NMIMS

WORLD CLASS OPERATIONS

APPLICABLE FOR JUNE 2022 EXAMINATIONS

1. Critically examine the phases of evolution of operations with specific reference to

manufacturing firms.

Answer:
Evolution of operations

Operations may be defined as a conversion (transformation) process that yields an

intangible output (services), a deed, a performance, an effort. For example, Consider Tata
Consultancy Services Ltd. Bombay which provides technical, financial and other business
services such as computer software feasibility reports etc. ‘Manufacturing or Service
Operation is an integrated extension of corporate policy to the extent that the total
enterprise exists and is organised as a system of transformation (value adding) activities to
satisfy pluralistic needs and expectations of stakeholders. The objective of the operation
system, then, is the means to a strategic end. If one can acknowledge this viewpoint, then
the entire organisation must be operation-oriented, because it is the engine of
development’.

Corporate strategy, functional area strategies, market analysis, competitive priorities,

competitive capabilities, and new service/product design are the main operations strategies
in any organisation. Operations strategy is formulated to leverage the advantages, absorb
the consequences of the variable nature of various functions, and provide a dependable
implementation programme. Effective and timely communication is a vital factor to involve
and coordinate people at various stages and monitor the progress.

All functions in the organisation including administration, finance, materials, purchase,

marketing, production, logistics, communication, and others can be considered as
operations. The reason is that all of them use some inputs like materials or information

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either on a person-to-person basis or through a flow line. They are required to use some
process and convert those into outputs usable in the next stage of the value chain. There
are various phases in the evolution of operations mentioned below.

Phases of evolution of operations

Factory system: First phase of evolution of operations is factory system where the
inventions of lot of machines were experienced in manufacturing firms. Actually, the
process which first started in England later on spread over the different parts of the world.
The system of production which came into being as a result of this “Industrial Revolution” is
now known as “Factory System”. The main forms of inventions were seen in textile
industries. This phase was the main foundation of modern-day or current form of industries.
Adam Smith was the major contributor in this phase as he promoted the principle division of
labour which can increase the output per worker.

Manufacturing system: Phase 2 is called manufacturing system which replaced factory

system in operations management. Here, the main contributor was Fredrick W. Taylor who
provided the concept of scientific management. The thought was led by Fredrick W. Taylor,
and he enunciated the principles of scientific management in1911 after experimenting on
the shop floor of a steel company as a supervisor. He was influenced by Frank and Lillian
Gilbreth
And their ‘Time and Motion’ study (a study that identifies the least time required for a
motion in workplace and make it scientific) of 1900 and that of Henry L. Gantt who
propounded the idea of scientific selection of workers and harmonious cooperation in 1901.
Another major contributor was Frank Gilbreth, who devised a system of classifying motions
into 17 basic divisions also known as Therbligs. In this era, there were many famous
entrepreneurs such as Henry Ford when he came up with big automobile venture, Ford
Motors. Moreover, a successful scheduling technique i.e. Gantt chart was also developed in
this era by Henry Gantt.

Human resource management: Under this phase, concept of human resource was
developed and introduced into manufacturing systems. Here the main contributors were
Maslow, McGregor and Elton Mayo. Maslow introduced the theory of motivation based on

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needs or expectations of individuals for their organizations. If the employees are motivated,
their productivity will be improved in a positive manner. McGregor developed theory of X
and Y where he mentioned the way like how an employee should be chosen for a particular
task. Apart from this, Elton Mayo’s theory helped firms to study and assess the behaviour of
the employees.

Quality revolution: Next phase is about quality revolution where the concept of quality was
introduced in production and manufacturing of products. The quality philosophers of this
age promoted quality as cost-cutting technique. Quality is the driving factor for any
organisation. When buying a product, a customer will always think about the value of the
money he or she is investing. Even if the price of the product is high, the quality of the
product will provoke the customer to buy it. Quality also includes cost competitiveness by
various methods like Just-In-Time (JIT), lean manufacturing, TQM, and TPM. Quality enables
the firm to be competitive, but more importantly, helps the company to remain stable.

Mass customisation: This is the last and latest phase in evolution of operations using
currently. The customisation of products is a dimension that is intimately related to both
product and process-oriented criteria. Customisation is essentially the extent to which a
product offering will work to satisfy the customer’s needs/wants. Mass customization is a
business strategy that focuses on customers and recognizes the need to provide outstanding
products while using new programs and procedures. The strategy makes it possible to
design a product that reflects the actual choice of an individual customer through a flexible
process. The components of a product are modular in some situations. The flexibility of
mass customization enables the customer or retailer to mix and match the modules into
different configurations and eventually realize a final custom-made product. Mass
customization is more common in the retail industry but may also apply to other fields. For
example, software creators can design products to allow remote services to increase
functionality. Another sector that embraces mass customization is the financial industry,
which is characterized by the growth of independent and free-only companies. Mass
customization attempts to give companies a competitive edge by providing unique value to
their customers at lower costs associated with mass production.

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2. In order to develop and maintain quality in processes, products and services, identify
the factors that need to be considered. Refer your answer to a firm in the service industry.

Answer:

Concept of quality and its importance:

In this globalized world, we are all exposed to the products and services from across the
world. These products and services carry very distinguishing features and compete for the
consumer attention there by trying to increase their presence and the market share. The
companies adopt various strategies and management systems to achieve this objective. The
Quality Management has acquired an increasingly predominant role in the company’s
success not only in achieving the customer satisfaction but also sustaining the competitive
advantage through process improvements.

“Quality Management can be described as a strategic process of seamlessly integrating all

functions, activities and processes of a Management or an organization for continuous
improvement of quality of goods and services”, the objective of quality management is to
achieve excellence in the performance.

Quality approach is to achieve excellence on economical, social and ecological parameters.

It emphasizes to provide quality in every dimension, process, and system to all the social,
economical and environmental factors. The focus is on wastage elimination, quality,
efficiency, productivity, growth and overall quality. Quality economical approach is to gain
maximum return on investment, customer satisfaction, stake holder’s satisfaction, cost
reduction and wastage elimination. To achieve quality organizations need to agree with the
requirement, specification, and the combination of the contributing factors which provide
the best. They need to analyse and design the process that eliminate waste and efficiently
utilize resources to provide the best.

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Perception of quality from the customer’s point of view is defined as ‘what they feel about
the quality’. Thus, customer perception is the opinion or feeling of a customer.
Understanding this feeling requires aligning an organisation understands with customer’s
perception. Customer perception can be right or wrong, reasonable or unreasonable, logical
or illogical, just or unjust, good or bad, etc. Such perceptions determine the perceived
quality of products. The service quality and customer satisfaction is measured by comparing
expectations and perceptions. Service quality is the comparison of perception with the
expectations of customers from an organisation that delivers high quality services

Factors to be considered in developing and maintaining quality in processes, products and

services with reference to service industry:

Reliability: This is the factor which is related to the ability of an organization using which it
can satisfy the needs of customers. This process involves every step of customer interaction,
including the delivery or execution of the good or service, swift and precise problem
resolution and competitive pricing. Customers have a certain expectation of reliability in
buying a specific product, and a company's success usually depends on its ability to meet
those expectations. Reliability is considered as the most important service quality
dimension. Reliability is defined as the ability to perform the promised service dependably
and accurately. In simple terms reliability means that a firm delivers the promises made to
customers. Customers prefer to be associated with firms that keep their promise especially
with respect service outcomes.

For Example, providing right kind of service in the promised time and as per the
specifications.

Tangibility: Another factor is tangibility where the customers can assess the service
provided by the organizations. This is an organization's ability to portray service quality to its
customers. There are many factors that give a company highly tangible quality, such as the
appearance of its headquarters, its employees' attire and demeanour, its marketing
materials and its customer service department. The representation of service physically is
known as tangibles. The physical facilities, equipment, personnel, and communication

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material involved in service are known as tangibles. Customers can evaluate quality by the
picture presented by these tangibles. Tangibles are associated with those services in which
the customer visits the establishment. Examples of these establishments are hospitals,
restaurants, and retail stores. Example, the ambience, infrastructure etc. of service firm.

Empathy: Companies need to provide customers with individualised attention and this is
known as empathy. Customers need to be treated as unique and special this has to be done
by offering them customised services. Company’s need to understand customer needs and
ensure that the customer feels valued. A customer who believes a company truly cares
about their well-being is likely to be more loyal to that company. Example, when people of
service firm understands the needs and wants of customers and try to provide them higher
satisfaction, it is all about empathy.

Responsiveness: Providing prompt service and the willingness to help customers is known
as responsiveness. Customer requests, questions, complaints and problems need to be
solved promptly. Responsiveness can also be defined as the time taken to respond to
customer problems, answers to questions, or attention to problems. A company with high
service quality always responds to customer communication as soon as possible which can
often indicate the value a company places on customer satisfaction. Example, in a service
firm, how quickly you resolve the queries and problems of your customers is called
responsiveness.

Assurance: Assurance is the confidence and trust that customers have in a certain
organization. This is especially important with services that a customer might perceive as
being above their ability to understand and properly evaluate; meaning that there has to be
a certain element of trust in the servicing organization's ability to deliver. Company
employees need to be mindful of earning the trust of their customers if they want to retain
them. Services that are of high risk, perceive the dimension of assurance with a lot of
importance. Examples of these services are banking, insurance, medical and legal service.
For example, customers are loyal towards a service firm for different types of work.

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3.a. As an Operations Manager with an automobile firm, with the agenda of achieving
world class standards, what would be the environmental concerns in achieving world class
standards in operations?
3.b. As an Operations Manager to implement TPM, state the objectives to be considered
for the implementation of TPM in your company.

Answer: a)

Environmental sustainability evaluation has been the most focused aspect in the supply
chain performance evaluation process. This is due to various environmental impacts on the
supply chain management. To develop an environmental sustainability metrics, a thorough
review of Life Cycle Assessment (LCA) tools and ISO standards is required.

Environmental concerns in achieving world class companies:

Sustainability is very much important for business. Businesses responding to demands for
clearly visible sustainability practices are also more attractive to the new class of ethical
investors, and regain the costs of managing sustainability through government grants and
increased sales to green activists and other members of the community. Ethical business
practices may also improve competitiveness between businesses, encouraging growth and
bigger profits. As all the businesses are working in a society so they all have some
responsibilities towards the society and the environment. It’s the main responsibility of the
organizations to keep the environment safe for other people. Social responsibility of
business organization is to keep check on issues pertaining to environment. To discharge the
responsibility organizations, need to accomplish “Environmental Quality policy”. Total
quality management provides a model for business excellence by advocating on
environment management as a key business process to create eco-friendly environment and
built premises of secure environment and better working condition.

Environmental sustainability involves making decisions and taking action that are in the
interests of protecting the natural world, with particular emphasis on preserving the
capability of the environment to support human life. It is an important topic in the present

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time, as people are realising the full impact that businesses and individuals can have on the
environment. Environmental sustainability is about making responsible decisions that will
reduce your business’ negative impact on the environment. It is not simply about reducing
the amount of waste you produce or using less energy, but is concerned with developing
processes that will lead to businesses becoming completely sustainable in the future.

After the finalization and setup of environmental targets, we need to proceed further and
check all the operations and respective activities. Environmental management is quite
necessary in current scenario so accordingly the strategies should be implemented. There
are various management functions such as planning, controlling, and directing, organizing
etc. so all those functions should also be followed in environmental management as it is also
equally important. Organizations should take assistance of the technological tools which
may help in minimizing the negative environmental impact on the operations. As the
economic cost is not too great, full advantage of this should be taken. There are many things
depending on the organization’s operations and one thing is environment which may also be
impacted. All the aspects of the EMS should be reviewed regularly and the changes should
be made as required.

b)

TPM is a management process developed for improving productivity by making processes

more reliable and less wasteful. It has its objective in maintaining the plant or equipment in
good condition without intervening into the daily process. Preventive and predictive
maintenance is required in order to fulfil this objective. Using TPM the unexpected failure of
the equipment can be minimized. Total productive maintenance puts the responsibility of
maintenance where it belongs to and on the operator who uses the equipment. It is a
companywide activity which involves all the people.

The main thrust is eliminating all break downs. The focus is on the operating personnel
because they would know about malfunctioning earlier more than anybody else. They work
on the machine and are aware of the slightest variations that occur and thus, should be able
to remove the cause before it becomes serious. So, every planned maintenance activity

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reduces the probability of a breakdown. Ownership of the operation and machine increases
the commitment of the workmen. Autonomy is the starting point for learning and
excellence. The worker can suggest better ways of improving quality, productivity, and
design. This helps in continuous improvement. Team work and participation improves the
quality culture. The principles of 5S – the housekeeping activities which improve efficiency
at workplace, is considered a measurable standard to aid the implementation of total
productive maintenance even in the office rooms.

Objectives to be considered in TPM implementation:

TPM aims for greater manufacturing competitiveness through improved effectiveness of

machines and equipment. IT increases production capacity, process reliability and reduces
the cost of lost production time, defects, repairs, shortened equipment life and inventory. It
also contributes to improvements in safety, morale and pollution control by involving
everyone in the process.

Direct objectives
 To increase in productivity and overall plant efficiency
 To rectify customer complaints
 To elimination of customer’s complaints
 To elimination of accidents
 To achieve goals by working as a team
 To reduce accidents
 To reduce the manufacturing cost

Indirect objectives
 To increase the confidence level among the employees
 To implement a favourable change in the attitude of the operators
 To deploy new concepts in all areas horizontally

The following results were reported from a typical firm after implementing TPM:

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1. Productivity: Breakdowns reduced by 85%
2. Quality: Defect rate reduced by 50%
3. Cost: Labour cost reduced by 25%, maintenance cost reduced by 15 -30%, energy reduced
consumption reduced by 20%.
4. Delivery: Inventory turnover increased by 150%
5. Morale: Improvement suggestions increased by 105%
6. Safety: Accidents reduced to nil
7. Environment: No pollution created

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