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Returning to roots of Operations Management

Understanding the forgotten and neglected key areas of operations management


By Waqas Ali Tunio, Saud Zafar Usmani, Zulfiqar Hussain, Lt. Cdr. Ghulam Qadir and Lt. Cdr. Tahir Mughal Department of Manufacturing Engineering & Management (IME), Pakistan Navy Engineering College (PNEC), National University of Sciences & Technology (NUST), PNS Jauhar, Karachi Pakistan

Photo by Waqas Ali Tunio (www.waqasalitunio.tk)

Returning to Roots of Operations Management

2011

Returning to roots of Operations Management


Understanding the forgotten and neglected key areas of operations management
By Waqas Ali Tunio, Saud Zafar Usmani, Zulfiqar Hussain, Lt. Cdr. Ghulam Qadir and Lt. Cdr. Tahir Mughal Department of Manufacturing Engineering & Management (IME), Pakistan Navy Engineering College (PNEC), National University of Sciences & Technology (NUST), PNS Jauhar, Karachi Pakistan

Introduction As the name indicates, in this paper, we have not attempted to present anything new; rather we have opted to do the unorthodox by returning to roots of operations management, by adopting the approach to revive the importance of what we term as forgotten blocks of OM. It starts with a look on what culture has to say the way it influences OM in Asia. Then we will have detailed look at Long-term Capacity Management, because its always considered in OM as a key, but if we observe real-time practice, people hardly give importance to it when really need to, its the time when there is no need to expand or erect new facility, but there is always ample time to plan and forecast and act accordingly. As we have also studied the same in our subject course work as it certainly remains center of attention when the plant is being erected (new or expansion), but no one ever take it as a critical part of OM, something books say practice doesnt reflect. Steve Brown1 in his book Manufacturing the future writes that he surveyed and also had interviews while writing the said book with Plant Managers and Strategy makers on operations management and capacity management. The outcome was that those who make strategies only paid attention to financial numbers of profit/loss to understand plants performance and so decided the capacity strategy and plant performance was judged, and majority of them never ever had taken a round of the plant. He

termed that as Traditional Plant, but said those who really consider plants actual performance, opinions of workers on OM/Capacity/Strategy Decisions, he termed them as Strategic Resonance, and it was after reading that book we chose this approach which to some extent reflect Steve Browns ideas on OM in general and Capacity Planning in particular. Human factor is yet another key area in this age of robotics/automation. Fourth section of our study is the success story of Tata Steels proven sustainability for over 100 years which they have managed by sticking to basics realizing and adhering to conformance of business ethics. Purpose of this selection was to highlight the definite identity of our chosen subjects in OM, because they are hardly considered in OM decision making. Idea was to go-through the very same basics which we wanted to be considered important for making decision in industries. CULTURAL IMPACTS ON OPERATIONS MANAGEMENT IN ASIA he time and place has an effect on managing operations. One set of operations cannot be imposed on another place. Every place and situation is unique. The Western concept is Universalism, i.e. in their view the rules and methods which govern them at West can be applied in any part of the world; they neglect the Cultural Phenomena.

Pakistan Navy Engineering College (PNEC), National University of Sciences & Technology (NUST) - Pakistan

Returning to Roots of Operations Management

2011

In this editorial, the writer has discussed the impact of culture by quoting examples of various organizations. One such example is of a Home Depot in US who has outsourced its call centers from India. The Home depots business is based on Do it yourself concept. Home Depot sells tools and materials to homeowners. They have provided trainings to their call centre agents, how they are going to communicate with the costumers and sell their product. But as the agents are Indian based they have no idea of homes in the west. They have no firsthand knowledge about them, they have seen homes made of bricks but the western homes are made of wood, and usually the maintenance and minor repair work is done by homeowners themselves. So here the cultural phenomenon comes into play and the agents are unable to communicate the effectiveness of the product to the costumers. And the Home Depot had to review its operations. Similarly, the writer has quoted an example of a Malaysian Factory. The factory workers find themselves being haunted by some evil spirits in the factory. When more and more such incidents happened the factory closed down and 8000 Hrs of production was lost. This incident was researched and found that the factory workers believed that evil spirits presence was there in the factory, and they were being haunted. The writer has discussed that such an incident would be catered for differently for different cultures. For example if it had happened in a Muslim country like Malaysia then some spirit healer or an Learned/Qualified Aalim of Islam would have been acquired to solve this problem. Had it happened in a Hindu culture, then some Pandith would have been acquired and some different method would have been adopted to avoid such an incident. Had it happened in a modern society like US, they would have fired all the employees

or ordered workers to get back to work. So, the writer has discussed how the cultural phenomenon affects the operations management of a company. The Concept of Universalism & Particularism The writer describes Universalism as that, People believe that what is true and good can be discovered, defined and applied everywhere. Particularism alternatively is a view that unique circumstances and personal relationships determine what is right and wrong. The writer has branded US as a Universalist society. And this effect is prevailing on all US influenced societies. Hence when companies decide to outsource certain operations, their major concern is how the service quality would be and secondly The Cultural Fit. The writer has rightly asserted on the concept of Particularism.2 Specific OM Decisions Affected by Asian Culture Operational Compliance The writer describes that the issue of compliance is one of the most frequently encountered difficulties Westerners face in dealing with Asian cultures. It typically presents itself when a Westerner believes that an Asian counterpart has assented to perform a task when no such assent actually took place: where yes does not really mean yes. The writer has quoted references to assert his point that in some cultures (usually western) the actions are important. While in Asia saying Yes is important. This has a great impact on operational compliance. The writer has associated cultures, where actions are important, with low Power Distance Societies. And those cultures

Pakistan Navy Engineering College (PNEC), National University of Sciences & Technology (NUST) - Pakistan

Returning to Roots of Operations Management

2011

where saying Yes is important are associated with high Power Distance societies. Power Distance Index is a measure of tolerance for inequality between hierarchical levels.3 Revenue Management The writer has quoted an example of a casinos revenue management system in US. It is based upon the tracked play of the gamblers. With this database the management is able to establish a loyalty index of their costumers, and according to the index they offer value added services to the gamblers. In contrast, a casino in China which is largest in the world, the scenario is different. The gamblers dont like to be tracked, because of cultural issues. Gambling is considered bad in Chinese society. So, here the same revenue management system fails due to lack of data. Labor Scheduling In many societies women are also becoming an integral part of the workforce. The societies which are men dominated, the women are usually filling the lowest level positions in the labor force. While those societies which are modern, the gender equality exists. So labor scheduling is greatly affected by the cultures. Cultures and societies where it is considered immodest for women working night shifts, the labor scheduling is affected, and women are not usually employed in some factories or they are not given the night shifts. But various modern societies like US and the west the Gender Factor is least considered in scheduling labor. Total Quality Management TQM initiatives demand inputs from down the line work force to the top management of a firm. A society or a culture where the sole target of down the line work force is to make some money

and leave the job soon for a better opportunity, where consistency in the labor is lacking, here the TQM initiatives from down the line work force are nil. Since one integral part of an organization is not interested in the continuous improvement of the process, The Total Quality Management is adversely affected. On the contrary, the societies and cultures where there is an element of consistency in all the levels of the workforce, the TQM is better. The level of consistency is greatly driven by the prevailing culture in the society. Choice of Governance While outsourcing has becoming a widely used method for western firms to enhance competitiveness, Chinese firms have been increasing the degree of vertical integration. One of the authors of this article has observed that many of the electrical appliance manufacturers in China often have 8090% of their parts made by their own factories which are located very close to the final assembly line. Executives in these firms are proud to tell other people that they employed two to three hundred thousand people in the town through their factories. Through vertical integration, they provide jobs for people in local community, reduce costs, and improve quality, delivery and flexibility simultaneously through better supply chain integration. Furthermore, they also gain knowledge in product and process design. An increased degree of vertical integration is being observed in Chinese manufacturers while Western companies are increasing outsourcing. The main point of this article is that time and place matter in Operations Management. That there are operational decisions that are appropriate for some instances but not others due to cultural issues, and that there are different operational challenges in different parts of the world.

Pakistan Navy Engineering College (PNEC), National University of Sciences & Technology (NUST) - Pakistan

Returning to Roots of Operations Management

2011

Long-term Capacity Management apacity is most often treated at aggregate levels, dealing with key work centers rather than all individual resources and based on forecasts of product families rather than of individual products. Long-term capacity management treats issues related to determining when and by how much capacity levels should change.

Furthermore, capacity may be acquired or reduced at times or quantities other than those required by the sales plan. Such issues are treated from two separate perspectives, on the one hand the manufacturing strategy perspective and on the other the sales and operations planning perspective, representing the highest planning level in a manufacturing planning and control system.4 Thus, the main focus on capacity management from a manufacturing strategy perspective is the timing of capacity changes. Manufacturing Strategy Hayes and Wheelwright5 use three variables to describe a capacity strategy: the type of capacity needed, the amount of capacity that should be added (or reduced), and the timing of capacity changes. Since the type of capacity strongly influences the amount that is to be added or reduced, the first two are normally discussed together in the so-called sizing problem. Capacity Timing and Sizing Following are the common capacity strategies: 1. Capacity Lead Strategy (Expansionist strategy) 2. Capacity Lag Strategy (Wait-and-see strategy) 3. Average Capacity Strategy (Combination of strategies) Sizing of Capacity Changes Sizing prompts to scale considerations, where economies as well as diseconomies of scale are weighted against each other, which lead to concepts such as optimal step change, optimal plant size, etc. Due to the inherent properties of most resources, capacity can normally only be changed in discrete steps with a considerable lead-time.

More specifically, long-term capacity management is most interested with the capacities that take a long time to change, either to acquire new capacity or to reduce capacity levels. Typically, the planning horizon is 1 to 5 years and the planning period is a month, at least for the first year, and then possibly quarters or even longer periods. The input to Long-term Capacity Management is sales plan, based on demand forecast, covering the time perspective for acquiring new capacity or reducing the relevant capacity. Capacity strategy for long-term demand will depend on following: Expected demand patterns Expected growth rate and variability of demands Facilities o Cost of building and operating Technological changes o Rate and direction of technology changes Behavior of competitors Availability of capital and other inputs

The sales plan can be translated into a corresponding capacity plan. However, decisions regarding the production plan, in terms of e.g. production smoothing, means that production will not be identical to the sales plan.

Pakistan Navy Engineering College (PNEC), National University of Sciences & Technology (NUST) - Pakistan

Returning to Roots of Operations Management

2011

Steps in the Capacity Planning Process 1. Estimate capacity requirements 2. Evaluate capacity gaps 3. Identify alternatives 4. Conduct financial analysis 5. Assess key qualitative issues 6. Select one alternative and implement 7. Monitor results Sales and operations planning (S&OP) perspective (a.k.a MRPII) S&OP is often referred to as a fundamental that maintains the balance between aggregate supply and aggregate demand, through monthly updates of the annual business plan. S&OP can be divided into a sales plan (based on forecasted demand) and a production plan, which of course both affects inventory and/or order backlog, and capacity requirements. The S&OP process is the forum where different functional strategies meet for establishing a production plan that economically serves the needs of the market, while supporting both the strategic and financial plans of the firm. One of the most interesting features of S&OP is its part strategic and part tactical nature.6 S&OP is on the one hand constrained by the capacity strategy, but on the other also influences the long-term capacity planning via feedback from the execution of the sales plan and production plan. Within the S&OP process the resource planning translates the production plan into a resource requirements plan, thereby reviewing the required capacity strategy for conformance. As tactical and operational decisions are made each month, the capacity plan gets executed or the need to review the capacity strategy becomes apparent. The issue in the S&OP process is to create a balance between the sales plan and the

production plan. In doing this, planners must make decisions on marketing activities, output rates, employment levels, inventory levels, backlogs, subcontracting, etc. The decision options can roughly be divided into two types; those trying to modify demand to match the production constraints, and those modifying supply to match the sales plan (sometimes referred to as aggressive and reactive alternatives. The supply option is normally further derived into the well-known methods where production is trying to either level production or chase sales (i.e. forecasted demand), or some kind of combination or mix of the two. We label these methods planning strategies. 1. Modify Demand 2. Modify Supply Models and methodologies Johansen and Riis7 provide a framework for choosing appropriate demand management depending on the strategy focus. In their framework a number of company specific factors (like forecast accuracy, intensity of season, process complexity, etc.) and political and social factors (like interest rates, rate of unemployment, etc.) are used to guide managers in the S&OP process. The framework aims at helping managers not only to choose the right option, but also suggests a couple of supportive methods that can be used in connection with these. A more handson tool is the S&OP reports8, where past and current performance as well as future plans are easily visualized. However, the cost trade-off mentioned above has been an object of research for several decades, wherefore the largest portions of articles in the S&OP/APP area focus on mathematical models trying to optimize the choice of planning strategy. However, all mathematical models for aggregate planning

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Returning to Roots of Operations Management

2011

depend on the estimation of a number of relatively uncertain cost parameters, and despite the numerous approaches and techniques covered in the literature, only a few have been implemented in an industrial situation Interaction of the two perspectives As mentioned in the introduction the capacity strategy mainly focuses on the timing of capacity changes, whereas the S&OP's primary focus is on the rate of production. Both perspectives do deal with long-term capacity management, but since they belong to different decision categories they are traditionally treated in sequence, where the S&OP has to work within the frames set by the capacity strategy. Yet, there is a strong interrelationship between them, which is discussed below. Manufacturing strategy's impact on sales and operations planning The decision on when and how to acquire new capacity strongly influences the action space for S&OP. This strategic manufacturing decision determines whether capacity is adjusted before a change in demand, or only once a demand change has been experienced. Consequently, the planning strategy of S&OP will be more or less forced to work within the capacity levels set by the capacity expansion or reduction strategy. Still, should a production plan be chosen that will need extra capacity, then that decision will implicitly imply that this extra capacity is of temporary nature, and not a new capacity acquisition? If a lead strategy is followed, then S&OP is left with much freedom. However, using a lag strategy will force the S&OP to act within much tighter capacity levels, restricting the use of a chase planning strategy. If a chase strategy is desirable, then there is a need for extra capacity in terms of subcontracting, short-term overtime, or capacity flexibility. A track strategy usually means that

capacity can be acquired in smaller steps, allowing for a closer fit between capacity and demand. Such a capacity expansion strategy would still imply that the planning strategy will use sub-contracting or overtime at some instances and have over-capacity at others, typically for MTO situations, or build inventory in MTS environments. Sales and operations planning's impact on manufacturing strategy The decision on how to produce also influences the need for new capacity. Production smoothing will keep the maximum capacity requirements to a minimum; whereas more capacity is needed in one form or another if production volumes vary a lot between periods. Also, in capacity reduction situations a level production rate will facilitate the decision on capacity levels. If products can be produced in a long-term stable production rate and there is an upward demand trend, then new capacity can be postponed. The option to use a level production rate is usually quite good in an MTS environment. On the other hand, if products are made or engineered to order and a chase planning strategy is pursued, then new capacity will be needed earlier as demand increases relative to an MTS situation. A mix or combination strategy would lead to a situation between these two other (extreme) planning strategies. Even in MTO situations, new capacity investments can be delayed if production can be leveled rather than be chasing demand. The reason is that the maximum capacity requirements are reduced, thereby reducing the need for extra capacity until the average capacity requirements indicate such a need. In one case, where one of the authors was involved, a company would have been able to delay a new investment by approximately one

Pakistan Navy Engineering College (PNEC), National University of Sciences & Technology (NUST) - Pakistan

Returning to Roots of Operations Management

2011

year, should they have adopted a production smoothing option. A framework for combining the two perspectives Typical capacity strategies and planning strategies for different product/process environments.

Also, the MTS situation and the importance of cost-efficiency lead to a level production rate. The main reason is again to avoid unnecessary temporary over-capacity. In this paper, we add capacity strategy and planning strategy to the list of characteristics related to the integrated choice of product/process environment. There is a correspondence between, on the one hand, lead and chase, and on the other, between lag and level. In this framework, it is necessary to treat the lead strategy as corresponding to a capacity supply surplus situation, and the lag strategy must correspond to capacity demand surplus. Hereby, the capacity strategies support the same order winning characteristics both for expanding and declining demand patterns. If capacity resources are acquired in large discrete steps, then it is important to distinguish between capacity acquisition (and reduction) and capacity control. The former is dealt with from a manufacturing strategy perspective, whereas the latter is treated in the sales and operations plan. However, these decisions need to be taken in an integrated fashion, and not in sequence. The reason is that there is interdependency between these decisions, such that both influence the decision space of the other. The main results from linking the perspectives of capacity expansion strategies and planning strategies are summarized in Figure The upper left-hand corner and the lower righthand corner both indicate situations where the two perspectives are mutually supportive. Lead and chase focus on resource availability and flexibility to provide order winners such as flexibility, design and quality. Lag and level combine their respective focus on resource utilization, in order to support competition on price. The lower left-hand corner illustrates a situation that is neither supportive nor conflicting.

Typically, manufacturing firms are found along the diagonal from the upper left-hand corner to the lower right-hand corner that is roughly represented by positions 1 to 4. Low-volume manufacturing of nonstandard, one-of-a-kind products is typically performed in a job shop. In such an ETO environment, a typical order winner is flexibility. Then, a lead strategy (according to our definition of capacity supply surplus) is preferable, to allow for volume flexibility. Also, due to the inherent nature of ETO not to manufacture to a forecast, a chase strategy is preferable. At the other end, high-volume, standard commodity items are typically manufactured in continuous processes. Such items are typically made-to-stock,9 and the predominant order winner is price.10 Due to the focus on price, resource utilization is most important leading to a lag strategy (capacity demand surplus), in order to avoid over-capacity.

Pakistan Navy Engineering College (PNEC), National University of Sciences & Technology (NUST) - Pakistan

Returning to Roots of Operations Management

2011

production relative to sales, inventory and/or backlogs. Together they provide two perspectives on long-term capacity management. The decisions related to capacity acquisition/ reduction and planning/control are interrelated in such a way that they must be integrated and cannot be dealt with in sequence. We have plotted these two characteristics relative to the product/process matrix and found a strong relationship. Typically, lead and chase are related because they both put a strong focus on resource availability and flexibility. Moreover, lag and level both strongly focus on resource utilization. When discussing capacity reduction strategies relative to the lead, track and lag strategies suggested by Hayes and Wheelwright for capacity expansion strategies, we suggest that these three strategies, related to the capacity level relative sales, should be interpreted in the following manner. A lead strategy is synonymous to capacity supply surplus, whereas a lag strategy assumes capacity demand surplus. An extension to this research is to relate the long-term capacity management issues to the product life cycle, to investigate the sensitivity relative to the various life cycle stages, e.g. taking market growth rate into account. Furthermore, the design of decision support systems for longterm capacity management, i.e. how to combine and integrate these issues, needs further attention. HUMAN FACTOR IN THE MANAGEMENT OF PRODUCTION he human factor is considered to be the central issue in the analysis of optimization of manufacturing systems. According to the research carried out by Per Langaa & Leo Atling11 a clear division of tasks between the management and the workers is of utmost importance, emphasizes that the management should perform planning and should assign the production tasks

Using a combination of lead and level means that production rate changes can be accommodated if needed, i.e. a possibility to move towards a mix or chase planning strategy. Also, using a level strategy means that the maximum capacity requirements are kept to a minimum and thereby new capacity acquisitions can be postponed. The real problem is the upper right-hand corner where the strategies are conflicting. Using capacity demand surplus means that there are very limited opportunities to execute a chase strategy. Instead, the company must rely on other, external sources for additional capacity when needed to support a chase plan. Still, the company is likely to face frequent overloads and subsequently major delivery problems. The positions for track and mix/combination can be viewed as intermediate relative to the other extreme compositions. In this paper we have linked a structural and an infrastructural decision category from the manufacturing strategy framework. The structural perspective deals with capacity in terms of capacity levels and expansion/reduction strategies. The infrastructural perspective deals with S&OP in terms of planning strategies for

Pakistan Navy Engineering College (PNEC), National University of Sciences & Technology (NUST) - Pakistan

Returning to Roots of Operations Management

2011

to the workers along with the insurance that the work performed is in compliance with the quality standard. The worker is supposed to execute the specified plans according to specifications given. Emphasizes the importance of worker empowerment and mentions with examples the impact of performance of such organizations which are taking such steps. Writes that the jobs of workers should be such that they should enhance the knowledge of workers, it should have a degree of variability and the work environment should be such that it should promote taking ownership of the work performed by the workers. When such aspects are taken into account the overall operations efficiency drastically improves. Business Ethics and Sustainability in Industry Analyzing 100 Years Experience of Tata Steel We generate wealth for the people. What comes from the people must, to the extent possible, therefore get back to the people. - Bharat Ratna, J R D Tata

Tata Steel is committed to tackling the challenges of sustainability. This means that it takes its responsibility towards both the environment and its communities seriously, balancing these against the need to make a profit. It has put systems in place to meet international standards for environmental management such as ISO 14001. Business Ethics & Sustainability Business ethics means taking the right course. Acting ethically takes into account all the factors of doing business which include production, business processes, and the companys behavior with its customers and the communities in which it operates. It is about doing the right thing in everything the company does. Tata Steel has five core values which define the ethics of the company: 1. 2. 3. 4. 5. Integrity Understanding Excellence Unity Responsibility

ata Steel was established in 1907 as a Greenfield project in eastern India. 2nd largest steel producer in Europe and has plants in UK and Holland. The European operations are a subsidiary of Tata Steel Group, one of the worlds top ten steel producers. The combined Group has around 80,000 employees. 12 A commitment to environmentally sound practices is part of many businesses commitment to act responsibly. Social responsibility refers to an organizations obligations to maximize its longterm positive impacts and minimize its negative impacts on society. For Tata Steel, it is a core part of its vision to be the global steel industry benchmark for value creation and corporate citizenship.

These values are evident in everything that it does and drive the ethical behavior of the company. For Tata Steel, taking responsibility for tackling the challenges of sustainability follows naturally from this ethical stance. The Tata Steel definition of sustainability is an enduring and balanced approach to economic activity, environmental responsibility and societal benefit. Sustainability is about meeting the challenges of ensuring that future generations can enjoy the same kind of lifestyles people enjoy today. This naturally involves taking a long-term perspective on balancing economic, environmental and social impacts of business.

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Returning to Roots of Operations Management

2011

A commitment to ethical behavior is often shown in the Corporate Social Responsibility (CSR) policy of a business. The Tata Steel sustainability policy states that: Our policy is to conduct our activities in relation to economic progress, social responsibility and environmental concerns in an integrated way in order to be more sustainable and to meet the expectations of our stakeholders. Making Ethical & Sustainable Decisions Current laws encourage ethical and sustainable practices e.g. anti-pollution laws place strict limits on levels of CO2 emissions. Tata Steel not only abides by these laws, but with its high ethical standards, aims to go beyond the minimum required by law, making a positive contribution wherever possible. This approach to CSR ensures that Tata Steel can tackle the relevant sustainability challenges. This is good for the environment, for the people that work with and for Tata Steel, for the communities in which Tata Steel operates and also good for customers and therefore for business and profits. Tata Steel builds ethical and sustainable practices into all areas of its operations. Steel has the benefit of being truly recyclable but is produced by a process that produces CO2 emissions. Tata Steel is working to reduce these emissions using new technology and practices e.g. it has introduced technology to re-use gases produced to create electricity equivalent to 10% of its needs. This has reduced the need for natural gas for power and helped reduce its CO2 emissions by nearly 300,000 tones. Tata Steel has set goals to reduce CO2 emissions to less than 1.7 tones per ton of crude steel by 2012. Tata Steel has continued to invest effort and resources in relation to the five key priorities that

underpin its vision with regard to climate change. These priorities are to: Continue to achieve emission reductions. Invest in longer-term breakthrough technologies for producing low-carbon steels. Develop new products and services that generate lower CO2 emissions through the life cycle. Actively engage the entire workforce in this challenge. Lead by example within the global steel industry.

Tata Steel promotes lifecycle thinking so that decisions are taken on the basis of manufacture, use and end-of-life phases for any material or product. Life cycle assessments (LCA) assess the true environmental impact of a product over its full life. Tata looks at the environmental impact of manufacturing a material, using it and finally disposing of the product. Through LCA Tata Steel is able to show that, in many cases, steel provides the most environmentally-friendly material solution Promoting Sustainability of Steel Tata Steel demonstrates ethical and sustainable practice in its own operations. It goes further in encouraging its customers and markets to also make decisions based on sound sustainability principles. The three examples (following after this) demonstrate where life cycle thinking is helping Tata Steel to promote the use of steel, while at the same time encouraging ethical behavior. EXAMPLE I - AUTOMOTIVE INDUSTRY Most CO2 emissions come from cars, referred to as tailpipe emissions. The laws targeting the reduction only look at car emissions and not

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Pakistan Navy Engineering College (PNEC), National University of Sciences & Technology (NUST) - Pakistan

Returning to Roots of Operations Management

2011

those caused by manufacturing and scrapping vehicles. Use-phase emissions can be reduced by making the car lighter as it uses less fuel. But materials such as aluminum or reinforced plastics have high environmental costs in manufacturing and are not as easy to recycle as steel. The savings made from using them are usually outweighed by the CO2 produced in the other life-cycle phases. Outcome: Tata Steel is now influencing the next generation of legislation to move towards an LCA approach rather than just looking at tailpipe emissions. EXAMPLE II CONSTRUCTION INDUSTRY There has been a revival in the use of timber frames for buildings which is perceived as being a sustainable and green resource. However, when Tata Steel looked at the LCA of timber in terms of where it came from and how it was recycled, it found that carbon emissions were similar to a typical steel framed building as most timber from demolished buildings is either land-filled or incinerated. Outcome: Tata found out that using a steel frame (where studies have shown that 99% is recycled) produces less CO2 over the entire lifecycle than using a timber frame. The results from the LCA study of building structures are being used to provide facts to architects, engineers and legislators regarding material choice. EXAMPLE III - PACKAGING INDUSTRY Many consumer brands are keen to give an image of environmental responsibility by reducing packaging or its weight. LCA studies by Tata Steel have shown that focusing on weight reduction does not necessarily make for more sustainable packaging. Targets just on weight reduction could lead to the wrong decision, for example, to use alternative packaging materials that could take more energy to produce and are not always completely recycled when they are disposed of.

Outcome: Tata Steel and its industry partners used their LCA approach to persuade regulators to take a different view on steel used in packaging. This resulted in national recycling targets taking a full life-cycle approach by using actual recycling rate as the measure, rather than reducing the total weight of cans. Benefits of Taking Responsibility for Sustainability Sustainable practices are often the best business options for a company. Taking responsibility for sustainability is increasingly important both to ensure reputation and also to satisfy the demands of a range of stakeholders. Benefits include an enhanced reputation & greater customer loyalty, fewer raw materials, less power and more recycling. Taking responsibility for sustainability is one way for Tata Steel to compete. It also helps the company to leverage its position to promote its own products. The benefits are also felt by employees, who are better motivated to work for a company that they perceive as doing the right thing. Tata Steel has shown that it is committed to sustainable and environmental practices as part of its overall aim to act responsibly. It shows commitment and progress towards key targets of sustainability as well as encouraging sustainable decision making in its customers and within their markets. The key to the success of this approach is to recognize the unique properties of steel as a recyclable material and to ensure that measurements of sustainability are taken over the entire life cycle of a product, not just the usephase. Conclusion In competing markets of the era, where we have become operations-focused and results oriented.

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At the same time, we need to recognize how the old (forgotten roots of OM) can benefit, and we should alter them to be considered in our daily decision making. Results at this time might not be apparent, but a mere application of all these could increase the annual returns of the company aided by the managers who ensure Steve Browns Strategic Resonance, not only by reading the financial statements to get a picture of smoothness of Operations and Plant Performance, rather by themselves involving and getting dirty with the work to analyze the actual operations scenario and then make strategies to manage them effectively and efficiently.
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T. Hill, Manufacturing Strategy } Text and Cases, MacMillan, London, 1995.


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Human Factors in the Management of Production Per Langaa Jensen & Leo Alting (1) Department of Manufacturing Engineering and Management Building 424, Technical University of Denmark
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The Times 100; Business Case Studies - Business ethics and sustainability in the steel industry (www.thetimes100.co.uk)

Steve Brown. Manufacturing the future (2005).

The way that can be told of is not an unvarying way: Cultural impacts on Operations Management in Asia - R. Metters*, E. Bendoly, X. Zhao, B. Jiang, S. Young (2009)
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The way that can be told of is not an unvarying way: Cultural impacts on Operations Management in Asia - R. Metters*, E. Bendoly, X. Zhao, B. Jiang, S. Young (2009)
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Long-term capacity management: Linking the perspectives from manufacturing strategy and sales and operations planning - Jan Olhager*, Martin Rudberg, Joakim Wikner (1999)
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R.H. Hayes, S.C. Wheelwright, Restoring our Competitive Edge } Competing Through Manufacturing, Wiley, New York, 1984.
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Long-term capacity management: Linking the perspectives from manufacturing strategy and sales and operations planning - Jan Olhager*, Martin Rudberg, Joakim Wikner (1999)
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J. Johansen, J.O. Riis, Managing seasonal fluctuations in demand: Practice and experience of selected industrial enterprises, Production Planning and Control 6 (5) (1995) 461}468.
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R.C. Ling, W.E. Goddard, Orchestrating Success } Improve Control of the Business with Sales and Operations Planning, Wiley, New York, 1988.
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H.W. Oden, G.A. Langenwalter, R.A. Lucier, Handbook of Material and Capacity Requirements Planning, McGraw-Hill, New York, 1993.

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