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Operations Management (Khawaja Float Glass)

Operations Management (Khawaja Float Glass)

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Published by Muhammad Furqan Xeb

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Published by: Muhammad Furqan Xeb on May 29, 2011
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03/04/2013

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Introduction

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History:
The Khawaja Group came into being with the creation of their first company named Khwaja Glass in 1969 at Hassan Abdal, District Attock, Punjab Pakistan. Over the years a single glass furnace facility has grown presently into a proud Glass manufacturing complex having an exclusive Market niche in tinted, thin transparent and patterned glass sheets in the country. From day one Khawaja Group has prospered and sustained through innovation and diversity and reliance solely on local raw material and local markets; and through their unflinching commitment to the development of modern technologies within Pakistan.The prime focus of the Khawaja Group is on Glass. In recent years, the Group has also diversified into various other sectors namely mining and mineral resource development, energy sector, and Information Technology Training and Development. However, their largest single endeavor is the introduction of high quality Float Glass manufacturing for the first time in Pakistan. In this regards, Khawaja Flat Glass industries (Pvt.) Limited was formed in 1993. This facility produce Highest quality float glass, using totally Western technology and equipment, Comparable to highest quality glass from any where in the world.

Projects:

Khawaja glass Neelum glass Flat glass Float glass Kohsar minerals

• • • •

Market Share:
Khawaja Group is the oldest and the largest sheet glass manufacturers in Pakistan. Its niche products like tinted glass, 1.8mm clear glass and figured rolled glass has enabled the group to maintain more than 30% share of the national market.

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Exports:
Khawaja group is exporting float glass to Afghanistan, and they are biggest exporters of glass in Afghanistan

Industry Overview:
The production capacity ranges between 10 tones and 200 tones/day. Most of the units are located near the sources of raw materials. Out of the total, around 73% are situated in Punjab, 19% in North West Frontier Province (NWFP), 5% in Sindh and 3% in Baluchistan. The total investment in the sector is estimated to be about Rs10.5 billion. During 1999-2000, the sector produced glass products worth Rs5.38 billion, contributing 1.2% to the total manufacturing sector value. The industry is directly providing jobs to more than 10,000 skilled, semi-skilled and unskilled workers.

Factory Overview:
Area Acquired • Total Factory Area: 400 kanals

No. of Employees •

300 (executives & labor)

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FLOW CHART

Raw material FLOW C silos Weighing and mixing

Batch house

High temperature furnace Refiners Float furnace

Annealing

Cutting process

Storage

Figure1: Flow Chart
Source: Mr. Saleem Salyani (DGM Process)

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Manufacturing Process of Khawaja Float Glass
Float glass manufacturing is not unlike the manufacturing of commodities like steel or plastic. Each of the processes requires raw materials to be weighed, mixed, melted at high temperatures, formed into continuous ribbons, cooled and cut into a size that fits its use. Float glass is made from a combination of several ingredients such as silica sand, soda ash, dolomite, limestone, sodium sulphate and cullet.

Raw material silos
The raw materials are received and stocked in the silos. Each material is filled in different silo. These silos are operated by a computer functions. When computer gives the command, the gates of all the silos opens and the materials simultaneously reached in pre hopper for mixing process.

Weighing and mixing
The raw materials are then drawn down from the silos for batch weighing and mixing. The mixer machine is fixed at one place and water is also added to it. Cullet is the last ingredient added to it. There is a cullet scale, bucket takes the cullet and put it into cullet scale. Cullet is basically showered on the mixture which is on the conveyer belt.

Batch bunker or Batch house
The batch house consists of, silos, hoppers, conveyors, chutes, dust collectors, and the necessary controls to properly handle the raw materials and mixed batch. The raw materials storage and handling is designed to suit the types of glass which will be produced along with the availability and cost of the raw materials.

High temperature furnace
The mixed batch is delivered from the batch house to the furnace storage bin, by a belt conveyor system, where it's stored and then feed into the furnace at a controlled rate by the batch charger. As the batch is feed into the furnace melter area it's heated by the natural gas burners to approximately 1500 c. There are five burners in the furnace and mostly after two the material is
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melted and other three burners are used to maintain the molten form of glass. When any burner is not working then “re operators” are used for burning so the melting process continuous.

Refiners
Glass is made in refiners where temperature is 1360c – 1365c. in refiners there is intake and outtake. Chemical cleaning is also done in refiners.

Float furnace
The float furnace consists of support steel, upper and lowers welded steel casings, a refractory liner, tin, electric heating elements, oxygen eliminating atmosphere system, temperature sensors, and a computerized process control system. Each customer's float furnace is specifically designed to respond to heat flow balance, desired ribbon width, glass thickness, and the gross daily production tonnage. In float furnace the temperature is 1100c. Material is molted in viscous form. This viscous form material is spread on tin bath. Cooling bottles are used to cool down the molten glass.

Annealing
The glass leaves the float furnace at about 1100 degrees F and enters the annealing lehr, which controls the cooling of the glass. The glass ribbon is carried through the lehr by a series of rollers driven by motors and a mechanical drive system. The temperature of the glass is reduced according to a precise time/temperature gradient profile. The cooling down of the glass continuous and at the end of this process the temperature of glass is 150 degrees. The time/temperature profile, for all of the glass thicknesses is installed in the computerized annealing lehr process control system.

Cutting process
The cooled glass ribbon exits the annealing lehr and is conveyed to the cutting area by a system of rollers and drives linked to the lehr drive system. The glass is scored by carbide cutting wheels, parallel and perpendicular to the ribbon travel, into sizes that meet the plant's customer requirements.

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The name of the cutting machine is “ Grenzebach” which is imported from Germany. There is a crusher under cutting machine. The wastage parts of glass goes down to crusher so that they can be use it as a cullet.

Storage
The glass is then separated into lites for packaging and for transfer to the wareroom for storage or shipment to the customer. Glass sheets are also powdered so that they do not stick to each other.

Competitive Priorities
The critical dimensions that a process or value chain must possess to satisfy its internal or external customers, both now and in the future.

In Khawaja Float Glass, the competative priorities are ranked as: 1. Quality 2. Time 3. Cost 4. Flexibility

Quality
Quality is the most important factor for the product. The quality of the float glass is no doubt lower than the imported ones, but khawaja groups ensures that their glass is the best possible quality under the current circumstances.. Therefore they always care about the quality of the product. They always maintain the quality to develop the trust among the consumers to purchase there product rather than to prefer the imported products. And what they believe is that if they can produce the quality just like imported glass then why should not? That is why they are producing one of the best glass in all over the world

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Time
KFG also have a well maintained schedule, so that there product delivery is always assured well in time. On asking to Mr.saleem Saliani, he told us that Due to there timely delivery, the customers always remain satisfy. As they are using the manufacturing process of “Make to order”. So they have to deliver order in time to increase consumer loyalty with the organization and to maintain a strong relationship with consumer.

Cost
A cost is the value of money that has been used up to produce something, and hence is not available for use anymore. KFG do not give importance to the cost of the product because there top priority is the quality of the product. They focus on the quality not on the cost because there target market ask for the best quality not for the lower cost.

Flexibility
KFG last competitive priority is Flexibility. Basically they are only producing Float glass in that plant. Any other type of glass is not made by them in that plant. They have the float furnace technology which only produces the Float glass. So we can say that flexibility is zero

Economy of scale
Khawaja float glass has a production plan which is a monthly plan. This plan is made by sales department and given to the operations department. All manufacturing depends on production plan. If demand is high they will increase the production pull. Daily capacity of glass is 200 tons. But 200 tons is not achieved .80% of the required production is optimum. They have peak seasons from march to September in which there production increases.

Economy of scope
They do not achieve the economy of scope as they are only producing float glass from that plant. And no other product can be produced from that plant.

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Capital intensity
The total setup of plant is cost of 40 million dollars (Approx) according to Mr. Saleem Salyani DGM-process

Process choice
They are using Continuous process and Batch process. The process runs 24/7. But in peak seasons it works on 100% capacity and in winter season it works on less capacity. In batch process they produce batches for manufacturing glass. Approximately each batch is of 2 tons. Silo has approximately space of 150 batches. From 2 tons batch 75% to 80% of good glass can be obtained. They are also using line process. The conveyer belt conveys the batches of raw material to the furnace for meting & then for further processes to manufacture glass.

Customization and volume
They don’t have any customization in the glass. They only have one standard quality of float glass. Volume depends upon the production plan of sales department.

Core and support process of KFG
The core process of Khwaja float glass is the continuous process. They run there factory 24/7. And their support process is line process as they are using conveyer belt to transfer raw material from 1 place to another.

Backward integration
They have backward integration as they have their own hydrogen and nitrogen plants and they also have generation plant.

Forward integration
They don’t have forward integration because they don’t have their own outlets. They supply glass to different dealers and agents.

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Capacity:
Effective Capacity: The maximum output that a process or firm can economically sustain under normal conditions is its effective capacity.KFG maximum output is 200 tons per day. But KFG’s effective capacity is 170-180 tons per day, which they are daily producing. Their average capacity of KFG in a month is 175 tons (gross production). Peak Capacity: The maximum output that a process or facility can achieve under ideal conditions is peak capacity. KFG attain peak capacity sometimes in ideal conditions. Their peak capacity is 200 tons per day. And in rear case they achieve this volume Bottleneck: According to DGM Mr. Saleem Salayani There is no bottleneck in their manufacturing plant. They are fulfilling the demands of the customers. KFG has the ability to produce the volume of glass which will satisfy the demands of customers. They are manufacturing float glass in this plant for the last 4 years, & they do not have any problem of fulfilling demands.

Capacity Strategies:
There are two ways to increase the capacity: • • Incremental ( Wait & See Strategy) Quantum ( Expansionist)

Incremental Strategy: Khawaja Float Glass is using the incremental strategy in increasing their capacity. Mr. Saleem Salayani told us in the interview that in case, if they use quantum strategy & increase the capacity at high level & start a new plant, they have to bear a lot of cost. The cost which they collect from the investors or bank, they have to pay back that amount. After paying back that amount then their profit will be generated. So that is why they are using the incremental strategy. They increase their capacity a little, and then they wait & analyze the situation of market. If the demand is still increasing then they will increase the capacity otherwise not. Mr. Saleem
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Salayani told us that if they increase a lot of capacity & increase their production, some problems can be occur. Like may be it can possible that there is no place to save the glass, the ware house is already full of manufactured glass. Sometimes they even have enough glass in their warehouse to fulfill the demand. The profit which they gain by using incremental strategy, they use this profit on increasing the productivity & quality. These are the reasons they are using incremental strategy. Incremental Strategy

Capacity

Time
Figure 2: Incremental Strategy

Source: Mr. Saleem Salyani (DGM Process)

Capacity Cushion: The extra capacity used to increase the volume of production is known as capacity cushion. E.g.: If the plant is running on a capacity of 80%, & its peak capacity is 100%. They are fulfilling the demands of customers on 80%. But if the customer demand becomes high even more then 100% then the plant have some cushion like 5% or 10% to increase the production. Formula is CC=1-C/100 In Khawaja Float Glass the daily production is 200 tons. It is not achieved, mostly 80% is optimum. But in their peak seasons from March to September they have to increase the production capacity. If the demands are not fulfilled, they have the capacity cushion of 5%-7% based on the demand. Mostly they use 5% of capacity cushion.
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Location:
In geography, Location is a position or point in physical space that something occupies on the Earth's surface. Location is basically an important factor while starting the business. It is very important to choose a better place for locating a factory or retail outlet. The current plant of Khawaja Float Glass is created about 4 years back. It is located in Fateh Jhang. The place is outside the city & far away from the population. The total area comes under the Khawaja Industries is 1000 kanal. The factory covered area is 400 kanal. While talking to the DGM process of Khawaja Float Glass, Mr. Saleem Salayni, he told us the primary dominant factors & some of the secondary factors to choose this location. Primary Factors: • Glass factory cannot be situated closer to the cities because of the dangerous gases which are emitting from chimneys so that is why they selected that location. It is the safety & health factor. • A large water resource is nearer to the plant, water is a necessary element in manufacturing of glass. • They got large area which they can’t buy inside the city because it will be costly. The total area is 1000 kanal approximately. Factory covered area is 400 kanal. • Proximity of raw material, e.g. they get silica sand from Khushab. It saves there transportation cost. Secondary Factors: • Motorway & G.T road is nearer. • When the new airport of Islamabad will be constructed, it will be easy for them to use air cargo for exporting. They have closed their other plant of Neelum Glass & want to manufacture it on the same plant with flat glass to save the cost. So they are centralizing everything. It is difficult to find labor in

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that area, but they got labor on the contractual bases. There is an agent who is providing labor to KFG on contractual bases.

Selecting a Location:
As Khawaja Float Glass do not have their own outlet, so we will just talk about their manufacturing plant. Onsite Expansion: They are using the onsite expansion. The Neelum glass factory has been close & now it will be manufactured on the same plant on which they are manufacturing flat glass. They are also starting the manufacturing of insulated glass & automotive glass. For this purpose they are constructing another plant on the same location. So they are doing onsite expansion. If they choose a new location or relocate their factory it will be highly expensive for them & inappropriate.

Layout:
It is the physical placement of economic centers. Economic centers are basically anything which occupies space. Product Layout: In Khawaja Float Glass they are using Product layout. KFG is using the continuous & line processes. In this kind of layout there is a strong division of work among the workers. Every individual is doing a separate task. E.g. the workers who are on the cutting machine will only do their work. When the glass cuts down, they will safely pick the glass from the rollers. The person working in control room will only do the same job. The person which is in the control room to make batches will always do the same job. So the tasks are divided according to the specialty of workers, & they have to do that certain jobs which were assigned by management. Mr. Saleem Salayni told us that their organization theory is different. In the case of emergency or some problem occurs the top management, even the CEO is present there to solve it.
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Group Technologies: It means the variations in the product. In this plant KFG is just producing the fine quality flat glass with the float furnace technology. There is not much variation in the glass. Variations are only the size & the thickness. They are only producing transparent glass. Size & thickness varies according to the demand of the customers.

Total Quality Management:
KFG is using special purpose team to check and appraise the quality of glass , and to make sure that they are producing the best glass. Special Purpose Team: In Khawaja Float Glass they are using the Special Purpose team. Special purpose team means that from every department one member comes, and then they make a team. This team is then responsible for the quality control of the product. Mr. Saleem Salyani told us that their philosophy about quality glass is that “quality in, the better quality out”. So there first goal is to check properly the quality of raw material which they have to use for manufacturing. The sample of the raw material is send to the laboratory. Management has given some limits & ranges to the workers working in laboratory. If the raw material’s quality is out of that range then they do not use it in the manufacturing. The whole formula of making batch is also provided by the management, Head of Department of Operations is also involved in the quality checking of batches. When the raw material is in silo it is again checked by the authorized person. When that raw material reaches the furnace then quality is checked by the control room. So in each & every step there is a quality check by the member of special purpose team. Even Management is involved in the quality check at each step. That is why Khawaja Float Glass is providing the fine quality to their customers as they have the process of checking the quality in each & every step which decreases the chances of defects.

Cost of Poor Performance & Quality:
Preventive Cost: It is the cost associated with preventing defects before they happen. KFG is using preventive cost at every level of their plant to avoid the defects to happen. E.g. they are using cost to do a mechanical procedure to check the power houses. This procedure has to be
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done as per requirement to avoid any problems in the future. Other then that if any machinery got some problem the upper level management is also involved to overcome the problem quickly & efficiently. The cost which is associated to prevent these problems is the preventive cost of KFG. This cost basically helps in reducing the future costs. Appraisal Cost: Appraisal costs are incurred when the firm assesses the level of performance of its processes. As preventive measures improve performance, appraisal costs decrease because fewer resources are needed for quality inspections. They are using instrument which is known as “strength checking instrument” to check the strength of glass and a micrometer to check the thickness of the glass. So appraisal costs are only the costs of these instruments. According to Mr. Saleem Salayani eye is the best quality checker for glass. Internal Failure Cost: These are the costs resulting from the defects that are discovered during the production of a service or product. In Khawaja Float Glass they are producing three qualities of flat glass, A, A+ & cutting quality. Their wastage is very less because they make batches according to the order. According to them they want a better quality raw material to make the best glass. The internal failure cost is, when a bubble arises in the glass, they do not waste whole glass but only cut the defective piece if the bubble is at the corner. The defective pieces can be used for cullet. External Failure Cost: In case of glass there is no external failure cost, because when KFG supply the glass to agents & dealers, they supply the best quality glass. The glass can break but no defect can occur in it, so that is why there in no external failure cost of KFG.

Recommendations:
• They do not have R&D department. They should start & maintain R&D Department in their company, so to check the quality & also remain update on the latest procedures & technologies in the market. • They should start effective marketing & advertising campaign in order to create awareness in market about their quality.
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As they are producing the best quality of glass, they should also start a new range of products made by glass, e.g. bottles, glasses, cooking instruments & glass used in electronics.

Khawaja Float Glass should start forward integration. They should acquire external warehouses, shops & provide the best quality products with quality services.

Action Plan:
• For the purpose of starting the R&D department, they should select some senior employees from the organization. This group of senior employees has much knowledge about the organization & also about market. So they can easily lead that R&D department. They can hire some laboratory experts for research work. This might help them in cutting their costs in different processes. • They should advertise in the newspapers. As it is the medium which is in range of everyone, means most of the population of Pakistan still want to read daily newspaper. In this way the people will get aware of it that KFG is the patent of float furnace technology in Pakistan. This might also increase their sales. • They should start manufacturing a new range of glass products to capture different markets. It will increase their revenues. They have a large area in fateh jhang & they can do onsite expansion & establish a new plant.

KFG do not have forward integration. They should start their own outlets & external warehouses. They can select a location of their choice. If they supply glass to dealers, then it’s up to dealers that where they locate their shop & place KFG’s glass there. But if they acquire their own outlets they can select a location of their choice. They can select the location like developing places. Like sectors of Islamabad G-14, G-15

Conclusion:
Khawaja Float Glass is successful carrying on its operations & catering the needs of the Pakistani market. The company has been going into profits with 30% market share. They are using latest technology of float furnace which is using in all over the world. They have a large area in Fateh Jhang, so they can expand their plant easily which will increase their production.
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They are not doing any advertisement & marketing of the glass, although some of the dealers are advertising the KFG’s glass, if they do market their product there self it will cut their cost of advertising. There are lots of opportunities for KFG in market as they have the patent of float furnace technology in Pakistan. They are only exporting in Afghanistan, but if they use air cargo, they can expand their export & generate higher revenues. They are also centralizing the Neelum glass and will manufacture it in the flat glass plant. There main focus is on quality that is why its name is trustworthy in market.

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Annex
1st Visit:

2nd Visit:

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3rd Visit:

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Bibliography:
The persons who provided the data are:

Qasim Mehmood Malik GM (Finance) Khawaja Group Ph #: (+92-51) 5524130

Saleem Saliyani
Deputy General Manager (Operations) Khawaja Group

Head Office 267-Block A, Kamal Road, The Mall, Saddar Rawalpindi Pakistan. Tel: 051-5564998,5568998 Fax:051-5564998 Email:kg@aol.com

Khawaja Flat Glass Industries (Pvt) Limited Garhi Mehoob llahi, 4th kilometer, Fateh Jang, Pakistan. Tel:051-2217803

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Fax:051-2217804 Email:ktjamal@aol.com

www.khawajafloat.com

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