Disc-333

Supply Chain And Logistics

 About the Company

 Millat Tractors is a global group of companies,

recognized for a range of quality products with
innovative design capabilities.
 The company is mainly engaged in assembly of
agricultural Tractors, Implements and
Multi-application products.
 Date of Incorporation——----————– June 08, 1964
 Market share

 Market leader
 Supply Chain:

Assembler/M
Raw End
Vendors anufacturer- Dealers
Material consumer
Millat
 Complex Supply Chain

 Take picture from internet of a complex supply

chain.
 Vendors buy raw material from suppliers
 vendors manufacture different components
 Components are bought by Millat, which assembles
them
 Final tractors and agriculture products are delivered
to dealers- 1000’s, spread across Pakistan.
 Final consumer- farmers, builders, purchase from
dealers
 More About Millat

 Batch production:
Different types of batches:
-Tractors (varieties)
-Forklift trucks
-Batteries
 Aim = minimize inventory levels
 Mostly operate on Just in time
 Problem

 Thousands of vendors- purchase different

components
 Price vary each time an order is made
 Cost of sales and Profitability fluctuates
 There is uncertainty
 Steps Taken

 Took procurement data of 50 different components-

prices, time of purchase quantity of purchase
 Chose 14 components
 Asked questions for each type of component related
to the profit impact and supply risk
 Plotted the 14 components on Portfolio Purchasing
Model to suggest possible action plans to solve
Millat’s problem
 Strategic Items

• High impact on
overall quality of the
product
• Availability issues
• Delivery issues
 Bottleneck Items

• Low impact on overall

quality of the product
• Frequent shortage
• Availability issues
• Delivery issues
 Leveraged Items

• High impact on overall

quality of the product
• Large number of
suppliers
• Easy access
 N0n-Critical Items

• Low impact on overall

quality of the product
• Standardized
products
• Large number of
suppliers
 Recommendations: Strategic Items

 Balanced Power
 Establish long-term supply relationship- fixed price
contract
 Mean while- find other suppliers, consider in-house
purchases
 Planning and contingencies
 Recommendations: Bottleneck Items

 Supplier have higher power

 Diversify
 Find alternative suppliers
 Maintain buffer stock
 Volume insurance contract
 Recommendations: Leveraged Items

 Millat have higher power

 Exploit
 High volume orders
 Long-term contracts
 Blanket agreement
 Tender
 Recommendations: Non-Critical Items

 Balanced power
 Optimize inventory levels-keep the current method