OPERATIONS MANAGEMENT

Service Organization- DMART

The Goal

_______

Semester VII, 4th Year MBA (Tech.) Computers

Division H

Group No.: 3
Sarvesh Shinde N048
Anusha Agrawal N064
Arushi Jain N065
Rohit Rai N071
Ritwik Pandey N240
Ekshu Singh N257
Contents

INTRODUCTION ........................................................................................... 3

OBJECTIVE .................................................................................................... 3

METHODOLOGY .......................................................................................... 4

ANALYSIS ....................................................................................................... 4

MARKET SIZE ........................................................................................... 4

INVESTMENTS .......................................................................................... 4

GOVERNMENT INITIATIVES ................................................................ 5

ACHIEVEMENTS ....................................................................................... 6

OBSERVATIONS............................................................................................ 6

PROCESS FLOW ........................................................................................ 6

LAYOUT OF THE FACILITY .................................................................. 7

KEY CHALLENGES .................................................................................. 9

SUGGESTIONS............................................................................................. 10

CONCLUSION .............................................................................................. 10

THE GOAL by Eliyahu M. Goldratt ............................................................ 11

REFERENCES .............................................................................................. 15
INTRODUCTION
Service sector, also known as the tertiary sector, is the sector that provides
services to the people instead of providing commodities. Service sector includes
retail, banks, hotels, recreation, real estate, education, media, health, social work,
computer services, gas, electricity and water supply. The service sector is
considered as a dominant sector in India's GDP. It has attracted foreign
investment flows and has contributed significantly to exports as well as large
scale employment. Retail industry is one such industry in the service sector. With
the entry of new players, the Indian retail industry has significantly grown into
one of the most dynamic and fast paced industry. Dmart is one such retail
industry.

OBJECTIVE
The objective of this report is to study and analyze the service sector of India.
Through this report we will be able to understand what is service sector, what is
its current scenario in India’s GDP and what can be the future of this sector. Then
we will select one service organization and make a process flow diagram of the
facility, what is the current layout of the facility, identify the key challenges in its
operations management practices and suggest improvements in specific areas
where potential for improvement exists. After this, with the help of the book THE
GOAL by Eliyahu M. Goldratt, we will try to understand the methods for
improving system performance, what is meant by “bottlenecks”, “cycle time”
and “balance with demand”.
METHODOLOGY
For this project we visited the Dmart store situated in Koparkhairane, Navi
Mumbai. We talked with the store manager about the various operations that took
place. We made a process flow diagram and mapped the current layout of the
store. Through this and our observations we found out the challenges the store is
facing and provided them with suggestions to improve the efficiency of the store.

ANALYSIS

MARKET SIZE
The service sector is considered to be the major factor for India’s economic
growth. The sector has contributed 54.17 per cent of India’s Gross Value Added
at current price in 2018-19*. Net service exports stood at US$ 60.25 billion in
April-December 2018 (P).
In case of retail industry, it is expected to grow from US$ 672 billion in 2017 to
US$ 1,200 billion in 2021. The e-commerce market of India is expected to
become the fastest growing market, with rapid increase in number of investments
and internet users. The luxury market is also expected to grow supported by
growing exposure of international brands amongst Indian youth and higher
purchasing power of the upper class in tier 2 and 3 cities.

INVESTMENTS
Some of the major investments in the service sector are:
• Tourism and business travel and leisure spending’s are expected to increase
to US$ 234.4 billion and US$ 12.9 billion in 2018, respectively.
• Indian healthcare companies are entering into merger and acquisitions with
domestic and foreign companies to drive growth and gain new markets.
Some of the major investments in the retail industry are:
 • Many companies are investing in Indian retail space due to rise in need for
consumer goods in different sectors such as consumer electronics and
home appliances.
• India’s retail sector investments doubled to reach Rs 1,300 crore (US$
180.18 million) in 2018.
• Walmart Investments Cooperative U.A has invested Rs 2.75 billion (US$
37.68 million) in Wal-Mart India Pvt Ltd.

GOVERNMENT INITIATIVES
The Government of India knows the importance of promoting growth in the
service sector and thus provides with several incentives in wide variety of sectors.
The Government of India has taken up a few initiatives which are:
• The Government of India is trying to remove the trade barriers to services
and had drafted a legal text on Trade Facilitation in Services to WTO in
2017.
• The Central Government has increased the incentives provided under SEIS
by 2%.
The Government of India has taken up a few initiatives for improving the retail
industry of India which are:
• The Indian Government might change the FDI rules in food processing
thus allowing the ecommerce companies and foreign retailers to sell Made
in India consumer products.
• Government of India has allowed 100% FDI in online retail of goods and
services through the automatic route, thereby providing clarity on the
existing businesses of e-commerce companies operating in India
ACHIEVEMENTS
Following are the achievement in the past four years:
• In 2018 India’s ranking changed to 24 from 137 on World Bank’s Ease of
doing business - "Getting Electricity" ranking.
• Indian IT firms generated the highest ever revenue at US$ 167 billion in
2017-18.
• Five times more growth in major ports’ traffic between 2014-18, compared
to 2010-14.

OBSERVATIONS

PROCESS FLOW

The work of D-mart employee begins with a customer entering their store. They
enquire about the products the customer would like to purchase, help them with
the billing process and even after the purchase is done. The above shown process
flow includes all the 3 aspects of customer service that is in-store assistance,
processing transaction and handling customers and after sales servicing. D-mart
is a hub for almost each and every household commodity and its customer base
are huge, so in order to ensure that none of the products go out of stock, inventory
management is necessary. Their inventory management is fully automatic with a
threshold value inclusive in it, that is whenever a commodity go below that of
the threshold value, the system automatically conveys it to the concerned
department. This system is included in the billing process only. After sale services
of D-mart includes 24/7 customer service number and return or refund policy for
any damage item received. The return procedure is completed within the 7
business days.

LAYOUT OF THE FACILITY

Ground Floor Layout: -

First Floor Layout: -
Second Floor Layout: -

KEY CHALLENGES
• There was an issue of storage space as heavy bulky products were lying on
the floor.
• The space management in the layout of the store was an issue. There was
very less space between two parallel racks.
• Shopping trolleys were not allowed to carried between different floors
resulting in inconvenience.
• The A/C duct and outlets were completely exposed due improper
construction of the ceiling.
SUGGESTIONS
• The layout of the store needs to be reconstructed in such a way that there
is optimum utilization of the space but at the same time no cramping of
space takes place. There should be adequate spacing between the racks.
• The products should be placed orderly in the shelves for easier
management.
• The operational floor is mainly utilized for storage. It would be better if the
store builds the storage shelves in the basement area where the back office
is situated.
• Adequate number of shelves should be created instead of stacking up boxes
as shelf.
• The products need to be monitored regularly in order to identify damaged
goods.
• Customer handling training need to be given to the staff as the staff was
inefficient in handling customers belonging to different backgrounds and
attitudes.
• Separate billing counters need to be provided for customers purchasing
fewer products.

CONCLUSION
Through this project we understood about the service sector and its positioning
in India’s GDP, we analyzed the various operations and working of Dmart store
and proposed the process flow and what suggestions can be made to improve the
operations of the store.
 THE GOAL by Eliyahu M. Goldratt

INTRODUCTION
The Goal is a management-oriented book by Eliyahu M. Goldratt, a business
consultant who is widely regarded for his theory of constraints, and Jeff Cox, a
bestselling author, and co-author of multiple management-oriented novels. The
Goal was published in the year 1984.
This book can be used for case studies in operations management. It mainly
focuses on the theory of constraints, bottlenecks and how to deal with them. This
book also emphasis the applications of these concepts in real-life scenarios. It is
used in many management colleges for teaching concepts of Operations
Management.
The main character is Alex Rogo, who manages a production plant owned by
UniCo Manufacturing, where everything is behind schedule without any proper
planning.

1. What are the methods used in the book for improving overall system
performance?

The main methods used in the book for improving the overall system performance
are:
1. Taking help from your teachers – Alex Rogo was not able to put his
inputs into the problems faced by the plant in his initial period. He turned
to his teacher Jonah. In response to Alex, Jonah helped him with his
questions but also did left some answers in order to make Alex motivated
and curious. Jonah gave the lessons to Alex which can be summed up into
three major points. They are:
• Money is most important aspect to the management over
efficiency.
 • Cost accounting is said as the number one enemy of productivity.
• A plant in which everyone is working all the time without any
plan is inefficient.
2. Observing your surroundings - Alex volunteered for his son in the Boy
Scouts hike. There he came to know the true meaning of "dependent
events" in relation to "statistical fluctuations". The relationship between a
single file hike through the mountains and a manufacturing plant, made
him realize the difficulty of making up the downside of fluctuations
following "dependent events". He also played the game of dice with the
boys. It quickly became clear that any balanced plant faced with "statistical
fluctuations" and "dependent events" will see throughput going down and
inventory going up.
3. Identifying the constraints – Jonah makes Alex understand the “Theory
of Constraints” which summarizes the concept of the bottleneck. A
bottleneck is any resource whose capacity is equal to or less than the
demand placed upon it. A non-bottleneck is any resource whose capacity
is greater than the demand placed on it. Jonah carefully explains that Alex
must NOT try to balance capacity with demand, but instead balance the
flow of product through the plant. The bottlenecks in the plant were the
NCX-10 machine and heat treatment.
4. Decide how to exploit the constraints - Alex prioritizes the bottlenecks
to work on the overdue orders starting from the most overdue down to the
least. The crew works out a detailed plan to keep the bottlenecks fully
utilized. They soon discover that there should be a mechanism to inform
workers about the priority sequence at non-bottleneck positions as well. A
system of red and green tags was installed to map priorities visually. He
also made one foreman stand at each constraint location at all times. This
reduced the communication gap between the workers to take decisions.
One of his dedicated foremen discovers how to process more parts by
 mixing and matching orders by priority, thus hiking efficiency by a full
10%.
5. Finding a universal approach – Once, when the team was brainstorming,
they discussed how chemists invented the periodic table of elements in
Chemistry. How were they able to classify something so vast into one
simple table? Maybe this is how they can approach the massive problems
of their division. By thinking like scientists, they must design a common
framework to examine all the issues of the division. Gradually they
formulated a five-step Process of On-Going Improvement (POOGI):
• Step 1: Identify the system’s bottlenecks
• Step 2: Decide how to exploit those bottlenecks
• Step 3: Subordinate every other decision to 'step two decisions'
• Step 4: Elevate bottlenecks of the system
• Step 5: if, in a previous step, a bottleneck has been broken, go back
to the beginning (Step 1).

This universal method helped them in formulating a unique and effective

approach towards a clustered set of problems regarding operations and production
at their workplace. Thus, whenever in the future, if they come across such
problems, they’ll have a universal approach to help them out.

2. What do you understand by “bottlenecks”, “cycle time” and balanced with

demand as described in the book?

Bottleneck
A bottleneck in production is a point where an operation in a company meets or
exceeds the capacity of the facility. Also, the factory or department can’t produce
enough units fast enough to keep the rest of the production schedule or other daily
operations flowing at the same rate. Having a bottleneck makes stalls in
production and also pressure from customers and low morale.

Cycle Time
It includes the total time starting from the inception of the process to the
termination of it, as defined by the organization and the customer. Cycle time
includes process time, during which a unit is processed from raw materials to
bring it closer to finished products, and delay time, during which a unit of work
is spent waiting to take the next action to be called upon. In all, cycle time is the
total elapsed time to move a unit of work from the beginning to the end of a
physical process.

Balanced with demand

The first objective of a plant is to balance output with capacity so that the plant is
operating at full capacity. But this also builds up inventory and not sales. So,
Jonah tells Alex that a balanced plant is the one in which the capacity of every
resource meets with the demand from the respective market. Although this sounds
fair but, in theory, and practice, this is problematic because the utilization rate at
each step will reach 100% and the dependencies between the steps and statistical
fluctuations will result in longer halt.

REFERENCES
• https://simple.m.wikipedia.org/wiki/Service_sector
• https://www.ibef.org/industry/retail-india.aspx
• https://www.ibef.org/industry/services.aspx