OPERATIONS MANAGEMENT COURSE NOTES

Meaning of operations management

An operation may be defined as the process of changing inputs into outputs thereby adding value to some entity. Right quality, right quantity, right time and right price are the four basic requirements of the customers and as such they determine the extent of customer satisfaction.  And if these can be provided at a minimum cost, then the value of goods produced or services rendered increases.

Operations management is concerned with managing the resources that directly produce the organisation services and products. The resources are generally consist of people, material, technology and information but may go wider than this. These resources are brought together by a series of processes so that they are utilized to deliver the primary service or product of the organization. Thus operation management is concerned with managing inputs (resources) through transformation processes to deliver outputs (service or products).

Objectives of operations management

• Producing the right kind of goods and services that satisfy customers’ needs (effectiveness objective).
• Maximizing output of goods and services with minimum resource inputs (efficiency objective).
• Ensuring that goods and services produced conform to pre-set quality specifications (quality objective).
• Minimizing throughput-time- the time that elapses in the conversion process- by reducing delays, waiting time and idle time (lead time objective).
• Maximizing utilization of manpower, machines, etc. (Capacity utilization objective).
• Minimizing cost of producing goods or rendering a service (Cost objective).

Transformation process in operations

A transformation process is any activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides outputs for customers or clients.

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Manufacturing and service operations

Organizations can be divided into two broad categories: manufacturing organizations and service organizations, each posing unique challenges for the operations function. There are two primary distinctions between these categories. First, manufacturing organizations produce physical, tangible goods that can be stored in inventory before they are needed. By contrast, service organizations produce intangible products that cannot be produced ahead of time. Second, in manufacturing organizations most customers have no direct contact with the operation. Customer contact occurs through distributors and retailers. For example, a customer buying a car at a car dealership never comes into contact with the automobile factory. However, in service organizations the customers are typically present during the creation of the service. Hospitals, colleges, theatres, and barber shops are examples of service organizations in which the customer is present during the creation of the service.

Manufacturing organizations

Organizations that primarily produce a tangible product and typically have low customer contact.

Service organizations

Organizations that primarily produce an intangible product, such as ideas, assistance, or information, and …

Characteristics of Products

Products are tangible – they are physical in nature such that they can be touched, smelled, felt and even seen. Services are intangible and they can only be felt not seen.

  Need vs. Relationship– a product is specifically designed to satisfy the needs and wants of the customers and can be carried away. However, with a service, satisfaction is obtained but nothing is carried away. Essentially, marketing of a service is primarily concerned with creation of customer relationship.

 Perishability- Products are perishable. For example, fresh farm and other food products are perishable and these can also be stored for later use or sale.   

 Quantity- products can be numerically quantified and they come in different forms, shapes and sizes.

  Inseparability-  

 product can be separated from the owner once the purchase has been completed.   6

 Quality- quality of products can be compared since these are physical features that can be held. However, it may be difficult to compare the quality of the services rendered by different service providers.

  Returnability- it is easier to return a product to the seller if the customer is not satisfied about it. In turn, the customer will get a replacement of the returned product. However, a service cannot be returned to the service provider since it is something that is intangible.

Value perspective- the value of a service is offered by the service provider while the value of the product is derived from using it by the customer. Value of a service cannot be separated from the provider while the value of a product can be taken or created by the final user of the product offered on the market.

  Shelf line- A product can be sold at a later date if it fails to sell on a given period. This is different with regard to a service that has a short shelve line and should be sold earlier.

 

Characteristics of a service

1. Perishability:

Service is highly perishable and time element has great significance in service marketing.

if not used in time is lost forever. Service cannot be stored.

2. Fluctuating Demand

Service demand has high degree of fluctuations. The changes in demand can be seasonal or by weeks, days or even hours. Most of the services have peak demand in peak hours, normal demand and low demand on off-period time.

3. Intangibility

Unlike product, service cannot be touched or sensed, tested or felt before they are availed. A service is an abstract phenomenon.

4. Inseparability:

Personal service cannot be separated from the individual and some personalised services are created and consumed simultaneously. For example hair cut is not possible without the presence of an individual. A doctor can only treat when his patient is present.

5. Heterogeneity:

The features of service by a provider cannot be uniform or standardised. A Doctor can charge much higher fee to a rich client and take much low from a poor patient.

6. Pricing of Services:

Pricing decision about services are influenced by perishability, fluctuation in demand and inseparability. Quality of a service cannot be carefully standardised. Pricing of services is dependent on demand and competition where variable pricing may be used.

7. Service quality is not statistically measurable

It is defined in form of reliability, responsiveness, empathy and assurance all of which are in control of employee’s direction interacting with customers. For service, customers satisfaction and delight are very important. Employees directly interacting with customers are to be very special and important. People include internal marketing, external marketing and interactive marketing.

Role of material management in business organizations

Material management is directly associated with the operational efficiency of an organization. A good material management system ensures the availability right materials in the production process with minimum wastage so as to cut losses. Here are the few ways which show the role of material management and how it influences your project performance: –

Time

Time is widely recognized as a primary criterion for performance measurement. Poor material management can have a negative effect on project time, like the insufficient stock of materials, lead to idling time as workers try not to exhaust the stockpile or it is worsened by the work stoppage. Due to this shortage, materials need to be reordered and causes longer idling time. Consequently, the work progress will be delayed. Therefore, the availability of sufficient quantity of materials affects the projects time.
A proper material management system ensures that there is enough buffer stock so as to prevent any stoppage in production.

Cost

Cost is one of the major considerations in the entire cycle of projects. Effective material management is able to reduce the overall cost of material. For example, in the purchasing process, discounts and bulk order may be economical as it reduced the transportation and ordering cost, thus, by minimizing the procurement cost of materials, the higher chances for reducing the overall project cost and concurrently increasing company profit.
However, the reasonable time needs to be considered so that the materials are not ordered too early or it may affect the company capital, interest charges, and storage charges. Wrong calculations can lead to over or under stocking which will be bad for the industry.

Quality

Availability of resources such as materials and equipment as planned during project duration is one of the factors contributing to quality performance. The available raw materials need to be of good condition and in sufficient quantity. Without the proper and sufficient raw materials, quality of the products can be jeopardized. Similarly, the materials itself also needs to be of appropriate quality according to the specification to ensure the products produced are of the right quality.

Productivity

The productivity is measured in terms of unit completely accomplished during given period and the related costs in terms of person-hours or money.
Efficient movement of materials increases productivity whilst reduces material travel time. Besides, the availability of material and equipment motivates workers to improve work productivity.

Waste

In simple words, waste is a product or material that is unwanted and required to be transported out. Inappropriate material storage and purchase of materials of poor quality contributes to waste generation in the production process.

PRODUCT DEVELOPMENT AND DESIGN

Meaning of product development

It refers to the creation of products with new or different characteristics that offer new or additional benefits to the customer.
Product development may involve modification of an existing product or its presentation, or formulation of an entirely new product that satisfies a newly defined customer want or market niche.

Meaning of product design

Product design is the process of creating a new product to be sold by a business to its customers. A very broad concept, it is essentially the efficient and effective generation and development of ideas through a process that leads to new products. In a systematic approach, product designers conceptualize and evaluate ideas, turning them into tangible inventions and products.

Why the need for product development

1. Changes in consumer tastes and preferences

Consumer needs and wants continuously change. Firms should respond to these changes through their products and services. Otherwise consumers will switch to competitor products that satisfy their “needs and wants”. For example consumers are becoming more health conscious, this is forcing companies to introduce low sugar, salt and fat products.

2. Product reaches the end of its product life cycle

The product maybe at the end of its Product Life Cycle, so the company may introduce new and improved updated versions.

3. Product is at the maturity stage of the product life cycle

The product might be at the maturity stage of its Product Life Cycle and need modifications to stimulate an increase in sales.

4. Technological Changes

There may be new technological changes which the company wants to capitalise on. Music companies are now selling more music via internet downloads than through traditional retail shops.

5. Competition

Competitors may force change. The product may be facing competition from other similar products being offered by competitors, hence the need to develop it further.

Sources of new product ideas

1. Internal sources

Internal sources are the great way to find new ideas. They are as follows-

• R & D (Research and Development) department:   It is the formal department of any organization that has the responsibility of generating new ideas. However the importance of R&D in the organization does not only depend on the idea generation, they also do some other important things.
• Employees: Companies can use the brain of their employees. If customers are the Oxygen of any company then employees are the heart of that company. All level of employees from executive to lower management can be great source of ideas. . However, picking up the great idea of it and rewarding the employees can encourage your employees to be more creative and contribute more in future.

2. Customers

 Most probably customers are the most important sources to get new product development ideas. The customer knows best what they need and what they are looking for. It is the most important thing to deliver satisfaction by providing exactly what your customers want.

3. Distributors

 Distributors works very closely with the market and they know consumer problems and their need. They cangive the ideas for new product possibilities.

4. Suppliers

Suppliers can also help with the information of the market like a new concept, technique or materials which can be used for developing new products.

5. Competitors

Competitors are another important source. One can analyze their competitors and can find many things which can be used for idea generation. Researching competitors can give you the idea that which thing you are missing or which thing they are missing, you can decide then what things you need to include in your new product. Remember your competitors are not your enemy, they are your strength.

6. Others

Other idea sources includes outside Consultancies, Design Firms and Online Communities, Trade Magazines, Shows and Seminars, trade fairs. Government agencies, Advertising agencies, marketing research firms, Universities, commercial laboratories, inventories and so on.

Stages in product development

1. Idea Generation

The first stage of the New Product Development is the idea generation. Ideas come from everywhere, can be of any form, and can be numerous. This stage involves creating a large pool of ideas from various sources.

2. Idea Screening

Ideas can be many, but good ideas are few. This second step of new product development involves finding those good and feasible ideas and discarding those which aren’t. Ideas can be evaluated against the following factors;

• The extent of existing demand for the new product if developed.
• The extent to which the proposed product harmonizes the existing product variables.
• Durability or the expected life cycle pattern of the new product.
• Technical capability or the degree to which the proposed product is in harmony with the current production capability.
• The long-term expected sales growth of the proposed product.

4. Concept Development & Testing

– Attractive ideas need to be developed into product concept and then tested.

-Product concept is an elaborated version of the idea expressed in meaningful consumer terms.e.g. a symbolic description of the product or prototype.

-Concept testing involves testing with an appropriate group of target customers.

-The concept may be presented physically or symbolically to customers in order for then to give their comments.

5. Business Strategy Analysis & Development

-It deals with estimating sales, costs and profits of the product.

-management needs to estimate whether sales would be high enough to return a satisfactory profit to the firm.

-Sales estimate can be made by examining the sales history of similar products and survey the market opinion.

-Costs and profits can also be estimated by research and development,production,market and finance department.

6. Product Development

Once all the strategies are approved, the product concept is transformed into an actual tangible product. This development stage of new product development results in building up of a prototype or a limited production model. All the branding and other strategies decided previously are tested and applied in this stage.

7. Test Marketing

Unlike concept testing, the prototype is introduced for research and feedback in the test marketing phase. Customer’s feedback is taken and further changes, if required, are made to the product. This process is of utmost importance as it validates the whole concept and makes the company ready for the launch.

8. Commercialization

The product is ready, so should be the marketing strategies. The marketing mix is now put to use. The final decisions are to be made. Markets are decided for the product to launch in. This stage involves briefing different departments about the duties and targets. Every minor and major decision is made before the final introduction stage of the new product development.

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What are the roles  of purchasing and supply in product development and design?

1. Provision of information on new components available.
2. Provision of information on possible components.
3. Identification of potential supply partners.
4. Advising on cost and availability of materials required.
5. Developing preliminary supply options.

PRODUCTION PLANNING AND CONTROL

Meaning of production planning

The administrative process that takes place within a manufacturing business and which involves making sure that sufficient raw materials, staff and other necessary items are procured and ready to create finished products according to the schedule specified. A typical large manufacturing business engaging in production planning will aim to maximize profitability while maintaining a satisfied consumer base.

Meaning of production control

-The planning and supervision of manufacturing activities to ensure that goods will be produced on time at the lowest possible cost.

Relationship between planning and control

1. Controlling takes place on the basis of standards developed by planning because if standards are not set in advance managers have nothing to control.
2. Planning without controlling is meaningless because once a plan becomes operational; controlling ensures events conform to plans.
3. Planning is prescriptive whereas controlling is evaluative because planning prescribes an appropriate course of action while controlling evaluates whether decisions have been translated into desired actions.
4. Planning and controlling are both forward because plans are prepared for the future, while controlling seeks to improve the future on the basis of the past experience.
5. Planning and controlling are both looking back because while planning is guided by past experiences, controlling compares the actual performance with the standards.

Meaning of Materials Planning:

A material planning is defined as the scientific way of determining the requirements of raw materials, components and other items needed for production within the economic investment policies

Factors to consider in planning for raw materials.

1. Plant capacity utilization
Extent or level to which the productive capacity of a plant is being used in generation of goods and services. Expressed usually as a percentage, it is computed by dividing the total capacity with the portion being utilized. More materials will be needed for firm with a high plant capacity utilization ratio.

2. Products demand level

– A product with a high demand will require constant supply of raw materials. High stock levels will also be stocked as buffer stock.

 

3. Reliability of Suppliers

Suppliers can have a huge influence on inventory control. Successful businesses require reliable suppliers in order to plan spending for raw materials and arrange for production. An unreliable or unpredictable supplier can have huge knock-on effects for inventory control. It can be a good idea to ensure you have a reliable back up supplier to prevent product shortages or delays in the manufacturing process.

4. Lead Time

It is the time it takes from the moment an item is ordered to the moment it arrives.

Lead time will vary widely depending on the product type and the various manufacturing processes involved, and therefore changes in these factors can require changes to inventory management.

5. Availability of funds

Factors such as the cost of borrowing money to stock enough inventories can greatly influence inventory management. In this case, your finances may fluctuate according to the economy, and it is wise to keep an eye on changing interest rates to help plan you’re spending.

6. Perishability of raw materials

Inventory management must take into consideration the different types of products in stock. For example, some products may be perishable.

7. Availability of storage space

As much as the firm is able to acquire raw material cheaply during some seasons, storage space may be limited, hence affecting policies on material acquisition.

8. Seasonality of some materials

Some materials can only be obtained at specific times of the year, after which they are not available or can only be acquired at very high prices.

9. Business cycles

The business cycle describes the rise and fall in production output of goods and services in an economy. Materials requirement will fluctuate as per business cycle.

10. Competition for scarce raw materials

Competition for scarce raw materials will force a firm to change its policies regarding stock levels and prices for raw materials

Production Planning Techniques

1. Capacity planning

-This is the process of determining the production capacity needed by an organization to meet changing demands for its products. In the context of capacity planning, design capacity is the maximum amount of work that an organization is capable of completing in a given period. Effective capacity is the maximum amount of work that an organization is capable of completing in a given period due to constraints such as quality problems, delays, material handling, etc.

The broad classes of capacity planning are lead strategy, lag strategy, match strategy, and adjustment strategy.

Lead strategy

is adding capacity in anticipation of an increase in demand. Lead strategy is an aggressive strategy with the goal of luring customers away from the company’s competitors by improving the service level and reducing lead time. It is also a strategy aimed at reducing stockout costs. A large capacity does not necessarily imply high inventory levels, but it can imply higher cycle stock costs. Excess capacity can also be rented to other companies.

Advantage of lead strategy:

• First, it ensures that the organization has adequate capacity to meet all demand, even during periods of high growth.
• It can be used to pre-empt competitors who might be planning to expand their own capacity.
• Many businesses find that overbuilding in anticipation of increased usage is cheaper and less disruptive than constantly making small increases in capacity.

Disadvantages

Of course, a lead capacity strategy can be very risky, particularly if demand is unpredictable or technology is evolving rapidly.

Lag strategy

It refers to adding capacity only after the organization is running at full capacity or beyond due to increase in demand. This is a more conservative strategy and opposite of a lead capacity strategy. It decreases the risk of waste, but it may result in the loss of possible customers either by stock-out or low service levels. Three clear advantages of this strategy are a reduced risk of overbuilding, greater productivity due to higher utilization levels, and the ability to put off large investments as long as possible. Organizations that follow this strategy often provide mature, cost-sensitive products or services.

• Match strategy- is adding capacity in small amounts in response to changing demand in the market. This is a more moderate strategy.
• Adjustment strategy -is adding or reducing capacity in small or large amounts due to consumer’s demand, or, due to major changes to product or system architect

2. Loading, sequencing and scheduling.

Loading

It involves assigning jobs to work centres and to various machines in the work centres. If a job can be processed on only one machine, no difficulty is presented. However, if a job can be loaded on multiple work canters or machines, and there are multiple jobs to process, the assignment process becomes more complicated. The scheduler needs some way to assign jobs to the centres in such a way that processing and setups are minimized along with idle time and throughput time.

Two approaches are used for loading work centres: infinite loading and finite loading.

Infinite loading -jobs are assigned to work centres without regard for capacity of the work centre. Priority rules are appropriate for use under the infinite loading approach. Jobs are loaded at work centres according to the chosen priority rule. This is known as vertical loading.

Finite loading

It projects the actual start and stop times of each job at each work centre. Finite loading considers the capacity of each work centre and compares the processing time so that process time does not exceed capacity. With finite loading the scheduler loads the job that has the highest priority on all work centres it will require. Then the job with the next highest priority is loaded on all required work centres, and so on. This process is referred to as horizontal loading. The scheduler using finite loading can then project the number of hours each work center will operate.

A drawback of horizontal loading is that jobs may be kept waiting at a work center, even though the work center is idle. This happens when a higher priority job is expected to arrive shortly. The work center is kept idle so that it will be ready to process the higher priority job as soon as it arrives. With vertical loading the work center would be fully loaded. Of course, this would mean that a higher priority job would then have to wait to be processed since the work center was already busy. The scheduler will have to weigh the relative costs of keeping higher priority jobs waiting, the cost of idle work centers, the number of jobs and work centers, and the potential for disruptions, new jobs and cancellations.

Sequencing

Sequencing is concerned with determining the order in which jobs are processed. Not only must the order be determined for processing jobs at work centers but also for work processed at individual work stations. When work centers are heavily loaded and lengthy jobs are involved, the situation can become complicated. The order of processing can be crucial when it comes to the cost of waiting to be processed and the cost of idle time at work centers.

These rules assume that setup time and setup cost is independent of the processing sequence. However, this is not always the case. Jobs that require similar setups can reduce setup times if sequenced back to back. In addition to this assumption, the priority rules also assume that setup time and processing times are deterministic and not variable, there will be no interruptions in processing, the set of jobs is known, no new jobs arrive after processing begins, and no jobs are canceled. While little of this is true in practice, it does make the scheduling problem manageable.

Scheduling

Scheduling pertains to establishing both the timing and use of resources within an organization. Under the operations function (both manufacturing and services), scheduling relates to use of equipment and facilities, the scheduling of human activities, and receipt of materials.

While issues relating to facility location and plant and equipment acquisition are considered long term and aggregate planning is considered intermediate term, operations scheduling is considered to be a short-term issue. As such, in the decision-making hierarchy, scheduling is usually the final step in the transformation process before the actual output (e.g., finished goods) is produced. Consequently, scheduling decisions are made within the constraints established by these longer-term decisions. Generally, scheduling objectives deals with trade-offs among conflicting goals for efficient utilization of labor and equipment, lead time, inventory levels, and processing times..

3. Standardization

Standardization means producing maximum variety of products from the minimum variety of materials, parts, tools and processes. It is the process of establishing standards or units of measure by which extent, quality, quantity, value, performance etc., may be compared and measured

Benefits to Manufacturing Department

1. Lower unit cost.
2. Better quality products.
3. Better methods and tooling.
4. Increased interchangeability of parts.
5. Better utilization of manpower and equipment.
6. Accurate delivery dates.
7. Better services of production control

Benefits to Production Planning Department

1. Scope for improved methods, processes and layouts.
2. Opportunities for more efficient tool design.
3. Better resource allocation.
4. Reduction in pre-production activities.

Advantages to Production Control Department

Well proven design and methods improve planning and control.

Accurate delivery promises.

Fewer delays arise from waiting for materials, tools, etc.

Follow-up of small batches consumes less time.

MERITS to Quality Control Department

Better inspection and quality control is possible.

Quality standards can be defined more clearly.

Operators become familiar with the work and produce jobs of consistent quality.

Disadvantages of Standardization
Following are the disadvantages of standardization:

1. Reduction in choice because of reduced variety and consequently loss of business or customer.
2. Standard once set, resist change and thus standardization may become an obstacle to progress.
3. It tends to favour only large companies.
4. It becomes very difficult to introduce new models because of less flexible production facilities and due to high cost of specialized production equipment.

4. Just In Time (JIT)

The just-in-time inventory system is a management strategy that aligns raw-material orders from suppliers directly with production schedules. Companies use this inventory strategy to increase efficiency and decrease waste by receiving goods only as they need them for the production process, which reduces inventory costs. This method requires producers to forecast demand accurately.The JIT inventory system is a shift away from other just-in-case strategies; in which producers hold large inventories to have enough products to absorb maximum market demand.

5. Gantt chart

A Gantt chart is a type of bar chart that illustrates a project schedule.This chart lists the tasks to be performed on the vertical axis, and time intervals on the horizontal axis. The width of the horizontal bars in the graph shows the duration of each activity. Gantt charts illustrate the start and finish dates of the terminal elements and summary elements of a project. Terminal elements and summary elements constitute the work breakdown structure of the project. Modern Gantt charts also show the dependency (i.e., precedence network) relationships between activities. Gantt charts can be used to show current schedule status using percent-complete shadings and a vertical “TODAY” line as shown here.

They are sometimes equated with bar charts.

Gantt charts are usually created initially using an early start time approach, where each task is scheduled to start immediately when its prerequisites are complete. This method maximizes the float time available for all tasks.

6. Network analysis

Breaking down a complex project’s data into its component parts (activities, events, durations, etc.) and plotting them to show their interdependencies and interrelationships.

7. MRP I and MRP II

Material requirements planning (MRP) and manufacturing resource planning (MRPII) are both incremental information integration business process strategies that are implemented using hardware and modular software applications linked to a central database that stores and delivers business data and information.

MRP is concerned primarily with manufacturing materials while MRPII is concerned with the coordination of the entire manufacturing production, including materials, finance, and human resources. The goal of MRPII is to provide consistent data to all members in the manufacturing process as the product moves through the production line.

Paper-based information systems and non-integrated computer systems that provide paper or disk outputs result in many information errors, including missing data, redundant data, numerical errors that result from being incorrectly keyed into the system, incorrect calculations based on numerical errors, and bad decisions based on incorrect or old data. In addition, some data is unreliable in non-integrated systems because the same data is categorized differently in the individual databases used by different functional areas.

MRPII systems begin with MRP, material requirements planning. MRP allows for the input of sales forecasts from sales and marketing, or of actual sales demand in the form of customers’ orders. These demands determine the raw materials demand. MRP and MRPII systems draw on a master production schedule, the breakdown of specific plans for each product on a line. While MRP allows for the coordination of raw materials purchasing, MRPII facilitates the development of a detailed production schedule that accounts for machine and labour capacity, scheduling the production runs according to the arrival of materials. An MRPII output is a final labour and machine schedule. Data about the cost of production, including machine time, labour time and materials used, as well as final production numbers, is provided from the MRPII system to accounting and finance.

Benefits

MRP II systems can provide:

• Better control of inventories
• Improved scheduling
• Productive relationships with suppliers

For design / engineering:

• Improved design control
• Better quality and quality control

For financial and costing:

• Reduced working capital for inventory
• Improved cash flow through quicker deliveries
• Accurate inventory records

8. Enterprise resource planning (ERP)

 Is the integrated management of core business processes, often in real-time and mediated by software and technology.

ERP is usually referred to as a category of business-management software — typically a suite of integrated applications—that an organization can use to collect, store, manage, and interpret data from these many business activities.

And also, itprovides an integrated and continuously updated view of core business processes using common databases maintained by a database management system.

its systems track business resources—cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data.^[1] ERP facilitates information flow between all business functions and manages connections to outside stakeholders.^[2]

The ERP system integrates varied organizational systems and facilitates error-free transactions and production, thereby enhancing the organization’s efficiency. However, developing an ERP system differs from traditional system development.^[4] ERP systems run on a variety of computer hardware and network configurations, typically using a database as an information repository.

 ERP systems typically include the following characteristics:

• An integrated system
• Operates in (or near) real time
• A common database that supports all the applications
• A consistent look and feel across modules
• Installation of the system with elaborate application/data integration by the Information Technology (IT) department, provided the implementation is not done in small steps^[20]
• Deployment options include: on-premises, cloud hosted, or SaaS

Advantages

The most fundamental advantage of ERP is that the integration of myriad business processes saves time and expense. Management can make decisions faster and with fewer errors. Data becomes visible across the organization. Tasks that benefit from this integration include:^[59]

• Sales forecasting, which allows inventory optimization.
• Chronological history of every transaction through relevant data compilation in every area of operation.
• Order tracking, from acceptance through fulfilment
• Revenue tracking, from invoice through cash receipt
• Matching purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced)

ERP systems centralize business data, which:

• Eliminates the need to synchronize changes between multiple systems—consolidation of finance, marketing, sales, human resource, and manufacturing applications
• Brings legitimacy and transparency to each bit of statistical data
• Facilitates standard product naming/coding
• Provides a comprehensive enterprise view (no “islands of information”), making real–time information available to management anywhere, anytime to make proper decisions
• Protects sensitive data by consolidating multiple security systems into a single structure^[60]

Benefits

• ERP can improve quality and efficiency of the business. By keeping a company’s internal business processes running smoothly, ERP can lead to better outputs that may benefit the company, such as in customer service and manufacturing.
• ERP supports upper level management by providing information for decision making.
• ERP creates a more agile company that adapts better to change. It also makes a company more flexible and less rigidly structured so organization components operate more cohesively, enhancing the business—internally and externally.^[61]
• ERP can improve data security in a closed environment. A common control system, such as the kind offered by ERP systems, allows organizations the ability to more easily ensure key company data is not compromised. This changes, however, with a more open environment, requiring further scrutiny of ERP security features and internal company policies regarding security.^[62]
• ERP provides increased opportunities for collaboration. Data takes many forms in the modern enterprise, including documents, files, forms, audio and video, and emails. Often, each data medium has its own mechanism for allowing collaboration. ERP provides a collaborative platform that lets employees spend more time collaborating on content rather than mastering the learning curve of communicating in various formats across distributed systems.^[57]

 

Disadvantages

• Customization can be problematic. Compared to the best-of-breed approach, ERP can be seen as meeting an organization’s lowest common denominator needs, forcing the organization to find workarounds to meet unique demands.^[63]

• Re-engineering business processes to fit the ERP system may damage competitiveness or divert focus from other critical activities.
• ERP can cost more than less integrated or less comprehensive solutions.
• High ERP switching costs can increase the ERP vendor’s negotiating power, which can increase support, maintenance, and upgrade expenses.
• Overcoming resistance to sharing sensitive information between departments can divert management attention.
• Integration of truly independent businesses can create unnecessary dependencies.
• Extensive training requirements take resources from daily operations.
• harmonization of ERP systems can be a mammoth task (especially for big companies) and requires a lot of time, planning, and money.

PLANT AND EQUIPMENT MAINTAINANCE

The technical meaning of plant and equipment maintenance involves functional checks, servicing, repairing or replacing of necessary items of plant and equipment.

Need for plant and equipment maintenance

• To maximize the useful life of plant and equipment.
• To keep the plant and equipment safe and prevent the development of safety hazards.
• To minimize the total production or operating costs directly attributed to equipment service and repair.
• To maximize production/operations capacity given equipment resources.
• To enable product /service quality and customer satisfaction be achieved through correctly adjusted operated equipments.

Consequences of machine breakdown

a. Loss in production time.

b. Rescheduling of production.

c. Spoilt materials (because sudden stoppage of process damages in-process materials).

d. Failure to recover overheads (because of loss in production hours).

e. Need for over-time.

f. Need for subcontracting work.

g. Temporary work shortages-workers require alternative work.

Types of Plant Maintenance:

Maintenance may be classified into the following categories

(a)Reactive maintenance/ Corrective / breakdown maintenance,

(b) Proactive maintenance

(i)Scheduled maintenance,

(ii)Preventive maintenance, and

(iii)  Predictive maintenance.

(a)Reactive/ Corrective/Breakdown Maintenance:

Corrective or breakdown maintenance implies that repairs are made after the equipment is out of order and it cannot perform its normal function any longer, e.g., an electric motor will not start, a belt is broken, etc.

This type of maintenance may be quite justified in small factories which:

(i) Are indifferent to the benefits of scheduling;

(ii) Do not feel a financial justification for scheduling techniques; and

(iii) Get seldom (temporary or permanent) demand in excess of normal operating capacity.

Typical Causes of Equipment Breakdown:

(i) Failure to replace worn out parts.

(ii) Lack of lubrication.

(iii) Neglected cooling system.

(iv) Indifference towards minor faults.

(v) External factors (such as too low or too high line voltage, wrong fuel, etc.)

(vi) Indifference towards -equipment vibrations, unusual sounds coming out of the rotating machinery, equipment getting too much heated up, etc.

Disadvantages of Breakdown Maintenance:

(i) Breakdowns generally occur at inopportune times. This leads to poor, hurried maintenance and excessive delays in production.

(ii) Reduction of output.

(iii) Faster plant deterioration.

(iv) Increased chances of accidents and less safety to both workers and machines.

(v) More spoilt material.

(vi) Direct loss of profit.

(vii) Breakdown maintenance practice cannot be employed for those plant items which are regulated by statutory provisions, for example cranes, and lifts, hoists and pressure vessels.

(b) Proactive maintenance

This is the kind of maintenance that is carried out before the machine breaks down. It’s categorized as follows:

(i)Scheduled Maintenance:

Scheduled maintenance is a stich-in-time procedure aimed at avoiding breakdowns. Breakdowns can be dangerous to life and as far as possible should be minimized. Scheduled maintenance practice incorporates (in it), inspection, lubrication, repair and overhaul of certain equipment which if neglected can result in breakdown.

Inspection, lubrication, servicing, etc., of these equipment are included in the predetermined schedule. Scheduled maintenance practice is generally followed for overhauling of machines, cleaning of water and other tanks, white-washing of buildings, etc.

(c) Preventive Maintenance:

A system of scheduled, planned or preventive maintenance tries to minimize the problems of breakdown maintenance. It is a stich-in-time procedure. It locates weak spots (such as bearing surfaces, parts under excessive vibrations, etc.) in all equipment, provides them regular inspection and minor repairs thereby reducing the danger of unanticipated breakdown. The underlying principle of preventive maintenance is that prevention is better than cure.

Preventive Maintenance involves:

(a) Periodic inspection of equipment and machinery to uncover conditions that lead to production breakdown and harmful depreciation.

(b) Upkeep of plant equipment to correct such conditions while they are still in a minor stage.

Objectives of preventive maintenance

(i) To minimize the possibility of unanticipated production interruption or major breakdown by locating or uncovering any condition which may lead to it?

(ii) To make plant equipment and machinery always available and ready for use.

(iii) To maintain the value of equipment and machinery by periodic inspections, repairs, overhauls, etc.

(iv) To maintain the optimum productive efficiency of the plant equipment and machinery.

(v) To maintain the operational accuracy of the plant equipment.

(vi) To reduce the work content of maintenance jobs.

(vii) To achieve maximum production at minimum repair cost.

(viii) To ensure safety of life and limbs of the workmen.

Where to start Preventive maintenance

One should not apply PM to the entire plant at once. PM programme should be built up in pieces; when one piece is finished, start the next. It is better to tackle one section (or department) at a time or one type of machinery over the entire plant. The entire PM programme hangs on inspections and their related duties of adjustments and repairs.

Advantages of Preventive Maintenance:

1. reduced breakdowns and connected down-time.

2. Lesser odd-time repairs and reduced overtime to the maintenance work-force.

3. Greater safety for workers.

4. Fewer large-scale and repetitive repairs.

5. Low maintenance and repair costs.

6. Less stand-by or reserve equipment, and spare parts.

7. Identification of equipment requiring high maintenance costs.

8. Lower unit cost of manufacture.

9. Better product quality and fewer product rejects.

10. Increased equipment life.

11. Better industrial relations because production workers do not face involuntary lay-offs or loss of incentive bonus because of breakdowns.

(d) Predictive Maintenance:

It is comparatively a newer maintenance technique.

It makes use of human senses or other sensitive instruments such as:

• Audio gauges,
• Vibration analyzers,
• Amplitude meters,
• Pressure, temperature and resistance strain gauges, etc., to predict troubles before the equipment fails.

Unusual sounds coming out of rotating equipment predict a (coming) trouble; an electric cable excessively hot at one point predicts a trouble. Simple hand touch can point out many unusual (equipment) conditions and thus predict a trouble. In predictive maintenance, equipment conditions are measured periodically or on a continuous basis and this enable maintenance men to take a timely action such as equipment adjustments, repair or overhaul. Predictive maintenance extends the service life of equipment without fear of failure.

Maintenance standards are used for

(i) Planning and scheduling maintenance work.

(ii) Providing fair number of maintenance-men.

(iii) Measuring the output or effectiveness of performance of maintenance men.

(iv) Providing incentive earnings for maintenance—men.

Advantages of Using Standard Data for Maintenance Control

1. Consistent estimating of maintenance jobs.

2. Elimination of delays through improved scheduling.

3. Improved supervisory controls.

4. Alternate methods of maintenance can be properly weighed and compared.

5. Determination of labour content for each craft provides proper coordination of crafts.

6. Through application of maintenance standards and proper estimating, the work backlogs can be adjusted as required.

7. Through controlled means, the fluctuations in maintenance requirements are handled properly.

8. Standard data forms a basis for accurately evaluating, forecasting and controlling maintenance expenditures.

Factors to consider when planning for plant and equipment maintenance

1. Keeping pace with changing technology
2. Economic life of the plant and equipment.

 Maintenance Expenses

Maintenance expenses are the costs incurred to keep an item in good condition or good working order. Maintenance costs are classified into fixed and variable costs.

Role of purchasing department in plant and equipment maintenance

1. Negotiation for the actual purchase of maintenance equipment. Once the maintenance kit has been identified, the purchasing department assumes the role of negotiating with the supplier over the price.
2. Liaising with the maintenance staff to ensure that information regarding cost, availability and delivery times is available in respect to critical items.
3. The purchasing department is responsible for initiating a policy of standardization to avoid holding a variety of critical spares.
4. Suggesting alternative items for maintenance. There are a variety of maintenance kits that can be used to carry the same maintenance task. The purchasing is always in know on the various maintenance kits.
5. Minimize administration and storage costs. The Purchasing department can help in determining the right re-order level to avoid high storage costs.

PRODUCTION SYSTEMS

The types of production system are grouped under two categories

1. Intermittent production system, and
2. Continuous production system.

Intermittent production system

Intermittent means something that starts (initiates) and stops (halts) at irregular (unfixed) intervals (time gaps).

In the intermittent production system, goods are produced based on customer’s orders. These goods are produced on a small scale. The flow of production is intermittent (irregular). In other words, the flow of production is not continuous. In this system, large varieties of products are produced. These products are of different sizes. The design of these products goes on changing. It keeps changing according to the design and size of the product. Therefore, this system is very flexible.

the Following chart highlights the concept of an intermittent production system.

Following are examples on the intermittent production system. Please refer above chart while reading examples given below.

1. The work of a goldsmith is purely based on the frequency of his customer’s orders. The goldsmith makes goods (ornaments) on a small-scale basis as per his customer’s requirements. Here, ornaments are not done on a continuous basis.
2. Similarly, the work of a tailor is also based on the number of orders he gets from his customers. The clothes are stitched for every customer independently by the tailor as per one’s measurement and size. Goods (stitched clothes) are made on a limited scale and is proportional to the number of orders received from customers. Here, stitching is not done on a continuous basis.

The features of an intermittent production system are depicted below.

The characteristics of an intermittent production system are listed as follows:

1. The flow of production is not continuous. It is intermittent.
2. Wide varieties of products are produced.
3. The volume of production is small.
4. General purpose machines are used. These machines can be used to produce different types of products.
5. The sequence of operation goes on changing as per the design of the product.
6. The quantity, size, shape, design, etc. of the product depends on the customer’s orders.

The types of intermittent production system include:

1. Project production flows,
2. Jobbing production flows, and
3. Batch production flows.

Continuous production system

Continuous means something that operates constantly without any irregularities or frequent halts.

In the continuous production system, goods are produced constantly as per demand forecast. Goods are produced on a large scale for stocking and selling. They are not produced on customer’s orders. Here, the inputs and outputs are standardized along with the production process and sequence.

Following are examples on the continuous production system. Please refer above chart while reading examples given below.

1. The production system of a food industry is purely based on the demand forecast. Here, a large-scale production of food takes place. It is also a continuous production.
2. Similarly, the production and processing system of a fuel industry is also purely based on, demand forecast. Crude oil and other raw sources are processed continuously on a large scale to yield usable form of fuel and compensate global energy demand.

The features of a continuous production system are depicted below.

The characteristics of a continuous production system are listed as follows:

1. The flow of production is continuous. It is not intermittent.
2. The products are standardized.
3. The products are produced on predetermined quality standards.
4. The products are produced in anticipation of demand.
5. Standardized routing sheets and schedules are prepared.

The types of continuous production system include:

1. Mass production flows, and
2. Process production flows.

1. Projects

A project is a series of tasks that need to be completed in order to reach a specific outcome. A project can also be defined as a set of inputs and outputs required to achieve a particular goal. Projects can range from simple to complex and can be managed by one person or a hundred.

Characteristic Features of a Project:

1. Objectives:

A project has a fixed set of objectives. Once the objectives have been achieved, the project ceases to exist.

2. Life Span:

A project cannot continue endlessly. It has to come to an end. What represents the end would normally be spell out in the set of objectives.

3. Single entity:

A project is one entity and is normally entrusted to one responsibility centre while the participants in the project arc many.

4. Team-work:

A project calls for team-work. The team again is constituted of members belonging to different disciplines, organisations and even countries.

5. Life-cycle:

A project has a life cycle reflected by growth, maturity and decay. It has naturally a learning component.

6. Uniqueness:

No two projects are exactly similar even if Die plants are exactly identical or are merely duplicated. The location, the infra-structure, the agencies and the people make each project unique.

7. Change:

A project sees many changes throughout its life while some of these changes may not have any major impact; then- can be some changes which will change the entire character of course of the project.

8. Successive principle:

What is going to happen during the life cycle of a project is not fully known at any stage. The details get finalised successively with the passage of time. More is known about a project when it enters the construction phase than what was known say, during the detailed engineering phase.

9. Made to order:

A project is always made to the order of its customer. The customer stipulates various requirements and puts constraints within which the project must be executed.

10. Unity in diversity:

A project is a complex set of thousands of varieties. The varieties are in terms of technology, equipment and materials, machinery and people, work culture and ethics. But they remain inter-related and unless this is so, they either do not belong to the project or will never allow the project to be completed.

11. High level of sub-contracting:

A high percentage of the work in a project is done through contractors. The more the complexity of the project, the more will be the extent of contracting. Normally around 80% of the work in a project is done through sub-contractors.

12. Risk and uncertainty:

Every project has risk and uncertainty associated with it.

Categories of Projects:

1. Normal Projects:

In this category of projects, adequate time is allowed for Implementation of the project. All the phases in a project are allowed to take the time they should normally take. This type of project will require minimum capital cost and no sacrifice in terms of quality.

• Crash Projects:

In this category of projects, additional capital costs are incurred to gain time. Maximum overlapping of phases is encouraged and compromises in terms of quality are also not ruled out. Saving in time is normally achieved in procurement and construction where time is brought from the vendors and contractors by paying extra money to them.

• Disaster Projects:

Anything needed to gain time is allowed in these projects. Engineering is limited to make them work. Vendors who can supply “yesterday” are selected irrespective of the cost. Quality short of failure level is accepted. No competitive bidding is resorted to; Round-the-clock work is done at the construction site. Naturally, capital cost will go up very high, but project time will get drastically reduced.

Advantages of projects

1. Efficient Goal Setting

Most projects fail simply because managers lack a clear goal. Professional project managers have the expertise and tools needed to create forecasts, manage project costs and determine the risks across an entire project life cycle.

2. Improved Communication

Project management allows for more efficient communication between leaders and other employees involved in the project

3. Greater Customer Satisfaction

Projects can deliver new features and open up new services or products to delight customers, or projects can contribute to reducing costs for customers.

4. High Level of Expertise

By hiring a project manager or outsourcing projects, your company will benefit from a high level of expertise. The people within your organization will learn new things and gain a new perspective that will contribute to their professional growth.

5. Accurate Risk Assessment

Over 75 percent of companies lack confidence in project success. Excessive rework, scope creep, poor communication and unclear objectives are often the culprits

Disadvantages of projects

1. High Costs

If you’re hiring a project manager, expect to invest in specialty software. These programs can be costly and difficult to implement.

2. Increased Complexity

Project management is a complex process with multiple stages.

3. Communication Overhead

When you hire a project management team, new employees join your company. This adds an extra layer of communication and may not always match your organizational culture.

4. Lack of Creativity

Sometimes, project management leaves little or no room for creativity.

2. Job- order production

-sometimes called jobbing or one-off production, involves producing custom work, such as a one-off product for a specific customer or a small batch of work in quantities usually less than those of mass-market products

Job production can be classical craft production by small firms (making railings for a specific house, building/repairing a computer for a specific customer, making flower arrangements for a specific wedding etc.), but large firms use job production, too, and the products of job production are often interchangeable, such as machined parts made by a job shop.

Examples include:

• Designing and implementing an advertising campaign
• Auditing the accounts of a large public limited company
• Building a new factory
• Installing machinery in a factory
• Machining a batch of parts per a CAD drawing supplied by a customer
• Building the Golden Gate bridge

Fabrication shops and machine shops whose work is primarily of the job production type are often called job shops. The associated people or corporations are sometimes called jobbers.

Job production is, in essence, manufacturing on a contract basis, and thus it forms a subset of the larger field of contract manufacturing. But the latter field also includes, in addition to jobbing, a higher level of out sourcing in which a product-line-owning company entrusts its entire production to a contractor, rather than just outsourcing parts of it.

 Benefits of job production

• can provide emergency parts or services, such as quickly making a machine part that would take a long time to acquire otherwise
• can provide parts or services for machinery or systems that are otherwise not available, as when the original supplier no longer supports the product or goes out of business (orphaned)
• work is generally of a high quality
• a high level of customization is possible to meet the customer’s exact requirements
• significant flexibility is possible, especially when compared to mass production
• workers can be easily motivated due to the skilled nature of the work they are performing

Disadvantages include:

• higher cost of production
• re-engineering: sometimes engineering drawings or an engineering assessment, including calculations or specifications, needs to be made before the work can be done
• requires the use of specialist labour (compared with the repetitive, low-skilled jobs in mass production)
• slow compared to other methods (batch production and mass production)

3. Batch production system

Batch production is a technique used in manufacturing, in which the object in question is created stage by stage over a series of workstations, and different batches of products are made. Together with job production (one-off production) and mass production (flow production or continuous production) it is one of the three main production methods.^[1]

Advantages of Batch Production

• Products can be produced in mass quantities, reducing the overall cost per unit
• Companies only focus on a small group of products, leading to greater quality control and product expertise
• Cost of labor is reduced, as workers only focus on a particular task or set of tasks
• Cost of machinery is reduced, as one machine can handle several different product configurations
• Lends itself to repeat orders, meaning a smoother, more consistent production flow over time
• Machinery isn’t always on, saving on energy costs

Disadvantages of Batch Production

• Each batch must be tested for quality and uniformity before future batches can be produced, causing idle downtime
• Machinery must be stopped and recalibrated between batches, also causing downtime
• Storage costs are high for large batches of the same product
• Fewer varieties of jobs can demotivate employees

4. Mass producti0n

it is the manufacture of large quantities of standardized products, frequently using assembly line or automation technology. Mass production refers to the production of a large number of similar products efficiently and typically is characterized by some type of mechanization to achieve high volume, detailed organization of materials flow, careful control of quality standards and division of labour.

	Advantages It is usually ‘automated’ to the highest extent possible. Fewer labour costs Faster rate of production Capital and energy are increased while total expenditure per unit of product is decreased Faster rate of production	Disadvantages Machinery is very expensive to buy, so production lines are very expensive to set up. Workers are not very motivated, since their work is very repetitive. Not very flexible, as a production line is difficult to adapt. If one part of the line breaks, the whole production process will have to stop until it is repaired.

5. Process production

It’s a system of production in which a product passes through several processes or stages of production which are operated on a continuous basis.

The distinctive feature of process costing is that the unit costs of products are determined for the respective process through which the units pass. All costs relating to a process are charged to a separate account and then averaged out to determine the cost per unit.

When a product pass through several processes the total cost of one process is transferred to next process. To these costs are added the additional cost of materials, labour, and overheads, and the total cost transferred until production is completed and finished products turned out.

Advantages of Process Costing

1. Process costing helps determination of cost in each process and of the final product at short intervals. If overhead rates are predetermined, unit costs can be computed very promptly even at weekly or monthly.

2. The average cost can be easily determined when the methods of production are standardized. Price quotations can be submitted more promptly with standardization of processes.

3. It involves less clerical work and cost than job costing. Cost finding is simpler and less expensive.

4. Allocation of expenses can be easily made and the costs in each process accurately determined.

5. Use of standard costing system is very effective in process costing.

6. The performance analysis and managerial control is facilitated to a greater extent because of the availability of cost data in the form of prompt and accurate cost reports.

Limitations of Process Costing:

1. Process costing is based on historical cost. The available cost information may not be useful for future managerial decision-making.

2. Unfinished units (work in process) at the end of the period are expressed in equivalent production units. This introduces subjective element in scientific cost determination.

3. The whole concept of process costing system is based on average costs. Average costs do not always reflect the true costs. If there is an error in cost determination in one process, it will affect the cost estimation in subsequent processes as well as the cost of work in process and finished products.

4. When two or more products are produced in the same process, the joint costs are prorated to the various products using some weightage say in terms of points. Giving weightage in terms of points is a subjective decision, which will give rise to approximate costs and cannot be taken as fully reliable. Absence of scientific base makes the process costing inadequate for managerial purposes.

5. Process costing system presumes that production activity of a factory is divided according to processes.

Factors influencing the choice of the manufacturing systems:

There is no best manufacturing system for any product. The choice of the system depends on various circumstances but it must meet two basic objectives, namely:

• It must be able to meet the specifications of the final product, and
• It must be cost effective

Effect of volume/variety:

One of the major considerations in the process selection is the volume/variety of the products. High product variety require highly skilled labour, general purpose machines, detailed production planning and control system. On the other hand low product variety (i.e. one or few products produced in large volumes) enables the use of low skilled labour, highly automated mass production processes using special purpose machines and simple production planning and control systems.

Capacity of the plant:

The projected sales volume is a major influencing factor in determining whether the firm should go in for intermittent or continuous process. Fixed costs are high for continuous process and low for intermittent process while variable costs are more for the intermittent process and less for continuous process. Intermittent process therefore will be cheaper to install and operate at low volumes and continuous process will be economical to use at high volume.

Flexibility:

Flexibility implies the ability of the company to satisfy varied customers requirements. Flexibility and product variety are inter-related. If more variety is to be manufactured, the manufacturing facilities will have to be commonised and depending upon the volume, the extent of commonalities will require to be justified. Greater commonalities demands intermittent manufacturing which is associated with higher inventories, large manufacturing lead times and elaborate planning and control.

Lead time: Lead times more appropriately called delivery lead times expected by the customers (i.e. how soon the demand has to be met without losing on sales) is another major influencing factor in a competitive market. As a general rule, faster deliveries are expected in a competitive market. The product, therefore, may require to be produced to stock using principles of batch production/mass product

Efficiency:

Efficiency measures the speed and the cost of the transformation process. Efficiency is the greatest when the product is mass producted. But to mass produce a product, greater sales volumes are required. Therefore, depending upon the sales volume, product variety will have to be considered and the process which will give the best efficiency in terms of machine and manpower utilization will have to be selected.

Environment:

Environment brings in new technologies and forces the adoption of new process of manufacturing. For example, wooden furniture is gradually being replaced by metals and plastic. A furniture manufacturing unit will have to change its technology (i.e. change from one off production to batch production) to fall in line with changing times. Similarly, as market preferences change due fashions or other reasons, the manufacturing process has to be changed accordingly.

LOCATION AND LAYOUT IN OPERATIONS MANAGEMENT

PLANT LOCATION

Plant location refers to the choice of the geographical location where men, materials, money, machinery and equipment are brought together for setting up a business or factory. Identifying an ideal location is very crucial, it should always maximize the net advantage, must minimize the unit cost of production and distribution. Plant location decisions are very important because once the plant is located at a particular site then the organization has to face the pros and cons of that initial decision.

Factors affecting the plant location

1. Primary factors

(a)Availability of raw materials

Availability of raw materials is the most important factor in plant location decisions. An organization should be located in a place where the raw materials availability is maximum and cheap.

 (b)Nearness to the market

Nearness of market for the finished goods reduces the transportation costs and renders quick services to the customers. If the plant is located far away from the markets then the chances of spoiling and breakage become high during transport. If the industry is nearer to the market then it can grasp the market share by offering quick services.

 (c)Availability of labour 

, labour-intensive firms should select the plant location which is nearer to the source of manpower.

(d)Transport facilities

In order to bring the raw materials to the firm or to carrying the finished goods to the market, transport facilities are very important. Transportation costs highly increase the cost of production. Here the point considered is transportation costs must be kept low.

(e)Availability of fuel and power

Unavailability of fuel and power is the major drawback in selecting a location for firms. Fuel and power are necessary for all most all the manufacturing units, so locating firms nearer to the coal beds and power industries can highly reduce the wastage of efforts, money and time due to the unavailability of fuel and power.

(f)Availability of water

Depending on the nature of the plant firms should give importance to the locations where water is available.

For example, power plants where use water to produce power should be located near the water bodies.

Secondary factors

• Suitable environment

Climate is really an influencing factor for industries such as agriculture, leather, and textile, etc. For such industries extreme humid or dry conditions are not suitable for plant location. Climate can affect the labour efficiency and productivity.

• Government policies

While selecting a location for the plant, it is very important to know the local existed Government policies such as licensing policies, institutional finance, Government subsidies, Government benefits associated with establishing a unit in the urban areas or rural areas, etc.

Availability of finance

Finance is the most important factor for the smooth running of any business; it should not be far away from the plant location

• Availability of social facilities

Availability of basic facilities such as schools, hospitals, housing and recreation clubs, etc can motivate the workers to stick to the jobs

• Disposal of waste

Disposal of waste is a major problem particularly for industries such as chemical, sugar, and leather, etc. So that the selected plant location should have provision for the disposal of waste.

PLANT LAYOUT

Plant layout means the disposition of the various facilities (equipments, material, manpower, etc.) and services of the plant within the area of the site selected previously. Plant layout begins with the design of the factory building and goes up to the location and movement of a work table. All the facilities like equipments, raw materials, machinery, tools, futures, workers, etc. are given a proper place. In deciding the place for equipment, the supervisors and workers who have to operate them should be consulted.

Objectives of Good Plant Layout

In a good plant layout:

 (1) Material handling and transportation is minimized and efficiently controlled.

(2) Bottlenecks and points of congestions are eliminated (by line balancing) so that the raw material and semi-finished goods move fast from one work station to another.

(3) Work stations are designed suitably and properly.

(4) Suitable spaces are allocated to production centres and service centres.

 (5) The movements made by the workers are minimized.

(6) Waiting time of the semi-finished products is minimized.

(7) Working conditions are safer, better (well ventilated rooms, etc.) and improved.

(8) There is increased flexibility for changes in product design and for future expansion.

 (9) There is the utilization of cubic space (i.e., length, width and height).

(10) There are improved work methods and reduced production cycle times.

(11) Plant maintenance is simpler.

(12) There is increased productivity and better product quality with reduced capital cost.

(13) A good layout permits materials to move through the plant at the desired speed with the lowest cost.

Principles of Plant Layout

A few sound principles of plant layout have been briefed as under.

They are the principles of:

(a) Integration:

It means the integration of production centres facilities like workers, machinery, raw material etc., in a logical and balanced manner.

(b) Minimum Movements and Material Handling:

The number of movements of workers and materials should be minimized. It is better to transport materials in optimum bulk rather than in small amounts.

(c) Smooth and Continuous Flow:

Bottlenecks, congestion points and back tracking should be removed by proper line balancing techniques.

(d) Cubic Space Utilization:

Besides using the floor space of a room, if the ceiling height is also utilized, more materials can be accommodated in the same room. Boxes or bags containing raw material or goods can be stacked one above the other to store more items in the same room. Overhead material handling equipment save a lot of valuable floor space.

(e) Safe and Improved Environments:

Working places-safe, well ventilated and free from dust, noise, fumes, odours, and other hazardous conditions decidedly increase the operating efficiency of the workers and improve their morale. All this leads to satisfaction amongst the workers and thus better employer- employee relations.

(f) Flexibility:

In automotive and other industries where models of products change after some time, it is better to permit all possible flexibility in the layout. The machinery is arranged in such a way that the changes of the production process can be achieved at the least cost or disturbance.

TYPES OF PLANT LAYOUT

1. Process Layout

It is also known as functional layout and is characterised by keeping similar machines or similar operations at one location (place). In other words, all lathes will be at one place, all milling machines at another and so on, that is machines have been arranged according to their functions. This type of layout is generally employed for industries engaged in job order production and non-repetitive kind of maintenance or manufacturing activities.

Figure 4.1 shows a process layout:

Advantages:

(1) Wide flexibility exists as regards allotment of work to equipment and workers.

(2) Better utilization of the available equipment.

(3) Comparatively less number of machines are needed, thus involving reduced capital investment.

(4) Better product quality, because the supervisors and workers attend to one type of machines and operations.

(5) Varieties of jobs coming as different job orders make the work more interesting for the workers.

(6) Workers in one section are not affected by the nature of the operations carried out in another section. For example, a lathe operator is not affected by the rays of the welding as the two sections are quite separate.

Disadvantages of Process Layout (When Compared with Product Layout):

(1) For the same amount of production, process layout needs more space.

(2) Automatic material handling is extremely difficult.

(3) More material-in-process remains in queue for further operations.

(4) Completion of same product takes more time.

(5) Work-in-process inventory is large.

(6) Production control becomes difficult.

(7) Raw material has to travel larger distances for being processed to finished goods. This increases material handling and the associated costs.

(8) It needs more inspections and efficient co-ordination.

2. Product Layout

It is also known as line (type) layout. It implies that various operations on raw material are performed in a sequence and the machines are placed along the product flow line, i.e., machines are arranged in the sequence in which the raw material will be operated upon. This type of layout is preferred for continuous production, i.e., involving a continuous flow of in-process material towards the finished product stage. Figure 4.2 shows a product type of layout.

Raw material from the store is fed to three lines X, Y and Z. Material in X line gets processed on machines D,E,F and G and meets material of Y line after it has been processed on the main assembly line machines A & B. Products of X and Y lines are assembled at W and get processed on machines H and I till another part comes from Z line and assembles with the main product at V. After that the total assembly gets worked on machines M, N, O and P and goes to the stock room. (The inspection phase has not been shown in the layout).

Advantages

(1) Less space requirements for the same volume of production.

(2) Automatic material handling, lesser material handling movements, times and costs.

(3) Less in-process inventory.

(4) Product completes in lesser time.

(5) Better co-ordination and simple production planning and control.

(6) Smooth and continuous work flow.

(7) Less skilled workers may serve the purpose.

Disadvantages as Compared with Process Layout

(1) Since the specified product determines the layout, a change in product involves major changes in layout and thus the layout flexibility is considerably reduced.

(2) The pace or rate of working depends upon the output rate of the slowest machine. This involves excessive idle time for other machines if the production line is not adequately balanced.

(3) Machines being scattered along the line, more machines of each type have to be purchased for keeping a few as stand by, because if one machine in the line fails, it may lead to shut down of the complete production line. This is how product layout involves higher capital investments.

(4) Though it involves less supervision as compared to process layout, sometimes it (inspection) becomes difficult when one inspector has to look after many (say all welding) machines in two or more production lines.

(5) It is difficult to increase production beyond the capacities of the production lines.

3. Combination Layout

A combination of process and product layouts combines the advantages of the both types of layouts. Moreover, these days’ pure product or process layouts are rare. Most of the manufacturing sections are arranged in process layout with manufacturing lines occurring here and there (scattered) wherever the conditions permit. A combination layout is possible where an item is being made in different types and sizes.

In such cases machinery is arranged in a process layout but the process grouping (a group of number of similar machines) is then arranged in a sequence to manufacture various types and sizes of products. The point to note is that, no matter the product varies in size and type, the sequence of operations remains the same or similar. Figure 4.3 shows a combination type of layout for manufacturing different sized gears.

A combination layout is also useful when a number of items are produced in same sequence but none of the items are to be produced in bulk and thus no item justifies for an individual and independent production line. For example, files, hacksaws, circular metal saws, wood saws, etc. can be manufactured on a combination type of layout.

4. Fixed Position Layout

Layout by fixed position of the product is inherent in ship building, aircraft manufacture and big pressure vessels fabrication. In other types of layouts discussed earlier, the product moves past stationary production equipment, whereas in this case the reverse applies; men and equipment are moved to the material, which remains at one place and the product is completed at that place where the material lies.

Advantages

(i) It is possible to assign one or more skilled workers to a project from start to finish in order to ensure continuity of work.

(ii) It involves least movement of materials.

(iii) There is maximum flexibility for all sorts of changes in product and process.

(iv) A number of quite different projects can be taken with the same layout.

Disadvantages

(i) It usually involves a low content of work-in-progress.

(ii) There appears to be low utilization of labour and equipment.

(iii) It involves high equipment handling costs.

Application:

Layout by fixed position of product is limited to large items made singly or in very small lots.

PLANT LOCATION ANALYSIS TECHNIQUES

Various techniques are available which help to identify the ideal location. Some of the popular techniques are:

1. Factor rating method
   1. Weighted factor rating method
   1.  Load-distance method
   1.  Centre of gravity method
   1. Break even analysis

1. Factor Rating Method

The process of selecting a new facility location involves a series of following steps

1. Identify the important location factors.

2. Rate each factor according to its relative importance, i.e., higher the ratings is indicative of prominent factor.

3. Assign each location according to the merits of the location for each factor.

4. Calculate the rating for each location by multiplying factor assigned to each location with basic factors considered.

5. Find the sum of product calculated for each factor and select best location having highest total score.

2. Weighted Factor Rating Method

In this method to merge quantitative and qualitative factors, factors are assigned weights based on relative importance and weightage score for each site using a preference matrix is calculated. The site with the highest weighted score is selected as the best choice.

3. Load-distance Method

The load-distance method is a mathematical model used to evaluate locations based on proximity factors. The objective is to select a location that minimizes the total weighted loads moving into and out of the facility. The distance between two points is expressed by assigning the points to grid coordinates on a map. An alternative approach is to use time rather than distance.

4. Centre of Gravity

Centre of gravity is based primarily on cost considerations. This method can be used to assist managers in balancing cost and service objectives. The centre of gravity method takes into account the locations of plants and markets, the volume of goods moved, and transportation costs in arriving at the best location for a single intermediate warehouse. The centre of gravity is defined to be the location that minimizes the weighted distance between the warehouse and its supply and distribution points, where the distance is weighted by the number of tones supplied or consumed

6. Break Even Analysis

Break even analysis implies that at some point in the operations, total revenue equals total cost. Break even analysis is concerned with finding the point at which revenues and costs agree exactly. .i.e.at the BEP total cost equal total revenue. The best location will be one in which total costs equals total revenue. Different location generates different revenues and costs.

TYPES OF BUILDINGS

Industrial buildings may be grouped under two types:

1. Single-storey buildings,

2. Multi-storey buildings

The decision on choosing a suitable type for a particular firm depends on the manufacturing process and the area of land and the cost of construction.

1. SINGLE-STOREY BUILDINGS

Most of the industrial buildings manufacturing which are now designed and constructed are singles storeyed, particularly where lands are available at reasonable rates. Single-storey buildings offer several operating advantages. A single-storey construction is preferable when materials handling is difficult because the product is big or heavy, natural lighting is desired, heavy floor loads are required and frequent changes in layout are anticipated.

Advantages of single-storey building

1. There is a greater flexibility in layout and production routing.

2. The maintenance cost resulting from the vibration of machinery is reduced considerably because of the housing of the machinery on the ground.

3. Expansion is easily ensured by the removal of walls.

4. The cost of transportation of materials is reduced because of the absence of materials handling equipment between floors

5. All the equipment is on the same level, making for an easier and more effective layouts supervision and control.

6. Greater floor load-bearing capacity for heavy equipment is ensured.

7. The danger of fire hazards is reduced because of the lateral spread of the building.

Limitations of Single-storey buildings.

1. High cost of land, particularly in the city.

2. High cost of heating, ventilating and cleaning of windows.

3. High cost of transportation for moving men and materials to the factory this is generally located far from the city.

 2. MULTI-STOREY BUILDINGS

 For Schools, colleges, shopping complexes, and residences, and for service industries like Software,etc. multi-storey structures are generally popular, particularly in cities. Multi-storey buildings are useful in manufacture of light products, when the acquisition of land becomes difficult and expensive and when the floor load is less.

Advantages of multi-storey buildings

When constructed for industrial use, multi-storey buildings offer the following advantages:

1. Maximum operating floor space (per sq. ft. of land). This is best suited in areas where land is very costly.

2. Lower cost of heating and ventilation.

3. Reduced cost of materials handling because the advantage of the use of gravity for the flow of materials.

Disadvantages of multi-storey building

1. Materials handling becomes very complicated. A lot of time is wasted in moving them between floors.

2. A lot of floor space is wasted on elevators, stairways and fire escapes.

3. Floor load-bearing capacity is limited, unless special construction is used, which is very expensive.

4. Natural lighting is poor in the centres of the shop, particularly when the width of the building is somewhat great.

5. Layout changes cannot be effected easily and quickly.

Generally speaking, textile mills, food industries, detergent plants, chemical industries and software industry use these types of buildings.

TECHNOLOGIES IN OPERATIONS MANAGEMENT      

Concept of benchmarking

Benchmarking improves performance by identifying and applying best demonstrated practices to operations and sales. Managers compare the performance of their products or processes externally with those of competitors and best-in-class companies, and internally with other operations that perform similar activities in their own firms. The objective of Benchmarking is to find examples of superior performance and understand the processes and practices driving that performance. Companies then improve their performance by tailoring and incorporating these best practices into their own operations—not by imitating, but by innovating.

Process of benchmarking

• Select a product, service or process to benchmark
• Identify the key performance metrics
• Choose companies or internal areas to benchmark
• Collect data on performance and practices
• Analyze the data and identify opportunities for improvement
• Adapt and implement the best practices, setting reasonable goals and ensuring companywide acceptance

 Companies use Benchmarking to:

• Improve performance. Benchmarking identifies methods of improving operational efficiency and product design.
• Understand relative cost position. Benchmarking reveals a company’s relative cost position and identifies opportunities for improvement.
• Gain strategic advantage. Benchmarking helps companies focus on capabilities that are critical to building strategic advantage.
• Increase the rate of organizational learning. Benchmarking brings new ideas into the company and facilitates experience sharing.

Types of Benchmarking

There are two primary types of benchmarking:

• Internal benchmarking: comparison of practices and performance between teams, individuals or groups within an organization
• External benchmarking: comparison of organizational performance to industry peers or across industries

These can be further distilled as follows:

Process Benchmarking: Demonstrate how top performing companies accomplish the specific process in question. Such benchmarking is collected via research, surveys/interviews, and site visits. By identifying how others perform the same functional task or objective, people gain insight and ideas they may not otherwise achieve. Such information affirms and supports decision-making by executives.

Performance Metrics: “Performance metrics” give numerical standard against which a client’s own processes can be compared. These metrics are usually determined via a detailed and carefully analysed survey or interviews. Clients can then identify performance gaps, prioritize action items, and then conduct follow-on studies to determine methods of improvement.

Strategic Benchmarking: Identify the fundamental lessons and winning strategies that have enabled high performing companies to be successful in their marketplaces. Strategic benchmarking examines how companies compete and is ideal for corporations with a long-term perspective.

Benefits of benchmarking

1. Gain an Independent Perspective of Performance

Depending on the reviewer, performance is a naturally subjective thing to evaluate. By laying down clear and quantifiable benchmarks against which future performance can be measured, you will be much better able to identify areas which need improvement. This holds true for one employee measuring their progress over time, and the performance of multiple employees against a baseline.

2. Identify Specific Areas of Opportunity

Benchmarking is a worthwhile exercise because it helps to clearly identify the areas where improvement can take place. If you don’t have periodic benchmarks by which to measure performance, it is difficult to see what can (or needs to) be improved in the long run.

3. Prioritize Improvement Opportunities

Similarly, benchmarking helps in prioritizing those improvement opportunities because it becomes clear what areas are most in need of attention over an extended period of time. Understand that benchmarking is about seeing the big picture, and providing reliable data to draw from in the future.

4. Validate Assumptions

Too often, managers and businesses at large make decisions about performance with little to no solid data to back up those assumptions. Performance is often tied directly to profit, with little insight into the effectiveness or strategy behind the performance decisions of an employee or team. Benchmarking provides the data that businesses need to support their decisions, which can be extremely valuable in the case of litigation or contention.

5. Set Expectations

Benchmarking, in part, is about communicating and documenting performance levels at any given time. Employees and managers should be able to look back at past performance benchmarks and actively track their performance improvement as outlined by an improvement plan, should they need to. That conversation between employee and manager created by the benchmark process enables the two parties to set clear expectations for the future.

6. Monitor Performance and Manage Change

Benchmarking, more than any other process, allows businesses to take an active role in the progress of their company as a whole. The effort to better communicate opportunities and expectations, across all levels, fosters support and often enthusiasm to do better than previous or external benchmarks. It empowers employees to grow within their role, and it provides companies with the data they need to manage change effectively.

Limitations of benchmarking

1. Itdoesn’t really measure effectiveness.
What you are not doing is measuring how effective your processes happen to be. You know why there are standards in place, but how were those standards attained in the first place? If there are any flaws in the process, you’re going to usually find out the hard way.

2. It is often treated as a solo activity.
Benchmarking is important, but it can’t be the only thing a business does in order to institute change. It is simply part of the process …

3. There tends to be a certainly level of complacency.
The biggest trap of benchmarking occurs when a business is able to exceed the standards of their competition.

4. The wrong type of benchmarking might be used.
There are 2 types of benchmarking:

1. internal,
2. External

In broad terms, a business should use a combination of each for the best possible chance at success. Sometimes only one type of benchmarking is used and it isn’t the correct one to meet their goals.

5. It can foster mediocrity.
The ultimate issue with benchmarking is the perspective behind it. If there is a certain arrogance that says an organization is already the best in the industry, then this bias will influence the data collected…

Flexible Manufacturing System

A flexible manufacturing system (FMS) is a method for producing goods that is readily adaptable to changes in the product being manufactured, both in type and quantity. Machines and computerized systems are configured to manufacture different parts and handle varying levels of production. A flexible manufacturing system (FMS) gives manufacturing firms an advantage to quickly change a manufacturing environment to improve process efficiency and thus lower production cost.

Advantages of flexible manufacturing system

1. Large variety of same products

Flexible Manufacturing System (FMS) can produce a large variety of the same type (homogeneous) of products.

2. Profitable investment

The company invests a lot of money (capital) in machines. However, FMS makes optimum use of these machines. Therefore, though costly, FMS is still a profitable investment.

3. Requires limited inventory

FMS requires limited inventories compared to other production systems.

4. Low labour cost

In FMS, most of the work is done by automated machines and robots. There is hardly any need of a manual work or some human intervention. Therefore, in FMS, the labour cost becomes very low.

5. Flexible system

FMS is a very flexible system. This is because it can produce a large variety of similar products. The quantity and design of production can also be changed very quickly.

6. Speedy production

The products can be produced very quickly because the materials are loaded, unloaded and transferred from one machine to another by robots

Disadvantages of flexible manufacturing system

1. FMS is a complex system

Flexible Manufacturing System (FMS) is a very complex system. It is not easy to understand and use it.

2. It requires highly skilled technicians

FMS requires highly skilled technicians to operate the complex machines. Secondly, it is also very difficult to repair these machines. Hence employing and/or contracting a small group of highly skilled technicians to operate and maintain FMS becomes mandatory.

3. Needs high level of planning

FMS needs a high level of planning and a more disciplined environment than other production systems.

4. Demands high initial investment

FMS demands a high initial investment. As a result, only those businesses that have huge capital can afford FMS and implement it. Small businesses cannot afford such a large initial investment and therefore, seek alternate systems of production.

Computer integrated Manufacturing system

Computer-integrated manufacturing (CIM) is the manufacturing approach of using computers to control the entire production process. This integration allows individual processes to exchange information with each other and initiate actions. Although manufacturing can be faster and less error-prone by the integration of computers, the main advantage is the ability to create automated manufacturing processes. Typically CIM relies on closed-loop control processes, based on real-time input from sensors.

Advantages of CIM

• It improves the quality.
• Reduces the cost.
• Reduces the delivery time.
• Reduces waste.
• Increase flexibility in manufacturing.
• Better use of materials and machinery.
• Less paper is used.
• Safer working environment.

Advantages of CIM

1. Cost

Computer technology used in CAM is expensive to implement and support. This is complicated by the fact that technology is not constant. New hardware devices and software programs constantly come on the market and engineers and businesspeople have to try to keep up with these changes for compatibility reasons. Furthermore, it costs money to train staff members to use the technology. This means that the cost of CAM does not stop after the initial implementation.

2. Technology Failure

Computers used in CAM may break down, as can the related equipment, such as robots. Any time this happens, there is a risk for the slowing or cessation of production. This is not desirable when a company is on a strict production schedule. The risk is highest in companies that rely on an assembly-line structure, as failure in these types of companies affects all points of production past the failure instead of just an isolated production area.

3. Waste

CAM depends on the accurate designs produced by computer software. If there is a flaw in the design, some materials may be wasted, since you may not discover the flaw until you see the actual product. This isn’t a huge issue if the products are recyclable or are inexpensive. However, it becomes a problem in products made from materials that can’t be used again, such as Styrofoam, or which have a high cost, such as a car. You also have to take the time and effort to dispose or recycle the waste and purchase replacement materials.

4. Finished Design

As pointed out by Reference for Business, CAM depends on the designs from a CAD system. Thus, it doesn’t aid designers much, as it focuses on the end-stage of a given project. It is hard to develop a CAM system without first having the CAD system.

5. Quality

Because CAM systems work with the same blueprints every time, they can be highly accurate in terms of producing the same quality of product. However, glitches can and do occur. Since the manufacturing process is automated, company workers may not discover the flaws unless they have a good quality- assurance team.

Computer Aided Design (CAD)

Computer-aided design (CAD) is the use of computers (or workstations) to aid in the creation, modification, analysis, or optimization of a design. CAD software is used to increase the productivity of the designer, improve the quality of design, improve communications through documentation, and to create a database for manufacturing CAD output is often in the form of electronic files for print, machining, or other manufacturing operations.

Advantages of CAD

1.     A design drawn on a CAD system can be engraved on acrylic, metal or glass

2.     A design drawn on a CAD system can be engraved on acrylic, metal or glass.

3.     Can be more accurate than hand-drawn designs – it reduces human error. 

4.     You can save and edit ideas, which make it easier and cheaper to modify your design as you go along.

5.     You can modify existing ideas, which saves time.

6.     A design drawn on a CAD system can be engraved on acrylic, metal or glass

7.     A design drawn on a CAD system can be printed out using a pen on paper, or it can be cut out of card or coloured vinyl by using a carbide-tripped cutter. This provides an excellent way of making cardboard models and designs

8.     Can be more accurate than hand-drawn designs – it reduces human error.

9.     You can save and edit ideas, which make it easier and cheaper to modify your design as you go along.

10. You can modify existing ideas, which saves time.

Disadvantages of CAD

1.     The software itself can be expensive so initial costs are high. There are free software packages though

2.     Staff need to be trained how to use the software, which also adds to costs.

3.     Requires personal computers which are expensive to acquire.

4.     The software itself can be expensive so initial costs are high. There are free software packages though.

5.     Workers needs to be trained how to use the software, which also adds to costs.

Lean Performance

1- Focus on Value

The goal is to link enterprise value strategies with internal process modeling so you can be sure of your goals without straying off course.

For this, it’s essential to determine the most appropriate metrics and KPIs, by monitoring processes constantly.

Consequently, the focus should be on the proper creation of processes, so that they manage the value determined in the organization’s strategy.

2 – Process Guidance

Another key aspect of the Lean performance improvement methodology is its focus on processes, but without taking an eye off the customer, of course!

The correct process is ultimately one that will deliver the value the customer wants.

The change in mentality that must be pursued is to leave behind management by objectives and instead pursue management by processes, which means:

• The mapping and visualization of all process flows
• Process standardization
• Disciplinary proceedings
• The process should only exist if demand exists for its output
• Value must flow in a single direction, without setbacks
• Each process delivery must comply with the expected level of quality, without wastage, delays and at the lowest possible cost

3- Teamwork

Complementary skills, the exchange of ideas, constant feedback, autonomy, “being your own boss”, having multiple roles.

These are some of the qualities of a Lean team. This requires HR processes to also be tailored to search for professionals with this type of profile.

4- Continuous Improvement

Excellence is the watchword and it can only be achieved with the constant modeling of processes in a search for continuous improvement.

In this context, the classic quest for process barriers should include the identification and dismantling of wastes such as the following:

• Excess inventory
• Low quality
• Rework
• Unnecessary movements and activities
• Wait times
• A lack of team motivation

See also: https://yourbesttutorhub.com/manage-customer-service-notes/

Summarizing the principles of Lean performance improvement:

• Change from a functional system to an organization of processes
• Seek excellence on a daily basis
• Align operational actions with the company’s strategic focus
• Create value through processes
• The appreciation of staff competencies and motivation
• Change the traditional hierarchical relationship to a “team spirit” focus
• Rapid adaptation power
• Process simplification