Master of Business Administration - MBA Semester III OM0013 Advanced Production & Operations Management 4 Credits (Book ID:

B1235) Assignment - Set- 1 (60 Marks) Name: Roll No: Manish Rajan Rajput 571012050

Q1.

Explain with an example the impact of product or service life cycle on operation strategy.

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

Product Life Cycle

For example, a service firm is defined as one that derives more than 50 percent of its sales from providing services. RCA's service revenues now exceed its revenues from electronic manufacturing. A service package is a bundle of explicit and implicit benefits performed with a supporting facility and using facilitated goods. When you eat at a fast food restaurant (supporting facility), you may purchase a hamburger (facilitating good) that someone else cooked for you (service). The service concept is the perception and expectations of the service itself in the minds of the customers, employers, shareholders, and lenders. The service system is the equipment, layout, and procedures used to provide the service and maintain quality and delivery standards. The service revolution relates to the shift in the United States to a service economy and the proliferation of service automation

Operation Strategy steps (changed with Product life Cycle) Stage 1 (Business Strategy / Business Unit Strategy): This stage is concerned more with how a business competes successfully in a particular market. Stage 2 (Functional Strategies): This stage is a selection of decision rules in each functional area. Two examples of these functional areas are marketing strategy and financial strategy. Stage 3 (Manufacturing Priorities): This stage helps in implementing the Production Planning Process. Stage 4 (Action Plans): This stage helps in formulating the action plans for an organization. An Action plan typically includes deciding who is going to do what, by when, and in what order, so that the organization reaches its strategic goals. Stage 5 (Detailed Tasks): In this stage each work unit in the action plan is assigned to a skilled worker. Stage 6 (Evaluation of the Methodology): This stage is concerned with selecting

and evaluating the methods. The overall goal of selecting an evaluation method is to get the most useful information so that key decision makers can make the most realistic and cost-effective decisions.
Relation with Product life Cycle and Operational Strategy 1. Development Stage: After collectively considering the products and services demanded by customers, strengths and weaknesses of competitors, the environment, and the firm's own strengths, weaknesses, cultures, and resources and analyzed. Proficient firms can formulate their vision as expressed through the mission statement. This statement expresses the organizations values and aspirations; basically its reason or purpose for existence. Based on this mission statement the firm will formulate its business strategy. This business strategy is a long-term plan for accomplishing the mission set forth in the mission statement. Each function within the business can then derive its own strategy in support of the firm's overall business strategy (financial strategy, marketing strategy, and operations strategy). 2. Introduction Stage: When the product is first introduced into the market, considering the uncertainty inherent in the market at the initial stage, the operations management of the company can best contribute to competitiveness by: a. Developing the flexibility to cope with any changes in the specification of the product or service. b. Developing the flexibility to cope with any changes in output volume. c. Maintaining quality levels so as to stabilize the performance of the product / service, which is the main basis for competitiveness.

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

4. Maturity stage: After a period of rapid growth, products and services lose their novelty and become mature in the market. During this period, Demand starts to drop, which leads to a shortage of supply. Some early competitors might have left the market. The industry then settles down and is ruled by a few larger companies. The design of the products or services also stabilises to a few standard types. Competition becomes intense, with an emphasis on price, or value for money. This increasingly competitive and price-conscious environment means that a company is forced to cut down on its operations to reduce costs, either by proper maintenance of projects or by price cutting, or both. 2 3 5. Decline Stage: This stage is characterized by fast declining sales revenue and fewer customers. It is generally caused by: 0 o Obsolescence. 1 o Changes in customer preferences. 2 o Global competition. 3 o New regulatory requirements, such as environmental protection laws. In this phase, there is a decline in sales and fewer customers in the market. Thus, the operational objectives are still be dominated by cost.

Q2.

Explain the types of value added factory services. Explain the major competitive dimensions of operations strategy.

Answer: Value added factory services can be classified into four broad categories, they are: 1 Information: It is the ability to furnish critical data on product performance, process parameters and cost to internal groups (such as Research and Development) and to external customers, who then use the data to improve their own operation or products. For example, many companies provide quality data sheets documenting actual product testing and field quality performance to field sales and service personnel. 2 Problem solving: It is the ability to help internal and external groups solve problems especially in quality. For example, a metal and fabricator company sends factory workers out with sales people to troubleshoot quality problems. This helps them join with shop floor personnel on remedial efforts. 3 Sales support: It is the ability to enhance sales and marketing efforts by demonstrating the technology, equipment, or production system the company is trying to sell. For example, Eureka Forbes organizes Kiosks in busy area to demonstrate its water purifier, vacuum cleaner and other products. 4 Field support: It is the ability to replace defective parts quickly (for example, Caterpillar promises to make repair parts available anywhere in the world within 48 hours) or to replenish stocks quickly to avoid downtime or stock outs (for example, a retail chain is linked to its Hong Kong textile mills via a sophisticated computer system that signals factories to begin producing fast selling items as soon as weekly sales figures are collected).

Competitive Dimensions of a Firm

5 Value added services provided to external customers yield two benefits. Firstly, it helps them to differentiate the organization from the competition. Indeed in many cases it is easier to copy a firms product than to create the value added service infrastructure to support. Secondly, these services build relationships that bind customers to the organization in a positive way. The design and ongoing management of a firms operation have a significant impact on the financial success of the firm. The firms strategy is implemented with a design that is portrayed financially in the assets of the firm. Each asset - be it a plant, a warehouse, an operations centre, or the inventory carried in these facilities is owned by the firm and requires a significant investment. The firms owners and shareholders want a return on this investment. Decisions such as how big a plant should be, how many plants there should be and where to locate them and whether or not certain operations should be outsourced are major topics of operations management. Other decisions such as how much inventory is needed to meet required service levels, relate directly to the asset investment.

Q3.

What is the meaning of performance measure? Explain with an example. List the different types of benchmarking?

Answer : Performance measurement is the process of quantifying action, where measurement means the process of quantification. The performance of the operation is assumed to be derived from the actions taken by its management and the performance can be defined as the extent to which an operation fulfils the five performance objectives at any point in time so that the customers are satisfied. Benchmarking is the process of learning from others and involves comparing ones own performance or methods against other comparable operations. The five common performance objectives are quality, speed, dependability, flexibility and cost that can be split into more detailed measures, or aggregated into composite measures, such as customer satisfaction, overall service level or operations agility. These composite measures are further aggregated using measures such as market objectives achievement, financial objectives achievement, operations objectives achievement and even overall strategic objectives achievement. The aggregated performance measures have greater strategic significance. This helps to draw a picture of the overall performance of the business, although by doing so they will necessarily include many influences outside those that operations performance imp movement would normally address. The more detailed performance measures are usually monitored closely and more often, and although they provide a limited view of an operations performance, they do provide a more descriptive and complete picture of what should be and what is happening within the operation. In practice, most organizations choose to use performance targets from a larger range. Performance measurement can be the process of quantifying action, where measurement means the process of quantification and the performance of operation is assumed to be derived from the actions taken by its management. Performance can be defined as the extent to which an operation fulfils the five performance objectives which are quality, speed, dependability, flexibility and cost at any point in time so that the customers can be satisfied. Some kind of performance measurement is a prerequisite for judging whether an operation is good, bad or completely different.

Types of benchmarking The following are the different types of benchmarking: 1 Internal benchmarking: It involves comparing operations or parts of operations within the same total organization. For example, a large motor vehicle manufacturer with several factories could choose to benchmark each factory against the others. 2 3 External benchmarking: It involves comparing an operation and other operations that are part of a different organization. 4 5 Non-competitive benchmarking: It is involves benchmarking against external organizations that do not compete directly in the same markets. 6 7 Competitive benchmarking: It involves comparing directly between competitors in the same or similar markets. 8 9 Performance benchmarking: It involves comparing the levels of achieved performance in different operations. For example, an operation could compare its own performance in terms of some or all of its performance objectives such as quality, speed, dependability, flexibility and cost against other organizations performance in the same dimensions. 10 11 Practice benchmarking: It involves comparing an organizations operations practices, or way of doing things, and those adopted by another operation. For example, a large retail store could compare its systems and procedures for controlling stock levels with those used by another department store.

Q4.

What is Flexible Manufacturing System? How does it help in improving the manufacturing process?

Answer:

Flexible Manufacturing Systems (FMS)

In the earlier topic we learned what Flexible Manufacturing Systems (FMS) are. Since a standard line is practically unable to satisfy the market requirements of variety and flexibility, an FMS is introduced. A typical FMS includes the following: 1 A number of workstations, such as Computer Numerically Controlled machines that perform a wide range of operations. 2 A transport system which moves material from one machine to another; loading and unloading stations where completed or partially completed components are housed and worked upon. 3 A comprehensive computer control system that coordinates all the activities.

FMS enables speed and flexibility in terms of rapid changes to products, that is, to be made with precision and consistency of reliability. FMS cells are arranged around a group of products where some variety of the product is required even though volume is high. If the volume is very high and the product variability is minimal, then a line process would be most applicable. FMS allows a product to be made in a number of variations and in different volumes over a period of time. This provides benefits for both manufacturer and customer. However, success with FMS is not just about investment in technology. Any organization has to invest in human resources to gain benefits from FMS. The activities in a flexible manufacturing system are the following: 1 Control of each workstation 2 Distribution of control instructions to workstations 3 Production control 4 Traffic control 5 Tool control 6 System performance monitoring .

Q5.

Name and explain the different types of plant layouts by

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providing examples for each.

Answer: The layout determines where and in what sequence activities that make up a process are located. The three basic layout types fixed, process, product and hybrid or cell layouts. Fixed Position Layout In a fixed position layout1, the product or person being acted on remains in one place, while operations take place around it. Workers come to the product (or to the production location) instead of the product moving between workers and work centers. Workers carry out single or multiple activities to modify a product or provide a service until completion. Fixed-position layouts are used in services, for example, in dental or surgical treatments where the patient remains in a single location while being treated. In manufacturing, the production of heavy, bulky or fragile products, such as ships and airplanes, and most construction projects take place with the people and machines moving around the product. Fixed position layouts are associated generally with lower volume process types most usually projects (as in construction), but sometimes with jobbing processes (specialized contractors in construction) and batch processes (as with the production of airplanes or construction of many types of the same house on a housing development). Process Layout In a process layout, specific types of operations are grouped together within the manufacturing or service facility. There is no pre-specified standard flow. Products move around according to processing requirements. This layout type is commonly used in hospitals, where specialties are grouped together, for example, accident and emergency, X-ray facilities, pediatrics wards, etc. Since few patients have identical problems and they do not receive identical treatment, wards and departments are laid out to accommodate a wide range of potential patient requirements. Many retail operations, especially department stores, use a process layout, where the customers move between areas dedicated to different goods, such as kitchenware, furniture and clothing.

The same occurs in manufacturing operations such as precision engineering, where the product does not move in a specified sequence but is moved to particular areas as and when required, allowing a variety of products to be made. In manufacturing, a process layout is commonly associated with jobbing production, where low volumes of products such as furniture, high-fashion clothing and jewellery is produced to individual 10

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

Product Layout The product layout was developed during mass production, as an extension of the principles of scientific management in the context of assembly-line production. In a product layout, people and machines are dedicated to a single product or small range of similar products. Each workstation is laid out in a sequence that matches the requirements of the product exactly, and each stage is separate from the next stage. A typical product layout is as shown in Figure

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The sequence of operations in a product layout follows a straightforward sequence, where one activity in the line cannot be started unless the previous activity has already been completed. In manufacturing, the product layout is common in automobile assembly and other high volume applications. In services, this layout can be found in high volume, standard services, especially where there is a tangible element, such as fast-food preparation. IKEA, the furniture retailer, has a product layout for its stores. People have to follow a pre-defined route through the store, from one area to another. In this way IKEA achieve rates of customer throughput that few other retailers can match. The operation does not need to be laid out in this manner indeed, space restrictions often dictate that a straight line cannot be used.

In line operations, workstations need to be located close together to minimize materials movement. Materials flow and control is critical, especially in ensuring that there is a steady flow of work to do and that both stock-outs (where materials run out) and large piles of Work-In Process (WIP) are minimized. Because each workstation is dependent on the next, the speed of the entire line is determined by the workstation with the lowest capacity. Furthermore, if a single work centre is not operating the entire line comes to a halt very rapidly. Japanese automotive manufacturers have made a feature of this for some time if there is a problem with any part of the operation, any worker can stop the line. This focuses attention on removing and preventing recurrence of the problem, which would be hidden if the line were allowed to continue working.

Q6.

Explain the ingredients of a Business Process.

Answer:

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Business Process (BP) is the overall response that a business undertakes in utilizing resources and delivering outputs that create value for the customer. The same can be listed as under. The Business Process: 1 Has a goal 2 Uses specific inputs 3 Delivers specific outputs 4 Collects resources 5 Performs a number of activities in some order 6 Creates value for the customer. Business Process Management (BPM) defines a set of activities1 undertaken to optimize the business process for improving the organizations performance, deliver better value to the customer, maximize the earnings and keep its head above competition. The business system contains a combination of people and the applications organized to meet business objectives. The applications are automated to enable information and reporting system to be accurate, timely and efficient. Designers and programmers put together the data and processes to provide optimum benefits, and put in place the architecture which is capable of addressing these needs. The architecture should be flexible to adapt new methods, processes and even business plans. All the elements like activities, parts, products, data, people, processes, software tools, delivery systems and performance measurement have to be structured and controlled for the purposes of analysis, evaluation, modification, implementation and correction. This is what we study under Business Process Modeling. Because of the extensive use of various software programmes for all these activities, BPM is synonymously used for the software tools also. The ingredients that go into a business process can be briefly outlined as: 1 Necessary data needed to accomplish the desired business objective.

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

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