2. Contents
Executive Summary:...........................................................................................................................4
Exporting Broiler Chickens from Gulf Poultry:.......................................................................................5
Where are the crates available from?...............................................................................................5
Pictures of Plastic Crates: ................................................................................................................6
How many crates can be mounted on a truck? .................................................................................7
Which truck to choose from?...........................................................................................................8
How much would a truck cost?........................................................................................................8
The body:....................................................................................................................................8
Processing time for the body:.......................................................................................................8
Mileage:.....................................................................................................................................8
Load Capacity:.............................................................................................................................8
How would the size of the truck effect supply chain management? ...................................................9
Loading time:..............................................................................................................................9
Transit time (one way):................................................................................................................9
Delivery time:..............................................................................................................................9
Pictures and Specifications – Aumark Foton M-280.............................................................................10
Exploring the Mazda Titan 3500 ........................................................................................................12
A Utility Truck:..............................................................................................................................12
Load Capacity:..............................................................................................................................12
Mileage:.......................................................................................................................................12
Odometer:....................................................................................................................................12
Price:............................................................................................................................................12
Pictures – Mazda Titan 3500..........................................................................................................13
Supplying our Chicken:......................................................................................................................15
Forward Integration:.....................................................................................................................15
Payment Terms:........................................................................................................................15
How many shops dowe need?...................................................................................................15
Having our own shops:......................................................................................................................16
Shop Pictures................................................................................................................................17
Supplying broiler chicken to restaurants: ...........................................................................................20
Applying Factor Rate.....................................................................................................................20
3. Quantity & Quality Required:.........................................................................................................21
Payment Terms:............................................................................................................................21
Targeting Catering Services Providers: ...............................................................................................22
Ad hoc Orders:..............................................................................................................................22
Supplying Chilled Meat: ....................................................................................................................23
Types of Chilling Machines: ...........................................................................................................23
Charge Based Cooling:...............................................................................................................23
Tabulating prices:......................................................................................................................23
Supplying our meat to branded meat outlets: ....................................................................................24
Requirement:...............................................................................................................................24
Quantity:......................................................................................................................................24
Rate:............................................................................................................................................24
Conclusion:......................................................................................................................................25
4. Executive Summary:
The purpose of the study is to understand and appreciate broiler supply chain and distribution system.
The systemhasbeenchalkedoutassumingaquantityof 10,000 chickensperday. Broilerchickens,atthe
presenttime,are generallybe soldtoartiswhosubsequentlydistributethemtoretailersandwholesalers.
Due to overproduction, artis tend to apply cut-rate on the actual farm rate. The cut rate depends on
several factors including payment terms, over production, season, and demand. Dealing with artis may
not be the best optionto sustaina viable businessoperation.Artis,more oftenthannot, work on credit
which can affect working capital plus profit is minimized due to cut rates.
Inlightof the above findings,thisresearchstudyaimstowards forward-integrationasabusinessstrategy
where Gulf Poultry can directly supply chicken to retailers and whole sellers. In order to export bulk
quantity, we would require our own slaughtering and processing unit. Gulf Meat Processing unit,after
slaughtering, assorting and packaging chicken parts can deliver the product to various restaurants and
caterers. Furthermore, Gulf Poultry can also supply chicken to branded meat outlets like Meat One.
There are differentSOPstotransport live chickenversuschickenmeat.Reporthighlightsvariousvehicle
options to begin with as well as how it is transported.
This is only the first step in the right direction. Gulf Poultrycan be one of the leading companies in the
poultry industry at par with K&N, Meat one, Big Bird and several others.
5. Exporting Broiler Chickens from Gulf Poultry:
Broilerchicken,once readytobe shipped –at approximately35days frombirth – are loadedintotrucks
that transportthe chickento Karachi city. The cityhas beendividedintofive zones –North,South, East,
West andCentral.
Shipment – from the farm gate - is unitized in plastic crates. Presuming an average weight of 2 Kg per
chicken one can load approx. 12 – 13 chickens per crate depending upon the size of the chicken. Crate
itself is weightsabout 8 Kgs. It is made of plastic and has a sliding door for entry/exit of broiler chicken.
Stuffinginmore than the recommendednumbersof chickencancause suffocation,therefore greatcare
and caution needs to be exercised during loading.
Whereare the crates available from?
There are specializedcratesthatare meantto transportfullygrownbroilerchickenfrompointA topoint
B. Research team was able to get in touch with a few vendors at Shershah (Site) and we were able to
obtain the following details:
Crate Size
Standard– stocking12 to 13 birds(depending
uponthe size of the bird).
Crate Weight 8 Kg
Crate Price 1800 per crate
7. How manycrates can be mounted on a truck?
There is no straightfigure on the about of crates that can be mountedona truck; this would essentially
depend on the size of the truck. Talking to different “Artis”, we were able to correlate the number of
crates to the size of the truck.
Small Truck (usually a Shehzore) 82 crates amountingto 984 chickens (keeping12 chickens percage)
Medium Truck (usually a Mazda
Titan 3500)
160 crates amountingto 1920 chickens
Large Truck (usually a Hino) 240 crates amountingto 2880 chickens
So,in orderto transport,10,000 broilerchickenswe wouldrequire acombination of3large and 1
mediumtruck OR approx. 5 mediumtrucks OR approx. 10 small trucks.
8. Which truck to choose from?
Selectionof truckwoulddependonseveral factors,somemore importantthanothers.Firstthingsfirst,if
Gulf Poultryistobuyatruckwe wouldinitiallygetthechassisorthe basicframeworkincludingthe engine.
We would then mount the chassis with supporting body which can be customized as per client
requirement(s).
How much would a truck cost?
Cost of a standardtruck wouldessentiallydependonthe brand,make,model,engine capacityaswell as
other vital characteristics including length of chassis, displacement and weather the deck is includedor
not.
A Foton truck,for example,withachassislengthof 14 feetwill cost us RS. 14, 60,000. Similarly,the
same truck with 11 feetchassis lengthwill costus RS. 14, 10,000.
The body:
Chassis in just the foundationof the truck and not the complete truck. In order to get a final version of
the truckwe orderthe body.The bodycanbe tailormade asperoutexpectations.Ourresearchteamwas
able to get in touch withcertainvendorsand price providedtous is: 1, 40,000 for 14 feetchassislength
and 1, 10,000 for 11 feet chassis length. It is not surprising that the price is correlated to length of the
chassis as well as body.
Processing time for the body:
Processingtime forthe bodyis15 dayswithoutinsulationand25days withinsulation.
Mileage:
Mileage – withoutload - accordingto the dealers,is10 – 12 Kms perliter.
Load Capacity:
Load capacitywouldbe essential andwill determinehow manychickenscanthe truck loadand
transportand therebycalculationhowmanyroutescana truck make per day.
Upon conversationwithkeymanagersatFoton,we learnedthatthe capacitywhichisstatedat 3 tonfor
a 14 feetchassisFotontruck,can be upsizedto5 – 5.5 tonswithcertainreinforcements.So,insteadof
goingfor an expensiveoption,itseemsfinanciallyviable toupsizeaFotonM-280. We alsohave the
optiontogo for deckwhichis anotherextraRs50,000 butaccording tothe vendoritisbetterto go
withoutdeckandget a customizedbody.
Comingback tothe loadcapacitylet’sconsideraFotontruck withan advertised3ton capacitywith
reinforcedbodytoextendthe capacityto5.5 tons.
9. How would the size of the truck effect supply chain management?
Thismeansthat a FotonM-280 truck withan upsizedcarryingcapacityof 5500 Kg will be classifiedasa
mediumtruckwith 160 crates. This meansthe size of the crates alone will be: 1280 Kg. Now addingthe
chickensandhypotheticallyconsideringasize of 2.2 Kg per chicken,a truck can transport 1920 broiler
chickenper trip.
Keepingthe 10,000 birds/day scenario,one truck will notbe enough.Researchtherebyrecommends
purchasingat least5 trucks. Thisisbecause of the followingfactors:
Loading time:
2 hours for1920 chickens.
Transit time (one way):
2 hours (consideringitisinthe nighthours there shall be minimumtraffic).Accordingtochickendealers
and Artis,transportingchickenis done after 2:00 AM inthe night.Since Gulf Poultryhas its own control
sheds,thislimitationdoesnotapply.Thatbeingsaid,nodealerwouldtransportchickensduringdaytime
as the heat and sunlight can affect transit mortality.
Delivery time:
Deliveringchickentodifferentmeatshopsin the markets isbasedon a pre-decidedroute plan. Delivery
timesforapprox. 1920 chickens(per truck) is 2 hours. Assuminga quantity of 12 chickens/crate – on an
average – we will have to touch 16 shops per truck.
Conclusively,if we assumethateachshopswill accept16cratesthentodistribute 160crates ina medium
sized Mazda Titan, we would require 16 shops per zone.
For 10,000 chickens,assuminga final weightof 2.2 and with12 chickens percrate, we are loadingabout
833 crates in 5 trucks whichare beingroutedto Karachi city in 5 differentzones.Notall zoneswill have
the same demand.
12. Exploring the Mazda Titan 3500
ContemporarydistributionpracticessuggestthatMazdatrucks, ingeneral,are beingusedforchicken
distribution.There trucks,comparedtoFotonare oldwithmodelsrangingfrom1981 to 2003. In 2003,
SEL and Mazda JapanJV deal ended,SELwas privatizedand boughtbyMasterMotors whonowadays
produce busesandmediumsize TrucksinJointVenture deal withChinese DongFengCorporation.
Back in 1980’s SindhEngineeringlimitedsignedaJointventure dealwithMazdamotorsJapanfor
assemblingTitaninPakistan.Inthe late ’81,productionstartedas the firsttruck goeson sale.
A Utility Truck:
Mazda’s T3500 or Titan isa multipurpose mediumsizetruckcapable of doingdifferentwork.From
refrigerationvansforIce Creamandfrozenfoodcompaniestocargo delivery,fromworkingasa chicken
transfervehicle toladdervanforelectricsupplycompaniesetc.Interestingly,Mazdachassishave also
beenusedtobuildminibusesontopof it.
Load Capacity:
The Mazda 3500 iscan a liftingcapacityof 3.5 tons,howeverusingreinforceddeckandsupporting
armor, the liftingcapacitycanbe upsizedto6.5 to 7 tons.
Mileage:
Mile of the truck dependsonthe weightitcarries,however,informationfromvariousdriverssuggests
that itgivesaround7 - 7.5 Kms/Liter.
Odometer:
We were alsoable tofindoutthat odometerforthese trucks,more oftenthannot,are tampered.Let’s
take thisscenarioforexample:
http://karachi.bolee.com/detail/new-mazda-titan-1373920
Upon callingthe driverwe were able tofindoutthatthe truck – althoughregisteredin2007 – was
actuallymade in1994. It isvirtuallyimpossible forsuchanoldtruck to have a mileage of just25000.
Tamperingodometersisacommonpractice inPakistanand therefore isinstrumental indepictingthe
actual wearand tearof a particulartruck.
Price:
A standardMazda 3500 Titanof 1984 - 2003 model will costus18, 00,000 to 20, 00,000. Price would
essentiallydependonmake,chassis(14feetversus16 feet) andcondition.
15. Supplying our Chicken:
Once we have the necessaryvehiclestotransportourchicken,the nextobviousquestioninmindis:who
do we transportthischickento?
Forward Integration:
Thismeanswe do what,incontemporarypractices,the Arti does.Havingourown trucksis onlythe tip
of the iceberg.Movingforward,we will have topenetrate the marketandofferretailers’betterrates.
Retailers,incontemporarypractices,are buyingatfarmgate rate +2 andat farmgate rate in some
cases.
For example:If the FarmGate Rate is 135, we can supplythe chickentothe general retailerat 135 + 2.
Therefore,the retailerwill pay Rs.137 per chicken.
Payment Terms:
Paymentisdone eitherincashor creditdependingonthe relationship.
How many shops do we need?
There are small,mediumandlarge shops.There isnohardand fastrule,as to the quantityrequired.
Generally,asmall shopwouldrequire10 – 15 crates. Similarly,alarge shopwouldrequire 15– 20
crates.
Hypothetically,assumingaquantityof 20 crates per shop,we shall have the followingscenario:
Crates/Shop 20
Chickens/Crate 12 (2.2 Kg)
ChickensDeliveredpershop 240
Keepingadailytarget of 10,000 chickens, we wouldrequire 10000/240 = 41 shopsapprox.
We can divide Karachi cityinto 5 zones(as mentionedpreviously).Thismeans,inotherwords, 8shops
per zone.
It isimportantto note that retailersdo not usuallybuy very heavy chicken.While talkingtodifferent
retailers,we discovered thattheypurchase chickenwhichweighbetween 1400 grams to 2000 grams.
Broilerchickenwhichis largerin size isgenerally requiredforbonelessmeat.
16. Having our own shops:
Research does not recommend thisoptionas 228 shops would require massive capital expenditure and
workingcapital.Instead,we were abletogetintouch withcertainshopsoutof whicha particularshop –
classifiedasa large shop – were willingtosublettheirfacility. Incanbe a good ideato use thisshop or a
similarshop forslaughteringanddistribution.Thiscanbe a stepinthe rightdirection.Inordertosell bulk
quantity we can target restaurants and catering companies using our shop as a central processing zone
for slaughtering and exporting meant to restaurant and catering companies.
Please refertothe picturesbelow forthe portionavailableforsubletting:
ShopName:Dehli Meat Shop
Location:Phase-2 extension,DHA, Karachi.
Contact information:Shallbe providedif required.
Thisparticularshopis strategicallylocatedinphase 2close toA1 snacks and has a massive slaughtering
space.
19. This can be our first retail outlet and perhaps a step in the right direction. The shop is currently selling
mutton and beef and has space for chicken vendors (refer to pictures).
In additiontothe above,Gulf ResearchTeamwasable toget intouch withshopownerwhoare also into
the cateringbusinessandwere willingtogive us cateringorders. Frequencyandquantityof orders is ad
hoc. They had a formulaforpricing the chicken.For example:if the chickenis for Rs 150 (live bird) they
shall multiply that by 1.4 (constant) and obtain chicken meat (with bones). In this case, it amounts to
210.
It is smart not to rely on retail alone and include “push marketing” as a marketing strategy to get
maximum number of catering orders.
20. Supplying broiler chicken to restaurants:
Unlike cateringcompaniesrestaurantshave amore consistentdemand.Restaurantspurchase chickenin
the followingforms:
Whole Chicken
Mince
Karahi Cut
Qurma Cut
Biryani Cut
BreastBoneless
Drum Sticks
ChickenWing’s
SkinChicken
We floatedbulkemails tovariousrestaurantsandwereabletogetintouchwithafew peopleoutof which
one of the purchase manager at Lal Qila was willing to give us an order if the rates are good. Mr. Azher
Shafi, GMOperations & Franchise Development, at LalQila.
Generallyrestaurantownersinsistonprovidingthemwitha factor rate. Factor rate isthe farmgate rate
into a decided constant. It may vary depending on the style of chicken pieces. For example: skinned
chicken will likely have a higher factor rate. Skinned chicken is usually used for sajji or broast.
Applying Factor Rate
Upon meetingGMOperations,we tentatively,decideduponafactorrate of 1.5. Thismeansthatkeeping
a factor rate of 1.5 in mind and a farm gate rate of 126 the amount would be:
Farm Gate Rate: 126
Factor Rate: 1.5
Result = farm gate rate * 1.5 (constant)
= 126 * 1.5 = 189
Conclusion:189 is therate perkg thatLalQila is willing to pay usfor4 pieces(2 breastpieces,2 leg pieces).
The same rate can be applied for 16 pieces (which is ideal for qurma cut or karhai cut).
Similarly, factor rate for boneless chicken is around 2.4. Usually heavy chicken is required for boneless
meat. Please observe the following scenario:
Farm Gate Rate: 126
Result = farm gate rate * 2.4 (constant)
= 126 * 2.4 = 302.4 or 302 approx.
Conclusion: 302 is the weight per Kg that restaurants are willing to pay.
21. Quantity& Quality Required:
LalQila,forthe timingbeing, requires aquantityof 40 Kg bonelesschickenand30 kg chickenwithbones.
Chickenwithbonesincludesboth4(2 breastpieces,2legpieces)and16 pieceswhichisthe classic qurma
cut or karhai cut. The quantity increases to 80 Kgs and 60 Kgs in peak seasons which are commonly
December, January andFebruary.Theyalsorequire 15 Kg of neckpiecesand20 Kg of kalegi perweek. In
addition they also require 25 Kg of skinned whole chicken for their famous Sajjji.
Theyhave qualitycontrol and standardsparameters.Meatneedsto be delivered freshanddirectly from
the slaughter house. The restaurant does not accept frozen meat. Meat – in transit – needs to be in a
chiller with temperature around 0 to 2 degrees Celsius. There are two widely available technologies in
the market – air based and water based. LalQila requires water based technology.
The procurement officer will place the order one day in advance usually in the evening
Payment Terms:
For orders delivered from the 1st
to 15th
payment is made on the 25th
of the month. Similarly, for orders
deliveredfrom16th
to 30th
paymentismade onthe 10th
of nextmonth.Therefore,theyexpectacreditof
10 days.
For reference purposes, they are currently purchasing from a few vendors including Big Bird.
22. Targeting Catering Services Providers:
Catering companies can be a valuable target, particularly because of the quantity they require. We
knockedona fewdoorsandwere able tohave a meetingwithDehli CaterersandServices.Forreference:
(https://www.facebook.com/DehliCaterersservices/) the company is accepting orders at the factor: 1.4.
If the price on 8th of November is 126, the revised rate after factor is applied is: 126 * 1.4 = Rs 176.4.
Suppliermaydeal onalowerfactorrate topenetrate the marketandafteracertainreputationrevisethe
terms. Factor rate can only be feasible if the order is in bulk.
Ad hoc Orders:
Unlike restaurants,cateringserviceproviderswill placeorderasandwhenrequired.Thispaybe lessthan
10 times in a dry month and may exceed 30 times in a months of festivity. December, January and
February are considered to be months of festivity and we can apply push marketing, developing
relationships with several event management companies. Meat can be supplied directly from our farm
from our base shop. Where it can be processed and supplied to catering companies.
23. Supplying Chilled Meat:
It is imperative to note that standard high quality restaurants accept farms fresh meat which is directly
deliveredfromtheirslaughterhouse. TheyWILLNOTaccept frozenmeat. Therefore,if we are tocater to
restaurants and catering companies, we would require trucks with chillers installed with an air based
cooling system as opposed to water based cooling which is outdatedand leaves ample moisture on the
product.
IF we are to assume that Gulf Poultry is to purchase a standard Mazda Titan 3500, we would require a
chillerwiththe followingdimensions: 16 * 7 * 7 = 784 cubic feet. Similarlyforastandard Shehzore truck,
the dimensions will be: 9.5 * 6 * 6.25 = 356.25 cubic feet precisely.
Types of Chilling Machines:
A Chilling machine essentially has two types:
1) Charge Based
2) Engine Drive Based.
Charge Based Cooling:
A charge basedcoolingsystemis expensive asopposedtoan engine basedcoolingsystem. Fora Mazda
Titan3500, a chargedbasedcoolingsystemwillcost 14,50,000. Similarly,the same systemforaShehzore
will cost: 9, 50,000.
An engine based coolingsystem hastwo options.You can eithergo for local or imported. A local engine
basedchillingsystemforastandard Mazda Titan3500 will cost 9, 50,000. Whereasan importedone will
cost 1,350,000. We also have to top-upthe systemwithan electrical socketso,evenwhenthe engine is
off and electricityisavailable,we cankeepingthe chillerrunning.Animportedengine basedsystemwith
a powersocketwillcost 15, 00,000. Similarly,alocal systemincludingapowersocketwill cost: 1,000,000.
Similarly,animportedengine basedcoolingsystem foraShehzore will cost7,20,000. We top itup witha
socketto make it functional evenwhenthe engine isoff,the total costwill be 9, 86,000. Whereasa local
system will cost 5, 65,000 and 600,000 with a power socket.
Tabulating prices:
Technology Mazda Titan 3500 Shehzore
Charge-Based Cooling System (Imported) 14, 50,000 9, 50,000
Engine Based Cooling System (Local, without socket) 9, 50,000 5, 65,000
Engine Based Cooling System (Local, with socket) 1,000,000 600,000
Engine Based Cooling System (Imported, without socket) 1,350,000 7, 20,000
Engine Based Cooling System (Imported, with socket) 15, 00,000 9, 86,000
There are no local optionsfor a charge-basedcoolingsystem.The charge can last for 6 – 8 hours. Thisis
Korean technology.
24. Supplying our meat to branded meat outlets:
We were able to get in touch with MEAT ONE - one of the premier meat suppliers in Karachi. We had a
meeting with Mr. Pervez Aamir, production manager at MEAT ONE. They are very particular about the
weight of chicken they buy.
Requirement:
They require a standard size of 1800 grams (give or take). The weight will be calculated against their
weighing scale installed at their slaughter house at Gadaap.
Quantity:
Theyare willingtostartwitha trial orderof 20 cages thatmeansapprox. 240 chickensper day.Following
that, they require minimum40 cages and maximum150 cages per day. This meansapprox.480 to 1800
chickens on a daily basis. On an average, they require 95 cages which means 1140 chickens on a daily
basis.
Rate:
MEAT ONE, similartoartis,also buysona cut rate.The discountedrate canbe decidedina meetingand
uponmutual agreementwhencansigna contract.
The dilemma,however,isthattheystrictlyrequire chickenweighing 1800 grams.In addition,theyneed
a consistent supply on a daily basis and the cut rate has to be fixed for minimum one year.
25. Conclusion:
Selling10,000 chickensperdaycan be a dauntingtask. Nosingle optioncanworkexclusively.Itisasmart
ideatouse avarietyof optionsinthe rightcombination. Havingmore than40shopswill require extensive
capital expenditure, however, by having a specialized meat processing outlet, our own slaughter house
and trucks installed with contemporary technology, we can supply meat to leading restaurants and
catering companies.
Researchfindingssuggestthatforwardintegrationcanbe astepinthe rightdirectionbutperhapsnotthe
firststep.We can considerworkingwith“Artis”at leastinthe beginningandthemphase themoutaswe
develop our supply chain network and start contracting with leading restaurants, catering companies,
premium meat shops and event management companies.
Working with MEAT ONE – Pros and Cons
Advantages Disadvantages
Working with premium brands like MEAT
ONE will help us develop a solid
reputationinthe market.We can bankon
this reputation and get several orders
from leading restaurants, catering
companies and event management
companies.
On an average, they require 95 cages
which means 1140 chickens on a daily
basis. This is more than 10% of our daily
yield. Supplying in bulk directly would
mean 7 less shops. So we save on the
capital expenditure.
MEAT One requires standard 1800 grams
of chicken. This may not be possible as
Gulf Poultry is targeting 2 Kg of broiler
chicken.
They require a steady supply, if there are
any hiccups in terms of supplying X
amount of 1800 chicken on a daily basis,
they may cancel the contract.
We have to bare of cost of transportation.
Theirslaughterhouse isat Gadaap; thisis
somethingwe needtofactorintothecost.
