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OPERATIONS MANAGEMENT

ABSTRACT

In the present business world there has been a significant concentration on service based

industries. This paper presents the way one of the world’s second biggest employer INDIAN

RAILWAYS has been operating and together analyzing its various issues/ problems, and its

relationship to operations practice in the organization. Though there have been many issues

subjected to operations management practice, in the interest of word limitation a few issues

relating to the concepts below has been discussed throughout. Consequently, incorporating some

of the Operations Management theory like process(es) structure, quality dimensions, TQM,

capacity planning, impact analysis, and improvement concepts. The study is based on the

comparison of theories with actual practice, evaluating the applicability of these theories in real

time progression of the organization, consideration of its impact on quality and customer focus.

Finally, a proposal as to how the practice (es) could be enhanced.

TABLE OF CONTENTS
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Page

ABSTRACT.....1

TABLE OF CONTENTS.........2

1 INTRODUCTION................................4

1.1 Definition....................................................................4

1.2 Basic Model of Operations Management...................................................5

1.2.1 Change of State..................................................................................5

1.2.2 Change of the Place...........................................................................5

1.2.3 Processes That Involve In Delivering the Processes........6

2 THEORY..........................................................................................................................6

2.1 IR Satisfaction............................................................................................6

2.2 Quality........................................................................................................7

2.3 Sponsor Satisfaction...................................................................................8

2.4 Personal Satisfaction................................................................................8

2.5 Society and Community Satisfaction9

3 ROLES AND RESPONSIBILITIES OF OPERATIONS MANAGER.........................10

4 ISSUES AND CHALLENGES......................................................................................13

4.1 No Market Segmentation Prospective......................................................13

4.2 Indian Politics...........................................................................................14

4.3 Railways Safety........................................................................................14

4.4 Poor Capacity Planning.........................................................................15

4.5 Lack of Benchmarking.............................................................................16

5 CUSTOMER REQUIREMENTS/ SERVICE QUALITY.............................................17

5.1 performance………………………………………………..17
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5.2 realibility ……………………………………………………..17

5.3 feature ………………………………………………………..17

5.4 conformances………………………………………………….17

5.5 Serviceability…………………………………………………………17

6 ANALYSIS OF TQM....................................................................................................18

7 RECOMMENDATIONS PROSPECTIVE/ SOLUTIONS................................................

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1. INTRODUCTION

Indian Railways reputedly known as IR is the nationalized railway company of India which

owns and operates most of the country's rail transport. “IR is the world’s second largest

employer behind Chinese army”, source (:http://www.sustainable-

sourcing.com/2009/06/29/nhs-procurements-10-carbon-challenge/). “Indian

Railways has one of the largest and busiest rail networks in the world”, source (

www.wikipedia.org). “ Indian Railways have an extensive network, which is spread over

63,028 Route Kilometre, comprising Broad Gauge (44,776 RKm), Metre Gauge (14,987 RKm)

and Narrow Gauge (3,265 RKm).Approximately, 24 per cent of the network is electrified. The

Indian Railways have played an integrating role in the social and economic development of the

country” http://indiabudget.nic.in/es2001-02/chapt2002/chap98.pdf “Transporting over 18

million passengers and more than 2 million tonnes of freight daily, it is the world's largest

commercial or utility employer, with more than 1.4 million employees.” source

(http://en.wikipedia.org/wiki/IndianRailways). The function carried out by the IR in the

country’s socio- political development is indisputable. Besides its stated function of transporting

men and goods across the length and breadth of the country, it also enhances the country’s

economy. Hence the role of the Indian Railways has become even more decisive to the

development of the Indian economy. As the country is emerging as one of the rapidly growing

economies in the world, the need for a well- organized transport infrastructure would become

more vital. Although there have been other modes of transport available in the country, IR is still

able to maintain its competitive position due to many advantages like geographical diversity,

world’s largest networks, and above all its economical fares in delivering the services.
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1.1 Definition

“Operations Management is defined as the management of products and processes that convert

input into goods and services. The input process and output transformation frame work

constitutes a perspective of organizations.” cited in ‘Operations Management’ By Nigel Slack

et al. 2e

Applying the below model to our present organization i.e. Indian Railways, a service based

organization, the users/customers of the IR are in fact helping to make the services and

consequently they become the co- creators of the service. Most of the operations involve

consumers in executing the service referring to the figure below and definition we hinted that

the “transformation of inputs” depicts the change of state and change of place category of

operation for the current organization.

Fig: Basic Model of Operations Management.

1.1.1 Change of State

These could be transformations or operations which relate to what we might call state.

Sometimes this involves maintenance repair and restoration.

1.1.2 Change of Place

The major role of Operation Management in IR involves the change of place category operation

which involves key issues like passenger safety& comfort, and quality of the service that has

been offered during the process.

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As we proceed further, we identify that these two types of changes function together in every

phase of Operation Management on analyzing value chain of IR.

1.1.3 Processes That Involve In Delivering the Service

“Process is the task which you put thought energy materials and labor so that you get something

out of every kind of business whether it manufacturing or service provider is based upon the

process and every kind of organization whether private, public or voluntary sector requires staff

to deliver through the process.” cited www.rdi.co.uk/learningmaterial

2. THEORY

Operations Management is influenced by detail formation of the organization’s aims and

objectives. As IR is a public sector organization, all the operations must contribute to the

satisfaction of its stake holders. They are:

• Users/customers or the public,

• The government,the guardian of the legislation and the statesmen,

• The personnel. Who have right to obtain the pride and satisfaction out of the

organization.

• The society and citizens.

Figure below gives us the design of IR Operations Management function.

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Fig: Design of IR Operations Management Function.

2.1 IR Satisfaction

This is one of the main objectives of any business that is either product based or service based.

Customer satisfaction is the core thing that customers want from the services/products they

purchase. They are quality, price, speed, and flexibility. If an organization can meet up to needs

of these customer constraints, it can be on the competitive edge in the industry.

2.2 Quality

This will occur when the services offered is being well specified and meets up to the terms that

have been promised prior to offering the service. In Indian Railways, there has been a question of
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quality in offering services. “Apart from the cost angle, the poor quality of the services that the

railways provide have also led to its losing market share to its competitors”, source

http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf

[accessed on 18.10.2009]page 4

Referring to the basic operations model in the product service design cycle, the consequences of

planning& control, and design are called the quality characteristics of the service. The quality

issue in IR needs to be addressed and lay down more attention on quality characteristics of the

service being offered, thus Matching Customer Requirements. The railways have to provide

higher reliable service i.e. safer transportation, and winning back its competitive edge that they

have lost to other segments of transport market. Quality means seeing the services from

consumer perspective. As such the whole organization should see the customer at the centre and

all the operation has to function towards the customer aspiration from the organization. The

theory of TQM total quality management is being discussed as we progress in understanding the

role of Operations Management and try to gain good hold on quality theory.

2.3 Sponsor Satisfaction

''The Railways is bankrupt. There is no other way to describe it.'' Sums up Y.P. Anand, 65,

former chairman of the Railway Board: Source

http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf page

15.

To satisfy the sponsor i.e. the Indian government, it is essential that the operations achieve

adequate focus on resources like personnel technology information and its core competencies so

that the operations generate value for money and time for the productivity and efficiency.

2.4 Personal Satisfaction

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Staff satisfaction is a vital prerequisite for an organization success. When happy at work,

Personnel generally become more active, effective, and productive. Dissatisfaction could lead to

underperformance and block the organization`s success. So, there should be a continuous

dialogue process between the personnel and the management. Whilst increasing staff strength of

the railways proportional to its agreed level of delivering quality standards and demand of

services, Compensation (bonuses, arrears, and travel privileges) accordingly has to be

implemented. It is another outline to make employee committed to the organization.

Compensation should be given not only by increasing pay but also empowering the employee by

providing adequate facilities to lead a handsome lifestyle.

2.5 Society and Community Satisfaction

Corporate Social Responsibility (CSR), or Sustainable Responsible Business (SRB), ideally, IR

policy would function as a mechanism whereby business would watch and ensure its obedience

to law, ethical standards, and state instructions. IR should not exploit the resources available for

its own benefit. All the operations would clinch responsibility for the impact of their activities on

the atmosphere, consumers, employees, and communities. Indian Railways should consider the

issues like environmental deprivation, pollution, and energy costs to be exploited fully for

promoting Railways. Furthermore, Indian Railway operations would positively promote the

public awareness by its own accord, eliminating exercises that harm the society.

In course of achieving these operation objectives there might be some conflicting constraints that

arise, like processing the new technology i.e., replacing the locomotives with TGV. This may

need a complete restructuring of track and the signal system and adopt a contemporary use of IT

by ERP (Enterprise resource Planning) solutions with the aid of many ERP packages like SAP,

People Soft, BAAN JD Edwards, ORACLE Applications. Looking at the past history of the
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other successful rail operating companies like German Rail and British Rail, IR woke up to the

situation fast and started on reforms to ensure the survival and growth of the railways.

3. ROLES AND RESPONSIBILITIES OF OPERATIONS MANAGER

• Develop a business plan that supports operational sales and financial aspects of the

organization,

• Ensuring the safety standards and compliance of law according to the state,

• Train staff and empower them in their functional systems,

• Liaising with the sponsors and the management and supply the required management

function,

• Operations sometimes also include delivering the promotional plan (like seasonal trains

and discounted travel for students and senior citizens etc.) that drives the agreed revenue

and sales targets,

• Liaising with suppliers, design and using facilities,

• Quality control,

• Be able to adapt and deliver the business expectations.

In the service organization sectors, the supplier and consumer meet face to face. This is known as

consumer interface. As an Operations Manager, it is essential to create the consumer interface

and maintain them i.e., during the transformation of inputs, the actual type of transformation that

has been taking place is change of state type of operations.

Hence, in IR, the consumer comes face to face in many instances which are called as multiple

interfaces. In transport industry, the supplier (IR) has many interfaces with the passengers. The

passenger’s first point of contact is the ticket counter/enquiry, then perhaps a luggage porter, a

security officer, the train conductor, food vendor, and so on. It is essential as an Operations
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Manager that during the course of passenger interaction with all the interfaces, consumer

satisfaction has to be achieved and it is also must that during each process the passenger must

feel that he/she is dealing with a right supplier. This entails consumer loyalty. So, an Operations

Manager has to be vigilant whilst delivering the services. If any of the interfaces fails to provide

the required satisfaction, then the entire view of the customer towards the organization is marred.

Hence, to achieve the customer satisfaction through the multiple interfaces, all the personnel of

the organization have to be trained well in accordance with the service that has been promised.

This also means adherence to the health and safety standards required by the state.

As an Operations Manager, it is a fundamental role to maintain the IR on the competitive edge.

Where does IR achieve its competitive edge?

According to “Operations Management’ By Nigel Slack et al. 2e”, “competitive advantage is a

merge of three core functions. They are product/ technology, marketing, and operations”.

Fig. gaining competitive advantage

In figuring out the business competitive edge, the initial step is situational analysis. It gives us

the picture of the relevant strategic forces that are operating against the Indian railways.

• “In recent years there has been increasing levels of competition from other sources of

transport within economy”, source

http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf page 5.

• Post deregulations of the trucking industry, the road ways have captured a huge chunk of

railways market share. This has been achieved with increased customer orientation,

flexibility, and lower costs for short distance routes.

• The development of expressways and six lane highways have only led to the level of

competition being offered by the road sector increasing. With the announcement of the
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‘Golden Quadrilateral’ (a road map that is connecting all the corners of the country)

project, the competition to the railways can only increase.

http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf page 5, 6.

Identifying important strategic forces, Operations Manager can then design and determine the

firm’s distinctive advantage. Thus formulation of key strategic objectives follows this

consideration.

4. ISSUES AND CHALLENGES

• No market segmentation perspective,

• Indian politics,

• Railways safety,

• Poor capacity planning, and

• Lack of benchmarking.

4.1 No Market Segmentation Perspective

“The Rakesh Mohan committee report identified some areas of concerns for viability of IR”.

http://www.esocialsciences.com/data/articles/Document1612009310.2725336.pdf page 40.

According to this report IR has not come up with a culture of generating strategies rooted in an

understanding of the consumer requirements. As IR has been operating since 1853

(http://en.wikipedia.org/wiki/IndianRailways), since then IR has not been able adapt much of a

change in its operations. IR is offering a very fundamental services focussing only on the traffic

and new routes/ trains and it implicitly considers only passengers as the source and nothing

beyond it. However, transportation industry is based on origin- destination based service. IR

failed to look its functions in other dimensions of trade. Looking back into the history, many

railway organizations in different countries, for instance British Rail has evolved to competition
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with its ongoing demand of passenger requirements in accordance with time. “British Railways

(BR), which later traded as British Rail, was the operator of most of the British railway system

from the nationalization of the 'Big Four' British railway companies in 1948 until privatization in

stages from 1994 to 1997. At first, the trading brand of the Railway Executive of the British

Transport Commission, it became in 1962 an independent statutory corporation, the British

Railways Board.”, Source http://en.wikipedia.org/wiki/British Rail.

4.2 Indian Politics

“Politics, not the market, dictates the pricing structure in India currently.” Cited in

http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf “politicians in India

subsidise many profitable routes which are potentially profitable like Bombay suburban route

that carry six million passengers daily for the sake of political benefit”

http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf. Due to political

obligations, Indian railways have been losing a huge passenger and freight revenue. However in

recent years Indian railways had awaken in this vicinity by increasing the prices which

previously used to offer as 10% rebate to its customers.

http://www.livemint.com/2009/06/23000844/Railway-ministry-to-increase-p.html

4.3 Railways Safety

Presently, this has been a major issue that railways have been facing. “The problems in railway

safety are well known. Rail fractures have been the main cause of derailments and are in turn due

to the condition of the track.” States the Hindu leading Indian news paper Tuesday, December

05, 2000 http://www.hinduonnet.com/thehindu/2000/12/05/stories/05052511.htm [acessed

19.oct.2009]
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Safety is on the whole the product of proper practices at all levels of operation i.e. maintenance,

operations planning, and design. Safety comprises of standard protocols that need to be followed

throughout the execution of task. “A detailed probe identified the absence of basic safety

equipment, poor track maintenance and the use of substandard steel (bought from a state-run

plant) as the main reasons for the accident. While there was much fuss about using ultrasonic

techniques to detect these cracks, barely eight months later a goods train derailed and slammed

into an express train near Mathura because of track fractures. To repeat the same error time and

again seems to be a compulsive disorder of the Indian Railways.” The Hindu Volume 20 - Issue

15, July 19 - August 01, 2003.

http://www.thehindu.com/fline/fl2015/stories/20030801006911900.htm. [Accessed on

19.10.2009]“Similarly, many wagons and coaches which are considered ``unfit'' for use on the

rails continue to be in service”.

http://www.esocialsciences.com/data/articles/Document1612009310.2725336.pdf.

“The coaches are not fitted with safety equipment like fire alarms or emergency exits. Vinyl

flooring with walls and ceiling in mica are risky during fires.”

http://www.outlookindia.com/article.aspx?217336. The above articles in the India’s biggest news

papers depict the flaws in Indian railway safety system. There have been many questions against

the safety in Indian railways. This could be due to heavy traffic, and lack of funds concentration

from government agencies. In addition to all the above there IR has been a victim of vandalism

when ever communal riots takes place IR has suffered severe vandalism.

4.4 Poor Capacity Planning

Capacity planning is the calculating, determining, and shaping the organization’s resources and

its ability to produce its services to meet its on growing demand. Organization can do several
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things to increase capacity and consequently gaining competitive advantage. Indian railways

have to increase the number of coaches to reduce packed trains besides increasing the length of

the platforms.

4.5 Lack of Benchmarking

As discussed earlier, IR is lacking or ignoring its competitive edge and it has failed to emerge as

the competitor to the private companies offering similar services. In the competitive market, it is

essential to compare the performances with the competitor. Here begins the concept of

benchmarking i.e. adopting the similar performance standards of the competitors and stimulating

creative ideas in which the organization can well perform and better serve the customer.

5.Customer requirements/quality:-

In “competing on the eight dimension of quality” David Garvin states that( Harvard Business

Review December 1987) customers are interested in following Eight quality characteristics.

They are performance, features, reliability, conformance, durability, serviceability, aesthetics,

and perceived quality

5.1 Performance:- the customer expectation from the IR is its ability to provide trains which stick

on to the agreed standard of time table

5.2 Reliability:- the quality characteristic of reliability in relation to the performance of the

service in present case it the safety mark that IR observes

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5.3 Feature: - Value-added services like online ticket booking tourist packages and discounted

travel for round trips internet facilities , cash points on the platforms and so on. Differentiate

the organization from competitors and helps to builds relationships that bind customers to the

firm in a encouraging way

5.4 conformances: - this characteristic simply implies whether the organisation is implementing

the ISO safety standards

5.5 serviceability: - customer expectation from the organisation whether the IR is able to meet

the quality standards and be able to deliver it in a right way at right time

6. ANALYSIS OF TQM

“TQM is the implementation of strategies, tactics, and operation methods for integrating

practical quality control techniques (statistical quality control, inspection, and quality assurance,

etc.) with organizational cultures conducive to the continuous improvement of quality. It focuses

on the totality of the system rather than its individual parts, seeking to identify the cause of

failure rather than the simple fact that failures have occurred.”

IR, in achieving TQM. There needs to be quality conformance to the service specified.

Conformance to quality standards means producing a service to a specific design specification.

Quality conformance can be achieved by following these sequential steps

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Defining the quality characteristics of the service i.e., delivering the service as it has been

promised with respect to all the rules terms agreed whilst making an accord with customer. As a

operation manager it is essential to measure the characteristic of the quality at every step during

the user interface. Secondly by controlling the quality of the services like passenger safety and

trains arrival-departure etc, against the preset standards. And continue to make improvements

10. RECOMMENDATIONS PROSPECTIVE/ SOLUTIONS:-

IR considering some the issues errors and defects and contious monitoring would be helpful this

means pursuit of of qulity is ongoing and contionus and the standards are to be contionusly

examined against the KPIs key performance indicators. Indian railways msut recognise that ana

organistion striving to please its users ust embarce the quality standards anf continue to improve

and benchmark them against its competetiorrs . some recomnedations are given to to enhance the

services in IR
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References :-

1) ‘Operations Management’ By Nigel Slack et al. 2e

• http://www.thehindubusinessline.com/2003/09/19/stories/2003091900090900
.htm
• customer service IT
http://news.bbc.co.uk/1/hi/business/3835525.stm

• Railways improving future

1) http://news.bbc.co.uk/1/hi/world/south_asia/6287152.stm

2) http://news.bbc.co.uk/1/hi/business/7265287.stm

• Ranking of Indian railways

https://www.cia.gov/library/publications/the-world-
factbook/rankorder/2121rank.html

• Indian culture and the culture for

• TQM: a comparison
www.emeraldinsight.com/10.1108/09544780710730014
• A performance benchmarking study of Indian Railway zones
www.emeraldinsight.com/10.1108/14635770810903178
• Restructuring Indian railways
http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf
• Issues performance and challenges
http://www.esocialsciences.com/data/articles/Document1612009310.272533
6.pdf
• http://www.esocialsciences.com/articles/displayArticles.asp?
Article_ID=1831