Q1. Explain the basic competitive priorities considered while formulating operations strategy bya firm?Ans:Competitive PrioritiesThe key to developing an effective operations strategy lies in understanding how to createor add value for customers. Specifically, value is added through the competitive priority orpriorities that are selected to support a given strategy.Skinner and others initially identified four basic competitive priorities. These werecost, quality, delivery, and flexibility. These four priorities translate directly into characteristicsthat are used to describe various processes by which a company can add value tothe products it provides. There now exists a fifth competitive priority—service—and itwas the primary way in which companies began to differentiate themselves in the 1990s.CostWithin every industry, there is usually a segment of the market that buys strictly on thebasis of low cost. To successfully compete in this niche, a firm must necessarily, therefore,be the low-cost producer. But, as noted earlier, even doing this doesn’t always guaranteeprofitability and success.Products sold strictly on the basis of cost are typically commodity-like. (Examples ofcommodities include flour, petroleum, and sugar.) In other words, customers cannot easilydistinguish the products made by one firm from those of another. As a result, customers usecost as the primary determinant in making a purchase.QualityQuality can be divided into two categories: product quality and process quality. The levelof quality in a product’s design will vary as to the particular market that it is aimed toserve. Obviously, a child’s first two-wheel bicycle is of significantly different quality thanthe bicycle of a world-class cyclist. The use of thicker sheetmetal and the application ofextra coats of paint are some of the product quality characteristics that differentiate a Mercedes-Benz from a Hyundai. One advantage of offering higher-quality products is that theycommand higher prices in the marketplace.The goal in establishing the “proper level” of product quality is to focus on therequirements of the customer. Overdesigned products with too much quality will beviewed as being prohibitively expensive. Under designed products, on the other hand, willlose customers to products that cost a little more but are perceived by the customers asoffering much greater benefits.DeliveryAnother market niche considers speed of delivery to be an important determinant in itspurchasing decision. Here, the ability of a firm to provide consistent and fast deliveryallows it to charge a premium price for its products. George Stalk Jr., of the Boston ConsultingGroup, has demonstrated that both profits and market share are directly linked tothe speed with which a company can deliver its products relative to its competition.11 Inaddition to fast delivery, the reliability of the delivery is also important. In other words,products should be delivered to customers with minimum variance in delivery times.FlexibilityFrom a strategic perspective, in terms of how a company competes, flexibility consists oftwo dimensions, both of which relate directly to how the firm’s processes are designed.

One element of flexibility is the firm’s ability to offer its customers a wide variety of products.The greatest flexibility along this dimension is achieved when every product is customizedto meet the specific requirements of each individual customer. This is oftenreferred to as mass customization..i. The ability to change the volume of production.ii. The ability to change the time taken to produce.iii. The ability to change the mix of different products or services produced.iv. The ability to innovate and introduce new products and services.

EXCELLENT OPERATIONS GIVES THE ABILITY TO

PERFORMANCE IN . . . COMPETE ON . . .

Q2.a. List the benefits of forecasting.

Ans: BENEFITS OF FORECASTINGGood forecast of material, labor and other resources for operation are essentially needed by the managers. If good projection of future demand is available, the management may take suitable action regarding inventory. Similarly, if production activities are accurately forecasted, then balanced work-load may be planned. Good labor relations may be

maintained, as there would be lesser hiring and firing activities by the management with better manpower planning. Therefore, forecasting is useful due to following benefits:

1. Effective handling of uncertainty2. Better labor relations3. Balanced work-load4. Minimization in the fluctuations of production5. Better use of production facilities6. Better material management7. Better customer service8. Better utilization of capital and resources9. Better design of facilities and production system.

 

Efforts in forecasting activity involve two types of costs. While more effort in forecasting causes increased cost due to data collection and analysis; lesser forecasting activity involves lost revenue, which may be due to unplanned labor, unplanned material or unplanned capital cost. Therefore, each firm should maintain a balance in its forecasting effort and stick to a zone near to accuracy cost trade off.

b. Explain the significance of plant location decision.

Ans: significance of Plant location:The strategic significance of facility location is connected with capacity decisions. Indeed, the issue of capacity expansion immediately raises the companion issue of where to expand in order to tie in effectively with the distribution network. We have separated the materials into two areas because the approaches to the sub-problems are quite different and to divide the materials into manageable units.The location of facilities involves a commitment of resources to a long-range plan. Thus, predictions of the size and location of markets are of great significance. Given these

predictions, we establish facilities for production and distribution that require large financial outlays. In manufacturing organizations, these capital assets have enormous value, and even in service organizations, the commitment of resources may be very large. Location and distribution take on even greater significance because these plans represent the basic strategy for accessing markets and may have significant impacts on revenue, costs, and service levels to customers and clients.It is not immediately obvious that location is a dominant factor in the success or failure of an enterprise. Indeed, it is not uniformly important for all kinds of enterprises. Decentralization within industries must mean that many good locations exist or that the location methods used could not discriminate among alternative locations.General technological constraints will commonly eliminate most of the possible locations. Or, to take the opposite point of view, a technological requirement may dominate, so that activity is then oriented toward the technical requirement. For example, mining is raw material oriented, beer is water oriented, aluminum reduction is energy oriented, and service activities, including sales, are consumer or client oriented in their locations. If some technological requirements, such as the location of raw materials, water, or energy, does not dominate, then manufacturing industries are often transportation oriented.The criterion for the choice of location should be profit maximization for economic activities. If the prices of products are uniform in all locations, then the criterion becomes one of minimizing relevant costs.If the costs of all inputs are independent of location, but product prices vary, then the criterion for location choice becomes maximum revenue. In such instances, locations will gravitate to the location of consumers, and the general effect will be to disperse or decentralize facilities.If all processes and costs are independent of location then choice will be guided by proximity to potential customers or clients or to similar and competing organizations and to centers of economic activity in general.

A plant should be located at a place where the inhabitantsare interested in its success, the product can be soldare interested in its success, the product can be soldprofitably and the production cost is minimum.profitably and the production cost is minimum. According to Dr. Visvesvarirya the decision of plant location

According to Dr. Visvesvarirya the decision of plant locationshould be based on nine M’s, namely should be based on nine M’s, namely

MONEYMONEY MATERIALMATERIAL MANPOWERMANPOWER MARKETMARKET MOTIVEMOTIVE MANAGEMENT(POWER)MANAGEMENT(POWER) MACHINERYMACHINERY MEANS OF COMMUNICATIONMEANS OF COMMUNICATION MOMENTUM TO AN EARLY STARTMOMENTUM TO AN EARLY START

Q3. What do you understand by “line balancing”? What happens if balance doesn’t exist?

Ans: Here is a simple definition and example of line balancing :

Everyone is doing the same amount of work Doing the same amount of work to customer requirement Variation is ‘smoothed’ No one overburdened No one waiting Everyone working together in a BALANCED fashion

Description

Line Balancing is leveling the workload across all processes in a cell or value stream to remove bottlenecks and excess capacity. A constraint slows the process down and results if waiting for downstream operations and excess capacity results in waiting and absorption of fixed costs.

Objective

Match the production rate after all wastes have been removed to the takt time at each process of the value stream.

EXAMPLE: Taking the example from the takt time page as the starting point there were additional studies conducted each the remaining processes that it takes to make UNIT ABC.

There are five processes in the workcell dedicated to only UNIT ABC.

Each process has same demand and available work time = same takt time.

The LOADING data was found using historical production data of ACCEPTABLE parts only including downtime but only when the processes were scheduled with operator(s).

The customer only wants acceptable parts and that is what the customer demand is based on within the takt time formula. When figuring the production rates (loading) the scrap or non-conforming pieces must be netted out. 

Process 1: Taking much longer than takt time. Overtime is probably used to make up production and is the #1 constraint.

Process 2: Exceeding the takt time, probably a lot of waiting and the excess capacity can be filled by absorbing some of the work from Process 1 and/or Process 4.

Process 3 & 5: Very close to meeting takt time, not a focus area but possibly some best practices and application of LEAN tools can improve these loading rates. Improvement in these areas could be used to share workload from constraint processes.

Process 4: Taking longer than takt time. Again, overtime is probably used or there are late deliveries, high expediting costs or unhappy customers. ApplyLean Manufacturing principles and try to alleviate workload to Process 2 or others that may be able be improved to absorb some of the workload.

After Line Balancing:

Visual Management tools were added to reduce complexity and improve consistency of units produced. Standard operating procedures and training were done for all operators. SMED activity was done on all operations with focus on Process 1. Point-of-use tooling and shadow boards were implemented. Kanbans were established for materials. Some steps in each process were no longer required as former paradigms and rules were challenged. The machines in a couple operations received upgrades and overdue minor rebuild and were added to a TPM program. There speeds were dramatically improved (the "performance" component of OEE) Error-proof jig to prevent defects and rework was implemented. And/on lights were added as communication signals.

BEFORE AFTER

Q4. Describe the various approaches to TQM?

Ans: approaches of Total Quality Management (TQM), you have to evaluate which methods best suit your company and your management style. The term came from the teachings of the late statistician and industrial consultant, W. Edwards Deming, who promoted five basic principles:

Reduce errors that occur during the manufacture or presentation of a product or service. Render efficiency among the components (staff or company departments) necessary to

produce the product or service. Utilize the most modern equipment or procedures available.

Maintain constant levels of employee training and education. Assess levels of customer satisfaction.

TQM is an integrated management philosophy and a set of practices that emphasize continuous improvement, meeting customer requirements, reducing rework, long-range thinking, increased employee involvement and teamwork, process redesign, competitive benchmarking, team-based problem solving, constant measurement of results, and closer relationships with suppliers (Ross, 1993). Using TQM in manufacturing will result in a number of improvements, including increased profits, more satisfied customers, and better business practices in general.TQM is broken down into the following shortening:

T - Total = involvement from everyone at the company Q - Quality = the standard in which you define product perfection M - Management = the system of managing the different steps of the business

management strategy:

Primary Elements of TQM:

(i) Top management has to demonstrate its commitment to TQM and provide strategic direction to the movement strategic outlook.(ii) Customer involvement/satisfaction, customer driven quality.(iii) Shares vision (suppliers/vendors, employees, employer) partnership.(iv) Process orientation process ownership.(v) Team work consensus.(vi) Products and services to be delivered at lowest social cost.(vii) Cultural change at all levels.(viii) Employees Empowerment.(ix) Innovation is must for survival.(x) System thinking has to be development.

Approches:(i) Dc buffering, Quality circle, Total quality control, JIT, SPC (ii) Scientific styling, Robust design, off line quality control, High technology circle, Total preventive maintenance, Statistical and management tools. (iii) Whole work force deployment, New technology deployment, Policy deployment, Automation deployment (iv) Process Engineering, Process improvement, Process execution automation, Process architecting, Process deployment automation.

Benefits of quality control are:

(i) Builds an information system for improving quality and reducing the cost.(ii) Increased production under the optimum conditions.(iii) Reduction in scrap.(iv) Quality consciousness.(v) Fewer customer complaints.

Q5.a. What is meant by productivity? Explain.Ans: Productivity is a measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it (inputs). The measure of productivity is defined as a total output per one unit of a total input. Production Management encompasses all activities which go into conversion of a set of inputs into outputs which are useful to meet human needs. It involves the identification of the requisite materials, knowledge of the processes, and installation of equipments necessary to convert or transform the materials to products. The quantities to be produced have to be ascertained, processes established, specifications detailed out, quality maintained and products delivered in time to meet the demands. 

Capital ProductivityCapital deployed in plant, machinery, buildings and the distribution system as well as working capital is components of the cost of manufacture and need to be productive. Demand fluctuations, uncertainties of production owing to breakdowns and inventories being created drag the productivity down. Therefore, strategies are needed to maximize the utilization of the funds allotted towards capital. Adapting to new technologies:

1. Outsourcing StrategiesWhen capacity requirements are determined it will be easy to determine whether some goods or services can be outsourced so that the capital and manpower requirements can be reduced and the available capacities are used to augment core competencies thus reducing the cost of the product or service to the customer. However, the following factors may restrict outsourcing-

(a) Lack of expertise – the outsourced firm may not have the requisite expertise to do the job

required(b) Quality considerations Loss of control over operations may result in lower quality. This is a risk that the firm gets exposed to.(c) Nature of demand – When the load is uniform and steady, it may not be worthwhile to outsourcing. Absence of spervisaion and control may be a hindrance to meet any urgent requirements of the customer. This affects the business especially if no production facilities are built in the organization.(d) Cost when the fixed costs that goes along with making the product does not get reduced considerably

2. Methods Improvement

Methods Improvement starts with Methods analysis focus of this process is how a job is done breaking it down to elemental tasks so that they are amenable for analysis.. This is done for both running jobs and new jobs. For a new job, the description becomes the input for analysis. For current jobs, the analyst depends on observations, records and suggestions of the persons involved in the job. When improved methods are suggested, they are implemented and records created for assessing the consequences of the methods improvement procedures. The analyst should involve all concerned persons in the process so that acceptance becomes possible and opportunities open up for further improvements. Moreover, the people actually involved would be interested in improving their productivity and will help the analyst in the process.

3 Balancing of WorkstationsAssembly lines necessitate out stringing together workstations which carry out operations in a sequence so that the product gets completed in stages. Since the workflow has to be uniform and operations may require different periods for completion the necessity of Line Balancing is felt. Capacities at workstations and the workforce to man are so adjusted that a product in the process of assembly almost approximately the same amount of time.

4. Rationalization of Packaging MethodsWith logistics becoming an important function of the supply chain and outsourcing becoming the norm, packaging has become an important aspect, packaging has become important . Space is at a premium and therefore stacking and storing have to more scientific. Movements inside the premises from one location to another location are being done with automated systems and they need that the packaging systems are designed for safe transit, continuous monitoring – both for quantities and operations. In case of outsourced products the materials used and their design should facilitate reuse of the same which brings in economy.

b. What do you mean by operations strategy? Explain in brief.

Ans:Obviously operations strategy is a huge subject. And although this textbook takes a slightly more strategic view than most books in the area, Chapter 3 only ‘scratches the surface’ of the subject. The first part of the chapter (the larger part) looks at the content of operations strategy by taking four, quite distinct perspectives. The second part of the chapter looks at the process of operations strategy, mainly by describing two relatively well-known processes for devising an operations strategy.

Top-down versus bottom-up perspectives of operations strategy

One view of operations strategy (the more traditional one) is operations strategy is one of several functional strategies which are governed by decisions taken at the top of the organisational tree. According to this ‘top-down’ approach, overall business strategy sets the general direction of the organisation, this is then interpreted by the different functional areas of the company (marketing, finance, operations, etc.) in their functional strategies. By contrast, the ‘bottom-up’ view of operations strategy is to see strategic decision making as an accumulation of practical experiences. After all, organisations would find it difficult to ‘invent’ strategies in a total vacuum. Their ideas are formed from their previous experience of dealing with customers, suppliers and their own processes. This is the idea behind emergent strategies. These are strategic ideas which emerge over time as an organisation begins to understand the realities of their situation.

When thinking about top-down versus bottom-up perspectives of operations strategy, remember that they are not ‘rival’ ideas. In reality we can see both top-down and bottom-up influences on strategy making. What is important to remember is that the pure ‘top-down’ view of operations strategy is simplistic in the sense that it does not recognise the importance of learning through experience.

Market requirements versus operations resources

The chapter goes on to propose another apparent clash of perspectives – that between market requirements and operations resources. Again, it is a comparison between what has been the orthodox view (market requirements perspective) and what is a more recent view (the operations resource perspective). Again also, it is not a real clash in the sense that neither perspective is right or wrong.

The market requirements perspective starts from the commonsense notion that any operations strategy should reflect what the organisation is trying to do in its markets. Companies compete in different ways, some may compete primarily on cost, others on the excellence of their products or services, others on high levels of customer service, others on customising their products and services to individual customer needs, and so on. The operations function therefore must respond to this by providing the capabilities which allow it perform in an appropriate manner to satisfy the requirements of its market. In some ways this is a ‘translation’ task because the techniques and language used by marketing managers to understand the requirements of markets are different to the language and techniques used by operations managers to manage their productive resources. So, for example, Figure 3.6 shows how competitive factors can be ‘translated’ into performance objectives. Different ways of competing imply different competitive factors and therefore different performance objectives. Table 3.1 gives an example of how this translation process works in the banking industry. See the figure below for another example. It describes and instrument manufacturer with two product groups.

The first product group is a range of standard electronic medical equipment which is sold ‘off the shelf’ direct to hospitals and clinics. The second product group is a wider range of electronic measuring devices which are sold to original equipment manufacturers who incorporate them in their own products. These electronic measuring devices often have to be customized to individual customer requirements.

The analysis of the two product groups shows that they have very different competitive factors. Therefore different performance objectives are required from the manufacturing operation. Such very different competitive needs could possibly require two separate operations – one for each product group – each focused on its own objectives and devoted to providing the things which are important in its particular markets.

Operations strategy influences performance objectives

To some extent all the decisions made in all strategy areas will exert some influence on all the performance objectives of the operation. Some strategies, however, are particularly influential on certain objectives. The table below highlights those objectives which will be particularly influenced by each strategy (though remember that the important links between strategies and objectives will to some extent depend on the type of operation and the circumstances in which it finds itself).

Strategies with a particularly significant effect on particular performance objectives

The process of operations strategy

The final part of the chapter illustrates two processes, the Hill methodology and the Platts-Gregory procedure. Both have similarities but neither claims to be a complete answer, or ‘how to do it’ process. When reading about these two processes bear in mind that they are both primarily ‘market requirements’ driven.

Q6. What is logical process modelling? What is physical modelling?

Ans: Logical Process Modeling is the representation of putting together all the activities of business process in detail and making a representation of them. The initial data collected

need to be arranged in a logical manner so that links are made between nodes for making the workflow smooth. The steps are as under:  

(a) Capturing relevant data in detail to be acted upon;

 

(b) Establishing controls and limiting access to the data during process execution;

 

(c) Determining as which task in the process to be done and subsequent tasks in that process;

 

(d) Making sure that all relevant data are available for all the tasks that need to be in the order determined;

 

(e) Making available the relevant and appropriate data for that task;

 

(f) Establishing a mechanism to indicate acceptance of the results after every task or process to have the assurance that flow is going ahead with accomplishments in the desired path.

Some of the activities may occur in sequential order whereas some of them may run parallel. There may be circular paths, like rework loops. Complexities arise out of the manner in which process activities are connected together. Logical Process Model consists only of the business activities and shows the connectivity among them. The process model is a representation of the business activities different from the technology dependent ones. Thus we have a model that is singularly structured only for business activities. Since computer programs are also present in the total system, to allow the business oriented executives to be in control of the inputs, processes and outputs, this unique model is helpful. Logical Process Model – improves control on the access to data and identifies who is in possession of data at different nodes in the dataflow network that has been structured. A few of the logical modeling formats are given below –

 

a) Process Descriptions with task sequences and data addresses

b) Flow Charts with various activities and relationships

c) Flow Diagrams

d) Function hierarchies

e) Function dependency diagrams.

Every business activity when considered as a logical process model and represented by a diagram. It can be decomposed and meaningful names given to the details. Verb and Noun combinations can be used to describe at each level. Nouns give the name of the activity uniquely and used for the entire model meaning the same activity.

 

Physical Modeling Physical modeling is concerned with the actual design of data base meeting the requirements of the business. Physical modeling deals with the conversion of the logical model described above into a relational model. Objects get defined at the schema level.

The objects here are tables created on the basis of entities and attributes. Here the database is defined for the business. All the information is put together to make the database software specific. This means that the objects during physical modeling vary on the database software being used. The outcomes are server model diagrams showing tables and relationships with a database.

 

The ingredients The ingredients that go into a business process can be briefly outline as under:

 

(i) The data that are needed to accomplish the desired business objective;

 

(ii) Acquisition, storage, distribution, and control of data across tasks in the process;

 

(iii) Persons, teams and organizational units that perform and responsible for tasks;

 

(iv) Decisions that modify and enhance the value of data during the process;

We have some behavioral aspects of the business process mainly the decision making process

Where humans are involved, Decision failures are common and research has shown that it is because of biases in perception and fallacies in reasoning. Another reason is a tendency to act on assumptions even when data are available easily for verification and/or confirmation. Selective recall a means tendency to bring out of memory the facts that reinforce our assumptions and biased evaluation and tendency to accept evidence or fact as absolute which support our hypotheses. These factors result in faulty decision making and being aware and avoiding them consciously improves the processes.