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Master of Business Administration - MBA Semester III

OM0013 Advanced Production & Operations Management

4 Credits

(Book ID: B1235)

Assignment - Set- 1 (60 Marks)

Name: Manish Rajan Rajput

Roll No: 571012050

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Q1. Explain with an example the impact of product or service

life cycle on operation strategy.

The product life cycle, or service life cycle, can have a big influence on the operationalstrategy of an organization. Figure below shows the stages involved in product/servicelife cycle.

Product Life CycleFor example, a service firm is defined as one that derives more than 50 percent of its

sales from providing services. RCA's service revenues now exceed its revenues from

electronic manufacturing. A service package is a bundle of explicit and implicit benefits

performed with a supporting facility and using facilitated goods. When you eat at a fast

food restaurant (supporting facility), you may purchase a hamburger (facilitating good)

that someone else cooked for you (service). The service concept is the perception and

expectations of the service itself in the minds of the customers, employers, shareholders,and lenders. The service system is the equipment, layout, and procedures used to provide

the service and maintain quality and delivery standards. The service revolution relates to

the shift in the United States to a service economy and the proliferation of service

automation

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Operation Strategy steps (changed with Product life Cycle)

Stage 1 (Business Strategy / Business Unit Strategy): This stage is concerned morewith how a business competes successfully in a particular market.

Stage 2 (Functional Strategies): This stage is a selection of decision rules in eachfunctional area. Two examples of these functional areas are marketing strategy andfinancial strategy.Stage 3 (Manufacturing Priorities): This stage helps in implementing the ProductionPlanning Process.Stage 4 (Action Plans): This stage helps in formulating the action plans for anorganization. An Action plan typically includes deciding who is going to do what, bywhen, and in what order, so that the organization reaches its strategic goals.

Stage 5 (Detailed Tasks): In this stage each work unit in the action plan is assigned toa skilled worker.

Stage 6 (Evaluation of the Methodology): This stage is concerned with selectingand evaluating the methods. The overall goal of selecting an evaluation methodis to get the most useful information so that key decision makers can make themost realistic and cost-effective decisions.

Relation with Product life Cycle and Operational Strategy

1. Development Stage :After collectively considering the products and servicesdemanded by customers, strengths and weaknesses of competitors, theenvironment, and the firm's own strengths, weaknesses, cultures, and resourcesand analyzed. Proficient firms can formulate their vision as expressed throughthe mission statement. This statement expresses the organizations values andaspirations; basically its reason or purpose for existence. Based on this missionstatement the firm will formulate its business strategy. This business strategy isa long-term plan for accomplishing the mission set forth in the mission statement.Each function within the business can then derive its own strategy in support ofthe firm's overall business strategy (financial strategy, marketing strategy, andoperations strategy).

2. Introduction Stage: When the product is first introduced into the market,considering the uncertainty inherent in the market at the initial stage, theoperations management of the company can best contribute to competitivenessby:

a. Developing the flexibility to cope with any changes in the specification ofthe product or service.

b. Developing the flexibility to cope with any changes in output volume.c. Maintaining quality levels so as to stabilize the performance of the

product / service, which is the main basis for competitiveness.

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1 3. Growth Stage:As different customer groups start to emerge in the growingmarket, there is a need for standardization in the design of the product or service.Standardization is necessary, as it allows the operations to supply rapidly to an ever-growing market. Successfully, balancing supply and demand proves to be the main pre-occupation of organizations which have products or services in the growth phase. Theincreasing competition also means that the company cannot afford to let its quality levelsdrop as it ramps up its level of activity.

1 4. Maturity stage:After a period of rapid growth, products and services losetheir novelty and become mature in the market. During this period, Demand starts todrop, which leads to a shortage of supply. Some early competitors might have left themarket. The industry then settles down and is ruled by a few larger companies. The

design of the products or services also stabilises to a few standard types. Competitionbecomes intense, with an emphasis on price, or value for money. This increasinglycompetitive and price-conscious environment means that a company is forced to cutdown on its operations to reduce costs, either by proper maintenance of projects or byprice cutting, or both.23 5. Decline Stage: This stage is characterized by fast declining sales revenueand fewer customers. It is generally caused by:0 o Obsolescence.

1 o Changes in customer preferences.

2 o Global competition.

3 o New regulatory requirements, such as environmental protection laws.

In this phase, there is a decline in sales and fewer customers in the market. Thus, theoperational objectives are still be dominated by cost.

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Q2. Explain the types of value added factory services. Explain

the major competitive dimensions of operations strategy.

Answer:

Value added factory services can be classified into four broad categories, they are:

1 Information: It is the ability to furnish critical data on product performance,process parameters and cost to internal groups (such as Research and Development)and to external customers, who then use the data to improve their own operation orproducts. For example, many companies provide quality data sheets documenting actual

product testing and field quality performance to field sales and service personnel.2 Problem solving: It is the ability to help internal and external groups solveproblems especially in quality. For example, a metal and fabricator company sendsfactory workers out with sales people to troubleshoot quality problems. This helps them

join with shop floor personnel on remedial efforts.

3 Sales support: It is the ability to enhance sales and marketing efforts bydemonstrating the technology, equipment, or production system the company is trying tosell. For example, Eureka Forbes organizes Kiosks in busy area to demonstrate its waterpurifier, vacuum cleaner and other products.4 Field support: It is the ability to replace defective parts quickly (for example,Caterpillar promises to make repair parts available anywhere in the world within 48hours) or to replenish stocks quickly to avoid downtime or stock outs (for example, a

retail chain is linked to its Hong Kong textile mills via a sophisticated computer systemthat signals factories to begin producing fast selling items as soon as weekly salesfigures are collected).

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Competitive Dimensions of a Firm

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Value added services provided to external customers yield two benefits. Firstly, it helpsthem to differentiate the organization from the competition. Indeed in many cases it iseasier to copy a firms product than to create the value added service infrastructure tosupport. Secondly, these services build relationships that bind customers to theorganization in a positive way.

The design and ongoing management of a firms operation have a significant impact onthe financial success of the firm. The firms strategy is implemented with a design that isportrayed financially in the assets of the firm. Each asset - be it a plant, a warehouse, anoperations centre, or the inventory carried in these facilities is owned by the firm andrequires a significant investment. The firms owners and shareholders want a return onthis investment. Decisions such as how big a plant should be, how many plants thereshould be and where to locate them and whether or not certain operations should beoutsourced are major topics of operations management. Other decisions such as howmuch inventory is needed to meet required service levels, relate directly to the assetinvestment.

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Q3. What is the meaning of performance measure? Explain

with an example. List the different types of

benchmarking?

Answer :

Performance measurement is the process of quantifying action, where measurementmeans the process of quantification. The performance of the operation is assumed to bederived from the actions taken by its management and the performance can be definedas the extent to which an operation fulfils the five performance objectives at any point intime so that the customers are satisfied. Benchmarking is the process of learning fromothers and involves comparing ones own performance or methods against othercomparable operations.

The five common performance objectives are quality, speed, dependability, flexibility andcost that can be split into more detailed measures, or aggregated into compositemeasures, such as customer satisfaction, overall service level or operations agility.These composite measures are further aggregated using measures such as marketobjectives achievement, financial objectives achievement, operations objectivesachievement and even overall strategic objectives achievement. The aggregatedperformance measures have greater strategic significance. This helps to draw a pictureof the overall performance of the business, although by doing so they will necessarilyinclude many influences outside those that operations performance imp movementwould normally address. The more detailed performance measures are usuallymonitored closely and more often, and although they provide a limited view of anoperations performance, they do provide a more descriptive and complete picture ofwhat should be and what is happening within the operation. In practice, mostorganizations choose to use performance targets from a larger range.

Performance measurement can be the process of quantifying action, wheremeasurement means the process of quantification and the performance of operation isassumed to be derived from the actions taken by its management. Performance can bedefined as the extent to which an operation fulfils the five performance objectives whichare quality, speed, dependability, flexibility and cost at any point in time so that thecustomers can be satisfied. Some kind of performance measurement is a prerequisitefor judging whether an operation is good, bad or completely different.

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Types of benchmarkingThe following are the different types of benchmarking:

1 Internal benchmarking: It involves comparing operations or parts ofoperations within the same total organization. For example, a large motor vehiclemanufacturer with several factories could choose to benchmark each factory against theothers.23 External benchmarking: It involves comparing an operation and otheroperations that are part of a different organization.

45 Non-competitive benchmarking: It is involves benchmarking againstexternal organizations that do not compete directly in the same markets.6

7 Competitive benchmarking: It involves comparing directly betweencompetitors in the same or similar markets.

89 Performance benchmarking: It involves comparing the levels of achievedperformance in different operations. For example, an operation could compare its ownperformance in terms of some or all of its performance objectives such as quality, speed,dependability, flexibility and cost against other organizations performance in the samedimensions.1011 Practice benchmarking: It involves comparing an organizations operationspractices, or way of doing things, and those adopted by another operation. For example,

a large retail store could compare its systems and procedures for controlling stock levelswith those used by another department store.

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Q4. What is Flexible Manufacturing System? How does it help

in improving the manufacturing process?

Answer:

Flexible Manufacturing Systems (FMS)

In the earlier topic we learned what Flexible Manufacturing Systems (FMS) are. Since astandard line is practically unable to satisfy the market requirements of variety andflexibility, an FMS is introduced. A typical FMSincludes the following:

1 A number of workstations, such as Computer Numerically Controlled machinesthat perform a wide range of operations.2 A transport system which moves material from one machine to another;

loading and unloading stations where completed or partially completed components arehoused and worked upon.3 A comprehensive computer control system that coordinates all the activities.

FMS enables speed and flexibility in terms of rapid changes to products, that is, to bemade with precision and consistency of reliability. FMS cells are arranged around agroup of products where some variety of the product is required even though volume ishigh. If the volume is very high and the product variability is minimal, then a line processwould be most applicable. FMS allows a product to be made in a number of variationsand in different volumes over a period of time. This provides benefits for both

manufacturer and customer. However, success with FMS is not just about investment intechnology. Any organization has to invest in human resources to gain benefits fromFMS.

The activities in a flexible manufacturing system are the following:1 Control of each workstation2 Distribution of control instructions to workstations3 Production control4 Traffic control5 Tool control6 System performance monitoring

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Q5. Name and explain the different types of plant layouts by

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providing examples for each.

Answer:

The layout determines where and in what sequence activities that make up a process

are located. The three basic layout types fixed, process, product and hybrid or celllayouts.

Fixed Position Layout

In a fixed position layout1, the product or person being acted on remains in one place,while operations take place around it. Workers come to the product (or to the productionlocation) instead of the product moving between workers and work centers. Workerscarry out single or multiple activities to modify a product or provide a service untilcompletion.

Fixed-position layouts are used in services, for example, in dental or surgical treatments

where the patient remains in a single location while being treated. In manufacturing, theproduction of heavy, bulky or fragile products, such as ships and airplanes, and mostconstruction projects take place with the people and machines moving around theproduct. Fixed position layouts are associated generally with lower volume processtypes most usually projects (as in construction), but sometimes with jobbing processes(specialized contractors in construction) and batch processes (as with the production ofairplanes or construction of many types of the same house on a housing development).

Process Layout

In a process layout, specific types of operations are grouped together within the

manufacturing or service facility. There is no pre-specified standard flow. Productsmove around according to processing requirements. This layout type is commonly usedin hospitals, where specialties are grouped together, for example, accident andemergency, X-ray facilities, pediatrics wards, etc. Since few patients have identicalproblems and they do not receive identical treatment, wards and departments are laidout to accommodate a wide range of potential patient requirements. Many retailoperations, especially department stores, use a process layout, where the customersmove between areas dedicated to different goods, such as kitchenware, furniture andclothing.

The same occurs in manufacturing operations such as precision engineering, where theproduct does not move in a specified sequence but is moved to particular areas as andwhen required, allowing a variety of products to be made. In manufacturing, a processlayout is commonly associated with jobbing production, where low volumes of productssuch as furniture, high-fashion clothing and jewellery is produced to individual

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requirements. In general, low-volume batch production is also associated with processlayout, although high volume batch production may follow the product layout that isdescribed next. This layout is ideal for handling small batches of products or a widevariety of tasks, each of which require specialist people or machines.

Product LayoutThe product layout was developed during mass production, as an extension of theprinciples of scientific management in the context of assembly-line production. In aproduct layout, people and machines are dedicated to a single product or small range ofsimilar products. Each workstation is laid out in a sequence that matches therequirements of the product exactly, and each stage is separate from the next stage. Atypical product layout is as shown in Figure

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The sequence of operations in a product layout follows a straightforward sequence,where one activity in the line cannot be started unless the previous activity has alreadybeen completed. In manufacturing, the product layout is common in automobileassembly and other high volume applications. In services, this layout can be found in

high volume, standard services, especially where there is a tangible element, such asfast-food preparation. IKEA, the furniture retailer, has a product layout for its stores.People have to follow a pre-defined route through the store, from one area to another. Inthis way IKEA achieve rates of customer throughput that few other retailers can match.The operation does not need to be laid out in this manner indeed, space restrictionsoften dictate that a straight line cannot be used.

In line operations, workstations need to be located close together to minimize materials

movement. Materials flow and control is critical, especially in ensuring that there is asteady flow of work to do and that both stock-outs (where materials run out) and largepiles of Work-In Process (WIP) are minimized. Because each workstation is dependenton the next, the speed of the entire line is determined by the workstation with the lowestcapacity. Furthermore, if a single work centre is not operating the entire line comes to ahalt very rapidly. Japanese automotive manufacturers have made a feature of this forsome time if there is a problem with any part of the operation, any worker can stop theline. This focuses attention on removing and preventing recurrence of the problem,which would be hidden if the line were allowed to continue working.

Q6. Explain the ingredients of a Business Process.

Answer:

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Business Process (BP) is the overall response that a business undertakes in utilizingresources and delivering outputs that create value for the customer. The same can belisted as under. The Business Process:1 Has a goal2 Uses specific inputs3 Delivers specific outputs

4 Collects resources5 Performs a number of activities in some order6 Creates value for the customer.

Business Process Management (BPM) defines a set of activities1 undertaken to optimizethe business process for improving the organizations performance, deliver better valueto the customer, maximize the earnings and keep its head above competition. Thebusiness system contains a combination of people and the applications organized tomeet business objectives. The applications are automated to enable information andreporting system to be accurate, timely and efficient. Designers and programmers puttogether the data and processes to provide optimum benefits, and put in place thearchitecture which is capable of addressing these needs. The architecture should be

flexible to adapt new methods, processes and even business plans. All the elements likeactivities, parts, products, data, people, processes, software tools, delivery systems andperformance measurement have to be structured and controlled for the purposes ofanalysis, evaluation, modification, implementation and correction. This is what we studyunder Business Process Modeling. Because of the extensive use of various softwareprogrammes for all these activities, BPM is synonymously used for the software toolsalso.The ingredients that go into a business process can be briefly outlined as:1 Necessary data needed to accomplish the d esired business objective.

2 Acquisition, storage, distribution, and control of data across tasks in the process.3 Persons, teams and organizational units that perform and are responsible fortasks.4 Decisions that modify and enhance the value of data during the process.We have some behavioral aspects of the business process, mainly the decision makingprocess where humans are involved. Decision failures are common and research hasshown that it is because of biases in perception and fallacies in reasoning. Anotherreason is a tendency to act on assumptions, even when data are available easily forverification and/or confirmation. Selective recall means a tendency to bring out ofmemory the facts that reinforce our assumptions and biased evaluation and a tendencyto accept evidence or fact as absolute which supports our hypotheses. These factorsresult in faulty decision making and being aware and avoiding them consciously,improve the processes.5

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