Executive Summary

The automobile industry of Pakistan is growing rapidly with the influx of many foreign brands. This growth is attributed to
the fact that most of the people are standard conscious and assume that the type of car that they drive reflects their
personality and is a symbol for image.

This report discusses operational activities, strategies of manufacturing cars followed by Dewan Farooque Motors Limited.
It also discusses the popularity of Korean technology in the market as well as its brand image seen nationwide. Dewan
Farooque Motors Limited is a subsidiary of Dewan Mushtaq Group, one of the country's leading business groups.

Dewan is working under the Technical Licensing and Exclusive Distributor agreements with Hyundai Motor Company,
Korea's No. 1 and the world's seventh largest automobile manufacturer. Dewan Farooque Motors is one of the key players
in the automobile industry of Pakistan offering an impressive line up of passenger cars and commercial vehicles. Its state-
of-the-art plant has a capacity of 10,000 vehicles per annum on single shift basis and is equipped with the latest facilities,
which includes CED (Electronic Dipping) paint system and robots.

Company <Tab/>Field of Business<Tab/>Capacity<Tab/>Established

Dewan Salman Fibre Ltd<Tab/>Polyester Staple Fibre<Tab/>108,500 MT<Tab/>1990
Dewan Sugar Mills Ltd<Tab/>White Refined Sugar<Tab/>9,000 MT<Tab/>1982
Dewan Textile Mills Ltd<Tab/>Spinning<Tab/>50,646 spindles<Tab/>1970
Dewan Mushtaq Textile Mills Ltd.<Tab/>Spinning<Tab/>27,400 Spindles<Tab/>1975
Dewan Khalid Textile Mills Ltd.<Tab/>Spinning<Tab/>26,624 Spindles<Tab/>1978
Dewan Farooque Motors Ltd.<Tab/>Automobile<Tab/>20,000 vehicles<Tab/>1998

Table of Content

<Tab/>Acknowledgement
<Tab/>Preface
<Tab/>Letter of Transmittal
<Tab/>Executive Summary
<Tab/>Marketing Forecast by Automobile Manufacturers
<Tab/>Organization Itself
<Tab/>An Introduction to Dewan Farooque Motors Limited (DFML)
<Tab/>Key Players in Automobile Market

Chapter # 1: Introduction to Operations Management

<Tab/>What is Operations Management?
<Tab/>Input Vs Output Diagram
<Tab/>Role of Operations Management at DFML
<Tab/>Type of the Organization

Chapter # 2: Operations Strategy

<Tab/>What is Operations Strategies?
<Tab/>Mission
<Tab/>Mission Statement of the Company
<Tab/>Environment
<Tab/>Target market
<Tab/>Core Competencies
<Tab/>Corporate Philosophy

Chapter # 3: Process Management

<Tab/>What is process management?
<Tab/>Process Choice
<Tab/>Vertical Integration
<Tab/>Customer Involvement
<Tab/>Resource flexibility
<Tab/>Capital Intensity

Chapter # 4: Management of Technology

<Tab/>Management of Technology
<Tab/>Which technology they are using?
<Tab/>Computer Integrated Manufacturing
<Tab/>Manufacturing Capabilities & Skills

Chapter # 5: Work-Force Management

<Tab/>What is Workforce Management?
<Tab/>The core values
<Tab/>Natures of Employments
<Tab/>Motivational Benefits
<Tab/>Leave granted to permanent employees

Chapter # 6: Total Quality Management

<Tab/>Total Quality Management
<Tab/>Customer Driven Quality Definition at DFML
<Tab/>Employee Involvement at DFML
<Tab/>Training & Communication
<Tab/>Infrastructure
<Tab/>Working Environment
<Tab/>Awards & Incentives
<Tab/>Continual improvement

Chapter # 7: Statistical Process Control

<Tab/>Benchmarking
<Tab/>Positioning Graph

Chapter # 8: Capacity Planning and Strategies

<Tab/>Measures of Capacity
<Tab/>Utilization Rate
<Tab/>Safety stock
<Tab/>BCG MATRIX
<Tab/>Setting Stock Levels

Chapter # 9: Location

Chapter # 10: Layout

<Tab/>Manufacturing Layout
<Tab/>DFML Layout
<Tab/>Production Line
<Tab/>Warehouse Layout

Chapter # 11: Supply-Chain Management

<Tab/>Distribution Technique
<Tab/>Channels of Distribution
<Tab/>Analysis of Dealer's Network
<Tab/>After Sale services

Chapter # 12: Forecasting Techniques

<Tab/>Demand Pattern
<Tab/>Judgment Method

Chapter # 13: Inventory Management

<Tab/>Inventory Management Objectives
<Tab/>Functional Area
<Tab/>Integrated Inventory Management
<Tab/>Analysis of Inventory Control Department
<Tab/>Segments of Inventory

Chapter # 15: Material Requirements Planning

<Tab/>Materials Management Cycle
<Tab/>Treatment of Materials at DFML

Chapter # 16: Just-in-Time Systems

<Tab/>Conclusion
<Tab/>Recommendation

Appendix
<Tab/>Population
<Tab/>Sampling
<Tab/>Research Methodology
<Tab/>Time & Cost Requirement
<Tab/>Questionnaire
<Tab/>Bibliography

Marketing Forecast by Automobile Manufacturers

Provided that economic growth continues at the current pace, or at the slighter higher rate forecasted for the years to come,
and provided that no significantly damaging legislation is introduced, Pakistan is likely to sustain an annual passenger car
market growth averaging about 6%. Economic growth of over 5% and the rising number of assemblers will help drive
demand to around 35,000 units by the year 2000.

Organization Itself

Management of the Group is now in the hands of fourth generation of Dewan Family. Current Chairman of the Group is
successfully navigating the Group activities on the lines set and visualized by his forefathers. This generation is young,
dynamic, and ambitious and is striving to expand the Group business activities.

To cope up with rapidly expanding activities and to be in line with modern management techniques, the Group has already
begun to change itself from a family-controlled style to a professionalized and participatory style of management.
An Introduction to Dewan Farooque Motors Limited (DFML)

On December 25, 1998, Dewan Farooque Motors Limited entered into Technical Licensing Agreement with Hyundai Motor
Company of South Korea for assembling and manufacturing of Hyundai vehicles in Pakistan. The project cost was
approximately Rs. 1.8 billion financed on a 58:42 Debt to Equity ratio, with the assembly plant's installed capacity of
20,000 vehicles annually in two shifts.

An independent team of professionals in the areas of Marketing, Finance and Production are working on the project. The
vision of the group is to expand activities gradually in the automobile industry with the introduction of a range of different
vehicles. DFML has the advantage of introducing a superior quality and cost competitive product to a market that was
dominated by Japanese manufacturers.

DFML has a long-term vision and plans to expand activities gradually in the automobile industry, i.e. the mother of
engineering industry; as a number of other sectors of the economy depend on it, directly or indirectly, for their income.
Some of these sectors are engineering, electronics, metal, rubber and plastic. The ultimate aim is to achieve 90%
localization by 2015.

The company also imports and market "HYUNDAI" Commuter Vans, which are not being manufactured in Pakistan. The
sale of these vehicles is supported by complete after-sales service, through a 3'S dealership network. The company has a
total of 22 dealers nationwide.

Short-term objective is to achieve a sales target of 25,000 Hyundai vehicles by the year 2005. This can easily be achieved
on the basis of the demands of the Pakistani buyer and the fact that per person car ownership in Pakistan is amongst the
lowest in the region and expected to rise in the near future.

The product line of DFML is

<Tab/>Santro, Shehzore and Grace Van by HYUNDAI

<Tab/>Sportage, Classic and Spectra by KIA

Key Players in Automobile Market

Pakistan automobile industry is basically dominated by four major players of automobile industry. Namely, Pak Suzuki,
Indus Motor Company Limited, Honda Atlas Cars Limited and Dewan Farooque Motors Limited in passenger and light
commercial vehicle segment are the key players of the automobile industry.

Pak Suzuki Motor Limited<Tab/>

Indus Motor Limited
Honda Motors Limited

Dewan Farooque Motors Limited (DFML)

DFML offers a wide range of superior quality and cost competitive products to a market that was dominated by Japanese
manufacturers.

Chapter # 1: Introduction to Operations Management

What is Operations Management?

Operations management is concerned with the efficient and effective transformation of inputs into "desired outputs".
Traditionally those outputs have been understood largely in manufacturing terms and in the context of profit making
organizations. Increasingly, however, it has been recognized that the disciplines of the operations manager can be deployed
in virtually any area where a purposeful system or organization is striving to achieve its objectives. There are many
subsections of operations management, but the one we are going to study is Operations Management in automobile
company.

Input Vs Output Diagram

Input

Worker
Manager
Equipment
Facilities
Material
Service
Land
Energy<Tab/>

Operations & Transformation<Tab/>Output

Goods & Services

Role of Operations Management at DFML

Dewan Farooque Motors Limited is a very big car manufacturing organization in the country as it generates revenue with
the co-ordination of a large number of departments, which are directly or indirectly connected, with the operations of the
organization, DFML is a manufacturing concern; the operations cycle is a bit complex in nature.

1.<Tab/>Sales/Demand Forecast: is prepared by the Marketing and Sales department, and is forwarded to the Production
Planning department.

2.<Tab/>BOM (Bill of Materials) and MPS (Master Production Schedule) are prepared by Production Planning department
in coordination with the Production department, and are sent to Procurement department.

3.<Tab/>The Procurement department then queries the members of SVL (Standard Vendors' List) for availability of
materials and their prices; then

4.<Tab/> Purchase Requisition(s) is/are sent to respective vendor(s) after getting approval from the Finance department.

5.<Tab/>Finally, upon arrival of the materials, samples of raw materials are taken from the Materials Quarantine and are
tested for 'quality standards'; if the materials are up to the required standards, then they are sent to the Raw Materials
Storeroom; or else, are returned to the respective vendors.
6.<Tab/>When the Materials Requisition is sent from the production floor to the Materials Management department;
materials are issued from the Raw Materials Storeroom to the production floor. When the product is produced, then again it
is sent to the Finished Goods Quarantine; samples are drawn from the finished goods and are tested for 'quality standards'. If
the finished goods are up to the required level of standards then they are sent to the Finished Goods warehouse to be
distributed; or else, 'batch failure' is reported to the Production department and the concerned offices.

Type of the Organization

The Dewan Farooque Motors Ltd is car manufacturing organization that is actually purchase parts from the local vendor(s)
and from Kia Motors Ltd and Hyundai Motors Ltd and assemble then to manufacture cars.

Chapter # 2: Operations Strategy

What is Operations Strategies?

An operations strategy, which specifies how operations can help implement the firm's corporate strategy, basically
operations strategy linked with long-term & short-term operations decisions to corporate strategy. Corporate strategy
defines the direction of an organization over a long term and determines the goal that must be achieved by the organization.

Mission:

Be the market leader in the passenger car segment (1000cc and above) by the year 2006.

Mission Statement of the Company:

The mission of Dewan Mushtaq Group is to be the finest organization, and to conduct business responsibly and in a
straightforward way.

Their basic aim is to benefit the customers, employees and shareholders, and to fulfill their commitment to the society.

Their hallmark is honesty, initiative and teamwork of their people, and ability to respond effectively to change in all aspects
of life including technology, culture and environment.

To create a work environment, which motivates, recognizes, and rewards achievements at all levels of the organization,
because in Allah they trust and in people they believe.

Environment:

In the opinion of DFML, both internal and external environment is really important and that can be done by the
environmental scanning by which the company monitors the trends within the socioeconomic environment, including the
industry and the marketplace for the potential opportunities and threads and also to stay ahead of the competitors.
Target market:

<Tab/>Small & Medium size businessman

<Tab/>People who already have a car and are in need of a second family car.
<Tab/>Professionals (Doctors, Engineers, Architects, Brokers, Insurance agents)
<Tab/>Corporate Customers
<Tab/>College & University Students
<Tab/>Working Ladies & House Wives

Core Competencies:

1.<Tab/>Workforce: Being a large automobile assembling industry Dewan Farooque Motors Ltd have well trained and
experienced workforce that can manage multi-tasks and respond to the market needs in a timely fashion.

2.<Tab/>Facilities: They have also well located plant, head-offices, warehouse and show-rooms give them a primary
advantage to handle a verity of products.

3.<Tab/>Market & financial know-How: They have a wide and flexible network of car distributors and have acquired
information system that can give them up to date information about their warehouse and plant as well.

4.<Tab/>System & Technology: In Dewan Farooque Motors Ltd they have well organized and updated information system
that gives them a competitive edge among other automobile industry. All the departments are interlinked through a strong
ERP (Enterprise Resource Planner) system and the link between head-office and assembling plant is through satellite.

Corporate Philosophy: The Group's corporate philosophy is based on following principles laid down by its founders and
predecessors:

-<Tab/>Credibility, integrity and honesty

-<Tab/>Straight forward business dealings
-<Tab/>Work as a worship
-<Tab/>Spirit of social service and human respect

By following the above philosophy, the Group enjoys an excellent corporate image amongst business community, banks,
financial institutions, and governmental circles. The share price of Group companies' shares is the most prominent reflection
of this confidence.

Chapter # 3: Process Management

What is process management?

Process management deals with how to make a product or service. Many choices must be made concerning the best mix of
human resources, equipment and materials. Process Management is of strategic importance and is closely linked to the
productivity levels a firm can achieve .It involves the selection of inputs, operations, workflows and methods used to
produce goods and services. Process Decisions are made in the following circumstances: a new product is to be offered or
an existing product modified, quality improvements are necessary, competitive priorities are changed, demand levels
change, current performance is inadequate, new technology is available, or cost or availability of input changes.

Process Choice:

Line Process is carried out in DFML. A number of well trained workers and programmed robots are there and every body
knows what to do. At every location where a new process is being start a supervisor is assigned who look after every finish
product of every process that can be the input for another process.

Vertical Integration:

Since DFML has its own assembling system or service facility, which helps in handling the entire process, the greater is the
degree of vertical integration at DFML. But as the manufacturing is concern they won't manufacturing a single thing, they
purchase the body parts locally and from Korea.

Customer Involvement:

There is a low level of customer involvement at DFML because DFML is an automobile assembling organization and the
plant of DFML is At Sajawal so the customers can not come up at any time and can express their ideas and views.

Resource flexibility:

There is a high degree of resource flexibility at DFML. The cars that are assembled at DFML are highly customized, in
order to fulfill the customer requirement there is highly flexible workforce & equipment.

Example: For Hospitals they made ambulance, for Armed Forces they made trucks and jeeps, and for corporate customers
they made Specified product that they called now as Santro Exe.

Capital Intensity:

DFML is highly capital intensive & requires a large amount of investment to equip the workers and maintain the
equipments. At DFML flexible automation is adopted which can be change easily to handle various products.

Chapter # 4: Management of Technology

Management of Technology:

Management technology relates to the designing and implementation plan of the manufacturing of the cars, they suggest
that the technology they are using to get more efficient and effective in the market and accomplish their business goal.

They are using in-house built ERP that can help them in decision making and problem solving and make them up to date.
The whole organization like assembly plant, head office and warehouse are linked with satellite.

Which technology they are using?

Dewan Farooque Motors Limited is using Korean Technology in manufacturing of cars, according to the DFML sales
executive that Korean technology is more reliable and much improved then the others.

Computer Integrated Manufacturing

<Tab/>They are using robotic arms for painting, welding and screwing the nuts of the car.
<Tab/>AGV's are also used in warehouse to arrange the stock.
<Tab/>Dewan Farooque Motors are also using PLC (programmable logic control).

Manufacturing Capabilities & Skills

1. Trained and qualified staff available
<Tab/>On the Job Training (OJT) from HYUNDAI /Asia Plants

2. DFML Plant Capacity available to accommodate HYUNDAI'S product

<Tab/>CED Paint shop can intake Sportage 4X4 and Grace Van

3. Localization Skills
<Tab/>Staff available having knowledge of HYUNDAI Engineering, Operational, Inspection services
<Tab/>Vendors are familiar with Hyundai's standards
<Tab/>Localization Achieved up to 57%.

Chapter # 5: Work-Force Management

What is Workforce Management?

Workforce management relates to the managing of all the people or the employees and to keep motivating them by offering
them incentives. In addition to "people" factors, there are numerous aspects dealing with manpower, accounting and finance
that must be considered. Human resource management, budgets, committees, planning activities, information systems and
decision support systems have been developed to assist with personnel management responsibilities.

As a Social Responsibility: Because many of the beneficiaries of good management practices are from groups of people that
are "disadvantaged" in our communities, there is certainly good reason to consider workforce diversity as an exercise in
good corporate responsibility. By diversifying our workforces, we can give individuals the "break" they need to earn a
living and achieve their dreams.

As a Resource Imperative: The changing demographics in the workforce, that were heralded a decade ago, are now upon us.
Today's labor pool is dramatically different than in the past. No longer dominated by a homogenous group of white males,
available talent is now overwhelmingly represented by people from a vast array of backgrounds and life experiences.
Competitive companies cannot allow discriminatory preferences and practices to impede them from attracting the best
available talent within that pool.

As a Legal Requirement: Many companies are under legislative mandates to be non-discriminatory in their employment
practices. Non-compliance with Equal Employment Opportunity or Affirmative Action legislation can result in fines and/or
loss of contracts with government agencies. In the context of such legislation, it makes good business sense to utilize a
diverse workforce.

As a Marketing Strategy: Buying power, particularly in today's global economy, is represented by people from all walks of
life (ethnicities, races, ages, abilities, genders, sexual orientations, etc.) To ensure that their products and services are
designed to appeal to this diverse customer base, "smart" companies, are hiring people, from those walks of life - for their
specialized insights and knowledge. Similarly, companies who interact directly with the public are finding increasingly
important to have the makeup of their workforces reflect the makeup of their customer base.

As a Business Communications Strategy: All companies are seeing a growing diversity in the workforces around them -
their vendors, partners and customers. Companies that choose to retain homogenous workforces will likely find themselves
increasingly ineffective in their external interactions and communications.

As a Capacity-building Strategy: Tumultuous change is the norm in the business climate of the 21st century. Companies that
prosper have the capacity to effectively solve problems, rapidly adapt to new situations, readily identify new opportunities
and quickly capitalize on them. This capacity can be measured by the range of talent, experience, knowledge, insight, and
imagination available in their workforces. In recruiting employees, successful companies recognize conformity to the status
quo as a distinct disadvantage. In addition to their job-specific abilities, employees are increasingly valued for the unique
qualities and perspectives that they can also bring to the table.

The core values:

Growth Development:
*<Tab/>Competence and contribution as the only basis for job security.
*<Tab/>Promotion from within
*<Tab/>Learning environment and opportunities
*<Tab/>Provision for world class education and training
*<Tab/>Aligning people with latest technological trends

Recognition & Reward:

*<Tab/>Achievement orientation
*<Tab/>Performance based evaluation
*<Tab/>Appreciation & Incentives
*<Tab/>Setting ever rising standards of performance

Innovation:
*<Tab/>Listening and two way interaction
*<Tab/>Participation
*<Tab/>Encouragement & Motivation
*<Tab/>Enterprise & Initiative

Trust:
*<Tab/>Cooperation & Support
*<Tab/>Teamwork
*<Tab/>Sense of ownership & Empowerment
*<Tab/>Integrity& Dignity
*<Tab/>Respect & Candidness

An employee is required to devote his/her whole time and attention to the service of the organization.

There are 5 natures of employments:

1.<Tab/>Permanent
2.<Tab/>Probationer
3.<Tab/>Badli
4.<Tab/>On contract
5.<Tab/>Apprentice

They also motivate by giving them benefits like

<Tab/>Provident fund
<Tab/>Group insurance
<Tab/>Sickness benefits
<Tab/>Maternity benefits
<Tab/>Death grant
<Tab/>Surgery benefit
<Tab/>Disablement pension
<Tab/>Employees old-age benefit

The following are the different types and quantum of leave normally granted to permanent employees:

<Tab/>Annual Leave
<Tab/>Maternity Leave
<Tab/>Casual Leave
<Tab/>Study Leave
<Tab/>Sick Leave
<Tab/>Compensatory Leave
<Tab/>Special Sick Leave
<Tab/>Extra Ordinary Leave (without Pay)

The following are some of the benefits a secured person is entitled to receive:

<Tab/>Sickness benefits;
<Tab/>Maternity benefits
<Tab/>Death grant;
<Tab/>Medical care during sickness & maternity
<Tab/>Surgery benefit
<Tab/>Disablement pension
<Tab/>Disablement gratuity, etc.

The employees will be entitled to following benefits under this act.

<Tab/>Old age Pension

<Tab/>Invalidity Pension
<Tab/>Widows Pension
Chapter # 6: Total Quality Management

Total Quality Management:

TQM is a continuous process that involves the whole organization and is customer-Driven. This process is aimed at creating
a culture of excellence in any organization. Hence, TQM can be seen as a process of culture transformation through which
the existing elements of the culture are modified, replaced or strengthened with better elements. These elements encompass
values and attitudes, systems and procedures.

Operational practices, organization structure and so forth. TQM aims, ultimately, to enable organizations to achieve total
quality in all its operational aspects. Hence quality does not only mean the production of quality products and services but
also encompasses all operations and activities pertaining to an organization. At this stage, quality will be reflected in many
ways in an organization such as effectiveness of management, ability of the employees, efficiency of the operational
systems and so forth.

Customer Driven Quality Definition at DFML:

Quality may define as meeting or exceeding the expectation of the customer. Most of the people are satisfied with the
quality of the cars and its performance but suggest the quality of the materials and the parts of the car should be improved.
The basic finishing of the parts and the inner sides of the bonnet needs improvement.
Some people say that the shape of Santro and Spectra is good because of aero dynamics but some suggest that still there is a
room for the aerodynamic shape to be improved. The position of the head lights and back lights should also be improved.
The cars are very reliable and help in storing more things. Some of the respondents are not very satisfied with the position
of the back seats. They suggest improving the back seats comfort as they require more leg space for the back seats. The
levers to move the front seats to and fro are very uncomfortable.

The CNG variance and the automatic variance are in demand. Some people also demand for automatic or power steering
and power windows. The rear windows should also be powered and the central locking system should be provided on the
driver's panel. People also suggest attaching CD player with Santro club, EXE and Spectra as well.
More option of colors should be provided by introducing dark colors. Some people believe that the car is too expensive and
too high. The pick up of the car should be improved and the speed of accelerator should be lowered down in order to change
the gears easily. The shape of the back view mirror should be changed. People also recommend giving the glove box at the
place of standard CD player.
Employee Involvement at DFML:

The challenge of quality management is to instill an awareness of the importance of quality in all employees to motivate
them to improve product quality. With TQM, everyone is expected to contribute to the overall improvement of quality. One
of the major challenges is to develop the proper culture for TQM is to define customer for each employee that could be
internal or external customers.

The concept of internal customers work when each internal customer demands value added activities of their internal
suppliers: that is activities that external customer will recognize and pay for. DFML gets its employees aware about the
concept of quality at source by arranging IMS day on the 6th of every month. This activity will create an environment
where every employee would feel them as a contributor to maintain the quality at all levels that are from managerial to
operator level. Handbooks are arranged to let everyone know about the TQM.

Training & Communication:

DFML Ltd. uses only competent and qualified personnel for performing tasks, which effect quality, safety and environment.
The organization has identified the competency levels for different positions. The bases for competency are education,
training, skill and experience.

Department / Sections heads are responsible to identify training needs of persons working under them through annual
appraisals. The assessment of training needs is based on competency evaluation, new equipment or process induction and
upgrade or cross-utilization of personnel. Accordingly, the training schedule is prepared and internal/external training is
provided to address the identified needs. HR manager is responsible to coordinate the training activity.

Records are maintained for all training of all employees; including internal training, external training, on-the-job training,
courses attended, and the qualification and certificates received.

Infrastructure:

DFML Ltd. ensures that its infrastructure including machines and instruments utility services and supporting services are
working properly under technical supervision. This is achieved by developing and implementing maintenance plans.
Maintenance of buildings and associated facility is generally carried out through outsourcing; however DFML management
ensures its continued suitability. Where required, regulatory and safety inspections are done to ensure safe operation of
equipment and other instruments. Concerned department is responsible for maintaining the necessary infrastructure to
ensure conformity with product requirements.

Working Environment:
DFML Ltd. management ensures that suitable work environment is maintained to achieve conformance of product to the
quality requirements. Identifying hazards and risks and eliminating or controlling them ensures safety of employees,
visitors, building & facilities, materials and other assets. DFML Ltd. ensures that work is carried out under suitable lighting,
ventilation, cleanliness of workspace, and personnel are provided with safety shoes, head mask and protective gears for use,
where required. Safety regulations are fully implemented.

DFML Ltd. also takes measures to ensure that its' activities do not adversely effect its surroundings and environment.
Environmental impacts are studied and controlled as part of the system.

Awards & Incentives:

The prospect of merit pay and bonuses can give employees some incentive for improving quality. DFML Ltd give cash
awards, gifts, prizes for showing inclination towards the quality, work standards and training institutions.

Continual improvement:

Continual improvement is a permanent objective of the company. The management strives to improve the effectiveness and
efficiency of the system objectives setting based upon data analysis, implementation of corrective and preventive actions. It
encourages employees' suggestions and involvement in determining the improvements needed and their achievement.

DFML Ltd actively engaged in continuous improvement and instills their work teams to use the Deming's approach plan-
do-check-act cycle for problem solving that focuses on continual improvement. They use to train employees for the SPC
tools and other tools they are normally using in their daily operations.

Based on the customers' requirements and technical parameters, planning is carried out by identifying and determining
quality objectives, required work processes, inspection and testing activities as well as criteria for acceptance.

DFML Ltd. has established OH&S (occupational Health and Safety) management programs to ensure that the requirements
of health and safety are met and its performance is constantly improved. A procedure has been established detailing the
methodology and criteria for identification of hazards and classification of risk and controls are planned accordingly.
Chapter # 7: Statistical Process Control

DFML Ltd. carries out analysis of performance of the integrated management system to determine improvement objectives.
Using suitably the statistical techniques and methods like Pareto charts, control charts, histogram and fishbone diagram does
this.

Data on customer satisfaction, defect trend, process performance, accidents and incidents as well as suppliers performance
is analyzed amongst other parameters.

Benchmarking:

Benchmarking is a continuous, systematic procedure that measures a firm's products, services and processes against those of
the industry leaders. DFML claims that there is no other pharmaceutical company in Pakistan that implements Total Quality
Management. So they have benchmarked their products, services and processes against foreign companies.

The company is newly founded, and they do not have any historical data of their own, but in order to focus on standards,
they have taken up benchmarking the international Automobile Manufacturing Industry.

Positioning Graph

Chapter # 8: Capacity Planning and Strategies

Measures of Capacity

1.<Tab/>No single capacity measure is applicable to all types of situations. Different organizations measure capacity in
different ways. In general it can be expresses in one of the following two ways:

<Tab/>. Output Measures

<Tab/>Input Measures

Output measures are best utilized when a firm provides a relatively small number of standardized products and services.
Such measures can be number of finished goods produced or number of customers served etc.

Input measures are best utilized when a firm provides a relatively large number of customized products and services. Such
measures can be number of labor hours worked or amount of material used etc.

(Examples of Input / Output Measures of Capacity)

Utilization Rate

2.<Tab/>Utilization at DFML is calculated as the number of customers entertained per showroom or number of order per
month.

<Tab/>Calculation for Average Output Rate

Total Number of units assembled in a year = 1,800 units/year.

Average output per month = 1800 / 12 = 150 units.
Total Number of Showrooms in Pakistan = 22.

<Tab/>Maximum Capacity

Maximum Capacity = 150 safety stock per month.

<Tab/>Utilization Rate

Utilization = (Average Output Rate / Maximum Capacity) X 100

= (150/ 150) X 100

= 100%
Safety stock:

To avoid CKD delays and robbing, DFML manages to store at least 1 month's safety stock for continuous production. Cost
does increase but not more than the cost burden due to plant inactivity. Moreover, by continuous production, they ensure
shorter delivery times.

Setting Stock Levels

One major objective of capacity control department is to ensure that "stock-out" does not occur, and that "surplus" stocks
are not carried. Stock-out occurs because insufficient stocks are carried; this may lead to production stoppage and hence loss
of customer goodwill. Surplus stock results in increased storage costs, and also ties up capital which could be utilized more
profitability in other projects. On the other hand the working capital of the company tends to increase. The stock levels to be
properly determined the company maintain strict figurative policies relating to the Re-Order Level, Minimum Level and the
Maximum Stock Level.

Chapter # 9: Location

Location of Dewan Farooque Motors Limited:

Location of Dewan Farooque Motors Limited has one of the most advanced automobile assembly plants of South East Asia.
Located in Sajawal, Thatta, 152 Kilometers from Karachi was built in a record time. The plant stands on a 40-hectare plot
and has been built with an initial investment of more than Rs.1.8 billion. Its unique feature include, inter-ailia, the provision
of high standard of living accommodation for all categories of employees, the availability of land for expansion of
production facilities, and the in-house generation of electric power. It has a production base of 10,000 units' p.a. on a single
shift basis.
The plant is first automobile manufacturing unit in Pakistan to be independently invested by 100% Pakistani investors. The
groundbreaking ceremony for the plant was held in August 1999, and the first pilot Santro was ready in a record-breaking
time of 6 months. Today the modern state-of-the-art plant is rolling out cars every day. This is the first automobile
assembling plant in Pakistan with the state of art robotic equipment.

Total Customer Care

Dewan Farooque Motors Limited strives to serve its valued customers. The in-house Customer Care & Training
Departments has been instrumental in conducting various seminars and workshops for developing professional skills and
techniques for effective customer handling to provide high value products and services to customers and to ensure highest
level of customer satisfaction.

Chapter # 10: Layout

DFML Layout:

DFML is using product layout that use standardized processing operations to achieve smooth, rapid, high-volume flow.
They are designed to accommodate only a few product designs. Such layouts are designed to allow a direct material flow
through the facility for products.

They use specialized machines that are set up once to perform a specific operation for a long period of time on one product.
These machines are usually arranged into product department. Product layouts can take one of the following three forms:

a) Production Line; which is a standardized layout arranged according to a fixed sequence of production tasks.

b) Assembly Line; which is a standardized layout arranged according to a fixed sequence of assembly tasks.

c) U-Shaped Layout; is a compact layout requiring half the length of a straight production line.

Production Line

1.<Tab/>Body shop (welding)

2.<Tab/>Paint shop (cleaning, and smoothing, coloring, actually they are using 3 types of methods for coloring: chemicals,
dip, robots)
3.<Tab/>Assembly shop (assemble the whole car)

A) Body Shop: Spread over an area of 8,400 square meters, the Body Shop is equipped with the most modern welding
equipment and automatic type jigs & fixtures from Korea.

The well-trained and experienced manpower is making the best use of the available equipment and is practicing up-to-date
production and quality control techniques to produce highest quality vehicle bodies here.

B) Robotic Paint Shop: The Paint Shop is a combination of excellent engineering know-how and design with the most
efficient German and Korean equipment.

The plant has a state of the art CED paint shop from Shindurr. Shindurr has German technology and has constructed number
of CED paint shops in Europe, Far East and Asian countries. The Cathodic Electro Deposition (ED) System provides
durability to the body and protection against rust.

The facility also includes high-speed integrated setup of Robots to provide unprecedented paint quality. Painting Robots are
supplied by DURR-BEHR of Germany, the most technologically advanced name in the world for such equipment, are being
used to paint the vehicle bodies for the first time in Pakistan.

This is the first Automobile assembling plant in Pakistan with the state of the art Robotic Equipment. The use of robots
results in the production of evenly sprayed, high gloss, defect-free and high quality painted bodies.

C) Assembly Shop & Inspection Line: The combination of the conveyors provided by SEOKWANG of Korea, and the
ANDON System installed throughout the shop provide efficient communication and better control of production activities.

The tester line, with high precision equipment from Iyasaka - Korea, is employed to test and adjust the vehicles in order to
ensure defect free and highest quality output. Exhaust gas analyzers are also used to ensure that environment friendly
automobiles are rolled-out from the factory.

Warehouses:

There are 2 warehouses. One is near the head office, which stored items for a temporary time period, and the other is at
Sajawal, which is the main. These warehouses are highly secured and well organized so that the parts may be easily located.
The parts are identified by its label and the concern person knows regarding the placement of the parts. The shelves have
tags on them where the item code, item name, store code and rake no is written down on each tag.

The inventory is stocked in the warehouse for the usage of one month only. At least 150 safety items for a complete car in
any case are stored in the warehouse. When any of the items goes out of the warehouse to the assembly line, it has to be
acknowledged by filling a particular form, which is to be signed by three authorized persons.The planning and controlling
of the inventories is done in a very well organized manner. Manager store and Deputy General Manager plans the inventory
strategy for the company.

Top management and marketing department decide the number of cars to be manufactured every month. The Top
management plans the total schedule and each department is informed regarding the plan and the related requirements
accordingly.

During the purchase of the inventories, the company faces difficulties in the negotiation of pricing, counting mistakes in the
units ordered, purchased, processed or assembled. It is also very hard to control the venders to supply the parts on time, and
if the market rate of some part increases, the company pays extra amount for the purchase. The company has no difficulty
regarding the storage of the inventories. The company has been successfully able to solve 90% of the theft issue by
implementing strict secured environment within the organization

Chapter # 11: Supply-Chain Management

<Tab/>Supply Chain Management is use to control inventory by managing the flow of material. Supply chain management
required a high degree of functional & organizational integration that progress link purchasing, production control and
distribution to create an internal supply chain which is responsibility of a material management development. They link
supplier & customer, an external supply chain to internal supply chain to form an integrated supply chain.

<Tab/>Inventory is a stock of material used to satisfy customer demand or support the production of goods or services.
There are three categories.

<Tab/>Raw Material is inventories needed for the production of goods or services. They are considered to be input to the
transformation processes of the firm whether they produce a product or service.

The Raw Material at DFML is spare parts & safety stock of a complete car.

<Tab/>Work-in-process (WIP) consists of items such as components or assemblies needed for a final product in
manufacturing. WIP is also present in some service operations, such as service shops mass finished goods (FG) service
providers, and service factories.

The WIP at DFML are the cars which are under process or those units that are not completed until the work stops.

<Tab/>Finished goods (FG) in manufacturing plants, warehouses, and retail outlets are the items sold to the firm's
customers. The finished goods of one firm may actually be the raw materials for another.

The Finish Goods at DFML is a complete tested car.

Distribution Technique

The distribution techniques adopted by DFML is the network of dealers. Presently, there are 22 dealers in all, managing
both Hyundai and Kia products. There are still 4-5 prospective dealers in the pipeline. The company is also planning to
separate Kia and Hyundai dealers from the existing combined dealerships. Santro and Shehzore are the products of
HYUNDAI, while Sportage, Classic and Spectra are Kia products.

Channel of Distribution

MANUFACTURER (OEM)

Distributor / Assembler (DFML)

Dealers (3'S Dealerships)

Consumer (Target Customers)

Analysis of Dealer's Network

Dewan Farooque Motor Ltd has a countrywide 3'S dealer network for the distribution of its products. The Assembly plant of
DFML is very huge located at Sajawal. The imported parts are directly taken from the port and off loaded at Sajawal. Many
parts are also bought from the local vendors. PTN is the main transporter responsible for delivering the cars to the dealers.
The (finished product) cars transported from the plant to the dealers, are delivered to the customers of the respective city.
The dealership network setup by the company is satisfactory. Presently, there are 22 dealers in all managing both Hyundai
and Kia products. There are still 4-5 prospective dealers in the pipeline. The company is also planning to separate the Kia
dealers from Hyundai. Santro and Shehzore are products of HYUNDAI, while Sportage, Classic and Spectra are Kia
products.

The dealer's analyzed are as follows:

1.<Tab/>Hyundai Apollo Motors

2.<Tab/>Hyundai Shahra-e-Faisal
3.<Tab/>Hyundai South Motors
4.<Tab/>Hyundai Sherwani Motors
5.<Tab/>Hyundai Western Motors

The dealers are basically very satisfied by the dealer's network set by the company. There are as such no strict terms and
conditions given by the company to the dealers. As per the company's Sales Policy, dealers have adopted the procedure of
Stock Sales i.e. the vehicles produced are allocated among all the dealers according to their region / territory wise fixed
sales targets, for which the dealers make advance payments to the company for the number of vehicles allocated.

The company wants the full payment of the car in advance at the time of placing the order for the car. The dealer takes the
payment from the client and makes the payment on his behalf to the company. The advance payments made by the dealers
to the company are for the total cost per vehicle, which includes the Sales Tax and dealers' commission as well.

Some times, there may be a delay of 10 -20 days in the delivery of the car by the company to the dealers. Hence, the dealers
plan the delivery date accordingly and then issue the delivery date of the car to the customer.

The distribution policy set by the company's logistics department is satisfactory as the vehicles are dispatched to each dealer
throughout the country by its nominated transporter, covered under an insurance policy. The dealer pays the cost of
transportation and Insurance to the company, which is then recovered by the dealer from the customer who buys the car.

According to the dealers colors of cars, which are mostly in demand, are;

<Tab/>Husky gray
<Tab/>Silver
<Tab/>Gun Metallic
<Tab/>Black
<Tab/>White

There are four departments in the dealership; sales, service, spare parts and accounts. The entire departments are working
very effectively and satisfactorily. All the departments are very well coordinated with each other.

The training courses are offered as per company's plans and schedules for both the Sales and Service departments. The
company carries out training programs for the employees in almost every department of the dealership after every 4 to 6
months. This process helps the employees to understand the products in detail and in enhancing the qualities and skills of
the employees, which may be favorable for the company. The company also carries out a training program at the time of
launching of new product or new variants.

Dealers get Rs.10,000/- commission from the company on each sale of car.

The dealers are satisfied with the price set by the company for their cars but in the view of the dealers, but the customers are
not very much satisfied with the price and consider the product to be expensive.

After Sales Service

The Sales and Service departments of dealership operates under the guidance of company's respective departments as per
the specified policies and procedures.
DFML, in order to provide complete after sales support to the customers, has established a nationwide dealership network
of 22 Hyundai-Kia 3S, also known as 3S DEALERSHIP NETWORK: (Sales, Service and Spare Parts) dealers, under its
roof.

It is the dealer's responsibility to carry out a Pre-delivery inspection of the car. The dealers also make periodic maintenance
calls to customers.

There are many more after sales services provided by the dealers. The dealers attract the customers by offering them
personal attention and prompt service. They also offer free after sales services, Parts and service warranty of the company
for 20,000 KM or 1 year, (which ever comes first) is also provided by the dealers.

In case of occurrence of any problem in the car, the dealer sends their mechanics to the customer, who tries to fix the
problem. In case, if the mechanic is unable to manage the problem, he then brings the car at the workshop and reports the
problem to the company's Service department. These incidents occur very rarely as the assembly system is automated and
the chance of having such problems is very rare. The new cars are thoroughly examined before finally distributed to the
dealers.

Chapter # 12: Forecasting Techniques

Forecasting

It's the predication of future events used for planning purpose. It needs to aid in determining what resources are needed,
scheduling existing resources, acquiring the additional resources. It allows schedules to the machine capacity efficiently
reduce production time & cut inventories. Its methods may base on model using historical data available, quantities methods
drawing on managerial experiences or a combination of both.

Demand Pattern

According to the dealers and the sales & marketing department of the Dewan Farooque Motors Ltd the demand pattern of
the cars is random or un-forecast able variation in demand they said that they are manufactured cars according to the
demand but it is not necessary that the demand of current month is same as the demand of next or pervious month. It is un-
forecast-able not conform that in which month the demand is high & in which its low.

Judgment Method:

Judgment methods can be used to modify forecasts generated by quantitative methods. Dewan Farooque Motors are using
marketing research method. Market research is a systematic approach to determine consumer interest in a product or service
by creating and testing hypotheses through data-gathering surveys. DFML have a separate department of research &
development. And after analysis the features of demand they plan annually that how many cars are been manufactured.

Chapter # 13: Inventory Management

At DFML Inventory Management Provides

<Tab/>Up-to-date information about data processing resources through the creation and archiving of records in a
centralized repository.

<Tab/>Financial records specific to a single component, or groups of components.

<Tab/>Service records for all components in the inventory.

<Tab/>Data used to support configuration diagrams of the hardware and software components contained within specific
locations, or the entire data processing environment.

Objective of Inventory Management at DFML

The objective of Inventory Management is to manage the physical and logical properties of I/S resources and their
relationship, while ensuring that service level commitments are achieved. This process will ensure efficient and timely
identification of vital corporate assets. It will also assist in managing the enterprise-wide inventory and provide a common
repository for asset protection. The inventory management process plans and controls the proliferation of assets across the
enterprise.

The objectives of Inventory Management are:

<Tab/>To identify and track all data processing assets in an Inventory System Repository.

<Tab/>To define the process by which assets are identified and maintained in the Inventory System.

<Tab/>To provide Inventory System access to all necessary personnel (data entry, update and deletion).

<Tab/>To provide a full range of reports that will satisfy informational requirements.

<Tab/>To document the Inventory Management System within the Standards and Procedures Manual.

<Tab/>To provide training to personnel responsible for supporting the Inventory Management System.

Functional Areas

The functional areas that interface with an Inventory Management System are:

Overview of DFML Inventory Management Functional Areas

All of the functional areas listed above can utilize the information contained within the Inventory Management System's
Central Asset Repository of information. Additionally, the Recovery Management area could utilize inventory information
to identify an assets criticality (especially when the asset's location and owner are identified within the Inventory
Management System). Through the use of reports generated from the Inventory Management System's Repository, it would
be possible to obtain a listing of all "Most Critical" resources, by location and group. This report would then serve as the
basis of a Business Recovery Plan.

Integrated Inventory Management System

To successfully implement an Inventory Management System, it is necessary to integrate it within the everyday functions
performed by company personnel. That is, when a user wants to order equipment or software, they would call up the
Inventory Management System screen associated with Acquisition. The same types of processes should be available for
Redeployment and Termination of assets. Should a user request the acquisition of a specific type of asset, then it could be
possible for the inventory system to determine if the asset is already in surplus, or if it should be purchased under an
existing Volume Purchase Agreement with a vendor.

The utilization of Inventory Management Systems to control the purchase and installation of assets can aid in the control of
the business environment, while assisting in the assignment of personnel to perform asset related work functions. This
methodology will result in a workflow and asset management system.
Analysis of DFML's Inventory Control Department

Inventory Control department is responsible for the production planning and material control language and cost ordering.
Dewan has been able to successfully launch the following cars up to date:

<Tab/>Shehzore
<Tab/>Classic
<Tab/>Santro (club, exec, and now planning to introduce sports model).
<Tab/>Spectra
<Tab/>Sportage

The effective inventory carrying system of Santro leads to its cost effective distribution and sales. The company has
implemented systems where 90% are using oracle system. The departments are being computerized one by one and then the
departments are linked with each other via satellite

Segments of Inventory at DFML

The inventory is segmented into 3 categories of material departments and then stored in the warehouse. Following are the
material departments:

1.<Tab/>CKD
2.<Tab/>Local Parts
3.<Tab/>Consumer material

1.<Tab/>CKD/ Imports

CKD (Completely Knock Down) is the main department where only the imported parts are stored. The order of the parts is
placed on internet and the further dealing is done through documentation and the further issues are resolved in personal
meetings. The order for the parts is placed according to the production of cars to be made in the next following month
instead of ordering parts annually or on estimate basis. The ordered parts are received at Karachi port and transferred
directly to the main assembly plant located at SAJAWAL.

2.<Tab/>Local parts

Second most important area is to purchase the parts locally from the local vendors. Following are the tasks performed:

<Tab/>Schedule the delivery: the heavy parts are directly delivered to SAJAWAL and the light parts are transferred from
the head office after recording.

<Tab/>Follow-up is regularly taken by the vendors to know whether they are manufacturing all the parts that were
scheduled or not. Sometimes the steel gets expensive and the vendors stop making the steel parts, so, the company has to
convince the vendors to manufacture those parts and the company gives extra money for this purpose.

<Tab/>Payments of the delivered parts are made within 30 to 40 days after PDI (pre-delivery inspection).

3.<Tab/>Consumer parts

Purchase of consumer goods like Greece, oil, battery water, break oil, coolant, etc. The company first schedules the items,
and then takes a follow-up with the vendors. The company then pays the outstanding amount to the vendors after checking
the quality of the goods purchased. The Inventory control department always keeps 200 units in hand as safety stocks so that
they can handle certain situation incase of rejection.

Dewan Farooque Motors basically emphasize on PP (product planning) department. The targeted deletion percentage
achieved is 57% at present. Officially the company is showing the targeted deletion percentage as 60%, and to cover the rest
of the 3%, they ask the local vendors to make purchases on their behalf. They are targeting to increase this deletion up to
70% to 80%.

CKD used<Tab/><Tab/><Tab/><Tab/><Tab/><Tab/>43%
Local <Tab/><Tab/><Tab/><Tab/><Tab/><Tab/><Tab/>57%

All the parts are not purchased at one time due to the outstanding payables. The parts keep on adding in the total inventory
based upon the usage and according to the need of the parts.

The company cannot delete 30% of the parts because the high quality glass or the high cost engine parts or those, which are
highly sensitive and not manufactured by the local vender, are imported at cheaper rate than being manufactured locally.
Mainly, parts of Engines and glasses are imported from Korea due to less rejection chances and quality factor. While, Steel
sheets items and rubber material is manufactured locally.

There are 2 warehouses. One is near the head office, which stored items for a temporary time period, and the other is at
Sajawal, which is the main. These warehouses are highly secured and well organized so that the parts may be easily located.
The parts are identified by its label and the concern person knows regarding the placement of the parts. The shelves have
tags on them where the item code, item name, store code and rake no is written down on each tag.

The inventory is stocked in the warehouse for the usage of 2 to 3 months only. At least 150 safety items for Santro in any
case are stored in the warehouse. When any of the items goes out of the warehouse to the assembly line, it has to be
acknowledged by filling a particular form, which is to be signed by three authorized persons.

The planning and controlling of the inventories is done in a very well organized manner. Manager store and Deputy General
Manager plans the inventory strategy for the company. Top management and marketing department decide the number of
cars to be manufactured every month. The Top management plans the total schedule and each department is informed
regarding the plan and the related requirements accordingly.

During the purchase of the inventories, the company faces difficulties in the negotiation of pricing, counting mistakes in the
units ordered, purchased, processed or assembled. It is also very hard to control the venders to supply the parts on time, and
if the market rate of some part increases, the company pays extra amount for the purchase.

The company has no difficulty regarding the storage of the inventories. The company has been successfully able to solve
90% of the theft issue by implementing strict secured environment within the organization

Chapter # 15: Material Requirements Planning

The importance of material management lies in the face that any contribution made by the materials management in
reducing materials cost will go a long way in improving their profitability and the rate of return on investment.
Materials management experts claim that efforts for saving a rupee in material cost is almost equal to the efforts made for
additional sale. Materials form an important part of the current assets in any organization. Thus the return on Investment
depends on a great deal on the manner of utilization of materials.
For any organization, may that be a manufacturing concern (Microwave manufacturers, Television manufacturers, etc) or a
service providing organization (Internet Service Provider, Bakeries, etc). Proper management of the raw materials or office
supply materials plays a very important role in the profitability and success of the organization.
Materials Management Cycle

The Materials Management Cycle for any organization

Explanation

The figure shows the materials management cycle of acquisition, storage, assembling, storage and distribution. The cycle
begins with the purchase of materials or services from outside suppliers. Materials are stored and then converted into goods
or services by one or more transformation processes. Manufacturers store semi finished and finished goods and finally
distribute the finished products to customers. Materials management decisions have short time horizons and therefore are
more tactical then strategic. However, they have a major cumulative effect and thus attract considerable managerial
attention. Tactical decisions about materials are important for two reasons

Treatment of Materials at DFML

In the DFML automobile industry direct material is basic part of all materials procured, consumption of which can be
identified with specific production unit and which becomes a part of the product. These materials are acquired, stored and
subsequently issued for production.
Indirect materials are those materials which are ancillary to production. These are considered as overheads. (E.g. cleaning
material for the factory and floor, stationary for the employees includes printer papers etc).

Chapter # 16: Just-in-Time Systems

Just in Time, or JIT is a set of techniques to improve the return on investment of a business by reducing in-process
inventory, and its associated costs. JIT causes dramatic improvements in a manufacturing organization's return on
investment, quality, and efficiency.

Japanese corporations cannot afford large amounts of land to warehouse finished products and parts. Before the 1950s this
was thought to be a disadvantage because it reduced the economic lot size.
Just in Time at DFML:

At DFML there is no use of JIT but in future their mission is to test this kind of approach & if it is suitable then implement
it permanently.

DFML's Opinion

A huge amount of cash appeared, apparently from nowhere, as in-process inventory was built out and sold.

This improved customer satisfaction by providing vehicles mutually within a day or two of the minimum economic shipping
delay.

It also save the space of inventory & reduce the risk.

Also, many vehicles began to be built to order, completely eliminating any risk that they would not be sold. This
dramatically improved the company's return on equity by eliminating a major source of risk.

Conclusion

The Dewan Farooque Motors Ltd is car manufacturing organization that is actually purchase parts from the local vendor(s)
and from Kia Motors Ltd and Hyundai Motors Ltd and assemble then to manufacture cars.

DFML mission is to be the market leader in the passenger car segment (1000cc and above) by the year 2006.

Line Process is carried out in DFML.

There is a low level of customer involvement at DFML because DFML is an automobile assembling organization and the
plant of DFML is At Sajawal.

DFML is highly capital intensive & requires a large amount of investment to equip the workers and maintain the
equipments.

Dewan Farooque Motors Limited is using Korean Technology in manufacturing of cars, according to the DFML sales
executive that Korean technology is more reliable and much improved then the others.

They are using robotic arms for painting, welding and screwing the nuts of the car.

Dewan Farooque Motors are also using PLC (programmable logic control).

DFML manages to store at least 1 month's safety stock for continuous production.

Located in Sajawal, Thatta, 152 Kilometers from Karachi was built in a record time. The plant stands on a 40-hectare plot
and has been built with an initial investment of more than Rs.1.8 billion.

DFML is using product layout that use standardized processing operations to achieve smooth, rapid, high-volume flow.

There are 2 warehouses. One is near the head office, which stored items for a temporary time period, and the other is at
Sajawal, which is the main.

Presently, there are 22 dealers in all, managing both Hyundai and Kia products.

It is un-forecast-able not conform that in which month the demand is high & in which it's low.
Judgment methods can be used to modify forecasts generated by quantitative methods. Dewan Farooque Motors are using
marketing research method.

At DFML there is no use of JIT but in future their mission is to test this kind of approach & if it is suitable then implement
it permanently.

Recommendations
Based on the research carried out we recommend the following suggestions:
The company should develop the major parts of cars locally rather then acquiring them from Korea. The local material and
labor is cheap in this way the company can save the substantial amount, which will result in the reduction of selling price of
Santo. This would be a competitive advantage.
Most of the people are satisfied with the quality of the car and its performance but suggest the quality of the materials and
parts of the car to be improved. The basic finishing of the parts and the inner sides of the bonnet needs improvement.
Some people say that the shape of Santro is good because of aero dynamics but some suggest room for improvement. The
back seats comfort should be improved along with the leg space. The levers to move the front seats to and fro are very
uncomfortable and need some modification.
The CNG variant and the automatic variant are in demand. Some people also demand for automatic or power steering and
power windows. The rear windows should also be powered and the central locking system should be provided on the
driver's panel. The company should increase the engine power of their cars so that CNG may not affect the performance.
The sales ratio of DFML vehicles in corporate sector is very low as compared to its competitor's Civic, City, Corola, Cultus
& Alto etc. The company should make strategy to focus on corporate sector as well.
The pick up of the car should be improved. More color options should be provided, by introducing dark colors.

Appendix

Population: The target population for our research report is segmented into two categories:
1. <Tab/>The employees working in Marketing and Inventory Control department of Dewan Farooque Motors Ltd.
2. <Tab/>The dealers responsible for the promotion of DFML.

Sample Size: In this study, our sample size of the population is 10 respondents including:
<Tab/>5 employees of Dewan Farooque Motor Ltd.,
<Tab/>5 dealers responsible for the sales and promotion of DFML,

Sampling Techniques: In this study non-probability sampling was carried out which is termed as "Trade-off between cost &
time and precision". The "researcher cannot calculate the bias involved". That is why statisticians usually avoid non-
probability sampling design.

Research Methodology: Primary and secondary research has been undertaken through survey forms and as per
requirements. Primary data has been collected through face-to-face interviews, whereas secondary data will be gathered
through brochures, business magazines, newspapers, internet, Seminars/discussions/workshops and other media. The study
carried out is under a systematic, objective and controlled condition.

Time & Cost Requirement: The time duration required to conduct the survey on a large organization like Dewan Farooque
Motors Ltd is of one month. The cost can be calculated by the expenses made for the print outs, scanning, transportation,
snapshots, binding, etc. which comes up to Rs. 2500/-

Questionnaire

Questionnaire for the Dealers

1.<Tab/>Are you satisfied with the dealer network set by the company?
2.<Tab/>What are the terms and conditions given by the company?
3.<Tab/>Are you satisfied with the distribution policy set by the company?
4.<Tab/>Does being Korean technology have anything to do with the sales of the car?
5.<Tab/>How do you manage to attract the customers?
6.<Tab/>Would you like to own the car for yourself?
7.<Tab/>What services you provide to your customers?
8.<Tab/>Which colors are mostly in demand?
9.<Tab/>How are your sales and service departments operating?
10.<Tab/>Does the company provide your staff training courses? How frequent and what types?

Questionnaire for the Inventory Control Department

1.<Tab/>What is inventory in your opinion?

2.<Tab/>How do you manage your warehouse?
3.<Tab/>What are the parts that you import from Korea?
4.<Tab/>What kind of parts do you manufacture locally?
5.<Tab/>How do you plan and control your inventories?
6.<Tab/>What difficulties you face to store the inventories?
7.<Tab/>What difficulties you face to purchase the inventories?
8.<Tab/>How many vendors does your company have? Name some
9.<Tab/>Who plans the inventory strategy for your company?
10.<Tab/>What time period do you stock the inventory for?
11.<Tab/>What type of inventory system do you have?
12.<Tab/>Do you have capacity Cushion?
13.<Tab/>What is the capacity of your plant (per month)?

Questionnaire for the Manufacturing & Assembling Department

1.<Tab/>What is the importance of material management with respect to DFML?

2.<Tab/>What is the procedure of purchasing materials?
3.<Tab/>Which manufacturing strategy do you follow for producing cars?
4.<Tab/>Which process strategy do you follow in the manufacturing of vehicles?
5.<Tab/>How many cars are assembled per day in your assembly plant?
6.<Tab/>Why your assembly plant is different & unique from other assembly plants in Pakistan?
7.<Tab/>Are you using any PLC in your plant?
8.<Tab/>What type of SPC tools you are using in DFML?
9.<Tab/>What is the targeted deletion percentage to be achieved by the company? And what percentage achieved?
10.<Tab/>What is the percentage of parts, which the company cannot delete (cannot be manufactured locally)?

Bibliography

<Tab/>HYUNDAI & KIA BROCHURE

<Tab/>DEWAN GUIDE BOOK

<Tab/>WEBSITES
1.<Tab/>http://www.planetsantro.com

2.<Tab/>http://www.dewan-motors.com

3.<Tab/>http://www.dewangroup.com

4.<Tab/>http://www.hyundai.com
5.<Tab/>http://www.yahoo.com

6.<Tab/>http://www.google.com

7.<Tab/>http://www.pak.org