Acknowledgement II

Preface III

Executive Summary IV

Introduction 1

Mission Statement 2

Future Planning of Company 2

Production Process 4

Product Process Flow Diagram 8

Quality Control 9

Raw Material 11

Location 17

Capacity 19

Distribution 20

Distribution Requirement Planning 20

Aggregate Planning 22

Demand Alternatives (Reactive Alternatives) 22

Capacity Alternatives (Aggressive Alternatives) 23

Inventory Management 24

Purchasing 29

The Acquisition Process 29

Supplier Contracts 34

Appendix
 Acknowledgement

I am highly grateful to Al-mighty Allah who gives me the power to complete

this report and my respectable teacher

Dr. Hayat Muhammad Awan

Who assigned me to write a term report of operations management on the DG

Khan Cement Factory.

I also acknowledge the following person who help me to complete my report:

Mr. Mujahid Hussain Shah

Shift Engineer

Mr. Shafi

Manager Store

Mr. Sher Khan

Manager Purchase Department

Javed Ahmed Bhutta

Mechanical Engineer

Muhammad Shahid

Kiln Operator

Amin-ud-Din

Junior officer sales Staff office Multan

Preface

Before you read this report one thing you must keep in your mind. Writing a
report on the real operations is not an easy thing. It is also easy for any student
of operations management to get all the knowledge of operation of whole
factory in three trips.
This report is not an academic requirement but also gives students a practical
vision of operations of company. It provided me an opportunity to perceive
what is the difference between theoretical studies and activities.

By the grace of God, I applied all the learning, which was taught to me by my
honourable teacher Dr. Hayat M. Awan, and the book which I read. Some
concepts and applicable at DG Cement Factory while the others are not.
Nevertheless, it gives me a greater practical knowledge about operations of
cement industry. Maximum efforts have been given to make this report easier
to understand for its readers.

I hope that the reader will find this report useful and practicable.

Executive Summary

DG Khan Cement Factory is one of the computerized cement factories in

Pakistan. It produces the cement by adopting dry process.

Production Process

These are three raw materials of Cement:

Lime Stone

Shale and

Gypsum

Limestone and shale is taken from quarry with the help of 7-Km long conveyor
belt. The both raw material and mixed in raw mill, heated in kiln upto 1600 OC
ground in cement mill along with gypsum almost 5%. The final product cement is prepared.

Location:

The company is located at Sattai Khofli, which is about 40 Km from city of

Dera Ghazi Khan.

Capacity:

The company has two plants

Existing
 Expansion

Both the plants capacity is 2200 ton and 3300 ton clinker per day respectively.

Quality Control

The company believes on quality assurance not on quantity inspection. So they

have got ISO 9002 certification. Following tests are performed at different
stages of production process.

Raw Materials

Test on these material are performed

Raw Mill

Following Tests are applied

Hydraulic Modulus

Silica Modulus

Limestone Factor

Kiln

Same tests are performed as in raw mill.

Clinker

Tests are performed to see the quality of clinker.

Cement

Following physical tests are performed:

Expansion

Fineness

Strength

Loading
 Tests are performed after loading.

Aggregate Planning

Aggregate planning is done to cope with demand by using both demand and
capacity alternatives.

Purchasing

Purchasing of items is the duty of purchase department. Need is recognized

when the indentor raises the demand notice. The purchase department identifies
and selects the supplier and order is placed. Placed order is checked by store
department and indentor to accept the order.

Inventory Control

The store is responsible to manage and control the inventory of inputs. The
inventory of outputs (cement) kept in silos. The received order is inspected by
store department. And accepted material is stored in the store.

Distribution

The company has four sales offices in the following cities:

Multan

Lahore

Karachi

D. G. Khan

These sales offices accumulate demand of their respective regions and send the
orders to the head office Lahore.

Introduction

State Cement Corporation of Pakistan (S. C. C. P) was established in 1984

managed by the Federal Government. In the beginning, existing plant was
purchased from U.B. E. industries of Japan. It had installed capacity of 2300-
ton clinker daily and started its production in April 1986.
The main purpose for the establishment of plant was to fulfil the demand of
Northern Marketing zone. In 1977 the annual demand for cement in Pakistan
was about at 3.7 million tons while the production was about 3.1 m. To fulfill
0.6 million gap, a new plant was required. After a detailed investigation, they
selected a place D. G. Khan City where large high quality material reserves
were available at least or 100 years. The location is ideal because it is near to
market as well as prior to raw material.

The govt. privatized the SCCOP, first purchased by Segol Group of Industries
and Nishat Group of Industries combinely. In 1992, the company purchased
by Nishat Group of Industries solely. After privatization it name changed
from SCCOP to D. G. Khan Cement Factory. Before the establishment of
expansion plant (new plant) in 1997.

The cement was brought to this and either from Maple Leaf Cement Factory
Mianwali and Zeal Pak Hyderabad and ACC Rohi. The new plant is the relief
for Bhawalpur, Lodhran, Khanewal Muzafargurh, Bhawalnagar, Vehari. It was
purchased from F. X. Smith of Denmark. Its design capacity of 3300 ton
clinker per day.

Types of Cement

The company has following types of cement:

Ordinary Portland Cement

Sulphate Resistance Cement

Black Cement

Heat Resistance Cement

White Cement

Slag Cement

Quick Setting Cement

Under Water Setting Cement

Acid Resistant Cement

Mission Statement
The mission statement of D. G. Khan Cement Company is:

“D. G. Khan Cement Company committed to produce and supply high quality
conforming the local and international standards adopting modern technique
satisfying the customer requirements the most competitive prices.”

Future Planning of Company

The company recently did two things:

Establishment of Expansion Plant

Getting ISO 9002 Certificate

Both the measures to reveal the future planning of the company. The future
planning of the company is to export their high quality cement. The existing
plant is unable to cope with the demand of country. With the establishment of
expansion plant, their supply is more than demand. So, they can easily export
their high quality cement. The main purpose of ISO 9002 certificate it to get the
approval from ISO, they can export their high quality cement according to
international standards and can export after 2000 A. D. when only ISO certified
companies can export their products.

Production Process

D. G. Khan Cement factory adopt true dry production process for the
manufacturing of cement. This process consists of following steps.

Drilling

Drilling is done in the quarry with the help of drilling machine. They create a
space for the powder explosive.

Blasting

The powder explosive is blasted under a controlled process to get different

small segments of limestone. The large segments are also converted into small
segments which is called crushing process.

Transportation
The small fragments are loaded on the 7-Km long 3 belts conveyor system
running over rough terrain. This conveyor takes the new material from quarry
to the factory site. The limestone and shale to stored in the open space.

Grinding

After storage, the stored limestone and shale are fed to the raw mill with the
help of two hoppers according to predetermined mixed proportion. The roughly
crushed material passed through 3 rollers. The mixture is dehydrated, sized, and
fine particulars are separated.

The cyclone extracts different gasses, which are emitted in this process. The
collected separated mixture is called raw meal. It is stored in a silo of 15000
ton. During the process water is also used with the purpose:

To lower the gas volume

To control the variation

To maintain the temperature

Clinker

The raw meal is fed into kiln shell. The kiln shell has following particulars.

Length of shell 45 m

Diameter 3.5 to 6.5 m

Slope 1.5o

In this kiln shell following reactions take place.

CaCo3  CaO + O2 (Calcium Oxide)

CaCo + SI O2  CaoSio2 (Calcium Silicate)

CaOSio2 + CaO  2 CaoSio2 (Dicalcium Silicate)

2CaoSio2 + CaO  3CaoSio2 (Tricalcium Silicate)

CaO + Al2 O2  CaO Al2 O3

 CaO Al2 O3 + CaO  2 CaO Al2 O3

2 CaO Al2 O3 + CaO  3 CaO Al2 O3

3 CaO Al2 O3 + CaO + Fe2 O3  C4AF*

(Tetra Calcium Aluminum Fersite)

The kiln shell can be divided into four portions.

Firstly, the incoming raw meal is heated with the help of preheated air which
comes from the cooler at the terminal end of the kiln. Heat is provided by the
combustion of the furnace oil. The raw meal is moved on the sloped shell
which have four zones of temperature.

Calcination zone 1200 OC

Transition zone 1250 OC

Sintering zone 1300 OC

Burning zone 1400 - 1500 OC

After the position of burning zone the mixture is cooled down with the help of
air fans of graze cooler. The heated is omitted which reduce the temperature of
mixture. This heated air is used to raise the temperature of raw meal entering
into the kiln. The finished product is called clinker, which is stored in an open
yard having capacity of 30000 tons.

Grinding

Now the clinker enters into Cement Mill. In this mill clinker is ground with
gypsum. Almost 5% of gypsum is added. The main purpose of addition of
gypsum is to increase the setting time.

The final product cement is prepared. It is stored in the silo having capacity of
10,000 ton each.

Packing

In the packing unit, there are 4 rotary packers and each packer has 8 nozzles.
The whole packing process is automatic. Cement bags are loaded on the trucks
and heavy trollers automatically. Each cement bag has 50 Kg weight.
Sometimes heavy users ask for bulk quantity of cement without packing. It is
loaded into the truck.

Computerized production process flow is attached at the end of the report.

Product Process Flow Diagram

Cement Mill
Storage Yard
Cooler
Kiln
Preheater
Silo
Raw Mill
Quarry
　

　
　

Quality Control

Quality a Competitive Priority

There are four competitive priorities

cost

time

flexibility

quality

The product like cement cost priority is not best because of legal consideration
and suffer heavy losses. Time can be used as competitive priority. On time
delivery is most important but the sometimes demand is very high the company
is unable to provided on time delivery. The flexibility is less because cement is
standardized product. The only one competitive priority is the main base which
offer the competition. This is achieving the high quality. As it was mentioned
in the mission statement of the organization. Provide the high quality cement at
competitive prices. Because the prices of cement are fixed so quality is the only
competitive weapon through which a company can compete the market.
Keeping this in its view, D. G. Cement Factory applied for ISO 9000
certificate.

ISO 9002

D. G. Khan cement factory is providing high quality cement for its beginning.
After the establishment of expansion department. The company No. 1 in the
cement industry Pakistan.
To cope with the environment they apply for ISO 9002 certificate. The
company hired Shakeel and Company Lahore as consultant to get ISO 9002
certificate. A committee is formed under the control of GM of the company Mr.
Dr. Asif Bashir to be certified as ISO 9002.

The company get the ISO 9002, certificate in the long run. The main aim to get
the certificate is to provide the customers the quality cement and competitive
prices.

After getting the ISO 9002 certificate. The company reduce its inefficiencies in
management as well as in production. It reduce in rework cost because of clear
cut responsibilities are awarded to employees. It also increase the reliability of
employee upon the D. G. Cement.

Modern equipped laboratory establishment

Quality to check according to plan at each stage.

Cement x-ray Spectrometer is used to check the quality of the product at

different stage. It takes 5 minutes to assess the ingredients of the product. There
are six tests for the quality assurance at different stages of the production
process.

Raw Material

Raw material of cement can be categorized in three types:

Limestone

Shale

Gypsum

Lime Stone

The sampling point of limestone after blasting the rocks. The fragments of the
rocks are taken and check its chemical composition. Several benches have been
opened and abandoned if found to be lantern* low grade limestone. The main
components of limestone is calcium oxide (CaO). The following equation shoes
the %age of CaO

Heat
CaCO3 CaO + CO3

100% 56% 44%

The production department accept only those limestone having at least 52% of
CaO.

Shale or Clay

Th second component of cement is shale. Shale can be found near the quarry.
They take different samples of shale at different points to find out which shale
has high quality. They utilize these shale first and then any other next.

Gypsum

Gypsum is another component of cement. It is 5% of the whole cement. It is

mostly taken from outside supplier. Its quality is checked at the entering gate. If
it is according to contsuit* then it is selected otherwise rejected to suppliers.

Raw Mill

When the mixture reach in raw mill, three sophisticated chemical tests are
performed.

They take different samples having different composition of two raw material
(limestone & shale). Usually six samples of following composition is taken.

Sample No. Limestone %age %age of Shale

1. 77% 23%

2. 78% 22%

3. 79% 21%

Hydraulic Modulus (HM)

In hydraulic modulus the above taken samples are taken and put the %age
values of composition of different compound in the following formula.

HM = = 2.1-/+ 0.2

CaO
 Si2O + Al2O3 + Fe2O3

The standard values is 2.1 and + 0.2 variation is allowed. The above formula
tell us by changing the composition CaO we can get the exact result.

Silica Modulus

The test is also performed similarly to the above by taking different ingredients.
The formula is given below

SM =

SiO2

Al2 O3 + Fe2O3

The SiO2 is the main component of shale. By changing the composition we can
get the standard result.

Ume* Saturation Factor (LSF)

This test is applied to find out the amount of CaO in the mixture. We can
calculate the LSF factor by the following formula

LSF = = 90 + 3

CaO

28Si2O + 1.2Al2O3 + 0.65FerO3

90% of lime in mixture is a standard value while + 3 stands for variation.

Kiln

When the raw meal is fed to the kiln, it is also checked chemically by taking
different samples. Some test of hydraulic modulus, silica modulus and lime
saturation factor is applied to raw meal as well. The main purpose of the raw
meal test is to find out the temperature required to heating purpose of raw meal.

Clinker

When the raw meal passes through kiln shell and take a form of clinker. A
sample is taken manually at this moment and then it is analyzed chemically
with the help of cement x-ray spectrometer. Clinker is a hasd* granular
material. They grand into powder form and analyze. If the result is not
according to standard they dispose it otherwise mixed in high quality clinker.

Cement

When the 5% gypsum is added to ground clinker, the final product is cement.
They take the sample of cement to find out the right %age of gypsum in
cement. As well as the fineness of cement.

Following tests are performed for quality assurance of cement:

Expansion

Setting Time

Fineness

Strength

Expansion

The expansion test check that upto what extent the cement is expanded after
addition of water. It is a complex test. According to world standard the
expansion of cement should not be more that 10-mm. The company mostly test
shows the expansion of 0.5 to 5.5 mm. Which is obviously excellent.

Setting Time

The setting time shows the time taken by cement to become solid.

There are two types of setting time.

Initial Setting Time

Initial setting time is the time when we can penetrate the specific middle exact
half position of the cement block.

Final Setting Time

It is the time when we can’t penetrate the specific needle into cement block.
We can compare initial and final setting time of D. G. Cement with the world
standards.

Setting time DG Cement World Standard

Initial Setting Time 150 minutes at least 45 minutes

Final Setting Time 200 minutes at least 10 hours

Fineness Test / Blaine Test

Blaine test measures the small size of the particles in specific weights. The world standard for the fineness test is that the should not be
less than 2250 cm2/gm while in D G Cement it is 2800 Cm2/gm.

Strength Test

The strength test check the strength of cement after passing different number of days.

The world standard and their standard are given below:

Strength Unit Company Std. World Standard

3 days PSI 3800-4400 2200

7 days PSI 4800-5400 3400

28 days PSI 6000-7000 5000

Loading

The final sample is taken when the packed cement is loaded on the truck. The some four tests are performed as it is performed in cement
mill. If the cement is not upto the mark dispatch is stopped otherwise no problem.

Location

The location of plant is at Sattie Khofli 40 Km away from the Dera Ghazi Khan City. Different factors are considered for the location

selection of the factory. The plant is located at sattai Khofli 40 Km away from the Dera Ghazi Khan City.

Cement industry is heavily raw material based industry. Without proper availability of raw material, no one can think of establishment of
the factory. If we look at the Southern Punjab region. No other place is suitable when limestone and shale is available. So, availability of
limestone and shale is a dominant factors. If we consume these resources at the present level, it is sufficient for at least 100 years.

The daily design capacity of both production plants is 56000 tons. So, it requires 9520 tons raw material.
1 ton clinker equals 1.7 ton of raw material. The company is located near to the raw material. It will reduce its transportation cost.

The one of the secondary factor is prior to market. The market is exclusive plans is located in the heart of the market. Another nearest
plant is 300 Km away. The dealers can be receive their order within one day.

The second secondary factor is availability of labor. The factory is located at remote area. Labor is available at cheaper rate without any
shortage. Higher level managers and technician staff are hired from the whole Punjab.

The third secondary factor is govt. legislation. The factory location is not contradicted with any rule of the govt. firstly, the govt. want all
these types of factories outside the city.

The govt. declared this zone as tax free zone in order to give prosperity to backward area. It was complemented in the beginning but not
now.

Capacity

Capacity is a maximum rate of output for a factory. According to engineers the capacity of both plants is

Plant Name Capacity Clinker per day

Existing Plant 2200 tons

Expansion Plant 3300 tons.

During peak seasons both the plants are working above their allocated capacity while during off season it works slow their allocated
capacity. It is harmful for the plant to run it above their recommended capacity.

Distribution

For the efficient distribution, the company open his four sales offices in four different cities.

Multan

D. G. Khan

Lahore

Karachi

And dispatch department at the factory site. Mostly sales offices are located near the target market. Dealers are registered called stockists.

They have to deposit at least Rs. 50000 as security. Before the establishment of expansion plant a quota system is introduced. Each dealer
has maximum and minimum limit of his quota.
Distribution Requirement Planning

All the dealers are allotted the dealership number. They booked their orders in one of the sales office. For all orders, dealers have to pay
the amount in advance. The sales office clerk accumulates all these orders and sends to the head office in two ways. Either he filled

customer order form or telephone.

The Head office (Lahore) make the distribution requirement planning. How much amount of dispatch needed for coming days. Usually

dispatch lot size is dependent on two things.

Quota imposed in distribution

Non-quota distribution

Head office informs the GM for daily dispatch all the dispatch process is done on automatic machines. 40% of excise duty is paid on each

bag. All the transportation cost paid by dealer.

Although the lead-time is one day but it takes more than one day because of any disturbance in market and operation.

Flow Diagram of Distribution Requirement Planning

Stockist

Stockist

Plant

Head Office

Lahore

Sales Offices

Stockist

Stockist

Stockist

Aggregate Planning

D. G. Khan Cement Factory has a family of cement types which consists of three cements ordinary port land cement, black cement and

sulphate resistance cement. They make their aggregate plan keeping in view the demand of cement and capacity of plant. There are two
types of alternatives:
 Demand alternative (Reactive Alternatives)

Capacity alternative (Aggressive Alternatives)

D. G. Khan cement factory apply both the alternatives to aggregate planning. We discuss these alternatives one by one.

Demand Alternatives (Reactive Alternatives)

This alternative is apply to cope with demand of the cement. In summer, the demand of cement is very high. To cope with this demand,

they hire extra unskilled and semiskilled labor. They also offer overtime to highly specialized and skilled person. Mostly unskilled labor
is taken from subcontractors.

The Company allows vacation schedule in winter, the month of Ramazan and rainy days. The plant is shut for repairing and maintenance
work.

The company always keeps the anticipation inventory to meet the unexpected demand e.g. in the peak season both the silo are filled most
of the time to cope with any mishaps sometimes the bricks of the kiln shell were broken and work was stopped at least 3 days. During

these 3 days anticipated inventory cope with the demand.

The company also gives relaxation to their workers during the peak season. Schedules are formed to give the employee more rest.

Capacity Alternatives (Aggressive Alternatives)

The company uses these alternatives during the slack. When the demand is less than their capacity. How to utilize their idle capacity? The
answer is to apply the aggressive or capacity alternatives. Aggressive alternatives allocation that attempt to modify demand and resource
requirement.

In the slack season the demand of ordinary postcard cement is low the company change the production OPC to sulphate resistance cement
and supply into the Karachi.

Another method is also used to enhance the demand by lowering the prices. When the price of cement will reduce the demand will
increase.

Inventory Management

We can divide inventory management broadly in two ways.

Inventory Management of Output (Cement)

Inventory Management of Inputs

D. G. Cement factory has no inventory in bags. They keep the cement in the 10000 tons capacity silos.
The main problem of inventory management of inputs. Each and every department is responsible for its inventory. Each department has to

raise the demand notice to the purchase department. The store department provides them the required. In the case of shortage, the
purchase refer it to purchase department.

Types of Inventory in Store Department

The store department provides the inventory of inputs to each department. Its main purpose is to control and manage the inventory.

The store department categorizes its inventory of two types as:

Immediately consumable goods (Fast Moving Goods)

Non-consumable goods (Slow Moving Goods)

Immediately Consumable Goods

Immediately consumable goods are those goods which lose their quality and quality with the usage of items e.g. explosive, stationary,
soap, towel, oil etc.

Non-consumable Goods

Non consumable goods are those goods which do not lose their quantity and quality with the usage and time. These are everlasting items

e.g. spare parts, machinery, either moving equipment or plant assets.

Functions of Store Department

The store department performs two basic functions:

Management of Inventory

Controlling of Inventory

Management of Inventory

The store department perform follwing functions for management of inventory.

the inward card is issued when the truck passes through factory gate.

Inspection of quantity of material done on the gate. Inspection note is sent to the concerning
department. The manager or incharge who raise the order called indentor write the remarks

upon it after checking the quality. It is the duty of indentor to write the acceptance and
rejection note upon it.
 All accepted material is stored by store department and write material receiving report.

One of copy of material receiving report is sent to following departments.

Finance department

Store department

Purchase department

MIS department

Supplier

All the received items are written in the records books.

Control of Inventory

The store department controls the inventory both manually and by computer. Two systems are introduced for physical control of
inventory.

Cardex Card or Bin System

In the Cardex card system, all the materials for which store department issued the material receiving report entered in the Cardex cards.

Different pieces of information is written on these Cardex cards. Different pieces of information is written on these Cardex cards.

1. Category 2. Code no.

3. Part No. 4. Description

5. Maximum Level 6. Re-ordering Level

7. Location

All the work done manually and balance the card when the inventory coming or going out of department.

Computer Records

The second system for controlling of inventory is computer records. All the transactions are updated in the computer.

The store department manages and controls 22000 inventory items for all the departments. In any of stock out (the inventory level down
the minimum level) store department is responsible for the replenishment. He order to the purchasing department for purchasing of goods.
Matching the tow systems

Both the systems records are matched at the end of accounting period in order to check the correctness of records.

In any disturbance in the records the physical inspection is also done.

The possible causes for disturbance of balance for an item may be the following.

Misplacement of inventory

Mistake in records calculating

Due to theft

In order to reduce the theft, the department due the physical inspection after every these months. It also reveals some other problems with
the inventory.

Purchasing

The purchasing of or different items done by the purchase department of the D. G. Khan Cement Factory. The purchase department not

only purchase for the factory as well as for the sales offices. Usually the department purchases machinery furnace oil, office equipment,
supplies, paper sacks, explosive etc:

The purchase department acquire the things through the acquisition process.

The Acquisition Process

The acquisition process consist of following steps.

Need Recognition

Need for the acquisition of raw material arises when the production department asks to the store department of some particular item. The
store department is unable to fulfil the need. So he recommends to the purchase department.

Production Department

Needs a calculator

Store Department

Calculator is not

available
 Purchase Department

Need to Purchase
calculator

Supplier Selection

In the supplier selection stage, Different suppliers are identified. Suppliers are of two types.

Permanent Suppliers

Random Supplier

The company has permanent contractor to the different items. Contracts are of long term in nature. So they don’t need any frequently
selection of random supplier. The company selected the supplier do to following characteristics.

Past experience

Past performance

Financial strength

Quality of material supplied

Price charges

Nature of relationship with the supplier

One of these factors can change the decision.

Placing the order

The purchase department has authority to buy the items. The purchase is done once the particulars given by the store department. The
following particulars are given in the indent form:

Name of the department

Description of the item needed

Last purchase date

Quality of item
 Quantity of item

The order placement is dependent upon the requirement of item. Different purchases procedure are adopted depending upon

Urgency

Availability

Importance

There are three types of purchase processes:

Regular Purchase

Spot Purchase

Importance

Regular Purchase

Regular purchase is the purchase of those items which they are required after the certain period with regularity. It exhibits the follwing

characteristics.

Such items are very expensive

Such items are not needed urgently

These are consumable goods.

The order is placed in the newspaper in the form of tender notice. The terms and condition are mentioned in the tender notice. The
supplier get the tender form from the nearest sales office (mentioned in the newspaper) on submission of fee. In this tender notice all the
description of item is mentioned. The supplier fills the form and submits to department with a security fee. The supplier is selected on the
basis of low bid of the supplier. In case, the company accepts the tender notice of supplier who give maximum discount.

Sometimes the indentor is also considered for the selection of supplier which negotiate with the supplier in term of quality of item.

After the supplier has been identified and selected the company will issue purchase order to the supplier.

Spot Purchase

Sometimes, different items are purchased on the spot. These items are urgently needed, having more alternative and payment made in

cash e.g. towels, tube lights, stationary, bullets, bed sheets and spoons, dishes etc. Spot purchase is done through spot purchase committee
which is consists of
 Indentor or end user

Purchase department representative

Commercial

The spot committee visits different suppliers evaluate the items in terms of price, quality and delivery date. The committee make the
payment to the supplier on the spot. One month is needed for the spot purchase to be completed.

Import

The company imports those items which are not available here or having low quality. Import is a long and complex process, it takes six
months for an import purchase to be completed mostly earth moving machinery, fire bricks and spare parts are imported.

Track the order

Track the order means routine follow ups of orders to anticipate late deliveries or probable deviations from requested order quantities.
Different modes are used or tracking the orders e.g. telephone, letter, fax. The company usually tracks the order when some delay will

stop the production.

Receiving the order

When the order is received from the supplier, the indentor checks the quality of the incoming materials. The indentor writes the remarks
about items either it is accepted or rejected. Acceptance or rejection note is issued by the store department. If the materials are accepted
the store department issues material receiving report. One copy of the material receiving report is issued to each of the following
department.

Supplier

Finance Department

MIS Department

Store Department

Purchase Department

The rejection of items is informed to the purchase department and they return to the supplier. The purchase department also maintain and

updates their records of different supplier on punctuality, quality, quantity deviations and price. All these information help for future
evaluation of supplier.

When the finance department has received the material receiving report from the store department supplier as paid and entries are passed
in their records.
Supplier Contracts

The purchase department of D. G. Khan Cement company has identified and registered different suppliers for the materials, which have
vital importance such as furnace oil, paper sacks and explosive.

Furnace Oil

90% of furnace oil is purchased from Pakistan State Oil

10% of the required furnace oil is purchased from Shell

Paper Sacks

The company usually makes a contract of six months duration for the supply of paper sacks. Generally, the company awards contract to
any of the following companies.

Pakistan Paper Sack Corporation Karachi

Khyber Papers Private Ltd. Gadoon.

Cherat Paper Sack Gadoon.

Supplier of Stationary

Following printing agencies are the suppliers of stationary to the D. G. Khan Cement Company:

Dera Press

Freedom Art Press

Top Signs

All located in Dera Ghazi Khan City.

Explosive

There is only one supplier of explosive in the whole country. So the company also makes purchase of explosive from that very company
i.e. Pakistan Ordinance Factories Wah Cantt.