Company Introduction:

The Kohinoor Maple Leaf Group was born from the trifurcation of the Saigol
group of companies and is a reputable and leading manufacturer of textiles and
cement. KMLG comprises of Kohinoor Textile Mills limited (KTML) and Maple
Leaf Cement factory limited (MLCF). Both companies are incorporated in
Pakistan and are listed on three stock exchanges of the country.

Maple Leaf Cement is the third largest cement factory in Pakistan. It was set up
in 1956 as a joint collaboration between the West Pakistan Industrial
Development Corporation and the government of Canada. It is strategically
located at Daudkhel (District Mianwali) in Northern Pakistan, which is an area
rich in raw materials required for the production of cement. Kohinoor acquired
the ownership and management of Maple Leaf Cement under the privatization
policy of the government of Pakistan in 1992. Presently Kohinoor Textile Mills is
the holding company for Maple Leaf cement.

HARD FACTORS

PRODUCT
PRODUCT DIVERSIFICATION
Since Maple Leaf cement is one of the few companies who is producing cement,
there is a diversification in its products to suit the requirements of different
customers

-1-
PRODUCT STANDARDIZATION
Manufacturing
As cement is a standardized product, hence it is possible to reduce
manufacturing costs, as the same procedure is used for the manufacturing the
cement. The company uses the standardized raw materials, machinery and
equipment to manufacture the finished product..

Maintenance
Maintenance carried out simultaneously to ensure that the production is not
hindered. Because of standardization maintenance becomes easier because the
procedure used to control the process is the same as the product is the same.

A continuous check on quality after every step is accomplished in the

manufacturing of cement. Incase there is something wrong with the
composition of cement, the production of that stage is stopped but the rest of
the process can continue up to three days.
This hence minimizes the cost of the company be as production is taking place
24hrs a day

PLANT AND EQUIPMENT

There are three production lines for grey cement with annual clinker capacity of
1.5 million tons. The white cement has three production lines with annual
capacity of 180,000 tons.

-2-
This capacity has increased over a number of years since maple leaf was
established in 1960. However we would like to discuss the recent upgradations.

• In 2000, Maple Leaf Electric Company Ltd. (MLEC) a power generation

unit was merged into the company.
• In 2004, the coal conversion project at new dry process plant was
completed.

• In 2005, dry process plant capacity was increased from 3,300 tpd to
4,000 tpd through de-bottlenecking and up-gradation of equipment and
necessary adjustments in operational parameters.
• In 2006, a project to convert the existing wet process line to a fuel
efficient dry process white cement line commenced its commercial
production.
• Currently, Company has undertaken an expansion project of 6,700 tpd
clinker capacity and is expected to commence its commercial production
as per schedule.

OVER CAPACITY UTILIZATION

In the financial year 2006, the capacity utilization was 93% for grey cement and
48% for white cement

RESEARCH AND DEVELOPMENT AND TECHNOLOGY

Research & development is an integral part of the Company’s policy of

development of new products and improving efficiency of the plant to
reduce cost. Through research and development Maple Leaf Cement
introduced the dry process technology which helped in reducing NO emissions
in the air from 4.5 kg/ ton to 1.5 kg/ton thus considerably lowering the
pollutants in the air and increasing the overall plant capacity.

-3-
Although research doesn’t form an integral part of the plant but we can observe
many strategic developmental programs that have been conducted with many in
the pipeline.
To retain the highest quality standards a laboratory has also been set up at the
site for the testing of raw materials and cement. This also helps Maple Leaf to
comply with national environment control standards.

TECHNOLOGY IMPROVEMENT
The Maple Leaf Cement Factory is completely
automated and the plant installation. The
engineers constantly work to improve the efficiency
and effectiveness of the machinery. The highlighted
techniques included
1. Troubleshooting
2. Continuous improvement under the Kiazen approach
3. ISO specified changes in work procedures and capacity utilization
4. Change in Hierarchy to support production

MATERIALS AND ENERGY

The following raw material is required in the production process
1. Lime stone: This raw material is company owned and is extracted from
the near by mountains of Iskanderabad. Limestone has the highest
composition in the cement product. 75% to 80% of the cement
constitutes of limestone
2. Clay: Clay is another natural resource. This raw material is also
company owned. 15% to 20% of cement composition comprises of clay
3. Iron Ore: Iron Ore is the only resource that is bought from contractors.
Iron Ore is added in small quantities and it helps to strengthen the
cement.
4. Gypsum: Gypsum acts as a retarding agent. It slows down the hardening
process which in turn gives the constructor enough time to use it.
5. Furnace oil: It is used mainly for power generation.

-4-
With the increase of furnace oil prices the company adopted coal as a more cost
efficient and environmentally friendly fuel for kiln firing. Today the management
is exploring possibilities of alternative and cheaper fuel such as waste firing.
The process (discussed later) is such that it ensures that excess stock isn’t left
and on the other hand enough stock is present so that the production process
is not hindered.

-5-
SOFT FACTORS
People
The company takes its people as one of its most valuable assets they view their
human resource as a competitive advantage therefore they ensure that their
employees only those people that are self motivated and professionally qualified.
They also take into consideration that their business goals are realized through
such diverse work force providing equal opportunities without any
discrimination on the basis of cast, creed, sex and religion

WORK METHODS
PROCESS
Raw Materials
There are basically three main raw materials that are used for the production of
cement. In addition to that, a small proportion of other additives such as silica
are also added.
1. Limestone 80%
2. Clay 20%
3. Iron ore
Lime stone and clay are extracted from the same place. Iron ore is bought from
a contractor near Kalabagh.

Stage 2

The raw materials are feeded in separate “crushers” that break them into
smaller pieces. After that they are stored in separate piles.

STORAGE AREA
It is a stacker that provides immediate storage. In case there is a problem with
the crusher, the stock present can be utilized immediately to provide enough
amounts to be used for three days.

-6-
Stage 3
From the stacker the components are mixed and made into an ultra fine powder
in the grinder. A weighing scale is maintained to check that the appropriate
composition of the materials is maintained and the right quantity is added.
Again the mixture is stored in a Consistent flow Silo.
It is to be noted that until now only a physical change has taken place. The next
step would involve a chemical change.

Stage 4
The mixture is then added into a KILN. This is a rotating machine that heats
the mixture up to 1300*C where it is converted into a compound as a chemical
reaction takes place. This compound is the cement produced in molten form. As
it moves onwards an air cooler is present that cools the cement and converts it
into small stones known as CLINKER. This is the intermediate product that is
formed. After that the clinker is stacked in piles.

Step 5
The clinker is then added into a grinder. At this stage another element known
as Gypsum is added. The composition of the cement is 95% and that of gypsum
is 5 %. The gypsum acts as a retarding agent. Cement on its own when kept in
contact with water hardens very fast. It ensures rapid setting but gives cement
the time to harden
In the grinder the cement is crushed into a powder form.
This stage is very critical in the cement production process because of the fact
that if something goes wrong with the composition, the quality of the cement
gets affected and the whole costs that are incurred to produce the cement is
wasted. Because of that the quality check at this stage is the maximum and
continuous.

-7-
EXTERNAL FACTORS

ECONOMIC FACTORS
Market for Cement in Pakistan exists in two main dimensions:
1. product type
2. And geographic area.
Product type:
Since cement is a specialized product, requiring sophisticated infrastructure
and production location. So, most of the cement industries in Pakistan are
located near/within mountainous regions that are rich in clay, iron and mineral
capacity.
Structure of Cement industry in Pakistan is as such that there is not much
substitutability to buyers. Which shows that the Cross elasticity of demand is
negligible.
Geographical Area:
The other factor i.e. geographic location also
doesn’t affects a lot considering the flexibility of
demand. Example can be taken from the fact
that if DG cement in DG KHAN raises its price
and MAPLE LEAF CEMENT in DaudKhel will
raise its price to match DG cement’s. This is
due to cartel of all of the cement manufacturers in Pakistan. Thus the customer
has no choice at all to switch between two brands of cement.
As the cement market is moving from a virtual 'sellers' market' to an over-
supply situation, it is expected that when prices stagnate and profitability
becomes a function of volume and economies of scale, location advantage and
proximity to markets will become extremely important factors.
At present the freight charges are a massive 20% of the retail prices. The plants
located very close to each other and tapping the same market will have to
expand their markets which will increase their freight expenses.

-8-
Dandot, Pioneer, Maple Leaf and Garibwal are all located within a radius of
100 kilometers and are selling bulk of their production in the same areas and
will thus face serious competition from each other.

POLICIES AND REGULATIONS

The policy of the Government is to keep a balance between rapid economic
development, on the one hand, and social justice and consumer’s protection, on
the other. There is a traditional conflict between these two aims. It is, therefore,
necessary to regulate trade, commerce or industry in the interest of free
competition therein.
The Ordinance was promulgated to provide for measures against un-due
concentration of economic power, growth of un-reasonable monopoly power and
un-reasonably restrictive trade practices. Thus cement industry too is
monitored and answerable to rules and regulations developed by the monopoly
control authority of Pakistan.
The government is considering allowing further concessions and additional
incentives for cement export, with a view to increase overall export volume.
These measures will immensely help in promoting and protecting high
investments made in cement sector in recent years.
In the wake of its huge surplus production as a result of massive capacity
expansion undertaken it rather seems imperative for Pakistani cement industry,
on one hand, to sustain existing export markets and, on the other, explore new
markets.

Export opportunities:
The demand of Pakistani cement is expected to continue to grow at the rate of
20 per cent for about four years to come. It may then follow traditional growth
rate of seven per cent per year. Announcement of major dams will dramatically
increase this demand.
Deregulation after accession of Pakistan to WTO is expected to open the window
of competition from cheaper markets. There may be no tariff after this
deregulation on import of cement allowing its entry into Pakistan from cheaper

-9-
market at lower rate. Cement from cheaper markets may also block Pakistan’s
export of cement to its neighboring countries.
Global market has vigorously taken up the advantage of economy of scales and
multinational giants now control more than 40 per cent of world production—
(China not included). The recent acquisition of Chakwal Cement by an Egyptian
giant, Orascom may be a beginning of such an entry in Pakistan by
multinationals.
New avenues for export of cement are opening up for the indigenous industry as
Sri Lanka has recently shown interest to import 30,000 tons cement from
Pakistan every month. If the industry is able for avail the opportunity offered, it
may secure a significant share of Sri Lanka market by supplying 360,000 tons
of cement annually.

Restriction of Exports:
Restriction of export of cement is deterring the
full potential of this sector. Keeping in view the
huge cement production capacity coming online
in the next financial year, it is hoped that the
government will reconsider its cement policy on an urgent basis and prevent the
industry from going into a crisis owing to over supply.

NATURAL RESOURSES
Manpower
The direct labor that works on one shift is on average 70. There are about three
shifts in a day. The labors are provided accommodation in the same place.
Land
The land that has the factory and used for accommodation is owned by the
company. There is enough space to accommodate new plants if the need arises.
Energy
Initially the company was relying on WAPDA for power supply but now the
company has its own electricity generation plant that provides upto 50% of the
total requirements. The services of the plant owned by the company is

- 10 -
especially utilized during peak hours when the electricity from WAPDA is
expensive

PERIODIC INVENTORY SYSTEM

This method is adopted by the company. As the ore from wh

Total raw materials ordered per day 16,478tons (constant demand)

Safety stock=3 days= 3* 10,700 tons=49,434

- 11 -
PRODUCTIVITY MEASUREMENT TOOLS
Primary profitability ratios

COMPANY PERFORMANCE APPRAISAL

i) Primary Profitability ratios
a) Net Profit / Net Sales
2005 727,450 0.1695
4,290,734

2006 1,059,240 0.1855

5,709,792

b) Cost of Goods Sold / Net Sales

2005 2,962,802 0.6905
4,290,734

2006 3,561,212 0.6237

5,709,792
c) Operating Expenses / Net Sales
2005 112,974 2.63%
4,290,734

2006 199,459 3.49%

5,709,792

d) Interest Expense* / Net Sales

2005 199,779 4.66%
4,290,734

2006 331,545 5.81%

5,709,792

- 12 -
 *Interest Expense includes Interest on
Long-Term Loans, Redeemable Capital
and
Short-Term Capital

ii) Secondary Profitability ratios

a) Total Asset Turnover

Net Sales / Total Assets
2005 4,290,734 41.14%
10,428,973

2006 5,709,792 30.38%

18,793,412

b) Inventory Turnover
Net Sales / Total Inventory
2005 4,290,734 23.42
183,217

2006 5,709,792 28.41

200,946

c) Fixed Asset Turnover

Net Sales / Fixed Assets
2005 4,290,734 50.70%
8,462,382

2006 5,709,792 35.49%

- 13 -
 16,088,505

d) Accounts Receivable Turnover

Net Sales / Accounts Receivable*
2005 4,290,734 33.14
129,490

2006 5,709,792 12.09

472,168

*Accounts Receivables include

Loans and Advances, Trade debt
and other Receivables

Primary Productivity ratios

Labor Productivity
a) Value Added* / Salaries and Wages
2005 780,710 27.04
28,872

2006 1,140,675 27.07

42,136

b) Value Added* / Total work hrs

2005 780,710 98.57
7,920

2006 1,140,675 144.02

7,920
Capital Productivity
c) Value Added* / Tangible Assets
2005 780,710 7.49%

- 14 -
 10,428,973

2006 1,140,675 6.07%

18,793,412

d) Value Added* / Fixed Assets

2005 780,710 7.49%
10,428,973

2006 1,140,675 6.07%

18,793,412

e) Value Added* / Fixed Assets

2005 780,710 9.20%
8,488,914

2006 1,140,675 7.07%

16,128,950

f) Value Added* / machinery and

Equipment
2005 780,710 0.1
8,130,867

2006 1,140,675 0.12

9,830,820
*Value Added includes Profit, labor cost,
salary cost and selling and
administrative expenses

- 15 -
Secondary productivity ratios

Capital Productivity
a) Value Added* / Accounts Receivables
2005 780,710 6.03
129,490

2006 1,140,675 2.42

472,168
b) Value Added* / Cash
2005 780,710 2.11
369,802

2006 1,140,675 11.3

100,938
c) Value Added* / Inventory
2005 780,710 4.26
183,217

2006 1,140,675 5.68

200,946
d) Value Added* / Quarry Equipment
2005 780,710 20.65
37,801
2006 1,140,675 7.36
155,001

Labor Productivity
a) By type of worker = Value Added* / Number of
direct workers
2005 780,710 11.27
69,300

- 16 -
 2006 1,140,675 16.46
69,300
b) By shift = Value Added* / Number hrs worked
on first shift
2005 780,710 2,365.79
330
Value Added* per shift 2,366 788.6
3
70 workers per shift 789 98.58
8
2006 1,140,675 3,456.59
330
Value Added* per shift 3,457 1,152.20
3
70 workers per shift 1,152 144.03
8

Analysis of Profitability ratios

The operating expense to sales ratio has increased from the year 2005-2006.
This is because of the donations that were made for the earthquake relief funds
The ratio of interest expense to sales has also increased. The long term and
short term finances for Maple leaf cement increased to finance tge expansion
project of 6700 tpd clinker capacity
Account receivable turnover has decreased because of the increase in advances
given to the employees, executives and suppliers.

Analysis of productivity ratios

The labor productivity with respect to salaries and wages has remained same
during year 2005 and 2006 with not a significant change. But it has
considerably increased with respect to total hours worked in year 2006 due to
the improvement in plant efficiency and induction of a new 6700 ton capacity
holding plant.

- 17 -
The capital productivity w.r.t tangible assets have decreased in year 2006 due
the overhead costs incurred for the induction of new plant. But it is believed
that from this year onwards i.e. 2007 the company will see a considerable
growth in this aspect as well.
The capital productivity w.r.t Cash, Inventory has increased in year 2006 from
2.11 to 11.3 for Cash, 4.26 to 5.68 for Inventory showing the potential
implementation of newer standards for better conduction of its processes and
terms of trade.
Labor productivity with respect to direct labor has increased from 11.27 to
16.47 owing to the better and efficient techniques being implemented that have
been brought forward with the induction of new plant. Similarly the
productivity with respect to each shift has also increased in year 2006 owing to
the same mentioned reasons.

- 18 -
EMPLOYEE BENEFITS AND COMPENSATIONS

Employee quality and satisfaction:

Maple Leaf is a private organization and therefore the employee pays aren’t
regulated by any government stipulations. There aren’t specified strategies or
labor laws that protect the labor wages at the factory. However Maple Leaf
considers employee satisfaction as a major contributor to their success in the
market and therefore has undertaken extensive planning to ensure the
employed labor force is happy with there remuneration packages. The general
employee salary and benefit package includes
• Basic Salary
• Remote area allowance
• Bonuses
• House allowance
• Free medical benefits
• Subsidized utility bills
• Education allowance for employee children who are over 15, currently it
is Rupees 100/month however it is subjected to revision shortly.

Although the basic salary figure for factory workers has remain un-disclosed
after the factory visit but the management confirmed that is was slightly above
the industrial average which in turn also helped to reduce the turnover since
most workers were aware of the fact that their salaries alone were better than
those offered by industrial competitors.

Bonuses
Bonuses to the factory workers are given on the basis of their performance on
ground i.e. the factory floor operations. According to specified standards the
plant should be run for 330 days at maximum. If the employee/labor force is
able to do that they get a bonus which is equal to their two salaries. The bonus
is a group incentive since it is not paid to individuals but rather to all
employees if collectively they are successful in running the factory for 330 days
a year.

- 19 -
EMPLOYEE PROMOTION
Another major incentive for working at Maple Leaf Cement Factory Ltd includes
the fact that promotions are very speedy in the organization, they are based on
employee competency which means it is performance based rather than the
number of years the employee has worked in the organization. This serves as a
major incentive for the young employees who enter into the organization since
they work hard to get to better positions in the firm quickly to get better
salaries, benefits and authority.

When we asked about the rate of internal recruitment, the DGM Works
responded by saying that employees are recruited on the bases of their
competency and ability to perform the specified job tasks. Preference is given to
hiring internal workers for better positions since this serves to motivate
employees at Maple Leaf however incase the recruiters to do not find a suitable
candidate they select employees from the external potential employee pool. He
also highlighted a new trend in the organization of hiring foreign experience and
qualified individuals because it is believed that new and creative ideas can be
brought into the organization

There is a vast pool of potential employees therefore there is never a shortage of

employees, one can also find a replacement at Maple this is because either
lower level workers are promoted upwards provided they are capable otherwise
there is a vast pool to choose from externally.

EMPOWERMENT
Maple leaf has centralized operations, major decision making power lies in the
hand of the central head quarters however delegation of authority has been
done in such a way that the senior management has enough power to direct
employees without informing the top management at the central office so as to
avoid operation hindrance only .

- 20 -
Bargaining with management
When we asked the management whether the employees were able to bargain
their way out with the management regarding the benefits and salaries, Mr.
Amir Feroze DGM Works, stated that the terms, conditions of working and the
benefits offered to the employee are stated in the employment contract. If any
bargaining has to take place, it takes place before signing the employee
contract. However once the employee has signed the contract he is legally
obliged to follow its terms.
Labor Union
Maple Leaf Cement Factory Ltd has a labor union however the labor union is
very organized and is overlooked by the general management. When we asked
about agency conflicts that existed between the management and the floor
labor, we were told that the owners of the factory are very concerned about both
the parties and invest a certain proportion of their time listening to both in
order to ensure minimum problems at the factory. Conflicts are rare since the
labor union head is allowed to visit the general manager directly to resolve
issues.
Informal coalitions
The group then moved on to discuss informal coalitions in the organization, Mr.
Amir Feroze refused to acknowledge any in the organization while stating that
such coalitions were only found in government organizations. He said that they
believe in team work where everyone in the factory belongs to the same team.
Employees are regularly appraised in order to ensure there quality. Only one
sort of appraisal is done where the employees direct superior ranks his
performance. Employee to employee appraisals is discouraged since they
encourage conflicts in organization

- 21 -
TOTAL QUALITY MANAGEMENT
When we asked the management how do they manage to retain the quality of
employees and hence the quality of the products, the management respondent
said they have quality circles all across the factory who aims to solve regular
problems in the production process. The suggestions of the quality circles are
bought in front of the top management at the Monthly Review Meeting (MRM)
and the best solutions are adopted

Maple has a functioning ISO Department inside the factory. The ISO
Department conducts regular audits to see the effectiveness of the employees
and the operations undertaken by them.

Key performance indicators

The management also has Key Performance Indicators regarding daily
productions, employee hours and energy capacity utilization.
The indicators include
International Standards:
They also follow the ISO9002-9 certification to ensure maximum quality in the
factory processes. They are following standards which are as such:
1. PS (Pakistani Standards)
2. BS (British Standards)
3. ASTM ( American Society for Testing & Materials)
4. ISO ( International Organization for Standards)
The British Standards that are being followed by Maple Leaf Cement are BS-
8110 & BS-5750.
Quality Control Approaches for improving product quality
1. PQ Teams: PQ teams exist at every level of the hierarchy
2. TQM
3. Zero Defect product
4. Productivity Maintenance Department
5. Quality assurance Department
6. Preventative measure and maintenance team

- 22 -
The success of any organization and its ability to outshine competitors depend
on the right mix of quality and quantity. According the management the quality
of cement at Maple Leaf is much higher than the required Pakistani standards.
The quality of the cement is kept at par with international standards since
Maple Leaf Cement Factory Ltd is importing a large chunk of their production to
foreign countries such as India and China. Furthermore quality retention is
very important because there is intense competition in the local market. There
major competitors include Pak Cement, DG Cement and the Mansha Group.
Furthermore there are 12 new cement industry projects in the pipeline such as
Kohat Cement.

Feedback and suggestions

They are suggestion boxes placed all across the factory so that workers can
drop their suggestions. The box is opened separately by the ISO Department
every month. The suggestions that are adopted are referred to as winning
suggestions and a reward is given to the employee who has made the
suggestion.

EMPLOYEE TRAINING
Management training takes place regularly at the head cities from where the
technical operations are controlled. The head cities include Lahore and
Islamabad. Training is also conducted abroad mostly in Denmark since most of
the industries machinery has been imported from Denmark. Technical
collaboration for skill development programs are also being conducted in
Germany, Sweden, Turkey and Egypt.

KAIZEN APPROACH IN MAPLE LEAF:

Kaizen means “continuous improvement". Kaizen strategy calls for never-ending
efforts for improvement involving everyone in the organization – managers and
workers alike. Our visit to Maple Leaf Cement Factory made it evidently clear
that the management of Maple Leaf strives hard to incorporate the principles of
continuous improvement continuously. But before we take a look at Kaizen

- 23 -
incorporation at Maple Leaf, let us first see how Kaizen relates to management
at the factory.

Kaizen and Management

Our study at the Sikandarabad-Mianwali factory enabled us to analyze that
management at Maple Leaf has two major components:

1.maintenance

2.Improvement.

The objective of the maintenance function is to maintain current

technological, managerial, and operating standards. The improvement
function is aimed at improving current standards.

Under the maintenance function, the management must first establish

policies, rules, directives and standard operating procedures (SOPs) and then
work towards ensuring that everybody follows SOP. The latter is achieved
through a combination of discipline and human resource development
measures. Although the management at Maple Leaf can be considered up to
date with their management practices especially when compared with the
industry however they have developed a strict norm of working. There are
numerous rules, policies, procedures and safety precaution to abide by which
have been developed bearing in the mind the interest of the factory and even
more the interest of the workers/ employees. In order to ensure that work
process and procedures are well maintained and adhered too, the
management under takes regularly training of the employees to ensure they
are up to date with the standards that are to kept to at the factory,
furthermore the middle and top level management often visits the factory floor
to ensure work process are smooth. In order to motivate individuals to follow
rules and procedure they are often offered rewards which are both monitory
and non monitory in their nature and examples include bonuses, promotions
and awards such as ‘’employee of the month’’

Under the improvement function, management works continuously towards

revising the current standards, once they have been mastered, and
establishing higher ones. Improvement can be broken down between

- 24 -
 innovation and Kaizen. Innovation involves a drastic improvement in the
existing process and requires large investments. Kaizen signifies small
improvements as a result of coordinated continuous efforts by all employees.
Maple leaf has a limited amount of innovation in work processes because the
entire factory is dependant on heavy use of machinery and automation which
is very costly and can not be replaced every year therefore most improvement
at Maple Leaf comes from the Kaizen approach where employees, technical
staff and management constantly ponder over ways to increase the efficiency,
effectiveness and hence the productivity of the machinery.

Kaizen must operate with three principles in place:

• Process-Oriented Thinking over Result-Oriented Thinking

• Systemic thinking (i.e. big picture, not solely the narrow view)

• Non-judgmental, non-blaming (because blaming is wasteful) nature of

all employees

Let us examine the principles incorporation into the system at Maple Leaf
Cement Factory

Kaizen concentrates at improving the process rather than at achieving certain

results. Such managerial attitudes and process thinking make a major
difference in how an organization masters change and achieves improvements.
There are obvious targets set for the factory to achieve at the end of the month
however the management is very flexible to allow changes in the process which
may make effect target fulfillment but leads to over all operational efficiency
improvement. For example the management has the capacity to undertake
production every day of the year, however the machines are given a certain rest
period to avoid excessive deprecation at the cost of increasing output and hence
profitability of the firm.

- 25 -
Systematic thinking is very important for the success of any business venture,
it allows the management to undertake strategic management, prepare them
selves for the worst case scenarios etc. We can see elements of systematic
thinking in the work processes at Maple Leaf. The fact that all process are
integrated and kept separate at the same time is fascinating. This allows
continuous production however incase of a problem with a particular step of
production the remaining factory work remains unhindered since the
management keeps 3days of work in process inventory.

The non judgmental and non blaming attitude Is very important since it helps
employees in giving suggestions without the fear of being held responsible.
Bright developments in any firm can be attributed to new ideas, suggestions
and critical comments however there is a high probability that not all the ideas
will be extremely efficient but to be non judgmental attitudes about those who
give the ideas instigates a creative process. For example Maple Leaf has
suggestion boxes placed all along the factory floor, that allows all employees to
drop their suggestions in the box, the box is opened by the ISO department and
the best suggestions are rewarded and the remaining not accounted for.

Quick and Easy Kaizen

The management at Maple Leaf is also incorporating the idea of Quick and Easy
Kaizen .Quick and easy Kaizen is aimed at increasing productivity, quality, and
worker satisfaction, all from a very grassroots level. Every company employee is
encouraged to come up with ideas – however small – that could improve his/her
particular job activity, job environment or any company process for that matter.
The employees are also encouraged to implement their ideas as small changes
can be done by the worker him or herself with very little investment of time.

The management believes that Quick and Easy Kaizen helps eliminate or
reduce wastes, promotes personal growth of employees and the company,
provides guidance for employees, and serves as a barometer of leadership. Each
kaizen may be small, but the cumulative effect is tremendous.

- 26 -
The quick and easy kaizen process works as follows:

Important Strategies that aid Kaizen system at Maple Leaf cement factory

Employee Empowerment: the Suggestion System

The suggestion system is an integral part of an established management system

that aims at involving employees in Kaizen. The number of worker's suggestions
is regarded as an important criterion in reviewing the performance of the
worker's supervisor and the manager of the supervisor.

- 27 -
COMPETITIVE ANALYSIS:
Herfindahl Index
It is a measure of the size of firms in relationship to the industry and an indicator of the
amount of competition among them.

In Pakistan there are 27 cement manufacturers that are playing a vital role in the build up of
country’s economy and contribution towards growth and prosperity. For the calculation of
Herfindahl index we have chosen 5 dominant industries of Pakistan, on the basis of their
production capacity. The market share of these firms is as follows:
• Askari cement (NZP) 7.6%
• DG cement 9.8%
• Lucky cement 12.7%
• Maple leaf 7.1%
• Pioneer cement 5.5%

Where si is the market share of firm i in the market and n is the number of firms.

(0.127^2)+ (0.098^2) + (0.076^2) + (0.071^2) + (0.055^2) = 0.395

Since the Hirfindahl index is Market share

above the standard set of (0.18)
Askari cement
for an unequally distributed
(NZP)
market share industry. This DG cement
indicates that there is a high
Lucky cement
concentration in the cement
industry. Maple leaf

Pioneer
cement
Others

- 28 -
Lerners Index:

Average industry price of cement bag/50Kg = Rs.235

Average industry cost of cement bag/50Kg = Rs.192.5
L = (P-C)/P
Where L is the Lerners index and is also = H/EoP for the whole industry.
Now L = (235-192.5)/235
= 0.181
And
Elasticity of Price = .395/.181
= 2.18

- 29 -
CONCLUSION:
In our conclusion the importance of productivity is imminent and is the need
of the hour. Real gains in productivity are important then simply measuring
success in meeting objectives. Improvements in productivity have a significant
impact on lives whether the change occurs at the national level, within the
given industry or a company or even at the individual level.

Changes in productivity within an industry or at the company level are closely

related to success and survival. The profit margins realized by an industry or a
specific company are related to its ability to make productivity gains ahead of
the competition. Industries where competition helps to propel improvement
often experience greater growth. Companies that fail to keep in pace will fail.
In either case, all stakeholders are directly impacted.

Now keeping in view the analysis of Maple Leaf with respect to its productivity
of labor, capital and growth, we have concluded that the current expansion of
its capacity and induction of newer plant with capacity of 6700tons might
have caused short term costs. But in due course of time it would provide
higher returns in the form of sales and revenue earned.

Secondly, the current management is actively resorting to international set of

quality standards so that to meet the upcoming competition with regards to
WTO. So the productivity and efficiency with regards to effectiveness of the
plant is satisfactory.

- 30 -
LITERATURE REVIEW:
Raw Data
1. Weight of a cement bag= 50kg
2. Cost incurred per bad= Rupees 150
3. Price in the market is subjected to demand and is generally above and
around Rupees 250.
4. Capacity of plant 1= 4000 tons/day
5. Capacity of plant 2= 6700tons/day
6. Plant 1 is operating at full capacity
7. Plant 2 is due to operate by the end of this year
8. Total number of operating days=330 days
9. Storage Capacity 30000 tons
10. Two plant producing cement and 1 packaging plant

ISO:
ISO 9000 includes the following standards:

• ISO 9000:2000, Quality management systems - Fundamentals

and vocabulary. Covers the basics of what quality management
systems are and also contains the core language of the ISO 9000
series of standards.

• ISO 9001:2000 Quality management systems - Requirements is

intended for use in any organization which designs, develops,
manufactures, installs and/or services any product or provides any
form of service. It provides a number of requirements which an
organization needs to fulfill if it is to achieve customer satisfaction
through consistent products and services which meet customer
expectations. This is the only implementation for which third-party
auditors may grant certifications.

• ISO 9004:2000 Quality management systems - Guidelines for

performance improvements. Covers continual improvement. This
gives you advice on what you could do to enhance a mature system.

- 31 -
 This standard very specifically states that it is not intended as a guide
to implementation.

British standards:

BSI British Standards is a division of BSI Group which also includes BSI
Management Systems, a management systems registrar and BSI Product
Services, a testing organization. British Standards is incorporated under a
Royal Charter and is formally designated as the National Standards Body (NSB)
for the UK.

Where BS-5750 is similar to those of ISO9000 family i.e. are related to the
quality of management. Where, BS-8110 is related to British Standard for the
design and construction of reinforced and pre-stressed concrete structures. It is
based on limit state design principles. Although used for most civil engineering
and building structures, bridges and water-retaining structures are covered by
separate standards (BS 5400 and BS 8007).

ASTM (American society for testing and materials):

The standards produced by ASTM International fall into four categories:

• The Standard Specification, that defines the requirements to be

satisfied by subject of the standard.

• The Standard Test Method that defines the way a test is performed.
The result of the test may be used to assess compliance with a
Specification.

• The Standard Practice that defines a sequence of operations that,

unlike a test, does not produce a result.

• The Terminology Standard, that provides agreed definitions of terms

used in the other standards.

The quality of the standard test methods is such that they are frequently used
world-wide, even in places where ASTM specifications are not used

- 32 -
COMPANY PERFORMANCE APPRAISAL (CPA)
Primary Profitability Ratios

a) Net Profit
Net Sales

b) Cost Of Goods Sold

Net Sales

c) Operating Expenses
Net Sales

d) Interest Expense
Net Sales

Secondary Profitability Ratios

a) Total Assets Turnover = Net Sales

Total Assets

b) Accounts Receivable Turnover = Net Sales

Total Inventory

c) Fixed Assets Turnover = Net Sales

Fixed Assets

d) Inventory Turnover = Net Sales

Total Inventory

Primary Productivity Ratios

Labor Productivity

a) Value Added
Salaries and Wages

b) Value Added
Total Work hrs worked

Capital Productivity

c) Value Added
Tangible Assets

- 33 -
 d) Value Added
Fixed Assets

e) Value Added
Machinery and Equipment

Secondary Productivity Ratios

Capital Productivity

a) Value Added
Accounts Receivables

b) Value Added
Cash

c) Value Added
Inventory

d) Value Added
Quarry Equipment

Labor productivity ratios

a)By type of worker = Value added/ no. of direct workers
b) By shift= Value added/ no. of workers on one shift

Steps in CPA:

Compute &
determine trends of
return on assets

Step 1 Is growth rate Yes Solve for Step

B Yes increasing? Step 6
primary
Step 2 Is trend increasing Step 4 6(i)
pro-tivity
ratios
A
Step 3 No No
Step Solve for primary
3(i) profitability ratios
Step 5 Solve for
secondary Step
pro-tivity 6(ii)
ratios
Step Solve for secondary
3(ii) profitability ratios

- 34 -
MODEL OF ENTERPRISE PRODUCTIVITY FACTORS (as included in report)

Enterprise
Productivity
factors

Internal External
factors factors

Hard factors Soft factors Structural Natural Government &

adjustments resources infrastructure

Policies and
Product People Economic Manpower Strategy

Plant and Work Methods

Equipment Land Infrastructure

Management Public
Technology Styles Energy Enterprises

Materials &
Energy Raw materials

Kaizen:

1.

- 35 -
2.

- 36 -
APPENDIX:

NET REFFERENCES:

www.en.wikipedia.org/wiki/Productivity

www.bls.gov/lpc

www.accel-team.com/productivity/productivity_01_what.html

www.productivity.com

www.oecd.org/topicstatsportal/0,3398,en_2825_30453906_1_1_1_1_1,00.html

www.researchandmarkets.com/reportinfo.asp?report_id=202293

www.wisegeek.com/what-is-kaizen.htm

www.finance.isixsigma.com/library/content/c050601a.asp

BOOKS:

Technology and Productivity: The Korean Way of Learning and Catching Up - Page 1
by Youngil Lim.

Innovation and the Productivity Crisis - Page 1

by Martin Neil Baily, Alok K. Chakrabarti

The Mining Industries, 1899-1939: A Study of Output, Employment, and Productivity -

Page 301
by Harold Barger, Sam H. Schurr

Progress in Cement and Concrete - Page 99

by S. N. Ghosh

CONTACTS:

- 37 -