Eden BOD subcommittee Findings

The subcommittee established to oversee the current status of the Company Performance, identify major
problems and challenges for future BOD strategic Direction. The BOD subcommittee has formulated
Action Plan to closely understand the current status of the company. The action plans include

1. Methodology
2. Reviewing resource utilization and control system of the Company
3. Review the life-cycle management of the company
4. Proposal for Way forward

1. Methodology

The committee has designed general approaches to be followed to understand the existing challenges on
company performance and productivity and propose the way forward for the Board of Directors policy and
direction decision to maximize the company profit and growth. The methods used are meeting with
employee, middle level, and top management level of the company at both factory sites and at head office
and physically observe the company’s resources.

Accordingly, the committee travelled to Eden water bottling Plant at Agena and made separate meeting
with factory employees, middle level management, and factory level top managers and some of the
committee members tried to interview and talk on phone with two shareholders living in the areas of water
bottling plant.

1.1. Factory site Meetings

The factory employees participated in this meeting include mechanics, operators, production teams, support
staffs, guards, regular and temporary laborers. The middle level management team involved supervisors of
store, production, electrical and guard. The final meeting was with Factory level top management team
involving heads of production, Finance and Administration and plant manager. The committee has given
briefing on the committee mission and facilitates opportunity to all level meeting participant to present
problems, weaknesses, challenges and means of improving productivity and profits. This factory site
enables the committee to see current status of challenges of the company and indications for future
improvements.
1.2. Head office Meetings

The committees made separate meeting with middle level and top level managers. The working hours and
limited time of the committee could not allow making meeting with all head office employees, sales staffs
and laborers. The middle level involved Marketing, Sales and Distribution team leader, General Account
team Leader, Cost and Budget Team leader, Share Administration head and Strategy and Business
Development team leader. The top management participated are Finance, Human Resource, Purchase, New
projects and Marketing and Business development Department Managers. The meeting was exhaustive,
covers general and departmental level challenges and problem identification and proposal for future
improvements.

2. Reviewing resource utilization and control system of the company

The head office and factory site meeting with manpower and the committee observation revealed that the
resource utilization and control system requires due consideration and monitoring. The gray areas require
immediate attention of the BOD and management of the company. The points raised in these meetings and
committee observation are indicated below

2.1. Resource Utilization

2.1.1. Human resource
 Inefficient and ineffective utilization of manpower
a. management of employee in the company
b. creating a structured and systematic labour utilization
c. availing incentive packages such as short term training, group health insurance, efficient
transport service at Agena and cost effective cafeteria service
 Weak in need based human resource recruitment, regular performance evaluation and
rewarding to maximize productivity
 Poor performance in succession planning and need based training
 Poor, traditional, centralized and none-participatory decision making
2.1.2. Plant
 The company underutilizes its water bottling machinery weak supply system, products
management, internal control and marketing system.
 Poor and inefficient plant facilities and infrastructure such us dusty road, unsafe loading and
unloading facility, product compartmentalizes
  The plant exposed to embezzlement or insecurity due to lack of reasonable strong and appealing
fence around the plant
2.1.3. Storage and Transport Facilities
 delayed raw material and spare part store construction and mixed-up and poor inaccessibility
to spare parts
 Poor strategic long term planning for construction of stores very close to plant site and market
centers such as Addis Ababa and Finfinne special zones
 In efficient transportation system, which emanates from poor organization system, which
heavily dependent on rented tracks and service minibus and labour service bus.
 Inefficient and uneconomic utilization of owned Plant site stores and rented stores in Addis
Ababa and Awasa due to poor and highly labour based loading and unloading
2.2. Control System

The internal control system of the company is inefficient and traditional due to
 Poor Control –check and balance system
a. No internal control/audit system, hence the system is made vulnerable to dishonesty and
favoritism;
b. Suspicion of dishonesty/corruption/ in areas of transportation, fuel purchase, tree plantation
and administrative running cost, etc.
 Poor system design linkage facilities that best fit and manage constraints and issues could be related
to geographical gap between the plant site and head office
a. power centralization and lack of coordinated efforts
b. Poor or nonexistent IT facilities and communication system
c. Nepotism/partiality
 Lack of awareness on the cumulative effect of waste of production time, redundant manpower and
damage to raw material and the product on overall productivity and profit of the company
 Lack of standards to measure the efficiency and effectiveness of raw material supply system,
labour competitive, and products type and size best fit the market demand and create competitive
advantage
3. Review the life-cycle management of the company
 Lack of unity of purpose at all level of the company life-cycle and weak diligence for coordinated
effort
 The constraints related to lifecycle of the company that comprise supply chain management,
production efficiency, transportation efficiency, storage capability, and marketing efficiency
3.1. Supply chain management
  Incapability to timely, required quality and quantity of the raw materials, spare parts, chemicals
and other production inputs due to poor and traditional procurement and supply planning
 Inefficient raw material and service sourcing and management
a. Poor international bidding system and dependency on limited accessed suppliers
b. Poor contractual agreement that manage the discrepancy between test samples and actual bulk
supply
c. Delayed reporting culture of the damages, shortages, overages and quality of the supplied bulk
raw material and spare parts
d. Poor handling of waste and damaged raw material
 Incapability in predicting future requirements to balance supply and demand
 inability of marketing supply chain to meet customer needs through product accessibility and
responsiveness to ensure on time delivery
 slow speed of decision making and thus leading to worse supply chain performance
 weak competitive infrastructure that synchronizing supply with demand and measuring
performance
3.2. Production efficiency
 Poor effort is made to meet machinery capacity and/or annual plan based production schedule and
to overcome the challenges
 Poor production performance resulting from
a. Delayed raw material supplies particularly Preform, shrink, ,
b. insufficient storage capacity at factory level,
c. power supply interruptions,
d. delayed and poor sorting of required spare parts
e. lack of forklift and conveyor belt to clear off products from production front
f. low quality raw material supply
 High rate of production waste related to
a. poor and traditional product handling
b. lack of pallets (metal sheet) for storage and transportation
 Lack or poor in recording and reporting Production downtime consistently for information based
decision making
 Poor plant performance
a. Dusty compound and internal roads that retarded movements and may pollute packed water
b. Poor production and storage floor quality and bad impression for regulatory authority
 c. Poor waste management system
3.3. Transportation efficiency
 Inefficient product transportation to marketing center
a. Lack of transparency in source,
b. Doubtful market competency,
c. dependency on limited FSR that are not dedicated to company
d. poor organization system
 dependency on rental transportation system and potential impact on company productivity
 the Addis Ababa product distribution tracks is better utilized but not fully functional due to
weekend stoppage, delay loading, lack of systematic monitoring system
3.4. Storage
 the plant site storage as main bottle neck for productivity
a. the currently built store still incapable to store more than two days production capacity
b. it could be used as emergency means of combating the problem but not sustainable solution
c. connected to the production room and lacks access for loading to market
d. still under the construction and could be delayed as usual
e. transport of the product from production to storage is manual
f. lacks metal sheet and or good quality pallet to store product with minimal damage
 Addis Ababa storage
a. Extreme under utilization and currently serve as waste product damping
b. The track to track transfer system is taken as cost efficient and minimizing labor cost and
inaccessibility to company locomotive
c. The central store is not functional due to broken gate and lack of timely maintenance
d. The loading and unloading at Addis Ababa store recently started very late ( 8 to 9:50 AM
e. The plant site stores functional 6 days per week and 8AM to 11PM while Addis Ababa
store works regular working days and time (Saturday and Sunday are not Functional)
 Awasa store is not investigated by the committee yet but gossips indicate it is not functional.
3.5. Marketing and sale

The marketing system of is not fully investigated by the committee due to shortage of time to
separately meet with owned sales and agent distribution crews

4. Proposal for Way forward

 Create supply chain planning capabilities that enable the company to allocate demand sharply to
the most appropriate production facility based on lowest manufacturing cost or available resources
 Construct New Ware houses in the factory compound
 improve the relationships with supply chain members to enhanced supply chain performance

 The need for BoDs self-assessment in crating functional policy and giving direction to management
to enhance the productivity and profits to shareholders
 The need for the change professional management
 Harmonize and enhance procurement process by acquisitioning raw materials well in advance and
ensure uninterrupted raw material supply
 Minimize rental based and idle storage system adequate infrastructure (access, parking space, fully
furnished floor and large storage area, closest to market centers and avail additional stores at
plant site
 Increase efficiency of production to full capacities of bottling machinery by timely supply of raw
material, availing efficient storage and loading and unloading facility crating broad based
marketing system
 The need to contract Transport companies with a capacity of more than ten trucks on tender
 Continuously survey the market landscape and expand distribution of products geographically and
in terms of quantity;
 Put in place check and balance system including internal audit system
 Put in place effective IT system and ensure application of software in most department
 Increase sales market promotion
 Work on group health insurance and improve benefit packages
 Organize on job short term trainings on selected fields;
 Instruction on further investigation of suspected corruptions and nepotisms;