Operations management

Answer 1)
Here are dissimilar factors that affect firms to initiate here facilities units from one place to
another place. These factors given that:
• Cost of production: That is taking place in obtainable facility is high and because of mat profit
margin is fewer
. • Transportation: The transportation is also a massive problem for reallocating of services
because a few time transport cost or distance is so high as a result; company has to tolerate huge
cost in transportation.
• Connectivity: The connectivity is also an problem as from time to time firm faces low
connectivity with cities and market therefore in order to enhance it is connectivity to numbers of
cities relocation is a good option which will increase better market share at a lower cost which
will further enhance profit margin
A company's location strategy should conform with, and be part of, its overall corporate strategy.
Hence, if a company strives to become a global leader in telecommunications equipment, for
example, it must consider establishing plants and warehouses in regions that are consistent with
its strategy and that are optimally located to serve its global customers. A company's executives
and managers often develop location strategies, but they may select consultants (or economic
development groups) to undertake the task of developing a location strategy, or at least to assist
in the process, especially if they have little experience in selecting locations.
Formulating a location strategy typically involves the following factors:

1. Facilities. Facilities planning involves determining what kind of space a company will
need given its short-term and long-term goals.
2. Feasibility. Feasibility analysis is an assessment of the different operating costs and other
factors associated with different locations.
3. Logistics. Logistics evaluation is the appraisal of the transportation options and costs for
the prospective manufacturing and warehousing facilities.
4. Labor. Labor analysis determines whether prospective locations can meet a company's
labor needs given its short-term and long-term goals.
5. Community and site. Community and site evaluation involves examining whether a
company and a prospective community and site will be compatible in the long-term.
6. Trade zones. Companies may want to consider the benefits offered by free-trade zones,
which are closed facilities monitored by customs services where goods can be brought
without the usual customs requirements. The United States has about 170 free-trade
zones and other countries have them as well.
7. Political risk. Companies considering expanding into other countries must take political
risk into consideration when developing a location strategy. Since some countries have
 unstable political environments, companies must be prepared for upheaval and turmoil if
they plan long-term operations in such countries.
8. Governmental regulation. Companies also may face government barriers and heavy
restrictions and regulation if they intend to expand into other countries. Therefore,
companies must examine governmental—as well as cultural—obstacles in other countries
when developing location strategies.
9. Environmental regulation. Companies should consider the various environmental
regulations that might affect their operations in different locations. Environmental
regulation also may have an impact on the relationship between a company and the
community around a prospective location.
10. Incentives. Incentive negotiation is the process by which a company and a community
negotiate property and any benefits the company will receive, such as tax breaks.
Incentives may place a significant role in a company's selection of a site.

Taking an example of AMUL.

AMUL’s Facility Location The brand name "Amul," fromthe Sanskrit"Amoolya," (meaning
Precious) was suggested by a quality control expert in Anand.), formed in 1946, is a dairy
cooperative in India. Itis a brand name managed by an apex cooperative organization, Gujarat
Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by some
2.8 million milk producers in Gujarat, India. AMUL is based in Anand, Gujarat and has been an
example of a co-operative organization's success in the long term. Itis one of the best examples
of co- operative achievement in the developing economy. "Anyone who has seen the dairy
cooperatives in the state of Gujarat, especially the highly successful one known as AMUL, will
naturally wonder what combination of influences and incentives is needed to multiply such a
model a thousand times over in developing regions everywhere.” The Amul Pattern has
established itself as a uniquely appropriate model for rural development. Amul has spurred the
White Revolution of India, which has made India the largest producer of milk and milk products
in the world.

Factors that amul management keeps in mind during facility location layout The location of an
industry is determined by taking into consideration the following factor: • Primary Factors: –
Supply of raw materials – Nearness to the market – Transport Facilities – Supply of Labor –
Availability of power – Supply of Capital • Secondary factors:
(1)Proximity to customers: AMUL Management during facility location analysis keeps in mind
the proximity of target customers and target market, so that the target customer can be
approached easily to outlets.
(2) Policies of management: AMUL managerial policies relate to future volume of production
and expansion, size of the plant, integration of production processes; facilities to employees,
sales and marketing policies and purchasing policies etc.
 (3) Plant location: Location of a plant greatly influences the layout of the plant. Topography,
shape, climate conditions, and size of the site selected will influence the general arrangement of
the layout and the flow of work in and out of the building
There are two types of techniques which followed by AMUL:
1) Factor Rating
2) Cost-Volume-
Profit Analysis Factor Rating In the factor rating system, factors that are important in the
location decision are identified. Each factor is weighted from 0 to 1.00 to prioritize the factor and
reflect its importance. A subjective scores assigned (usually between 0 and 100) to each factor
based on its attractiveness compared with other locations, and the weighted scores are summed.
Decisions typically will not be made based solely on these ratings, but they provide a good way
to organize and rank factors.
AMUL plant is indigenously worked out with facilitation of various production processes and
production of multi products under one plant. The total plot is nearly about2.27 kms. Separate
buildings are provided with required arrangements of machine tools handling and computers
connection through the control room to fit for varying product manufacturing departments.
Factors that influence layout  Volume, weight of items to be produced.  Nature of the service
to be provided.  Cost of the building to house the operation.  The fragility of the product or
component AMUL facility layout: The plant is engaged in producing milk, ice creams, milk
powder and ghee. Entire department is uniquely provided with facilities for the processing each
Product. There are 4 production departments and packaging departments pertaining to each
product respectively

Reasons for Amul’s success are its Robust Supply Chain, Low Cost Strategy, Diverse Product
Mix, Strong Distribution Network, Technology advancements & an Initiatives and service
availability. Because of all these competences. Amul is the largest producer of milk and milk
products in the world. It has set world best practices for dairy producers.

Answer 2)

In manufacturing, facility layout consists of configuring the plant site with lines, buildings, major
facilities, work areas, aisles, and other pertinent features such as department boundaries. While
facility layout for services may be similar to that for manufacturing, it also may be somewhat
different—as is the case with offices, retailers, and warehouses. Because of its relative
permanence, facility layout probably is one of the most crucial elements affecting efficiency. An
efficient layout can reduce unnecessary material handling, help to keep costs low, and maintain
product flow through the facility.
Firms in the upper left-hand corner of the product-process matrix have a process structure known
as a jumbled flow or a disconnected or intermittent line flow. Upper-left firms generally have a
process layout. Firms in the lower right-hand corner of the product-process matrix can have a
line or continuous flow. Firms in the lower-right part of the matrix generally have a product
layout. Other types of layouts include fixed-position, combination, cellular, and certain types of
service layouts

Product Layout: Possible Advantages:

(1) Low total flow time of the product from the input stage to the output stage (i.e. higher rates of
output) due to:
(a) Continuous flow without intermediate stoppages and storages;
(b) Repetitive, small, fragmented jobs learnt to perfection by the concerned workers; and
(c) Minimum set-up times of machines.

(2) Production planning and control is simple; less paper work

(3) Inspection required is less
(4) Lower degrees of skills in the manpower may suffice
(5) Raw materials and other inputs can be planned better, even to the extent of ‘Just in Time’,
resulting in lower inventories.
(6) Lower work-in-process inventories needed.
(7) Lower material handling costs
(8) By ‘balancing’ the line, labor utilization can be high.

Product Layout: Possible Disadvantages:

(1) None or very little variety possible.
(2) Less flexibility to changes, particularly to other than minor changes.
(3) Entire line or significant portions of the line may come to a grinding halt if any equipment in
the line breaks down, resulting in high stoppage costs.
(4) Larger maintenance crew needed.
(5) Very low job variety and therefore lower job satisfaction and higher boredom for the
workers.
(6) More coordination required by supervisors.
(7) Duplication of machines and equipments may be necessary resulting in higher capital
investment.
(8) More space may be required.

Process Layout: Possible Advantages:

(1) Very high degree of variety in products is possible.

(2) Flexibility and adaptability to changes is high.
(3) Machine breakdowns do not cause crippling production stoppages.
(4) Requires small maintenance crew.
(5) Good level of variety, skills requirement and therefore higher job satisfaction.
(6) Coordination and supervision is simpler as the processes are similar and the staff is skilled.
Process Layout: Possible Disadvantages:

(1) Higher flow times of products due to:

(a) Intermittent flows of the material; and (b) More numerous machine set-ups.
(2) Production planning and control is more complex; much paper work is necessary.
(3) Worker skills need to be high in order to complete all components of the job.
(4) Higher inventories of basic raw materials may be necessary due to much uncertainty
of demand.
(5) Higher work-in-process inventories due to necessary intermediate storages, if the
machine and labor utilization is to be at a satisfactory level and if the flow times of the
products are to be at acceptable levels.
(6) More handling of materials.

The Maruti Suzuki factory at Gurgaon, thirty kilometres south-west of New Delhi,
features three fully-flexible lines with 21 separate shops, arranged to allow production to
flow around bottlenecked areas. The new Manesar plant, a further thirty kilometres from
Gurgaon, features a single line arranged in the ‘straight line’ concept, with press, paint
and assembly shops all located under one roof, with raw steel entering and finished
vehicles exiting the plant

One of the joint-venture companies (located at the Gurgaon facility) supplies the chassis.”

Both facilities feature paint operations from Taikisha, though the two plants use dissimilar
painting methods. Says Mani, “In Gurgaon, the basecoat is applied then baked, followed by the
intermediate and top coats and another baking process.

The final finishing coat is then applied and baked. In Manesar, it is different, we have a three-
coat and one-bake system. In India, dust is a big challenge in regards to painting and this has to
be constantly managed.”

In addition to the dust, energy delivery poses another problem. Instead of depending on the local
grid for a consistent power supply for the paintshops, the Gurgaon and Manesar plants have their
own power stations delivering power throughout.

From weld, which features robotics by Kawasaki, Fanuc and Motorman, the car bodies move
through paint and into the assembly shop. At Gurgaon, where many of the seven models in
production can be built on any of the three lines, bodies move through the assembly shop on
conveyors from NKC. All finished vehicles undergo rolling road, emissions and water ingress
tests before dispatch.

There are a variety of quality control elements built in to the production line. Over two hundred
‘quality gates’ are placed at strategic points, where inspectors check for problems with the parts,
vehicles or the system. The gates provide feedback to the source station regarding observed
defects. Generated tickets prompt a supervisor to check the vehicles on the line to confirm
quality, while also making sure there is no replication of the problem. “We get instant feedback,”
says Mani, “so people can immediately act upon that information.”

Other quality checks include ‘pika pika’ or foolproof dynamic bolt systems. Within a takt time of
75 seconds, workers must tighten sixteen wheel bolts per vehicle. For each action, the system
recognizes the completion of an individual tightening operation, reducing the number of
anticipated movements per vehicle. If a bolt is missed, an incomplete job total triggers an alarm,
giving the operator an opportunity to fix the problem before the line is halted.

In addition, a vehicle tracking system follows each body through the assembly process. As there
can be multiple models on the same line, when the vehicle is presented in-station, the system
indicates from which rack the worker should take the necessary part. Sensors record if the part is
taken and if not, the line is automatically stopped. “This way,” explains Mani, “we ensure that
the right part is picked up in the right way.” Mani goes on to say that Maruti Suzuki is in the
process of implementing a multi-training programmed, by which workers in one station can also
operate the systems in earlier and later stations, defined as ‘+1 and -1’.

As defects are recognized, vehicles are repaired on the production line, with only a small number
being directed to a rework park at the end of the line. Once the repair is made, the car is then
reintroduced to the line to complete the assembly process.

“With the multi-station skilling programmed and other quality initiatives, we hope to reduce the
level of warranty costs. And less problems mean less cars taken off the line for repairs. Currently
we have a direct pass (defect-free) production total of 91%. This means that out of about 2,500
units per day, there is an average of 67 units that require repair work.”

Answer 3.A)

Total Quality Management is defined as a customer-oriented process and aims for continuous
improvement of business operations. It ensures that all allied works (particularly work of
employees) are toward the common goals of improving product quality or service quality, as
well as enhancing the production process or process of rendering of services. However, the
emphasis is put on fact-based decision making, with the use of performance metrics to monitor
progress.

The key principles of Total Quality Management

Commitment from the management:

 Plan (drive, direct)

  Do (deploy, support, and participate)
 Check (review)
 Act (recognize, communicate, revise)

Employee Empowerment

 Training
 Excellence team
 Measurement and recognition
 Suggestion scheme

Continuous Improvement

 Systematic measurement
 Excellence teams
 Cross-functional process management
 Attain, maintain, improve standards

Customer Focus

 Partnership with Suppliers

 Service relationship with internal customers
 Customer-driven standards
 Never compromise quality

Benefits of Total Quality Management

The advantages of total quality management (TQM) include:

 Cost reduction. When applied consistently over time, TQM can reduce costs throughout an
organization, especially in the areas of scrap, rework, field service, and warranty cost reduction.
Since these cost reductions flow straight through to bottom-line profits without any additional
costs being incurred, there can be a startling increase in profitability.
 Customer satisfaction. Since the company has better products and services, and its interactions
with customers are relatively error-free, there should be fewer customer complaints. Fewer
complaints may also mean that the resources devoted to customer service can be reduced. A
higher level of customer satisfaction may also lead to increased market share, as existing
customers act on the company's behalf to bring in more customers.
 Defect reduction. TQM has a strong emphasis on improving quality within a process, rather than
inspecting quality into a process. This not only reduces the time needed to fix errors, but makes it
less necessary to employ a team of quality assurance personnel.
 Morale. The ongoing and proven success of TQM, and in particular the participation of
employees in that success can lead to a noticeable improvement in employee morale, which in
turn reduces employee turnover, and therefore reduces the cost of hiring and training new
employees.

Conclusion

A successful TQM implementation requires a significant training for the employees

involved in it. Since the training program can take employees away from their day to day
work, this eventually can have a negative short-term impact. Also, since Total Quality
Management tends to result in a consistent series of incremental changes, it can lead to
creating an unpleasant response from those employees who prefer existing system, or
employees who are afraid of losing their jobs because of it. Total Quality Management
works best in an environment where there are strong support and commitment from the
management.

Answer 3.B)

Essential requirements for successful implementation of TQM

 Commitment: Quality improvement (in all aspect) must be everyone’s job in the
organization. An apparent commitment from the top management, breaking down the
barriers for continuous quality improvement and steps required to provide an environment
for changing attitudes must be provided. Training and support for this should be extended.
 Culture: There should be proper training to effect the changes in attitude and culture.
 Continuous Improvement: Recognize improvement as a continuous process, and not
merely a one-off program.
 Customer Focus: Perfection in service with zero defectives and full satisfaction to end-user
whether it’s internal or external.
 Control: Ensure monitoring and control checks for any deviation from the intended course
of implementation.
The PDA cycle:-
Planning Phase: This phase is the most crucial phase of total quality management. Under this
phase, employees have to come up with their respective queries and problems which need to be
addressed. The employees apprise the management of different challenges which they are facing
in their day to day operations and also analyze the root cause of the problem. They need to do the
required research and collect significant data which would help them find solutions to all the
problems.
Doing Phase: In this phase, a solution for the identified problems in the planning phase is
developed by the employees. Strategies are devised and implemented to crack down the
challenges faced by employees. The efficiency and effectiveness of solutions and strategies are
also evaluated in this stage.
Checking Phase: Under this phase, a comparison analysis of before and after is done in order to
assess the effectiveness of the processes and measure the results.
Acting Phase: This is the last phase of the cycle, in this phase employees document their results
and prepare themselves to address other problems.

Beliefs about Total Quality Management

Following are the universal Total Quality Management beliefs:

 Satisfaction of the customer/owner is the measure of quality.

 Everyone is an owner.
 Continuous Quality improvement must be there.
 Analysis of the processes is the key to quality improvement.
 Constant TQM is not possible without consistent, active and enabling leadership by
managers at all levels.
 It is important to incessantly improve quality of the products and services which we are
supposed to provide to our customers/owners.