MEAT KING Report and Plan

INTRODUCING: “MEAT KING”

INTRODUCING: “MEAT KING”

 

1-Our Products:

Our products include chilled beef, mutton and chicken (in whole carcass and meat cuts). Following is the brief description of the products:

Beef, mutton and chicken products

 In beef we deal in young bull and buffalo meat. The meat is in the form of four cuts of whole carcass (two leg and two shoulder) packaged in cotton cloth along with plastic packaging as well. (Plastic packaging is for meat cuts).

 In mutton we deal in meat of goat and big lamb in the weight range of 8Kg to 12 Kg per carcass. Whole carcass is packaged in the cotton cloth and is delivered to the client’s location.

1.1-Product description

Meat consists of skeletal muscle tissue, including fatty, connective and bone tissue, originating from slaughtered animals. Frequently transported types of meat are: cattle (quarters of beef), calves, sheep and lambs (all whole). Boned chilled meat (portioned meat) is also vacuum packaged for storage and transport.

Chilled meat is also described as fresh meat because, when correctly chilled, it retains the characteristics of fresh meat. The greater or lesser degree of redness of meat is determined by its content of myoglobin (muscle pigment) which depends upon the species, breed, age and other factors.

The rapid perishability of meat is due to its high protein and water content and its fat content. Since fresh meat may rapidly become unfit for consumption due to biochemical and microbiological changes, it is only ever transported as chilled or frozen meat. Degradation processes are retarded by maintaining low temperatures.

1.2-Packaging

            Chilled meat is transported as quarters of beef,whole calf, sheep and lamb carcasses and is usually packaged as follows:

            Quarters of beef: in plastic bag and stockinette (protective covering made, for example, from linen).

• Plastic tray and cloth packing will be used overall
• Sheep, whole carcass: in plastic bag and stockinette
• Boned portions: wrapped in film and then packaged in plastic tray
• Boned portions of chilled meat: vacuum-packaged in plastic bags

1.3-Purpose of packaging:

The basic purpose of packaging is to protect meat and meat products from undesirable impacts on quality including microbiological and physio-chemical alterations. Packaging protects foodstuffs during processing, storage and distribution from:

•           contamination by dirt (by contact with surfaces and hands)

•           contamination by micro-organisms (bacteria, moulds, yeasts)

•           contamination by parasites (mainly insects)

•           contamination by toxic substances (chemicals)

•           influences affecting colour, smell and taste (off-odour, light, oxygen)

•           loss or uptake of moisture (evaporation or water absorption )

2.0 -Mode of Transportation:

Chiller van used for Meat Distribution

 

3.0-Market Analysis (Using Five forces Model):

Threat of new Entrants /Potential Competitors (Median Pressure)

1-         Entry barriers are relatively low for meat packing industry: there is almost 0 consumer switching cost and very low capital requirement. There are more and more new brands appearing in the market with competitive prices however these competitors are not direct to us but still threat of consumer shift exists.

2-         Meat one is direct competitor and has work on its branding over the years, so it is likely that some of loyal customer will remain stick with them.

3-         Threat from local meatshops is high but we are selling higenic and quality meat.

Threat of Substitute Products: low to median pressure

         There are many food product brands which offer pre cooked food which is direct substitute of out prime cut raw meat; however these are quite expensive as compare to raw meat. Overall consumers of raw packaged meat have different perception while buying meat as we compare it to pre cooked food. Pressure on sales however exists but not that significant.

The Bargaining Power of Buyers :High pressure

•           It will be difficult to cater the attention of institution sales, as they have different suppliers and each individual large buyer will have significant impact on our pricing strategy.

•           For this we have to improve our cost deficiencies and work on target costing principle and lower down the overall cost base. That is how we can offer competitive prices.

The Bargaining Power of Suppliers: Low to median pressure

•           There are potentially large supplier base in providing quality meat and normally credit is given on large scale basis, if we have to get quality meat in competitive prices we have to purchase initially on cash and in large quantities to get bulk discount.

•           Also since we are operating slaughter house for export sales, we can use livestock suppliers to provide cheapest supply and get it processed at slaughter house.

Rivalry among Existing Firms:  Median to High Pressure

•There are range of meat suppliers for institutional sales  and stiff competition exists

4.0-Product Distribution Strategy:

We will be dealing with two markets.

   Local market

   Export Market (Direct from Slaughter House)

For local market we are planning to have 3-4 outlets through which we will supply our product. Initially we have worked on the feasibility of one outlet only.

We are going to introduce an entire new concept of vaccume packaging. A method of packaging that removes air from the package prior to sealing. It can involve both rigid and flexible types of packaging. The intent is usually to remove oxygen from the container to extend the shelf life of foods and, with flexible package forms, to reduce the volume of the contents and package.

This will enable us to

   Reduce wastages and

   preserve food for long time

We have designed our strategy for local market as:

Local Market. And Export Market:

4.10-Distribution Plan:

Effective distribution provides customers with convenience in the form of availability (what, where, when - the right product, at the right place, at the right time), access (customers' awareness of the availability and authorization to purchase) in order to create customer convenience we are moving to retail outlet concept so customer can get their desired products.

Distribution decisions have both strategic and logistical dimensions:

Strategic distribution is a competitive advantage that accrues generally from the configuration of a distribution network (who, what, where, when) and, more specifically, from the selection of partners (i.e. middlemen) who intermediate between the company and the customer by performing necessary fulfillment and service activities. Since this is a small business plan we are initially avoiding un necessary cost of intermediaries by offering direct product at our retail outlet and for institutional sales, our field force will get the orders from cafeteria, restaurants, supermarket and hypermarkets and later on orders will be processed and distributed to them

Logistical distribution ( supply chain management), which is inclined to efficiently supporting the strategic objectives, refers to the storage and movement of goods, information, and money between the manufacturer and the final customer.  Logistics is sometimes inappropriately viewed as an exclusive operations function.  In reality, marketing often has a major role in the day-to-day logistics process with responsibilities ranging from sales forecasting and demand management to inventory planning and the allocation of short supplies. These all functions will be performed critically in consideration to the persishability of the product.

4.40-Distribution related decisions:

1-   The number of layers between the company and customer (Channel Depth) will be minimum to avoid extra cost as stiff competition prevails in the market for product.

2-   The specific type of partners in each layer (e.g. wholesalers or distributors, mass merchants or high-end specialty retailers) large buyers will be given bulk discount since over all large volume reduces cost per unit . The targeted buyers will be large restaurants, hypermarkets such as Metro etc. Also orders from Government forces ( such as Pakistan Navy) etc will also be in consideration to approach to.

3-   The number of partners at each layer (channel breadth), and the geographic placement of partners (location, density).It will be focused to locate our self near our channel partners.

The primary objective of distribution strategy is to provide sufficiently broad, gap-free market coverage, i.e. being available in enough outlets so that customers have convenient access for purchases, this will be one limiting factor we will be facing initially since for purely retail sales we have only one outlet , we will observe the demand and growth in local sales and then we will decide on investing in new outlets

Feildforce:

Fieldforce mobilises teams of people to get things done quickly and efficiently. Whether that’s a small pilot project or an extensive nation-wide program, our years of experience delivering outsourced field solutions means we’ve got the knowledge to help save our client’s time and money.

      Fieldforce can deliver a wide range of services based on our diverse skill set, and        we’re flexible enough to customize a program to suit your particular requirements. We can scale up as required too – our strengths in training and managing high numbers of field staff are evidenced in our successful deployment of many large-scale projects.

Field sales force:

To meet the ever changing needs of customers, we have set up a distribution network that ensures availability of all our products, in our outlet, all the times this will include maintaining favorable trade relations, providing innovative incentives to large buyers and organizations demand generations activities among host of other things.

The important activities that our field sales force will do are (1) target chasing and (2) reporting on the daily basis. Account information will be maintained on daily basis.

Field Force Management:

The working cycle of field force member is from 1^st of every month to 1^st of the next month. During this period he is given various targets that help to achieve company objectives and give him chance to prove his performance relative to other.

5.0-Competitive Advantage

Cost Factor Strategy:

   We are selling our product in cost reduction approach and this will be our cost competitive approach. Currently Meat is selling packaged fresh chilled meat ranging from 650 -800 rupee per kg .We are penetrating the marketing with keeping eye on large volume .Pricing section is explaining in feasibility section. For retail consumers price would be 8% higher then what is explained in feasibility section. This adjustment is made because at retail level expenses for storage and wastage would be higher as compare to institutional sales. But still over all prices for retail are much lesser then what meat one is offering is.

   Overall cost reduction is our main target.

6.0-FEASIBILITY STUDY:

Figure 1

			FEASIBILITY STUDY
			(IF MINIMUM ORDER SIZE IS 1500KG)Per Day
PARTICULARS			Quantity		Rate		Total		Cost Per Kg
Purchases (Mutton)			1500		460		690,000		460
Processing Charges			170		20		3,400		2
Packaging Charges			1500		5		7,500		5
Salaries and Rent			1500				9,000		6.00
Variable Expense
Chilling Charges			1500		10		15,000		10
Chiller Van			1500		10000		10,000		7
Marketing BTL expenses							6,000		4
NET TOTAL							740,900		493.93
Sale Value
PARTICULARS			Quantity		Rate		Amount in Rupee
Sale			1470		515.00		757,050
Cost (total)					494		(740,900)
Gross Profit					21.00		16150
* 2% Wastage Allowance from 1500 purchase value to 1470 sales value
Figure 2			FEASIBILITY STUDY
			(IF MINIMUM ORDER SIZE IS 1500KG)Per Day
PARTICULARS			Quantity	Rate		Total		Cost Per Kg
Purchases (Beef)			1500	250		375,000		250
Processing Charges			12	250		3,000		2
Packaging Charges			1500	5		7,500		5
Salaries and Rent			1500			9,000		6.00
Variable Expense
Chilling Charges			1500	10		15,000		10
Chiller Van			1500	10000		10,000		7
Marketing BTL expenses						6,000		4
NET TOTAL						425,500		283.67
Sale Value
PARTICULARS			Quantity	Rate		Amount in Rupee
Sale			1470	300.00		441,000
Cost (total)				284		(425,500)
Gross Profit				16.00		15500
* 2% Wastage Allowance from 1500 purchase value to 1470 sales value

Figure 3

			FEASIBILITY STUDY
			(IF MINIMUM ORDER SIZE IS 2000KG)Per Day
PARTICULARS			Quantity	Rate	Total	Cost Per Kg
Purchases (Chicken)			2000	190	380,000	190
Processing Charges			2000	2	4,000	2
Packaging Charges			1500	5	7,500	4
Salaries and Rent			1500		9,000	6.00
Variable Expense
Chilling Charges			1500	10	15,000	8
Chiller Van			1500	10000	10,000	5
Marketing BTL expenses					6,000	3
NET TOTAL					431,500	217.25
Sale Value
PARTICULARS			Quantity	Rate	Amount in Rupee
Sale			1960	225.00	441,000
Cost (total)				217	(431,500)
Gross Profit				8.00	9500
* 2% Wastage Allowance from 2000 purchase value to 1960 sales value

Figure 4

Fixed Expenses
Rent ( Outlet)	60,000
Electricity &utilities	30,000
Salaries	161,000
Maintainence	20,000
total	271,000
		Days	per day
total	271,000	30	9,033
FIGURE 5
Salary Break UP	Qty	Offered Salary	total
Cashier	1	10,000	10,000
Meat Triming Butchers	3	7,000	21,000
Drivers	2	10,000	20,000
Quality Checker	2	15,000	30,000
Sales Representative	4	10,000	40,000
Key Account Officer	1	30,000	30,000
Cleaner	2	5,000	10,000
Total Human Force	15
total payroll			161,000

FIGURE 6

Initial Inevstment	Qty	Cost	total
Freezers	3	350,000	1,050,000
Flooring and Interior Design		700,000	700,000
Shelves and Racks		100,000	100,000
Furniture		75,000	75,000
Computers	2	20,000	20,000
Chiller Vans	2	3,000,000	3,000,000
Generator	1	150,000	150,000
total cost			(5,095,000)
Working Capital Requirement			(15,000,000)
Total Initial Investment			(20,095,000)

7.0-Risk factors and implications for sales and distribution management

1-   Tendency of Postpone purchase by Customers:

If sales are lower than expected it is obvious that customers are less willing to purchase , since this type of packaged meat is new in market people generally link with the freshness of meat which increases the tendency to postpone sales. For such an issue it is imperative for the sales force to deal expertly and communicate benefits of consuming hygienic meat.

2-   Another factor which is almost supports the factor mentioned above is the level of knowledge displayed by customer during the buying process. If the knowledge of consumer is higher in product it makes life easier for the sales force to concentrate on other areas of channel management and ensuring the availability of required product

3-   The perish ability of the product also leads and speeds up the process of reaching the customers quickly in order to avoid such pressures we have introduced vacuum packing which will make life limited to 1 month , making the product as fresh as it was on day 1.

4-   Time band associated with the purchase of the product is another factor which involves the seasonality of the product, for instance it has been observed that during Ramadan Season consumption of meat product increases such increase will not only require increased capacity but also at a competitive price, in order to avoid such type of risk purchasing could be made as per season and vacuum packing will ensure shelf life .Same implies in the winter season as well.

5-   Value /Volume ratio is another critical risk factor which can change the forecasted sales, it is imperative to increase the volume of sales so as to decrease the cost per unit and increase margins

6-   Transportation costs, with increasing prices of fuel it is important to establish routing for effective and efficient use of chiller vans during delivery of meat product at various customers.

7-   Supply chain management, being backbone of any business it is also important to choose reliable suppliers for our meat product range so to avoid shortage of supply and increasing prices. Further in order to improve supply chain limitations we will be eyeing on specific tasks:

i.         Hassle-free order entry (prompt)

ii.   High fill rates (available when ordered)

iii.  Consistent cycle times (predicable order to receipt times)

iv.  Dependable deliveries (on time, intact)

v.   Timely order tracking (real-time status)

vi.  Accurate invoicing (right quantities and prices)

Posted in: MEAT KING