Engro Foods is a 3-year old company and started in 2006 with one brand of Olper’s. In a market space where Nestle was ruling the world and Haleeb was very close behind, the company started off as a local group with all the energies possible. In a short span of 3 years, Olper’s captured over 30% of the packaged milk market share and rapidly climbed to number two in the market.

How does a company having such limited experience in the food business, manage to pose such a challenge to the market leader? There’s quite a story about the role technology has to play in making this local ‘multi-national’ the company to watch out for!

“When the business started, technology wasn’t the top priority . It shouldn’t be. However very quickly, the organization began identifying the key areas where they thought could be made more efficient with the help of technology. These were the areas which had a large volume of information and usually these areas were the ones which had a direct impact on the bottom line of the company,” explains Zainab Hameed,  Senior Manager, Business

Applications at Engro Foods
One area that was identified by the organization was that of milk procurement. “There are approximately 25,000 suppliers who are involved in the actual procurement of milk, and who have to be paid on a weekly basis,” says Atif Mohammad Ali, System Analyst. Each of the 25,000 dairy farmers make it possible for the massive amounts of milk that the market demands each day.

“In terms of their IT needs, the company had been adding solutions and platforms on as and when they needed. SAP, for example, was already running in the HR and Financial departments at Engro Foods. Albeit with a limited footprint but it was running in the organization.”  And while this kind of ad hoc growth is common practice in many organizations, for an FMCG in such a competitive market, this limits the speed and success with which they can grow. “Last year, the management realized that if they wanted to move forward, the non integrated infrastructure wouldn’t serve their purpose.” With the growth plans the company had, they would not be able to keep up the pace they needed, if something didn’t happen for their infrastructure,” comments Zainab. “Offshoots from within the same basic product are also in the pipeline which means that the dependency on information from all the business divisions is growing. Additionally, the amount of data that has to be input and processed from a growing number of points of interaction, is also increasing.”

Nobody said expansion was easy, but as in most cases, if the organization can identify its specific, targeted needs how technology can make them more efficient, it’s one more step in the right direction.

Be it an FMCG or a small business, organizations function in highly competitive environments. The company is only as good as the information that is fed into its systems, enabling it to make proactive, intelligent decisions as regards its roadmap. “With a little bit of this and that pieced together, the environment had become very disintegrated as far its information
gathering was concerned. And no department was getting access to all the information from the other departments,” explains Atif.

Technology Pulls Innovation
Considering that there is a perishable item being dealt with, the solution has to be something that will enable the accurate recording and tracking of the item since it has a limited lifespan. In addition to the competition in the market and other external variables, the company also needed solutions that would enable them to beat the clock FMCG is a different business in which “you must have access to enough information which will enable you to be innovative in, be it Olper’s or upcoming Ice cream line.” Innovation, explains Zainab, doesn’t come by adding more people onboard a company. “You need systems and you need solutions.”

Last year when the IT team came into the picture, one of the first task the team was given was to experience the business dynamics, first hand. “Milk collection, from the procurement process to the time it gets into a box, to a distribution point and into our homes.” When Zainab and Atif came on board, their first task was to travel down to some of the distribution points in the rural areas to see what the process of collection was for themselves.

“This was an important experience because by the end of this exposure, we were thinking like different people,” reminisces Zainab.
Perhaps one of the greatest challenges that any professional struggles to overcome, especially when it comes to designing a solution or being an architect behind a system, is that of assumption.  All the technology available to us in the world is no good if the system architect doesn’t know every inch of the business process. “Experience it so when you plan the solution, you can actually have it resolve issues that can make the existing process more efficient.”

“Engro is very focused on giving its customers the best quality product, in this case, milk,” explains Zainab. To truly appreciate this and the monumental effort that goes into achieving this each day, you have to understand a bit about how Olper’s actually is ‘produced’. “Starting from Nawab Shah up  to lower and central Punjab, we have 700 milk collection in the rural areas, spreading out to 20 area offices across 4 zones. We collect milk from close to 25,000 farmers and the payment that has to be made to the farmers on timely basis.” Zeeshan – Financial Controller MPD,  explains that majority of these farmers are daily wage earners who are literally waiting for the payment, almost hand-to-mouth, therefore  managing these bulk transactions every week requires perfection & cannot be done without the support of a proper system.

“Anything we can do to increase the efficiency in this clearance process, will only continue to serve the entire nation. “As the milk is transferred from the 700 distinct collection points, the documentation involved is massive and conducted manually. The physical transferring of the documentation to a location where it can be tallied and entered into a system so that the actual payment can be made to each farmer, itself takes a few days.” Each of these ‘points’ has  a basic setup that has a back-up generator  and a chiller with a capacity of minimum 1000 liters. Once the milk is collected in these points, there is obviously a limited time in which the product has to be delivered to the plant.

Globally no other dairy industry collects milk quite in this way. Zainab explains, “When we had traveled to other large-scale milk producing companies in Thailand, for example, they thought we’d be quite impressed at the way they collect milk. Atif continues, “Around the world, there are central points of collection where the farmer brings in a few hundred liters of milk in a truck or loader serving just that purpose, and offloads it into Village Collection Centers or corporative societies. In the case here, we have farmers who will travel through non-existent roads to deposit a few liters of milk to our collection centers. The dynamics are just so different. And we have to be sure and compensate every individual for every liter of milk he has contributed. The onus of that accountability, is what technology can ensure. It’s really quite amazing.”

Stronger, More Measurable Handshakes Through Technology
From each collection point, the milk changes ‘hands’ several times before it gets to the plant. “There are multiple, what we refer to as, ‘handshakes’. Between the center and the MMT (the transport truck), the MMT hands the milk over to the Area Office, who will then transfer the milk to the plant. So there are a total of 4 stages here. At every stage, there are two things that need to be monitored: the quality  and the loss of milk. Previously, by the time I would receive the documentation, it would be too late for me to actually backtrack and investigate where a certain loss of quality or quantity took place. Remember, it is a perishable item we are talking about so by the time anyone is in a position to assess anything, the milk has been long consumed by the end user!”

Engro Foods collects significant quantity of milk, across two provinces, covering a stretch of 1,300  kilometers, On a daily basis!, with no Eid “It’s a perishable product, and in the organization, there is a team of 1400 people dedicated to ensuring that this product reaches the Engro Foods processing plants which actually creates the brand.

Atif thinks back to the time when he was still understanding this entire process at the onset. “It doesn’t make sense for the nature of this business, that it takes 2 days to input the documentation and information into the system. By the time it would be documented into the system for any kind of verification or tally for accounts or quality checks, the product has been already processed and long gone from within our reach. To speed this process up was a challenge for us.”

Zainab recalls that the vision for access to instant information, came from the top. “The management outlined their need to be able to have access to the information at every ‘handshake’.” She picks up her cellphone and says, “They felt that if they can talk to people everywhere, why can’t we use it to access the same information.”

Zainab and Atif’s  team began hunting down a solution which would make all this possible. Atif says, “We started working on a few things, and learned with every option. We started by putting a cellphone where a person would simply SMS the information but that also created issues because at times, multiple SMS’s would be sent.” In isolation, clarifies Zeeshan, this problem doesn’t seem like a lot, but when you are looking at the impact that 700 centers would have with multiple SMS messages being sent from several locations, that not only becomes an added strain on the financial aspect, but also makes it inaccurate to track and log.

Engro Foods finally discovered that the POS devices would be most suitable. “We worked with vendors to modify the system so that the  hardware remains the same. The idea was to solve their problem rather than just get  technology in place.” This perhaps becomes a classic example where there is stringent alignment between technology and business. Zainab continues, “The business needed timely information and the combination of technologies that came across included the following: an input device, a media to carry it and a backend solution to support all the information that was coming in. This device, yes, could have been a phone, but you have to understand that most of the places that we needed to deploy the technology at, didn’t have any ready infrastructure for us to use. These are, once again, remote areas that have no roads or electricity. We needed something that would work despite this.”

The POS device would log in the relevant information and contain the relevant metadata so the management knows not just when and how much, but also where a transaction or handshake took place.

The team kicked off a pilot for this project in October 2008 and running it simultaneously with the manual system to create the proof of concept. “For the last one year, we have been trying to prove that technology can actually get the information each department needs. Through the pilot, we have been able to achieve this.”

Lessons Learned
The fact that the management had the vision and pushed for the realization of that vision, helped. “The top-down approach is very critical in the success of any solution any organization. You have to take the first step in the right direction. Make sure that your business partner is fully aligned with your vision.”

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