Tobacco Company (RTC): Case Study in Digital Procurement Transformation

The Tobacco Company (RTC), a major player in the Pakistani tobacco industry, faced significant operational and financial challenges due to its manual, paper-based green leaf procurement process. Key issues included rampant inventory theft, payment irregularities, and a complete lack of traceability for individual tobacco bales.

RTC initiated a comprehensive digital transformation program to create a fully tracked and transparent supply chain from the grower to the Green Leaf Threshing (GLT) plant. The solution integrated barcoding, Wi-Fi connected weighing scales, and a centralized inventory management system. This implementation successfully established a complete backtracking trail for every bale, drastically reducing discrepancies, eliminating fraud, and providing the Audit team with real-time, accurate financial and stock data.

RTC’s prior system for purchasing raw tobacco leaves was characterized by manual data handling, which created critical vulnerabilities and a high-risk operational environment:

Theft and Missing Bales

The lack of individual bale tracking allowed for the physical disappearance of inventory, resulting in significant financial losses.

Irregularities in Payment Vouchers

The manual voucher system was prone to manipulation, leading to fake or duplicate payment records and inflated liabilities.

Weight Irregularities

Manual recording of weights at the procurement centers allowed for human intervention and manipulation, resulting in fraud related to weight discrepancies.

Lack of Traceability

Once a bale was purchased, it was virtually impossible to trace it back to its original grower or procurement center, making quality control and accountability nonexistent.

Audit Deficiencies

The paper-based system could not satisfy the audit team's stringent requirement for real-time, verifiable data on stock, payments, and liabilities, leading to ongoing control issues.

RTC implemented a unified digital system designed to secure the supply chain at every step of the procurement process.

Step	Legacy Process (Manual)	Digital Solution (Automated)
Weighing	Manual weighing, handwritten log.	Wi-Fi Connected Scale: Weight is automatically captured, time-stamped, and transmitted directly to the central system upon weighing.
Identification	Tagging with handwritten paper slips.	Barcoding: A unique barcode is immediately printed and affixed to the bale. This barcode is the bale’s digital identity.
Data Entry	Manual data entry and transfer of paper logs.	Centralized System: All weighing and identification data is instantly logged in the central inventory system and associated with the grower’s ID.
Verification	Simple visual check.	Two-Step Verification: 1. Verification at the procurement center upon purchase. 2. A mandatory second scan/verification upon receipt at the warehouse.
Payment	Manual voucher creation, prone to duplicates.	System-Generated Vouchers: Vouchers are automatically generated based on the digital weight record, ensuring accuracy and preventing duplication.

The digital procurement system transitioned RTC from an opaque, high-risk, paper-based operation to a transparent, auditable, and data-driven supply chain.

The new system provided an unparalleled level of transparency, enabling complete backtracking of every single bale:

Source Tracking

Instantly identifying the grower and procurement center for the initial purchase of the green leaf.

Location Tracking

Determining the bale’s current or last known warehouse location.

Final Product Linkage

Tracing a processed leaf bale back to its original constituent grower bales, fulfilling the critical requirement for end-to-end tracking.

The most significant benefit was the system’s ability to satisfy the stringent requirements of the audit team by providing real-time, verifiable data:

Audit Inquiry	System-Provided Data & Solution
Stock Purchased	The system provides an instant, accurate record of the total number of bales purchased and the total value of the stock acquired at any procurement center in a day.
Grower Payments & Liabilities	System-generated vouchers and payment records ensure a direct and accurate ledger of how much was paid to growers and the current liabilities against procured stock.
Preventing Discrepancies	The automated weighing, barcoding, and the two-step verification significantly mitigated the risk of theft and weight fraud.

The digital procurement transformation at Tobacco Company serves as a successful model for applying technology to overcome pervasive operational and financial risks in traditional supply chains. By establishing a rigid, transparent, and digitally-enforced chain of custody for its raw materials, RTC not only solved its issues with fraud and theft but also created a reliable, auditable foundation for future strategic growth and quality assurance.

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