VOLUME V : 2014-2015
THE FUTURE OF OPERATIONS
Directors Message “It is my great pleasure to present the fifth edition of the pan IIM Operations Magazine, OpsWorld. This edition puts forward views of the students of different IIMs and industry experts from across the country. The theme for this edition of OpsWorld is “Future of Operations”. We have tried to capture the essence of the evolution under way in the domain of operations management.”
“I wish Op-Era, The Operations club of IIM Shillong, a great success in their endeavour to create an awareness about the future of operations vertical and its relevance for future growth.” Dr. Amitabha De Director, IIM Shillong
Editorial With India moving forward with “Make in India� campaign, the whole manufacturing sector is taking a step towards a new era. The focus has been shifted to build Best-in-Class manufacturing infrastructure and enhance skill development, to facilitate investment and to foster innovation.
The fifth edition of OpsWorld, the pan IIM Operations Magazine,
puts forth the way ahead in supply chain, manufacturing sector, logistics and so on. This edition also brings a special interview on automobile components from Mr. G Rajanbabu, Business Director, Litens Automotive India Pvt. Ltd. Most of the managers today are focusing on operational efficiency and thus hoping the new technologies and new systems implemented would give them a competitive edge. This opens up endless opportunities for those who are looking towards having a future in the field of operations management.
On behalf of the editorial team, I would like to thank Mr. G Rajanbabu for providing valuable insights on the automotive sector. I would also like to thank all the students, professors and industry experts for their valuable contributions. We are grateful to the Operations Interest groups of all the IIMs for their support to make OpsWorld a huge success. Happy Reading !! Editor-in-Chief
Contents 6 Impact of GST on Indian Supply Chain 10 3D Printing - The Future of Manufacturing 14 Implementing Lean Thinking in Indian Manufacturing Sector 17 2014: Year of Automobile Recalls 21 Interview - Mr. G Rajanbabu 25 Scope of Analytics in Supply chain Management 29 Emerging Delivery Mode in Supply Chain - Drone Delivery 32 Fourth party logistics- The way ahead 36 Productivity - ‘Check’; Efficiency - ‘Check’; Standardization - ‘Check’; Reverse Logistics????
Interview
The Team - IIM Shillong Abhay Hitendra Chheda, Chaitanya Deepak Beera, Deepak Venugopal Nair, Eashwar Ranjan , Karthik S, Peeush Goel , Rajesh Kumar Meena , Vinod Kumar M
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Executive Summary
Impact of GST on Indian Supply Chain
GST has been much talked about in news recently and has been vouched for as the required elixir to cure the ailing Indian economy. Here I try to decode GST, its positives and how it is going to impact the design of supply chain.
Understanding GST
Goods and Service Tax is a single tax that will subsume all major indirect taxes (with some exceptions). As of now there are multiple taxes levied by the Centre like excise duty, service tax, customs duty etc. and States like VAT, CST(tax levied on inter-state sales) and local taxes like entertainment tax, luxury tax etc. Government has proposed a dual GST model. In it, taxes levied by the center have been merged under CGST and taxes levied by states have been merged under SGST.
Author
Rahul Mann IIM Calcutta
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Taxes merged under Taxes under State GST Centre GST (CGST) (SGST)
GST - A Win-Win Situation for Indian Customer
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Central excise Duty, Additional Excise Duties
VAT/Sales Tax
Impact of GST on Indian Supply Chain Taxes merged under Taxes under State GST Centre GST (CGST) (SGST) Additional Customs Duty known as Countervailing Customs Duty, Special Additional Customs Duty
Tax on Interstate Sales (CST) – This has to be phased out with introduction of SGST. A new concept called Inter-state GST or IGST
Service Tax
Service Tax
Cesses and Surcharges
Local Taxes - Entertainment Taxes, Luxury Taxes, Tax on lottery, betting etc.
I N R Tax in Pres- GST(with Lakh ent System input Tax (no Input credit) Tax credit) Final Selling Cost: Raw Material: 500 Input Tax: 50 Processing Cost : 50 Margin: 100
700
70
70
Total tax
120
120
Less Input tax credit
0
50
Net Tax Payable
120
70
An input tax credit has been introduced. It means that if an entity has already paid tax on material purchased as input, then in payment of further taxes, it can avail tax credits for this already paid tax. Imagine a manufacturer who procures raw material worth Rs. 500 lakh, incurs cost of Rs. 50 lakh in processing it and plans to sell it at a margin of Rs. 100 lakh. Assuming 10% tax rate, tax paid under GST will be 70 as compared to 120 paid under the current tax system. I N R Tax in Pres- GST(with Lakh ent System input Tax (no Input credit) Tax credit) Manufacturing Material Cost
500
50
50
Current system with CST S u p p l y Chain Point
Cost
Margin
Input VAT Price BeCredit fore Tax
VAT
CST
Total Tax
F i n a l Price
Firm
200
50
0
250
0%
2%
5
255
Distributor
255
20
0
275
4%
0%
11
286
Retailer
286
15
11
290
4%
0%
11.6
301.6
VAT
CST
Total Tax
Final Price
Proposed system with GST (IGST) Supply Chain Point
Cost
Margin
Firm
200
50
0
250
4%
0%
10
260
Distributor
260
20
10
270
4%
0%
10.8
280.8
280.8
15
10.8
285
4%
0%
11.4
296.4
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Retailer
Input VAT Price Before Credit Tax
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Impact of GST on Indian Supply Chain States have been given additional incentive to charge service tax as part of SGST but CST has been removed from the purview of the state. Instead Inter-State GST(IGST) will be levied by Centre to account for inter-state sales. Thus, GST is conceived such that sates will get taxation power on services also, while Union government will extend taxation powers to distributive trade. Advantage to tax-payers is that input tax credit can be availed in IGST also.
Effects of GST on supply chain
Under present regime of CST, manufacturers have incentive to not directly sell to distributors across state but instead set up warehouses in other states. Selling to distributors is recorded as sale and taxed under CST, while transporting to own warehouse in other state is not recorded as sale. Application of CST increases end consumer purchase price and hence makes the product less competitive. To avoid it manufacturers set up warehouses in other states which may not be otherwise required. Removal of CST will encourage manufacturers to locate warehouses on logistics and customer service consideration rather than tax consideration. It will lead to leaner, smarter supply chain with reduced costs. Also, application of CST encourages producers to source products locally rather than across state borders, thus dampening inter-state trade. From Current system with CST and Proposed system with GST tables we can see that under the current regime the end price is higher if firms directly sell to
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distributors across the border. Firms will have to give discount to distributors and retailers to keep the end prices lower. To compensate for it firms set up ware houses in different states to lessen this burden. This leads to setup of an inefficient supply chain, based on taxation consideration rather than efficiency, market or other considerations. In the GST tax regime the number of warehouses will decrease and they will be bigger in size. It will lead to a need to implement ERP systems to manage big warehouses. As of now it is hard for firms to realize profits from implementing ERP systems as warehouses are small and there are different taxation regimes in different states. Uniform taxation system will enable implementation of uniform ERP solution across the supply chain. As the number of warehouses will decrease, it will create new avenues for third party logistics suppliers. Companies will have to relook at the importance of 3PL in their supply chain mix. Non uniform tax regime has hampered the development of 3PL providers in India. GST, reduced documentation and lower overhead will make 3PLs more efficient. On an average, a vehicle in India loses between 24 to 48 hours of complying with paperwork and other formalities. As of now India has the highest ratio of logistics cost to GDP compared to US, Europe and Japan. With less number of warehouses to be set up, it will become easier for foreign firms to enter into India and set up their supply chain. It will lead to more competition for Indian
Impact of GST on Indian Supply Chain firms this pushing them to increase their efficiency.
Effects of GST on finance of supply chain Presently there is burden in the form of fees levied by carry and forward agents. Different sales taxes in different states lead to diseconomies of scale and add to overhead cost of trans-state logistics provider. Introduction of GST should enable removal of these inefficiencies and a better availability of credit in inter-state transactions. GST will lead to an increase in need for working capital. GST is levied during stock transfer but credit is given only on sale. Also any unutilized credit in the form of CGST or SGST will be refunded at the end of year. Thus GST would delay the realization of cash
and reduce working capital. GST provides a great opportunity to increase supply chain efficiencies in India. Implementation of GST will lead to more competition between domestic and foreign firms thus spurring innovation, a win-win situation for Indian consumers.
References 1. http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture_Goods_and_Service_Tax. pdf 2. http://www.cognizant.com/InsightsWhitepapers/ Indias-Goods-and-Service-Tax-the-Case-for-Distribution-Network-Redesign.pdf
Quiz
1. The average of errors made by the forecast over the period of time without considering the direction of error. 2. Who developed the use of standardization in large-scale mass production using a moving assembly line? 3. Methodology by which we try to minimize the cost and improve the revenue of a product or an operation. 4. Chart that indicate only the cumulative workloads for each job and to what extent the work centres are to be scheduled is _________________. 5. ABC is a soap producing company. The profits of the company have increased by 20% this year. The demand for the soaps increased at a high level and also the customers expect faster delivery. Which manufacturing strategies should the company adopt to ensure immediate delivery of the soaps? 6. What priority rule is being used when jobs are processed according to the lowest ratio of due date to remaining processing time? 7. The 4 costs of quality are external failure costs, internal failure costs, assurance costs and _________________ costs. 8. The quality management strategy which is most associated with quality standards such as ISO9000 is 9. Revenue management is a technique often used by hotels and airlines to manage demand. It is also known as _____________________. 10. The organization of customers for processing through a series of service encounters is called a _____________________. 11. Joining a queue and then leaving after some time before being served is ___________________. 12. A technique devised by Kaplan and Norton (1992) to measure performance across four different operating areas is ___________________. 13. Mass customization uses which techniques to deliver its order winners. 14. Moving some of an organization’s operations from a high-cost economy to a low-cost economy is ___________________.
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Introduction
3D Printing - The Future of Manufacturing Author
Ramkumar M
History of Manufacturing
IIM Ahmedabad
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Changing the way of Manufacturing Products with the help of 3D Printing OpsWorld
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In ancient Hindu Vedic society and Greek society (during the time of Plato), access to information was reserved only for elites. Though libraries across the world tried to address this problem, the exclusivity trend largely persisted centuries together until the advent of internet. Internet turned the control over accessibility to information on its head and democratized it for the consumption of the masses. The rest, as they say, is history. Can 3D printing take us to the internet moment of the manufacturing, that is, the democratization of manufacturing? Let us explore.
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In the earliest days of manufacturing before the Industrial Revolution, goods were developed using craft production: a cobbler creating custom-made shoes. Though craftsmanship epitomized the human’s desire to create things, it had three major drawbacks: high lead time, no economies of scale, and no industry standards. These shortcomings of craft production paved way for the birth of industrial revolution. Contributions such as Division of labour (Adam smith, 1776), Interchangeable parts (Eli Whitney, 1790) Principles of scientific management (Frederick W. Taylor, 1911), Moving Assembly line (Henry Ford, 1912) atrophied craftsmanship and ushered in the changes in the world of manufacturing from localized and distributed to
3D Printing - The Future of Manufacturing mass and centralized manufacturing in the earlier part of 20th century. And now, 3D printing is set to change and disrupt the manufacturing as we know it.
3D Printing Technology
3D printing, or additive manufacturing as it is occasionally called, is a three decade old technology. A 3D printer develops a three dimensional product, layer by layer by depositing materials (thermoplastics) in a design as dictated by CAD data, the product design data developed in professional design programs. The technology was invented by Chuck Hull, also known as the father of 3D technology, in 1983 (Hickey, 2014). The first prototype he printed using his 3D printer was an optometrist’s eyecup. The technology has come a long way since then. First 3D printed object –Optomerist’ eyecup The potential of 3D printing could be explained through a simple product: an eyewear. A regular user of eyewear would be familiar with one of the most annoying, yet indispensable, parts of the eyewear: the hinge assembly. The sole purpose of the hinge is to fit the standardized eyewear, the child of mass production, to our unique nose and temples. Would not it be great to have an eyewear that are made to measure just for us in the same, if not less, cost and time you get the standardized one? 3D printing technology will do just that and much more. In the 30 years after the first prototype created by Hull, 3D printing technology has been embraced by the large automobile manufacturers such as GE and Mercedes Benz to build prototypes for testing their new automobile designs (Hickey, 2014). Tech giant Google is betting on 3D printing to develop a customizable phone, the Ara (ProjectAra, 2014). As with the case of internet, the adoption of 3D printing technology went beyond
the sweeping spaces of deep-pocketed corporations and into the small garages of the budding entrepreneurs. Planetary Resources, a start-up for space explorations, is one of the pioneers in the commercialization of 3D printing in low cost space exploration. One of the significant applications of 3D printing technology is in medical sector. Back in 1996 (Hickey, 2014), the surgeons at the Wilford Hall medical centre in Texas generated predictive 3D models in advance of a surgery, a feat hitherto unfeasible without 3D printing technology. Another phenomenal change brought by 3D printing in medical sector is the development of personalized and affordable medical devices. From our body data, medical devices such as wireless dental braces, in-the-ear hearing aids, and full knee replacements (Summit, 2011) could be made to measure to perfectly fit our bodies and personalities as well. What’s more, feats such as printing our organs (Atala, 2011), instead of looking for transplants, through cells borrowed from cells, or printing our own medicine (Cronin, 2012) through a process known as on-thefly molecular assembly will be possible in the near future.
Renaissance of Craftsmanship
The biggest value 3D printing brings into the world of manufacturing is its ability to fabricate complex, detailed designs with the same ease and speed as rudimentary designs. Complexity is no longer a constraint for a 3D printer unlike traditional mass production methods. This very attribute of 3D printers is highly utilised by Product Designers to create prototypes for testing their new product designs and by Architects to build prototypes for their buildings (Harouni, 2011). Does the complexity-free 3D printing technology beckon a new era of manufacturing distinctly different from our past and the present? Avi Reichental, the CEO of 3D Systems, does not think so. In his TED talk on “What’s next in 3D printing?” (Reichental, What’s next in 3D printing, 2014), he said: “3D printing is not going to catapult us into the future, but rather that it’s actually going to connect us with our heritage”. He substantiated his argument by explaining how 3D printing would make everybody “an expert maker and an expert manufacturer” by putting the technology in the hands of the individuals. It is craftsmanship all over again.
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3D Printing - The Future of Manufacturing
Possibilities in abundance
3D printing technology has the potential to democratize manufacturing: returning the power to create from the corporations to the individuals. The power to create (3D printing) along with the power of information (internet) can open up the world of endless possibilities to our generation. In the near future we may have e-commerce websites shifting from selling completed products to selling the product design data (three-dimensional geometric representation of the data). When such a scenario becomes a reality, it may solve the biggest headache currently faced by the e-commerce websites: time and costs involved in delivering the physical product. Customers will then use the product data and/ or customize it to fabricate the product in their personal 3D printers. On the other hand, the adoption of 3D printing in cor-
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porations would necessitate the development of new, or updating, traditional operations management concepts. Right from inventory management to manufacturing (such as JIT and lean production) to supply chain management, all the existing practices will undergo significant changes to stay relevant in the future world of 3D printing.
Challenges
3D printing is not without its flipsides. Though it is a three-decade old technology, it had not seen widespread adoption until recently. While it looks to bring back craftsmanship into our world of mass production, the technology is still complex, expensive, slow and inconsistent in comparison with the existing manufacturing methods (Harouni, 2011). However, these barriers are slowly breaking down with large players such as Google, GE, Benz and, also, quite a number of startups such as Within technologies, Planetary Resources investing heavily in developing the ecosystem for 3D printing. Complexity in Designing: One of the possible hurdles that may hamper the large scale of adoption of 3D printing technology by consumers in the near future is the necessity to have the knowledge of complex designing tools such as CAD. Not everyone can master the professional designing tools. However, the barriers in designing are slowly breaking up with the emergence of new, user friendly designing tools. With softwares like Google SketchUp (Harouni, 2011), consumers can design the complete product right from the scratch. Haptics, a technology that offers the user the sense of touch and feel their designs, can go a long way to help 3D printing technology get pass the designing hurdle. Expensive: Another important challenge that limits the appeal of 3D printing is the exclusivity and expensive nature of its input materials. The existing 3D printers cannot support a wider array of input materials as it requires the input materials to be in powder form. This makes the formulation to convert bulk input materials such as steel, plastics in the powder form quite expensive. Researchers are working to overcome this obstacle through two different approaches. On the one hand, they look to develop new processes that make the conversion less expensive, like what Metalysis, based in U.K., claimed to haves developed that reduced the cost of conversion by 25% (Majcher, 2014). On the other hand, researchers are into developing input materials such as thermoplastics that would replace the traditional input materials such as steel. Slow & Inconsistency: Speed is another feature 3D printing should offer to be adopted by the industries for mass production. The existing 3D printers take days
3D Printing - The Future of Manufacturing to print a product the size of a shoebox. Oak Ridge, a 3D printer manufacturing company, has recently developed a 3D printer that prints 200 to 500 times faster than the existing ones (Majcher, 2014). However, this speed comes with a high price: surface finish of the product suffers. Other unintended consequences of 3D printing are the democratization of counterfeiting and production of illegal products such as guns or explosives. Marc Goodman, the head of Future Crimes Institute, a think tank and clearinghouse that researches and advises on the security and risk implications of emerging technologies, in his TED talk on “A vision of crimes in the future” (Goodman, 2012) cautioned us on the the dark side of technology – the potential dangers when great tools like 3D printers get into the wrong hands. It is scary even to imagine the consequences of such a possibility
6. 7.
8.
9.
theguardian.com/business/2014/jun/22/chuckhull-father-3d-printing-shaped-technology Majcher, K. (2014). How to Build 3D printing. MIT Technology Review - Business Report , pp. 10,11. ProjectAra. (2014, November 11). Google’s Project Ara: Who Are Real Targets? Retrieved from http://motorolaara.com/: http://motorolaara. com/2014/11/11/googles-project-ara-who-arereal-targets/ Reichental, A. (2014, March). What’s next in 3D printing. Retrieved from http://www.ted. com/talks/avi_reichental_what_s_next_in_3d_ printing?language=en: http://www.ted.com/ talks/avi_reichental_what_s_next_in_3d_ printing?language=en Summit, S. (2011, November). Beautiful artificial limbs. Retrieved from http://www.ted.com/: http:// www.ted.com/talks/scott_summit_beautiful_artificial_limb
The Future
As humans, one common trait across all of us is that each of us are unique. We all are unique in our preferences, our needs, and our expectations. Craft production fed our differences by offering personalized products custom-made for us to suit our uniqueness. However, with the advent of the industrial revolution, we traded off customization with standardization for mass consumption. Now, the 3D printing technology has the potential to bring back the glories of the past while ushering us into the future.
Guess the Operations Concepts from the pictures below
References 1. Atala, A. (2011, March). Printing a human kidney. Retrieved from http://www.ted.com/: http://www. ted.com/talks/anthony_atala_printing_a_human_ kidney 2. Cronin, L. (2012, June). Print your own medicine. Retrieved from http://www.ted.com/: http://www. ted.com/talks/lee_cronin_print_your_own_medicine/transcript?language=en#t-111002 3. Goodman, M. (2012, June). A vision of crimes in the future. Retrieved from http://www.ted.com/: http://www.ted.com/talks/marc_goodman_a_vision_of_crimes_in_the_future 4. Harouni, L. (2011, November). A primer on 3D printing. Retrieved from http://www.ted.com/: http://www.ted.com/talks/marc_goodman_a_vision_of_crimes_in_the_future 5. Hickey, S. (2014, June 22). Chuck Hull: the father of 3D printing who shaped technology. Retrieved from http://www.theguardian.com/: http://www.
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Lean Manufacturing Implementing of Lean Thinking in Indian Manufacturing Sector Author
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Soumyadipta IIM Calcutta
Lean manufacturing is looked at more a shop floor initiative that has limited impact on the company
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Introduction
The “Make in India” campaign launched recently by the Indian Prime Minister Mr. Narendra Modi is aimed at making India a manufacturing hub and thereby bringing about economic transformation in the country. One of the major objectives is to make the manufacturing sector contribute to about 22% of the GDP by 2022, going up from the dismal 12.89% in 2013. Going by the 2013 Deloitte Global Manufacturing Competitiveness Index, China is ranked number one, while India is ranked fourth having fallen from its 2010 rank of second position. The fact that Mangalyaan (India’s Mars Orbiter Mission) used predominantly indigenously manufactured components is a positive sign for the manufacturing sector, but India still has a long way to go to match China’s manufacturing sector contributing 30% to its GDP. One of the best tried-and-tested mechanisms that might be effective in pushing the Indian manufacturing sector forward is the proper implementation of lean manufacturing.
History of Lean Manufacturing
Lean manufacturing is a relentless process of delivering what the client needs, when they need it, at a value they are ready to pay while utilizing the minimum measure of assets. The central thought behind lean is minimizing waste, hence creating more value for customers with fewer resources. The concept of lean manufacturing
Implementing of Lean Thinking in Indian Manufacturing Sector (LM) was originated at Toyota plant, Japan after the Second World War as a strategy to minimise non-value added activities in the production and operation system. The concept, also known as the Toyota Production System, helped Toyota transform from a small company in Japan to the world’s largest automobile manufacturer. In the current business situation and aggressive business environment, it is amazingly critical to comprehend, analyse and examine the existing production or manufacturing practices at an organization to make it free from muda (Japanese for waste). Embracing and practising the lean apparatuses can help enhance the existing production system. The Government of India has been historically concerned about the awareness and implementation of lean thinking. It set about to found the “National Manufacturing Competitive Council (NMCC)” in the year of 2004 under the Ministry of Micro, Small and Medium Enterprises (MSMEs) with an idea to invigorate and manage the development of manufacturing industries. The Ministry, in line with this program, had proposed a “Lean Manufacturing Competitive Scheme,” with the reasons of decreasing waste, expanding benefit, presenting inventive practices for enhancing general intensity, instilling great administration frameworks and espousing a society of ceaseless change. The scheme has been operational since July 2009.
Present Scenario
The question that arises now is what is the status of lean thinking and its implementation in Indian industries? As of late, Indian manufacturing companies have been progressively restructuring operations, all the while embracing world’s best practices. The enterprises range from Bharat Forge, Bajaj and Tata in the auto sector to Larsen & Toubro and Godrej & Boyce in the specialist engineering space as well as Ballarpur Industries in paper, and others in the pharmaceutical and textile sectors. Tata Motors has been successful in utilising lean concepts as well as home-grown scientific expertise to come up with the first indigenously built automobile, Tata Indica as well as the world’s cheapest car, Tata Nano. Maruti Suzuki India, the country’s largest passenger cars manufacturer has been following the concept of lean thinking since its inception in 1984, in order to improve its productivity and lesser defects in the products. Sundaram-Clayton Limited, one of the country’s largest auto component manufacturers, has been able to reduce 2.5–5 per cent of costs and product prices by going lean. The espousal of lean manufacturing practices significantly helped the company to enhance employee morale and productivity and posi-
tion itself as one of the leanest companies on the planet (ranked by Lean Enterprise in the US). In spite of the rosy image portrayed by some of these top companies vis-à-vis implementation of lean practices, a pilot study conducted by S.J. Thanki and Jitesh Thakkar on the Status of lean manufacturing practices in Indian industries shows a slightly different picture. A scoring method was devised in the study in which industries were given points on a scale of 0 to 5 based upon their performance in key areas like quality, inventory, maintenance, process and process technology, scheduling and performance control, etc. The study, which surveyed people working at different positions across a variety of industries situated in Western and Eastern India, shows that about 36% of the industries fare low on the scale of awareness about lean practices and out of the 64% of industries aware of these practices, only 32% are able to reach a high level of implementation.
There are a variety of reasons giving rise to such a gloomy state of affairs. Of the employees who are aware of lean practices and have not been part of the implementation, most were found to be cognizant of the barriers that prevent its successful application. However, the human nature of inertia and resistance to change has stopped them from carrying out the implementation. A research in Austrian industries in 2011 had also found that rather than the lean practices themselves, the willingness of the employees to execute the practices is a greater hindrance. The employees refuse to move from their traditional methods owing to the perception of additional workload, fear of failure in jobs, and lack of monitory reward policy. Apart from that, there have been instances when industries have not been very effective while trying to implement lean practices. This might be due to improper insight about lean principles or uncertainty about appropriateness of a lean tool and principle. The scores received by the manufacturing industries are lowest in the criteria of process and process technology and that of quality, in which they rank lowest across industries. This may be attributed to lack of attention to the need of statistical process control, process capability analysis as well as giving more quality responsibility to workers.
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Implementing of Lean Thinking in Indian Manufacturing Sector According to experts in Deloitte India, “In most cases, lean manufacturing is looked at more a shop floor initiative that has limited impact on the company. The impact can be huge when these principles are applied on the enterprise supply chain as opposed to just the shop floor.” This requires an overhaul in thinking right from the top management. Also, these initiatives do not reap much fruit when executed with the prime intention of just cost reduction. Organisation should seek out lean thinking as a means to achieve operational excellence, not just cost effectiveness if they want to be in the race for the long haul. The requirement of high-quality products and services cannot be overstated for the survival of an organisation in today’s globally competitive environment. One of the effective tools for improvement in quality standards is the application of Statistical Process Control (SPC). Overall improvement in quality standards can be achieved through more direct participation of employees in SPC application, priority on training of employees in SPC and bringing more processes under the purview of SPC. In addition to that, conversion to cellular manufacturing by producing in small lots, having dedicated equipment sized to production requirements of the particular product or product family and by improving the flexibility with cross-trained people, the issues identified with process and process technology can be successfully handled.
The way forward
Staff empowerment through efficient lean education and training framework and the backing of workers to take an interest effectively in all the decision-making and analytical-thinking procedures, change in the current reward strategy for advancement of skills are a part of the solutions for changing the employees’ mentality to lean customs. For the fruitful execution and durability, human facets of inspiration, empowerment and appreciation for individuals are vital. The present scenario for manufacturing in India does not seem too encouraging. Insufficient lean training and awareness programs for employees, under-utilisation of statistical tools for process improvement and ambiguity concerning the suitable lean tool seem to be the chief roadblocks to implementing lean practices in India. The Indian manufacturing division businesses need to fortify their endeavours to enhance the current status and need to offer regard for executing lean in all the relevant places from an all-inclusive point of view. Proper prominence should be given to the improvement in the quality standards and process management as well. Government initiatives should also focus on addressing these issues in order to make India a manufacturing hub and to ensure that the vision of the “Make in India” campaign is more than just a pipe dream.
References 1. S.J. Thanki Jitesh Thakkar, (2014),”Status of lean manufacturing practices in Indian industries and government initiatives”, Journal of Manufacturing Technology Management, Vol. 25 Iss 5 pp. 655 675 http://www.ibef.org/download/OperationalExcellence-in-Indian-Manufacturing-310512.pdf 2. http://www.vectorconsulting.in/about_us/newsroom/Vectors_views_on_effectiveness_of_lean_ implementations_in_india.html 3. http://www.tradingeconomics.com/india/manufacturing-value-added-percent-of-gdp-wb-data. html 4. http://www.makeinindia.com/policy/nationalmanufacturing/ 5. http://www.thehindubusinessline.com/features/ smartbuy/automobiles/lean-manufacturing-themaruti-way/article6037338.ece 6. http://www2.deloitte.com/global/en/pages/manufacturing/topics/global-competitiveness-manufacturing.html
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Introduction
2014: Year of Automobile Recalls Author
Dhruv Bhandula IIM Calcutta
“
The regularities and severities of the Automobile Recalls calls for Stringent Quality Control Measures
�
2014 is almost certainly going to enter the record books as the year of automobile recalls. According to the data released by Associated Press, more than 550 recalls have been issued by the automakers for more than 52 million vehicles this year. Almost every major automaker has recalled its vehicles this year. Be it global giants like General Motors with 26 million cars, Ford with 202,000 cars or Indian auto giant Mahindra and Mahindra with around 23,000 units recalled in July, almost everyone across the globe recalled their vehicles. 2014 has beaten the previous record of 30.8 million recalled vehicles set in 2004 by a substantial margin. One question that comes to our mind reading these staggering numbers is whether the automobile industry is becoming more and more inefficient or is there something more to the picture?
New technologies in automobile industry
Automobile industry has seen a lot of changes in the last decade. Now days, cars are becoming more and more like a high tech device on four wheels. Technological improvements in wireless communications, smartphones and computers have left a huge mark on the automobile industry. Cars are becoming more electronics and data driven. Engines are getting smaller
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2014: Year of Automobile Recalls
This decade has already seen more cars recalled than the entirety of the 1970s, despite there being fewer recall campaigns. Image: Society of Automotive Analysts/NHTSA data
The SAA report also found, based on NHTSA data that the number of recalls for safety-related components has also increased, although the data is more volatile than trends as a whole.
and more powerful. Vehicles have become more fuel efficient with new technologies like MPFI, automatic transmission coming into the picture. Security and legal regulations have become more stringent leading to technologies like ABS, Rear View Cameras, Blind Zone reduction, Airbags etc. There is also a lot of emphasis given on the overall comfort level and driving experience of the passengers. Just a few years back, customers looked for powerful engines and basic comfort while purchasing a car. Today’s customer is becoming more quality conscious and looks for the overall expe-
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rience with fuel efficiency, powerful ACs, a good infotainment system and safety devices being the judging criteria before purchasing a car.
Challenges faced by the automobile industry
Growing number of features in the car have led to a multifold increase in the number of parts that go into a modern vehicle. All these features are heavy electronics driven and require a lot of sensors to function properly.
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vitae dicta sunt cabo 2014: Year of Automobile Recalls
This growing list of parts poses a serious challenge to the automotive industry. Earlier most of the parts were manufactured in-house but this is not possible in the present scenario. Most of the parts are manufactured across different locations in the world which poses a great challenge to ensure that the quality standards are strictly followed by all the suppliers. Even a small manufacturing defect in a small part can lead to a major problem in the smooth functioning of the vehicle. Small defects have been the cause of many accidents in the past which makes the job of the supply chain manager and the procurement manager even more challenging than before.
Reasons behind the growing number of recalls
In spite of all the major advances in the industry and more stringent regulation in place, the number of recalls is increasing on an alarming rate. The first thought that comes to our mind is what are the reasons behind this trend? The major reasons behind this trend are: 1. Deadlines pressures: With the growing number of competitors entering into the automobile market, automakers face a continuous pressure to come out with new and innovative products in the market in a short period of time. Due to crunch of time, most of the parts do not pass through the required number of quality and tolerances checks leading to poor quality of overall product. 2. Advancement in automobile technology and vehicle complexity: As the vehicles have become more advanced and complex, the number of parts have increased which cause a great difficulty to ensure that quality standards are ensured across each part which may lead to some parts being overlooked. 3. Cost optimization: With huge pressures from the top management to reduce the manufacturing
costs of the vehicles to ensure low priced models in the market, automakers are procuring parts from the local suppliers and end up compromising on the required quality standards. 4. Stringent regulations: With the introduction of stringent emission norms and safety regulations like NCAP, Euro 5 norms and other such regulations, earlier vehicles running in the market which don’t conform to these regulations have to be recalled to remove the flaws and improve their efficiency in order to make them compliant. 5. Preemptive Recall Strategy of automakers: Learning from the mistakes from the past, companies are becoming more proactive and cautious these days. There is a growing consensus that the financial damage because of preemptive recall is less costly as compared to damage to the reputation and brand image of the company. As a result, many companies are coming out in the open and accepting their mistakes instead of hiding it from the regulators and the customer. Many a times, vehicles are recalled even before any issue has been raised by the customers leading to this increase in the number of recalls. Ever since the automotive body Society of Indian Automobile Manufacturers (SIAM) started voluntary vehicle recall in Indian market for safety related issues in July 2012, over 7,00,000 vehicles have been recalled by various manufacturers like Maruti, Mahindra & Mahindra, General Motors,Toyota, Ford etc.
Costs of Recalls
1. Repair Costs: Fixing and repairing costs are the direct costs that are associated with the recalls. Even though they are not huge as compared to the other costs, but they still make a considerable impact on the annual profit and loss statements of the manufacturer. Toyota set aside approximately $1.2 billion for the quality related costs in 2010 distributed among the 3rd and 4th quarters. 2. Legal Costs: Legal liabilities and compensations comprise of the major chunk of losses that the automobile companies have to bear. Arizona Attorney General has filed a lawsuit worth $3 billion against General Motors for the damages the recalls caused to the customers of the state. Another $10 billion lawsuit might be filed in the near future by New York State against the company. Many such lawsuits take away a major chunk from the earnings of major automobile manufacturers. 3. Image Costs: Besides the tangible costs enlisted above, another intangible but significant costs bore by the manufacturers are the intangible costs like
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2014: Year of Automobile Recalls damaged brand image and loss of future sales. Regular recalls portrays a very negative image of the brand in the eyes of the customer which may in turn lead to the customer switching on to rival brand in the future which can lead to a potential loss of revenue for the firm. According to some rough estimates, Toyota lost nearly $770 to $880 million in sales revenue in 2010 because of their regular recalls.
Other side of the coin
So far we have discussed only the negative effects of the increasing number of recalls. But this trend has a positive side to it too. Voluntary recalls brings an aspect of transparency in the functioning of the automobile industry which might lead to building of greater amount of trust in the eyes of the customer who will think that the auto-manufacturers care more about his safety than their pockets which might reflect in increasing amount of brand loyalty. It might also save the manufacturers from more serious litigations and losses occurring due to a major safety related fiasco which might take place in future if proper care is not taken.
Measures taken to reduce the recalls
Manufacturers are learning fast from their mistakes and have started adopting various measures to ensure that the frequency of the recalls is reduced in the near future. They are becoming more and more wary of the potential damages of such events and have started believing in the thinking of doing it right for the first time. Toyota has launched a plethora of reforms in their manufacturing and procurement practices. A global computer data base has been established to better track vehicle repairs and to reduce the reporting times about the customer complaints from months to days. Rapid response teams have also been set up to determine the causes of accidents beyond the developed markets. A high level official has been named as czar responsible to handle quality related issues in the future. Manufacturers have started introspecting over what went wrong and are now looking for a balance between rapid growth and quality assurance. More stringent checks have been introduced in the procurement process. Start of production in being delayed till the time safety clearances are received. Contracts with suppliers are included with the cost sharing in case a manufacturing defect is discovered from their side. Proper feedback mechanisms have been put in place to ensure timely response to the customer complaints. Even though some steps have been taken to handle this issue, many more steps need to be taken to reverse this trend.
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The way forward
From the trend of the last few years, one can safely say that automobile recalls are here to stay in the near future and they should not be seen in a complete negative manner as many of the recalls are for a minor defect or just voluntary preemptive recalls. However the automobile manufacturers should get their act together and ensure that regularity and severities of these recalls is reduced and enforce more stringent quality control to survive profitably in the highly competitive automobile industry.
References 1. http://businesstoday.intoday.in/story/vehicleauto-recalls-in-india-impact-positive-and-negative/1/206319.html 2. http://www.business-improvement.eu/lean/Toyota_recall_and_Toyota_Production_System.php 3. http://online.wsj.com/articles/SB100014240527 48704520504576161691126673246 4. h t t p : / / w w w. p o p u l a r m e c h a n i c s . c o m / c a r s / news/industry/why-are-there-so-many-car-recalls-15413366 5. http://www.nytimes.com/2014/07/25/business/ gm-plans-to-pay-more-than-400-million-to-victims-of-faulty-ignition-switch.html?_r=0 6. http://www.nytimes.com/2014/11/19/business/ regulators-call-for-takata-airbag-recall-to-be-extended-nationwide.html?_r=0 7. http://sloanreview.mit.edu/article/what-reallyhappened-to-toyota/ 8. h t t p : / / a b c n e w s . g o . c o m / b l o g s / business/2014/11/2014-year-of-the-most-automobile-recalls-ever/ 9. http://motherboard.vice.com/read/why-massiveauto-recalls-are-becoming-the-norm 10. http://economictimes.indiatimes.com/industry/ auto/news/passenger-vehicle/cars/mahindramahindra-recalls-2300-units-of-scorpio-xuv500xylo/articleshow/45194457.cms
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Excellence in Technology – Small Category Gold Trophy Litens Automotive (India) Pvt. Ltd., Pune (L) Mr. Rajanbabu Govindan, Director -India Operations & (R) Mr Jagannathan Ramasamy, Head Marketing & Technical Sales, India (source: www.acma-act.in/acma-award-photos-2013-2014/)
About Litens
About the Interlocutor
Mr. G Rajanbabu, a mechanical engineer from Government College of Technology, Coimbatore has a wide experience in the OEM industry and has worked for Tata Autoplastics, Enkei Castalloys, Ashok Leyland and India Pistons amongst various other organisations. He’s also an avid musician who led his own troupe during his college days.
Interview
Mr. G Rajanbabu
Director, Business Devlopment, Litens Automotive India Pvt. Ltd
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Automotive Sector: Success lies in being Specific in every Single Analysis
”
Litens which started its Indian operations in April 2009 and has come up in leaps and bounds since then. Litens won the Gold Trophy for technological excellence in the prestigious ACMA Awards 2013-14. Mr. Rajanbabu shared with us his experience over the last 6 years at the helm of the Indian operations and how Litens has become a major global player in the OEM industry and why the Indian operations have succeeded in the last 5 years despite the tough economic climate. Team Op-era: Litens India Automotive Pvt. Ltd., your organization has recently been awarded the ACMA Gold trophy this year for excellence in technology this year. Can you tell about some technological changes brought about and also tell us how technology innovation has helped improve your production capabilities? Mr. Babu: Litens which began in 1979 in Toronto, Canada came about majorly due to the oil revolution. The first question that any automobile buyer asks when he goes to buy a car is, “what is the mileage?” So Litens, a Magna Group company, tried to address this need through its technological innovations which mainly addressed the problem of reducing fuel consumption in the accessory drives. Litens India too started with the same mission of entering the Indian market and reduce fuel consumption and also provide quality products at
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Interview - Mr. G RajanBabu
Customer Logos
the same time to the Indian manufacturer. Hence technology has not only helped us improve our production but has also improved the production qualities of our customers. And this was the characteristic recognised by ACMA which gave us the award for our technological innovations. Team Op-era: How do you differentiate between inventions and innovations? Which according to you is more applicable to the automobile industry today? Mr. Babu: Both inventions as well as innovations are important in today’s competitive world. Although inventing new products is the best method to capture the market value, we need to consider that inventions are driven by an innovative attitude itself. Thus, having an innovative attitude towards things is necessary to proceed towards a new invention in a product to capture the eye of customer. Litens which prophesises through its tagline – ‘Delivering Innovation’, clearly believes that it’s the technological innovations that lead to the inventions as a result. Hence one can say that every organisation doesn’t invest in inventions directly. They invest in innovations and it’s these innovations that lead to a large invention over time. Hence in essence it’s the innovative attitude that is the most important facet of any large organisation Team Op-era: India is lacking in technology and
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copies from other countries. Is this adoption a best model for way forward? Mr. Babu: There is no doubt that a leader has an advantage and others always try to copy from them. Even the Japanese copy from Europe’s technology. For instance, Toyota copied in 1980s and 90s. But then looking at the results, one can clearly say that there is no point in re-inventing the wheel, if copying the technology is working to our advantage, we can tweak them to our benefits and gain that competitive advantage. But having said that, we can say today, India is not lagging behind by a huge margin in new technology terms. Investors have been making investments in new technology of solar power, bullet train, etc. Every OEM has started investing in new technology in India with Litens being a pioneer in the industry. Team Op-era: In automobile industry, who do you think is more important to be taken care of when it comes to gaining a competitive advantage - the assemblers or the other in-between entities within the supply chain? Mr. Babu: When it comes to OEM and automobile manufacturers, the ultimate advantage is driven by assemblers- this is what leads to a customer buying our product. Also for an OEM, the assemblers are the main customers. And as we all know, every business is driven
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vitae dicta sunt cabo Interview - Mr. G RajanBabu
by the customer. And for every customer, technology is always given priority when coming to this kind of advantage. In a cost competitive market, the money efficient technology wins the race in current scenario. Having innovation in supply chains to gain that extra edge in cost efficiency may be a point of focus, but the main driver remains in implementing the new technologies in assembler stage only. So, in essence, technology that’s driven forth by the assembler is what drives the automobile industry forward. This is proven by the fact that cars were cheaper in terms of their cost in the 1980s, but today though more expensive, we can say that they’re more cost competitive due to their technology. Team Op-era: Risk management and crisis management, these two are generally used to mitigate the disruptions in supply chains. Which one do you prefer and why? Mr. Babu: Break downs are seen as disasters by every supply chain manager. Risk Management which is the management of a planned break down event is seen in instances like labour unrest, raw material unavailability and so on so forth. Every company can and does predict its losses in such circumstances. From an organisation’s perspective, risk management is what is always preferred. But then from a manager’s perspective, the skill and art of crisis management needs to be developed in them by the organisation in which they work. Risk management can be taught theoretically, but its only experience that can teach crisis management. Disasters like the Japan tsunami can only be mitigated by Crisis managers.
to supply and meet our demands, so we had to rush people to Hungary and Gulf to get into quick contracts with new suppliers and get the raw material to finish our products because commitments had been made to the customers which had to be kept. Team Op-era: Global supply chain was and is being affected by the current Ebola crisis. What do you think is being adjusted in logistics/supply chains to overcome such losses? Mr. Babu: Tsunamis, Russian empire collapsing are such similar examples to the case of ebola where global supply chain was hit. To overcome huge losses from such activities in future, what the industries can do is developing a global supplier base, with different technology in different regions. If one channel does get hit, we can still tap on the remaining base. Hence a global supplier base is what is needed to handle such crisis. Team Op-era: Lean operations, 6 Sigma, TQM and so on are methods invented by Japan. How important are these techniques in the automobile industry from a practical perspective? Mr. Babu: These theories that you’ve mentioned are basically speaking statistical tools. Some were developed by Japan and some in Europe. But it was Japan who used these techniques to practically improve their production quality and quantity. Automobile sector has always implemented such techniques because they’re always looking for ways to reduce waste and hence reduce costs pf production and this is the one mantra for every operations manager. Hence to answer your question, yes these theories have been and will always be of practical importance in the automobile sector.
Therefore organisations will have a forecast team that handles risk management, but top managers will be adept in crisis management.
Team Op-era: What is your perception about the future of global supply chain of automobiles? How much increase in revenues are you expecting by 2020?
Team Op-era: So Sir, can you please share some personal experience of crisis management encountered by you in your job.
Mr. Babu: Currently there is a recessionary attitude prevalent in India. Revenues in the auto-component fields are proportional to those in the automobile industry. After-market sales are also the result of number of cars sold. By 2020, studies have given clear findings – huge demand (in 4 fold increase). The major portion of this increase will be seen in developing countries like India and in under developed nations in Africa. Even though the sales will be higher in terms of numbers, yet the profitability will be coming down as cost will be-
Mr. Babu: One experience that comes to my mind immediately happened in the 90s when I was working in India Pistons Ltd. Resourcing of Aluminium was mainly being managed from Russia at the time. But due to Russia-India political scenario and unrest, the supply chain was disrupted suddenly. Russia was not able
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Interview - Mr. G RajanBabu come the driver. Lesser marginal profits will have to be accepted by the companies unless they come up with some innovative technology to improve their profits. Team Op-era: Complexity and cost pressures are increasing by the day for OEMs. Platforms are being shared by organisations. But at the same time regulatory pressures are being tightened. In this era of flat pricing across the market, how does OEM stay profitable? Mr. Babu: Industry is already global, very few countries are regional not following norms of global standard emission, being regional is not economical in future, and everyone will have to meet norms. Everyone is becoming cost effective and hence the competition is sure to become very tight in future. Litens has addressed this issue by choosing each supplier after a lot of checks about their attitude. Every supplier has to have an attitude matching that of litens in terms of their waste management, technology and most importantly have to be as transparent in their transactions as possible. But at the same time, Litens has also adapted themselves when it sees that the supplier cannot reach Litens’ technology requirements. In such cases, on a case to case basis, the organisation has helped each supplier with their technological knowhow using our resources. So in effect, Litens can say that transparency is something that has helped us reduce our costs tremendously when compared with our competitors. Team Op-era: Despite the world being a global market, yet challenges are different in every market. How does Litens – a global MNC with its presence in 11 countries and catering to so many other markets around the globe cater to such a wide range of demands? Mr. Babu: As you said yes, demands are different for every market. But at the same time, we can safely say that gone are those days when every market designed on its own for every single part. Today all designs are global in nature. What varies continuously is the demand for these manufactured parts. In such a scenario, what an organisation like Litens has done to good effect is that we’ve managed to divert our excessive supplies from one market to another where perhaps demand has exceeded the supply. This was observed in 201213 in Europe when due to the recession the demand came down drastically in this region. Immediately unassembled parts were transferred to India which had quite
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a high demand at the time. This is the reason why MNCs are what will grow in the future and single country OEMs will cease to exist. Team Op-era: Digitalization is the era right now and E Commerce is the new business everywhere. How do you see E Commerce influencing the auto industry through both first hand sales as well as after-market sales? Mr. Babu: There are various parts like washers, nuts and bolts which in terms of the auto-component industry are today comparable to commodities. Almost every supplier makes the same and these parts are almost always bought from the local market. These are the parts which may be sold by E Commerce. Completely designed and engineered parts may come to the E Commerce platform only if E Commerce starts offering various companies’ parts on a single platform. Certain components like alternators and batteries too may come to the E commerce sector, but specifically designed parts like the tensioners that Litens does may not come to the E Commerce market at least in the foreseeable future Team Op-era: What is the one thing that sets Litens apart from its competitors? Mr. Babu: ‘Delivering Innovation’, the mantra for Litens Automotive is what differentiates us from any other OEM manufacturer. This is not something solely written on our letterheads but is something that is truly followed by every single employee in the organisation. Team Op-era: What will be your message to the future managers who wish to work in the auto sector? Mr. Babu: I have one line, “Go into detail; do not be general”. Their success lies in being specific in every single analysis that they do.
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Analytics in Supply Chain Management
Scope of
Author
Vinod kumar M
“
Introduction
Traditional supply chain are slowly being phased out due to the mixing of global operating systems, pressure of pricing and increasing customer expectations. Wastage in supply chain is often created due to various economic factors such as rising fuel price , recession, scarcity of supplier bases and increase in competition between low-cost outsourcers. This has created a substantial scope for the usage of data analytics as a tool to overcome the challenges & minimize wastage. Data Analytics is the practice of gathering data and drawing inferences and conclusions from it. This helps business entities make better predictions and also verify them using various models.
IIM Shillong
Analytics plays a vital role in supply chain management due to the complexities present and increasing competition and customer expectations effecting the company’s cost and profitability.
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Supply chain analytics aims at improving the operational efficiency and effectiveness through data driven decisions at strategic, operational and tactical levels. It helps optimize the whole business vertical encompassing sourcing, manufacturing, distribution and logistics. Analytical approach to supply chain can deliver markable growth in revenues, margins, manage working capital in a better way, and enhance the control points across the supply chain. In other words, it helps in identifying the bottle necks, risks and opportunities while also adapting to the emerging supply chain technolo-
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Scope of Analytics in Supply Chain Management gies. Below flow chart gives the components of a typical supply chain.
“Many experts are of the opnion that the time has come for real-time supply chain practices and technologies to go mainstream.�
Types of Analytics
The analytical process can be further broken down into Working Capital analytics, Inventory Analytics, Revenue & Expense analytics, Control analytics, Logistics analytics and Supply Chain Network Optimization. Below we look at each one of these in breif. 1. Working Capital analytics focuses on end to end supply chain inventory, it helps in freeing up locked capital and thus improving cash flow 2. Inventory Analytics determines the right safety stock levels for both finished goods and raw material and also analyses slow-moving, obsolete inventory, balance stock across nodes to ensure lower inventory carrying cost. This overall process of improving inventory positions improves service levels at downstream nodes and reduces loss in sales while also enabling to set optimum inventory norms 3. Revenue Analytics identifies all the opportunities for growth and also controls potential revenue losses due to supply chain bottlenecks 4. Expense Analytics improves the margins by identify and analysing various supply chain costs across the nodes beginning from network costs till delivery at the last mile 5. Control Analytics identifies the risks in various supply chain operations and analyses financial and other risks of all the partners involved in supply chain leading to control enhancement 6. Logistics analysis categorizes and helps to derives meaningful insights from the analysis of data related to the logistics arm of the company. For eg: It may analyse freight costs periodically and find the scope for renegotiation which helps in making buying decisions smarter 7. Supply Chain Network Optimization where one analyses network in terms of cost to services and service levels, evaluation and comparision of sce-
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narios to consider all foreseeable market dynamics and identifying the best available option
Big Data
Real time supply chain practices are possible due to the various available cloud data management tools and software platforms. These data management tools & software platforms helps to address issues like supply chain traceability, multi-level inventory optimization and demand signal repository. These in turn aid the business entity to improve the sales, operations planning, and leveraging point of sale data. Off late, Big Data has become the richest source of data for analytics. Big Data is considered as a tsunami of data and it can bring in a big revolution in supply chain management if utilised and analysed properly.
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vitae dicta sunt cabo Scope of Analytics in Supply Chain Management
Big data is too complex and too dynamic to process, store, analyse and manage with traditional data tools. From an organisational point of view the sources of Big Data can be categorised into internal and external. Internal data consists of information related to product transactions, financial records and channel interactions. External data consists of web behaviour and social media interactions. The data can also be classified into Unstructured and Structured. Unstructured data is the data which does not follow any pattern or a predetermined model and Structured data is the recorded data. Examples of Unstructured data are metadata, twitter tweets and other social media posts.
Big Data & Analytics
Big data examines a broad range of sources that include structured information from purchase histories, customer relationship management (CRM) data and intelligence from industry partners, as well as unstructured information such as social media. Big Data & analytics go as a service. 1. Big data will help a company to improve on their products – with the increasing use of social media analytics, corporates analyse the feedbacks of a particular product in social media such as Facebook and accordingly make changes to the product to meet customer needs 2. Big data will cut down company’s cost – example, already there are technologies which accurately predict when there is a need to replace an equipment. Many companies that used to replace its equipment well before its expiration period due to fear of incurring significant variable cost in case of damage of its equipment’s were not able to utilize that equipment optimally. But all of this is slowly changing 3. Knowledge about the performance of the product – immediately after a new product launch companies would be able to view various comments about their products, thus after proper analysis and evaluation of the comments corporates would be able to gauge whether that product in general would be successful or not
Big Data Analytics & Logistics
Big Data is a relatively untapped asset that companies can exploit once by using the right drilling techniques. Selecting the data and having skilled people is very crucial. Entities have to decide the sector and segment to concentrate upon and the related supply chains. Transportation sector is one such sector where Big Data has already been used by the customers ef-
fectively. Customers in the logistics and transportation industries have better understanding and solve some of their most common challenges by using Big Data. Cloud Data like Big Data & Software Platforms like SAS & SAP can be very helpful in analysing the huge chunk of unstructured data and helping in reducing the risks in the supply chain management and increasing the working capital by reducing the costs.
“Big Data and Logistics are made for each other.” Analytics gives an advantage over the competitors by improving the logistics of the company. 1. Data analytics helps in improving the delivery fleet of the services or products by optimizing the route based on the recipient status, environmental and geographical status which is also called as Realtime Route Optimization. Here the salesperson is informed about the route for every mile or km throughout the route 2. Data analytics helps in crowd based deliveries and pickups. This reduces the cost and time to make the trips. This can be done by tapping on to the data collected from external sources, mobiles devices and sensors. This helps in increasing the operational efficiency of the delivery services 3. Data analytics helps in optimization of network planning. Based on the analysis the demand can be estimated and the capacity of the network can be altered accordingly to meet the demand. More accurate results from the data analysis helps in increasing the efficiency of the network and also minimizes the risk of investing in warehouses, storages and custom- built vehicles 4. The very need of reverse logistics which is becoming a throbbing issue for many firms can be tackled by using data analytical techniques which can help in improving the customer service levels and reduces the cost
The Future
Looking forward, there are lot of obstacles like data privacy, quality and feasibility of adapting to new technology, etc. Many IT firms have been puting big data analytics to good use and turned it into business. In
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Scope of Analytics in Supply Chain Management the modern business environment it is imperative to improve the supply chain efficiency and customer experience. This can be achieved by having a clear strategy and application of right data mining techniques.
References 1. http://www.industryweek.com/blog/supply-chainanalytics-what-it-and-why-it-so-important
Fun Facts
2. http://www.ebnonline.com/author.asp?section_ id=1061&doc_id=262988 3. h t t p : / / w w w. c s c . c o m / b i g _ d a t a / p u b l i c a tions/89362/96477-4_ways_big_data_will_transform_business 4. http://www.dhl.com/content/dam/downloads/g0/ about_us/innovation/CSI_Studie_BIG_DATA.pdf
Fun Section The production time for a single car dropped from over twelve hours to just 93 minutes due to the introduction of the assembly line.
Barcodes were inspired from Morse code dashes and dots. Barcodes were first used to label railroad cars although the first scanned item in a supermarket was a Wrigley’s chewing gum in 1974.
Disney has an underground command center that keeps tabs on waiting times. It employs creative tactics to keep visitors waiting times as low as possible and keep them entertained while they are waiting in the queue for their rides.
Guess the Operations Concept from the picture below
Henry Ford actually didn’t invent the assembly line. It was invented by Ransom E. Olds. Henry Ford invented the moving assembly line though.
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Emerging Delivery Mode in Supply Chain - Drone Delivery Author
Vipin Kumar IIM Kozhikode
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Drone technology can bring a new Era in the delivery system
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Introduction
Unmanned Aerial System (UAS) also known as drones are flying robots and requires very little or no human guidance while flying. Drones can be navigated by remote control or onboard computers which provide them a degree of autonomy. Currently drones are not very reliable and are not used in any country for commercial purpose. Initially they were developed for their effectiveness in military operations. Drones were used to perform tasks that were very lengthy as they can be programmed to do patrolling and surveillance for a very long time. Apart from surveillance, drones are also used by farmers for surveying large fields at low costs and high convenience. It will help in optimal use of fertilizer and water on crops (Precision Farming) to determine the health and quality of crops (Yap, 2014). Currently there has been a lot of innovation in landing and take-off of drones along with computer based navigation using GPS. Companies are also targeting drones for mining applications by using a fully autonomous system. Now companies are shifting to use this technology to transport cargo to the destination. Amazon.com Inc. in 2013 stated that they are studying the feasibility of drones to deliver small packages to the customers in less time. Lakemaid, a beer brewery in Alaska, also testing out an aerial beer delivery system (Kelly H,
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Emerging Delivery Mode in Supply Chain - Drone Delivery 2014). QuiQui, a San Francisco based company has developed an application in which customers can order for medicines over a phone call. Technicians will prepare the order and medicines will be delivered within 10-15 minutes after the placement of order (BerkeleyLaw, 2014).
Background / Problems
Sale of drones (UAS) in civilian market is not reliable and commercial as of now. Concerns include like collision sensing mechanisms, self-diagnosing the structural integrity and handling of drones by naïve users who are not trained on safety concerns of drones (Yap, 2014). As a result in USA Federal Aviation Authority (FAA) has put ban on using drones for commercial purpose of any kind. Only hobbyists are allowed to use drones that too below 400 feet which should be of less than 55 pound (Yap, 2014). Commercial drones are illegal to be used for freight services in most of the countries like US and India; lobbying with the government to change the regulatory allowances is expected in near future. FAA needs to maintain the benefits of general public against the benefits of using drones. (Stolaroff, J K, 2014) Drones are of three types i.e. recreational, commercial and military drones. Recreational drones are generally used for hobby purposes while flowing for photography or pleasure. Civilian or commercial drones are used by businesses for delivery of goods, surveillance or domestic policing etc. Military drones are used for remote sensing, surveillance, armed attacks and warfare (Wilson, 2014). Fixed-wing drones are easy to fly and are more efficient than current motor based drones. But they are very expensive and can’t land at roof-tops.
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Google is currently working on the drones that can fly in both helicopter and fixed-wing mode (Forbes, 10 October 2014).
Solution
Drones are commercially available UAS. Some organizations are in the position to test drone feasibility in their business work flow. Drones which are being used by Amazon have micro-controllers, camera and other sensors to provide them autonomy. Drones are able to perform the aerial imaging survey of any region specified by the user. The operator can define the boundary/location of the area via GPS coordinates. In this way, a predefined location will be set for the drone to deliver the parcel. Then drone can be launched from the location where parcel is packed and needs to be delivered. Then drone calculates its location using GPS and determines the navigational route which should be used. After reaching the delivery location drone lands at desired location drops the package and takes-off back to the Amazon warehouse (Gorgan, 2013 et al.). Although drones till now has been tested only on battery power, but there is a possibility that the operators may turn to fossil-fueled models as there is advantage of energy and range in them. According to Amazon CEO Jeff Bezos, drones used by Amazon are “Octocopters” and won’t be able to delivers for next 4-5 years due to FAA regulation. The current drones can deliver within the range of 10 miles and can carry products under 5 pounds. This criteria is met by 90% of Amazon products. For long distance package delivery companies can propose a particular location as “safe landing zones”.
Business Benefits
Fixing and repairing costs are the diDrone based delivery promises a new class of delivery time – Amazon claiming 30 minutes delivery time from the time of purchase. If the delivery location is much far away then integrating drone based delivery in the last leg of shipment will bring considerable logistical benefits in terms of energy savings. Even if drone based delivery uses significant amount of energy as compared to truck delivery, it is suitable to estimate whether the extra need of electricity is significant in context of already overloaded grids. (Stolaroff J K, 2014) Drone based delivery will bring quick and efficient methods for transporting packages (BerkeleyLaw, 2014). Companies are also joining lobbying group of the companies who are interested in drone based de-
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vitae dicta sunt cabo Emerging Delivery Mode in Supply Chain - Drone Delivery
livery. Michael Drobac, executive director of small UAV has urged FAA to accelerate the testing trials. Many companies which can’t do trials due to drones in restricted airspace are going for locations where they can do their trials like Papua New Guinea and Bhutan. These locations are advantageous in terms of inefficient transportation infrastructure and unrestricted airspace regulation (Forbes, 10 October 2014).
Risks and Challenges
Civil and commercial drones will be used by companies and they will be hovering all across the areas. There comes the issue of collecting data about individuals or locations. It will include the privacy issues also further. Amazon’s ‘Prime Air Project’ which is expected to deliver the parcel in 30 minutes will create additional problem. Scale of amazon’s business will lead to incorporation of too many drones in a small area, which will be like having too many vehicles in a limited airspace. These drones will fill the civilian airspace; air traffic control will get affected due to their less visibility. Drones colliding with each other will also be a problem. (Wilson, 2014) Energy and environmental assessment of drones implication needs to be done rigorously. Such accounting of environmental impact should determine the level of air traffic needs to be covered by drones. If FAA allows the drone based delivery then established players will be at advantage in terms of getting airspace. It will be against the startups fairing in this field during their incubation period. Widespread use of drones poses two critical questions about energy and environment systems: 1. What will be the level of energy use and emissions as compared to current methods? 2. How it will affect the demand of batteries and supply of scarce material which are used in batteries? (Stolaroff, J K, 2014)
Conclusion
We have to develop a physical model of drone based delivery on the basis of energy consumption and making several assumptions regarding the penetration of drones in delivery: average time to deliver, number of packets that can be delivered, average weight of package etc. The results of such a disruptive technology may bring a new era of delivery which has never been used. FAA is working on relaxing the restrictions for the commercial use of drones. Experts have estimated that such changes are expected by 2015. (BerkeleyLaw, 2014) In near future drones will become very common artifact to see. Drones will also be used to do jobs that are very
difficult too dangerous, too remote for human-run vehicles. Although the package payloads and range is low but with emerging technology it is expected to meet the demand of most of the industries. FAA recently granted a series of exemptions for cinematography companies who want to film scenes of movies. Such approval shows positive sign companies may soon get permission for doing outdoor testing of drone based delivery.
References
1. BerkeleyLaw, 2014.The Commercial Drone Phenomenon by Roxana Guidero Published on Thursday, July 10, 2014. Retrieved from: http:// thenetwork.berkeleylawblogs.org/2014/07/10/ the-commercial-drone-phenomenon/ 2. Forbes, 10 October 2014. Drone Technology Investments: Place Your Bets... by Tim Wilson Retrieved from: http://www.forbes.com/sites/artimanmanagement/2014/10/08/drone-technology-investments-place-your-bets 3. Gorgan B, Danielle J and Driscoll J A (2013). Fixed-Wing Survey Drone: Functional Description and System Block Diagram Retrieved from: http:// cegt201.bradley.edu/projects/proj2014/surdrop/ FunctionalDescriptionBlockDiagram.pdf 4. Kelly, H (2014) “Beer-delivery drone grounded by FAA.” CNN. Cable News Network, 3 Feb. 2014. Web. 3 Apr. 2014. Retrieved from: http://edition. cnn.com/2014/01/31/tech/innovation/beerdrone-faa/ 5. Stolaroff, J K. (2014). The Need for a Life Cycle Assessment of Drone-Based Commercial Package Delivery. Doi: 10.2172/1129145 6. Wilson Richard L (2014). Ethical Issues with use of Drone Aircraft: University of Maryland at Baltimore County, Philosophy/Engineering Management, 978-1-4799-4992-2/14 Retrieved from: http://ieeexplore.ieee.org/stamp/stamp. jsp?arnumber=6893424 7. Yap, Y K (2014). Structural Health Monitoring For Unmanned Aerial Systems, EECS Department, University of California, Berkeley. May 14, 2014 UCB/ EECS-2014-70. Retrieved from: http://www.eecs. berkeley.edu/Pubs/TechRpts/2014/EECS-201470.html
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Introduction
4PL - Fourth Party Logistics
- The Way Ahead
Author
Abhay Hitendra Chheda IIM Shillong
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4PL as a whole will open up a totally new dimension to operations management by further deepening the scope in this area OpsWorld
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The functioning of a company’s logistics is an integration of many operation processes which includes processes starting from procurement of raw materials, sampling, production, quality control, labelling, packaging, transporting and many more. A company as a whole can perform all the task on its own, but for this it requires lots of resources, also while putting more emphasis on each of these steps the company cannot concentrate completely on the primary objective of the firm. To by-pass this many of the companies outsource some or the other process to a third party which performs that particular function on the behalf of the parent company, this concept as a whole is known as third party logistics. Take for example a multi-national company which deals in pharmaceutical drugs, as a result of huge demand for a particular drug which it cannot produce on its own with its manufacturing equipment’s it outsources its production to a third party which does the work of production on its behalf. But in 1996 Accenture (Anderson consulting group) came out with idea of fourth party logistics what they meant was strip away the marketing artifice of a neatly coined acronym and you’re left with a supply chain contractor barking out assignments and looking for answers from a motley logistics crew. Thus when a company firm contracts out (outsources) its logistical operations
4PL - Fourth Party Logistics to two or more specialist firms (the third party logistics) and hires another specialist firm (the fourth party) to coordinate the activities of all the third parties comes in the concept of fourth party logistics. In simple words we can say that the concept of fourth part logistic is not much different from third party logistic it is just the scale wherein fourth party logistic manages the entire supply chain management whereas third party logistic manages one part of it. There are many models of a fourth party logistics which include: 1. Synergy plus operation model: In this type there is a partnership between a fourth party logistic firm and third party logistic with the help of which they market supply chain solutions. In this model the partners share their capabilities and help in developing better solution for the supply chain management 2. Solution integration model: In this model the fourth party logistic works for a single client to manage their supply chain, in this the fourth party supplies technology, resources and it relies on other service providers for complementary services which it does not deal in 3. Industry innovator model: This is one of the most beneficial plan however it is complex and is challenging. Here the fourth party logistic develops and runs a supply chain solution for multiple industry players with the key goal of collaboration for all players
2.
3.
4.
5.
parent company can take charge of its core business with increased efficiency without worrying much about the other parts Reduced operation cost: With the outsourcing of the supply chain to a party which deals specifically in it, the operation cost may reduce as the new company may bring with it better and efficient technology resulting in optimal and efficient utilisation of resources Working capital reduction: the working capital required for the business will reduce as the firm has low inventory to carry, also the order to cash cycle will reduce bringing in more cash, and finally management of SKU’s will become easier with intervention of better technology Risk Reduction: the risk involved when the companies own assets are into action will be reduced as the fourth party will be the one which provides their resources Reduced fixed assets: Fixed assets requirement will decrease as many of the operation or rather most of them will be taken over by the fourth party which will look into it
Activities of Fourth Party Service Provider
1. The fourth party analyses the supply chain of its client and determines the gaps or lacunae within and thus provides solutions for the same by integrating services and improving the chain as a whole 2. The fourth party coordinates the storage, deliveries and shipments by the logistic service provider and to make this possible it has various online location tools with the help of which it can control the transport operation throughout the supply chain 3. It also integrates its services with the third party and provides the best possible solution to the client 4. It also works as a consultancy firm wherein it studies the entire supply chain in order to provide the best fit alternative to improve it. Its technological capacitation is also essential for the implementation and integration of services
4PL value proposition
1. Increased attention to core business: With a fourth party in action taking care of the supply chain the
Limitation
1. A school of thoughts says that the concept of 4PL came in when there was recession in the economy, so in order to earn a living even a small third party logistic providers which didn’t deal into entire supply chain started projecting themselves as fourth party, thus the concept in itself was not a full proof course of action it was just a survival tactic. 2. Large advances in IT required: To have a very efficient management of the entire supply chain what we need is sound IT which can integrate the entire function. Although this is possible but it doesn’t suit all the organisation to have such high definition technology.
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4PL - Fourth Party Logistics 3. Evaluating gain sharing financials: What a company will gain by implementing a 4PL is something which is really hard to say and thus allocating the required financial share to the fourth party, also evaluating what is it that the company will gain by implementing this logistics plan. 4. Loss of touch with final customer: The parent company can lose the direct touch with the final customer as the feedback offered by the customer might not reach to the parent company, this might at times result in losing the credibility 5. Modus operandi: at times there can be cases where the modus operandi followed by fourth party may require total restructuring of the process, this can create lots of problem in initial stages, but are supposed to improve with time.
Conclusion
Supply chain management as a whole is one of the most integral part for a company be it any industry, outsourcing the same can be controversial as you are
letting one important part to hands of other. But on the other hand the benefits that the company can reap out of it are immense especially if the company is a new entrant as it doesn’t need to invest a lot in manufacturing equipment, transport and many other operation essentials as this can be taken up by the fourth party, whereas the parent company can deal with its prime objective. Thus 4PL as a whole will open up a totally new dimension to operations management by further deepening the scope in this area.
References 1. http://supplychain.enchange.com/bid/24156/ Fourth-Party-Logistics-4PLP-what-this-means-foryour-Supply-Chain 2. http://www.cquential.co.za/industries/3pl-4pl/ 3. h t t p : / / w w w. i n b o u n d l o g i s t i c s . c o m / c m s / article/4pls-take-control/ 4. http://npeters.com/studium/4pl_present.pdf
Fun Section
Trucks of United Parcel Service, world’s largest shipment and Logistics Company, never turn left. They end up saving time and money by avoid traffic signals in USA. The probability of accidents goes down as they avoid crossing traffic.
Guess Who I Am ?
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Crossword
Down: 1. Limited capacity that reduces the whole capacity of the whole chain 2. Watchdogs that investigate complaints by the customers in specific industry 3. Planning, Control and Improvement Included in ______________ triology 4. Indian company which won Deming Prize in 2014 5. The detention of a shipment beyond its specified time results in payement for that detention 9. Process-behavior charts in statistical process control (.... charts) 11. The process of disabling equipment and energy sources during servicing to prevent injury from an unexpected startup
Across: 6. Continuous Improvement 7. Comparing one’s function with industries best 8. Are International Consignment delivery terms 10. The activities associated with optimizing product placement in pick locations in a warehouse 12. 80% of effects are as a result of 20% causes 13. A specfic quantity of a specific item that could not be filled on the requested date 14. An agreement between organisations to sell their products higher than they would under free competition with one another
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Reverse Logistics
Productivity - ‘Check’; Efficiency - ‘Check’; Standardization - ‘Check’;
Reverse Logistics ??? Author
IIM kozhikode
Increased focus on customer relations in commerce has paved way to Reverse Logistics OpsWorld
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Manufacturing and Services has undergone many changes and has evolved tremendously over the years. The evolution is primarily due to dynamic market place which changes according to changing societal norms. Operations management is the result of interplay between these two, (ever changing market and society) and in the process, adopted many new trends & practices to serve the changing societal demands.Thus, understanding of Operations in yesteryears is essential to anticipate what beckons for it in the future.
History of Operations
Akanksha Kirti
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Introduction
”
The modern operations origin can be traced to the Industrial Revolution which began around 1770s in England. In its initial years only one person was responsible for production of goods from start to finish and systems were not very developed; modern machines were not available. With the advent of machine power, craft production started (skilled workers produce customized items with simple, flexible tools). It lacked in achieving economies of scale and the process was too slow. During 1950s With the World War II, pressure grew on manufacturing which led to adoption of quantitative models for different areas of operations management such as project management, forecasting and inventory.
Productivity - ‘Check’; Efficiency - ‘Check’;Standardization - ‘Check’;Reverse Logistics ??? serving to the customers. It soon became evident that technological advances (hard skills) had merely becomehygiene factors for companies to survive, while soft skills such as execution of services are the cornerstone for sustenance of companies in the highly competitive business environment.This business acumen is wonderfully captured in Michael Dell’s(founder of Dell having net worth of $15bn) words “Our business is about technology, yes. But it’s also about operations and customer relationships.”He realized that customers grew demanding and traditional methods were insufficient to slake their desires. It was this insight that exploded in 1996 when he started catering to customers’ needs directly with JIT method and make-to-order production plan. He identified the fact that future of operations doesn’t belong to productivity, efficiency and standardization but to building customer relationship.
During 1970-1980s Quality Revolution: The world economy got liberalized and globalization set in. This onset led to increased competition among firms and thereby adoption of Japanese techniques such as continuous improvement, TQM, JIT and lean management. The emphasis for firms changed from quantity to quality of products to sustain in competitive market. During 1990s Scientific Management era (spearheaded by father of scientific management Frederick Winslow Taylor) sowed the seeds of planning and selecting best methods for achieving efficiency. Techniques such as moving assembly lines and mass production, division of labour, advanced manufacturing technologies, enterprise resource planning and standardization were adopted. During 21stcentury: This era witnessed proliferation of internet /World Wide Webacross the globe. It changed the functioning of commerce with the advent of e-commerce. This new paradigm of commerce is technology embedded and entails electronic fund transfer, online processing of transactions, and electronic data interchange.All these generated an intense competition as information asymmetry diminished and info become available in the public domain.
Bearings of Recent Commerce Advancements
The present era unraveled the fact that using internet for sales and marketing is very different from actually
Reverse Logistics& How it may develop in the future The significance of manufacturing excellence has merely reduced to a datum point of performance. According to a study by BVL international, increase in customer satisfaction surfaced as the most important trend. Indeed, Customer Relationship’s criticality has increased manifold and service-orientation became the motivational factors to visit the firm again. A satisfied customer not only walks into the store repeatedly but also becomes an advocate for the company’s performance.
This shift of real power into the hands of customers culminated in the adoption of Reverse Logistics-- which was once considered as an evil in the industry. Though it costs almost nine times as that of forward logistics, it increases responsiveness of the supply chain. A robust Reverse supply chain salvages values for firms by calling back products at opportune time from the market in case of snafus. A case in the point is the rolling back of Tata Nano cars after various occurrences of its model catching fire. Also the recent incident of Cadbury chocolates roll off in Malaysia over concerns of presence of pork DNA in its chocolate Dairy Milk Hazel Nut and Roast Almond further reiterates the advantage of having a reverse supply chain. According to Rogers and Tibbern-Lemke, Reverse Supply Chain is “the process of planning, implementing, and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing values or proper disposal”.
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Productivity - ‘Check’; Efficiency - ‘Check’;Standardization - ‘Check’;Reverse Logistics ???
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Productivity - ‘Check’; Efficiency - ‘Check’;Standardization - ‘Check’;Reverse Logistics ??? GreenDust an Indian company established by Hitendra Chaturvedi found its value proposition in Reverse Logistics. He saw the opportunity lying in damaged products and envisioned a business strategy out of defective pieces. GreenDust banks upon effective Reverse Logistics and collects products returned by customers to various companies and then sells refurbished products at lower price. The company had made a mark for itself and tied up with big giants such as FutureBazaar.com, LG, Samsung, Panasonic, Philips, Toshiba, Apple, Whirlpool, Amazon.com. This creates a win-win situation for all the stakeholders -- customers who return goods, partner companies -- who could generate money out of waste piling-ups and Green Dust -- which is poised to achieve a revenue ceiling of Rs 1200 crore in the year 2015 because of its innovative strategy. As per Benchmark Report on “Revisiting Reverse Logistics in the Customer-Centric Service Chain,” reverse logistics “improved customer loyalty and retention, increased revenues, reduced operating costs and improvements in product uptime and quality” and helped in “recognizing the inherent opportunities to improve overall service performance”. It helps a firm to carve a niche for itself in the cluttered market by offering competitive differentiation. Zappos.com, an e-tailer, has imbibed Reverse Logistics in its core function. With the aim to provide customer satisfaction, it encourages consumers to return goods free of cost. As a result, Zappos.com have strong, loyal customer base with almost 75% repurchase rate among its customers.
cy which is the ultimate panacea to customer relationship as well as is an effective mechanism to leverage firm’ competence.
References 1. https://www.inkling.com/read/operations-management-stevenson-11th/chapter-1/operationstoday 2. http://www.slideshare.net/ajithsrc/evolution-ofom 3. http://www.slideshare.net/shakthifernando7/historical-evolution-of-operations-management 4. http://www.supplychainmovement.com/trendsstrategies-in-logistics-and-supply-chain-management/ 5. http://www.mole.my/content/cadbury-fiasco-concern-rather-opportunity-rest-snacking-industry 6. http://economictimes.indiatimes.com/industry/services/retail/greendust-owner-eyes-rs600-crore-for-expansion/articleshow/38371989. cms
Fun Facts
Apart from financial gains, it also reduces carbon footprint of industries. Coca-Cola, a hard core manufacturing firm integrated Reverse Logistics to offer the best after sales services. It uses returned bottles for repackaging and thereby, reduces its negative environmental impact as mandated by ISO 14000.
The Final Judgement
The ideology of ‘power lying in customers hands’ is no more limited to service oriented firms such as banks, insurance companies etc. In the present era, a firm need to be customer-oriented to renew and retain its Numero Uno position.Customer relationship holds profound significance especially when there is proliferation of companies offering similar products. Any shift in customer service means loss of credibility which may go on to dissuade customers from further purchases. This increased focus on customer relations has altered the way commerce is conducted. It has paved the way for Reverse Logistics as the new market philosophy.Thus, the future of operations lies in Reverse logistics efficien-
The longest freight carrier is Maersk Triple E which is 2 meters short of a quarter mile long and can carry up to 36000 cars in a single trip.
Guess Who I Am?
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CONTENT Answers Quiz 1. Mean absolute deviation 2. Henry Ford 3. Value Engineering 4. Gantt Chart 5. Make to stock 6. Critical Ratio 7. Prevention 8. Quality Assurance 9. Yield management 10. Queuing system 11. Reneging 12. Balanced Scorecard 13. Modularity 14. Offshoring
Down: 1. Limited capacity that reduces the whole capacity of the whole chain (bottleneck) 2. Watchdogs that investigate complaints by the customers in specific industry (ombudsmen) 3. Planning, Control and Improvement Included in ______________ triology (Juran) 4. Indian company which won Deming Prize in 2014 (Mahindra) 5. The detention of a shipment beyond its specified time results in payement for that detention (demurrage) 9. Process-behavior charts in statistical process control (.... charts) (shewharts) 11. The process of disabling equipment and energy sources during servicing to prevent injury from an unexpected startup (lockout) Across: 6. Continuous Improvement (Kaizen) 7. Comparing one’s function with industries best (benchmarking) 8. Are International Consignment delivery terms (incoterms) 10. The activities associated with optimizing product placement in pick locations in a warehouse (slotting) 12. 80% of effects are as a result of 20% causes (pareto) 13. A specfic quantity of a specific item that could not be filled on the requested date (backorder) 14. An agreement between organisations to sell their products higher than they would under free competition with one another (cartel)
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Page 12 Guess the Operational Concepts Picture 1: 7 Wastes - TIMWOOD (Transport,Inventory, Motion, Waiting, Over-processing, Overproduction, Defects) Picture 2: Kaizen Page 27 Guess the Operational Concepts Picture: Accuracy & Precision Page 33 Guess Who I Am? Picture 1: Taiichi Ohno Picture 2: Joseph Juran Picture 3: Milk Run Page 38 Guess Who I Am? Picture: Phil Crosby
Fun Facts Credits: Dhruv Bhandula (IIM Calcutta); Crossword Credits: Abhay Kumar Chheda (IIM Shil-
long)
Quiz Credits: Rajesh Kumar Meena (IIM Shillong) Coverpage Credits: Vinod Kumar M (IIM Shillong) Contents Page Picture Credits: Pratik Chakrabarti
(IIM Shillong)
Presented By
Partner Institutions OPTIMA, IIM AHMEDABAD |OPMAC, IIM BANGALORE |OPERATIONS SPECIAL INTEREST GROUP, IIM CALCUTTA | SIGMAETA, IIM TRICHY |OPERATIONS INTEREST GROUP, IIM LUCKNOW | OMEGA, IIM KOZHIKODE | KAIZEN, IIM INDORE |OPEP, IIM RAIPUR |OPERATIONS CLUB, IIM RANCHI | OPERATIONS CLUB, IIM ROHTAK |OSM ClUB IIM KASHIPUR | THE SUPPLY CHAIN AND OPERATIONS CLUB, IIM UDAIPUR