Name Roll No. Course & Semester Subject Name & Code Assignment No.

LC name & Code Date of Submission Session

Anil Kumar Joshi 520949950 Master of Business Administration ± MBA Semester 3 Advanced Production & Operations Management ± OM0004 (Book ID: B1075) Set ± 1 & 2 NIPSTec Ltd. 1640 14.12.2010

Assignment Set - 1 Advanced Production & Operations Management ± 2 Credits
Q 1 - With examples show how operational strengths can be used effectively as competitive weapons. Answer: The following examples show how operational strengths can be used effectively as competitive weapons: Product/Process Expertise: An organization can employ its strengths in certain areas of product functionalities and process capabilities to gain a competitive advantage over its competitors. For instance, Intel Corporation, USA, has superior computer chip design due to its technological expertise in producing microchips. Quick Delivery An organization with flexible capacity and an adaptive production process can produce a product and satisfy customer needs quickly. One-hour eye glass manufacturing, onehour photo developing services and same day dry-cleaning and shoe repair services are some examples. Shorter Product Cycle The first company that enters a market usually gains a significant market share over subsequent entrants. The speed of product introduction is dependent on the flexibility and adaptability of the production system. A company, which is more adaptable than its competitors, can introduce a product into the market relatively quickly and will gain the advantage of untapped market demand and as a result will be able to corner a significant market share. Production Flexibility Some organizations specialize in having a highly flexible and responsive operations environment. Celestica, Inc, a Canadian computer component manufacturer, uses equipment that is not fixed to the floor. This enables production lines to be reconfigured within hours or days to make new and different products. This flexibility to expand from manufacturing a few products for single customer (IBM) to making hundreds of products for over 40 different companies.

Operations Management This has allowed Celestica to expand from manufacturing a few products for a single customer (IBM) to making hundreds of products for over 40 different companies. Lowcost Process An organization with an efficient production system or access to low-cost resources can make standard products at costs lower than its competitors. For example, steel companies, such as Nucor in the United States, have competed successfully with larger integrated steel producers like Nippon and US Steel by using mini-mills (a smaller version of a steel refining mill that can process scrap). The mini-mill production process allowed Nucor to gain a substantial price advantage over competitors by reprocessing scrap steel rather than producing primary steel from iron ore. Convenience and Location Facility location can provide substantial competitive advantage. For example, local courier and parcel company, Desk To Desk Couriers (DTDC), is a strong competitor to foreign multinationals like DHL and FedEx in India, as it has deep penetration and covers a larger number of Indian towns and cities. Product Variety and Facility Size In some industries, the variety of products offered and the size of operations can provide competitive advantage. Grocery stores and supermarket retailers compete by having larger stores that allow them to display a greater variety of products and to benefit from economies of scale. Standard product design Operations managers customized product design when the level of customization is high and the quantity to be produced is low. Products are designed to satisfy individual customer needs. The emphasis in this type of product design is on the quality and on on-time delivery, rather than on cost. Industrial products like boilers and turbines are Customized product design Facility planning designing the Production System Designing the production system is one of the key responsibilities of any operations manager. It involves selecting the product design, the production system, and the inventory policy for finished goods for each product line. Product design Product design is primarily of two types: i Allocation of resources to strategic alternatives i Technology selection and process development i Product/service design and development i Designing the production system iincrease its sales volume even while commanding a higher price. Such an example is found in Sundaram Fasteners of the Sundaram Clayton Group. Their radiator caps are standard equipment in major automobile companies like Daimler Chrysler and General Motors.

Elements Of Operations Strategy An operations strategy is a high-level integrated plan for business effectiveness or competitiveness. Key components of operations strategy are described below: examples of customized products. Standardized product design is employed when an organization is involved in the production of limited variety of products, which are produced in large batch sizes. In such systems, importance is given to costcontrol and quality rather than on the flexibility of the system. Consumer durables like coolers, fans, and televisions are examples of standardized products. Production system The production system can Process-focused systems Product-focused systems are generally employed in mass production organizations where there are groups of machines, tools and workers arranged according to their respective tasks in order to put together a product. These systems are suitable for producing standardized products like cars, televisions, computer systems, etc. Processfocused systems are designed to support production departments that perform a single task like painting or packing. These systems are highly flexible. Product-focused systems be broadly classified into two major categories: can easily be modified to support other product designs. Hence they are used Produce-to-order policy In a produce-to-stock policy, products are produced well in advance and are stored in warehouses, from where they are dispatched as per customer orders. This policy is suitable for organizations manufacturing products, parts or components, which have seasonal demand (like refrigerators and air-coolers) or those, which have general applications (like bolts and nuts). A produce-to-order policy allows production to start only after the company receives customer orders and halts production until another order is received. This policy is suitable for organizations that produce products, parts or components of high value (like spares of an aircraft engine) or those that are meant exclusively for specific purposes (like dyes, castings, etc.). Product/Service Design and Development Every product has a life cycle. The first stage in the life cycle of a product, after it is designed and developed, is the: introduction stage In this stage, sales are dependent on promotion and other marketing efforts. Profits are either negative or quite insignificant. The products that successfully survive this stage enter the growth stage. In the growth stage, sales volume increases exponentially. During the growth stage, organizations take decisions regarding production capacity expansion. These decisions are

dependent on the response to the product in the market. In the maturity stage, sales growth becomes stagnant.

Finished Goods Inventory Policy There are two types of policies relating to finished goods inventory: ity stage, organizations focus on improving efficiency of the processes, minimizing costs, etc. Finally, the product enters the decline stage. In this stage, sales show a downward trend, because of obsolescence of technology used Idea Generation Feasibility Studies Prototype Design Prototype Testing Initial Design of Production Model Economic Evaluation Market Testing Final Design of Production Model New product development always starts with idea generation. Ideas in the product, changing customer requirements, and the availability of substitute or complementary products. The operations department plays a significant role in the initial stage of the product life cycle. Its role diminishes as the product moves up in the life cycle and the organization¶s focus shifts towards maintaining or increasing the market share and improving the quality of the product and the production process. The following are the important steps in the development of new products: can come from various sources such as employees, customers, intermediaries, vendors, market research and so on. After a new idea is selected, it is screened to ascertain its feasibility in implementation. Feasibility studies consider whether the idea generated is feasible both technically and economically. Such studies test whether the production of the product is technically feasible and profitable to produce and market. If the idea is found to be both technically and economically feasible, then a prototype of the product is developed. The prototype may not have all the features of the final product, but it has all the basic characteristics of the product. The prototype is tested under standard conditions and defects are noted. On the basis of the results of testing, the necessary changes are made in the prototype. Then the prototype is tested again. This process is carried out until the performance of the prototype reaches a satisfactory level. Once the final structure of the prototype is in place, the prototype design is evaluated for profitability. If the production of the model is profitable, then the prototype enters the production design stage. The initial production design is transformed into final production design after performance testing, production trials and testing, economic studies and test marketing. These steps ensure that the final product performs satisfactorily and can be produced efficiently in the desired quantities. The product development process continues even after the launch of the product. The product is modified or upgraded to adapt to changing market conditions and/or to adopt new technology.

Technology selection and process development Once the design of the product is finalized, managers concentrate on determining how the product will be produced. This involves thorough analysis and planning of the production processes and facilities. Every step in the process of production is planned in detail. The technology to be used in the production process is selected from a range of options. Allocation of resources to strategic alternatives Production companies have to continuously deal with the problem of scarce resources like capital, machines and materials and so on. As these resource inputs are vital to production activities, their shortages can influence production performance significantly. Hence operations managers have to plan the optimal use of resources, both in terms of minimizing wastage, and in terms of their allocation to the best strategic use. Facility planning The location of the production facilities is one of the key decisions and operation manager has to make since it is critical to the competitiveness of the organization. Setting up production facilities with adequate capacity involves massive initial investment. Therefore, strategically right options should be carefully weighed against all available alternatives. These decisions also influence the future decisions on probable capacity expansions plans. Managers have to take into account factors like the availability of raw materials and access to the market when making their decisions. Operations managers also make layout decisions, i.e. decisions on the internal arrangement of workers and departments within the facility. Developing an Operations Strategy The operations strategy should be in line with the organization strategy, and the organization strategy should be in line with the corporate vision and mission. If the organization strategy is not consistent with the corporate vision and mission, the organization cannot survive in the competitive marketplace. For example, let us assume that the operations strategy of an organization focuses on cost reduction by specializing production processes and utilizing long production runs, while the marketing strategy focuses on product customization and quick response. These strategies are in conflict with each other. In such a case, it will be difficult for the organization to achieve its corporate vision and mission. Strategic planning is different from operations planning in the scope of its application. Strategic planning is concerned with long-term planning and involves selection of target markets and distribution channels, whereas operational planning is concerned with short term, day-to-day planning. Selections of markets are the key to any strategy. After markets are analyzed for their attractiveness, operations managers develop appropriate processes and designs to achieve the organization¶s objectives. As mentioned earlier, the operations strategy is developed in line with organization strategy, which, in turn, is derived from corporate objectives.

Organization strategies focus on achieving corporate objectives by utilizing a company's current strengths and identifying capability to improve the company¶s competition. In the face of global competition, many Indian manufacturers suffered declining sales, market share, and profitability, during the early 1990s. One of the main reasons for this decline was the ineffectiveness of the operations strategy. Managers now realize the significance of operations strategies and are using them as competitive weapons. Operations strategy, in general, involves planning, allocation of resources i.e. man, material and machine to gain competitive advantage. A firm¶s overall competitive position is influenced by both extern al factors like social, political, legal and technological factors, and internal factors like employee skills, product range, technical expertise, infrastructure, and financial position. So, operations managers should be conversant with both internal and external situations. In the past, managers concentrated most of their efforts on finance and marketing strategies. However, companies started recognizing the significance of operations strategies. Wickham Skinner, a Harvard Professor opined - ³A firm lacking proper operations strategy is like an anchored ship. Finance, design, and marketing may set the rudder and expect the ship to steam off, but with anchor set, the ship won¶t move, or moves reluctantly, dragging its burden.´ Conclusion The value chain, or known as value chain analysis, is a concept from business management that was first described and popularized by Michael Porter. (Porter) Most of business strategy is to achieve a sustainable competitive advantage. Cost advantage and differentiation advantage are the two basic types of competitive. According to the resource-based view, in order to develop a competitive advantage, the firm must have resources and capabilities that are superior to those of its competitors. Resources are the firm-specific assets useful for creating a cost or differentiation advantage and that few competitors can acquire easily. Capabilities refer to the firm¶s ability to utilize its resources effectively. The firm¶s resources and capabilities together form its distinctive competencies. All of these activities can be obtained through value chain analysis. Competitive advantage cannot be understood by looking at a firm as a whole. It stems from the many discrete activities a firm performs. Each of these activities can contribute to a firm¶s relative cost position and create a basis for differentiation. It is necessary to have a systematic way of examining all the activities a firm performs to analyze the sources of competitive advantage. Value chain is the basic tool for doing so.

Q ± 3. Analyze the difference between Mass Production and Toyota Production System. Answer: Lean manufacturing or lean production, often simply, "Lean," is a

production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, "value" is defined as any action or process that a customer would be willing to pay for. Basically, lean is centered on preserving value with less work. Lean manufacturing is a generic process management philosophy derived mostly from the Toyota Production System (TPS) (hence the term Toyotism is also prevalent) and identified as "Lean" only in the 1990s. It is renowned for its focus on reduction of the original Toyota seven wastes to improve overall customer value, but there are varying perspectives on how this is best achieved. The steady growth of Toyota, from a small company to the world's largest automaker, has focused attention on how it has achieved this. Lean manufacturing is a variation on the theme of efficiency based on optimizing flow; it is a present-day instance of the recurring theme in human history toward increasing efficiency, decreasing waste, and using empirical methods to decide what matters, rather than uncritically accepting pre-existing ideas. As such, it is a chapter in the larger narrative that also includes such ideas as the folk wisdom of thrift, time and motion study, Taylorism, the Efficiency Movement, and Fordism. Lean manufacturing is often seen as a more refined version of earlier efficiency efforts, building upon the work of earlier leaders such as Taylor or Ford, and learning from their mistakes.

Differences from TPS Whilst Lean is seen by many as a generalization of the Toyota Production System into other industries and contexts there are some acknowledged differences that seem to have developed in implementation. 1. Seeking profit is a relentless focus for Toyota exemplified by the profit maximization principle (Price ± Cost = Profit) and the need, therefore, to practice

systematic cost reduction (through TPS or otherwise) to realize benefit. Lean implementations can tend to de-emphasise this key measure and thus become fixated with the implementation of improvement concepts of ³flow´ or ³pull´. However, the emergence of the "value curve analysis" promises to directly tie lean improvements to bottom-line performance measuments. 2. Tool orientation is a tendency in many programs to elevate mere tools (standardized work, value stream mapping, visual control, etc.) to an unhealthy status beyond their pragmatic intent. The tools are just different ways to work around certain types of problems but they do not solve them for you or always highlight the underlying cause of many types of problems. The tools employed at Toyota are often used to expose particular problems that are then dealt with, as each tool's limitations or blindspots are perhaps better understood. So, for example, Value Stream Mapping focuses upon material and information flow problems (a title built into the Toyota title for this activity) but is not strong on Metrics, Man or Method. Internally they well know the limits of the tool and understood that it was never intended as the best way to see and analyze every waste or every problem related to quality, downtime, personnel development, cross training related issues, capacity bottlenecks, or anything to do with profits, safety, metrics or morale, etc. No one tool can do all of that. For surfacing these issues other tools are much more widely and effectively used. 3. Management technique rather than change agents has been a principle in Toyota from the early 1950s when they started emphasizing the development of the production manager's and supervisors' skills set in guiding natural work teams and did not rely upon staff-level change agents to drive improvements. This can manifest itself as a "Push" implementation of Lean rather than "Pull" by the team itself. This area of skills development is not that of the change agent specialist, but that of the natural operations work team leader. Although less prestigious than the TPS specialists, development of work team supervisors in Toyota is considered an equally, if not more important, topic merely because there are tens of thousands of these individuals. Specifically, it is these manufacturing leaders that are the main focus of training efforts in Toyota since they lead the daily work areas, and they directly and dramatically affect quality, cost, productivity, safety, and morale of the team environment. In many companies implementing Lean the reverse set of priorities is true. Emphasis is

put on developing the specialist, while the supervisor skill level is expected to somehow develop over time on its own.

Assignment ± Set - 2
Q1. Explain briefly the current trends in Operation Management. Ans. Recent Trends In OM

Organizations must improve their products as well as productivity to retain their market share. The long-term success of an organization requires investments in technology because new technologies can improve efficiency and productivity. In this chapter, we discussed how organizations can benefit from automation. Some of the recent technological developments in the field of operations management, which include computer-aided design (CAD), direct and indirect computer-aided manufacturing (CAM), flexible manufacturing system (FMS), and computer integrated manufacturing (CIM) were discussed in the chapter. Computer Aided Design (CAD) is used for designing products and processes on a computer terminal. Computer systems assist in the creation, modification, analysis and optimization of a design. In Computer Aided Manufacturing (CAM), computers are used either directly to control the processing equipment, or indirectly to support manufacturing operations. Automated machines usually perform a variety of operations, depending on the instructions received from the computer with respect to the sequence and operational specifications of a process. FMS is a form of flexible automation in which several machine tools are linked to the materials-handling system. A central computer controls all aspects of the system. CIM refers to a computer application that connects various computerized systems into a single multi-functional system. Another development in the field of technology is artificial intelligence (AI). AI enables computers to exhibit some of the characteristics of human intelligence, like the capacity for learning, understanding language, reasoning and problem solving. EDI is a system, wherein standardized forms of electronic documents are transferred between two computer systems. Customers and suppliers or departments within the same organization can share and transmit information electronically in real time using EDI.

Q ± 2 What is Rapid Prototyping? Explain how concept time to market can be drastically reduced using this technique. Ans. Introduction Rapid Prototyping (RP) can be defined as a group of techniques used to quickly fabricate a scale model of a part or assembly using three-dimensional computer aided design (CAD) data. What is commonly considered to be the first RP technique, Stereolithography, was developed by 3D Systems of Valencia, CA, USA. The company was founded in 1986, and since then, a number of different RP techniques have become available. Rapid Prototyping has also been referred to as solid free-form manufacturing, computer automated manufacturing, and layered manufacturing. RP has obvious use as a vehicle for visualization. In addition, RP models can be used for testing, such as when an airfoil shape is put into a wind tunnel. RP models can be used to create male models for tooling, such as silicone rubber molds and investment casts. In some cases, the RP part can be the final part, but typically the RP material is not strong or accurate enough. When the RP material is suitable, highly convoluted shapes (including parts nested within parts) can be produced because of the nature of RP. There is a multitude of experimental RP methodologies either in development or used by small groups of individuals. This section will focus on RP techniques that are currently commercially available, including Stereolithography (SLA), Selective Laser Sintering (SLS®), Laminated Object Manufacturing (LOMŒ), Fused Deposition Modeling (FDM), Solid Ground Curing (SGC), and Ink Jet printing techniques. Rapid Prototyping improves product development by enabling better communication in a concurrent engineering environment.

The basic methodology for all current rapid prototyping techniques can be summarized as follows: 1. A CAD model is constructed, then converted to STL format. The resolution can be set to minimize stair stepping. 2. 3. The RP machine processes the .STL file by creating sliced layers of the model. The first layer of the physical model is created. The model is then lowered by the thickness of the next layer, and the process is repeated until completion of the model.

4.

The model and any supports are removed. The surface of the model is then finished and cleaned.

Timberland is a cultural icon, a dream brand. The nickname ³Timbs´ is name-checked on dozens of hip-hop lyrics, and one of the genre¶s best-selling producers, Timbaland, is named after the company¶s footwear. On the corporate side, Timberland¶s commitment to social responsibility is respected and emulated worldwide. Hand Craft Meets Digital Timberland has made the transition to its new last production process in just over two years by implementing DSSP, a collection of technology components that enables users to quickly create accurate digital models of complex physical objects. DSSP is used by manufacturers worldwide to capture a part with a 3-D scanner, reconstruct the measurement data (point clouds) into highly accurate polygon or NURBS surfaces, and use the resulting digital model for applications such as product design, tool and mold design and verification, customized manufacturing, recreating legacy parts, engineering analysis, digital archiving and computer-aided inspection. Design conceptualization can be done in minutes by making changes to the 3-D model. In cases where a physical prototype is needed, Timberland sends the Geomagic data to a Z Corp. rapid prototyping system, which can produce a realistic physical model for design and engineering review in three or four hours. DSSP is a vehicle for exploring the type of eclectic designs and customization that defines brands in today¶s consumer market. At the back end of the process is archiving, formerly a process involving a lot of manual labor and physical space to store and retrieve hundreds of historical lasts. Now, Timberland transfers the Geomagic 3-D models of lasts to an electronic library managed using 3Shape software.

Q3. Explain the seven types of wastes w.r.t. just in time. Explain what is Kanban and its types. Ans. The seven types of wastes w.r.t. just in time are under below: 1. Defects The simplest form of waste is components or products that do not meet the specification. We all know about the Japanese scaring us with their target of singlefigure reject rates when we realised that they measured in parts per million and that 1% defects gave a figure of 10,000. Of course, the key point of Japanese quality achievement came with the switch from Quality Control to Quality Assurance - efforts devoted to getting the process right, rather than inspecting the results. 2. Over-Production A key element of JIT was making only the quantity required of any component or product. This challenged the Western premise of the Economic Order Quantity (EOQ) which was built on acceptance of fixed ordering costs, built around set-up times, and thus the need to spread these fixed costs over large batches. Another Japanese guru who contributed to this change is Shigeo Shingo who led Toyota's move from long setups to Single Minute Exchange of Die (or SMED). 3. Waiting Time not being used effectively is a waste - we are incurring the cost of wages and all the fixed costs of rent, rates, lighting and heating so we should use every minute of every day productively. Ohno looked at the reasons for machines or operators being under-utilised and set about addressing them all. Thus we have learnt about preventive maintenance and the creation of flow through our factories with the emphasis on takt time, the rate at which a component or product moves to the next stage. 4. Transporting Items being moved incur a cost, if it is only the energy needed to initiate the movement such as the electricity absorbed by a fork lift truck. Of course, movement brings another cost, which is less visible but more significant. Managing a factory with operations spread apart is much more difficult than when the subsequent stages are adjacent to one another. This can be seen as the primary driver behind cellular manufacturing (though some would point out that Group Technology is very similar and came from Sweden, rather than from the Orient). 5. Movement

On a related note, people spending time moving around the plant is equally wasteful. The time a machine operator or fitter wastes walking to the toolroom or the stores for a fixture or a component could be far better utilised if our plant layout and housekeeping were geared around having everything that is required close to hand. 6. Inappropriate Processing The most obvious example of inappropriate processing from my own experience relates to surface finishes that required components to be moved to grinders for completion, when in fact such finishes served no purpose. A basic principle of the TPS is doing only what is appropriate. 7. Inventory The element that Western industry immediately focused upon when confronted with JIT was the cost reduction available from holding less inventory. The fact that the initial factfinding trips to Japan took place when interest rates were at breathtakingly high levels (my own mortgage was at 15%) perhaps contributed to our failing to see the other costs that Ohno had considered in his own interpretation. We now know that stock hides problems and that problems are pearls in that finding a problem is a good thing - now we can solve it, which we couldn't until it came to light! Kanban Systems This article describes the 8 types of Kanban system available and what you need to do to choose, design, implement, and operate Kanban systems, size buffer stocks (the number of Kanbans), choose containers and signalling mechanisms. It shows the need to integrate the system with your planning systems. It includes the impact on people, accounting, materials handling systems and some important do's and don'ts. This type of system belongs to a category of materials management systems called "pull" systems. (See Materials Management & Stock Control.)

Types of Kanban Systems You may previously have thought that there was only one, or maybe two types of Kanban system! In fact there are 6 main types, (plus two significant variants), (excluding 2 bin & 3 bin systems) and here they are:

One card systems

In the above diagram: A signal is sent back from the consuming process to supplying process (or supplier). This is a signal: a. To send some more (a transfer batch), via a buffer stock. b. To produce some more (a process batch), at the supplying work centre. NB. Empty containers acting as a signal are a potential hazard as any empty container is a signal to fill it. Also occasionally containers have been known to go missing! Usually, for these reasons, the signal is separated from the container. Input / Output Control Kanban (Two variants) Sometimes called the ConWip (constant work in process) system, this type imposes input / output control, where the signal travels directly from the end of a line or section to the preceding section or raw material stores. In this case the supply chain is treated as one unit rather than a series of linked operations. So, as one transfer batch is completed (output) another is launched on the first operation (input), thus ensuring that work in process cannot build up. However there are some special considerations required in the operation of the system, to avoid hidden capacity problems, which are not so clearly visible when this method is used. We have used adaptations of this system to manage workflow and capacity rather than materials in a number of environments including job shop & clerical / technical process environments.

Kanban Accumulator In this method Kanban signals are allowed to accumulate at the supplying work centre until the production batch size is reached. In this case buffers can be depleted or exhausted depending on the accumulation rules. Also because buffers can be exhausted, slightly higher mixes can be accommodated. Dual Card System (2 Card System) (Two variants) First used by Toyota, there are in fact now two types of two card system. The first method separates the replenishment (send some) signal, which is produced from the Kanban system, from the "produce" signal, which is produced by a scheduling system such as MRP. The purpose of each of the cards is as follows:
y The scheduling system says which job is next. y The Kanban says make it now. (I need some.)

The second variant of this method generates the second card (after authorisation) as a result of one or more replenishment requests in a similar way to Kanban accumulators above. These methods can deal with higher mixes. They can also deal with larger batch sizes, caused by long changeovers, where scheduling is necessary, although you should be trying to reduce batch sizes (See Previous Technique: T019 Avoiding set ups and Reducing Changeover Times). In this case the buffer is depleted, and can be exhausted. In addition a longer planning system such as MRP1 (See "Levels of Planning & Control") is also necessary to that the system is durable. Kanban systems operate at level 3 in this model. Variable Quantity (fixed frequency) System In some situations it is more convenient to replenish items used, by fixed frequency deliveries (or collections), rather than respond to fixed quantity replenishment requests. This method forms the basis of supplier "top up at point of use" systems, where a supplier visiting your point of use will top up stocks to a predefined maximum level. We have also used this method as the mechanism to drive "replacement systems" for maintaining stocks of critical spares items or maintaining "van stock" for on-the-road service engineers.