OPERATIONAL MANAGEMENT

PEANUT BUTTER MANUFACTURING

Ankit Bharadwaj (170301009)

Ankit Kumar (170301008)
Harsh Vardhan (170301023)
Nitin Saxena (170301031)
Tathagat banerjee (170301044)
Contents
Product .................................................................................................................... 3
Product Design ............................................................................................................ 3
Idea Generation........................................................................................................ 3
Economics ............................................................................................................ 4
Physiological ......................................................................................................... 5
Replicate ................................................................................................................. 6
Review ................................................................................................................... 7
Location Planning ....................................................................................................... 7
Factors Considered for choosing the location ......................................................................... 7
Raw materials ......................................................................................................... 7
Labor cost ............................................................................................................... 7
Land Cost ................................................................................................................ 8
Electricity Cost .......................................................................................................... 8
Environment ............................................................................................................. 8
Ease of Doing Business .................................................................................................. 9
State Economy .......................................................................................................... 10
Factor Rating Method .................................................................................................. 10
Capacity Planning .......................................................................................................... 11
Why capacity planning is important for a company? .................................................................. 11
Manufacturing process flow of Our Peanut butter Factory .............................................................. 12
Plant layout: ............................................................................................................. 12
Equipment Used ...................................................................................................... 12
Systematic Layout Planning (SLP) .................................................................................. 13
Flow of Materials: .................................................................................................. 14
Product
Peanut Butter

Product Design

Idea Generation

Peanut butter is a low calorie, high protein and balanced nutritive values and price competitive
product. It is an idyllic alternative for Dairy butter as bread spread.
Peanut butter is both nutritious and delicious. It pairs well with everything from fruits to chocolate
and jelly to celery. High in healthy monounsaturated fats and nutrient-rich, it’s one of our favourite
foods for weight loss. It is healthy alternative to dairy butter and used as bread spread. Major
market presence of peanut butter is in western countries in comparison to Asian countries such as
India as product is relatively new to the Asian region. Peanut butter is used in various applications
in the form of spread and is used as the substitute for milk butter. However, in comparison to other
spreads peanut butter is a low calorie product with high protein content. Consumption of peanut
butter includes various benefits associated with it such as it helps to reduce the weight and also
possess optimum nutrition value. Peanut butter are also available in powder form and used in
various applications such as breakfast food, savoury sauces and smoothies.

Peanut Butter Market Segmentation

Peanut butter market is segmented on the basis of product type, distribution channel and region.
On the basis of product type peanut butter market is divided into regular, low sodium, low sugar
and plain. Among all the segments of the peanut butter, regular peanut butter is the dominating
segment, followed by other segments. However, low sodium peanut butter is expected to show
fastest growth in the forthcoming years. Peanut butter market is segmented on the basis of
distribution channel into supermarkets, hypermarkets, retailers and others. Among all the
segments of peanut butter market supermarket segment is expected to contribute maximum
revenue to the overall revenue of the peanut butter market, followed by hypermarkets and retailers.
Peanut butter market are segmented into North America, Latin America, Western Europe, Eastern
Europe, Asia Pacific excluding Japan, Middle East and Africa and Japan.

Peanut Butter Market: Region-wise Outlook

The global peanut butter market is expected to witness robust growth over the forecasted period
due to the rising needs of the consumers for low calorie nutritious products. Globally, among all
regions, North America is expected to contribute highest market share, followed by Europe over
the forecasted period. In North America, U.S. is expected to contribute maximum market share
due the high disposable income of the consumers. However, in emerging economies such as Asia
Pacific peanut butter market is anticipated to witness highest growth owing to the rising disposable
income of consumers in these regions.
 Peanut Butter Market: Drivers

Various drivers for peanut butter market includes rising demand for nutritious products coupled
with increasing disposable income of consumers especially in developing countries. Other drivers
that fuel the growth of peanut butter market are increasing demand for low calorie healthy food
and emergence of hectic life schedule. Changing lifestyle coupled with shift towards the intake of
convenient food are also factors that are expected to drive the peanut butter market in the coming
four to five years. Major restraint that is expected to hamper the growth of the overall peanut butter
market is the availability of peanut at relatively competitive prices coupled with fluctuating
production of peanuts especially in India.

Economics

Global butter market to reach US$21.6 billion, growing at a CAGR of 3.3% during 2010 to 2020

 However, in emerging economies such as Asia Pacific, peanut butter market is at a nascent
stage and is anticipated to witness highest growth owing to the rising disposable income of
consumers in these regions.

Indian Oils and Fats market to grow at 6.7% CAGR during 2010-2020

Increasing health awareness is leading to the growth of healthier oils and fats. Olive oil continues to record
the fastest growth in current value sales at 47% in 2015.
In addition, the growth of oils and fats is primarily driven by the
Growing population and the high per capita consumption of oils and fats in India

Butter constitute ~5% of the total oils and fats market in India; it is forecasted
to reach US$603.5 million by 2020, growing at a CAGR of 8.6%

Physiological

Rich Source of Protein

Peanut butter (100 grams) contains a high amount of protein (25 – 30 grams). Proteins that we eat are broken
down into amino acids, which are then utilized in each and every cell for repairing and building the body.

Lowers cholesterol levels

The fat content in peanut butter is almost equal to that of the fats found in olive oil. It contains both
polyunsaturated fats and monounsaturated fats. As these fats are not saturated, they are good to consume
without putting the heart at any risk. The unsaturated fats in peanut butter help to lower bad cholesterol
levels (low-density lipoprotein) and promote the circulation of good cholesterol (high-density lipoprotein).

Prevents type ii diabetes

Consuming peanut butter can also be beneficial in reducing the risk of type II diabetes. Peanuts contain not
only protein but also unsaturated fats. Unsaturated fats have been noted to improve insulin
sensitivity. Research into peanut butter consumption and diabetes showed that a higher intake of peanut
butter and other nuts lowers the risk of type II diabetes.

Good Source of Vitamins

Peanut butter contains many vitamins that are good for our body to function properly. Vitamin A found in
it is helpful for eyesight, while vitamin C helps to boost the immune system and heals simple ulcers faster.
On the other hand, the vitamin E found in peanut butter is a very important micronutrient needed by our
body to dissolve complex fatty acid structures and fat blockages in the arteries.

Antioxidant properties
Peanut butter contains antioxidant properties due to the presence of folate, niacin, pantothenic acid,
pyridoxine, riboflavin, and thiamin. One of the antioxidants found in it is resveratrol. Resveratrol is a
polyphenolic antioxidant which has been found to be effective in controlling certain types of cancers, heart
disease, Alzheimer’s disease, viral and/or fungal infections, and degenerative nerve diseases.
Prevents cancer
Peanut butter contains B-sitosterol, a phytosterol that has a great property of fighting against cancer,
particularly colon, prostate, and breast cancers. Peanuts and its products, such as peanut oil and peanut butter
are ideal sources of phytosterols.

Regulates blood sugar levels

Peanut butter is a good source of magnesium (170mg/100 grams). This makes up for 42% of the daily
recommended value of magnesium. Magnesium has an important role to play in muscle, bone, and immunity
development in the body. Magnesium also helps in regulating blood sugar levels and blood pressure. Its
presence in our body helps in more than 300 biochemical reactions that are extremely important for our
survival.

High in Potassium
Peanut butter contains potassium (70 mg/100g) that acts as an electrolyte and is a fluid-balancing element in
the body. In comparison to sodium, which directly puts pressure on the cardiovascular system in the form of
hypertension, potassium does not put any pressure either on the blood or on the cardiovascular system. In
effect, potassium is a heart-friendly element that is found in high quantities in peanut butter.

Reduce Risk of Gallstones

Gallstones, a major health risk in developed countries, is caused by being overweight, crash diets, certain
types of cholesterol drugs, and birth control pills. A study on peanuts and nut consumption relating to the
risk of gallstones was undertaken and the results of the study showed that over a period of 2 decades, women
who consumed peanut butter and nuts on a regular basis had reduced their risk of developing gallstones.

Rich in Dietary Fiber

Peanuts and peanut butter are both high in dietary fiber. One cup or approximately 125 g of peanuts and
peanut butter has 12 g and 20 g of dietary fiber, respectively. Dietary fiber is one of the most important parts
of our diet since a lack of dietary fiber can lead to several health problems and diseases such as constipation,
diabetes, cholesterol, and various heart diseases.

Features

Peanut Butter will packaged in 100gms clear PET jar. (133mm x 75mm)

Prototype
We will be producing a prototype batch of 10000 jar for distribution in Tier 1 cities across India as there is
demand of healthier Low calories & low fat food like peanut butter due to emergence of nuclear
family and hectic life schedule which is Changing life style and people are shift towards
consumption of convenient food.

Replicate
We will be mass-producing after prototype sales are successful.
We will be making Only 1(Crunchy) out of 3 different flavours of Peanut butter popular in india. The three
main types of peanut butter are crunchy (or chunky),Creamy and chocolate. In crunchy peanut
butter, some coarsely-ground peanut fragments are included to give extra texture. The peanuts
in creamy peanut butter are ground uniformly, creating a creamy texture.

Review
We will be conducting a customer survey after a period of 6 months to gauge the user’s level of satisfaction.
Based on the feedback we will be tweaking the offered flavors.

Location Planning
Factors Considered for choosing the location
Raw materials
Peanut kernels, sugar, salt, emulsifier, and preservatives

Peanut Producing States

Andhra Pradesh, Gujarat, Tamil Nadu, Karnataka, and Maharashtra

Emulsifier producing vendor present in

Madhya Pradesh, Gujarat, Maharashtra, Tamil Nadu

Labor cost
Land Cost

Electricity Cost

Environment
For any food product manufacturing plant to be set up, the environment around the plant should be safe and
clean.
Swachh Sarvekshan 2017 was conducted between 4 January 2017 and 7 February 2017. The results of top
30 cities are as follows:

Rank City State/Union Territory

1 Indore Madhya Pradesh
2 Bhopal Madhya Pradesh
3 Visakhapatnam Andhra Pradesh
4 Surat Gujarat
5 Mysore Karnataka
6 Tiruchirapalli Tamil Nadu
7 New Delhi Municipal Council Delhi
8 Navi Mumbai Maharashtra
9 Tirupati Andhra Pradesh
10 Vadodara Gujarat
11 Chandigarh Chandigarh
12 Ujjain Madhya Pradesh
 13 Pune Maharashtra
14 Ahmedabad Gujarat
15 Ambikapur Chhattisgarh
16 Coimbatore Tamil Nadu
17 Khargone Madhya Pradesh
18 Rajkot Gujarat
19 Vijayawada Andhra Pradesh
20 Gandhinagar Gujarat
21 Jabalpur Madhya Pradesh
Greater Hyderabad Municipal
22 Corporation Telangana
23 Sagar Madhya Pradesh
24 Murwara Madhya Pradesh
25 Navsari Gujarat
26 Vapi Gujarat
27 Gwalior Madhya pradesh
28 Warangal Telangana
29 Mumbai Maharashta
30 Suryapet Telangana

Ease of Doing Business

State Economy

Factor Rating Method

Considering all the above parameters, we have chosen Saurashtra: Pipavav Special Investment
Region(Gujarat), chittoor (Andhra Pradesh) and Satara (Maharashtra) as the final three locations on which
we need to decide by using Factor Rating method.

Importance Saurashtra chittoor

Factors IxS Satara(X) IxX IxC
(I) (S) (C)
Distance from Raw Material
5 4 20 4 20 3 15
Source
Ease of Import by Sea 5 5 25 3 15 3 15
Labor Cost 4 4 16 3 12 5 20
Land Cost 4 5 20 4 16 3 12
Electricity cost 4 5 20 4 16 4 16
Environment around the
4 4 16 2 8 5 20
location
Ease of doing business in the
4 4 16 3 12 5 20
state
Economy of the state 3 3 9 4 12 5 15
Total 33 142 111 133

The rating for each location is provided by an experienced professional.

As the result, by Factor Rating Method, Saurashtra: Pipavav Special Investment Region(Gujarat) is a
suitable location for the Peanut Butter factory.
Capacity Planning

Capacity planning is the process of determining the production capacity needed by an organization to
meet changing demands for its products. In the context of capacity planning, design capacity is the
maximum amount of work that an organization is capable of completing in a given period.

Classes of Capacity Planning strategies:-

1. Lead Strategy is adding capacity in anticipation of an increase in demand. It’s an aggressive type of
strategy with the goal of luring away the customers from the company’s competitors by improving
the service level and reducing the lead time.

2. Lag Strategy refers to adding capacity only after the organization is running at full capacity or
beyond due to increase in demand. Three clear advantages of this strategy are a reduced risk of
overbuilding, greater productivity due to higher utilization levels, and the ability to put off large
investments as long as possible. Organization that follow this strategy often provide mature, cost-
sensitive products or services.

3. Match Strategy is adding capacity in small amounts in response to changing demand in the market.
This is a more moderate strategy.

4. Adjustment Strategy is adding or reducing capacity in small or large amounts due to consumer's
demand, or, due to major changes to product or system architecture.

Why capacity planning is important for a company?

Capacity planning is long-term decision that establishes a firms' overall level of resources. Capacity decisions
affect the production lead-time, customer responsiveness, operating cost and company ability to compete.
Inadequate capacity planning can lead to the loss of the customer and business. Excess capacity can drain the
company's resources and prevent investments into more lucrative ventures. The question is that when
capacity should be increased and by how much are the critical decisions? System Capacity is the maximum
amount of work that an organization is capable of completing in a given period. System Efficiency is the
maximum amount of work that an organization is capable of completing in a given period due to constraints
such as quality problems, delays, material handling, etc.
 Desired Capacity 5000 TPA

Planned Capacity 3000 TPA

Installed Capacity 2500 TPA

Available Capacity 2000 TPA

Manufacturing process flow of Our Peanut butter Factory

Plant layout:
Equipment Used
The following equipment are required to produce peanut butter
Systematic Layout Planning (SLP)

Systematic layout planning is an organized approach to layout planning. It is a tool used to arrange
a workplace in a plant by locating areas with high frequency and logical relationships close to
each other. The process permits the quickest material flow in processing the product at the
lowest cost and least amount of handling.
Flow of Materials: