Natco Essay, Research Paper

NATCO INTRODUCTIONNATCO is an acronym for the initial s National Confectionery Co. It is a very popular brand name in England, which tries to satisfy the needs of the Asian community it is often mistaken that NATCO is the name of the company; but this is not true. NATCO is only a brand name for an international trading company, a specialist in Indian foods, -T. Choitram & Sons. T. Choitram & sons is the largest chain of supermarkets in the U.A.E., a confectionery manufacturer, a wholesaler, a cash &carry operator, and the manufacturer and packer of more than 250 products marketed and distributed in the UK under the NATCO brand.Some of the other brands of the company are Papa – lentil and spices, Leone – tea, Koto – medicated products, Family – tissues, NATCO – sweet and biscuits. NATCO was their first and is their main brand, and NATCO sells more than any other of their brands does. This is why we also have emphasized more on the NATCO brand in our report. NATCO is called the lucky brand for the company, as they believe that this brand has led to them towards success. Topics, which will be discussed in the report, are the management structure, their company history, manufacturing process and facilities, inventory control, quality control, just in time and forecasting. The helpful staff of NATCO kindly provided this information. Historical ReviewT.Choitram although an Indian migrated to West Africa in 1942. At the age of 17, he began his enderpreneurial career by selling seeds fruits magazines. He was a man who was always motivated with the dream to be a very successful businessman. He saw his future in the food industry and so he began his own supermarket and named it after himself. As years passed by he gained tremendous success and due to this he launched a brand name i.e. NATCO for his trading company in the year of 1968. Company OverviewIn London, T. Choitram & sons, a packaging firm has been in the competitive market of packaging and distributing foodstuff, spices, and confectionery for over 40 years. The owner of company has come a long way from a small grocery store in Sierre Lonne to one of the biggest distributor of foodstuff in London. With his unique managerial style he succeeded in bringing up his trading company to be one of the best in the world.T. Choithram & sons is located at Wembley. The factory and warehouse together under one roof occupies around 25,000-sq. ft. in area. NATCO has employed over 150 skilled and unskilled labor, and has a staff of around 50 people, which adds up to a total of 200 people employed at NATCO. NATCOs team of highly experienced buyers is regularly traveling the Four Corners of the globe to source the best quality crop for export to their Wembley factory to be packed under the NATCO label. They guarantee premium products at the best price, ensuring that NATCO is excellent Value of money.The NATCO brand was first launched in the UK in the early 60s, catering to the needs of the Asian communities. The extensive product range includes Spices, Lentils, Beans, Flours, Nuts, Dried Fruits, Basmati Rice, Canned Products, Butter Gee, Betel Nuts, Pappadums and much more. NATCO brand today is known for its superior quality standards. NATCO products are exported through a network of distributors to U.S.A, Canada, European Community, Middle East, and West Africa and they are continuing to develop these export markets.Papa is the other brand name for NATCO. T. Choithram and sons came up with this other brand name because in many countries, government regulations allow only one agent for a brand for the whole country. This limits the sales in those countries. To increase the sales in these countries they planned to have more distributors. They could not introduce Papa into the other countries as a brand of T. Choithram as it would be an illegal activity. To legalize it they came up with a plan, which would help them to sell the Papa brand in the countries where NATCO already exists and it would not be illegal at the same time. They established a new company Orient Foods. Papa is a brand name for this new company and sold in outside market, which helps NATCO compete with other similar product. This move has helped the company as its sales have increased in foreign markets.The mission statement for NATCO is we shall strive to produce the very best product and materials available, when and where they are wanted and at a price that represents good value at every stage of the trading process, from the harvest to the shelf, to the factory to the home. FunctionsThe organization of NATCO is based mainly on the three function called Finance, Marketing, and Operations. Each of these functions has its own managers or directors. FINANCEFinance is the lifeblood of commerce and industry. The finance department of NATCO has the responsibility of ensuring that enough funds are available for the smooth operations of the organization. Mr. R.D.Rajwani, the managing director of the company, also commented on the finance department that it is concerned with budgeting activities of the other departments. He also mentioned that this department also operates the cost and budgeting control system by gathering and analyzing cost and other financial data, before the redistribution of information in the form of performance report. Mr.Rajwani also talked about the other activities dealt with this department, such as handling accounts of income and expenditure, payment of wages, pricing decision, etc. It also involves the function of banking. Banking involves depositing cash, withdrawal of cash, taking loans, discounting of bills. MARKETINGMarketing function of NATCO comprises of number of sub-function such as publicity and advertising, sales promotion, samples and coupons, fairs and exhibitions, public relations, distribution and marketing resources. It is the function of the marketing department to advertise and price the product. The marketing department closely works with operation and production department, so that the changes could be administered from time to time as per the result of market research. The sub-functions under marketing are very essential for the business. They sub functions are explained as follows: –1) Publicity and Advertising– Advertising has become an indispensable function in the modern business due to the competition and mass production. Publicity brings forth production to the knowledge of the consumer and helps both in creating and maintaining demand for the goods produced. It persuades people to buy goods and services again and again. It helps to create regular demand by smoothening out seasonal and other fluctuations. Without publicity, goods may not be taken note of and in the absence of demand; production of those goods may have to be stopped. It creates a good image of the company and reputation of the products. It adds to the goodwill of the enterp rise.2) Sales Promotion- Sales promotion includes all those activities, which are directed towards the promotion of sales such as organizing publicity, introductory sales. It also includes personal as well as innovative selling. Though the ultimate aim of sales is to increase sales and profit, but it is different from advertising and personal selling in approach and technique.3) Samples and Coupons- Distribution of free samples of smaller size of the product is an effective device of sales promotion, especially to introduce a new product. Samples may be widely distributed or given only to selected customers. Customers can test the product before purchase. Premium or prizes may be given to the buyer on the purchase of some specific product e.g. one Lux toilet soap for the purchase of an economy pack of Surf. In some cases coupons are issued to prospective buyers through newspapers. Sometimes clearance sales, off-season sales, reduction. 4) Public Relations- Public relations aim at securing favorable opinion and good of the public towards the enterprise. A business enterprise price must build up a good image of its own to have better sales. It must maintain cordial relations with the clients and always look after their welfare. It must go on informing the public about the improvement in packing, the quality or the new uses of the products and influence their decision to buy the product. It must give prompt attention to their suggestions and to the redressal of their complaints. It must take note of the bias or the special prejudices of the customers and try to win over their support.5) Fairs and Exhibitions- Business enterprises always like to participate in fairs and exhibitions to promote their sales. Some of them organize their own exhibitions of their own products. Fairs and exhibitions are held on local, regional or international level. Trade Fair Authority of India organizes various exhibitions of different kinds at various places in the country. OPERATIONThis department of NATCO consists of all the activities concerned with the production of food and services. The operation function is dependent on the finance side for its financial needs and on the marketing department for further research and development of the products. The operation function of NATCO is concerned with transformation of various inputs into desired outputs. MANAGEMENT STRUCTUREManufacturing organization is usually beuracratic in structure. The word beurocratic is not used despairingly but rather in true sense, which implies division of labor into bureaus or departments. The organization structure of NATCO is a typical pyramid type structure, each post at one level subordinate to a post at a higher level. After our visit to the company we observed that each person is responsible to only one-person level, which is a sign of an organized company.The division of labor in the company allowed the advantage of specialization to be obtained. To be precise, each person had specific and often unique task to perform. As seen in most of manufacturing firms, the labor force is divided into skilled and unskilled labor, NATCO also has this kind of mix. The labor strength existing in the company is around 150 of whom the majority is skilled. The staff employed at NATCO is about 50, which add up to 200 people working for the company. THE ORGANIZATION CHART OF THE MANAGEMENT.In the manufacturing firms a number of major functions are performed by a variety of personnel. These personnel have specific job and titles. It is a norm in a modern firm to specify the job, then find appropriate person to fill the post. The same strategy is used by NATCO too. The major functions and jobs of the company are as follows. The Managing DirectorAt NATCO the board of directors delegates its authority to the managing director of the company. The managing director is responsible for the everyday running of the organization. At NATCO Company Mr.Rajwani is responsible directly to the board of directors for the successful achievement of the company broad objectives. It s him who is responsible for the completion of goals and putting forward the desired objectives of the firm. Mr. Rajwani is also responsible for various other activities concerned with the delegation of the authorities to sales and marketing manager, technical/ engineering manager, financial manager, manufacturing manager and finally the personnel manager. He as a managing director is also responsible for the various activities concerned with the above managers. Production ManagerThe Production Manager of the NATCO is responsible for ensuring that the product is completed as scheduled, within the budgeted cost, and at the specified quality levels. The production manager of the NATCO. Has also direct authority over the production labor force. Reporting to him are the various supervisors. The production manager of the NATCO delegates his authority to the casting dept and various other supervisors at the lower levels. Purchasing ManagerThe purchasing manager at NATCO is concerned with not only the purchase of the raw materials but also the packing materials like-wrappers, tins, bottles etc. and is also responsible for fulfilling the needs of manufacturing departments. He is also responsible for the purchases, which in turn help in the ultimate completion of the production process. MANUFACTURINGIt is under this sector where the majority of the workforce is employed. Activities such as production engineering, production planning, production control, maintenance, quality, purchasing etc. are a part of this function.The Manufacturing manager of the NATCO. Mr. Gurbachan is responsible to the Managing Director for the efficient operation of the Manufacturing facility. He has a large span of control i.e. a large number of the people will report to him. Under the supervision of Mr. Gurbachan will be the manager of the production dept., production control, purchasing, maintenance etc. Mr. Gurbachan said that, the main objective of NATCO s manufacturing process was to produce the right product, at right time, at a right price, and at agreed and expected quality by the NATCO customers. Manufacturing FacilitiesNATCO owns 20 machines to complete its manufacturing process. This machinery includes refining and cleaning machines, metal detector machines, electronic weighing machines and other packaging machines. These machines have been imported from Germany. As there are around thousand items that they produce and packet, and as most of the foodstuff is similar in nature, several similar items are packaged out of one machine. The machines have these some special detachable parts which are changed for every different item fed in the machine. This helps them to packet 10-15 products in different sizes from one machine.The raw materials are imported from India, China, Bangladesh, Indonesia, Sri Lanka, Brazil and Mexico. They receive these through channels of distribution. The first step in the manufacturing process is that these raw materials are fed into refining and cleaning machines which gets rid of the dirty or unneeded particles. The next step in the manufacturing process is quality control. Quality is a very important factor, which should be always given a high priority, as the reputation of the company is affected by it. A small selection of samples at random of every item is inspected for high quality. This quality check is not only manual but also passes through a computerized quality check control. If in any case, any sample is not found to be up to the company standards then the matter is passed on to the quality control manager whose function is described latter in the report. The following step in the process is packaging. A few items go through four to five machines for this process whereas; most of the others require only two. This is because those few items require better and double packing for example, tins and bottle products have to be sealed and then tinned and bottled respectively. During this stage of the process computer weighs the food item just before it gets packaged. After this stage the sealed products go through metal detector machines, which makes sure that even a small piece of metal has not being mistakenly mixed in the product. Before these sealed packets are boxed they pass through this machine which prints the expiry date of the product. This expiry date is set with the consent of the health department before hand.Although machines do most of the process, the manual labor is also required. The labor is required to box the small packets and then store them, and also to overlook the machines just in case anything goes wrong. The main task of the company lies in storing their huge product range. They have a twenty five thousand square feet warehouse, which has been racked till the roof. There is a strong possibility of their food getting spoilt if it is not stored properly. The food items require a cool and dry place to be stored in. The have to kept in the appropriate temperature till they are sold.

PACKAGINGPackaging and packing are concerned with the putting up of the product in bags, boxes, bottles, cans or other categories of special containers, before they are dispatched for sale. Packing of goods implies placing them in suitable packets to facilitate their easy and safe handling, to insure their quantity and quality, to protect them from any kind of damage during transit or storage and to improve their sale prospects by their attractiveness. Packing also provides additional information to the consumer about the products such as contents, price, date of manufacture, date of expiry, brand name etc. The type of packing depends upon the nature of product. Food-grains are packed in jute bags, liquids are packed in bottles or tins, and fruits are packed in cardboard or wooden boxes. WAREHOUSINGWarehousing is very important function after packaging. It involves storage or accumulation of goods for the purpose of equalizing supplies over a period of time. Warehouses create time utility and remove the hindrance of time. A warehouse is a place used for the storage or the accumulation or preservation of goods in proper condition from the time they are produced until they are needed by the consumers. Warehouses render very useful services to the businessmen by enabling them to hold up their stocks during the dull season. In the absence of the warehouses, the merchandise would be required to dispose of their goods as and when they are brought or manufactured. AUTOMATION AND THE MANUAL PROCESSNATCO being a reputed company base its standards on its effective quality. It is the quality of the product that is given the importance, to achieve the ultimate standard of the company. The manufacturing process of the company is based much on the automation tecqunice rather than the manual ones. It is self evident that with the use of the automation, the cost of the labor is reduced while the value of the goods produced remain constant or increases. To improve the total productivity of the company and its quality of the product, the company made a wise decision by investing in the latest production technology. In it s the company has imported its latest German technical machinery. Natco has also purchased various kinds of machinery from U.K as well. For example vertical form of packaging bought from Sandicre U.K. as per the information of the company brought to be knowledge we can broadly say that automation helped NATCO to improve the efficiency of the company by providing the following advantages.1.Quality: This is one of the most important aspects of the automation process. It is with the help of the automation process the quality is improved by the human errors. The views presented by the manufacturing factory manager is that people become tired by working and repetitive jobs bored; they are therefore prone to mistakes. Products produced by the manual workers also vary in the quality due to differences in the personnel skills. Once automatic equipment is set up to produce good quality products then it will repeatedly produce the same quality products. Any tendency to deviate from the standards set can be monitored and altered using the statistical quality control (SQC) technique and the process can be modified whenever required. This ultimately means that with the help of automation technique the results of the quality will remain same from time to time.2.Production Rates: With the advantages of automation, it leads the company to increase the production rates over the manual methods. For example, before the company use to function on the manual methods which were broken down into the various sequences and had to pass through various hands before achieving the ultimate and the final product. The disadvantage with this was that the production was getting slow but after achieving the automation technique the production rates of the NATCO Company were really increased.3.Flow of the work: The next main advantage of automation commented by the NATCO manufacturing manager was that the flow of work through the factory could be easily monitored and controlled by this method. In addition to this, he also commented that this method also helps in the reduction of the cost and time between the order receipt and the delivery of the goods. As machines perform most of the production activity, so the order received for the production could be completed on time and could also be delivered on time. This function of automation also helps in achieving the punctuality concept and this adds up to the strength and reputed standards of the company.Automation process having advantages is also backed by its specific disadvantages too. As told by the manager of the NATCO firm, implementation of automation technique usually requires large capital expenditure by the company. To achieve this target the company should be backed up by good financial capabilities in order to achieve the desired results. The manager also commented that the maintenance cost of machinery and other general technical problems should never be ignored. As the maintenance charges of getting the machinery fixed are really high. He also commented on the reason for high maintenance charges was because the machinery are imported from Germany and other parts of U.K so it needs high degree of specialization in the events of break down and this makes the charges go up.NATCO is also backed up by the manual process, but to a small scale. The reason for the company to take this step is mainly because if the company faces some serious technical problems then the production should not be affected. Thus by taking this measure into consideration the company would never face zero percent production until and unless the company undergoes some serious strike and so on. INVENTORY CONTROLInventory control is an art of ensuring that just enough inventory (or stock) is held by an organization to economically meet both internal and external demand commitments. As the NATCO manager commented on inventory that there could be a disadvantage in holding either too much or too little inventory. He also added that inventory control is primarily concerned with obtaining the correct balance or comprises between these two extremes. By giving the example of the NATCO product itself, he said that the firm is in both manufacturing and packing business so they have to keep different type of stock for different products. He also said that stock held by NATCO is in the form of raw materials, work in progress stock and finished goods stock. He also commented that they rely on the past experience for holding the stock for e.g. some products are seasonal like dry fruits and they increase or decrease the stock when approaching the particular season. At present the stock value at NATCO estimates to be around 2 million pounds. The manager of NATCO also outlined the main problem of holding too much stock. As most of the products they deal in are perishable ones, so the product stored for a long time could loose its freshness and can effect the quality of the product. This has to be avoided as NATCO emphasizes on its quality to be the best. QUALITY CONTROLNATCO Company since beginning has always given importance to Quality control. All the NATCO products are packed and manufactured to the highest standard of quality and safety. The main purpose of controlling quality within its operation is to provide the customers with a product and consistent quality, which ultimately satisfies the needs of various consumers. Together with price and promptness of delivery, quality is today one of the principal factors in achieving success. As commented by the quality manager it is apparent that within the manufacturing operation itself physical work areas can be considered for the allocation of quality targets to be achieved. He also said that once the product of NATCO is packed and dispatched the company still considers the quality of transport used to deliver the finished goods. Specifications regarding the handling and storage of goods must be created and best quality service should be ensured to the consumers.The manager also added that, to ensure the best quality it is the responsibility of everyone liable to the company. He also commented that quality is based on the assurance function and the test equipment function. In NATCO quality control process starts as, samples are selected that reflects the extremes of acceptable quality and subsequent production and future repeat orders are controlled to fall within there agreed parameter. Quality is maintained by the process operating with random inspection by patrolling quality control staff and final inspection of random samples undertaken by the packing section. Coming on further we learnt from one of its quality control staff that NATCO production trails are conducted and control samples are selected and authorized off site by NATCO quality assurance function. In addition a specified number of cartons from each pallet of finished goods are kept aside for subsequent inspection and referenced to the relevant pallet. When these orders are being processed the procedures described involves two quality inspectors on a full- time basis. NATCO personnel subject delivered goods to further inspection. According to the staff many a times the goods they import are not to the their quality standard. These goods are called second quality product. In this situation the company has three options1. If this quality is extremely poor than they dump the whole product.2. As they purchase their goods on credit they sometimes invoice the whole lot back to the supplier who ultimately pays for it.3. Finally they sometimes resell the product to the wholesaler or retailer without mentioning their brand name.As quality conformance is a qualifying criterion in manufacturing strategy terms, and its impact on market share is more dramatic than probably any other single factor. NATCO Company has systematically increased the level of production quality to such an extent that they have fundamentally changed customer s expectations, not only in U.K market but also as a general rule. Today, quality is now a qualifier in many markets. Thus, failure to meet existing quality expectation or to track future improvement will lead to an order – losing scenario and attendant consequences Just In Time ManagementJIT manufacture is a phase used to describe the concept of having zero inventory; having materials arrive in the factory just in time to make the product. Operation of JIT could be easily and efficiently applied where the product variety is relatively limited and most of the parts are reputedly manufactured. NATCO being a packaging company, which holds, more than a thousand different products would find it difficult to apply the concept of JIT management. As most of the raw materials are imported it is not possible to get it in the factory just before manufacturing it. It has to be imported well in advance and stocked in a large number to meet the demand of the finished product, as the demand is not constant. It is hard in NATCO’s case to achieve zero percent inventories. Although NATCO has high quality standard, which is a pre requisite for this type of system, it cannot be put into action because of its numerous product range. But NATCO s manager assures that all the stock of the finished products and raw materials stock are not held for a long duration, as it not only shows inefficiency but also occupies a large storage area. RESPONSIBILITY OF COMPANY TOWARDS THE DIFFERENT INTEREST GROUPS.NATCO has responsibilities towards different interest groups. They are as follows: -1) Owners of Business- Management provides safe, fair, adequate and stable long run rate of returns and steady capital appreciation to the shareholders for their investments. It provides regular accurate and adequate information about the working of the company. It always insures planned growth, solvency, of the business and optimum utilization of the resource of the business.2) Consumer or Customers- In the words of Henry Ford, management must provide ” those goods and services which the society needs at a price which the society can afford to pay.” The management provides good quality of goods to the consumer at reasonable prices. It develops a fair attitude towards the customer. It maintains regular supply of high quality of products and provides all courtesies and services to the consumers. The management puts strict control on various activities like food adulteration, poor quality, lack of services and discourtesy towards the consumers, misleading and dishonest advertising etc. It also handles the complaints of consumers more carefully and efficiently and cooperates to the maximum extent with the consumers. 3) Employees- Employees need security of their jobs, need good or nominal wages, better working conditions, opportunities of self-development and other benefits such as their insurance in case of of any mishappenings, medical insurance etc. The management also provides them social security, welfare and a share in excess profit. They consider their employees as a part of the family and also allow the m to participate in the decision making process. They also encourage a sense of belonging to the company. This feeling for the company not only increases its unity but also helps in the growth of the company.4) Competitors and Fellow-businessmen- A business should develop healthy relationships with fellow businessmen. The company has always opted fair trade practices regarding prices, quality, terms and conditions of sale and after sale services. FORECASTINGForecasting is a projection into the future based on the analysis of the past data and is the principle technique for analyzing the future demand. Forecasting decisions are based on the linear and seasonal trend of the market. Linear trend is one in which the average demand value increases or decreases linearly with the time. NATCO relies on both linear and seasonal trend to forecast their future activity. The linear trend because as the numbers of people increase the consumption of food also increases pertaining to the conditions prevailing in the market. NATCO has been realizing positive linear trend; thus it expects the sales to increase as the demand for the product increases in the market. As for the seasonal trend because most of the products NATCO deal in are seasonal food products. Thus the demand varies from time to time. The strategy used by NATCO to forecast the sales is by depending on the past experiences, on capacity planning, sale planning, production and inventory planning, purchase planning and etc. Forecasting plays an important role in planning process as it enables the manger to anticipate the future and to plan accordingly.NATCO being a large packaging and manufacturing company faces critical problems. The main problem, which the company faces, is with its competitors. As NATCO is backed up with the huge amount of stock it could be easily hit by any of its competitors providing better quality goods at a better price.Another problem of NATCO is that it is into the production of various goods which does not allows the firm to function the concept of JIT management, which for a company like this could have been an added advantage. It could have saved the company with reduction in various costs of goods. It could have saved to a certain extent, cost on warehousing and could also avoid surplus on some particular goods.The other major problem that this company faces is that by being global it lacks the R&D sector. Having R&D could have helped the company in analyzing their various other problems. It could have helped the company in researching its future expansion programs.As the future of the NATCO is concerned, the company is planning to enter into the manufacturing of the spice jars. It is planning to produce high quality jars, which would help the company to reduce its cost of making jars from outside. This plan will also expand the network of T. Choithram as it adds to the addition strength of the company as whole.