100 million kilograms per year, although
what is perhaps more important is the types of tobacco grown in the country.

Once tobacco is planted, it undergoes a myriad of processes as it moves through the supply chain
which converts it into a consumable product worthy of pride.

PHASE (II)
There are two departments lie under process department.

• Primary Manufacturing Department

• Secondary Manufacturing Department

Following is the process performed by each department.

PRIMARY MANUFACTURING DEPARTMENT

This department is generally known as PMD. The main function of this department is to produce
the blend of tobacco that is required for the manufacturing of a cigarette stick. Different blends
are created for each brand, the tobacco is processed and at the end of this stage the dust from the
tobacco is separated. Different blends (recipe of brand) for each different brand like Gold Leaf,
Gold Flake, and Capstan etc. are mixed with their flavors. Blend of Tobacco is processed in
shifts; in each shift 5000 kilogram of Tobacco blend is produced.

PMD receives stem and Leaf (Lamina) separately from Leaf Department and process them |PAKISTAN TOBACCO COMPANY |

separately. During the process steam and different flavors added for different blends of Tobacco.
At the end Stem and Leaf are mixed with a specific ratio of 80:20.

After this the blend of Tobacco that is ‘Cut Tobacco’, is stored in Cut Tobacco Store.

SECONDARY MANUFACTURING DEPARTMENT

This department is commonly known as SMD. SMD is further divided into three sub-
departments are that are;

4
 1. Cigarette Making Department

CMD receives blend of Tobacco from Cut Tobacco Store and processed it to form a
cigarette stick. The process of cigarette making is done through fully automated
machines. “Protos” is the highest capacity machine that is installed in PTC Jhelum
Factory. It has capacity of producing 10000 sticks per minute. It has ability of
checking the filter, leakage, tobacco, length, level of humidity etc. The machine
rejects if it finds any error in length, width, etc.

When a cigarette stick is produced it is transferred to Cigarette Packing Department

for further processing.

2. Cigarette Packing Department

CPD receives cigarette sticks from CMD and packs them in flats. This process of
cigarette packing is also done through fully automated machines. GDX-3 is the
highest capacity machine that is installed in Jhelum Factory which has the capacity of
packing 500 packets per minute.

Firstly cigarettes are packed in packets (flats) then ten flats are transformed into an
outer. These outers are further packed into a CBC, each CBC contains 10000 sticks.
Then these CBCs are transferred to shipping godowns from where they are
transferred to Marketing warehouses on demand.

3. Filter Rod

Filter rod department works as a subsidiary department to the SMD. The filter rod
department prepares the filter rod. The Material Management Department supplies
|PAKISTAN TOBACCO COMPANY |

the raw materials, which are mainly acetate Tow, plug warp, till box, hot melt and
adhesives. The filter rod is manufactured in two sizes, one is a 54mm and other is
66mm. The filter rod hence produced, is sent to the SMD through filter rod treys.
There is machine that adds the filter rod to cigarettes.

PROCESS CHOICES
Process Choices for the above three stages are:

• Phase 1 is done through a batch process

3
 • Phase 2 and 3 are done through a continuous process

• The manufacturing is not ‘made to order’ its ‘made to stock’ based on volumes

MANAGEMENT OF TECHNOLOGY
INFORMATION TECHNOLOGY

Information Technology (IT) is to provide business consultancy with a technical infrastructure

that enables PTC to perform with speed and flexibility of an integrated virtual team”

IT is the backbone of every business; with out it concept of successful business is becoming
impossible in modern business environment. The information technology does a great work in
today’s modern industrial world. To be competent and successful every business needs to have a
computerized system. Every moderate and large size business needs;

o Accurate and timely information

o Accurate transfer of information

|PAKISTAN TOBACCO COMPANY |
o Processing of data

o Proper record keeping

For Electronic Data Interchange “Minitab” is used for the communication between
manufacturing plant and head-office.

MECHANICAL TECHNOLOGY

Latest state of the art machinery is used at PTC Jhelum, which includes:

4
 - Direct conditioning and casing Cylinder-2005

- Lamina-Cutting PMD 2005

- ITM Dryer PMD 2005

- 3CC Cylinder

- GLT Plant is used for segregation of lamina from the stem

- PROTOS machine

- G.D X3 is used for multi brand packaging

In1956 they were producing 1000 cigarettes per minute but due to constant innovation of
machinery they are now producing10, 000 cigarettes per minute and are packing 500 packs per
minute.

To bring precision machines are managed for productivity and packaging of each brand) make
and package balance

Research and Development

Their training center comprises of the following:

- Creating
- Implementing
- Managing effective R&D
Currently their T&D department is working on reducing the nick and tar level so that their
cigarettes cause less harm to their consumers and is their first preference.

TOTAL QUALITY MANAGEMENT

|PAKISTAN TOBACCO COMPANY |

As the name indicates the department checks and ensures the quality of the product at different
stages to get the maximum satisfaction of the customer, which is the primary goal of the factory.
It mainly deals with P.M.D and S.M.D.

This has always been an area of major focus for PTC as they are extremely cautious of their
product quality. There was a time when PTC was 12 points behind their major competitor but
now through TQM they have now become the market leaders and are 4 points ahead of them.

3
 • ISO 9000 certified
• Six sigma- they have achieved a green belt
• MRP (Managing, Resourcing, and Planning) are main functions that the organization is
focusing for quality assurance to International standards. i.e. MR II classic certification.
RELATION WITH P.M.D:
In P.M.D they find and check three types of parameters;
• Fill value

• Moisture

• Particle size
RELATION WITH S.M.D:
In S.M.D finished product inspection (F.P.I) system is followed. It is further sub divided into two
branches:
• M.Q.I (Manufacturing quality index)

• P.Q.I (Product quality index)

M.Q.I:
In M.Q.I nine parameters are measured. Parameters are
• Circumference
• Weight
• Filter pressure drop
• End fall out
• Cigarette pressure drop
• Moisture (After packing)
• Firmness |PAKISTAN TOBACCO COMPANY |
• Visual tests
• Cigarette
• Packet
• Outer
• Pack seal
P.Q.I

4
 In P.Q.I there are fourteen parameters. Mostly are same as that of M.Q.I but only two are
different which are;
• NFDPM ( Nicotine free dry particulate matter)

• Puff Numbers

• Standard average puff numbers for P.G =8.5 for others brands =9

Machines used for checking Quality

• Q.T.M (quality test module)

• Infra Red Lab
• Rotap machine
• End Stability Tester
• Densimeter height (d.m.h)
• Ovens
CONTINUOUS IMPROVEMENT

To focus on continuous improvement PTC is emphasizing on following:

• Improving quality of Tobacco through R & D department

• Giving the toll numbers on cigarette packs for feed back from customers

• Maintaining shelf life of minimum three months

|PAKISTAN TOBACCO COMPANY |

3
 PHASE - II

Capacity
Capacity is the maximum rate of output of a process or a system. Capacity often refers to an
upper limit on the rate of output. Different companies have different measures of capacity.
Capacity on the basis of output has been divided into two categories as effective capacity and
peak or design capacity.

Production capacity in Pakistan Tobacco Company is measured in terms of number of sticks

produced per annum. Pakistan Tobacco Company has two plants which meets the demand
requirements of the country. Total production capacity of both plants is 45 billion sticks per
annum this year and is continuously on an increasing trend per year.

Akora Khatak plant produces 23 billion sticks per annum whereas Jhelum plant produces 22
billion sticks per annum approximately. This production is carried under effective production
capacity. The latest production machine “Protos” at Jhelum plant produces approximately 8,500
sticks per minute under effective capacity. But whenever the company required increased
production, under the peak capacity, the machine “Protos” can produce 10,000 sticks per minute
approximately. Effective capacity is always less than the peak capacity because of certain factors
that Pakistan Tobacco Company also faces on its plants. Some of these factors which cause
actual output to be usually less than effective capacity are as follows:

• Attendance |PAKISTAN TOBACCO COMPANY |

o Absenteeism of workers and operators etc

• Breakdowns
o Machine break downs (Machines inefficiencies)
o Skill level of employees
o Periodic maintenance of equipment
o Quality problems

4
 o Lunch breaks, coffee breaks
o Stoppages (Time loss)
• Changing product mix, shortage of materials etc.

Capacity planning:
Pakistan Tobacco Company focuses on pull strategy while doing capacity planning. Pakistan
Tobacco Company has designed its operations on the basis of made to stock rather than made to
order. Because in the Tobacco industry the demand is always high and there is a continuous
struggle for meeting the demand. Pakistan Tobacco Company executes its capacity planning on
the basis of previous trends in sales.

However there is a high demand before budget and demand sharply goes down after budget and
in the period of Ramadan. The monthly production plan is prepared at Pakistan Tobacco
Company head office based upon market research and previous history. Competitive market
analysis also plays a vital role in capacity planning. For the capacity planning according to
demand (which is ever increasing) and previous sales trends, Supply chain management
department, Production department, Marketing department, Finance department etc. coordinate
with each other to forecast the demand and devise the capacity planning and capacity cushions.

Planning depends on the availability of buffer stock and things in the pipe line of the supply
chain. Pakistan Tobacco Company has its 9-11 days buffer stock available in the warehouses.

Different measures of capacity are useful in defining two measures of system effectiveness:
efficiency and utilization. Efficiency is the ratio of actual output to effective capacity. Utilization
is the ratio of actual output to peak capacity. Pakistan Tobacco Company has “Protos” machines
|PAKISTAN TOBACCO COMPANY |

for cigarette manufacturing which have following efficiency and Utilization ratios:

(Production figures are shown as per annum)

Efficiency = Actual Output / Effective Capacity

Efficiency = 450,000,000/450,000,000 * 100% = 100%

Utilization = Actual Output / Peak Capacity

Utilization = 450,000,000/480,000,000 * 100% = 93.75%

3
Capacity Strategies
Capacity cushion is the amount of reserve capacity a process uses to handle sudden increases in
demand or temporary losses in production; it measures the amount by which the average
utilization (in terms of total capacity) falls below 100 percent. As the cigarette demand is on
increasing trend, so 15% of capacity cushion is enough for Pakistan Tobacco Company.

Capacity Cushion = 100% - Utilization Rate (%)

Capacity cushion = 100% - 93.75% = 6.25%

Expansion
In the case of Pakistan Tobacco Company, generally it meets the forecasted demand and it
happened rare that the company fell short of supply. The two plants in Jhelum and Akora Khatak
are enough to meet the country demand of cigarettes. So “wait-and-see strategy” is being used
whenever needed to meet the demand. Like Jhelum plant has new Protos machines but Akora
Khatak consists of old machines whose production capacity is less. This time the short term
strategy to expand to meet demand will be to install Protos in Akora Khatak plant aswell.

Capacity Requirement
The capacity requirement is being calculated with the complete coordination of production
department, supply chain department, finance department, inventory management and other
related departments. Generally, the capacity requirement is measured on the basis of output |PAKISTAN TOBACCO COMPANY |
measures. Output measures are appropriate for high volume processes with little product variety
or process divergence. Pakistan Tobacco Company uses demand forecasts for the future capacity
requirements. As the demand is on increasing trend, so capacity requirements are also increased
accordingly.

4
 Location
Location considerations are very important for any business. Location decisions represent an
integral part of strategic planning process of virtually every organization. Pakistan Tobacco
Company also focused on important issues pertaining to location because location decisions
often have an impact on investment requirements, operating costs and revenues, and operations.
A poor choice of location might result in excessive transportation costs, a shortage of qualified
labor, loss of competitive advantage, inadequate supplies of raw materials, or some similar
condition that is detrimental to operations.

Pakistan Tobacco Company started its operations in 1947 right after the partition of sub-
continent by taking over the business of Imperial Tobacco Company and its plant in Jhelum.
Currently Pakistan Tobacco Company has two plants performing the operations in Jhelum and
Akora Khatak. Both these plants are used for making cigarettes. The different features of both
plants and dominant and secondary factors associated with the location are described as under:

Jhelum Factory
Pakistan Tobacco Company acquired Imperial Tobacco Company in 1956 that was incorporated
in sub-continent since 1926. Jhelum is located in 100 kilometers in south from Islamabad, the
capital of Pakistan. Initially the Jhelum factory was working in single shift and then in 1971 it
started working on second and third shifts due to increasing demand. Following are the dominant
factors in selection of Jhelum location for Pakistan Tobacco Company:

• The location is ideal in terms of covering the Punjab and NWFP.

|PAKISTAN TOBACCO COMPANY |

• Already established infrastructure (Imperial Tobacco Company)

• Skilled labor with respect to wages (The major workforce at Jhelum plant is of retired
Pakistan Army soldiers; as Jhelum has major population serving in Pakistan Army).
• Reduced supply chain costs and accessibility in central Punjab
• Jhelum plant is hub for packing material which is imported from Singapore, Indonesia,
Philippines, and Japan etc. So easily cover the requirements of both plants in terms of
providing packing material.

3
 • Plant on Grand Trunk Road (GT Road).
The brands that are produced in Jhelum plant are:

• Benson & Hedges

• John Player Gold Leaf
• Capstan
• Gold Flake

Akora Khatak Factory

Akora Khatak factory started its operations in 1976. Akora Factory is situated 100 kilometers in
North from Islamabad. A special thing about Akora Khatak factory is that it is situated with Leaf
warehouses in NWFP. The cut leaf is shifted to Green leaf threshing (GLT) plant and mixed with
specific ratio for different blends and converted into Prized leaf which is then shifted to both
plants for manufacturing of cigarettes. So Akora Khatak factory has no such transportation costs
for raw materials.

The dominant factors for choosing the Akora Khatak plant are as follows:

• The leaf threshing department (a whole separate production) is with the Akora Plant, thus
saving the transportation costs of Prized leaf.
• Ideal location for supply in Sindh and Balouchistan.
• Availability of cheap and skilled labor
• The feasibility of land and environment
• Lowered costs i.e. purchased land, raw materials etc.

|PAKISTAN TOBACCO COMPANY |

• Plant at main road of Noshehra (Grand Trunk Road)
The low premium brands produced at Akora Khatak plant are:

• Capstan
• Gold Flake
• Embassy
As there is availability of high-tech machines so setting up a new plant is not feasible in case of
high demand. By replacing the machines could overcome the issue of high demand only if

4
 required. But the following dominant and secondary factors are considered by Pakistan Tobacco
Company, if at any point in time, in future, they have to establish a new plant:

Dominant Factors

• Proximity to raw material: Prized Leaf (Because prized leaf is blend mixed and costs
more than normal leaf, so it is most important of its safe supply)
• Skilled Labor (Labor is the major resource for effectively and efficiently carrying out the
business operations)
• Investment and costs
Secondary Factors

• Location as peaceful, secure and legally protected (Current condition)

• Proximity to markets
• Real estate costs

Team work
Efficient and effective team work plays a vital role in the continuous growth and success of the
company. Pakistan Tobacco Company, that’s why, emphasize on team work and coordination.
The departments in Head office Islamabad coordinate with each other in terms of planning,
production, and forecasting, financing, marketing and all other strategic issues.
|PAKISTAN TOBACCO COMPANY |

3
 Layout
Layout decisions are important for the three reasons: (1) they require substantial investments of
money and effort, (2) they involve long term commitments, which makes mistakes difficult to
overcome and (3) they have significant impact on the cost and efficiency of short term
operations. Pakistan Tobacco Company has built the lay out in such a way to avoid inefficient
operations or accidents. As for the project of course “Operations & Productions Management”
we have selected Jhelum plant of Pakistan Tobacco Company and visited the plant location and
studied the layout.

Layouts are generally of four types: Product layout, Process Layout, Fixed position Layout and
Hybrid Layout.

The Jhelum plant of Pakistan Tobacco Company has operations under process layout rather than
product layout for continuous flow of material. Process layout is that which can handle varied
processing requirements.

The processing of raw material until its finished form occurs in a forward straight path as shown
in figure in Annex - A. The raw material is brought in Primary Manufacturing Department, from
after blending and mixing of leaf and stem, it is kept in cold room. Then these wooden boxes of
mixtures for cigarettes are moved to Secondary Manufacturing Department where cigarette
making section, filter rod and cigarette packing sections helps in making finished products.

|PAKISTAN TOBACCO COMPANY |

4
 Conclusion
All the activities carried out at Pakistan Tobacco Company are well planned and are adjusting to
Political – Legal environment, Cultural Environment, Technological environment and other
related strategic issues. British American Tobacco Company is giant of the World in cigarette
manufacturing industry and is following the best operating procedures to enhance the business.
The management team at Pakistan Tobacco Company and workforce in both plants are well
competent to carry out the industry operations effectively. We visited the Jhelum plant of
Pakistan Tobacco Company and understood how effectively each operation within plant has been
carrying out by the employees. The practical view and understanding has been related with
theory of operations and production management and the concepts have been cleared.
|PAKISTAN TOBACCO COMPANY |

3
 Recommendations
• Reduction in tobacco wastages must be addressed.
• Growth of brands and volumes.
• Productivity enhancement and reduction in stoppages
• Low brand margins.
• Low skill level of master technicians
• Low education and skill level of employees for advanced machinery
• Unstable inventory level because of before time and pending deliveries
• Service level of local suppliers for PTC must be improved in order to reduce
the problems related to quality

|PAKISTAN TOBACCO COMPANY |

4
 Action Plans
• Raw material must be handled with care by the employees. Workers must be specifically
trained to carry out the activities effectively and minimize the wastage of raw material.
The machinery in Primary Manufacturing Department in which leaf and stem are
separated are locally manufactured and needed to be replaced with efficient and latest
machines.

• As the current situation of inflation in the Pakistan, PTC should introduce new brands of
lower costs and accessible to lower income level people. This will cause to keep the
volume growing and enhance the shares and profits.

• Production schedules, availability of raw material, activities with in plant, employees’

training and machines maintenance schedules must be carried out effectively to avoid
stoppages and breakdowns during production.

• As the new machinery is being imported from other countries with the passage of time,
similarly employees must be given training according to that. Technical engineers must
get training of latest machines to avoid problems during production.

• All the departments in Head Office of Pakistan Tobacco Company which is in Islamabad
must be coordinated with production managers and technical personnel at both plants in
Jhelum and Akora Khatak to accurately forecast the demand fluctuations and handle the
|PAKISTAN TOBACCO COMPANY |

increasing demand. This will help to avoid excessive inventory stocks and decrease
inventory costs.

3
 Bibliography

Primary Data:

• Visit to plant: Pakistan Tobacco Company, Jhelum Plant

Secondary Data:

• www.ptc.com.pk

• www.bat.com

• www.google.com/PTC

• www.wikipedia.com

|PAKISTAN TOBACCO COMPANY |

4
 |PAKISTAN TOBACCO COMPANY |

3
Annex – A (deleted)
4
|PAKISTAN TOBACCO COMPANY |