Cover Story History of Operations Management Around the World with Operations Management ____
Challenges in McDonalds Supply Chain ____
Opsession
Transformation in Mobility Solution
January Issue This is the sixth issue from Volume three of Opsession, the monthly newsletter of X-Ops. The newsletter was introduced two year ago, by X-Ops with the intention of covering all the activities and events that took place during the span of a month.
Xavier Institute of Management, Bhubaneswar Volume#3
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History of Operations Management It is time to rethink what we mean when we think about “operations.” Operations are not merely about manufacturing. Operations have always been what give an organization the power to act: to create value for customers; to capture value for shareholders; and to share value with ecosystem. In this era of ubiquitous digital technologies, operations empower an increasing variety of organizations, ever more modular, distributed, centered on software and data and connected. The field of operations has gone through major evolutions over the history. Growing from the industrial revolution of the late 1800s, the field took off as the modern economy emerged from the new phenomenon of volume manufacturing. Innovators like Eli Whitney led the way with the popularization of manufacturing systems which transformed an artisan economy based on “filing and fitting” parts. The gradually growth into the concepts of logistics, supply chains, and assembly lines, and formed the foundations of the “American System of Manufacturing,” which grew during the first half of the 20th century and peaked during the 1950s and 60s. In the first half of the twentieth century, operations were focused only on manufacturing.
In the 1960s, the field of operations research expanded, developing a broad variety of analytical methods to analyse and optimize the flow of goods and information in manufacturing. Use of these methods spread beyond manufacturing to variety of service contexts, ranging from banks to electric utilities. This led to the establishment of service management and service operations as core area in the operations field. The evolution continued during the 1980s and 1990s, as new generations of digital technology began to revolutionize the fundamentals form of operating excellence and extend the field to the management of companies delivering software-based products and services. From its earliest days, digital technology has supported operations. After all, the management of information has been the key to operating excellence. Whether we optimize forecasts through operations research at Nike or order inventory through Toyota’s “Kanban” system, operating capabilities hinge on managing and optimizing digitized information. And from the days of the first commercial IBM mainframes in the late 1950s, computers have driven increasing efficiency in manufacturing and service institutions.
Digital technology is also enabling completely new operating models that are increasingly open, distributed, and share thousands of organizations and individual contributors. These new models have enabled close to 9 million independent developers to contribute apps the IOS and Android mobile platforms. They have enabled Uber’s 2,000 internal employees to manage the complex logistics of 200,000 drivers. And they have also enabled WhatsApp to grow to over 450,000 users with fewer than 30 employees. As such, the design of development tools, operating system APIs, or the user on boarding process for a mobile application have become crucial to operating excellence as production planning or inventory management. In large organizations, for example, supply chain management becomes increasingly critical to the buildup of data centre infrastructure. Moreover, digital technology is becoming increasingly ubiquitous as the traditional analogue and digital worlds converge. Not only do old firms need to understand relatively new digital technology, but relatively new firms like Microsoft, Google, and Amazon need to understand and master traditional operating concepts.
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Around the World with Operations Management Apple to Assemble in India Apple joins the group of MNCs interested in production in India as part of Make in India. The US giant is planning to set up its plant in Bengaluru. The Corporation is in talks with Ministry of Commerce and Karnataka Government for various demands raised by Apple. This plant will mainly involve assembly of iPhone. The company intends to import “components, completely knocked down (CKD) and semi knocked down (SKD) units of iPhones”. The first set of iphones will be assembled in April.
conditions, and infrastructure and transport connection. India is considered as the country with highest potential to grow as a logistics market. Within the next five years India will grow into a logistics hub. China is first in Agility index.
Multi-modal policy
transport
hub
Indian government is looking into the policy of setting up a multi-modal transport hub combining road ways, rail ways and inland waterways. A multimodal hub is under development in Varanasi. The ₹170-crore multi-modal India stands second in Agility Logistics index 2017 For the second consecutive year India has been ranked at 2nd rank in Agility logistics index. The index offers an annual snapshot of the logistic industry with the rankings of the world’s 50 leading emerging markets by size, business
terminal at Varanasi is set to emerge as a major logistics gateway connecting North India to the eastern and north-eastern
states, extending up to Bangladesh. Construction for this is underway and will have waterway, rail and road connectivity. Iron Mountain gets new MD operations Mr Hitesh Gupta has been appointed as Managing Director for Iron Mountain India. Mr Gupta has been entrusted with the steering the company's business in India during a period of fast change and ongoing expansion to help Iron Mountain deliver on its global strategy for growth. The appointment of Gupta is part of Iron Mountain's rapid investment and expansion plan in India, which includes building a new management team and making strategic acquisitions to expand the company's footprint in India.
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Challenges in McDonald’s Supply Chain Having an efficient supply chain is not an added advantage but a necessity. Haywire Supply chains can affect a firm’s financial performance and reputation. Recently McDonald’s was under the spotlight because of its poor performance. Supplier closure that elevated a food safety concern all over the world and created supply shortages. Sales was directly impacted and a new CEO had to be appointed. So, what McDonalds should do differently to improve their supply chain? In a company like McDonald’s, it’s critical to have several back-up sources of supply. If a disruption occurs, tested, credible and reliable suppliers are needed to speed up the production. It’s also important to diversify the geographic supply base and transportation network – so that if a slowdown happens in one region, you have the other regions as a back-up.
When a product is central to the menu, it’s also vital to split up the supply volume between multiple suppliers which lessens the burden on each source, and the impact on the business of a potential slowdown.
the suppliers will be more likely to give an appropriate substitute in the event of a crisis if you have cultivated a long-term relationship with them, and have earned their trust through transparent and honest communication.
Companies can avoid menu interruptions by making sure that they have additional sources of supply for key products and that those suppliers are ready to replace the main supplier should a disruption transpire. The best way to prepare is by leveraging online sourcing on a steady basis; by regularly taking key categories to bid through online sourcing, procurement teams can establish a clear view of other suppliers, products and prices, which makes it easier to find alternative sources of supply during disruptions.
Along with transparency evaluation of a supplier is also very important. Information should be taken about the supplier’s operational and financial health. The location of the supplier should also be factored in in case a regional weather disruption causes problems. Understanding their plan of action in the event of a calamity, safety policies, the inventory practices will provide better insight about their working.
Investing in supplier relationships is also smart, as
Implementation of these practices is essential if McDonalds wants to maintain their existence. Further reinvention of the brand is the need of the hour.
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Transformation in Mobility Solutions Amidst all the hue and cry over the driverless cars, Toyota Motors have recently announced they are going to design cars in which humans retain the larger share of the control, at least for the next few years. The decision to hand over all the controls to computers is a dangerous choice as the technology is yet to mature. According to a Toyota Research Institute official, none of the automobile or IT manufacturers is close to attaining true Level 5 autonomy which is the ability to control a car without any sort of human intervention. It will take many more years of machine learning coupled with logged miles in both simulated and realworld testing environment to achieve the required level of performance. As of now, in the automated vehicles, computers will have some control over steering, braking and accelerating with humans retaining the overall command.The human control element is expected to go down gradually. In level 3 autonomy the humans will be expected to assert control during emergency situations. But sudden human intervention can be challenging as the human driver’s attention might wander during safe navigation period. Instead, the automakers might choose the level 4 autonomy directly. But this level does not meet the safety-critical
driving functions of every possible scenario. Once the Level 4 system is safety tested and meets the required criteria, automakers can improve the existing system and work towards fully-autonomous level 5 system. In this system, the autonomous vehicle's performance is expected to be equal to that of a human driver, in every driving scenario. Although autonomous cars represent the future of transportation, traditional powertrains and internal combustion engines are more than likely to be the dominant type of vehicle on the road for decades to come. In this context, newer vehicles will be distinguished in terms of innovative technology behind assisted driving and global connectivity. The technology required to make these connected and intelligent cars is not the area of expertise of traditional auto manufacturers. So, cutting edge technology firms are going to come in to bridge this gap. Thus, these companies are going to have a significant
impact on the automotive development and on the auto manufacturers’ fortune.
On Demand: Challenger
The
New
Like many other industries, the automotive sector is facing forces of change from various directions and undergoing significant transformation. With on Demand and sharing economy on the rise, the OEMs are experiencing fierce competition. Staying competitive during this time of turbulent transformations is a challenge in itself. Adaptation to this everchanging environment has become the core business demand and a critical competency to stay in business. The on demand shared mobility as well as adoption of new mobility services is prompting the OEMs to explore new business strategies and further innovate the products. Some automobile manufacturers have already announced their intention to become mobility companies, offering new services alongside the existing business of manufacturing vehicles. Automakers are finally attempting to turn ride hailing and car sharing companies into reliable customers for their vehicles.
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Opsession Monthly XIM, Bhubaneswar
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