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A Critical Evaluation of Operations Management in a Manufacturing Company

in Sri Lanka: A Case Study

Technical Report · July 2018

DOI: 10.13140/RG.2.2.12794.13766

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 A Critical Evaluation of Operations Management in a
Manufacturing Company in Sri Lanka: A Case Study

Subasgar Kumareswaran
University of Wolverhampton Business School; E-mail: S.Kumareswaran@wlv.ac.uk

1. INTRODUCTION

This case study report is prepared to understand the role and importance of the operations
management concepts at ABC Company in Sri Lanka. Operations management is one of the
core areas of business to deliver great quality of products or services based on the customer
requirement with limited resources, minimum cost and maximum profit. Therefore, this study
will help to ABC Company to recap their operations management activities and also to acquire
the theoretical and practical knowledge about the operation management concepts. Here, ABC
Company which is one of the manufacturing facilities of XYZ multinational corporation
(MNC), is an industrial glove manufacturing company in Sri Lanka.

1.1 Purpose of the case study

According to author’s observation and company’s last decade of data, the company’s
performance is getting sudden decline in unexpected way in the last two years after changing
of top management, and making of some strategic decisions by shareholders. Here, they have
taken a strategic decision to product transfer from other business units to ABC Company. In
addition, they have implemented SAP ERP real time workflow conformation at each and every
stage of the business processes. It has created a major disaster to entre XYZ group and now
they are recovering performance of ABC Company back in the field by getting support from
sister companies. If the situation continues with same trend which will leads to loss of valuable
customers and reputation of the group. Therefore it is a very disheartening time not only for
sale and marketing teams but also each and every employee of the company.

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 1 of 27
In this case study, three areas of operations management concept are critically evaluated in
relation to the situation of ABC Company. Those are capacity planning, process design, and
Enterprise resource planning. In addition, project management concept is critically evaluated
with suggested strategic project and plan to ABC Company to overcome from the current
operations management issues.

2 CAPACITY PLANNING

2.1 Critique of capacity planning

Managing the capacity of an operation is very complicated and important art of business
science to fulfil the customer demands with limited resources at the given time period.
According to Slack, Brandon-Jones and Johnston (2013), the capacity of an operation is defined
as “the maximum level of value-added activity over a period of time that the process can
achieve under normal operating conditions”. That is why proper capacity planning and control
are significantly influencing in organization’s operational efficiency and fundamental decision
making processes. Capacity, demand, supply and forecasting should be considered in effective
manner in successful capacity planning process (Paton et al., 2011).

Defining and measuring the capacity is the initial step of capacity planning but studies argue
that there is difficulty due to the complexity of most operations, different interpretations of the
term capacity, and their measuring units (Slack, Brandon-Jones and Johnston, 2013; Stevenson,
2002). However capacity can be defined as design capacity and effective capacity. Here design
capacity is meant by maximum output that can be possibly achievable; effective capacity is
getting maximum possible output with supporting activity barriers such as product changeover,
machine maintenance, quality issues and so on (Stevenson, 2002). Both design capacity and
effective capacity are considered when capacity planning in terms of utilization and efficiency.
Nowadays the overall equipment effectiveness (OEE) is also getting more popular in
measuring the operations equipment in terms of time, quality, and speed (Slack, Brandon-Jones
and Johnston, 2013). Therefore defining and measuring the capacity help to find out the
capacity bottleneck and successful capacity planning.

Capacity planning framework mainly depends on understanding of demand and changing

market conditions to estimate the current and future capacity requirement (Mahadevan, 2009).
Mainly demand can be into two broad categories which are dependent and independent
demand. But responding to the demand is a tough strategic planning process with limited

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 2 of 27
capacity in terms of resource-to-order, make-to-order, and make-to-stock (Proud, 2013;
Wallace and Stahl, 2003). According to Paton et al. (2011), organizations have mainly three
strategic choices such as capacity leads demand, capacity matches demand, and capacity lags
demand strategy in the capacity planning and controlling process. Anyhow demand forecasting
is a necessary process to make successful capacity planning decisions.

Demand fluctuations are unavoidable and in these situations organizations need to respond in
the way of level capacity plan, chase demand plan, or demand management (Slack, Brandon-
Jones and Johnston, 2013). In the manufacturing environment, level capacity plan is considered
as traditional and most appropriate strategy but some organizations select chase demand plan
which attempts to adjust rapidly to the changing conditions with limitation barriers of
manpower, equipment, material, and so on (Robinson, 2009). Slack, Brandon-Jones and
Johnston (2013) suggest some methods of adjusting capacity when approach chase demand
plan; those are overtime and idle time, varying the size of the workforce, using part-time staff,
and subcontracting methods which help to do rapid respond to demand fluctuations.

2.2 Application of capacity planning

ABC Company is manufacturing industrial supported gloves and producing more than 100
verities of products with 13 production plants for more than 100 customers. It has a planning
department for the capacity planning and management activities. They are setting capacity
levels over the short term in aggregated term and responding to demand in way of resource-to-
order. ABC Company has adapted to SAP enterprise resource planning (ERP) system and they
are doing all the capacity planning activities through the SAP ERP with high transparency and
on-time actual data. Anyhow recent last two years, ABC Company is facing lots of capacity
planning issues and struggling with on time product delivery mainly after taking some strategic
decisions on products transfer within business units of XYZ group as discussed earlier section.

ABC Company has glove production design capacity around 9,000 dozen pairs per day with
target overall equipment effectiveness (OEE) around 70%. But based on top management
decision, completely new set of high value products were transferred to ABC Company from
another sister company. Those products have customer demand around 1,500 dozen pairs per
day with more than 20 varieties of products and value added packing methods. Due to
overestimation of their packing capacity, ABC Company management didn’t much think about
methods of adjusting capacity of packing. In addition, the management had given high priority

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 3 of 27
to transferred high value products meanwhile they didn’t focus on existing high volume
products as it is earlier. It has led to lots of capacity planning and control issues for last two
years such as accumulation of work in process (WIP), on-time product delivery, over-
utilization of production plants, additional product change-over, plant down-time, high reject,
high rework, process control issues, quality issues, manpower issues, and stress on employees.
In last year, ABC Company got many customer complains due to delay delivery of products
and quality of value-added products. It may lead to loss of valuable customers and reputation
of XYZ group brand if it is continuing in same way.

Now, ABC Company is forced to follow-up high risk chase demand level strategy with
methods of adjusting packing capacity like out-sourcing, over-time, extra-work force, and so
on. Meanwhile top management has decided to again transfer some of the products to other
business units to reduce the pressure on ABC Company and now they have started to build a
new building with high tech modern dipping plant and automated online packing line to
overcome this capacity issues.

2.3 Recommendations

Currently, the bottleneck of the capacity of ABC Company is packing capacity; therefore,
management should focus on expansion of packing capacity which will stop unwanted cash
flow out of the business unit due to outsourcing and subcontracting. ABC Company should
follow the pull manufacturing strategy to overcome from the accumulation of work in process
(WIP) which will lead to smooth production flow. They should give priority in capacity
planning activities not only to high value products but also to high volume products otherwise
it may create unexpected in-process inventory, customer complains, and wastes.

The effective capacity of each production units should be measured in a systematic way instead
of approximation from design capacity. Currently, ABC Company is not following proper
forecasting technique in capacity planning activities and just responding to demand in way of
resource-to-order meanwhile they have excess forecasting facilities. Therefore, they should
strictly follow appropriate forecasting method to overcome fluctuation of demand and supply
issues in capacity planning activities.

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 4 of 27
2.4 Role of IS in supporting the operations

The main objective of the information system (IS) is providing quality information to managers
and stakeholders to make better decisions in planning, foresting, monitoring and controlling of
business activities (Olumoye, 2013). According to Wang et al. (2015) quality information
should have some specific qualities such as relevance, timeliness, understandability,
comparability, accuracy, completeness, neutrality, meaningful, effectiveness, and efficiency.
However information system can be classified as transaction processing system (TPS),
management information systems (MIS), executive information system (EIS), decision support
systems (DSS), expert systems (ES), and so on (Brown, 2012; Olumoye, 2013). MIS, DSS and
TPS are directly deal with capacity planning activities (O'Brien and Marakas, 2011; Olumoye,
2013). Hare management information system (MIS) is providing weekly, monthly, and yearly
reports in related to budget fore-casting reports, inventory reports, production scheduling
reports, sales forecasting and sales reports. In addition, transaction processing system (TPS) is
doing daily transection of the organization in related to payroll systems, purchase and sales
order entry systems, and stock control systems. According to Brown (2012), decision support
system (DSS) is helping in terms of capacity planning, production scheduling system, and a
capital investment decision system.

ABC Company has SAP enterprise resource planning system in order to do capacity planning
activities in successful decision making way of strategic, tactical, and operational. TPS, MIS,
and DSS functions are integrated with SAP ERP system which helps operations managers to
take appropriate decision in daily, monthly, and yearly planning at ABC Company. In capacity
planning activities, MIS is doing great role in making daily decisions, monitoring, and control
the organization activities by middle level operations managers. MIS helps to managers by
providing demand forecasting and production scheduling reports but still ABC Company is
struggling in proper capacity planning and its execution as discussed in application of capacity
planning section.

Information gaps between shop-floor management to top-floor management have created lots
of unsuccessful decision as example; products were transferred to ABC Company without
adjusting dipping and packing capacity; most of the decision made with design capacity instead
of effective capacity with chase demand level strategy. Therefore, ABC Company should more
focus in integration of shop-floor to top-floor activities in efficient ways. Because, traditional
shop management processes are manual and time intensive that is why information to top-floor

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 5 of 27
from shop-floor is getting delay, subject to human error and interpretation. It can lead to wrong
decision making by top management. Decision support systems (DSS) and expert systems (ES)
should be improved at ABC Company to make better capacity planning decisions in way of
retrieving and analyzing data with complex mathematical models, and human expertise and
knowledge in particular area of expertise.

3 PROCESS DESIGN

3.1 Critique of process design

Slack, Brandon-Jones and Johnston (2013) defines that “design is the activity which shapes the
physical form and purpose of both products and services and the processes that produce them”.
The design can be a Process, Innovation of product and service, Supply network, Layout and
flow, Process technology, People, jobs and organization design. The process is getting different
meaning in context of its use however the business process is meant by how something is done
in an organization (Laguna and Marklund, 2013). Therefore, process design is a most important
functional long term concept which is deciding success and failure of the operations mean
while it directly influences on product design, capacity planning, forecasting, layout of
facilities and other operations (Stevenson, 2002).

Design of the process is varying organization to organization with their business strategy and
their market segment conditions. Anyhow literature defines some of process design objectives
such as quality, speed, flexibility, cost, and dependability (Brown et al., 2001; Slack, Brandon-
Jones and Johnston, 2013; Stevenson, 2002). Commonly process design can be a project
process, jobbing process, batch process, mass process, and continuous process in product
manufacturing environment. But process design selection is related to process task, process
flow, volume and variety of the demand in market for the particular industry (Brown et al.,
2001). These selection factors’ relationships are commonly illustrated by product– process
matrix. According to Slack, Brandon-Jones and Johnston (2013), moving off from the natural
diagonal or line of fit in the product– process matrix will incur excess cost while creating
operations management issues as illustrated in Figure 1. Therefore, point out the required
process on the product– process matrix will give clear business strategic process design.

After strategic overall process design, details process design is systematic and analytical
approach to identify all the individual activities such as process mapping, throughput time,
cycle time and work in progress which are helping to achieve the main process objectives

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 6 of 27
(Slack, Brandon-Jones and Johnston, 2013). According to Hunt (1996), process mapping is an
analytical and communication tool to improve existing process or implement new process to
re-engineering the organization’s business process. It gives clear picture of flow of work,
information, customer, and materials through the organization meanwhile express the reality
of process behaviour (Brown et al., 2001; Slack, Brandon-Jones and Johnston, 2013). In
addition, process visibility through the process mapping helps to process thinking, process
management, process improvement, and control activities.

Figure 1: The product–process matrix with the natural diagonal line (Slack, Brandon-Jones
and Johnston, 2013)

As discussed theoretical concepts, literatures give more important to focus on analytical and
mathematical view in process design. Throughput time, cycle time and work in progress are
helping to numerically measure the performance of processes (Barnes, 2017). In 1961, MIT
Professor John D. Little published with proof a theoretical relationship between throughput
time, cycle time and work in progress called as Little’s Law (Barnes, 2017; Little, 1961). It is
a simple law but gives more impact on process design, process control and capacity planning
in an organization. Process variability is significantly effect on performance of the process and

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 7 of 27
it creates operation issues such as reworks, rejects, quality of the product, down time, wastes,
production scheduling issues, work in progress (WIP), utilization, and so on (Krajewski,
Malhotra and Ritzman, 2007; Slack, Brandon-Jones and Johnston, 2013; Stevenson, 2007). To
overcome from these process variability issues, nowadays many tools and concepts are used to
standardize and improve the process such as Lean manufacturing, Six Sigma, Total Quality
Management, ISO 9000 and so on.

3.2 Application of process design

Through the strategic decision by top management completely new set of products were
transferred to ABC Company from its one of the sister company as discussed deeply in earlier
section: capacity planning. It has created biggest challenge to ABC Company in term of process
design from top to bottom to meet better business based on the design objectives of quality,
speed, flexibility, cost, and dependability. ABC Company faced process design issues through
the history due to high varieties of product; anyhow they have managed by mass production
because of significant demand. But, after transferring the new products, they are still facing
process barriers in adopting with existing machineries, technology, and human resource.

In addition, now the transferred products are produced with high varieties and batch
manufacturing process types. According to the product– process matrix, it is moving off from
the natural diagonal or line of fit, which can create more cost in the manufacturing process and
reduce the product’s profit margin. There are significant process variability in the designed
process lead to high rejects and reworks which are creating most of capacity planning issues
and accumulation of work in progress (WIP). Last year, ABC Company got many customers
complain related to product quality issues and on-time product delivery issues due to some of
process design errors.

However, now ABC Company has implemented lean six sigma approaches to control and
improve the existing processes. Moreover, already they have adapted to ISO 9001 quality
management system in order to standardize all the processes in systematic way. Based on some
strategic decisions, some product has been transferred from ABC Company to other business
units to reduce the high varieties of products. In this year, some new process and manufacturing
technologies has been introduced in order to reduce the process variability such as robotic
technology for dipping process, completely automated mass production dipping plant, and
online automated packing technology.

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 8 of 27
3.3 Recommendations

ABC Company should re-validate, re-design, and standardize the processes which have high
process variability, rejects, and reworks. It can help in on-time deliveries of products, avoiding
rescheduling, and zero in-process inventory. By using detailed process mapping, analytical,
and statistical methods they should eliminate the process wastes in terms of in-process delays,
in-process errors, inappropriate process inputs, excess process capability, and excess capacity.
ABC Company should find out the bottleneck process and attack that by proper strategic move
to avoid work in process (WIP) which can help to overcome company’s most of the operations
management issues.

In traditional glove manufacturing processes use lots of hazardous chemical and consume high
heat energy which can impact on company’s sustainably in terms of employee’s health
concerns, water pollution, and greenhouse gas emissions. Therefore, ABC Company should
focus on sustainable process design in terms of social, environmental and financial to adapt to
green business strategy.

3.4 Role of IS in process design

Information system (IS) can support in business process in way of process design and process
optimization. Detailed external and internal information will help to successful process design
(Slack, Brandon-Jones and Johnston, 2013). Information system is processing the data into
information in way of data collection, data evaluation, data analysis, data interpretation, and
data reporting (Perry, 2009). Transaction processing system (TPS) supports process design
activities and routine operations of process control by providing basic data to management
information systems (MIS) and decision support systems (DSS). Here TPS can be classified as
batch transaction processing system and online transaction processing. Stair and Reynolds
(2010) defines that batch transaction processing system is a “form of data processing where
business transactions are accumulated over a period of time and prepared for processing as a
single unit or batch”. It will make delay in decision making which leads to lots of operations
issues like process variability, rejects, reworks, and so on.

Still ABC Company is following batch transaction processing system in case of process design
and control data inputs. It makes more difficulties in making on-time decision by operations
mangers and process optimization. Therefore, ABC Company should implement online
transaction processing system to get accurate data at on-time. External information

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 9 of 27
significantly impaction on process designs; those are competitor product information, market
trends and analysis competitor’s prices, competitors wage levels, industry production levels,
competitors share prices and trends. But, ABC Company doesn’t have any proper information
system to collect external information. Hence, ABC Company should focus on their internal
and external information collection and they should redesign some of their products which are
deviate from theoretical process design concepts and having high process variability quality
issues.

Currently, ABC Company has new product/process development stage gate procedure which
should be modified through strong information system to transferred information to top-
management team. ABC Company has executive information system (EIS) which can help to
strategic process design and control activities in term of tracking key performance indicators
(KPIs). Anyhow, ABC Company has great fundamental structure of integrated information
system (IS) through SAP ERP system. They should utilize the all the function of SAP ERP
system in efficient manner.

4 ERP AND MRP SYSTEMS

4.1 Critique of ERP and MRP systems

Enterprise Resource Planning (ERP) is a core computer program system which is used to
integrate and coordinate the information from every functional area of the business in an
organization (Monk and Wagner, 2013). It is an extended version of Material requirements
planning (MRP). MRP is a system which is used to production planning, inventory control, and
scheduling activities. It was introduced in 1960s for bill of material processing (Wallace and
Kremzar, 2001). In success of MRP was expanded in 1980s as manufacturing resource
planning (MRP II) and then technology innovation allowed to extend as ERP system (Slack,
Brandon-Jones and Johnston, 2013). In addition the exponential growth of internet and
technology now lead to new form of ERP which is called as web-integrated enterprise resource
planning.

MRP has three major input information which are master production schedules (MPS), bill of
materials (BOM), and inventory records (Stevenson, 2002). Slack, Brandon-Jones and
Johnston (2013) defines the master production schedules as “time-phased records of each end
product, which contain a statement of demand and currently available stock of each finished
item”. Bill of materials is a list of the materials and quantities needed to make a product (Monk

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 10 of 27
and Wagner, 2013). Literatures reveal that MRP is a dependent demand system and it allows
to easy material and production planning with known demand and forecast demand (Brown et
al., 2001; Slack, Brandon-Jones and Johnston, 2013; Stevenson, 2002). In addition demand
fluctuations can be handled easily in the strategic way of level capacity plan and chase demand
plan by MRP system. As output of MRP, production and inventory planning and control reports
are primary output which helps to authorization of release, change, revision, cancellation of
orders. Moreover performance control, planning, and exceptions reports are secondary output
which helps to identify deviations from plans and cost information, assessing future material
requirements, identify discrepancies encountered (Stevenson, 2002).

Enterprise resource planning (ERP) is latest and more advance functional integrated system
with MRP philosophical concepts. It gives on-time complete transparency of data on each and
every functional activities of the business including data of human resource, finance, customer,
supplier, operations, and so on (Wallace and Kremzar, 2001). Anyhow, literatures argue that
advantages and drawbacks of implementation of ERP are varying with micro small and
medium enterprises and their traditional operations activities (Bradford, 2015; Monk and
Wagner, 2013; Wallace and Kremzar, 2001). The main advantages of ERP system are timely
data, improved decision making, integrated business activities, and inconsistency free data
(Bradford, 2015). However ERP system is a luxury and untouchable target due to high
implementation cost for most of the small and medium companies. Nowadays web-integrated
ERP is offering potential benefits to organizations to link up with outside world in terms of
internet-based trading or e-commerce (Slack, Brandon-Jones and Johnston, 2013).

4.2 Application of ERP/MRP systems

Implementation process of SAP enterprise resource planning system has been started six years
ago at ABC Company but still struggling with plenty of practical issues meanwhile getting
significant advantages. Two years back, ERP team have implemented real-time workflow
conformation in each step of the manufacturing process in terms of raw-material (RM), semi-
finished good (SFG), and finished good (FG). But, last year stock count showed huge
difference between actual stock and system generated report. In addition, down-time, work-in-
progress (WIP), production rescheduling, and on-time products delivery issues are created due
to real stock unavailability of RM, SFG, and FG while ERP system was showing enough stock
availability. These are created big arguments and strategic decision makings among top-
management personnel.

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 11 of 27
After that SAP team conducted a root cause analysis then they have realized the actual issues.
Those are lots of material consumptions are not matched with system data due to high process
variability in the production plants; manual processing without ERP confirmation due to
irresponsibility and poor understanding of ERP system; module access issues and inflexibility
of the system let to worker in stress and encourage to do manual process. Anyhow, ABC
Company is doing huge investment on SAP ERP maintenance and series of training after this
unforgettable experience. Now, ABC Company is able to react better to any unforeseen
problem or situation with help of ERP system.

4.3 Recommendations

As defects troubleshooting activities to control the rejects and reworks, still most of the
chemical processes are redesign which can impact on consumption of materials. Therefore,
SAP team should update input of bill of material (BOM) in regular basis to make sure actual
workflow. In addition, ABC Company should perform to delete and archival of old system
data in way of improving SAP ERP system. At the moment, most of the employees are
performing SAP ERP function with lack of system knowledge due to insufficient training and
skill development. Therefore, ABC Company should give proper training in regular basis
meanwhile they are facing issues with knowledge erosion problem due to high employee
turnover.

Still most of the employees couldn’t access required data modules and its conformation
authority when some employee access unwanted data. Hence, SAP ERP maintenance team
should consider these issues and make sure in proper way of assigning of data module access
and more flexibility of the system. ABC Company should focus on implementation of sale
orders and purchase orders tracking system which can help to smooth and better customer and
supplier relationship.

4.4 Role of IS in ERP/MRP systems

More information and good communication make successful business management with less
cost, fast product delivery, high quality, and required product variety (Uçaktürk and Villard,
2013). Enterprise systems are occupying the today’s business world by intergrading all the
business functional information. According to Stair and Reynolds (2010), an enterprise system
is defines as “central to an organization and ensures that information can be shared across all
business functions and all levels of management to support the running and managing of a

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 12 of 27
business”. The enterprise system can be divided into mainly two sections which are transaction
processing systems (TPS) and enterprise resource planning (ERP) (Stair and Reynolds, 2010).
Here ERP system is doing main role in information system (IS) by intergrading all basic
business functions and its information such as production, finance, marketing, and human
resources management. That is why the primary benefit of implementation of ERP system is
to access improved information from raw data for operational decision making, elimination of
inefficient or outdated systems, improvement of work processes, and technology
standardization (Slack, Brandon-Jones and Johnston, 2013; Stair and Reynolds, 2010).

Three years ago, ABC Company implemented SAP Success Factor (SAP-SF) which is
executive information system (EIS) is helping to senior level managers with strategic-level
information through key performance indicators (KPIs). But still there are lots of practical
issues with performance appraisal system, objective settings, and attendant system. But, payroll
system is still running as separate function without integrating with SAP ERP.

Management information systems (MIS) and decision support systems (DSS) are already part
of SAP ERP and those are functioning well. Anyhow, ABC Company should encourage to on-
time workflow conformation or online transaction processing approach instead of traditional
batch transaction processing approach. It will help to make successful decision by operations
mangers by on-time real information. Therefore, ABC Company should focus on automate
workflows using intelligent automation technologies. ERP system is giving a benefit is
elimination of separate systems and replaces them with a single but ABC Company has many
duplicate data under different T-codes. Therefore, ABC Company’s SAP team should make
well by continuous improvement process. The great sign of ABC Company is adoption of SAP
ERP system meanwhile they should upgrade of technology infrastructure such as hardware,
operating systems, databases, etc. to give better inputs, to get improved pack of information,
and to use all functions of SAP ERP.

5 PROJECT MANAGEMENT

5.1 Introduction to project

ABC Company is expecting to complete the empty building of new production facility in July,
2018. ABC Company’s top management has decided to build a new production facility with a
butterfly chain dipping plant, a robotic dipping plant, and online automated packing system to
overcome the capacity issues as discussed on previous sections. Therefore, from the August

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 13 of 27
onwards they can initiate above mentioned three projects all together or one after one. In this
case study is going to discuss about installation of robotic dipping plant project in the new
building of ABC Company.

The main objective of this project is to automate the manual dipping plants by using robotic
technology. It can increase the productivity and quality for highly complex processes
meanwhile it will reduce the labour cost and process variability due to human error. Therefore,
this kind of automated robotic technology has huge scope not only for to overcome current
ABC Company’s issues but also help to face threat of competitors in future manufacturing. The
project should be completed with required technology and high quality within approved budget
and given timeframe. The project will take approximately four months, around half million
USD budget, and significant company’s employee resources with project team. The detailed
project plan is attached with Appendix section.

5.2 Project and its relations to strategy

A project is a set of activities with defined start, end, and set of resources to achieve defined
goal (Slack, Brandon-Jones and Johnston, 2013). According to Kerzner (2009), Project
management is defined as “the art of creating the illusion that any outcome is the result of a
series of predetermined, deliberate acts when, in fact, it was dumb luck”. Therefore success
full project management will achieve the strategic objectives of the projects with defined
quality, budget, and time. When defining the strategic objectives and planning of the project,
organizations are mainly considering the market demand, strategic opportunity, customer
request, technological advance, and legal requirements (Project Management Institute, 2008).

ABC Company has taken strategic decision to install an automated robotic dipping plant as
part of capacity adjustment to overcome operations management issues as discussed previous
sections. The strategic objectives of this project are not concern with high-volume but high
profitability and variety by the conversion of robotic automation from manual dipping process.
Through this strategic objectives, ABC Company can overcome from most of the operations
management issues such as capacity planning issues, process design issues, process variability
issues, quality issues, manpower issues, and health & safety issues.

Unfortunately, ABC Company’s project team should overcoming obstacles of this project such
as project complexity, project risk and uncertainty, changes in technology, and forward
planning and pricing (Kerzner, 2009). Therefore they should follow proper project

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 14 of 27
management techniques in way of project planning and controlling. Anyhow, there are plenty
of project management tools in the market to achieve the project’s strategic objectives in
systematic and safe way.

5.3 Project Plan

In order to achieve the project objectives, series of activities and tasks should be completed in
systematic management way. That is why project management involves mainly in five
processes such as initiation, planning, execution, monitoring and control, and closure (Project
Management Institute, 2008). However Slack, Brandon-Jones and Johnston (2013) defines the
stages of project management in more descriptive terms such as understanding the project
environment, defining the project, project planning, technical execution, and project control.

First of all, project environmental factors should be considered to effective project management
process in terms of geo-social environment, economy-political environment, business
environment, and internal environment (Slack, Brandon-Jones and Johnston, 2013). The
second stage of the project management is project definition which should be defined in terms
of objectives, scope, and strategy. Then after, project planning is the very important and
challengeable process in project management. It should do for mainly four reasons such as to
eliminate or reduce uncertainty, to improve efficiency of the operation, to obtain a better
understanding of the objectives, and to provide a basis for monitoring and controlling work
(Kerzner, 2009).

After the technical execution, the project control is playing a significant role in project
management. It involves mainly in three sets of decisions such as monitor, assess the
performance, and intervene (Slack, Brandon-Jones and Johnston, 2013). Network planning and
Gantt charts are popular project planning techniques which are used to assessing of project
duration and individual activities within the project. Henry Gantt first utilized the Gantt chart
in the early 1900s (Kerzner, 2009). Nowadays it is most commonly used project management
tool in project planning activities.

ABC Company’s project team will understand the project environment in the initial stage of
the project. Because, all the projects have stakeholders with different interests and priorities
that can lead to objections and problems later in the project if not understand the power and
interest of the stakeholders (Slack, Brandon-Jones and Johnston, 2013). Therefore, project team
will clearly explain the benefits of this project to key stakeholders meanwhile stakeholders

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 15 of 27
should explain their business requirements to the project team and provide the resources to
successful completion. Then after, project will be defined in proper manner with full support
of powerful key stakeholders in terms of its objectives, scope, and strategy (Kerzner, 2009).

The objective will be clearly defined with quality, speed, dependability, flexibility and cost as
discussed in previous sections. In addition, project control activities will be defined in terms of
how to monitor the project, how to assess the performance of the project, and how to intervene
in the project (Slack, Brandon-Jones and Johnston, 2013). Scope, scheduling, resource, and
technology Risks will be identified with help of risk professional, in addition effective risk
mitigation planning and strategies will be set in terms of avoid, accept, reduce, control, or
transfer (Hillson, 2009).

After agreeing on objectives and execution plan of the project, the data collection of existing
manual dipping process, site visit, preparation of robotic dipping plant layout, and defining of
appropriate suppliers will be carried out in order with help of technical experts. The project
approvals are very important and a legal process to commence the project activities. First of all
need to take approval from top management of XYZ group and ABC Company then after other
stakeholders such as government authorities, professional authorising bodies, social bodies,
and so on. In the glove manufacturing process, there are lots of hazardous chemicals are used;
therefore, ABC Company’s project team must get approvals from Environment, health and
safety (EHS) authorising bodies.

The successful project management is heavily depends on individuals and leaders who are
managing the key functional activities of the project. Kerzner (2009) is categorizing top ten
skills for effective project management; those are team building, leadership, conflict resolution,
technical expertise, planning, organization, entrepreneurship, administration, management
support, and resource allocation. Therefore, staffing is very important and sensible process in
project management. Get down the plant and equipment will be executed with support of ABC
Company’s supply chain management department as per company policy. Anyhow, at the same
staffing process, get down the plant and equipment, and get down other raw material will be
conducted by project team in order to complete project initiation activities. As mentioned in
Appendix project plan, project initiation activities will take around two month time scale.

In the development stage of the project plan, concrete flooring as per layout, plant installation,
wiring, electric power supply, heating thermic oil supply, utilities instalment and other

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 16 of 27
construction activities will be conducted with around one month time scale. In this period,
majority of labour intensive work is undertaken for activities which are mentioned above. The
network analysis technique will be used to efficient project planning for day-to-day project
control activities (Slack, Brandon-Jones and Johnston, 2013). Programme evaluation and
review technique (PERT) will be used to effective and optimistic calculation of duration and
cost.

Then after, plant commissioning, production process design, trial production, environment,
health and safety (EHS) internal audit, and quality assurance and control design will be
conducted in order as operational activities. As part of completion of operation activities, plant
validation will be conducted and each and every process will be documented in systematic way.
All the layout, process, and documentation will be design to compliant company’s production
management strategies such as lean six sigma, ISO 9001, ISO 14001, and OHSAS 18001.

Finally, plant launch and project sign-off process will be conducted by ABC Company project
team. Here, plant launch process will be included production planning, plant launch,
monitoring, and handover to production team. Then as final step of project life cycle, project
sign-off process will be conducted in way of complete schedule and plan, complete project
close checklist, conduct project close meeting, secure approval and sign-off, and recognize and
celebrate (Baxter, 2015).

5.4 Challenges to Project Management

The biggest challenge of the project management is to identify and manage the potential risks
such as delays, increased costs, and an inability to meet technical specifications (Stevenson,
2002). Kerzner (2009) defines that “risk is a measure of the probability and consequence of not
achieving a defined project goal”. Risk can change the way of project plan towards
unsuccessful output but also in some case it can lead to termination of project. Most of the risks
are occurring in the beginning of the project and getting lower in the end of the project but
financial related risk is occurring in opposite way as getting highest near the end of the project
(Stevenson, 2002). Therefore, proper risk management is important in project management in
way of plan risk management, identify risks, perform qualitative risk analysis, perform
quantitative risk analysis, plan risk responses, and monitor and control risk (Project
Management Institute, 2008).

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 17 of 27
Grey (2007) argues that there are several methods are used in project risk management but
most of them are fit into six categories; those are informal direct assessment of risks, checklists,
risk indicator scales, structured brainstorming and evaluation, probability, probabilistic
modeling of costs, schedules and cash flows. Therefore risk should be identify in each and
every stage of the project and risk mitigation plan should be defines based on avoid, accept,
reduce, control, or transfer (Hillson, 2009).

In this case study, technology and engineering risk will be significant in the stage of
commissioning operation such as equipment design, automation alignment and robotic tune-
up. Because of robotic and automation are new technology and no previous experiences to
XYZ group and ABC Company. Therefore, in the commissioning stage may take long time
scale, high manpower cost, and other financial risk due to series of equipment and process
modification to achieve required specifications. It should be solved in the beginning of the
project by proper risk management with help of technical experts.

Another major risk is to get down the materials such as plant, equipment, and other raw
materials on time. Because, most of the defined suppliers are from out of the country; it may
lead to change of project plan due to delay in receiving goods. In this project, most of the
equipment are assembled semi-finished-goods with high technology therefore local staffs need
time to learn equipment and re-modify to fit with process design. In addition, there are lots of
challenges in process design by converting manual dipping plant related to human skills and
sense to automation robotic mechanism. ABC Company’s finance team should help project
team in case of financial risk management planning. In addition, they should do project risk
insurance on both pre and post plant installation phases to overcome from high risks.

Therefore systematic brainstorming and evaluation is the best way to identify the risk and
understand its impact to do strategic decisions in risk management. In addition, carefully
planned and executed workshop process will help to avoid risk and uncertainty (Grey, 2007).
In another way, frequency monitoring and analysis through the project life cycle will help to
identify the risk in the initial stage and to eliminate before destroying the project plan and
objectives. Therefore, ABC Company’s project team should do proper risk analysis and take
decisions in terms of certainty, risk, and uncertainty, otherwise wrong decision leads to another
way of challenges.

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 18 of 27
5.5 Project Evaluation

The evaluation is defined as “the systematic and objective assessment of an on-going or

completed project, programme or policy, its design, implementation and results” (European
Communities, 2006). According to Anbari (1985), system approach to evaluate the project
through the life cycle can have four elements such as input, process, output, and feedback. Here
input can be physical, human, and conceptual resources; process can be scope, time, cost,
quality, human resources; output can be a product; and feedback can be communications and
lessons learned. Anyhow, Thomas (2015) expresses that there are mainly six categories of
evaluations which are project, product, program, policy, process, and performance evaluations.

However evaluation of a project comes down into mainly two questions which are what are the
desired outcomes of your project? How will you measure them? (Public Safety Canada, 2015).
Anyhow according to Cooke and Tate (2011), evaluation can be done based on functional area
such as executive management can evaluate about strategic results and future preparation;
financial management can evaluate about financial resource and control; operating officers can
evaluate about efficiency in term of resource utilization; divisional managers can evaluate
about project delivers on expectations; and service manager can evaluate in terms of
compliance with organizational policy.

In this case study, project close down evaluation will be conducted based on project objectives
by project team and top management of ABC Company in terms of quality, cost, and time. In
addition product and process evaluation will be conducted by process control team at the end
of the project in terms of quality, speed, dependability, flexibility and cost. Furthermore policy
evaluation will be conducted by quality assurance team at the end of the project life cycle in
terms of lean manufacturing, six sigma, TQM, ISO 9001, ISO 14001, and OHSAS 18001. In
addition every stage of the project, various evaluations will be conducted to make sure smooth
execution of project plan.

In addition, post project reviews will be conducted on annual basis by project team to evaluate
the benefit of the project in the business. Finally, the strategic objective of this project will be
evaluated by operations management team through the years in way of process variability,
capacity issues, and quality issues as discussed in previous sections. This will encourage
stakeholder and give confident to shareholders of the company.

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 19 of 27
6 CONCLUSION

Hope this case study will help to improve the company’s performance in some case in future.
The core issue of this case is; after taking some strategic decision by company’s top
management, company’s operational performance has been suddenly fallen in unexpected way
as last two years. Therefore, this case study is critically analyzing the actual issues in the
company in terms of operations management concepts. This case study mainly discusses about
capacity planning, process design, enterprise resource planning, project management, and
suggested strategic project plan. Anyhow, there are some limitations in getting quantitative
data from the company due to company’s policy. In addition, couldn’t conduct the study more
narratively to company’s process due to limited literatures and research works related to glove
manufacturing sector.

7 REFERENCE

Anbari, F. (1985) A systems approach to project evaluation. Project Management Journal,

16(3), pp.21–26.

Barnes, D. (2017) Operations management. London, UK: Palgrave.

Baxter, R. (2015) Project Management for Success Handbook. Naples, Florida: Value
generation partners.

Bradford, M. (2015) Modern ERP: Select, Implement, and Use Today's Advanced Business
Systems. Releigh, NC: Lulu.com.

Brown, C. (2012) Managing information technology. 7th ed. Upper Saddle River, N.J: Pearson
Prentice Hall.

Brown, S., Blackmon, K., Cousins, P. and Maylor, H. (2001) Operations management. Oxford
OX2 8DP: Butterworth-Heinemann.

Cooke, H. and Tate, K. (2011) Project management. 2nd ed. Maidenhead: McGraw-Hill
Professional.

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European Communities (2006) Evaluation methodology for European Commission's external
assistance. Luxembourg: EUR-OP.

Grey, S. (2007). Project risk management methods [online]. Pymble, Australia: Broadleaf
Capital International. [Accessed 19 July 2018]. Available at:
<http://broadleaf.com.au/old/pdfs/articles/Art_APM_ProjectRM.pdf>.

Hillson, D. (2009) Managing risk in projects. Surrey, England: Gower.

Hunt, V. (1996) Process mapping. New York: Wiley.

Kerzner, H. (2009) Project management. 10th ed. Hoboken, New Jersey: Wiley & Sons.

Krajewski, L., Malhotra, M. and Ritzman, L. (2007) Operations Management. 8th ed. Pearson
Education.

Laguna, M. and Marklund, J. (2013) Business process modeling, simulation and design. 2nd
ed. Boca Raton: CRC Press.

Little, J. (1961) A Proof for the Queuing Formula:L= λW. Operations Research, 9(3), pp.383-
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Mahadevan, B. (2009) Operations management. New Delhi: Published by Dorling Kindersley

(India), licensees of Pearson Education in South Asia.

Monk, E. and Wagner, B. (2013) Concepts in enterprise resource planning. 4th ed. New York:
Cengage Learning.

O'Brien, J. and Marakas, G. (2011) Management information systems. 10th ed. New York, NY:
McGraw-Hill/Irwin.

Olumoye, M. (2013) Impact Of Information Systems On Management Decision-Making In

The Nigerian Insurance Sector. International Journal of Scientific & Technology Research,
2(12).

Paton, S., Clegg, B., Juliana, H. and Pilkington, A. (2011) Operations management.
Maidenhead: McGraw-Hill Education.

Perry, B. (2009) Enterprise operations. Oxford, UK: CIMA/Elsevier.

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Project Management Institute. (2008) A guide to the project management body of knowledge.
4th ed. Pennsylvania, USA: PMI.

Proud, J. (2013) Master scheduling. Hoboken, N.J.: Wiley.

Public Safety Canada (2015) Project Planning and Evaluation. [online] Available at:
<https://www.publicsafety.gc.ca/cnt/cntrng-crm/crm-prvntn/tls-rsrcs/prjct-plnnng-
en.aspx#a04> [Accessed 19 Jul. 2018].

Robinson, P. (2009) Operations management in the travel industry. Wallingford: CABI.

Slack, N., Brandon-Jones, A. and Johnston, R. (2013) Operations management. 7th ed. Harlow:
Pearson Education Limited.

Stair, R. and Reynolds, G. (2010) Principles of Information Systems. 9th ed. Boston, USA:
Course Technology, Cengage Learning.

Stevenson, W. (2002) Operations management. 7th ed. Boston: McGraw-Hill Irwin.

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Wallace, T. and Kremzar, M. (2001) ERP: Making It Happen. New York: Wiley.

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Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 22 of 27
8 APPENDICES

8.1 Project plan schedule for robotic dipping plant

No. Activity Start date End date

Duration Immediate Labour Status
(Days) predecessor requirement
(Person)
A Set kick-off 01/08/2018 02/08/2018 1 - 0 Not
meeting started
B Agree on 02/08/2018 04/08/2018 2 A 0 Not
objectives started
Initiation
C Data collection 04/08/2018 09/08/2018 5 B 0 Not
of existing started
process
D Site visit 08/08/2018 09/08/2018 1 B 1 Not
started
E Preparation of 09/08/2018 15/08/2018 6 D 1 Not
plant layout started
F Define the 15/08/2018 20/08/2018 5 E,C 0 Not
suppliers started
G Get approval 20/08/2018 22/08/2018 2 F 0 Not
from started
management
H Get approval 22/08/2018 05/09/2018 14 G 0 Not
from gov't started
authorities
I Get down the 05/09/2018 08/10/2018 33 H 5 Not
plant and started
equipment
J Staffing 24/09/2018 08/10/2018 14 H 0 Not
started
Development
K Concrete 08/10/2018 15/10/2018 7 I,J 4 Not
flooring as per started
layout
L Plant 15/10/2018 05/11/2018 21 K 6 Not
installation started
Operations
M Get internal 05/11/2018 06/11/2018 1 L 0 Not
EHS pre- started
report

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 23 of 27
 N Plant 06/11/2018 20/11/2018 14 M 3 Not
commissioning started
O Product 12/11/2018 20/11/2018 8 M 1 Not
process design started
P Trial 21/11/2018 23/11/2018 2 N,O 3 Not
production started
Q Get approval 23/11/2018 24/11/2018 1 P 0 Not
from QA team started
R Get EHS 23/11/2018 24/11/2018 1 P 0 Not
report started
S Plant 24/11/2018 01/12/2018 7 Q,R 3 Not
validation started
Launch
T Production 01/12/2018 03/11/2018 2 S 0 Not
planning started
U Plant launch 03/12/2018 04/12/2018 1 T 3 Not
started
V Project 04/12/2018 08/12/2018 4 U 0 Not
evaluation and started
monitoring
W Project sign- 08/12/2018 09/12/2018 1 V 0 Not
off started
Project ends

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 24 of 27
8.2 Gantt chart for robotic dipping plant

Gantt Chart
01-08-2018 21-08-2018 10-09-2018 30-09-2018 20-10-2018 09-11-2018 29-11-2018 19-12-2018

Set kick-off meeting

Agree on objectives

Data collection of existing process

Site visit

Preparation of plant layout

Define the suppliers

Get approval from management

Get pre-approval from gov't authorities

Get down the plant and equipments

Staffing

Concrete flooring as per layout

Plant installation

Get internal EHS pre-report

Plant commissioning

Product process design

Trial production

Get approval from QA team

Get EHS report

Plant validation

Production planning

Plant launch

Evaluation and monitoring

Project sign-off

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 25 of 27
8.3 The precedence diagram method (PDM) for robotic dipping plant

Determine the Early Start (ES) and Early Finish (EF) of activities in a precedence diagram
method (PDM) network diagram. There are two critical paths which are
ABDEFGHIKLMNPQSTUVW and ABDEFGHIKLMNPRSTUVW.

START
0 A 1
0 1 1

1 B 3
1 2 3
END
124 W 125
3 C 8 3 D 4 124 1 125
5 5 10 3 1 4

120 V 124
10 F 15 4 E 10 120 4 124
10 5 15 4 6 10

119 U 120
15 G 17 119 1 120
15 2 17

117 T 119
17 H 31 31 I 64 117 2 119
17 14 31 31 33 64

110 S 117
31 J 45 64 K 71 110 7 117
50 14 64 64 7 71

109 R 110 109 Q 110

71 L 92 109 1 110 109 1 110
71 21 92

93 N 107 107 P 109

92 M 93 93 14 107 107 2 109
92 1 93

93 O 101
99 8 107

Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 26 of 27
 Operations and Project Management, University of Wolverhampton Business School, July 2018 Page 27 of 27

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