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

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

A comprehensive digital solution was implemented to create a fully tracked and transparent supply chain from the grower to the Green Leaf Threshing (GLT) plant. The system integrated barcoding, Wi-Fi connected weighing scales, and a centralized inventory management system. The result was the establishment of a complete backtracking trail for every bale, drastically reducing discrepancies and providing the Audit team with real-time, accurate financial and stock data.

KTC’s prior system for purchasing raw tobacco leaves was characterized by manual data handling and lack of accountability, leading to several critical risks:

Theft and Missing Bales

Physical disappearance of inventory due to a lack of individual bale tracking.

Irregularities in Payment Vouchers:

The manual system was prone to manipulation, resulting in fake or duplicate payment records.

Weight Irregularities

The manual recording of weights allowed for human intervention and manipulation during the weighing process.

Paper-Based Process

The entirely manual and paper-based procurement and GLT threshing processes were slow, error-prone, and inefficient.

Lack of Traceability

There was no system to link a specific purchased bale to its grower, procurement center, or assigned internal/external grade.

Inconsistent Grading

Subjectivity and irregularities in the green leaf grading process led to disputes and financial discrepancies.

No Warehouse Management System

Inventory was managed manually, making it impossible to know the exact location or status of bales.

Paper-Based Audit

The audit process was reliant on paper records and Excel spreadsheets, making real-time verification and discrepancy analysis cumbersome and ineffective.

KTC implemented a robust, integrated, and technology-driven system to digitize and automate the entire green leaf procurement and primary processing workflow.

Step	Key System Feature	Mechanism and Benefit
Grower Registration	System Registration	Grower details were logged centrally to establish a verified identity, forming the first link in the traceability chain.
Bale Identification	Bale Registration & Barcoding	Each bale received a unique barcode tag at the lot level, instantly creating a digital identity and enabling physical tracking.
Automated Weighment	Wi-Fi Connected Scales	Weighing scales were connected directly to the system. This eliminated human intervention in weight recording, directly addressing the primary challenge of weight manipulation.
Quality Assessment	Digital Grading	Supervisors assigned Internal and External Grades after physical inspection, with the grade recorded directly against the bale’s barcode in the system.
Value & Payment	System-Generated Voucher	The system automatically calculated the bale’s price based on the formula: Weight × Grade Rate. A voucher with a unique barcode was generated to prevent fraud and duplication.
Dispatch Control	Goods Transfer Note (GTN)	A GTN was created for all purchased stock of the day, detailing the bales being dispatched from the procurement center to the warehouse.

Inventory Management System (WMS)

A dedicated system was introduced to manage inventory within the warehouse.

Goods Receipt & Validation

Upon receiving the bales against the GTN, every bale's barcode was scanned and reweighed. This rigorous check verified:

Warehouse to GLT Issuance

A formal digital process was established to issue bales from the warehouse for threshing in the GLT section.

GLT Processing Module

A separate, integrated module managed the threshing process, including the receipt of processed bales back into the warehouse inventory.

Consumption Tracking

This module tracked which specific raw green leaf bales (and thus which growers) were consumed to build a specific processed leaf bale.

The successful implementation of this digital solution transformed KTC’s procurement process, yielding critical improvements in control, accountability, and financial integrity.

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

Source Tracking

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 (procurement and warehouse receipt) significantly mitigated the risk of theft and weight fraud.

In summary, the digital system transitioned KTC from an opaque, high-risk, paper-based operation to a transparent, auditable, and data-driven supply chain.

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