final assignment mo october 25 2010

8/6/2019 Final Assignment MO October 25 2010

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Master of Business Administration

Course: Managing Operations (UOWMBAOM01)

Student Name: Clayton Nicholas

Wales Student Number: 0911867179733

RDI Students Number: STU23407

Assignment

Word Count: 3827

Submission date: 25th October 2010

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Table of Contents

Contents

Page Number

Company Overview3

Introduction to problem

4

Process under consideration5

Process chart

7

Process table

8

Relevant operations theory9

Scheduling

9

Queuing

9

Quality Focus

10

Facility/ Plant layout

10

Comparison of theory with practice

12

Scheduling12

Capacity planning

13

Room and workbench capacity review

13

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Current Process/ facility layout under review

14

Potential changes that could improve quality and customer focus

15

Recommendations on improving the process

16

Master Schedule and job review17

Recommended service work flow and work process layout

18

Summary of recommended Changes and their impact on operations

19

Change Execution

19

Bibliography/ Work Cited

20

Appendices

21

Company Overview

Supreme Engineering Services is a family run company based in St Lucia, Caribbean. Its

primary areas of business are sales of electromechanical equipment, Information technology

products and IT related services. It was founded in June 1997.

The company has a thirty percent share in the IT equipment/ hardware service and maintenance

business in St Lucia. This service sector continues to grow year after year at a high rate. In the ar

of equipment and product sales we have struggled to keep a slim ten percent market share in the

ever so aggressive sales sector.

There are five small business units which make up the company. Those units are:

1. Equipment and general IT product sales.

2. Networking (data + voice, wired and wireless) hardware products sales.

3. Computer, printer, copier and general IT equipment repair and maintenance services.

4. Networking wired and wireless installation and maintenance.

5. Computer assembling unit.

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The third and fourth SBUs above have core staff and shared staff currently. All staff that joins the

company must undergo training in their core specialty areas followed by cross training in the

operations of the other SBUs.

This cross training policy generally helps well in optimizing the usage of human capital within

organization. It also helps with quick adjustments in labor to handle marginal shifts in demand for

our services and it also helps with creating strong synergies between related functions across

SBUs.

Introduction to the problem

The Computer, printer copier and general IT equipment repair and maintenance services SBU is t

unit that continues to experience the highest growth both in volume and profitability. The staff is

trained and executes their duties optimally on a normal service demand day.

When there is a surge in demand for our service in this SBU we are unable to handle the sudden

volume increase. The net result is that our qualities of our output service drops the customer

becomes dissatisfied and even the staff become unhappy.

The building structure housing the operation has sufficient physical space to handle a quadruple

increase in equipment service demands, but the way it is being utilized currently creates bottle

necks and inefficiencies. This is primarily so because when the layout was designed five years ag

the forecasted growth rate of the service department stood at 2 % per annum. Unexpectedly the

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growth rate for service demand was at 5 percent and since 2008 (global financial recession) ther

has been a 10% increase per annum until now in 2010. This surge in growth rate in the last two

years has been primarily due to the fact that the more homes and business places are opting for

the option of repairing equipment to extend its useful life instead of replacing. This results in

savings and improved cash flows for customers.

In addition to the layout it is important to realize that the type of organization has a broad

spectrum of skilled human resource, starting from the senior service technicians to the yard

maintenance man. The use of skills currently do not allow for high levels of efficiency, optimizatio

With the shift in the demand of products and services the organization must be a learning one, to

allow resilience and long term sustainability.

The quality of output of our service and customer focus must be improved. In operations practice

is very important to improve on value added products and services while minimizing waste. This

translates to higher returns and satisfaction for all stakeholders associated with organization.

The use of the human capital will require some element of scientific management intervention

techniques in the Job design to achieve this improved utilization. The fundamental thing is to hav

high skilled workers engage in activity that will allow them to use their skill in high skill job

requirements. At the same time the work flow must me managed to get optimal throughput. The

high skilled technicians are definitely doing too many low skilled functions such as wiping

computers, pushing trolleys, making lengthy calls etc.

To minimize or eliminate this problem the operations of this SBU has to be reviewed and remodel

to ensure that our output results in customer satisfaction and smooth work flow systems at all

times.

Process under consideration

In reviewing this specific problem the broad operations management strategy will be reviewed an

the following will be examined about Supreme Engineering Services.

1. The design of processes and systems as needed

2. Forecasting- planning for capacity

3. Designing and using facilities- production planning

4. Scheduling

5. Actual Production.

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6. Quality control

The following areas in operations processes will be reviewed in detail on a micro level in an attem

to solving current problem:

1. The design of the repair process

2. Our Work scheduling system for the equipment repair SBU.

a. Capacity Planning for the long term

b. Aggregate planning for the medium term

c. Master schedulesd. Short term schedules

1. Queuing system

2. Job Design

3. Output Quality and customer satisfaction.

The process map visually depicts the sequence of events to build a product or produce an outcom

This system was invented by Frank Gilberth. The process chart discriminates between waste an

value added.

When a customer or pick-up driver walks in with a piece of equipment that needs servicing or

repairs done, it is taken to the login desk. At the login desk customers give information about the

problem to the customer service representative. Information is entered directly into the repair

management software. At this point customer pays a non refundable fifty dollar diagnostic fee an

signs a read agreement. Customer is issued a receipt and a reference equipment number

generated by the software. This number is affixed to the equipment also.

All the equipment is transferred to the storeroom in the repair room zone periodically by repair

technicians. Equipment moves on a queue on a first in first out system. To identify equipment

order of queuing display monitors at each repair workbench assist technicians with this.

Technicians read customer concerns and diagnose equipment problem. Based on our policy,

customer is only called if a repair job needs more than one hundred dollars in parts. This is stated

verbally and in writing by customer service representative at the point of logging-in equipment.

Once proceed to work is issued then equipment is repaired. Technician walks to the storeroom an

pickup part requested and brings back to service room. If proceed to work is not issued by

customer equipment is channeled to be returned to front pick up counter for customer.

After equipment is repaired a series of standardized test is performed on equipment. This is to

ensure conformance and maintenance of a high quality output from the repair process. Technicia

physically cleans and renews outer surface of equipment and then enters his report into the

system.

Technician trolleys batches of completed equipment to the front pickup desk as complete.

Customer is called as soon as equipment gets to customer service representatives at desk.

Customer comes in pays up and leaves with repaired or serviced equipment.

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Process Chart -Existing Service Job process design

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Process Table

A Login

B Transf

Relevant operations theory

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Scheduling

Scheduling is the expected duration of an activity based on work load, staff size, speed etc.

The strategic importance of scheduling is faster movement of goods and services through a facili

There is greater use of assets and hence greater capacity per dollar invested which in turns lower

cost.

Added capacity, faster throughput and flexibility mean better customer service through faster

delivery.

Good scheduling also contributes to realistic commitments and hence dependable delivery.

Scheduling begins with capacity planning which involves the total facility and equipment

resources available.

Aggregate planning makes decisions regarding the use of facilities, inventory, people and

outside contractors.

Master schedules breaks down aggregate plan and develops a schedule of specific products or

product lines for each week.

Short term schedules then translate capacity decisions, aggregate (intermediate) planning and

master schedules into job sequences and specific assignments of personnel, material and

machinery.

Adjustable capacity: involves planning the best quantity to produce during periods in the

intermediate range horizon and planning the lowest cost method of providing the adjustable

capacity that will accommodate the production requirements.

Queuing

Queuing can help for planning waiting times before delivery of service. It is developed on the bas

that not all scheduling problems can be solved by labor force, shifts and labor capacity etc. A

queue forms when the short term demand for service exceeds the short term service term.

It looks at the

1. Receiving rate per hour.

2. The turnover rate per hour.

3. Space considerations if queue is not flowing as planned and there is a buildup.

There will be some element of waiting but one must assess the tolerable level at which the

customer will remain happy.

On a daily basis there is a morning influx of equipment for repair.

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To achieve a balanced queuing system work methods has to be reviewed in times when surges

demand occurs.

Quality Focus

Quality is defined as The totality of features and characteristics of a product or service that bear

on its ability to satisfy stated or implied needs, adopted by the American Society for Quality.

The high quality of service at our company has been a commitment by the management team an

has become a culture throughout the organization.

This is evident in the fact that in spite of having a leading market share in the equipment service

industry combined with continuous growth, management found it necessary to come up with a

solution to avert dissatisfaction among a few customers when there are demand surges for a sho

period.

The following Quality characteristics are expected from a service when being received

by a customer:

Reliability, responsiveness, competence, access, courtesy, communication, credibility, security,

understanding, tangibles.

The following Quality characteristics are expected from a product when being received

by a customer:

Performance, features, reliability, conformance, durability, serviceability, aesthetics, perceived

quality.

Plant / facility layout

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The layout of the facility in delivering service to a customer follows Product/ Process-oriented

layout where the equipment moves at several nodal points from start to finish.

In the entire process the fundamentals must always remain where:

A product is input into supreme engineering services system, through the intervention of

processes, value is added to the product and an output goes back to the customer with value

added. The customer as well as owners and all stake holders must be optimally satisfied in order

achieve, equity, stability and long term resilience stability of the organization.

Input Value added products and services (operations process) Output (satisfied

customer and stakeholders)

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Comparison of theory with the practice

Scheduling

To alleviate the problem an accurate forecast of the future demand must be done and this will b

the basis by which current and future capacity plans can be developed.

Current demand and forecasted future demand

The average demand on our services is about 10 pieces of equipment a day.

There are times where there are surges in demand.

Daily Demand

On a Monday there is an average of 13 computers received and this is handled my overtim

by one technician. Technicians do weekly rotations to achieve this in a balanced way.

Weekly Demand

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Weekly demand has not unique patterns throughout the month. The only time of the mont

where weekly demand changes is when there is a demand increase surge other than

Monday. This causes an abnormally high week, but this has no pattern.

Monthly demand

The monthly demand is quite stable from December to May annually. The erratic surge is higher i

volume and frequency from June to October which coincides with the rain and hurricane season in

the Caribbean where there is lots of thunder, lightning, wind and rain. There is a higher level of

power grid instabilities during this period.

Annual Demand

At a rate of 10 computers per day the annual demand is about 2400 units per year. The annual

demand is growing at a rate of 10% per annum and will continue so for the next three years. Prio

to 2009 this growth rate stood at six percent. The four point increase in growth rate was influence

by:

1. There has been a rapid expansion in the use of the internet in schools, businesses and

homes hence the volume of equipment for servicing on the St Lucia market is raising.

2. Because of the global financial crisis, more people have been opting to repair and service

equipment over replacement as a first option because of budgetary constraints.

As shown in the linear graph in Appendix A the daily or annual demand is expected to increase

50% in five years.

Capacity Planning

The current daily human resource capacity of the service department is 24 man hours which is

three technicians a day with an output of eight hours a day. Output is the most appropriate

measure of capacity.

Each computer average repair/ service time per equipment is 2hrs. If this average has to be

dropped then there is a high chance of compromising quality of service. An average of four

computers can be repaired per technician per day during the peak periods.

The actual running capacity of this unit in terms of units turned over is

4 X 3 techs = 12 computers per day

Utilization of department is = actual output/ design capacity

The current utilization = 10/12 X 100 = 83.33%

Efficiency of department = actual output/ effective capacity

Efficiency = 10/11 X 100 = 90.91%

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Currently technicians work on one computer at a time.

The physical capacity of the service room is to support 3 computers at a time on the work bench.

Currently three machines are worked upon at a time including peak demand surge periods.

Room and Workbench capacity review

The physical work bench capacity is insufficient to handle current peak demand and future growt

for the next five years. To handle current surges in demand the workbench capacity must be

increased by 100%. This would mean it must handle six machines at a time.

To handle future growth of 50% in the next five years the workbench capacity must be able to

handle 9 machines at a time this will also cater for surges in demand.

The physical size of the service work area and bench has to be doubled. There is an adjacent

storeroom which houses incoming, current completely repaired equipment and aging repaired

equipment. This room can be merged with service room to quadruple the capacity of theworkbench area as illustrated in Fig 1 below.

The capacity of electrical outlets, diagnostic tools, instruments and human capacity must be

increased.

To do those physical changes do not involve heavy capital expenditure and this investment in, ne

electrical, network outlets, tools etc will pay back on its investment which the five year period

based on projected sustained growth for this department.

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Potential changes that could improve quality and customer focus.

Generally the departments performance is up to par under normal conditions. That is the current

operations handles normal work flow with an output which is reasonable and hence a satisfied

customer.

To improve quality and customer focus the departments reliability of service must be sustainedconsistently, there must be improved responsiveness to moments of surge in demand. Quality of

output product must not be compromised to affect performance, reliability and conformance of

repaired equipment especially in surge demand moments.

The proposed changes to the physical, work and process structure of the department will solve 80

percent of the problem, a simple but critical tool will have to be intelligence and communications

Communications with the customer must be improved at demand surge moments

Communications internally between customer service department and equipment service

department supervisor must be intact so as to give very early warnings about sudden demandchanges.

Customers have to be given a very accurate lead time that their equipment will take in the proce

This will help boost their confidence and eventual satisfaction. There must be a lead time set and

maintained even in peak demand periods. This target must be one set strategically which will be

within the tolerable level of an average waiting customer.

Linear programming along with gathered statistics about demand patterns in the past can help

predict future demand at a reasonable level of accuracy. The intervention of human intelligence

about issues such as weather patterns, abnormal social disturbances, accurate market volume et

can help improve on accuracy on forecasting and hence improve on the responsiveness of theorganization which leads to a happy customer.

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Recommendations on improving the process

Expected outcome

After this operations management intervention exercise we are hoping to achieve the following:

1. A service department which has the capacity to handle the peak capacity (surge) demand

moments effectively and efficiently.

2. To improve our general efficiency and output in this SBU.

3. To increase organizations overall efficiency by sharing resources from SBU to SBU to contr

demand surges etc while all SBUs function normally.

4. To improve on customer confidence to ensure our lead and differential advantage is

maintained and increased in this sector in St Lucia.

5. Based on the situation at supreme engineering services the holistic approach will have to b

based on one of mixed strategy.

As part ofaggregate planning, the human capacity of the service department must be reviewe

to ensure efficiency. There must be an optimal resource quantity which will allow for adequate

serving of customer demand changes whiles no non cost effective issues arise. To achieve this, th

following must be done:

1. Processes BDG and I in table 1 must be relieved from computer repair technicians and be

allowed to be done by a trained lower skilled handy person. This will allow for a savings of

minutes of non productive time from the computer technician per computer. The available

time for direct equipment repair has been improved by 15%.

2. This same this savings translates into an improvement in the actual output and efficiency o

the department.3. In addition to medium aggregate human capacity planning the long term strategy will

include:

a. To add 1 new technician immediately and add two more over five years with one every

2.5 years.

b. Develop an overtime system. Overtime will only be considered if a certain productivity

level is achieved in the day for which an incentive would have been given already.

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Master Schedule and job review

The master schedule and job sequence and the actual modus operandi of the technicians were

evaluated by doing a visual survey and mapping how they utilized their times.

The most interesting observation was that the technicians usually sat and rested away whiles

computer software was loaded. During this average time of 35 minutes a technician can diagnose

an incoming pc.

This will help parallel their efforts for 35 minutes and translate to a 17.5 minute savings of time othe repair and diagnostic process which is 60 plus 35 minutes which is 95mins. Savings in time w

be 18.42% time savings.

To achieve this staff will have to be motivated in some way and do it at their will. Some

compounded motivation technique will have to be developed with the HR department to achieve

this. The technicians may have to be offered special pay incentives for achieving increased outpu

above 8hrs a day.

Also the handyman must be trained in the JIT system to ensure that two consecutive hardwarerepairs must be delivered to the same technician.

It must be either two software problems or one software problem and a hardware problem assign

together. It will be impossible for a technician diagnose and repair two hardware issues as its ju

not practical.

To achieve this incoming and outgoing equipment will have to be relocated to the Customer area

and be brought into the service room on the workbench (JIT) just in time. This equipment must

leave the workbench JIT just in time so the workbench always remains clear immediately after

service or repair is complete.

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Recommendedser

Tech 1

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Summary of recommended Changes and their impact on operations

Chan

ge

#

Change

category

Change done Impact on operations

1 Physical Layout Incoming storeroom remodeled to

accommodate 6 more technician

Workbenches

Increase in physical capacity o

workbench to increase output

capacity by 200%2 Physical Layout Equipment Stored in customer

delivery area.

Increased physical space to

create more workbenches.3 Process/ Human

resource

Equipment handled inward and

outward to service room by

handyman.

Reduced losses in technician

non productive time by 10

minutes4 Process/ Human

resource

Calls to customers done by

handyman in service room

Saves technician 5 minutes pe

machine.5 Process/Human

Resource/ Output

quality

Handyman Wipe and clean

equipment to perfect.

Improved output quality.

Reduced loss time by

technician by 8 mins.6 System/ Process/

Human resource

Handyman Delivers Equipment Just

in time to open workbench

Allowed space of incoming

storeroom to be freed up and

also saves tech from walkinglost time.

7 HR Increase Technicians to 6

immediately and add more on

demand.

Increased turnover rate.

Increased flexibility to demand

spikes. Strategically positioned

for high growth rate.8 HR Employ and train handyman.

Introducing more scientific

management.

Maximize use of skilled

technician and work flow.

9 HR/ Work method Train and transfer three techs on

demand from other SBUs within

organization.

Increased HR capacity and

flexibility to handle demand

spikes.10 HR/ Work method Train technicians to handle to

machines at a time, offer special

incentives to do so and train handy

man to filter and categorize

machines delivered to workbenches

especially when demand gets

tough.

Further improves efficiency in

service operations and

turnover rate.

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11 Communication

and intelligence

Improve on internal

communication, intelligent

gathering of current and future

demand, improve on customer

communication and accuracy of

disseminated information

Improved quality, reliability,

customer focus and a happier

customer.

Change Execution

In redesigning the process there will naturally be resistance to change. The process must be

planned in a project format with a budget and time frame to be completed. The strategy and

objectives can be developed by the management team and it is recommended that a project

consultant and a change consultant be hired under contractual terms. Management will ensure th

consultants execute to plan and that company objectives are met in alignment with its mission.

BIBLIOGRAPHY/WORKS CITED

Dilworth J.B., 1989, Production and Operations Management Manufacturing and Nonmanufacturing , Fourth Edition, New

York, Random House, Inc.

HEIZER.J and RENDER. B., 2006, Principles of Operations Management, Sixth Edition, New Jersey, Pearson, Prentice

Hall.

CHOPDE.R.

Available from http://www.scribd.com/doc/29800368/O-M-Facility-Layout

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Appendices

Appendix A

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final assignment mo october 25 2010

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