OM-ASSIGNMENT CASE STUDIES :BBA-BA- 22.7.2019 (S.

No 8 to 17) 
OPERATIONS MANAGEMENT-LIST OF INDUSTRY EXAMPLES
*8-Y..1/ 1.3 Priorities in OM Industry challenges in OM OM Scope U-1
*9-Y…2/2.1 Strategies in OM Air Deccan operations OM Scope U-1

UNIT 2 :OPERATIONS MANAGEMENT-LIST OF INDUSTRY EXAMPLES

*10-Y…15/6.1 Product development Tata Nano Prod devt U-2
*11-Y….16/6.2 Product development Indian experience Prod devt U-2
*12-Y…17/6.3 Product development Customer requirements Prod devte U-2
*13-Y…18/6.4 Product development Variety reduction Prod devt U-2
*14-Y…39/13.1 Demand forecasting in a petro chemical mfg Forecasting U-2
*15-Y…40/13.2 Demand forecasting Role of WEB Forecasting U-2
*16-Y…41/13.3 Demand forecasting Accuracy factors fertilizer use Forecasting U-2
*17-Y…46/16.1 Scheduling operations Scheduling operations Software PPC U-2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UNIT 1 :OPERATIONS MANAGEMENT-LIST OF INDUSTRY EXAMPLES
*8-Y….1/ 1.3 Priorities in OM Industry challenges in OM OM Scope U-1
1/1.3 Priorities in OM Industry challenges in OM OM Scope U-1
Challenges faced by the white goods/1
Manufacturing organizations face newer challenges on account of changes in the competitive
dynamics in market. The current state of white goods industry in India bears testimony to
thus fact.
The first significant issue is the falling price of white goods. A five-kilogram automatic
washing machine is available today for INR 6000, compared to INR 8000 years ago.
Similarly, the price of a 1-5 ton ac has come down from INR 25000 four years ago to INR
15000 today. The problem is compounded by the price of components,plastics,and metal.
Another related issue in this sector is its installed capacity. The installed capacity for
manufacturing refrigerators is 5 million, and the demand is estimated to be 3.3
million.moreover, the estimated annual growth rate in demand for refrigerators is below 6
percent the market for washing machines was1.1 million units in 1999. It has almost
stagnated, and the current demand estimates are at 1.4 million units. Therefore, firms are
stuck between falling prices low volumes, and overcapacity.
Some companies have emphasized the need to have a diversified portfolio as it provides some
operational and business advantages. A diversified portfolio provides scheduling and
assembly-line flexibilities. Under such conditions, the need for sound operations management
practices is felt strongly. Some of the principles of operation management that can be applied
to slove such a problems faced by organizations are; implementing cost cutting measures
improving productivity through process improvements, improving the planning and
scheduling of operations with operational and assembly flexibilities and improving suppliers
management and collaborating with suppliers
Scource- Based on k.mitra “bloodbath in white goods” business today 17 july 2005 pp
118-122
*9-2/2.1 Strategies in OM Air Deccan operations OM Scope U-1
2/2.1 Strategies in OM Air Deccan operations OM Scope U-1
IDEAS AT WORK 2.1/
Air Deccan: India’s First low-cost Airline
Imagine that you want to travel from Bangalore to Mumbai by air. A decade ago, you would
have had to choose between Indian Airlines and Jet Airways. Today, If you log on the
internet and search for possible alternatives, you will find a wide range of flight timmings and
price option offered by low cost airlines such as Kingfisher Red (formerly known as Air
Deccan), Spice jet, Go Air and Indigo. The current scenario in the Indian civil aviation sector
offers rich insights into the key elements of operations strategy.
The operation strategy of an organisation is derived from its overall corporate
strategy. Operations strategy is, in fact , the starting point of operations management. It
involves facing trade-offs while designing an operations system and making specific choices
in operational control. The case of Air Deccan, India’s first low-cost airline, demonstrates
some of the decision and processes involved in operations strategy.
Air Deccan’s basic strategy was to make travel accessible to every Indian by pricing
its services at 30-40 per cent of the price of regular airline services. To translate tis overall
strategy into operations, it made unique choices in various areas of operations, it made unique
choice in various areas of operations, mangment. At a broad level, it adopted unique methods
for procuring aircraft, maintenance, ticketing and flight services and flight and schedule
management policies.
 At the most fundamental level, Air Deccan’s operations strategy is
characterized by four features: (1) More flying hours per aircraft, (2) Cutting out all frills, (3)
elimination of inter-airline arrangement for baggage, and (4) a new distribution model. Such
a strategy requires careful selection of an appropriate services delivery system, including the
types of aircraft to be used.

Air Deccan used airbuses on heavy traffic routes and smaller aircraft for routes with
lower traffic. This choice and other unconventional approaches to mainatenance enabled it to
save on cost considerably. Other operational design choices in the services delivery system
included elimination of in flight food, business-class services and lounges at airports. Air
Deccan decided not to offer refunds, compensation, or accommodation facilities for missing
aflight. These choices were consistent with the airline’s operations strategy.
The ticketing services and distribution system adopted aby Air Deccan reflect its
overall operations strategy. In the conventional distribution system, 90 percent of ticketing is
done through travel agents and agent gets a commission of 7-10 percent. The other
operational complexities in the traditional system include lock-up of funds, multiple booking
in flights by travel agents, highly fluctuating occupancy levels, and high costs of tickets are
also enormous. Air Deccan made choices that were different from this traditional distribution
model. Figure presents a schematic representation of its distribution model.
The ticket distribution and cash collection model of Air Deccan factored several local conditions and
operations strategy requirements. Air Deccan developed its own computerized reservation system (CRS). It also
started a 24 hour call centre based in bangalore, which made use of local phone number as opposed to costly
nationwide toll-free numbers. The call centre was linked to reservation system through a virtual private network
network (VPN) on the internet. The reservation system, in turn was linked to a bank terminal through a VPN.
Air Deccan used multiple modes of cash collection and ticket delivery. Besides booking tickets through
the call center, customer could use the internet or approach a travel agent for bookings. In fact, Air Deccan
pioneered the concept of e-ticketing in the country, reducing distributions cost drastically . it used the internet
and VSAT technology to cut costs in flight yield management and ticketing.
In order to drive cost, Air Deccan made some crucial decisions in its operations. To
avoid the delays involved in the hub-spoke model, the airline adopted point to point flying.
This means that each customer has a contract for one flight only. Inter airline arrangement for
operational aspects such as baggage result in added cost and delay and achieved more flying
hours by avoiding such arrangements. In the addition it outsourced the facilities in all
airports. For example, at Hubli airport in north Karnataka, one Air Deccan flight per day
means one hour of work at airport. If air deccan filght were to invest in facilities, it would
result in poor utilization and high cost. By outsourcing the airports, it was able to cut costs
incurred on account of poor utilization.
 Air Deccan made several important choices in its operations to achieve its overall
stratergy. Today, other low-cost airlines such as spicejet, Go Air, and Indigo also utilize
similar operational stratergies.
Source: Adapted from murali Patibandla,IIMB Management Review 17,no 1(March 2005)
UNIT 2 :OPERATIONS MANAGEMENT-LIST OF INDUSTRY EXAMPLES
*10-Y…15/6.1 Product development Tata Nano Prod devt U-2
1/15/ 6.1 Product development Tata Nano Prod devt U-2
TATA NANO: THE INR 1,00,000 PEOPLE’S CAR/15
When Ratan Tata unveiled the complete prototype of the Tata Nano in January 2008 at the
auto show in New Delhi, it opened up a new chapter in product development. The compact
car, priced at USD 2,500(INR 1,00,000), is a valuable experiment from which much can be
learnt about the best practices in new product development.
The product development team at Tata Motors had to meet three requirements for
the new vehicle: it should (i) be low-cost, (ii) adhere to regulatory requirements, and (iii)
achieve performance targets such as fuel efficiency and acceleration capacity. Balancing
design changes with their cost implications is an important challenge any new-product
development project. Every design, therefore, had to cater to these three key requirements.
Clearly, while the cost was very critical, the company was unwilling to make any
compromises in other areas. Fuel economy is a major driver for selling a vehicle in India. It
was also important to ensure that the car could be maneuvered in city areas.
There is considerable value in having multiple stakeholders in a product team.
Ideas for the Nano came from unexpected sources and they were given due consideration
before a decision was taken. For instance , in addition to the vendors, a small group of
mechanics was part of the development phase. This group suggested an additional opening on
the rear floor, which would provides access to the intake manifold and the starter. While the
design team was trying to avoid this for cost reasons, the mechanics insisted on the change.
The design team had to redesign several aspects before the style could be
frozen. The car’s body was designed twice and the engine was designed thrice. The floor and
the seats were designed 10 times. There were two simultaneous concepts for the car’s
dashboard, with detailed designs and cost estimates. The Nano team eventually chose the
concept they thought would look more attractive to the customer.
The Nano is not over-engineered like, say, the German cars. It is an example
of frugal, cost-effective and relevant engineering. Several suppliers got involved in the
project at a very early stage. This was perhaps one of the ways by which costs were reduced.
Electronic sourcing has been another approach to cut costs.
Rane Group, which makes a rack-and-pinion steering system, focused on
reducing the weight of the materials used by replacing the steel rod of the steering with steel
tube. This acted as a major cost reducer. Further, the product, which is made of two pieces,
was redesigned into one piece to save on machining and assembling costs. GKN Driveline
India, a subsidiary of global auto parts leader GKN, spent a year developing 32 experimental
variants for the rear-wheel drive system and finally designed a smaller diameter of shaft,
which made it lighter and saved on material costs. All the suppliers have similar stories and
most of them were able to meet the target costs.
A good product development exercise has several features: unambiguous
objectives for the project, the involvement of multiple stakeholders, the role of suppliers in
cutting time, and cost and value engineering. We see several examples of these in the Nano
project.
*11-Y…16/6.2 Product development Indian experience Prod devt U-2
2/16/6.2 Product development Indian experience Prod devt U-2
Facets of the New-product Development in Indias/16
In the past, Indian manufacturers have been obtaining products from their technology
partners. Often, partners tend to hand over an obsolete design. Of late, however there have
been several successful attempts at making indigenous designs, especially in the automobile
industry. Notable among them include the Scorpio by Mahindra and Mahindra(M & M0, the
Victor by TVS Motor Company, the Pulser by Bajaj, and the Thunderbird by Royal Enfield.
Edge, brought out by Titan, is the world’s slimmest watch(3.5mm). These initiatives point to
the growing importance of the product development process in operation planning and
management in the Indian manufacturing sector.
M&M developed its first sports utility vehicle—the Scorpio—using a product development
team of about 120 people. This team was divided into 19 cross-functional teams.
Considerable design work was spread over the United States, Korea, Japan, France, Austria
and United Kingdom. These teams were co-ordinated from Kandivili in Mumbai. Using a
concept known as ​concurrent engineering ,​the design teams were able to work closely with
the suppliers and could significantly cut down the development time and rework the design.
At every stage of development, attempts were made to incorporate customer feedback to
ensure that when finally manufactured, the vehicle was close to market expectations.
Moreover, M&M also used the concept of gates to review the progress of the product
development effort and to ensure completion of critical events before it proceed further.
M&M used five gates; and at each gate a green ,yellow, or red signal was used after review.
A green signal indicated a “go-ahead” while yellow meant the need for a re-fix. The red
signal indicated a serious problem. Due to these and several other initiatives, M&M was able
to improve the design productivity. This enabled M&M to set the price of the Scorpio at
somewhere between INR 550,000 and INR 635,000. The nearest competitor, the TATASafari
,was priced over INR 750,000.
Two-wheeler manufacturers such as TVS Motor Company and Bajaj Auto use the technique
of ​target costing​ for determining the price of the product. Using this information, they work
backwards to fix the maximum acceptable cost to develop various components. Organizations
such as Vediocon use other techniques for developing new products with a short life cycle.
Vediocone invests large amounts of money and effort in developing “basic platforms” that
will not change quickly. At a later stage, they invest similar additional resources for
designing additional features that will differentiate the final products from each other.
These examples point to the need for using certain generic ideas for an effective product
development process. These include understanding customer requirements and factoring them
into the new-product design, using cross-functional teams for simultaneous processing of
various ideas, and using unique concepts to accelerate the product development time and
improve design productivity. These measures will enable organizations to bring new and
interesting products to the market faster and at a lower cost than competition.
*12-Y….17/6.3 Product development Customer requirements Prod devte U-2
3/17/6.3 Product development Customer requirements Prod devt U-2
IDEAS AT WORK 6.3/17
GETTING TOGETHER TO KNOW WHAT THE CUSTOMER WANTS
Getting to know what the customer wants is not always easy, nor do many organizations
know how to get this information. Breaking away from old procedures and systems and
creating an interdisciplinary team within the organization can sometimes offer invaluable
help.
Bharat Electronics Ltd (BEL) was to manufacture outstation broadcasting (OB) vans
during the Eighth Five-Year Plan period. It had already manufactured eight such vans in the
past and the chief engineer approved the design for manufacturing. However, the project
chief wanted to know whether the OB vans required any further improvement. Contrary to
the contemporary wisdom prevailing at that time, the project chief insisted that the R&D
personnel should be involved (along with marketing) in this exercise of getting to know what
the customer wanted.
The unorthodox suggestion paid rich dividends. Typical problems encountered by
users included the prospect of hitting one’s head on the van roof when negotiating rough
terrain, and two springs breaking down almost every time when the vans completed a trip to
villages, to name just a few. Despite their initial reluctance, the satisfaction level of the R&D
team was worth more than the effort in spending time with the user.
About 100 changes were made in the design, nearly half of them at no significant
cost. It also brought into focus the fact that it is sometimes not possible for marketing
personnel to appreciate, understand, and articulate the design problem.
*13-Y…18/6.4 Product development Variety reduction Prod devt U-2
4/18/6.4 Product development Variety reduction Prod devt U-2
IDEAS AT WORK 6.4/18
VARIETY REDUCTION EXERCISE: OPPORTUNITIES FOR COST CUTTING.
A manufacturer of industrial equipment operating in South India was facing stiff competition
from new entrants, mainly from Japan, for a product that it had developed just a few years
ago. The Japanese competition was offering a similar product, but at a lower price. Therefore,
despite having a product with good technology and quality, the company was finding it
difficult to compete in the market.
After initial studies, it was found that one promising opportunity for cost cutting was
revisiting its design philosophy. There was a widespread feeling that opportunities for using
several of the existing components in the new product may have been missed. Moreover, it
was also felt that unnecessary variations had been introduced in the product design, thereby
increasing the number of unique components used in the product. Based on these initial
inputs, the components used for the manufacture of the product were studied. In a cursory
analysis, the study concluded that there were significant opportunities for reducing part
variety, thereby bringing down the cost. ​Table 6.2 shows a partial list of 15 components
used in the product.
The study pointed to several shortcomings in design. It showed that use of mirror-image
components added no substantial value to the operation of the product but to the variety (as in
the case of ​Cornet Teeth design​). ​The organisation failed to recognize the need for using
universal components even at the expense of over design​.
This example underscores the need for the design team to have an appropriate design
philosophy. In the absence of this, even with a resourceful and productive design team, the
organization can introduce products that are not competitive at the market place.

Table 6.2 Analysis of a partial list of components used in the product.

Parts Part no: Description Remarks
1 375 ph 02321 House These houses can be
substituted with one variety
after examination of
assemblies
2 CHH 18 01615 House ….do….
3 CHH 18 01616 House …..do….
4 375 PH 02046 House ….do….
5 CHH 04 00805 House ….do….
6 375 PH 02184 Tube string(LH) LH and RH parts can be
avoided after suitable
 redesign
7 375 PH 02281 Tube string(RH) ….do….
8 375 PH 02176 Tube string(LH) ….do….
9 375 PH 02168 Tube string(RH) ….do….
10 375 PH 02208 Tube string(LH) ….do….
11 375 PH 02257 Tube string(RH) ….do….
12 375 PH 02216 Tube string(LH) ….do….
13 375 PH 02265 Tube string(RH) ….do….
14 375 LL 31583 Cornet Tooth(LH) Both these teeth can be
substituted with straight teeth
15 375 LL 31575 Cornet Tooth(RH) ….do….
*14-Y…39/13.1 Demand forecasting in a petro chemical mfg Forecasting U-2
8/39/13.1 Demand forecasting In a petro chemical mfg Forecasting U-2

THE ROLE OF FORECASTING IN A PETROCHEMICAL-MANUFACTURING

COMPANY

Forecasting has always been an important activity in manufacturing and service

organizations. For a manufacturer of petrochemicals, its role is crucial as long term contracts
for feedstock could provide the competitive advantage of cost-effective inputs. With the wild
fluctuations in the price of crude in recent times, the value of forecasting is even greater.

Consider the polyethylene plant of Reliance Industries Limited at Hazira, near Surat(Gujarat).
Forecasting the requirement of polyethylene is no simple task. There are sever complexities
in the process. For example, exchange rate fluctuations and geo-political movements could
significantly affect the Demand – Supply of feedstock. On the domestic front, the installed
capacity and capacity projections of all the players in the sector and excise and customs tariff
schedules could affect the Demand-Supply scenario for its final product. Let us understand
the various steps involved in the forecasting process and the nature of decision taken.

The process starts with certain assumptions about the tariff structure for customs and excise,
the prevailing local price, exchange rate fluctuations, import price, and the nature of
competition. Based on these assumptions, the total market for polyethylene in the medium
term of 18 to 36 months is arrived at. In the next step, an analysis of Supply –Demand
position is made on the basis of its own capacity and competitors’ capacity and expansion
plans during the year.

Based on these, the demand to be met during the next planning year is arrived at. This is
based on a series of forecasting exercises done at various levels and actual collection and
analysis of the end-use data of the previous year. At this stage, a certain level of aggregation
of data is required. For example, there will be several grades of polyethylene in production
and several new grades will be introduced during the planning year. This data needs to be
aggregated in order to analyze capacity availability. Similarly, the end-use data is collected at
the tertiary level and progressively aggregated at regional and national levels. This data is
used in the forecasting exercises carried out to estimate future demand.

The output from forecasting is put to several important uses. The foremost use is balancing
capacity availability to actual projected requirement for the planning year. This is done by
some decisions on de-bottlenecking schedules, adjusting planned maintenance schedules and
reworking some technology up gradation initiatives. Furthermore, the forecasting exercise
directly leads to detailed production planning for the year. During this stage, the data is
dis-aggregated into specific product variant and scheduling plans for each variant arrived at.
At this stage, change-over considerations from one product variant to another are taken into
consideration. The forecasting exercise also helps in establishing performance targets for the
year for various departments such as production, material, and marketing, as well as in the
setting up of control systems.

*15-Y….40/13.2 Demand forecasting Role of WEB Forecasting U-2

9/40/13.2 Demand forecasting Role of WEB Forecasting U-2
IDEAS AT WORK 13.2/
THE ROLE OF THE WORLD WIDE WEB IN FORECASTING
In a number of decisions involving long term strategies the utility of the forecast critically
depends on the quality of the data. Therefore, one of the important tasks in making long term
forecasts is the collection of relevant data from various sources.
Let us consider the case of a strategic planning exercise undertaken by the firm in the steel
industry to develop plans for the next years. The firm may want to address issues pertaining
to the addition of new product lines and investing additional capacity in the existing product
lines. Such an exercise requires several kinds of data on the steel industry. For instance the
firm may require information on various players in the industry, their installed capacity,
product mix, and expansion plans.
In the pre-WEB, such information tool time to collect was expensive. However, the
WEB plays a vital role today in our search for relevant information. In our example, we may
visit a few related to the steel industry both in India and abroad to collect relevant
information. One such portal is the steel exchange of India WEB
site​(http://www.steelexchangeindia.com)​. This WEB site provides a great deal of information
on the steel industry. This data includes a classification of the entire industry in terms of the
products offered by various producers, company information and production plans, market
information (such as quantum of trade and prevailing prices), consultant reports on the
industry, the overall scenario in the industry, manufacturing technology and process, EXIM
policy’s classified information and yellow pages. With membership privileges, the extent of
information availability increases.
Figure presents a screen-shot of the list of producers, the product range and the
installed capacity extracted from the steel exchange of India WEB site. Such information is
very useful in strategic planning exercise. Similar information from a large number of WEB
Sites both in india and abroad is just a few clicks away. This example demonstrates how
organisations can greatly benefit from using the web to obtain relevant data for their
forecasting exercise.
  
*16-Y….41/13.3 Demand forecasting Accuracy factors fertilizer use Forecasting U-2
10/41/13.3 Demand forecasting Accuracy factors fertilizer use Forecasting U-2

FACTORS AFFECTING FERTILIZER USE IN PUNJAB

As the population increases, food grain production also needs to increase. One of the methods
to improve productivity per hectare of cultivable land is the judicious use of fertilizers.
Farmers in the country continue to use fertilizers and therefore , firms manufacturing
fertilizer need to understand the demand for fertilizer.

A study was conducted to identify the variables that influence the consumption that influence
the consumption of fertilizers per hectare. Data on different factors affecting the intensity of
fertilizer use in Punjab during the period 1970-71 to 1997-98 was collected and analyzed as
a part of the study. The analysis revealed several variables that may explain the use of
fertilizers as important. When potash and phosphate fertilizers were decontrolled during the
1990s, the data showed changes in the usage pattern. Another factor was the gross cropped
area. The increase in the consumption of fertilizer at a particular point in time was attributed
to the intensity of fertilizer use rather than increase in the gross cropped area. There have
been some changes in this.

However, the analysis further showed that fertilizer consumption is also dependent on the
gross cropped area of high-yielding varieties. For example,changes during the nineties
reflected increased efforts in the research and development of high-yielding crops and their
relationship to fertilizer use.

On the basis of this analysis, a casual model was developed to estimate consumption of
fertilizers in Punjab, as follows:

Log Y=log a + b​1 log

​ X​1 +
​ b​2 log
​ X​2 +
​ b​3 log
​ X​3 ,

Where,

Y= fertilizer use per hectare( in kg)

X ​1​=percentage of gross cropped area under high yielding varieties
X 2​​ =deflated price of fertilizers (in INR)
X ​3​=percentage of irrigated gross cropped area

The regression analysis revealed that the value of b​3​ was 2.38 and was significant. This
indicated that gross cropped area had a positive effect on fertilizer use. Moreover, the area
under high-yielding varieties also had a positive co-efficient, whereas price had a negative
coefficient, as expected. The negative and low price elasticity indicated that smaller price
changes may not affect fertilizer use significantly.
*17-Y….46/16.1 Scheduling operations Scheduling oprns Software PPC U-2
13/46/16.1 Scheduling operations Scheduling oprns Software PPC U-2
IDEAS AT WORK

PREACTOR APS & ITS SOFTWARE SCHEDULING OPERATIONS

Preactor APS is one of the many software packages available for planning and scheduling
operations in a manufacturing system. Such software provides alternative scheduling
algorithm and rules. Furthermore, the schedule will also provide interfaces with other system
such as MRP/ERP and enable the planner to communicate the impact of the decision across
several other business processes.
All the scheduling tools in the Preactor family can use the sequential or
one-job-at-a-time scheduling method. Using Preactor, each job or order is loaded in sequence
depending on due date, priority and so on, and the operations are loaded forward, backward,
or bi-directionally. Additionally, Preactor APS allows the use of the dynamic loading
method, where, as each resource become free, operations are selected from the queues of
work waiting to be processed using standard dispatching rules.
Preactor APS uses several standard scheduling rules . The in-built scheduling rules
are preferred sequence (by job attribute, set-up, process time, or critical ratio), minimize work
in process (WIP) forwards, minimize WIP backwards, selective bottleneck, and dynamic
bottleneck.
The critical ratio used, for example, to minimize late jobs by dynamically changing
the priority of jobs based on a comparison of remaining process time with due date. The
minimize WIP rules endeavour to minimize the make-span for each job. “Minimize WIP
forward” loads each job forward from the current time, lock the last operation, and
backward-sequence from there. “Minimize WIP backward” loads each job from its due date,
locks the first operation and forward-sequences from there.
The selective bottleneck rule is based on the theory of constraints (TOC) philosophy.
For selective bottleneck scheduling the user selects the “Bottle neck resource” or “Bottleneck
resource group”. Each order is then backward scheduled from the due date (less delivery
buffer). The dynamic bottleneck rule is an improvement over the classical selective
bottleneck scheduling. Rather than pre-processing the orders to determine a single bottleneck,
the dynamic bottleneck rule calculates the bottleneck individually for each job. Operations
“upstream” of the bottleneck are then backward sequenced, inserting a resource buffer like
the selective bottleneck rule.