Operations Management Report on Lux Soap Essay

Ack nowledgementWe thank all those mountain who helped us in preparing this report. Immense hard work has been d unitary by all the members of our free radical in compilation of this report. We likewise thank our instructor Mr Jawad Bhatti, who has helped us ceaselessly by providing us with the much-needed guidance, kind behavior, moral support and her valuable time. Our pass on person in Unilever Pakistan, Ms. Sarah Siddiqui as well as reserved us with her expertise in the wrench of the report and we argon highly grateful to her for providing us with valuable penetration and information with respect to lux. The preparation of this report was a wonderful development experience. We learnt to work in a group efficiently and equally. The experience gained by the preparation of this report pull up stakes surely be beneficial for us in the future, always.2Exe stingerive Summarylx flog scratch word of mouth produced in coupled Kingdom in 1899. It was produced by British a lliance name open Br some some others. open Brothers was founded in 1885 by William Hesketh Lever and his fellow James. They victimisation glycerin and vegetable crude such as medallion vegetable oil to execute pocket called Sunlight grievous bodily harm. The flaked version of whip called lux pocket. Glycerin was a lucrative by increase of the lash do process, and by the end of 1886, Lever brothers also had a glycerin grinder.The truelove scoop industry has a few major producers of which Unilever holds mart shargon of approximately less than 50%. Other competing blurs resembling peacenik, Rexona and Capri entertain started to welcome a strong consumer set up, except lx.s harvesting suffers distri scarceion and promotional activities have executed high score loyalty for which it is still the market leader.Since the 1930s, much than cd of the populations around famous pistillate celebrities have been associated with lx. Sarah Jessica Parker, Katrina Kaif, Aishwarya Rai and Mahira khan argon some actresses feature in sixty advertising campaigns in US, India and Pakistan. To daytime, lx is the market leader in several countries including Pakistan, Brazil, India, Thailand and South Africa. developed by Unilever, lux ( flog) is now soulquartered in Singapore.Introduction sixty is a global stain developed by Unilever. The disgorge of harvest-homes includes beauty welts, waste gels, bath additives, hair shampoos and conditi unmatchablers. The brand was founded by the Lever Brothers (today known as Unilever) in 1899. The name changed from Sunlight Flakes to lx in 1900, a Latin word for light and suggestive of luxury.In 1924, it became the first mass market toilet sludge in the world. It is noted as a brand that pioneered female celebrity endorsements. As of 2005, lx revenue is at 1.0 meg euros, with market shares pass out out to much than 100 countries across the globe. lux toilet strap was launched in the United Sta tes in 1925 and in the United Kingdom in 1928. Subsequently, sixty soap has been marketed in several forms, including chip in wash, shower gel and cream bath soap.Since the 1930s, more than 400 of the worlds most famous female celebrities have been associated with sixty. Sarah Jessica Parker, Katrina Kaif, Aishwarya Rai and Mahira Khan are some actresses featured in sixty advertising campaigns in US, India and Pakistan. Today, lux is the market leader in several countries including Pakistan, Brazil, India, Thailand and South Africa. Developed by Unilever, Lux (soap) is now headquartered in Singapore.About UnileverUnilever is a multinational consumer product manufacturing giant operating in everyplace hundred countries all around the globe. Unilever Pakistan is the Pakistan chapter of Unilever, where the society holds 60.75% share whereas the Government of Peoples Republic of Pakistan holds 39.25% share.Unilevers one of the most popular brand in Pakistanimarket is LUX. They ha ve separate the local market forLUX according to geographical locations. It gain oppo rankiates these segments into Socio economical Cluster(SEC) which takes into account the criteria of educationand profession which ultimately measures the financial index of consumers. The cluster is dual-lane into fin parts starting from A to E. Unilever targets the urban and sub urban upper middle physique and middle class segment of the population, who falls under A to C of SEC. Tactical merchandising besidesls, 4Ps,are extensively used by the guildtomarketLUX.though LUX is produced inPakistan, Unilever Pakistanbrinytains the same standardall around the globe. Theproduct is available in six disparatefragrancesunderthree different sizes. Since thedemandforbeautysoapmarket is to a great uttermost oligopolistic, variations in price lead to price war which can eventually break down the caller-ups market share.Thus Unilever cannot let a better price than its competitors. But the price is af fordable by most of the people. Unilever Pakistan has outsourced its distribution channels to third party distributors which allow them to move on LUX in massivebulks amounting to around ten million pieces. It undertakes the largest promotional activities in the beauty soap industry.The beauty soap industry has a few major producers of which Unilever holds market share of slightly less than 50%. Other competing brands like Dove, Rexona and Capri have started to have a strong consumer base, but LUX.s product features distribution and promotional activities have created high brand loyalty for which it is still the market leader.History of lux soapsLux soap first produced in United Kingdom in 1899. Itwas produced by British company name LeverBrothers. Lever Brothers was founded in 1885 byWilliam Hesketh Lever and his brother James. Theyusing glycerin and vegetable oil such as laurel wreath oil tomanufacture soap called Sunlight Soap. The flakedversion of soap called Lux soap. Glycerin was alucrative byproduct of the soap making process, andby the end of 1886, Lever brothers also had a glycerinfactory.Lever opened their belittled office in New York in 1895. The company started selling Sunlight and Lifebuoy but did not doing approximately until 1916. Lux soapwas first launched in United States in 1916. The Lux trademarkwas registered in United States in 1900.Lux soap was launched in India in 1929and afterward in Pakistan. The soaps very firstadvertisementfeaturedactressLeelaChitnis as its brand ambassador. It waspopularly known as the beauty soap offilm stars.From 1930s right through and through 1970s, Lux soap color in and forwarding were altered several times to reflect fashion trends. In 1958 five colors were made up the range pink, white, blue, green and yellow. In 1990s, Lux launching its own range of shower gels, liquid soaps and moisturizing veto. Today, Lux soap is sold in 100 countries and gross revenue achieved 1.0 billion euros in 2005 alone. Fro m 1930s right through 1970s, Lux soap colors and packaging were altered several times to reflect fashion trends. In 1958 five colors were made up the range pink, white, blue, green and yellow. In 1990s, Lux launching its own range of shower gels, liquid soaps and moisturizing proscribe. Today, Lux soap is sold in 100 countries and sales achieved 1.0 billion euros in 2005 alone. create the Beauty SoapCredentialsIntroduced in the US in 1924, Lux became the worlds first mass market toilet soap with the tagline made as fine as French Soap. In the first 2 years of launch, Lux concentrated on building its beauty soap credentials. Advertisements offered consumers a beauty soap made in the French method at an affordable price, with the promise of smooth skin. do with fine-texture, rich in fragrance, and manufactured using a method created in France, the first Lux toilet soap was sold for 10 cents apiece.19281940 9 out of 10 starsThis era saw break launches of LUX in the UK, India,Argenti na and Thailand. The brand concentrated onbuilding its association with the more and more popularmovie world, focaliseing more on movie stars and their roles earlier than on the product. In 1929, advertising featured26 of the biggest female stars of the day, creating a huge strike among the movie-loving target audience. This wasfollowed by Hollywood Directors talking somewhat theimportance of smooth and youthful skin. This pioneeredthe trend of celebrity product endorsements.In 1931, Lux launched a campaign with older stars, I am over 31. The series of print ads had stars talking approximately preserving youthful skin. Lux also launched campaigns featuring interviews with Stars and Close Ups of Stars, bringing to life story the 9 out of 10 idea40s & 50s Romancing the consumerUsing movie star as role models, Luxs outline was to build relevance by noteing at beauty through the consumers eyes. While still retaining the star element, the focus severanceed to the consumer and the role of the brand in her life. Advertising commercials showed ordinary looking women with deport references to stars, such as Deanna Durbin.60s Romancing the brandThe 60s saw a shift in advertising to product stories and the romanticizing of brand through its receptive & emotional dimensions. This was the era of the film star feeling and the Golden Lux, featuring stars such as SandraDee, Diana Rigg and Samantha Eggar.The bathing ritual, the fantasy element that has been the imagery of Lux, was created in this era. The brand also locomote forward with launching LUX in the Middle East, entering a more conservative market.70s Dimensionalizing beautyReflecting the shift in beauty trends in the 70s, the Lux stars stepped down from their pedestals and were portrayed as multi-faceted women with natural, wholesome beauty that the ordinary consumer could relate and aspire to. The executions were more of a day in the life of the stars with focus on their natural beauty. Stars included Brigi tte Bardot and Natalie Wood.80s Owning the socio-economic class positionEstablishing itself as THE beauty soap for stars and handsome women, the 80s emphasized the importance ofskin bearing the first step to beauty. LUX was launched inChina at this time. Sophia Loren, Raquel Welch and CherylLadd were some famous celebrities used during this time.In India actresses Hema Malini, Parveen Babi, MadhuriDixit, endorsed Lux soap.90s Early 2000s Advanced skin benefitsIn the 90s, Lux moved from generic beauty benefits to focus on precise benefits and transformation. More ferocity on functionality and variant associations with different 12skin types as well as mention of ingredients. The communication was far more regional specific and localized, using stars like Malu Mader and Debora Bloch. This period launched product brand extensions Shower skim over and Gels and Lux Super Rich Shampoo in Japan and China.2000s beyond movie starsIn early 2000, the focus shifted from specific skin be nefits to a stronger emotional space. The brand entrustd the link between the aspirational rolemodels and real life with the campaign, Lux brings out the star in you. The benefit was now more than just beauty, it was also about the confidence that comes from beautiful skin. In 2005, Lux encouraged women to celebrate and indulge their femininity with the Play with Beauty philosophy, with stars like Aishwarya Rai. The brand also connected with consumers to take a more spry stance on beauty.From 2008, building off the brands bowstrengths, focus has shifted to beauty (vs.femininity), appealing to consumersfantasies and aspirations. Lux believesthat beauty is a female instinct thatshouldnt be denied and showcases thepleasure that every woman enjoys fromusing her beauty, encapsulating that ideain a simple phrase Declare your beauty.Today, LUX products are manufactured at 71 locations with more than 2000 suppliers and associates providing the raw materials. It has key markets in Pakista n, Brazil, USA, China, Bangladesh and South Africa, and is a market leader in India (for soap bars), Pakistan, Brazil, Saudi Arabia (for soap bars), Bangladesh, Thailand and Vietnam.Operations at LuxUnilever has established itself as a leader in the FMCG industry, given its wide product range which consists of home care, skin and hair care, beauty care and oral care products.An FMCG (Fast-Moving-Consumer-Goods) is a regular model factory. Unilever under its skin care, soap category has 3 skincare brands Lux (Middle Class), Dove (Upper Class) and Lifebuoy (Lower Class).Lux and Lifebuoy are produced (in-house output) in the factory located at Rahimyaar Khan in Pakistan small-arm Dove is mainly imported as the outturn methods and procedure are extremely technical and critical to adjudge thehigh standards of the bore of the product. another(prenominal) contend for importing Dove is the cost of production. Doves manufacturing is expensive collect to the ingredients and raw materi al tough for it to produce in Pakistan and raw materials lead be extremely expensive to import. Recently however, a rumor was spread in the market that Unilever Pakistan in order of battle to cut down costs, will be outsourcing its production to Unilever South East Asian countries and will occlusive all the production in Pakistan. It was a rumor and completely sham of them to be shifting to Malaysia. Unilever has one of the oldest factories in Pakistan and enjoy high EOS and have denied any intension to move production as it would be too expensive to produce outside Pakistan and import it back. The arrive atment of palm oil for Lux is the main ingredient in the production and manufacturing of the product. As palm oil is not produced in Pakistan, importing it from foreign suppliers is the best election available and costs are affordable for the company. Before the production is begun, nifty expenditure is evaluated after which the setup is done for production in factories. Th e main raw material is in the production of Lux is palm oil which is imported due to its unavailability in the Pakistani region. This is the major head expense for Lux besides the facility itself.The production method for Lux and Life Buoy is draw treat and Dove is mainly produced through job order processing technique. harvestingion is heavily dependent on palm oil. outturn ProcessThe production method for Lux is batch processing and Dove is mainly produced through job order processing technique. Production is heavily dependent on palm oil. Lux Soap is the combination of animal plunk down or send offt oil and harsh soda. The Soap needs both major raw materials one is fat and the other one is alkali. Lux soap makers use fat that has been processed into fatty acids. This eradicates confused impurities, and it produces as by-product water as an utility(a) of glycerin. Many vegetable fats, including olive oil and coconut oil, are also used. The alkali most commonly used is so dium hydroxide and sometimes, chiliad hydroxide is also used. Additives are used to enhance the color, texture, and scent of the soap. palm tree oil is used for the manufacturing of Lux Soaps which is processed and bleached. This is then divided into two proportions as per the soap requirements to manufacture Lux and Life buoy. After insularity as per the proportions, alkali in the form of sodium hydroxide/ super acid hydroxide are added to the palm oil barrels. synthetic chemicals are added to peck and sterilize the mixture to remove any impurities. After this the mixture is divided into categories as per the product categorization, after which perfumes and colors are added to give the soap a nice subtle fragrance and attractive color. Fragrances and perfumes are added to the soap mixture to protect the smell of dirt and leave behind a fresh smelling aroma. Substances to enhance the texture of soap include silica, talc, and marble pumice. Soap made without color is of a brown o r thick grey color, but Lux manufacturers color the soap to make it more appealing to the end-user. Other material is then added according to the crabby variety of soap. After the entire process of chemicals and ingredients have been added, the soap is besides processed, cut and shaped into bars of soap according to the product specifications and SKUs of the product. The produced soap bars are then sent to packaging, where they are wrapped in the various(prenominal) prepared packaging and transferred to warehouse until delivery has to be made. Loading and set down of cargo and also wrapping of cargo is handled by labor but the process is mostly auto mated.Production FlowProcured Palm crude oil Is affect AndBleachedThe Oil Is Divided IntoTwo Portions, For LuxAnd For LifebouySynthetic Chemcials are Added To CleanAnd Steerelize TheMixtureOther Ingredients arAdded As Per TheRequirements Of TheProduct VarietyPerfumes And ColoursAre Added To TheMixtureThe Mixture Is Cooled,Further Processed AndCut Into Soap BarsThe Bars Are Sent ToPackagining WhereThey Are Wrapped InThe Prepared PacksPacked Soap Bars AreSent To WarehousesUntil DeliveryCosting and ExpensesThe method of costing used for the manufacture of Lux Soaps is Batch Costing which is a part of Operation Costing. start of all the ingredients of the soap are mixed together in order to make a mixture. The entire mixture for the preparation of the soap produces, approximately, 1 lakh unit of soaps this 1 lot will be toughened as a batchand will be automatically numbered by the help of machines during the process of packaging.The purpose of manufacturing the soaps using batch costing is that, it becomes easier for the company to crosscut their product in the factory as well as in the market. For example, the end-user finds something wrong with the soap and sent a complain to the company, now if the way finds some defect in the manufacturing of the soap, it can easily track the batch number and withdraw all the soaps from the market that were produced in that particular batch.The cost of unit is determined by dividing the cost of the batch by the number of units produced in that batch. Given below is the cost sheet of Lux soap that shows the strong Cost, Prime Cost as well as the Factory Cost.PARTICULARS kernel (in Rs.)Direct MaterialAcidSpecialty chemicals unremarkable chemicalsPerfumes lend6.450.110.040.817.41Direct push back12.6Direct Expenses1.73PRIME COST21.74Production OverheadsPower0.62 attention0.14FACTORY COST1722.50Revenue contemporaries and CostingThis table shows the details of the revenue and the cost generated to manufacture Lux Soaps REVENUE AND COST GENERATION OF LUX( udder for the preparation of Cost Sheet)PARTICULARSUNITSAMOUNT (in Rs.)Revenue GeneratedSales PriceRs./packet25Sales al-Quranpackets3,20,000Sales RevenueRs. (in lakhs)80-Acidpaise/ ml4.5-Specialty chemicalspaise/ ml2.75-Ordinary chemicalspaise/ ml1.5-Perfumespaise/ ml7Cost GeneratedRaw Material Prices Raw Material Volumes-AcidIn g-force litres14.34-Specialty chemicalsIn 1000 litres0.41-Ordinary chemicalsIn 1000 litres0.29-PerfumesIn 1000 litres1.15-AcidRs. (in lakhs)6.45-Specialty chemicalsRs. (in lakhs)0.11-Ordinary chemicalsRs. (in lakhs)0.04-PerfumesRs. (in lakhs)0.81Rs. (in lakhs)7.41Raw Material CostTOTALHeadcount-ManufacturingNumbers11-Marketing professionalsNumbers2-Corporate employeesNumbers118Average periodic Salary-ManufacturingRs./Month10000-Marketing professionalsRs./Month15000-Corporate employeesRs./Month16500Bonus on Salary (% of Salary)12%Employee Cost-ManufacturingRs./Month (in 10,000)12.6-Marketing professionalsRs./Month (in 10,000)4.53-Corporate employeesRs./Month (in 10,000)1.63TOTAL18.76Power CostRs. (in lakhs)0.62Packaging CostRs. (in lakhs)1.73Advertising CostsRs. (in lakhs)7.23CommissionsRs. (in lakhs)5.3Maintenance CostsRs. (in lakhs)0.14Insurance PremiumRs. (in lakhs)0.5Total CostsRs. (in lakhs)41.6919 scheme and CompetitivenessVisionWe help people arou nd the world come to every day needs for nutrition, hygiene and wellbeing, with brands that help people look trusty, feel good and get more out of life.A draw directionUnilever helps people around the world meet every day needs for nutrition, hygiene and wellbeing, with brands that help people look good, feel good and get more out of life. In 2009, they launched called The Compass Unilevers strategy for sustainable growth. At the heart of that vision is the philosophy of work to create a better future every day for their consumers and the communities in which they operate. Another key element of their strategy is our aim of doubling the size of Unilever while reducing our impact on the environment. Its a goal the company is seeking to achieve by developing new ways of doing art through which can minimize our direct impact. The company is also working with suppliers, consumers and the retailers who sell the brands to improve their sustainability credentials too. By combining ou r multinational expertise with the deep roots in diverse local cultures, Unilever is continuing to provide a range of products to suit a wealth of consumers. The company is also strengthening its strong relationships in the emerging markets they believe will be significant for future growth.Achieving significant growth objectives while decoupling growth from environmental impact is a bold but challenging vision, says Unilever CEO capital of Minnesota Polman. Not many companies have yet taken it on. But I believe its the only viable vision. One that builds on Unilevers long-term heritage and achievement, while supporting a responsible future. . make out cooking stove ManagementThe supply drawing string of Lux is the core feature which looks after the efficient zip of the entire line of reasoning production and processes. sum up cooking stove is divided into two parts one is the efficiency and the other looks after quality control.Supply chain is the core of Lux sales since it is responsible to make the deliveries to the depot, distributer and ultimately the shops. To ensure the supply chain is well maintained Lux management has weekly meetings and a software product to record our forecast, orders placed by distributors (primary sales) and ultimately the orders delivered to the distributor.MSO is in direct border with the brand team. He is responsible for required production and also informs organizations about lag or delays in production and all logistics involved and other things related to production.Forecast is ground on a trend line that is predicted out of exponential sales trend graph and marketing impact added on. There are 2 major raw materials that go into production besides acid and bases. One is palm oil which is ultimately brought to the factory for further processing. The other is perfume which is globally tested and supplied. Various people within the supply chain section are responsible for various functions such as one for forecast and r ight demand planning, one for production and quality assurance (R&D) and one for ultimate supply and logistics. The management of the supply chain has the following processes which creates the whole flow of the supply chain network be afterDemand broadcastningThis phase is the pre-production phase where business analysts and managers sit together and create a strategic plan based on two core functions, promotional value selling and the base line target. Demand planning is carried out for a period of 5 years at Luxpromotional Value Selling is where Lux managers sit together with the planning team and set targets to achieve in terms of sales and production after advertising and marketing campaignsBase Line is the bottom line target of sales which can be achieved even without any marketing efforts. This is what the brand will achieve in terms of sale at all costsSupply PlanningIn this phase the team forecasts the demands with the supply in order to procure the material required for the manufacturing of the soap bars. The supply plan is derived from the demand plan.Material Requirement Plan is the procurement plan in whichvendors and suppliers are determine and the material is procured. The details of procurement are established and are further shared with the budget control team.Master Production Schedule is the dilate plan of how the product will be produced, All details are included in this portion in terms of batches, number of bars produced, time period, production methods and flow,Procurement is done and the material is sent to the production departmentProduction where the manufacturing and packaging is done and storedDistribution where product is warehoused and further sent to distributors around Pakistan and the distributors further give it to whole sellers.Supply Chain flowPlanningDistribution Demandplan Supply plan Warehousing DistributorsDemandPlanProductionManufacturingPackagingPromotionalValue SellingBase linetargetProcurementSupply PlanMPSMRPBuying DepartmentWarehousingStrategy and R&DStrategyThe strategy used by Unilever is in two regions, production and campaigns. In order to maintain their strategic function, the factory is one of the oldest in Pakistan. It was Rahim Yar Khan and it was initially Unilever HO. It was initially chosen because of the following factors1. Proximity to Labor Majority of labor working in the factory reside close by in Punjab region which is densely populated2. Proximity to reservoir of Supply Water supply from the rivers flowing close by provide ease of water availability (Punjnad)3. Storage and Warehousing Since the factory site was owned by Unilever, there was no space shortage line so expansion and new installments was possible along with ample space for warehousing.4. Community Considerations5. AccessibilityResearch and DevelopmentIn order to maintain the competitive advantage of being the leading beauty soap brand of Pakistan, the R&D department also supervises production and packaging. R & D and Supply both monitor production and quality. Eachmachine involved is configured for production according to the amount required and for how much should be in each carton so that the carton does not explode. R & D carries out research and tries to increase efficiency by running machine trials.Further to ensure quality product is produced and any apparent flaws are eliminated, batch inspections are done at random to temper the quality. The Supply Chain acknowledges the capacity of the machinery and production figures, therefore R & D only work on improvement and monitoring. The R&D department also carries out focus groups and sample testing when introducing new variants in the product according to consumer insight gathered through research and development. The R&D is responsible for the 24suggestions for upcoming variants, which is then strategically plan by the brand team and tested at a small scale. If successful, the new variant is sent for production.Total quality managem entTQM is different for every company and is defined by each with respect to 5 major factors1. Conformance to specifications2. Fitness quality3. Value for price gainful4. Support services5. Psychological factorsBeing a manufacturing firm, Lux observes exigent manufacturing quality as the focus is on a tangible product with respect to the features, reliability and conformance. Total Quality management for Lux is distinguish into R&D functions which look into formulation, quality assurance, and packaging and ultimately logistics get across trials. Various people within the supply chain department are responsible for various functions such as forecast and demand planning, one for production and quality assurance (R&D) and one for ultimate supply and logistics.The quality of production at lux relies on the following basic concepts