Description
The document about operations management discusses mangalore cashew industries buy analysing demand for the product, business and market, cashew processing, capacity management.
A report on
MANGALORE CASHEW INDUSTRIES SIDDAPUR
MANGALORE CASHEW INDUSTRIES
ABOUT THE COMPANY Mangalore Cashew Industries is one of the pioneer cashew manufacturers of this region. It was founded in 1977 by the great visionary, Late Sri. D. Narayan Kamath. Today, it is a name to reckon with in the cashew industry and a company that had the patronage of three generations of a respected family. It has an annual turnover of over Rupees 90 million in national sales and exports, mainly to countries like Japan, Australia, USA, UK, Netherlands and the Middle East. Mangalore Cashew Industries (MCI) has established regional cashew procurement centers all over the country and abroad. Since they believe that the first level of quality depends on the raw materials, they take great care in procurement of raw cashew nuts in addition to keeping a strict vigil at every stage of processing. For over a quarter of a century, Mangalore Cashew Industries has earned an image for product quality which has come to be accepted as the benchmark in global standards. Mangalore Cashew Industries has 4 partnership firms in India (3 in Karnataka and 1 in Maharashtra), with more than 2000 employees employed in the 4 plants and close to 450 employees in the Siddapur plant alone. Siddapur plant is the main centre where all the decisions regarding the procurement of raw cashews and the distribution of the products (for both domestic and international markets) are taken. Special care is taken on hygiene while processing and packaging, in adherence to the guidelines of Cashew Export Inspection Agency. Total quality management system as per the HACCP standards is adopted to match the international quality standards.
DEMAND FOR THE PRODUCT: Cashew nuts processed at MCI are in great demand in foreign countries like the United States of America, Canada as well as the European nations. The quality of MCI cashew nuts is unique among all its different firms at different regions of the country. The nuts produced by MCI account for huge sales during festive seasons like Diwali, Sankaranti, and New Year. During this time, the sales of the whole cashews and white cashews are high, compared to the other varieties
of cashew nuts. However, during the rest of the year, export of these cashews will be high due to the higher profit margin compared to domestic market. Business, Markets and nature of demand: MCI is a cashew processing industry where the raw cashew kernels are processed to a consumable form. The raw kernels are purchased from Kundapura, Mangalore and neighboring states like Goa, Maharashtra and Kerala. Bulk purchases are mainly made from Kerala, because the raw materials from that region are easy to be processed and are of good quality. The Supplier relationship maintained by MCI is excellent. They have maintained relationship with the same suppliers for over 25 years now. The raw materials are not available throughout the year in India, but are seasonal. Hence to overcome this limitation, MCI was one of the first few firms in India that started importing raw kernels from countries like Kenya, Tanzania and Nigeria. The kernels that are imported are of low grades; hence the raw kernels obtained from foreign countries are used for the production of low quality cashew nuts. The imported kernels are less expensive compared to those bought within India. The purchase is usually done by a family member who visits the foreign countries during the peak purchase season. The processed cashews are then sold mainly to northern parts of India where the demand for cashews are high. Places like Delhi, Mumbai, Lucknow and Indore are the prime centers where the cashews are mainly sold in bulk to wholesale dealers, who would in turn sell them in loose to consumers at desirable quantity and price. The whole sale dealer generally sells the cashews by their own brand name. And all this business takes place through agents. The agents are the people who sell MCI cashews to different whole sale retailers ensuring a profit for both the parties. Regarding its sales, the owners of MCI have excellent contacts with several retailers in and around Karnataka enabling them to diversify the product to different places. India is the largest producer and exporter of cashew kernels in the world. Nearly 50 percent of the global export of cashew kernels is accounted for by India. Indian cashews are consumed in as many as 60 countries all over the world. MCI exports their product to many foreign countries like the United States of America, European countries, Canada etc. MCI has contacts with customers through emails and directly export their high-quality cashews to consumers. This
avoids the commission of 0.5% of the sale to the agents or other such sources. The demand does not just confine to a particular period of the year, as cashew nuts are essential in day to day life in several eatables like sweets, cakes, milk shakes, etc. Hence, the cashew nut processing industry has a perennial demand throughout the year with demand reaching its peak during festive seasons like Diwali, Christmas and New Year. Process and the analysis Cashew Processing MCI specializes in taking out cashew nut kernels intact from the shell and grading them carefully to superior standards required by top food companies all over the world. The raw cashew nut is steamed to soften the shell and then it is carefully cut open. The kernel is dried to loosen the skin which is then peeled off. Whole kernels are graded by size and color. After final QC including metal detection, they are packed in air tight containers for freshness. The following is the sequence of analysis of the different processes: Steaming: The raw cashews are steamed under pressure to soften the shell. This causes the kernel inside to become loose and easier to remove. Shelling: Each cashew shell is split open longitudinally and the cashew inside is immediately taken out by hand.
Fig. Sequence of processing of cashew kernels
Drying : The peel on cashews is dried in an oven at low heat for a few hours to loosen the skin. Peeling: The peel of each cashew is removed by hand and the cashew is simultaneously
visually graded according to quality.
Grading: The whole cashew kernels are individually graded by hand according to number of cashew nuts per pound.
Quality Inspection: The cashews of each grade are inspected according to the quality standards for that grade. Quality Control : Cashews are then put through a set of quality assurance measures like, heating in an oven, metal detection, dust removal, etc. Packing : Cashews are packed in 50-pound (22.68 kg) multilayer barrier packets in a controlled atmosphere of nitrogen, low oxygen and high carbon dioxide. These packets are placed one each in a carton. CAPACITY: MCI, started initially with a production of 750 kg per day of processed cashew output now produces about 10 quintals per day. The storage facility at MCI is about 35000 kg of raw cashew kernels stored in 5 different sections of the warehouse area depending on the nature of raw material that is obtained. The amount of storage required is really high because the cashew kernel season is for 3 months (from March to May) when MCI purchases enough raw kernels that would satisfy the demand for the whole year. Capacity management: Cutting: Average load that a person can handle in one day = 50 kilograms of raw cashew nut Total cashews effectively separated = 30% of the total processed nuts No. of people involved in this process = 120 Total processed cashew nuts = 120 * 50
= 6000 = 60 quintals Total amount of cashews = 30% (6000 Kgs) = 1800 kilograms of cashew nuts Of this entire load, about 95 % is whole nuts and about 5% is pieces. Whole nuts = 95% (1800) = 1710 kilograms of cashew nuts Pieces = 5% (1800) = 90 kilograms of piece cashew nuts Hot chamber: On an average, about 6% of entire produced cashews is rejected in hot chamber due to various reasons, hence the quantity of whole nuts that can be used are 1710 * 94% = 1608 kilograms and the amount of piece nuts is 90 * 94% = 85 kilograms. Peeling: Average load a person can peal = 10 kilogram of cashew nuts and 9 kilogram of piece cashew Number of people Total load that is generated = 150 = 150 * 10 = 1500 kilograms Total load of piece nuts = 150 * 9 = 135 kilograms
10 % of the entire load goes away as husk Hence, the effective amount of cashews that can be used are 1350 & 122 kilograms of whole & piece cashews, respectively Grading: Average load each person can handle = 75 & 40 kilograms
(for whole and piece nuts, respectively) Number of persons in floor Total load of whole nut that is handled = = = Total load of piece nut that is handled = = 55 75 * 55 4125 kilogram of graded nuts 40 * 55 2200 kilogram of pieces
As grading units are not there in the other two plants at Mangalore and Bantwadi, the nuts processed there are also brought to this plant for grading having load of 600 & 1500 kg of nuts. Total grading process is carried out for about 4125 + 600 + 1500 = 6225 kilograms of cashew nuts. FUTURE PROPOSALS At MCI the waste raw shells are used as fuel for heating the boiler. A project is in pipeline to construct an oil mill, so that these raw shells could be processed to produce cashew oil to be used as a preservative and lubricant.
SUGGESTIONS:
The value chain of processing industry as a whole is explained in the figure shown below. Also this implies there are several middle level brokers and mediators who actually fix the price with the wholesale retailers and take up an accrued amount as commission. This is the method of selling the processed products to the market that has been followed by MCI over the years. After careful study we can infer that the key retail players actually can be targeted and the whole selling to these retailers can be done reducing the huge commission which is being wasted by operating through brokers. Also one more additional point of concern is at MCI they sell only products in huge weights like 5, 10 kilograms etc. But what the general consumer wants is of small variants of cashew nuts, hence they can target that kind of people by packaging it in small variants like 50 gram 100 gram packets. This can be done by having strategic partnerships with heavy retailers. Also MCI can concentrate on brand building as that provides an excellent means of attracting retailers towards the company as such. Fig. Value chain of Mangalore Cashew industries
AGENT
MANUFACTURI NG UNIT
AGENT
STORAG E Profit maximization FARMER
DISTRIBU TOR
RETAILER
CONSUMER
doc_787373462.doc
The document about operations management discusses mangalore cashew industries buy analysing demand for the product, business and market, cashew processing, capacity management.
A report on
MANGALORE CASHEW INDUSTRIES SIDDAPUR
MANGALORE CASHEW INDUSTRIES
ABOUT THE COMPANY Mangalore Cashew Industries is one of the pioneer cashew manufacturers of this region. It was founded in 1977 by the great visionary, Late Sri. D. Narayan Kamath. Today, it is a name to reckon with in the cashew industry and a company that had the patronage of three generations of a respected family. It has an annual turnover of over Rupees 90 million in national sales and exports, mainly to countries like Japan, Australia, USA, UK, Netherlands and the Middle East. Mangalore Cashew Industries (MCI) has established regional cashew procurement centers all over the country and abroad. Since they believe that the first level of quality depends on the raw materials, they take great care in procurement of raw cashew nuts in addition to keeping a strict vigil at every stage of processing. For over a quarter of a century, Mangalore Cashew Industries has earned an image for product quality which has come to be accepted as the benchmark in global standards. Mangalore Cashew Industries has 4 partnership firms in India (3 in Karnataka and 1 in Maharashtra), with more than 2000 employees employed in the 4 plants and close to 450 employees in the Siddapur plant alone. Siddapur plant is the main centre where all the decisions regarding the procurement of raw cashews and the distribution of the products (for both domestic and international markets) are taken. Special care is taken on hygiene while processing and packaging, in adherence to the guidelines of Cashew Export Inspection Agency. Total quality management system as per the HACCP standards is adopted to match the international quality standards.
DEMAND FOR THE PRODUCT: Cashew nuts processed at MCI are in great demand in foreign countries like the United States of America, Canada as well as the European nations. The quality of MCI cashew nuts is unique among all its different firms at different regions of the country. The nuts produced by MCI account for huge sales during festive seasons like Diwali, Sankaranti, and New Year. During this time, the sales of the whole cashews and white cashews are high, compared to the other varieties
of cashew nuts. However, during the rest of the year, export of these cashews will be high due to the higher profit margin compared to domestic market. Business, Markets and nature of demand: MCI is a cashew processing industry where the raw cashew kernels are processed to a consumable form. The raw kernels are purchased from Kundapura, Mangalore and neighboring states like Goa, Maharashtra and Kerala. Bulk purchases are mainly made from Kerala, because the raw materials from that region are easy to be processed and are of good quality. The Supplier relationship maintained by MCI is excellent. They have maintained relationship with the same suppliers for over 25 years now. The raw materials are not available throughout the year in India, but are seasonal. Hence to overcome this limitation, MCI was one of the first few firms in India that started importing raw kernels from countries like Kenya, Tanzania and Nigeria. The kernels that are imported are of low grades; hence the raw kernels obtained from foreign countries are used for the production of low quality cashew nuts. The imported kernels are less expensive compared to those bought within India. The purchase is usually done by a family member who visits the foreign countries during the peak purchase season. The processed cashews are then sold mainly to northern parts of India where the demand for cashews are high. Places like Delhi, Mumbai, Lucknow and Indore are the prime centers where the cashews are mainly sold in bulk to wholesale dealers, who would in turn sell them in loose to consumers at desirable quantity and price. The whole sale dealer generally sells the cashews by their own brand name. And all this business takes place through agents. The agents are the people who sell MCI cashews to different whole sale retailers ensuring a profit for both the parties. Regarding its sales, the owners of MCI have excellent contacts with several retailers in and around Karnataka enabling them to diversify the product to different places. India is the largest producer and exporter of cashew kernels in the world. Nearly 50 percent of the global export of cashew kernels is accounted for by India. Indian cashews are consumed in as many as 60 countries all over the world. MCI exports their product to many foreign countries like the United States of America, European countries, Canada etc. MCI has contacts with customers through emails and directly export their high-quality cashews to consumers. This
avoids the commission of 0.5% of the sale to the agents or other such sources. The demand does not just confine to a particular period of the year, as cashew nuts are essential in day to day life in several eatables like sweets, cakes, milk shakes, etc. Hence, the cashew nut processing industry has a perennial demand throughout the year with demand reaching its peak during festive seasons like Diwali, Christmas and New Year. Process and the analysis Cashew Processing MCI specializes in taking out cashew nut kernels intact from the shell and grading them carefully to superior standards required by top food companies all over the world. The raw cashew nut is steamed to soften the shell and then it is carefully cut open. The kernel is dried to loosen the skin which is then peeled off. Whole kernels are graded by size and color. After final QC including metal detection, they are packed in air tight containers for freshness. The following is the sequence of analysis of the different processes: Steaming: The raw cashews are steamed under pressure to soften the shell. This causes the kernel inside to become loose and easier to remove. Shelling: Each cashew shell is split open longitudinally and the cashew inside is immediately taken out by hand.
Fig. Sequence of processing of cashew kernels
Drying : The peel on cashews is dried in an oven at low heat for a few hours to loosen the skin. Peeling: The peel of each cashew is removed by hand and the cashew is simultaneously
visually graded according to quality.
Grading: The whole cashew kernels are individually graded by hand according to number of cashew nuts per pound.
Quality Inspection: The cashews of each grade are inspected according to the quality standards for that grade. Quality Control : Cashews are then put through a set of quality assurance measures like, heating in an oven, metal detection, dust removal, etc. Packing : Cashews are packed in 50-pound (22.68 kg) multilayer barrier packets in a controlled atmosphere of nitrogen, low oxygen and high carbon dioxide. These packets are placed one each in a carton. CAPACITY: MCI, started initially with a production of 750 kg per day of processed cashew output now produces about 10 quintals per day. The storage facility at MCI is about 35000 kg of raw cashew kernels stored in 5 different sections of the warehouse area depending on the nature of raw material that is obtained. The amount of storage required is really high because the cashew kernel season is for 3 months (from March to May) when MCI purchases enough raw kernels that would satisfy the demand for the whole year. Capacity management: Cutting: Average load that a person can handle in one day = 50 kilograms of raw cashew nut Total cashews effectively separated = 30% of the total processed nuts No. of people involved in this process = 120 Total processed cashew nuts = 120 * 50
= 6000 = 60 quintals Total amount of cashews = 30% (6000 Kgs) = 1800 kilograms of cashew nuts Of this entire load, about 95 % is whole nuts and about 5% is pieces. Whole nuts = 95% (1800) = 1710 kilograms of cashew nuts Pieces = 5% (1800) = 90 kilograms of piece cashew nuts Hot chamber: On an average, about 6% of entire produced cashews is rejected in hot chamber due to various reasons, hence the quantity of whole nuts that can be used are 1710 * 94% = 1608 kilograms and the amount of piece nuts is 90 * 94% = 85 kilograms. Peeling: Average load a person can peal = 10 kilogram of cashew nuts and 9 kilogram of piece cashew Number of people Total load that is generated = 150 = 150 * 10 = 1500 kilograms Total load of piece nuts = 150 * 9 = 135 kilograms
10 % of the entire load goes away as husk Hence, the effective amount of cashews that can be used are 1350 & 122 kilograms of whole & piece cashews, respectively Grading: Average load each person can handle = 75 & 40 kilograms
(for whole and piece nuts, respectively) Number of persons in floor Total load of whole nut that is handled = = = Total load of piece nut that is handled = = 55 75 * 55 4125 kilogram of graded nuts 40 * 55 2200 kilogram of pieces
As grading units are not there in the other two plants at Mangalore and Bantwadi, the nuts processed there are also brought to this plant for grading having load of 600 & 1500 kg of nuts. Total grading process is carried out for about 4125 + 600 + 1500 = 6225 kilograms of cashew nuts. FUTURE PROPOSALS At MCI the waste raw shells are used as fuel for heating the boiler. A project is in pipeline to construct an oil mill, so that these raw shells could be processed to produce cashew oil to be used as a preservative and lubricant.
SUGGESTIONS:
The value chain of processing industry as a whole is explained in the figure shown below. Also this implies there are several middle level brokers and mediators who actually fix the price with the wholesale retailers and take up an accrued amount as commission. This is the method of selling the processed products to the market that has been followed by MCI over the years. After careful study we can infer that the key retail players actually can be targeted and the whole selling to these retailers can be done reducing the huge commission which is being wasted by operating through brokers. Also one more additional point of concern is at MCI they sell only products in huge weights like 5, 10 kilograms etc. But what the general consumer wants is of small variants of cashew nuts, hence they can target that kind of people by packaging it in small variants like 50 gram 100 gram packets. This can be done by having strategic partnerships with heavy retailers. Also MCI can concentrate on brand building as that provides an excellent means of attracting retailers towards the company as such. Fig. Value chain of Mangalore Cashew industries
AGENT
MANUFACTURI NG UNIT
AGENT
STORAG E Profit maximization FARMER
DISTRIBU TOR
RETAILER
CONSUMER
doc_787373462.doc