Free Essay

Edible Oil Industry in Calicut

In: Business and Management

Submitted By meghaj16
Words 5457
Pages 22
Operations Management at
Agrotech Pvt Limited (Edible Oil Refining)

Group Number A8
I P Sudhir Kumar PGP16/002
Jayashree ML PGP16/024
Megha Jain PGP16/031
Pooja Sharma PGP16/036
Neeraj Kumar PGP16/033
Rohit Kumar PGP16/042
Boby Chaitanya V FPM
Piyush Kumar FPM

Acknowledgement
During the term project for Operations Management (OM-I), we had a great opportunity to learn and apply the various concepts and principles that we have learnt in the course. For a successful and enriching learning experience, we’d like to acknowledge, with utmost sincerity, the efforts of all those who have made the successful completion of our project possible.
We are thankful to Prof. Sanjay Jarkharia (Instructor for OM-I course), for his constant guidance and support throughout the period of project.
Also, our honest regards for all the staff at Agrotech Pvt Ltd., who made this project experience all the more enriching and enjoying, our fellow classmates who were always at help regarding anything concerned with the project and the wonderful people of Kerala who were always helping and considerate during our field trips.

LIST OF DIAGRAMS Title of Diagram | Organizational Structure of Agrotech Private Limited (Refining unit) | Block Diagram of Plant | Process Flow Diagram |

TABLE OF CONTENTS S.NO | Contents | Page No | 1. | Introduction | | | 1.1 Oil Manufacturing in India | | | 1.2 Domestic production and consumption | | | 1.3 Classification of consumers geographically | | | | | 2. | The Agrotech Private Limited | | | 2.1 Mission | | | 2.2 Vision | | | 2.3 Human Resource Management | | | 2.4 Organizational Structure | | | 2.5 Suppliers of raw material | | | 2.6 Customers and market in India | | | | | 3. | Manufacturing of Vanaspati Ghee | | | 3.1 Block Diagram | | | 3.2 Process Flow Diagram | | | 3.3 Description of Process | | | 3.4 Add-on processes | | | | | 4. | Analysis and Discussion | | | | | 5. | Job Design | |

1. Introduction
1.1 Oil manufacturing in India

India is one of the world’s largest edible oil economies with 15,000 oil mills, 689 solvent extraction units, 251 Vanaspati plants and over 1,000 refineries employing more than one million people. The total market size is at Rs. 600,000 mn. And import export trade is worth Rs.130, 000 mn.
India having less production as compared to its high domestic demand in edible oils has to import 57% of its consumption requirements. India is also a leading producer of oilseeds, contributing 8-10% of world oilseed production and around 6% of the world’s production of edible oils. India is the fifth largest producer of oilseeds in the world, behind US, China, Brazil, and Argentina.
Groundnut, Soybean and Mustard/rapeseed, these three oilseeds, together account for 80 % of aggregate cultivated oilseeds output. Mustard seed alone contributes Rs.120, 000 mn turnover out of Rs.600, 000 mn of oilseed sector domestic turnover. Cottonseed, Copra and other oil-bearing material also contribute to the domestic vegetable oil pool. Currently, India accounts for 7.0% of world oilseeds output; 7.0% of world oil meal production; 6.0% of world oil meal export; 6.0% of world veg. oil production; 14% of world veg. oil import; and 10 % of the world edible oil consumption.
With steady growth in population and personal income, Indian per capita consumption of edible oil has been growing steadily. However, oilseeds output and in turn, vegetable oil production have been lagging behind consumption growth, making it necessary to import to meet supply shortfall. Major Oilseeds | 2-Jan | 3-Feb | 4-Mar | 5-Apr | 6-May | 06-07* | Groundnut | 7 | 4.1 | 8.1 | 6.8 | 8 | 4.4 | Rape/Mustard | 5.1 | 3.9 | 6.3 | 7.6 | 8.1 | 7.6 | Soybean | 6 | 4.7 | 7.8 | 6.9 | 8.3 | 8.7 | Other Six | 2.6 | 2.1 | 3 | 3.1 | 3.6 | 2.9 | Sub-Total | 20.7 | 14.8 | 25.2 | 24.4 | 28 | 23.6 |

Oilseeds production (Quantity in mn tonnes)
Edible oil or fat products can be classified into four categories, vegetable refined oil, hydrogenated oil (vanaspati), bakery fats/margarine, and de-oiled cakes. The industry mainly includes Ghanis, small scale expellers, solvent extractors, oil refiners and vanaspati manufacturers. 70% of oil produced is sold in the open market and remaining 30% is refined and sold as branded oil. After the extraction of oil, residual seeds are processed further by solvent extractors, to make solvent-extracted oil, most of which is used to make ‘vanaspati'.
The Indian edible oil industry is highly fragmented with a large number of small scale producers which includes ghanis that are mainly found in rural areas. Small scale expellers, much like the ghanis, use metal screws to press or expel oil from seeds. However, they are larger than the ghanis, oil expelling capacity being in the range of 5-10 tonnes per day, compared to around 50-60 kilos a day for ghanis. Solvent extractors belong to the organized segment and are also 2nd largest after SSI segment, in the domestic edible oil industry. They use modern technology to process low oil & high meal seeds like Soya bean, cottonseed into edible oil and de-oiled cake. Oil refining is also a part of the organized sector and has shown rapid growth in recent years. Refiners generally refine both expeller oils and solvent extracted oils.
Vanaspati is made by hydrogenation of refined oil to vegetable shortening or spread and is similar to the milk product ghee and absorbs around 10% of the total edible oil supply in India.
As a result of increased consumer preference for non-traditional oils such as soya bean and sunflower oil, the organized sector has emerged as one of the fastest growing sectors. Branded products make small portion of the total edible oils market yet they have been one of the main drivers of rapid growth.

1.2 Domestic production and consumption of Edible oil in India
Imports:
Due to the strong demand from domestic consumers, Indian production has been unable to keep pace with consumption, and as a result, India's edible oil import has reached record level in 2012. From November 2011 to September 2012, within these 11 months the import of edible oils has reached 8.96 million metric tonnes, which is the highest ever. Imports are expected to go even further since there is likely to be a negligible growth in domestic oil supply. For the marketing year ending in October, 2012, imports were expected be around 9 million metric tonnes.
RBD Palmolein, Sunflower Oil and Soybean Oil were the major drivers of growth in imports. In 2011-12, India imported up to 57 per cent of edible oil demand, up from 49 per cent in 2008-09, higher than the average of 55 per cent during the last decade according to the data compile by Solvent Extractor Association of India.
Regarding Parisons Agrotech Pvt. Ltd., the company majorly imports crude palm oil from Malaysia, Indonesia. The data (2004) for the same is as follows:

Import of Palm oil by the firm

An example of import receipt
Exports:
Export of edible oils was permitted only in branded consumer packs of up to 5 Kgs, within a ceiling of 10,000 tonnes, for the period November 1, 2011 to October 31, 2012. However in August, 2012, government has put ban on export of edible oils even in branded consumer pack of up to five kilos due to the concern that productivity of some oilseeds may come down because of 20 per cent deficit rains so far.
Export division of the Parisons group was set up with headquarters in Calicut; it is responsible for trade of edible oils after packaging. Cochin office was also established to speed operations of the group. The exports division caters to needs and demand of all overseas buyers. Due to its continuously growing production, Parisons group is one of the most competitive exporters in India.

1.3 Classification of consumers on the basis of geography
In India, chief consumers of edible oil are household and industrial buyers including food processors, restaurants and hotels. It is sold mostly as loose oil or vanaspati (partially hydrogenated vegetable oil). Only a small percentage of edible oils are sold in branded form at the retail level.
In India, consumer oil preferences change with the region; it mainly depends upon local cultivations. Region | Oil Preference | North | Mustard/ rapeseed | East | Mustard/ rapeseed | West | Groundnut | South | Groundnut, coconut |

Consumer market of different types of edible oil in India
In India, a wide variety of the oil-seed crops are grown in different agro-climatic zones. Groundnut, mustard/rapeseed, sesame, sunflower, linseed, Niger seed/castor are the major traditionally cultivated oilseeds. Soya bean oil consumption has also increased in recent years. Coconut oil is the most important in this category. Rice bran oil and cottonseed oil have become important among non-conventional oils.
Demand for the edible oils
Edible oil consumption in the country is continuously rising, was roughly 11.2 kg/head/year which is lower world average consumption level of 17.8 in 2008. Consumer classes (annual income in Rs) | 1996 | 2001 | 2007 | The rich (Rs 215,000 or more) | 1.2 | 2.0 | 6.2 | The consuming class (Rs 45,000 - Rs 215,000) | 32.5 | 54.6 | 90.9 | The climbers (Rs 22,000 - Rs 45,000) | 54.1 | 71.6 | 74.1 | The aspirants (Rs 16,000 - Rs 22,000) | 44.0 | 28.1 | 15.3 | The destitute (less than Rs 16,000) | 33.0 | 23.4 | 12.8 | Total | 164.8 | 179.7 | 199.3 |

Structure of the Indian edible oil market
India’s overall consumption is most likely to increase with growing population and economic development but it highly relies on the imports. The Agrotech Limited: It is one of the 16 units of Parisons group of companies, located in Calicut. The Parisons group is into manufacturing of wheat flour and edible oil. Corporate office of company is located in West Hills, Chungam, Kozhikode. The manufacturing unit of Vanaspati ghee is nearly 2 kms away from corporate office. Parisons Group, a legacy of trust was envisioned by late Mr A.V.Kunhipari in the 1950's. From its humble beginnings in a small hamlet to a leading corporate entity in south India, the group recorded a phenomenal growth over the years.

Location of Agrotech Pvt. Limited

2. The Agrotech Private Limited
2.1 Mission:

The company having a strong foothold in the oil industry segment strives to maintain it and has its defined mission objectives

* Parisons group complies to total quality management system in raw material sourcing as well as in product manufacturing. * Parisons group has attained a cutting edge in raw material sourcing * Parisons group supply chain system is firmly matured through years of experience. * Parisons group also lays importance to green field marketing. * Parisons today manufactures and markets total 12 product lines and commands market leadership in wheat products and edible oil segment. * Being one of the pioneers in agribusiness, Parisons group is competent to handle the market needs both in India and Middle East countries professionally and successfully.
2.2 Vision:

The group has in store its vision which it constantly strives for * To be market leader in Agro-Business both in India and Middle East countries, through holistic marketing * To develop market opportunities by scaling through innovation * To employ innovative and world class production technology in all its ventures * Exploit its capabilities and resources efficiently to venture out into diverse new areas * To encourage R&D in food processing for product and process development * To enchant policy support, promotional initiative and physical infrastructure to promote value added exports * To chart out new job opportunities especially in rural areas

2.3 Human resource management Mr. Habeebu is the Human Resource manager at Agrotech Private Limited. HR manager has been appointed nearly a year ago, since people did not feel the need for HR manager before that time. The organization exhibits a clan control, workers are made responsible for their work. Mutual trust exists among employees of the firm, as well as between managers and the workers. The system looks more of a self managed system. Appraisals are given on the basis of seniority rather than performance. On one hand the system keeps clan control managed, but the flip side is that it leads to lower performance. Organization is moving towards scientific management, hence they want to hold someone responsible for managing issues related to human resources.

2.4 Organization Structure

The organization structure of the organizations is drawn in the figure given below

RU General Manager Production Manager
HR manager

Workman1
Workman2
Workman3
Oil chemist
Lab Assistant
Prod. Supervisor3

Production supervisor2

Production supervisor1

Record Keeper2
Record keeper1

Production Manager
Every oil refinery unit is managed by one production manager in that unit. The production manager acts as liaison between production, marketing, purchases and HR manager. He is responsible for scheduling all production related activities including materials procurement for the unit, transportation of finished product out of the unit, managing shifts of various specialists, estimating performances, measuring workmen requirements, product quality tests and packing etc.
Every production unit manager acts as a HR Manager for its unit and is in touch with HR manager for all workers related activities. Parisons Group holds a fleet of trucks for materials movement but it requires hiring transportation services from outside then such requirements are estimated and managed by the production manager. The activities being managed in production unit are Neutralization, Bleaching, Hydrogenation, Hydrogen Gas Generation, Post Treatment, Deodorization, and Blending & Packing. This department ensures all the machinery works, technology for product quality and necessary maintenance of working tools is done appropriately.
Specialist
The specialist in the department makes sure the process is continuous for 24*7. The specialists who are typically 3-4 in a particular production unit work in rotating shifts. Under the guidance of specialists there are 3-4 workmen working.
Workmen
They are responsible for material flow into machines, steaming and power generation within the plant machinery, and storing the finished product. The main challenge for any production unit manager is to maintain steady flow of materials into the unit while minimizing incoming and outgoing inventory both.

2.5 Suppliers

The suppliers of sunflower seed oil are from Ukraine and the suppliers of palm oil are from Indonesia, Malaysia etc. The imported materials are received either at Cochin Port or at Mangalore Port and then the materials are transported to required production units across Kerala. In order to take advantage of economies purchases mostly are bulk.

2.6 Customers & Market in India:

Edible Oils: Parisons group entered the retail market through Parisons liberty gold palmolein brand. It is a premium brand in the market. Palmolein is the common people’s cooking medium, and is mainly used for cooking purposes at homes, bakeries and hotels. Parisons also manufacture palm oil in the brand name, Kerala palm oil which is also used for cooking purposes.

Vanaspathi and specialty fats: Parisons is the only manufacturer of vanaspathi in Kerala. It has set up a state of the art hydrogen plant with Belgian technology for the first time in India. Vanaspathi is mainly used in homes, hotels and other catering industries for cooking purpose. Parisons Agrotech manufactures two brands of vanaspathi. Parisons liberty is already one of the leading brands in north Kerala. It has now opened a new depot at Ernakulum to enter the southern markets more effectively, where it has limited presence. The group has got sales points at Kakkanchery, Kuttippuram & Angamali , recently Trivandrum will also become a sales point.

Parisons chakra, dream & premier no. 1 bakery shortenings are used for preparation of ordinary bakery items like breads, cakes, cookies, biscuits etc. Golden puff is especially used in making quality puffs. Margarine, for pastries & cakes will soon be introduced in the market.

Parisons group is the first and only manufacturer of specialty fats or bakery shortening in Kerala. They are used in the catering, confectionery & bakery industry. Within a short period of introduction with quality and Parisons groups goodwill support, it has captured a major share of north Kerala market. Now it hopes to capture a good part of south Kerala market as well and become a market leader in this segment. There are 4 brands of specialty fats manufactured by Parisons.

3. Manufacturing of Vanaspati Ghee

3.1 Block Diagram
Removal of fatty acids

Bleacher
Removal of impurities
Neutralizer
Storage Tank

Boiler Furnance
Distillation
Hydrogenation
Condensation Tank
Removing odor
Autoclave
For cooling
Deoderizer
Ghee well
(Storage of finished product)
Figure 3.1:Block Diagram showing various states of Vanaspati Ghee

Furnace
Firewood

3.2 Process Flow Diagram

Neutralization
By-products
Fatty Acids

Phosphoric acid + caustic soda

Raw palm oil

Bleaching earth

Bleaching

Heating at high temperature

From Boiler

Distillation

Nickel Catalyst

Hydrogenation

Post treatment

Deodorization

Add Vitamin A,D

Packaging
Blending
Process Diagram of Vanaspati Manufacturing

3.3 Description of process:
3.3.1 Neutralization:

The edible oils permitted for manufacturing Vanaspati contain certain percentage of free fatty acids (FFA), gums and other impurities with FFA, varying between 0.5% to 5%. To remove the FFA and other impurities, the oil is first treated with Phosphoric Acid to remove Phosphatides and then with caustic soda solution to neutralise the free fatty acids into a soap stock. The soap stock so formed is removed by allowing it to settle in a batch process. To remove all the soapy matters hot water wash is further given to the oil under constant agitation in the vessel. The washed Water being heavier settles down and is removed from the bottom in batch process and by centrifuge in continuous process.

An image showing various tanks in a refining unit

3.3.2 Bleaching

Oil so obtained after neutralising and washing is taken in a bleaching vessel where the oil is first dried by heating under vacuum at temperature of 100 degree centigrade and then bleached by adding earth and activated carbon to remove its colour. At the end of bleaching process the oil is filtered in filter press to remove the spent bleaching earth and carbon. The cleaned oil so received after bleaching is taken into autoclave for hydrogenation.

An image showing Bleaching tank
3.3.3 Distillation

Oil is heated with the help of steam at a high temperature (200-250 C). Vapors so formed are condensed in a condensation tank (shown in figure).

3.3.4 Hydrogenation

The oil is first heated with the help of steam in coils and then spent nickel catalyst is fed into the process. Since, most of the oils used for Vanaspati manufacture are unsaturated, they consume hydrogen gas which is passed through the oil at that temperature in the presence of nickel catalyst and thus the melting point of the oil rises. Fresh quantity of nickel catalyst is added into the process, the quantity depends upon the type of oil. When desired melting point of oil is obtained, the supply of hydrogen gas to the process is stopped. Then the hydrogenated nickel catalyst mixed oil is first cooled from 200oC and then it is filtered through a filter press. Some time for easy filtration filter aid is also added.

An Image showing Autoclave

3.3.5 Post Treatment

There are two processes carried out in post-treatment :
Nickel Removal
As nickel is an important caustic agent which is used during Hydrogenation process, it becomes necessary to remove this agent. Even a miniscule portion left will be hazardous so there is the need to clean it out. The process mainly removes nickel catalyst. For this the solution is left with either much diluted caustic soda solution or with hot water as found suitable at that time. The extremely hot water will help out in nickel vaporize and this is collected in another suitable container. The neutralizing, washing and bleaching process will be repeated in the same manner as were carried out for soft oil.
FFA Removal After hydrogenation, there appears a slight increase in the FFA (free fatty acid) content of the oil, which is removed again by the neutralization and bleaching process. However, the caustic employed is less and more diluted and the bleaching earth usage is lower. After this, the oil is filtered again for removing the bleaching earth.

3.3.6 Deodorisation

Another oil refining step in the manufacturing process is Deodorization carried by the process unit Deodorizer. It is the high temperature process in which any kind of undesirable trace contents which give undesirable flavours and odours are removed from oil. The process essentially involves the removal of these volatile components by steam at about 240-260°C under a vacuum of 2-5 mbars.
Thus the removal and recovery of residual free fatty acids and other volatile impurities via vacuum steam distillation is the main part. The heat treatment also produces a bleaching effect. The process is defined in steps as follows--
Deodorization process conducted in a closed vertical steel tube provided the heated oil from the previous step into the Deodorization vessel.Oil is then heated at a temperature of 210°C at atmospheric pressure and then at low pressure (below 1 kPa).The steam is flown into the system for 1-2 hours to transport a compound that can evaporate. The pressure must be consistent and high. Any drop during the deodorization process will reduce the amount of steam that will be used. The adverse impact of is that it prevents hydrolysis of oil by water vapor.In general situations, The Deodorization tank (D-240) works at a temperature of 210 ° C and pressure of 0.03 atm to meet the desirable standards of ghee manufacturing process.

Following diagram shows a closer look at the Deodorization process. Depending upon the sophistication of the technology being used, some of the steps may be removed or some steps may be redundant. But an ideal deodorization looks as below diagram.

3.3.7 Blending & Packing
Blending
Keeping in view the nutritional quality required to bring in the vanaspati ghee according to ISO standards, in the fully processed oil that is obtained after deodorization, the specified quantity of vitamin A & D are added into a churn having cooling and agitating arrangement.
Packing
After the blending with required nutrients is complete, the oil so produced is complete with all qualities of a typical Vanaspati ghee and according to Parisons product availability requirements, the Vanaspati so processed is filled into containers to make package of 15 liters, 5 liters, 1 liters,1/2 liters. Two forms are possible either into tins, big plastic jars or in poly packs. The containers are then taken to a cold room in which the temperature is maintained for having good environment settings for the product. After putting the product in cold rooms for about 24 hours, it is removed to the storage godown where the Parisons brand labels are pasted with batch number, date of manufacturing, best before etc. as per standard rules. After this the product is ready for dispatch.
Vanaspati is produced either with a granulated texture resembling 'ghee' or as a smooth grain less product.

3.4 Add-on processes:
3.4.1 By-products

Fatty acids removed during the process of neutralization are sold to the local soap manufacturers.

3.4.2 Use of near to expiry date product

Parisons Manufacturing process takes back the products which have crossed the expiry date or are near to expiry. This keeps the buyers of products ensured that any left out stock at their end won’t cause losses. Once these products are brought back into factory they are again fed to the manufacturing process as an intermediate material. The vanaspati ghee in these packets or tins is collected into a big well. This well becomes a source of material to hydrogenation process. And thus finally after all the process it becomes part of the finished product.

4. Analysis and Discussion

Based on the data collected from employees of the organization, Throughput rates of equipment at different manufacturing stages are calculated as follows
Throughput Rate=Average Production /hour Manufacturing Stage | Throughput Rate | Neutralizer | 1.5 tons/hour | Bleacher | 1.5 tons/hour | Condensation tank | 2.5 tons/hour | Autoclave | 1.25 tons/hour | Deodorizer | 2.0833 tons/hour | Packaging | 1 ton/hour |
Table No 4.1: Throughput rates of various manufacturing stages of Vanaspati production

The Flow Time (MLT) for the processes are also calculated and the data is put below. Manufacturing Stage | Flow Time/ton in minutes | Neutralizer | 40 | Bleacher | 40 | Condensation tank | 24 | Autoclave | 48 | Deodorizer | 28.81 | Packaging | 60 | | | Total Flow Time in hours | 4.013 hours |
Table No 4.2: Flow Time calculation of various manufacturing blocks and the complete process
Thus the Cycle time is observed to be 48 Minutes which is the time taken by Autoclave to finish the process. Thus Autoclave is the bottleneck in the manufacturing process. Also, we observed that after Deodorizer, vanaspati is collected in a temporary storage tank of capacity 3 tons. The Packaging unit collects vanaspati for packing from this tank.
Also currently the Packaging unit completely relies on manual labor for Packing and storing the end product (Vanaspati).The process is relatively simple and we estimated a 70% learning curve for the process. The data supporting our learning curve analysis is given below.

| Time for Packing for a New Employee (In minutes) | Iteration No | Collecting Vanaspati(i.e. using collecting tools) | Cutting and Collecting Packaging accessories | Packing + Folding + Cleaning | Total | Learning rate | 1 | 10 | 10 | 20 | 40 | | 2 | 9 | 10 | 19 | 38 | 95 | 3 | 6 | 8 | 14 | 28 | | 4 | 4 | 7 | 12 | 23 | 60.52631579 | 5 | 4 | 6 | 12 | 22 | | 6 | 4 | 5 | 10 | 19 | | 7 | 3 | 5 | 9 | 17 | | 8 | 2 | 3 | 7 | 12 | | 9 | 2 | 3 | 7 | 12 | 52.17391304 | 10 | 2 | 3 | 7 | 12 | | | | | | approximately 70% learning curve | 69.23340961 |
Table No4.3: Learning curve estimation of Packaging unit

We calculated the total efficiency i.e., the material Utilization rate to be 98% with 2% of input material being wasted at various stages of manufacturing processes. The typical wastages are given below. Manufacturing Stage | Wastage Percentage as a percentage of total input | Storage tank | 0.3 | Neutralizer | 0.1 | Bleacher | 1.02 | Condensation tank | 0.01 | Autoclave | 0.2 | Deodorizer | 0.2 | Packaging | 0.16 | Total wastage | 1.99 |
Table No 4.4: Learning curve estimation of Packaging unit

5. Job Design

Employee Job Performance & Motivation
There are no strict ways of monitoring performance, there is no firing of employees, workers are given salary hike yearly, and promotions are based on seniority in the organization. Hence there is no external force to push them to work. It is their willingness. Moreover, workers share responsibility of work among themselves. There is no explicit time for lunch, dinner, or breaks. They take on breaks according to their capacity and willingness. Thus it is more of a self-controlled system. Why we are considering workers as important is because it is a manufacturing unit and the ultimate outcome depends on workers’ efficiency to large extent. Giving them responsibility is working very well in the organization. As the HR manager, Mr. Habeebu Rahman says-“You treat workers like animals and they will behave as animals, you treat them as humans, and they will behave as humans”.
As reported by him, there have been no incidences of workers cheating the organization. They are given responsibility right from collecting the raw materials consignment to delivering the finished goods to the shops. They count/weigh the items, record it in proper registers, and deliver them at their correct destinies. There have been no incidences of theft of material, or money; although the Parisons group is in manufacturing for past 20 years. Workers consider completion of tasks as their responsibility. They compete among themselves for who does the task in a better way. New workers are taught by the older ones about the techniques to be adopted.
Thus if we look at Maslow’s Hierarchy of Needs framework, it turns out that Parisons group is satisfying workers’ social needs.

Modifying Jobs to Provide Broader Range of Needs Satisfaction

Cross Training
Workers are trained to perform multiple jobs- a direct result of which is that there is low dependency on individual workers. Even if a worker falls ill or couldn’t come to work, others can substitute him.

Job Enlargement
To make the job more interesting, there is a horizontal job expansion i.e. employees are given a variety of tasks to perform.

Job Enrichment
There is no job enrichment in Parisons group. Workers are not given any kind of managerial powers and authority.

Team Production
Workers are generally organized into teams. For instance there are teams for packaging, maintenance etc.

Sociotechnical Systems

Task Variety
Employees are given a variety of tasks to perform which makes their work somewhat interesting and allows the employee to rest from a high level of attention or effort while working on another task.

Skill Variety
Employees are also trained on multiple skills which enhances their satisfaction.

Feedback
Each worker is supervised by a supervisor who quickly points out any error which the employee has committed. This greatly accelerates learning process for new employees.

Task identity
Employees have responsibility for a set of tasks that is clearly defined, visible and meaningful. In this way, work is seen as important by the employees undertaking it and others understand and respect its significance.

Task autonomy
There is little or no autonomy i.e. employees can’t exercise much control over their work. Not much decision making power is available to them.

Plant Layout Design
Product (Line) Layout * Special purpose expensive equipment are used * Changeover is expensive and lengthy * Material flow approaches continuous * Material handling equipment is fixed * Operators need not be skilled

6. Operations Strategy

Strategy for Competitive Advantage
Cost Leadership
The Parisons group follows mostly a low-cost leadership strategy. They produce majority of the products in bulk so that the costs are reduced. The selling price of their products is much lower than the competitors. They offer a variety of products at low cost to the consumers.

Order Qualifiers & Winners
Qualifiers
Parrisons group leveraged the reputation of its ‘Liberty’ brand to gain entry into edible oil market. When they decided to launch their edible oil, ‘Liberty wheat flour’ was already a market leader in Kerala, well known for its high quality. Hence they used the same brand name ‘Liberty’ for this oil.
Winners
Low selling price is the order winning characteristic which won orders for them in the marketplace. But it doesn’t mean that they compromised on quality. They achieved low cost by using efficient production techniques and by producing items in bulk.

Variety of Products
Process Design
Product focused
Continuous
Volume
Moderate
Moderate
High
High
Low
Low

Parrison group produces high volumes of same product i.e. edible oil. Hence, they use Product focussed continuous process design.

Positioning Strategy in Manufacturing Type of Product | Type of production process | Finished Goods Inventory Policy | Standard | Product focussed | Produce-to-stock |

Product life Cycle

Growth rate
Current Phase
1992

Time

Parisons group established their first manufacturing unit in 1992. Now the group has a total processing capacity of 380MT for edible oil refining per day and they are growing continuously. In fact, an Edible Oil refinery with a capacity of 1 lakh metric tonnes/annum is to be commissioned by end of 2012 at Cochin.

Capacity Strategy
Parrisons group believes in adding capacity before it is needed. They maintain excess capacity to satisfy surges in demand. For instance, they built a number storage tanks in mangalore for their own usage but now they are using the excess capacity for leasing purposes.

7. Recommendations

1) After neutralization process, the soap stock so formed is removed by allowing it to settle down (batch process). This takes lot of time, while the plant remains operational and hence results in wastage. To fasten the process, centrifugal process can be adapted which will remove the impurities in one go, and with greater efficiency. 2) Autoclave is the bottleneck, so a parallel autoclave can be put in the process. This will increase the capacity of plant from 30 tons to 36 tons. If demand is not there, the plant can be shut down for some time, and hence can result in saving of energy. 3) Manual labourer is there to put firewood into furnace, one by one. This requires 5 workers per day, as the task is quite laborious. Instead of this, movement can be done with the help of conveyor belts. This will reduce the man power cost. Also, an automatic indicator can be installed, which can help to shut down the supply of wood whenever there are ample.

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