Bata India: APP write up

The General Manager of Bata Plant was restlessly flipping the past annual production reports. The
proposed meeting for approval of the aggregate production plan with the chairman and other board
members was due in next four days. He was aware of the agenda of meeting and spent the last few
sleepless nights to make a perfect plan. However, the uncertainties of the labor market, unavailability
of skilled workers at reasonable wages and the seasonality cycle of shoes production were giving him
nightmares. These uneven fluctuations of the shoes plant made hiring and firing of laborers a
challenging task, during the production and maintenance period. The management wanted him to plan
the labor requirement for the upcoming production season to optimize the profits, reduce the risk
without additional cost. He was contemplating on the detailed forecasting with minimum possible
errors for canvas shoes demand across the season. Improper planning would lead to increase in the
overall cost, loss of production and other valuable resource. The stakes were high, and he was aware
of the gravity of the situation.
  
Bata India Ltd.
Bata India went public in the year 1973, with a benevolent view of providing employment to the local
people and best quality of life to the people. Bata’s mission was to provide the best quality shoes to its
customers. The plant worked more efficiently and effectively to fulfil the public demands. Bata India
has established itself as India’s largest footwear retailer.

With a never-ending focus on quality Bata India Ltd. had also bagged numerous prestigious awards
such as best quality; best service; best HR management; best omni-channel retailer, in the last year .
Moreover, Bata India had managed to register a handful of products and its quality as well.

Canvas Shoes Production (Exhibit 1)

1. Cement and Latex Manufacturing:

Cement adhesive and rubber latex were the main chemicals which were used to paste together the
different parts of a shoe. Both these cement adhesive and rubber latex were produced keeping in mind
the exact requirement and correct specifications which was the right mix of chemicals and to make it
the best pasting element so that the desired quality was obtained.

2. Sole Pull Manufacturing:

Inner and outer shoe required in the shoe were produced with the help of rubber sheets which was
measured around 3 ft. x 2 ft. which had a thickness of approximately 2 centimetres. This rubber sheets
were first heated to high temperature and were then placed in a curing chamber for approximately 8
minutes where they were again processed at a high temperature of around 170oc. Such high
temperature resulted to expand the sheets and were then sent for vulcanization.

3. Making Binding:

Binding was required on the outer part of the shoe to bind the edges of the upper cloth. This Binding
Material was also made in the plant itself using a cloth. It was machine stitched onto the upper cloth.

4. Folding, Cutting and Stamping:

Cloth for the upper part of the shoe was produced by Bombay Dyeing. It was first folded into huge
lots and then cut into pieces of uniform sizes as per the different size lots. These cloth pieces were
then stamped with what was called as a batch number and the shoe size. After the stamping was done
the upper part of the shoe was then sent for stitching.

5. Stitching:

The stitching process basically started with the folding of the piece and stitching It in a designated
fashion to give a proper shape. After this it was sent for stitching the binding onto the edges of the
shoe. After the binding is done, the shoe was then transferred further where lace holes and flips were
used. The Last Step in the Stitching Process was to insert the laces into the shoe which was done by
hands.

6. Assembly:

The Assembly Process included a dual level conveyor belt. Fully Assembled Shoes were then hand-
picked from the conveyer belt at a particular point on the belt. It was indeed a very well organized and
systematic assembly line configuration wherein none of the employee sat idle at any given point of
time, thereby minimizing the idle time losses.

7. Vulcanization:

After the assembly process the next step was of vulcanization. Though the shoes were ready but they
were still very sticky and were not set for the usage. Therefore, this vulcanization step was present to
harden the shoe and to ensure that were pasted properly and whether the chemicals were dried up or
not.

OPERATIONAL CYCLE:
Apart from shoes production plant, there were other departments such as powerhouse station,
sustainability, waste management, human resource management, and accounts that supported plant
operations. The prime factor in optimizing the shoes production was good co-ordination among all
these departments. A failure of one department eventually led to stoppage/delay in the production of
shoes. Bata had done well in terms of coordination of the various departments and achieved
significant amount of efficiency.
The overhauling season started from March and lasted until October due to schools opening and
upcoming festivals required more product as compared to normal months, whereas the production
season worked for whole year. Bata made production planning, forecasting, and developing a detailed
plan for next season to fulfil the consumer demands. There were a lot of transactions dealing with
buying or procuring the spare parts that were needed for the overhauling process.

THE DILEMMA

General-Manager had to submit the aggregate production plan (production plan and manpower plan)
for the upcoming year to the management. All the planning was a function of the forecasted demand,
and he wanted to have maximum accuracy in the forecasted figures. Moreover, the shoes consumption
had a sales seasonality and modern life or health safety effect, which was apparent from the past
market demand (see Exhibit 2). Another problem that he needed to address was hiring, training, and
firing of laborers. The labor market was becoming challenging owing to multiple factors such as
limited pool of laborers, unavailability of skilled laborers, poaching by competitors/allied
manufactures belonging to nearby vicinity, availability of jobs in the metro cities. The labor union
knew these factors and played hard to increase the wages and other benefits for the laborers. The
General Manager wanted to optimize the labor cost during production period.
Considering the production plan, he was supposed to forecast the demand for 2022 accounting for the
seasonality and market trend factor. This forecasting had to be done in a manner that would minimize
errors because they could not be eliminated. He had three primary alternatives for the production
planning.
1. Chase the production (Chase Plan): - Where the production quantity as per forecast would
be chased and the laborers would be hired and fired according to it.
2. Maintaining inventory with constant workforce (Level Plan): - Where the constant
workforce would produce the same quantity every month. If the production would be surplus,
the inventory cost would add to the total cost. If the demand would not be fulfilled due to
shortage in quantity, then cost of missing out on customers would add to the total cost.
3. Subcontracting: - The production would be carried out with a minimum workforce required
for every month, and then the extra quantity required for respective months would be
subcontracted to other manufacturers or a third party.

He was deeply involved in the thought process of selection of the best alternative/s that would
optimize the returns. The sudden sound of the rooster’s crows interrupted his thoughts. He smiled and
thought it was time to rise with the sunrise.
 EXHIBIT 1: BATA CANVAS SHOES PRODUCTION PROCESS FLOW

Raw Binding
Compound Chemical Shoe Thread
material Cloth

Making Sole
Folding
pull
Making
Binding
Cutting

Stamping

Cement

Latex

Stitching

Assembly

Vulcanizing

Controlling

Packaging
EXHIBIT 2: DEMAND (in pair of shoes) VARIATIONS OF PAST 5 YEARS

Month/Year 2016-17 2017-18 2018-19 2019-20 2021-22

April 14500 14900 14250 14360 13500
May 13850 14250 14450 16000 14850
June 18280 18990 18235 20000 18280
July 12230 12000 12250 14000 11230
August 11880 13000 12265 14600 12880
September 12280 12100 12000 14000 14280
October 17540 18290 18365 19000 17540
November 11040 11180 11200 13000 12040
December 11000 11220 11000 13250 11000
January 10000 10250 11750 13265 10000
February 9500 10900 10235 10500 9500
March 15900 17000 18000 11000 14900

Source: Company Information

EXHIBIT 3: LABOUR COST (in ₹) AND OTHER DETAILS

Sr.no Particular Value

.
1 Average salary of full time labourers 10/hour
2 Average salary of seasonal/part time labourers 7/hour
3 Firing cost 1,200/labourer
4 Hiring cost 1,000/labourer
5 General shifts 2 (8 hours each)
6 Provision for shift 2 (12 hours each)
7 In 12 hours shift Efficiency of workers is 60% after 8
hours
8 In regular shift Efficiency- 100 % till 8 hours
9 Sub-contracting cost 20/pair of shoe
10 Sub-contracting labours cost 11/hour
11 Labour cost in 8 hours of shift 10/hour
12 Labour cost in 12 hours shift 12/hour
13 Inventory carrying cost 2/pair of shoe
14 Non fulfilment of order cost 10/pair of shoe
15 Factor of safety for containing errors in 10%
forecasting
Source: Company Information

Team 6
21M110 – Dhyey Salot
21M131 – Shubham Khair