Cost Minimization Techniques: A Case of Dairy Product Manufacturers in Pakistan

Abstract

One of the key challenges faced by manufacturing concerns in Pakistan is maintaining (or preferably increasing) the profitability level of their operations. For the purpose of this descriptive study, the dairy sector of Pakistan has been selected as a sample industry. The literature review explains why the dairy sector has been selected for this research, the key cost components and why cost minimization is necessary for companies manufacturing dairy products in Pakistan. A primary survey has been conducted with managers in top dairy companies of Pakistan and the findings have been discussed in detail. The findings include identification of cost components and their impact, cost minimization techniques and their impact on profitability as well as suggestions for new cost reduction measures. This research article is the first one conducted on this topic in Pakistan and can also open new avenues for further research in this area.

Data-driven capabilities, supply chain integration and competitive performance

“…In general, the F & B industry is fragmented and a mix of domestic and foreign-owned firms. Although MNCs have adequate IT infrastructure to integrate their supply chain, many firms are still struggling to confront numerous supply chain complexities that constrain the development of agile food supply chains, mainly due to the poor level of integration, lack of adopting big data technologies, channel conflict and loose market structure (Billah, 2013;Sammuel and Kashif, 2013). In addition, firms in the F & B industry tend to have a hybrid distribution structure with online and offline distribution channels.…”

“…About 97 percent of this milk is used as "open milk" which passes through unplanned sales routes in rural and semi-urban areas and just 3 percent of total milk production is collected by the milk processing industry for subsequent sales in packaged form (Kamran and Rizvi, 2013;Sammuel and Kashif, 2013). The dairy sector in Pakistan is unable to forecast and meet the agile demand due to lack of training and dairy-related education, lack of practical IT knowledge, imperfect market conditions, poor logistics infrastructure, information asymmetry and poor level of operational coordination (Billah, 2013;Jalil et al, 2009). To cope with challenges in dairy milk collection, processing and distribution, firms must capitalize on big data resources and drive value by assimilating data in supply chain activities from procurement to end consumption.…”