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SAMUYA FOOD MANUFACTURING INC. (LUDY’S PEANUT BUTTER)

Group 6: Paolo M. Manalansan Riza P. Mejorada Marinelle B. Oriola Joanne Christelle D. Reamico Kylie Ann A. Romero Eunice L. San Miguel Kristine Nicole T. Tejada

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Company Profile A family business established in 1971 by Mr. and Mrs. Pedro and Gloria Tianzon. Its name is derived from the Bicolano word samuya, whicc means “amin” (ours) that indicates a familial treatment to everyone that is part of the company. It aims to provide employment for fellow Filipinos, especially the residents in it neighboring compound so as to help them improve their way of life. It manufactures a variety of foodstuffs which include peanut butter, coco jam, banana ketchup and nata de coco, under the flagship brand LUDY’S.

Mission “To be the top manufacturer of peanut butter and coco jam in the country”

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Every manufacturing companies’ goal is to be the top manufacturer in their area of specialization i.e. Ludy’s Peanut Butter in the Peanut industry. This is the primary mission of the company but it still has three other mission which is “For the Ludy’s Brand to be known for its excellent quality and taste”, “To be able to develop and provide products that appeals to both Filipinos and Foreigners here and abroad”, “To able to provide job opportunities for fellow Filipinos.” Vision “To transform SFMI into a highly progressive, sanitary and productoriented company” SFMI sets its high standards with its products’ quality all throughout its production process due to peanut’s high risk to salmonella. A salmonella infection generally

causes

nausea,

vomiting,

abdominal

cramps, diarrhea (sometimes

bloody), fever, and headache. SFMI visions its products on shelves of every grocery and sari-sari stores; being the top brand of peanut butter not only in the Philippines but also in other countries.

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OUR PRODUCTS As a Filipino company, SFMI captures the Filipino taste in its products. It manufactures a variety of foodstuffs which include peanut butter, coco jam, banana ketchup and nata de coco, under the flagship brand LUDY’S. From among these product peanut butter and coco jam became the company most saleable and in fact, rose to gain the most market share in their respective categories. Currently, Ludy’s Peanut butter and Lufy’s Coco jam are being sold in stores alongside other ludy’s brand product under private labeling arrangements- Ludy’s Salabat, Ludy’s Pancit Canton, Ludy’s Pancit Bihon, And Ludy’s Liquid Seasoning. OUR CORE VALUES In addition to being a God-fearing institution, SFMI conducts business with our suppliers and customers in a professional manner. We Value cleanliness in our facilities, the materials that we use , and in the process of making our products so as to ensure that the consumers get the only healthiest and the tastiest products. Moreover, we value that the value of raw materials that we use so as to ensure the integrity of our brand and products. WHAT PROPELS US The owner as well as the chairman of the company, Mr. Pedro Tianzon imbibed in the employees his passion for the company as well as its big potential to succeed. As a company that is one in mind and in one spirit, we are fueled by our purpose and we

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are delighted to take on these undertakings as we strive to be of the better service and provider to our customers. 

TO BE THE TOP MANUFACTURER OF PEANUT BUTTER AND COCO JAM IN THE COUNTRY As a manufacturer in business for 40 years now, we take pride in our Ludy’s Peanut butter and ludys coco jam as a product that truly captures the Filipino’s taste with a delectable consistency. Truly a pinoy gem!



For the Ludy’s brand to be known for its excellent quality and taste. SMFI assures quality of all Ludy’s Brand products through documents to provide traceability on different batches of the product, strict adherence to the Good Manufacturing Practices (GMP) as well as the mandates of FDA and other local government agencies. Samuya food manufacturing, Inc. Is food and Drugs Administration (FDA) Certified as well as all SFMI products specifically Ludy’s Peanut Butter , Ludy’s Coco Jam and all its variants.



To be able to develop and provide products that appeals to both Filipinos and foreigners here and abroad. Continuous researchers are being done in order to present new lines of products that will entice, not only Filipinos but also other nations around the world.



To be able to provide job opportunities for fellow Filipinos.

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More products and more orders mean more work, and work could help alleviate the poverty that most of the Filipino families are experiencing. SFMI aims to be a tool or medium in which they could help themselves and their families have better lives.

OUR CURRENT PRODUCTS PEANUT BUTTER AND LUDY’S COCO JAM Samuya food Manufacturing, Inc. is Located in Pasay City. This is where it manufactures its flagship Ludy’s Peanut Butter as well as it secondary peanut butter brands, namely, Yummy, Sunny Cheers and Mama. This is also where it manufactures Ludy’s Coco jam under four (4) variants – Ludy’s Coco Jam with peanuts, Ludy’s Coco Jam with Langka, Ludy’s Coco jam special, And Ludy’s Coco Jam Regular. New Product Development Idea Generation Mr. Tianzon was a former employee of Newborn Food Products Inc. (Lily’s Peanut butter) where he got his knowledge in the production of peanut butter. After a few years of working in Newborn Food Products Inc., he resigned and thought of putting up his own business.

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To achieve his dream of putting up a business he worked abroad.

THE SWOT ANALYSIS I.

Strengths a. What are the advantages in making the product? 

Availability of resources, low cost of materials



Awareness due to his previous experience

b. What factors mean that you "get the sale"?  II.

There is a demand in the product, a variability in taste that attracts customers. Weakness

a. What should you avoid? 

To be contaminated in salmonella bacteria. Peanuts are risky and prone to this bacteria.

b. What factors lose you sales? 

III.

Spoilage of raw materials. Peanuts are perishable.

Opportunities a) What good opportunities can you spot? 

Manufacturing cost can be lowered, thus product is much cheaper.



Peanuts are beneficial for health, having a good nutrient profile such as dietary fiber, vitamins and minerals.

IV.

Threats a. What obstacles can you face? 7



There is already an established competitor.



The quality standards cannot be maintained.

Idea Screening Mr. Tianzon screened his idea by thinking of the things he attained through the years; he has the knowledge of producing peanuts, he studied abroad about business and he has the capital to start a business. What do we need to improve from the idea created? For improving the concept: They set criteria 1. The basic homemade peanut butter can be improved on its taste. (sweeter) 2. The product to be made use “reduction of cost” as its competitive advantage. (cheaper)

Concept Development Does the consumer understand, need, or want the product?

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Yes. It has a potential that consumer may understand, need and want this product, by its unique taste that gives variability of the food, eating bread with peanut butter, rather than rice meal. By its cheaper cost yet the company still provides a high quality product better than their competitors. Market Strategy Product: It has one size, attractive layout of letters written in label, placed in a glass container, sealed. Price: (unretrieved data due to loss of files, cannot be approximated due to different denomination of the early years) but the price is always below the leading brand Lily’s. Place: Their house became their office and production site as well. Since it is in a compound, his target market are his neighborhood. Promotion: They started selling as “peddlers”, word of mouth. Feasibility Study Is the product saleable? Ludy’s peanut butter is a food product. As long as there are people eating, there is a demand. Thus, there is always demand in the product. There may be seasons that the sales are low, still, the demand is continuous. Value added are their unique taste and appeal on consumers. Can they continually manufacture the product?

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Yes. The availability of its main product, peanuts, in the Philippines are abundant. The materials used also has low cost so fluctuation of prices may have little effect on the overall manufacturing cost. Product Design What are the materials needed for the production of peanut butter? o Peanuts o Coco jam o Salt o Butter o Honey o Sugar What are the materials needed for packaging? o Bottle with lead o Sealer

Nutritional Facts Serving size: 2 tbsp (23 grams) Per servings % Daily Value *

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Calories

140

Calories from fat

81

Total Fat

9 g 14%

Saturated Fat

1g 5%

Cholesterol

0mg 0%

Sodium

55 mg 2%

Carbohydrates

8g 3%

Sugar

7g

Protein

6g

Vitamin A

0%

Vitamin C

0%

Calcium

0%

Iron

2%

Test Marketing The family themselves give the standard quality and taste of the product. They started selling as “peddlers”, with the word of mouth their product may be known and gives greater sale. 11

Launching They loan from banks for additional capital, incorporate into a corporation: SAMUYA CORPORATION, thus makes its production massive and went into small groceries for market selling.

PROCESS FLOW CHART PROCESS OF MANUFACTURING PEANUT BUTTER

Peanuts

Roasting

Cooling

Sorting

Peeling

Cooling

Mixing and Grinding

Filling

Packing and Sealing

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PROCESS AND CAPACITY DESIGN Batch production is the methods used to produce or process any product in groups, or batches where the products in groups, or batches where the products in the batch go through the whole production process together. Batch production is used in many different ways and is most suited to when there is a need for a quality/quantity balance. This technique is probably the most commonly used method for organizing manufacture and promotes specialist labor, as very often batch production involves a small number of people. Production Process of Peanut Butter 1. Receiving Raw Materials Production wouldn’t be able to start without the aid of a raw materials. In every production process procurement of raw materials is the very first process.Samuya Manufacturing Food Inc., receives the fresh, cleaned and shelled peanuts from Binondo, Manila together with salt, oil, and sugar.

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2. Roasting After Receiving the raw materials , the peanuts are first placed in a hot air roaster which raises them to temperature of 240 degrees Celsius. The oven rocks back and forth to make sure the peanuts roast at an even pace, turning them from white to light brown to golden brown. Raw peanuts are roasted for 2 hours or until golden brown

3. Cooling

Deliveries of raw materials usually done thrice a week

After roasting, the peanuts are cooled at room temperature, but at a fast phase. Suction fans are used to pull warm air out of the room. The quick cooling process keeps the peanuts from continuing to cook and helps to ensure that natural oils will remain in the peanut.

4. Peeling Once roasted and cooled, the peanuts are placed in a peeling machine. The peeling machine removes the outer skins by lightly rubbing the peanuts between two

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belts. The two kernels of each nut are then split and the heart in the middle is removed. The heart of the nut is used in peanut butter because it is too bitter. 5. Sorting The roasted and peeled peanuts will be transferred to the sorting area. This is where they manually select peanut of good quality, like plump seeds free from dark spots/ off color and free from manifestation of aflatoxin.

6. Mixing and Grinding Additional ingredients are added to the roasted and peeled peanuts in order to create the peanut butter. They include salt, sugar and hydrogenated palm oil. The hydrogenated palm oil is considered a stabilizer as it keeps the peanut oil from separating from the peanut butter and rising to the top of the jar. No artificial ingredients or preservatives are added to peanut butter. The roasted peanuts and other ingredients quickly find themselves in a large stainless Steel container. From there, the nuts and other ingredients are dropped into a grinder where they are ground into a paste at a reasonable pace. Workers should be very careful in grinding the peanuts. If they did this too quickly, it would produce heat and allow the peanuts to begin cooking again. Mixing the peanut butter paste heats it to approximately 60 degrees Celsius. Currently, Ludy’s have 4 grinding machines and 1 mixer.

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7. Filing Before jarring, the paste is cooled back down to 38 degrees. Mixtures is contain in a filling tank before transferring to a different kind of packaging materials. 8. Packing and Sealing Once the clean jars are filled with peanut butter paste, they are moved to the capping area. Where they manually capped, sealed and code the production and expiration dates on the jar. Unopened containers of peanut butter will stay fresh for up to a year. Then pack in cartons, check labels and manufacturing dates, double check if free from defects. Samuya uses FIXED AUTOMATION, in an intermittent operations fixed automation are necessary since the machine are less automated and focused more on their different tasks I. Process used is “Batch processing” a) FROM MIXER(estimated time of production: APPROXIMATELY 30MINS)- TO 1ST GRINDING MACHINE(estimated time of production: SECONDS) (needs human intervention) b) From 1st to 2nd grinding machine (FULL machinery operation only needs no human intervention) take note that quality is inspected from the beginning at the filling tank to ensure that the peanut butter to be process or the peanut butter that will undergo the throughout process will not encounter any quality defects II. It is “Process Focus” COMPANY

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III. Main focus is a “100% purity of product” since peanut butter is prone to microbiological toxin called “SALMONELLA” IV. Capacity is Equal to 16800 bottles of Ludy’s Peanut butter computed as each batch of production produces 50 cases X 25bottles per cases X 14 batches V. ITS ESTIMATED FULL OR MAXIMUM CAPACITY is more than 20 batches a day but not greater than 30 batches a day. therefore, a full Capacity is equal to 37500 bottles (TOTAL No. Of bottles produced = No. Of batches x 25 bottles per case x 50 cases )

SUPPLY CHAIN MANAGEMENT I. Delivery is three times a week II. Each delivery Van contains 500 sacks of 50kgs sack of peanuts PERSONNEL AND SCHEDULING I. THE production plant is consists of 64 personnel II. Production shift at normal season from 6am-2pm III. During peak season 2 shifts are needed IV. Personnel includes extras and regular employees. V. Incentive system : OUTPUT-BASED, for extra employees and TIME-BASED for regular employees Location Analysis Location decision is one of the ten operations management decisions. It is one of the determinants if a business will succeed or fail. In making this decision, it does 17

only not requires long term commitments in buildings and facilities but also requires sizable financial investment and this can have a large impact on operating costs and revenues. Ludy’s is located in 2451 Lakandula Street, Doña Adela Hidalgo Village, Pasay City, Philippines. And in choosing this certain location, Ludy’s have taken into consideration some factors and these are: 

Ownership of land Ludy’s current location is originally the owners’ house and since they thought of putting up a business, which is Ludy’s, they decided to transform their house into a factory where they will make their product, in this way they will reduce their rent expense.

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Proximity to Sources of Supply Another reason why Ludy’s chose their current is their proximity to their sources of raw materials. Their main raw materials in making their product are peanuts and sugars and since their main suppliers are located in Binondo, Manila they decided to really just settle in Pasay City since Pasay is not far from Binondo, Manila. In making this decision, Ludy’s avoided incurring high transportation costs.



Proximity to Customers Pasay City is said to be the “heart” of Metro Manila so Ludy’s have no problem when it comes to proximity to their customers since their target market is 18

malls and supermarkets and Pasay is surrounded by different malls and supermarkets. Another factor is that Pasay is near the business center of Metro Manila, Makati City.

Layout Analysis Layout decision can have a great impact on the productivity of a business so it’s important to choose the right layout for your business. Ludy’s is using intermittent processing system, particularly a “BATCH PRODUCTION SYSTEM”, which means they are producing a high variety of products. Ludy’s layout is an example of process layout. In process layout, the raw material moves continuously and uniformly through a series of workstations until the product is completed and this is what exactly the layout of Ludy’s. The main raw materials, which are peanuts, are put into a roasting machine and then roasted peanuts are put into cooling machine. After being cooled, peanuts are peeled manually. After that process, they segregate good quality peanuts from the bad ones. This is to separate peanuts with off color and dark spots and to avoid aflatoxins (molds) on the peanuts and finally the sorted peanuts are put into grinding machine and mix it with other different raw materials. The following are the characteristics of a process layout Facilities are more labor intensive Ludy’s rely on highly skilled workers who can perform different functions. Arrangement of resources is important

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Since Ludy’s produced high variety of product, it is important that their machines and equipments are arranged in the right order that will help them to maximize production. Space for inventory is high Ludy’s produced high variety of products making them need a high space for their inventory.

HUMAN RESOURCE Employees are said to be the “Heart and Soul” of a business firm, without the employees efficient and effective operation will not be possible.

SMFI ORGANIZATIONAL CHART

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PRODUCTION ORGANIZATIONAL CHART

Ludy's has its "marketing army" which composed of the following. •Sales representative •Sales merchandiser

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•Sales personnel The sales representative is the one who is sent by the company to outlets to sell products. Sales merchandiser on the other hand is the one who arrange the company's products on outlets. And lastly, the sales personnel is the one who receives orders and manages the delivery of goods to customers. All in all they have 64 personnel inside the factory excluding the 100 delivery personnel. They also have their layout artist for the packaging of their product for it to become enticing to the eyes of consumers. The basis of the wages of their employees depends whether the employee is working on them on a regular basis or just an extra. Time based system is applicable to the regular worker while the extra workers were compensated through output based systems. Samuya Food manufacturing Inc. Has 64 skilled workers in their plant and 30 skilled workers in their production. These workers serves as secondary quality. Inspector for the product duringvthe process thus, preventing defects and low quality products SFMI seeks 2shifts (1st shifts 6am-2pm and 2nd shift 2pm-10pm during peak season which is from september to february to match the increased demand during this season

QUALITY Before the production the company ensures quality on raw materials.

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The company doesn't use extenders and stabilizers to ensure the purity of the product. They also don't use oils in the production. The product only contains natural oils. They have their quality inspectors to check if all is in good condition and is aligned with the standard. They were following the FDA standards. Issues on Quality On March 2009, the Department of health ordered a nationwide recall of the popular Ludy's Sweet amd Creamy peanut butter after it tested positive for salmonella. Salmonella is an organism that causes infections, fever, diarrhea, nausea, vomiting and abdominal pain. The contaminated products have batch numbers 02230905 and 02-20906. SMFI didn't found where the peanut butter got infected with salmonella. They have to recall all the infected batches and ordered those batches be burnt giving them more than 6 million of losses.

INVENTORY The company's daily inventory consists of 30% safety stock. This safety stock is good for 2 days of production. One batch of production is equal to 50 cases, each case contains 24 pieces and the company can manage 14 batches per day. The company's reorder point is thrice a week 500 sacks each delivery. MAINTENANCE Maintenance is usually done on a weekly basis. 23

“The Great thing is the start- to see an Opportunity for Service, and to Start doing it, even though in the beginning you Serve but a single Customer – and Him for nothing.” -Robert Collier

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