2018-19

OPERATIONS
GUIDE
 TABLE OF CONTENTS
INTRODUCTION TO OPERATIONS MANAGEMENT .................................................................................. 3

1. FORECASTING ............................................................................................................................................... 5

2. PRODUCT AND SERVICE DESIGN ............................................................................................................. 11

3. PRODUCTION STRATEGIES........................................................................................................................ 13

4. PROCESS SELECTION................................................................................................................................... 15

5. FACILITY LAYOUT ........................................................................................................................................ 18

6. SCHEDULING ................................................................................................................................................. 22

7. CAPACITY PLANNING ................................................................................................................................…24

8. QUALITY MANAGEMENT..........................................................................................................................…27

9. SIX SIGMA .....................................................................................................................................................…29

10. LEAN OPERATION....................................................................................................................................…32

11. TOYOTA PRODUCTION SYSTEM ...........................................................................................................…35

12. INVENTORY MANAGEMENT .................................................................................................................…39

13. THEORY OF CONSTRAINTS ...................................................................................................................…43

13. SUPPLY CHAIN MANAGEMENT ............................................................................................................…45

14. LOGISTICS MANAGEMENT ....................................................................................................................…49

15. PROJECT MANAGEMENT........................................................................................................................…53

16. MRP and ERP .............................................................................................................................................…57

17. SERVICES OPERATIONS MANAGEMENT ............................................................................................…59

18. EMERGING TECHNOLOGY IN SUPPLY CHAIN MANAGEMENT………………………………………………… .. 63

19. GST AND SUPPLY CHAIN………………………………………………………………………………………………………....68

20. E-WAY BILL…………………………………………………………………………………………………………………………….70

21. REVERSE ENGINEERING AND ITS IMPORTANCE IN NEW PRODUCT DEVELOPMENT………………..72

22. TOP SUPPLY CHAIN INNOVATIONS TO LOOK OUT FOR………………………………………………………….....73

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 INTRODUCTION TO OPERATIONS MANAGEMENT
Operations management is managing the process which converts inputs
to outputs.

 Inputs–Raw material, labour, energy, etc.

 Output – Goods or services

It involves ensuring that the business operations are efficient and effective.
Few examples are:

 Using fewer resources as needed

 Meeting customer requirements

Operations process adds value during the transformational process
from input to output.

OPERATIONS
INPUT MANAGEMENT
OUTPUT

Goods are physical items which include raw material, parts, sub-assemblies and
final products. Ex: Automobile, Computer, Shampoo
Services are activities that provide some combination of time,
location, form or psychological value. Ex: Air travel, Education, Haircut
Scope of Operations Management:

 Forecasting
 Product/Service design
 Capacity planning and scheduling
 Inventory management

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  Quality Assurance
 Location/Layout Planning

Decision Making:
Decision making is the selection of a course of action among available
alternatives. Some factors which affect decisions are:
 Cost
 Quality
 Environmental issues
 Capacity
 Employee skill set
 Productivity
 Safety
 Vendor Relations

The primary function of the operations manager is to guide the system by
taking the right decisions.

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 1. DEMAND FORECASTING
Forecasting is estimating or predicting the future based on the analysis of past
and present data. Forecasting is used in operations to match the supply and
demand. A demand forecast is essential to determine the supply/production
to match the demand.
Categories of forecasting methods:

 Qualitative
 Time series
 Causal
 Simulation Models

 Components of demand are as follows:

1) Average demand for the period

2) A trend - Long term gradual shift to higher or lower value
3) Seasonal Elements - Regularly repeated pattern attributed to
seasonal influences
4) Cyclical Elements - Recurring sequence of points above and below the
trend line
5) Random Variations - Unexpected deviations

6) Autocorrelation – Denotes the persistence of the occurrence.

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Qualitative method:
This method is appropriate when requisite past data is not available. These are
subjective or judgemental and are based estimates or opinion of experts. Ex:
Phasing out subsidies on LPG can raise questions about the validity of past data
for future LPG sales prediction. Popular qualitative methods are
1) Grass Roots - It is a method which base on the concept of asking the people
who are close to the eventual consumer, such as sales person, each member
of the sales force report the trends of their own region, until the entire
forecast is built up, therefore it also call “Sale Force Forecast”. For eg., an
overall sales forecast can be delivered by combining the inputs from each
sales person who is closest to his/her territory.
2) Market Research – Set out to collect data in a variety of ways (surveys,
interviews and so on) to test the hypotheses about the market. This is
typically used to forecast long-range and new product sales.
3) Panel Consensus – Free open exchange at meetings. The idea is
discussion by the group will produce better forecast, than one individual.
Participants may be executives, salespeople, or customers.
4) Historical Analogy – Ties what is being forecasted to the similar item.
It is important in planning demand forecasts of new products.
5) Delphi Method – In this method a group of experts respond to a
questionnaire. A moderator then compiles the results, refines forecasts
and conditions, and again formulates a new questionnaire that is
submitted to the group. Usually, this process is repeated thrice before
satisfactory results are achieved.

Time series method:

Time series forecasting methods try to predict the future based on past
data. Types of time series methods are as follows:

1) Simple Moving Average – When demand for a product is neither growing

nor declining rapidly, and if it does not have seasonal characteristics, a

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 moving average can be useful in removing the random fluctuations for
forecasting.
The longer the moving average period, the more the random elements are
smoothed (which may be desirable in many cases). But if there is a trend
in the data – either decreasing or increasing – the moving average has
the adverse characteristics of lagging the trend.

2) Weighted Moving Average – This method allows any weights to be

placed on each element, providing, of course, that the sum of all the
weights equals to one.
Experience and trial and error are the simplest ways to choose weights.
Usually, the most recent data should be given the highest weight as it
would be a better estimate for the coming month. However, if the data
are seasonal, weights should be established accordingly.

3) Exponential Smoothing – In this method, as each new piece of data is

added, the oldest observation is dropped and the new forecast is
calculated. The reason this is called exponential smoothing is that each
increment in data, the past data is decreased by (1 – α).

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 Forecast error:
Difference between forecast value and actual value.

Causal methods:

Identifying the factors that influence the forecasted variable. Ex: Making use of
weather report to predict the sales of umbrella. Regression analysis is the
most common causal method. This may contain multiple variables.

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Simulation Models:

Dynamic models, usually computer based, that allow the forecaster to make
assumptions about the internal variables and external environment in the
model. Depending on the variables in the model, the forecaster may get the
effect of changes like increase in price, decrease in recession, etc.
Here are four primary causes of forecast error:

 Statistical forecasting methods have inherent limitations because they

use the history of demand to project forward. If history teaches us one

thing, it’s that the future is often different from the past.
 Statistical forecasting systems don’t understand the contextual or
situational factors that influenced demand in the past or that will

influence it in the future.
 Demand for some kinds of items in some situations is inherently harder
 to forecast than for others.
 Human judgment and memory are unreliable.

Quick Reads – Chapter 1

Importance of Demand Forecasting in Supply Chain- 7 Authentic

Reasons The importance of Demand forecasting is increasing exponentially
and across sectors. Read more about its importance in Supply Chain.
Link: http://www.supplychaindigital.com/top-10/seven-reasons-why-you-
need-forecast-supply-chain

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Evolution of Forecasting:
Forecasting is not a recent concept and it has proved its existence since early
ages. Read about its evolution over years and how it advanced from
rudimentary intuition to a high technology machine learning based concept.
Link:http://www.supplychain247.com/images/pdfs/ToolsGroup_The_Evoluti
on_o
f_Forecasting.pdf

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 2. PRODUCT AND SERVICE DESIGN
Activities and responsibilities of product and service design include:
1. Translate customer wants and needs into product and
service requirements
2. Refine existing products and services
3. Develop new product and/or services
4. Formulate goods quality
5. Formulate target costs
6. Construct and test prototypes
7. Document specifications

Product life stages:

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Product Cycle with 4 Ps

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Product Life Cycle vs. Service Life Cycle:
In simple terms, the product life cycle indicates the revenue amount generated by a
product over a period of time, right from its inception to its discontinuation. There are five
common stages that make up a product cycle. These are

1. Development/planning
2. Introduction/initiation
3. Execution/sales
4. Maturity/growth
5. Decline

What is a Service Life Cycle?

A service organization will have to handle a service life cycle as opposed to a product life
cycle. What does the management of a service life cycle entail? It is essentially a strategy
which offers support to service organizations, helping them realize their gross revenue
potential. The service life cycle management typically includes these critical elements:

1. Administration of workforce
2. Planning/forecasting of components
3. Organizational asset management
4. Knowledge administration
5. Reverse logistics
6. Management of repair and returns
7. Contract management

Service lifecycle management (SLM) software is typically seen as a component of the

Product lifecycle management (PLM) software. SLM is helpful in reducing service cost and
minimizes preventable return of any faulty products while improving operational
efficiency of the service.

What is Common?

While the product life cycle and service life cycle may be managed differently in an
organization, they are both determined by the time period for which they can be marketed.
For instance, the life cycle of TV CRT (cathode ray tube) has come to an end since a greater
number of flat screen TVs are being bought by people today. Similarly, the era of VoIP
(voice-over internet protocol) telephone services is now in its growth phase with more and
more people showing an inclination to try it out. Hence, the service life cycle of traditional
phone lines is slowing coming to an end.

When you have awareness regarding where your service of product is in the life cycle
stage, you are better able to determine adjustments or refinements that need to be made so
that they are kept aligned with the already developed vision, goals and strategy.
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 3. PRODUCTION STRATEGIES

Engineer to order - Engineer to Order is a manufacturing process defined by

demand driven practices in which the component is designed, engineered, and
built to specifications only after the order has been received. It is a more
dramatic evolution of a Build-To-Order supply chain. This approach is only
appropriate for specific and rare items, such as large construction projects or
Formula 1 cars.
Make to order - Make-To-Order describes a production environment in
which a good or service can be made after receipt of a customer’s order. The
final product is usually a combination of standard items and items custom-
designed to meet the special needs of the customer. Synonyms for Make-To-
Order include Produce-To-Order and Build-To-Order.
Assemble to order - Assemble-To-Order describes a production environment
in which a good or service can be assembled after receipt of a customer’s
order. The key components (bulk, semi-finished, intermediate, subassembly,
fabricated, purchased, packing, and so on) used in the assembly or finishing
process are planned and usually stocked in anticipation of a customer order.
Receipt of an order initiates assembly of the customized product. This
strategy is useful where a large number of end products (based on the
selection of options and accessories) can be assembled from common
components. Synonym for Assemble-To-Order is Finish-To-Order.
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Make to stock - Make-To-Stock describes a production environment where
products can be and usually are finished before receipt of a customer order.
Customer orders are typically filled from existing stocks, and production
orders are used to replenish those stocks. Synonyms for Make-To-Stock
include Produce-To-Stock.

Quick Reads – Chapter 3

Different types of production strategies:

The types of production strategies depend on the type of product or service,
target markets, resources and many more factors. Hence, besides the
traditional strategies we have many other strategies for justifying production.
Link: http://kalyan-city.blogspot.co.uk/2011/12/what-are-different-types-of-
production.html

Strategies to connect Sales with Production:

It is a goal to be agile and fulfill every customers wish on time and on quantity,
but it is also important to minimize waste and enable smooth replenishment
and production.
Link: https://blogs.sap.com/2012/07/06/mts-mto-ato-cto-eto-strategies-to-
connect-sales-with-production/

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 4. PROCESS SELECTION

Process selection is deciding the way production of goods and services will
be organized.
Major implications:

 Capacity Planning
 Facilities Layout
 Equipment
 Work Systems Design

Process selection criteria (Product-Process Matrix):

Product–Process Matrix is a pictorial representation of the four process types

(job shop, batch, repetitive, continuous) based on two variables - Volume &
Variety.
The diagonal of the Matrix represents the ideal choice of processing system
for a given set of circumstances.

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  Variety – How much
  Flexibility – What degree
 Volume – Expected output

Process Types:
 Job shop – Small scale, high customization and low volume. Ex:
 Appliance repair

 Batch – Moderate volume, narrower range of products and lesser
 customization. Ex: Bakery

 Repetitive/assembly line – High volume and standardized product.
 Ex: Automatic car wash

  Continuous – High volume and non-discrete goods/services. Ex: Oil 









Process automation:

 Computer aided manufacturing (CAM) – Using computer software

 to control machines in manufacturing
 Numerically controlled (NC) machines – Machines controlled by a set of
instruction called programs encoded on a storage medium

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  Robot – A mechanical agent guided by electronic circuitry or computer
 program
 Manufacturing cell – Machine sets grouped by parts or products they
 produce
 Flexible manufacturing system (FMS) – Allows flexibility in case of
 predicted or unpredicted changes
 Computer integrated manufacturing (CIM) – A system for linkingbroad
range of manufacturing activities through an integrated computer
system

Line balancing:
Line Balancing is levelling the workload across all processes in a cell or value
stream to remove bottlenecks and excess capacity. A constraint slows the
process down and results if waiting for downstream operations and excess
capacity results in waiting and no absorption of fixed costs.

Critical Path Method (CPM)

The Critical Path Method can help you to make informed process selection and
facility layout decisions. This production mapping technique uses a visual
string of nodes representing individual activities to show the flow of materials
in a multi-step process, while conveying a range of useful information about
each activity, including its shortest and longest possible completion times, its
required inputs, expected outputs and labor needs. Using CPM to map out
your production processes can reveal areas of slack time, non-value-adding
activities and opportunities to streamline production processes.

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 5. FACILITY LAYOUT
Arrangement of machinery, equipment and other industrial facilities
with the aim of achieving production in least possible time and cost.
Factors determining layout:
 Ease of future expansion
 Output needs
 Space Utilization
 Shipping and receiving
 Safety


Types of layout:
Product layout: Machines arranged in one line depending on sequence of
operations. Ex: Paper mill.

Process layout:
Grouping of similar machines into one department. Ex: Grinding
machines, painting shop, etc.

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Fixed position layout:
Men and machine are moved around to build a bulky product. Ex: Ship
assembly.

Cellular manufacturing layout:

Machines grouped into cells, each of which produces few parts
with common characters. Ex: Lathes

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Combination layout:
Combination of product and process layout. Ex: Supermarket

Evaluating location alternatives:

 Cost-Volume-Profit analysis - Plot the fixed and variable costs of
alternatives on a graph and choose the location which has the lowest
total cost

 Factor rating analysis – Assign a weight and score to each factor of
 alternative based on relative importance and choose the alternative
 with highest composite score

 Centre of gravity method – Treat distribution costs as a linear function
of distance and quantity and choose the alternative whichhas minimum
distribution cost

 Transportation model – Finding the lowest cost plan fordistributing
goods or supplies from multiple origins to multiple destinations


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 Quick Reads – Chapter 5

Common Challenges in Layout Planning:

Facility layout need not be fixed and some of common issues and scenarios for
layout planning are discussed here.
Link: http://polarismep.org/common-challenges-layout-planning/#more-281

Lean Production Facility Layout -Four Principles:

Optimizing the production facility layout is a key component to improving the
overall production process. Well-designed and optimized production layouts
support the production process with appropriate infrastructure and layout.
Implement Lean Solutions to optimize production facility layouts
Link: http://www.fourprinciples.com/solutions/lean-prodution-
facility-layout#.WWeg6ISGPIU

Facility Layout - Objectives, Design and Factors Affecting the Layout

For an organization to have an effective and efficient manufacturing unit, it is

important that special attention is given to facility layout.
Link: http://www.managementstudyguide.com/facility-layout.htm

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 6. SCHEDULING

The process of determining the job order on some machine or in some work
centre is known as sequencing or priority sequencing. Some of the priority
rules for obtaining a job sequence on single machine are:
1) First Come First Serve (FCFS) – Orders are run in the order they arrive
in the department.
2) Shortest Operating Time (SOT) – Run the job with shortest
completion time first, next-shortest time second, and so on. This is
sometimes also referred to as SPT (shortest processing time).
3) Earliest Due Date (EDD) – Run the jobs with the earliest due date first.
4) Slack Time Remaining (STR) – This is calculated as the time remaining
before the due date minus the processing time remaining.

Orders with shortest STR are run first.

STR = time remaining before the due date - the processing time
remaining
5) Last Come First Serve (LCFS) – This rule occurs frequently by default.
As orders arrive, they are placed on top of the stack, and the operator
usually pics up order on the top to run first.
6) Random Orders (or Whim) – The supervisors or operators select
whichever job they feel like running.

Gantt Charts
It is a bar chart that plots tasks against time. Gantt charts are used for
project planning as well as to co-ordinate a number of scheduled activities.

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 Quick Reads – Chapter 6

Scheduling in Production Planning And Control:

Know all about establishing of times at which to begin and complete each event
or operation comprising a procedure
Link: https://www.wisdomjobs.com/e-university/production-and-operations-
management-tutorial-295/scheduling-9619.html

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 7. CAPACITY PLANNING
Capacity planning process determines the production capacity an
organization needs to meet with change in demand for its process.
 Maximum capacity -> Maximum amount of product a company is
capable of producing

 Effective capacity -> Maximum amount of product a company is
capable of producing due to constraints

Capacity = No. of machines/workers x No. of shifts x utilization x efficiency

Efficiency = Actual output/Effective capacity
Utilization = Actual output/Design capacity
Capacity strategies:
 Lead strategy – Lead strategy is adding capacity in anticipation of an
increase in demand. Lead strategy is an aggressive strategy with the goal
of luring customers away from the company's competitors by improving
the service level and reducing lead time. It is also a strategy aimed at
reducing stock-out costs. A large capacity does not necessarily imply high
inventory levels, but it can imply higher cycle stock costs. Excess capacity
 can also be rented to other companies.
 Lag strategy – Lag strategy refers to adding capacity only after the
organization is running at full capacity or beyond due to increase in
demand (North Carolina State University, 2006). This is a more
conservative strategy and opposite of a lead capacity strategy. It
decreases the risk of waste, but it may result in the loss of possible
customers either by stock-out or low service levels. Three clear
advantages of this strategy are a reduced risk of overbuilding, greater
productivity due to higher utilization levels, and the ability to put off
large investments as long as possible. Organization that follow this
strategy often provide mature, cost-sensitive products or services.




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

 Match strategy – Match strategy is adding capacity in small amounts in
response to changing demand in the market. This is a more moderate
strategy.


 Adjustment strategy – Adjustment strategy is adding or reducing capacity

in small or large amounts due to consumer's demand, or, due to major
changes to product or system architecture.

Inefficiencies result due to discrepancy between capacity and demand.

Capacity planning aims to minimize this discrepancy. Capacity planning is
used in performance monitoring.

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 Quick Reads – Chapter 7

How to do Capacity planning:

Why should a company do capacity planning? How did it evolve? Benefits of
capacity planning?
Link:http://www.teamquest.com/files/7314/6818/7961/HowToDoCP_2016
0710
_2016template.pdf

Capacity Planning: 7 Tips To Unlocking Hidden Manufacturing Capacity:

For manufacturers, capacity planning is essential. It seems so simplistic –
determine production capacity requirements based on current demands and
continually mobilize to react to changes in capacity requirements. What could
be more straight forward? Production capacity planning calls for organizations
to track, adjust and scrutinize large amounts of data to strategically optimize
everything from end-to-end supply chain operations to inventory management
and fleet transportation scheduling.
Link: http://www.compudata.com/increasing-manufacturing-capacity-
strategy/#sults

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 8. QUALITY MANAGEMENT

The act of overseeing all activities and tasks needed to maintain a desired level of
excellence. This includes creating and implementing quality planning and
assurance, as well as quality control and quality improvement.
Determinants of Quality

 Design
 Conformance to Design
 Ease of Use
 After Sales Service

Costs of Quality
 Failure costs: Costs incurred by defective parts/products or faulty
 services

 Appraisal costs: Costs of activities designed to ensure quality or
uncover defects

  Prevention costs: All TQ training, TQ planning, customer assessment,
process control and quality improvement costs to prevent defects from
occurring

Total Quality Management
A philosophy that involves everyone in an organization in a continual effort
to improve quality and achieve customer satisfaction.

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 9. SIX SIGMA
Six sigma is a disciplined, data driven approach and methodology to help
eliminate defects in a process, from manufacturing to transactional, and from
product to service. Six Sigma is:
A Philosophy
 Make fewer mistake in all that we do 
A statistical measure
 Help gauge adequacy of the product, process and service. 
A metric
 A measuring system

A business strategy

 Good Quality can help reduce

cost Numerically

 Having no more than 3.4 defects per million




















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Seven basic tools of quality

Identifies many possible causes for an

effect or problem and sorts ideas into useful categories. (Also called Ishikawa
or Fishbone diagram).

The most commonly used graph for showing frequency

distributions, or how often each different value in a set of data occurs.

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

Process Capability
Once a process has been determined to be stable, it is necessary to determine if
the process is capable of producing output that is within an acceptable range.
Tolerances or specifications

 Range of acceptable values established by engineering design or

customer requirements

Process variability
 Natural or inherent variability in a process



Process capability

 Process variability relative to specification Cp

 = (UTL – LTL)/6

UTL -> Upper tolerance (specification) limit
LTL -> Lower tolerance (specification) limit

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Is Six Sigma Killing Your Company's Future?

Six Sigma and other efficiency seeking approaches can dramatically reduce
variance and inefficiency in an organization. But if you’re not careful,
innovation and growth may be swept away in the process.

Credit for coining the term “Six Sigma”, the ubiquitous quality improvement
model, goes to an engineer named Bill Smith who helped Motorola realize an
estimated $16 Billion in savings in the 1980s as a result of standardizing core
processes. Six Sigma is effectively a means for identifying and eliminating
variance, and companies around the world have built entire cultures upon this
foundational concept.

Today, as a result of Six Sigma or similar approaches, many organizations are

operating at very high levels of efficiency. But as leaders now shift their focus
to the acceleration of growth, they are discovering that the very culture of
little to no variance that allowed them to achieve their efficiency goals is
suffocating their growth potential. Variance – dare I even say error – is
essential for innovation and growth.

Variance is the very characteristic that dictates the rate at which evolution in
nature occurs. Consider the countless number of times that your cells divide
to make you who you are. Now consider that each time a cell replicates, it
must copy and transmit the exact same sequence of 3 billion nucleotides to its
daughter cells. Inevitably, errors occur—and much more often than you might
expect. Yet it is these errors in DNA replication that have allowed single-cell
organisms to evolve into the unimaginably complex beings that we are today.
Listen to any CEO these days, and at first glance, they would seem to be the
opposite of this variation-averse type – leading organizations that are built for
innovation and entrepreneurship. But there's an older, efficiency-driven part
of the culture that fights like hell to defend the status quo.

Eliminating variation in a large organization can be a laudable goal, leading to

profit and efficiency. Yet variation is also not an obstacle to steadfastly avoid;
it is a key to unlocking your breakthrough future.

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 10. LEAN OPERATION

A flexible system of operation that uses considerably less resources than a

traditional system and tend to achieve:

  Greater productivity
  Lower costs
  Shorter cycle times
 Higher quality

Some terms:

 Muda–Waste and inefficiency

 Kanban – A manual system that signals the need for parts or materials
 in simplest terms by better communication through visual
 management. Example: Two bin system

 Pull System: Replacing material or parts based on demand

 Kaizen: Continuous improvement in the system

 Jidoka: Quality at source (worker)

 Poka Yoke: Safeguards built into a process to reduce the possibility of

 errors. In Japanese, it means “Mistake Proofing”. 





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 
 Heijunka – Workload levelling

Value stream mapping (VSM):

Value stream mapping is a lean-management method for analysing the

current state and designing a future state for the series of events that take
a product or service from its beginning through to the customer.

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7 Types of Waste (Muda):

  Defects
  Overproduction
  Inventories
  Over processing
  Unnecessary movement
  Unnecessary transport and handling of goods
 Waiting time

Quick Reads – Chapter 10

How to Set Up a Lean Factory That Works:

A lean factory, or lean-oriented production layout, creates a seamless flow of
people, material and information.
Link: http://www.industryweek.com/continuous-improvement/how-set-
lean-
factory-works-part-1

Benefits of lean manufacturing – short/long term benefits and

challenges: Before investing in any major project, you need to compare the
potential benefits to the costs. Lean manufacturing is no different. You need to
consider whether or not the benefits of lean will outweigh the costs incurred
to implement. And understanding these differences will help you determine
whether or not lean is right for your company.
Link: http://www.lean-manufacturing-junction.com/benefits-of-lean.html

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 11. TOYOTA PRODUCTION SYSTEM

7 Principles of Toyota
Production System:

  Reduced setup time

  Small lot production
 Employee involvement
 and empowerment

  Quality at source

  Equipment maintenance

 Pull system

 Supplier involvement

Andon (Signboard):

 A manufacturing term referring to a signboard incorporating signal

light, audio, alarms and text or other displays installed at aworkstation
to notify management and other workers of a quality of process
problem.

Mura:

 Japanese term for unevenness

 One of the three types of waste (Muda, Muri and Mura)

Muri:

 Japanese term for overburden or unreasonableness

 Can be avoided through standardized work

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 Quick Reads – Chapter 11

Lean Manufacturing and the Toyota Production System:

The term Lean in the manufacturing environment also refers to the Toyota
Production system established by the Toyota Corporation.
Link: http://www.bxlnc.com/download/Lean-Manufacturing-and-the-
Toyota-Production-System.pdf

7 Principles of Toyota Production System (TPS)

Read about the seven underlying principles on which TPS stands.
Link:
http://www.1000ventures.com/business_guide/processes_lean_tps_7princip
les.html

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 12. INVENTORY MANAGEMENT

Inventory:
The raw material, work in progress and finished goods that are considered to be
a portion of business’ assets that are ready or will be ready for sale.
Inventory management:

 What to keep, where to keep and how much to keep

 Determine the optimum level of inventory by comparing the costs with
cost of excess inventory

Inventory costs:
 Holding/carrying cost – Cost to carry an item in inventory for lngth of
time, usually a year

 Ordering cost – Cost of ordering and receiving inventory

 Shortage cost – Costs resulting when demand exceeds supply of

inventory

Safety stock:
 Stock held in excess of expected demand due to variable demandand/or
lead time. Safety stock depends upon:


 Average demand rate and average lead time 

 Demand and lead time variability

 Desired service level 

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Economic Order Quantity (EOQ):
Fixed order quantity that will minimize total annual inventory costs

Economic Production Quantity (EPQ):

Quantity of product that should be produced in a single batch so as to

minimize the total cost which includes setup costs for machines and
inventory holding costs.
Reorder point:
The point when an item is reordered after the quantity on hand drops
below a certain level.
Determinants of reorder point:

  Demand rate
  Lead time
  Extent of demand and/or lead time variability
 Degree of stock out risk acceptable to management

Reorder point = d x LT
D -> demand rate
LT -> lead time
Methods of inventory analysis:
Pareto analysis:

 20% of clients responsible for 80% of sales volume

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  80% of stock movements are for 20% of our products

Assumption: Most of the results are determined by small number of causes

ABC analysis:

Classification of items based on “Consumption Value”

Consumption Value = D x C

D -> annual demand in units

C -> cost per unit in rupees

Based on CV, inventory of a number of items can be separated into A, B and

C classes:
A items – Top 10% items account for 70% of CV
B items – Next 20% items account for 20% of CV
C items – Bottom 70% items account for 10% of CV

New Inventory Models:

Just In Time (JIT):
Receive items as they are needed rather than maintain high inventory levels.
Advantages of JIT:

  Setup times significantly reduced in warehouse

  Flow of goods from warehouse to shelves improved
  Employees possessing multiple skills utilized more efficiently
  Consistency in scheduling and working hours
 Increased emphasis on supplier relationships

Example: Toyota, Dell

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Vendor Managed Inventory (VMI):

 Practice of retailers making suppliers responsible for determiningorder

size and timing based on inventory data

  Goal is to increase inventory turns and reduce stock outs

 May or may not involve consignment of inventory

Advantages of VMI:

  Decrease in stock out and inventory levels

  Decrease in planning and ordering cost
  Improvement in service level with right product at right time
 Increased visibility and hence easier forecasting

Example: Walmart

Quick Reads – Chapter 12

Inventory Optimization Needs the Right Processes to Make a Difference

Retailers and distributors try to solve their inventory challenges by using
forecasting tools to determine what and when to buy - instead look at the flow
of inventory and synchronizing supply chains based on the variability of
demand.
Link:http://www.supplychain247.com/article/inventory_optimization_needs
_the_
right_processes_to_make_a_difference/inventory

It's 2017. Do You Know Where Your Inventory Is?

Keeping close track of inventory is one of the easiest and least expensive ways
to improve company’s bottom line.
Link: https://www.entrepreneur.com/article/285235

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 13. THEORY OF CONSTRAINTS
TOC states that a supply chain is no stronger than its weakest link.
The weakest link is called bottleneck.
The purpose of TOC for an organization is to continuously increase
value for its stakeholders in the present and in future.

The maximum quantity that comes out of a bottle is

determined by its neck.

Five focusing steps of Theory of Constraints (TOC):

TOC identifies the weakest link and thereby improves the productivity
of the entire supply chain.

Drum Buffer Rope (DBR):

Generalized process used to manage resources to maximize throughput.

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 Drum is the rate or pace of production set by system’s constraint

 Buffers establish the protection against uncertainty so that the

 system can maximize throughput

  Rope is a communication process from the constraint to the gating
operation that checks or limits material released into the system to
 support the constraint



Quick Reads – Chapter 13

Understanding the Theory of Constraints:

The Theory of Constraints (TOC) is a suite of management concepts developed
by Dr. Eliyahu Goldratt as introduced in the landmark book "The Goal."

Link: http://www.tocinstitute.org/theory-of-constraints.html

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 13. SUPPLY CHAIN MANAGEMENT

Supply chain is the sequence of

organizations, their facilities, functions,
and activities – that are involved in
producing and delivering a product or
service. It is also referred to as value
chains.

Manufacturing supply chain

Service supply chain

 Key difference is the tangibility of output

 Service supply chains are subjected to higher variations and

uncertainties as decisions are often taken locally

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Supply chain management (SCM)

The strategic co-ordination of business functions within an organization

and throughout its supply chain for the purpose of integrating supply and
demand.
The goal of SCM is to match supply and demand as effectively
and efficiently as possible.
Key issues:

  Determining appropriate levels of outsourcing

  Managing procurement
  Managing suppliers
  Managing customer relationships
  Being able to quickly identify problems and respond to them
 Managing risk

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Supply chain performance metrics:

Bullwhip effect:

An occurrence detected by the supply chain where orders sent to the

manufacturer and supplier create larger variance than the sales to the end
customer. These irregular orders in the lower part of the supply chain
develop to be more distinct higher up in the supply chain. This variance can
interrupt the smoothness of the supply chain process as each link in the
supply chain will over or under estimate the product demand resulting in
exaggerated fluctuations.

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Applications of a Supply Chain Management System:

Point-of-Sale Synchronization
When all facets of the supply chain have the same data at the same time, the
increased efficiency of information removes data lags and saves costs. The
textile firm Milliken & Company was one of the first companies to use point-
of-sale data from retail outlets to link up to their manufacturing facilities.
Before the synchronization efforts, the company would take 18 weeks to fill
an order from retailers. The increased data efficiency allowed Milliken to cut
that time down to three weeks.
Web-Based Supply Chain Management System
The U.S. Department of Agriculture developed a Web-based solution for
farmers and ranchers seeking to communicate with distributors and
wholesalers. The Web-Based Supply Chain Management System consists of
commercially available software packages that provide an integrated system
to purchase, track and order agricultural products. The Internet-based system
allows all the participants in the supply chain to obtain the information they
need.
Supply Chain Failiures

When the supply chain management system fails, every entity in that chain
feels the effects. In 1999, retail giant Toys"R"Us promised to deliver all online
orders placed before December 10 by Christmas. The company's Internet
servers were not equipped to handle the traffic and thousands of orders went
unfulfilled. The company received thousands of angry emails and telephone
calls, and some employees worked seven straight weeks without a day off to
fill orders. As a result, Toys"R"Us outsourced its order fulfillment to
Amazon.com.

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 14. LOGISTICS MANAGEMENT

Complementary to supply chain. Logistics is the medium for transfer of

materials, information or money from one partner to other. Can also be
defined as the task of coordinating the material flow and information flow
across supply chain.
Logistics ensures the availability of the right product, in the right
quantity and right condition:
 At the right place
  At the right time
 At the right cost
 For the right customer
Objective: Minimize cost, minimize investment and maximize customer
service
Total Logistics Cost:
 Expenses associated with transportation, materials handling
andwarehousing, inventory, stock outs, order processing and return
goods handling.

Cross docking:
 Practice of unloading products from suppliers, sorting products
forindividual stores and quickly reloading products onto trucks for a
particular store.

Logistics Models
 First Party Logistics (1PL) Concerns beneficial cargo owners which
can be the shipper (such as a manufacturing firm delivering to
customers) or the consignee (such as a retailer picking up cargo from a
supplier). They dictates the origin (supply) and the destination
(demand) of the cargo with distribution being an entirely internal
process assumed by the firm. With globalization and the related 

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 outsourcing and offshoring of manufacturing, distribution services
that used to be assumed internally tend be contracted to external
service providers.
 Second Party Logistics (2PL) Concerns the carriers that are providing
a transport service over a specific segment of a transport chain. It
could involve a maritime shipping company, a rail operator or a
trucking company that are hired to haul cargo from an origin (e.g. a

distribution centre) to a destination (e.g. a port terminal).
 Third-party logistics (3PL) are firms that perform most or all of
thelogistics functions that manufacturers, suppliers and distributors
would normally perform themselves. They are:
 Freight forwarders
 Courier companies
 Other companies integrating & offering subcontracted logistics and
transportation services
 Fourth Party Logistics (4PL) differs from third party logistics in the
 following ways;
 4PL organization is often a separate entity established as a joint
venture or long-term contract between a primary client and one or
more partners


 4PL organization acts as a single interface between the client and

multiple logistics service providers


 All aspects (ideally) of the client’s supply chain are managed by

the 4PL organization


 It is possible for a major third-party logistics provider to form a

4PL organization within its existing structure.

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Reverse Logistics:
 A process of reclaiming recyclable and reusable materials, returnsand
reworks from the point of consumption or sue for repair,
remanufacturing, redistribution or disposal.

Intermodal Transportation:

 Combining different transportation modes to get the best features from

each.

Freight forwarders:
 Firms that accumulate small shipments into larger lots and then hire a
carrier to move them, usually at reduced rates.
Lead time:

 Lag from ordering an item until it is received and ready for use
or sale. Also called order cycle time or replenishment time.

Intermodal transportation:

 Combining different transportation modes to get the best

features from each.

Quick Reads – Chapter 14

6 Key Supply Chain and Logistics Trends to Watch in 2017:

Call it a cop-out if you like, but seriously, predicting which logistics and supply
chain trends will make a difference to businesses in any given year has
become notoriously difficult, given the speed at which technology in particular
can suddenly disrupt the way things are done.
Link: http://www.logisticsbureau.com/6-key-supply-chain-and-logistics-
trends-to-watch-in-2017/

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The 7 Trends Shaping the Future of the Logistics Industry
In today’s society, technology has been changing at an unprecedented pace.
Logistics industry trends have also not been left behind in the move towards a
more technological future.
Link: http://cerasis.com/2016/12/16/logistics-industry/

Transportation Modes, Modal Competition and Modal Shift

Transport modes are the means by which people and freight achieve mobility.
Each transportation mode has key operational and commercial advantages
and properties. The technological evolution in the transport industry aims at
adapting the transport infrastructures to growing needs and requirements.
When a transport mode becomes more advantageous than another over the
same route or market, a modal shift is likely to take place.
Link:https://people.hofstra.edu/geotrans/eng/ch3en/conc3en/ch3c1en.html

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 15. PROJECT MANAGEMENT

It is the discipline of planning, organizing and managing resources to bring about

the successful completion of specific project goals and objectives.

Objectives:
 Make strategic business decisions
 Control the minute detail that is necessary to finish projects
 Understand current resource demands, set priorities and evaluate
 long term staffing requirementsUse skilled resources effectively
 Reorganize projects

Dimensions of project planning:

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4 stages or phases of project:

1. Initiation:

 
 the project objective or need is identified 
 
 response to the need is documented
 
Feasibility study is done
2. Planning:
  project solution is further developed in as

 much detail as possible 

 
 team identifies all of the work to be done 


Schedules are prepared and costs are

estimated

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 3. Execution :

 
 project plan is put into motion 

 
Communication is focused upon as well as control

4. Closure:
 
Emphasis is on releasing the final deliverables to the customer
Milestone:
  End of a stage that marks the completion of a work package/phase
  Signals the completion of a key deliverable
 Project monitoring done based on milestones

Critical path:

 The shortest path to complete the project

 The activity sequence which impacts downstream milestones and

theoverall timeline of project. If critical path is missed, entire project is
delayed, or
 You have to make up ground on downstream critical paths

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 Quick Reads – Chapter 15

Basic Principles Of Project Management

Project management is a composite activity with multiple dimensions.
Depending on the type and class of project, this management activity can be
very complex. Let’s not see in terms of just the traditional definitions but in
terms of the scope of this management activity.
Link: https://www.simplilearn.com/project-management-basic-principles-
article

The 'Failure to Deliver On Time' Excuse List:

Can you add to this list of excuses for missing your delivery dates?
Link: http://www.industryweek.com/operations/failure-deliver-time-
excuse-list

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 16. MRP and ERP

Material Resource Planning (MRP):

An approach to inventory planning, manufacturing scheduling, supplier
scheduling and overall corporate planning.

The MRP system provides the user with information about timing and
quantity, generates new orders and reschedules existing orders as necessary
to meet the changing requirements of customers and manufacturing.
MRP Inputs:

 Master schedule: It states which end items are to be produced, when

these are needed and in what quantities. It should cover a period that
isequivalent to the cumulative lead time.

 Bill of Materials (BOM): A list of all the materials, parts sub-assemblies
needed to produce one unit of product.

 Inventory records: Includes information on the status of each item
bytime period called time buckets.

  Gross requirements
 Scheduled receipts
 Expected amount on hand

Cumulative lead time:

The sum of the lead times that sequential phases of a process require
from ordering of parts or raw materials to completion of final
assembly.
Enterprise Resource Planning (ERP):

 Next step in the evolution that began with MRP and evolved into MRP II
 Represents an expanded effort


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 

ERP systems are composed of a collection of integrated modules

ERP strategic implications:

High initial cost
High cost to maintain
Need for future upgrades
Intensive training required
Benefits:
 Can improve supply chain management
 Stronger links between their customer and their supplier
 Makes organization more capable of satisfying changing
customerrequirements

 Offers opportunities for continuous improvement

Quick Reads – Chapter 16

The Difference between a MRP System and an ERP System:

Many manufacturing companies mistakenly believe or are steered into the
decision by companies with a vested interest that they need ERP system over
an MRP system. To help make sure you don’t do the same, let’s explore the
difference between an MRP System and an ERP System.
Link: http://progress-plus.co.uk/mrp-system-and-erp-system/

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 17. Service Operations Management

Services are deeds, processes & performances.

An activity or series of activities of more or less intangible nature that

normally but not necessarily take place between customer and service
employees and / or physical resources or goods and / or systems of the
service provider which are provided as solutions to customer problems.

All economic activities whose output is not a physical product or

construction, is generally consumed at the time it is produced and provides
added value in form (convenience, amusement, timeliness, comfort or health)
that are essentially intangible concerns of the first producer.
Comparison of Service and Manufacturing Considerations

Distinctive Characteristics of Services Operations

1) Customer Participation - Most services require customers but a few
also focus on processing information. E.g. Banks, etc.
2) Simultaneity - A factory operates as a closed system with the inventory
decoupling productive system from customer demand. A service facility
is actually an open system with full impact of demand variations being
transferred to the delivery mechanism. Simultaneity reduces
opportunities for quality control interventions. Services, unlike products
must rely on other methods to ensure quality.

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 3) Perishability - Because a service cannot be stored, it is lost forever if it is
not used. The full utilisation of service capacity is a challenge due to
customer demand variations.
4) Intangibility - Services are Ideas and concepts which follows that any
service innovation is not patentable.
5) Heterogeneity - Due to the intangibility & participation of the customer,
the service delivery system varies from customer to customer.

Classifying Services for Strategic

Insights 1) Services – Process Matrix

2) Nature of services act

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3) Relationship with Customer

4) Customization and Judgement

5) Extent of demand fluctuations

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 Quick Reads – Chapter 17

Service Operations vs. Manufacturing Operations

Service and manufacturing operations have differences, but also similarities.
For example, both create mission statements and a vision for how the
organization will be run and perceived by customers. However, manufacturing
and service operations answer different questions and formulate different
strategies when it comes to planning and managing the way in which an
organization is run.
Link:http://smallbusiness.chron.com/service-operations-vs-manufacturing-
operations-25843.html

Service Operations:
Services operations often encounter different opportunities and challenges
than tangible goods, and thus require unique operational considerations.
Link: https://www.boundless.com/business/textbooks/boundless-business-
textbook/operations-management-10/introduction-to-operations-
management-69/service-operations-329-1656/

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 18. Emerging Technology in Supply Chain Management

Innovation is altering traditional, linear supply chains into ones that are more
connected, intelligent, scalable, and nimble. The emerging technologies are
creating what is called as an “always-on” supply chain which is an integrated
set of supply chain networks characterized by continuous, high-velocity flow
of information and analytics, creating predictive, actionable decisions that
better serve the customer. Sensors are enabling data collection, advancements
in computing power have improved predictive analytics, and supplemental
tools – such as automation and wearables – are creating digital, continuously
operating supply chains and unified networks of supply chain workers.
1) IoT (Internet of Things)

IoT is a network of physical objects that are technologically enabled to

collect and exchange data, allowing for groundbreaking access to real-time
information. It helps drive unprecedented visibility into operations, and
influence logistics decision-making on how goods are produced, stored,
monitored, routed, transported, and delivered to customers
Pervasive Visibility: helps to track and monitor a shipment in real time
using a combination of sensors (RFID), connected devices and
communication channels (3G/4G, GPS, Internet). It provides the ability to
have real time transit status including location, temperature and diagnostics.
Proactive Replenishment: it’s the capability to automatically recognize the
need to order and restock a product on a “machine-to-machine” basis,
reducing the need for human interaction. In the warehouse, IoT allows
companies to track and manage inventory through the use of mobile devices.

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Predictive Maintenance: predictive maintenance utilizes sensors and
connected devices to monitor and react to issues. IoT allows companies to
manage products remotely by fixing sensors on the product which helps
monitor consumption conditions to decide timely repair and up gradation
activities. This self-diagnosis capability can detect a potential issue before
there’s a failure, order a replacement part and even schedule maintenance to
avoid costly downtime.

IoT across the Supply Chain

2) Artificial Intelligence
Artificial intelligence can be defined as the use of computers to
simulate human intelligence, specifically including learning – the
acquisition and classification of information, and reasoning – finding
insights into the data. At the core of artificial intelligence is the ability to
recognize patterns across the 3Vs of big data (volume, velocity and variety)
and find correlations among diverse data.
Ai in manufacturing and supply chain automation: Siemens in its
“lights out” manufacturing plant, has automated some of its production

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lines to a point where they are run unsupervised for several weeks.
The demand and order information would automatically get converted
into work orders and be incorporated into the production process.
AI in supplier management and customer service: IPsoft’s AI
platform, Amelia automates work knowledge and is able to speak to
the customers in more than 20 languages. A global oil and gas
company has trained Amelia to help provide prompt and more
efficient ways of answering invoicing queries from its suppliers.
AI in logistics & warehousing: DHL uses autonomous vehicles such
as forklifts to support 24x7 operations in high-volume warehouses
driving higher service levels and immediate signaling of inventory
movements.
The next step would be driver less autonomous vehicles undertaking
goods delivery operations.
AI in procurement: The procurement spend data is automatically
classified by AI software and is checked for compliance and any
exceptions in real time. The AI algorithm analyzes HR and finance data,
procurement requests, tender approvals, workflows, and vendor
employee to identify potentially corrupt or negligent practices.
3) Blockchain

One of the biggest problems faced by companies with complex

supply chains is a lack of transparency. Today’s production and supply
cycles, which have become extremely fragmented, complicated and
geographically dispersed making it hard to track the movement of
goods. Pinpointing issues can be difficult because of all the moving
parts. This is where something like block chain can shine.

Blockchain technology is all about the distributed public general

ledger and is the underlying technology of the crptyocurrency Bitcoin.
A simple application of the blockchain paradigm to the supply chain
would be to register the transfer of goods on the

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ledger as transactions that would identify the parties involved, as well
as the price, date, location, quality and state of the product and any
other information that would be relevant to managing the supply
chain. The public availability of the ledger would make it possible to
trace back every product to the very origin of the raw material used.
The decentralized structure of the ledger would make it impossible for
any one party to hold ownership of the ledger and manipulate the data
to their own advantage. And the cryptography-based and immutable
nature of the transactions would make it nearly impossible to
compromise the ledger.

Blockchain enabled Smart Contracts

Smart contracts which are agreements between a buyer and a seller

which with the ability to self-execute and self-enforce itself and don’t
require an intermediary. With the use of smart contracts, you can
make sure different suppliers are meeting their obligations. You can
see deliveries at multiple locations, and track shipments based on the
fulfillment of smart contract terms.

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All of these technologies can either be a source of competitive
advantage or a source of disruption for supply chains. They can deliver
massive economic and environmental rewards or threats. They can
boost productivity and sustainability, drive new markets, and
encourage innovation, resulting in exponential change for industry and
society as a whole.

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 19. GST and Supply Chain

Inter-state transactions to become tax neutral

Under GST inter-state sales transactions between two dealers would be cost
equivalent compared with stock transfers / branch transfers. According to the
proposed model, centre would levy IGST which would be CGST plus SGST on
all interstate transactions of taxable goods and services. The inter-state seller
will pay IGST on value addition after adjusting available credit of IGST, CGST,
and SGST on his purchases. Similarly the importing dealer will claim credit of
IGST while discharging his output tax liability in his own State. This will result
in inter-state sales transaction becoming tax neutral when compared to intra-
state sales. India would become one single common market no longer divided
by state borders.
Warehouse Engineering

  Hub and spoke model with large consolidated stockyards

  Major distribution hubs could emerge close to demand clusters
 For small dealers, a more tailored supply chain model such as
 direct dispatch from factories in a “Milk Run”
 Better control and reduction in inventory due to lesser numbers
 of stocking points and cases of stock outs.
 Larger warehouses can benefit from technological sophistication
by deploying state-of-the-art planning and warehousing systems which
are not feasible in smaller, scattered warehouses.

 IT costs of having ERPs deployed at many small warehouses can
 be saved.
 Demand planning based on runner – repeater – stranger
 categorization of products
 Collaborative multiuser stock yards at a cluster level leading to
shorter lead times and reducing freight cost.

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Logistics

 Companies will save between 2.2 to 8.5 percent in logistics costs in a

 GST environment.
 The time sent by Trucks at borders for administrative and tax
 purposes will go down by 50 -60 %.
 Halving delays from roadblocks, toll, etc could cut freight times by 20 -
 30 %.
 Logistics companies will need to relook at Asset Footprint, Technology
 Enablement, and Quality of Service
 GST will provide a competitive advantage to the business through
better service and faster turnaround times at lower costs.

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 20. E-Way Bill

The E-way bill, short form for electronic way bill, is a document to be
generated online under the GST system, when goods of the value of more
than ₹50,000 are shipped inter-State or intra-State. The E-way bill must be
raised before the goods are shipped and should include details of the goods,
their consignor, recipient and transporter. The transporter has to carry the
invoice and the copy of E-way bill as support documents for the movement of
goods. He can also carry the E-way bill number, mapped to an RFID (radio
frequency identification device).

Though check-posts have been abolished under GST, a consignment can be

intercepted at any point for the verification of its E-way bill, for all inter-State
and intra-State movement of goods. If a consignment is found without an E-
way bill, a penalty of ₹10,000 or tax sought to be evaded, whichever is greater,
can be levied.

GST laws flexibly allow any of the parties to a transaction — the consignor or
the recipient — to generate the E-way bill, provided they are registered.
Whether goods are transported on one’s own or hired conveyance, by air, rail
or road, the E-way bill has to be generated. Where the goods are handed over
to a transporter for conveyance by road and neither the consignor nor the
consignee has generated the E-way Bill, the transporter becomes liable to
generate it.
When the consignor or transporter generates the E-way bill, the recipient for
the consignment has to either accept or reject it on the portal. If no action is
taken by the recipient in 72 hours, it shall be taken as accepted.

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Why should you care?
The LPI Survey by World Bank in 2014 put logistics costs at 14 per cent of the
total value of goods in India, while it is only 6-8 per cent in other major
countries. The GST E-way bill combination was expected to trim logistics costs
by 20 per cent.
Both the GST levy and the E-way bill were expected to root out such transit
delays, while at the same time plugging tax evasion. Every E-way bill
generated by a sender or buyer of goods is to be automatically updated in the
outward sales return (GSTR1) of the supplier, leaving little scope for tax
evasions on shipments.

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 21. REVERSE ENGINEERING AND ITS IMPORTANCE IN NEW
PRODUCT DEVELOPMENT

Two decades back, CAD/CAM was a new domain in the field of new product
development (NPD), and the manufacturing industry started using this
technology mainly used to reduce product design cycle after it was universally
accepted and people trusting this technology.
A decade later, many of them realised that new product development is
essentially 60% to 70% of derivatives from the existing products available in
India as well as abroad. Then what is the need to reinvent the wheel when it is
already there? This was the stage where the role of Reverse Engineering came
into play. Nowadays, the early technology adopters have started using
terminologies such as 3D digitising, white light scanning and laser scanning
which are predominantly used for copying the available product as it is.
Today, CAD/CAM has become an essential and integral part of NPD and
people have started looking for the advances in this domains such as
Computer-Aided Engineering (CAE) to validate product development as also
to reduce design cycle time and so reverse engineering techniques have
started picking up effectively.
This is the decade of 3D printing, conventionally popular as Rapid
Prototyping. Even as this technology has been creating waves globally for the
last two decades, it is witnessing a rapid change and today is not only
restricted to plastics and polymers resins, but has spread its wings in metal
printing, ceramic printing and pattern, jewellery design, titanium etc. Even
some bio-compatible materials can also be fitted into a human body with the
help of this technology.

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The basic input for 3D printing is steriolithography (STL) file which can be
obtained from your CAD i.e. 3D solid modelling. As the usage of CAD,
particularly 3D animation, 2D drafting to get an engineering drawing and CNC
programming for usage on CNC milling, turning and wire cut machine, is
increasing by the day, the requirement of CAD modelling is huge compared to
the available resources. Hence alternative methods such as reverse
engineering is easy and fast besides it reduces the overall design cycle time.
In the conventional method of NPD, the concept was jotted down on sketch
mode with designer and after getting the approval from marketing
department, it is dimensionally constrained by the engineer. Later, a mock up
or handmade prototype or even a clay model used to be prepared. This
process is very long and prone to lot of errors in the manufacturing process.
Instead of this conventional method, the CAD/CAM usage along with reverse
engineering and 3D printing gives the prototypes faster and more accurate.
The quality of the product can also be enhanced by doing more and more
validity iteration on the same model.

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 Top Supply Chain Innovations to Look Out For

1) Port Management - Autonomous Freight Shuttle Debuts at Texas Port

Texas A&M Transportation Institute’s Freight Shuttle System (FSS) has
been developed to move truck trailers and containers through
congested ports and border crossings. The FSS allows cargo to travel on
elevated platforms at sea ports, border crossings and other heavily
congested areas in order to expand shipping capacity, expedite trade
and reduce congestion on highways. Additionally, the FSS is designed to
enhance road safety, improve efficiency and significantly lower
emissions and pollution.

2) Inventory Management – MIT and TI develop Hack-Proof RFID Chip

Researchers at MIT and Texas Instruments have developed a new type
of radio frequency identification (RFID) chip that they say is virtually
impossible to hack. If such chips are widely adopted, it could mean that
an identity thief couldn’t steal your credit card number or key card
information by sitting next to you at a café, and high-tech burglars
couldn’t steal swipe goods from a warehouse and replace them with
dummy tags.

3) Brand Protection – Invisible Marker to Help Fight Counterfeit Products

A new technology that puts an invisible but digitally traceable marker
on products to ensure that a product is not counterfeit has been
developed by eApeiron. The technology is tailored for retail and e-
commerce, including a tagging system that offer a signature profile for
identifying and tracking products throughout the supply chain. The
track and trace technology incorporates unique, serialized visible and
invisible marks onto products or packaging that can be authenticated,
tracked in a database, and traced throughout the supply chain.

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4) Workplace Safety – Using Wearable Devices to Protect Workers in
Extreme Environment
North Star BlueScope Steel, a steel producer for global building and
construction industries, is taking part in a research project that uses
Internet of Things (IoT) technology developed by IBM Watson to
protect workers in extreme environments. The research project aims
to identify potentially troublesome conditions by collecting data from
various sensors that continuously monitor the worker’s skin body
temperature, heart rate, galvanic skin response and level of activity,
correlated with sensor data for ambient temperature and humidity.

5) Warehouse Management – Can a Robot be a Picker’s Best Companion

DHL Supply chain is pilot testing robot technology for collaborative
automated order picking in a warehouse located in Germany. EffiBOT,
a robot developed by French start-up Effidence, is a fully automated
trolley that follows pickers through the warehouse and takes care of
most of the physical work. It is specifically designed to work safely
with and around people. During the test, two robots supported the
pickers by carrying the weight and automatically dropping off the
orders once fully loaded.

6) Infrastructure - Drones Being Deployed to Inspect Bridges

In an effort to improve safety, reduce traffic congestion and save
money, 33 state departments of transportation are testing drones, or
unmanned aerial vehicles (UAV) to inspect bridges and assist with
clearing vehicle crashes, among other applications. A traditional bridge
inspection typically involves setting up work zones, detouring traffic
and using heavy equipment. The drones are able to capture data in near
real-time, and cause far less distraction and inconvenience to drivers.

7) Maritime Transportation – Maersk Tests Drone Delivery to Cargo Ship

Maersk Tankers is testing delivery to vessels on drones that have been
certified for explosive environments, meaning that with a tanker the

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 drones cannot create any spark even if they were to crash. The use of
drones is cost-effective as there can be high costs for on-board delivery
of small parcels, filled with urgent spare parts or mail. Costs for a barge
are on average $1,000 and can be higher. Drone use with the current
payload could bring potential savings of $3,000-$9,000 per vessel per
year.

8) Motor Carriers – Mercedes to Bring Electric Truck to Market in 5 Years

Daimler AG has developed and plans to manufacture a 26-metric-ton
electric truck, called the Mercedes-Benz Urban eTruck, as the
company’s entry into the market. The model will be targeted for inner-
city tasks such as supermarket deliveries and have a range of about 120
miles per battery charge. About 10% of trucks make deliveries in urban
areas, making them an appropriate choice to be electrified. Electric
battery technology has not yet progressed to the point to make long-
haul electric trucks feasible.

9) Sustainability – New Standard Developed to Calculate Carbon

Footprints of Supply Chains
A universal method to calculate the carbon footprint of the logistics
supply chain has been developed by the Global Logistics Emissions
Council (GLEC). This new standard will make it possible to consistently
calculate emissions at a global level, including road, rail, inland
waterways, ocean, air and trans-shipment centers. The GLEC
Framework for Logistics Emissions Methodologies combines existing
methods into a single framework, and it carries the World Resources
Institute “Built on GHG Protocol” mark, making it compatible with
global carbon accounting standards.

10) Fleet Management – Internet of Things Improves Forklift

Efficiency by 10%
Itamco, a manufacturer of precision-machined components, has
connected its forklifts to the industrial Internet of Things (IoT). A
communication system notifies a material handler as soon as materials

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are ready to go to the next work area within Itamco’s manufacturing
facilities. Each forklift is linked to Itamco’s ERP system through its GPS
and an application on a smart tablet mounted in the forklift. Forklift
operators are notified via their smart devices when they’re needed.
Itamco has seen a 10% reduction in the time it takes to get material
ready for the next operation.

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 Case Study: Domino’s India Logistics Management

Introduction
In early 2000, Pawan Bhatia (Bhatia), the CEO of Domino's Pizza India
(Domino's) was a man in a hurry. Ever since Bhatia took over as the CEO of
Domino's in November 1999, he had been frantically reworking the pizza
chain's India strategy. Bhatia was planning to open 150 new outlets by the end
of 2002 covering 23 cities,1 including Bhubaneshwar (Orissa) and Jamshedpur
(Bihar). In late 1999, Indocean Chase, the private equity fund bought a 25%
stake in Domino's operations in India from the Delhi-based industrial family,
the Bhartias, who held Domino's franchise in India. Domino's told investment
bankers at the fund that it planned to go in for an initial public offering (IPO)
in the next two years. Indocean Chase advised Domino's to go beyond its 16
outlets in Delhi to exploit the potential in the pizza delivery business. Unless a
well-thought-out expansion plan was put into place, the IPO was unlikely to
find too many takers.

As part of its expansion plans Domino's revamped its entire supply chain
operations, from sourcing raw materials to shipping them for processing at a
central location to delivering it to the customer's.

Initially, Domino's had a simple model. It had three self-contained

commissaries in New Delhi, Mumbai and Bangalore which bought their own
wheat, tomatoes and other ingredients, processed them, then delivered them
in refrigerated trucks to each outlet. However, volumes were expected to
increase when Domino's planned to open new outlets. Therefore, the existing
model had to be revamped. Bhatia said, "It's crucial for us to build a low-cost
supply chain operation which takes costs out of the system and in turn gives
us greater pricing flexibility in the marketplace."

Analysts felt that Domino's had to rethink its supply chain operation because
it was the biggest area of costs. Since 75% of Domino's customers ordered
either from office or home, it did not have to lease large plots of land in prime
locations to attract traffic. Instead, it needed an efficiently managed call centre
to bring better returns.

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In the late 1950s, Dominick De Varti (Varti) owned a small pizza store named
DomiNick's Pizza on the Eastern Michigan University campus in Ypsilanti,
Michigan. In 1960, two brothers who were students of the University of
Michigan - Thomas S. Monaghan (Thomas) and James S. Monaghan (James) -
bought the store for US$900. In 1961, James sold his share of business to
Thomas.

The pizza business did well and by 1965, Thomas was able to open two more
stores in the town - Pizza King and Pizza from the Prop. Within a year, Varti
opened a pizza store in a neighborhood town with the same name, DomiNick's
Pizza. Thomas decided to change the name of his first store, DomiNick's Pizza,
and one of his employees suggested the name Domino's Pizza (Domino's). The
advantage of this name Thomas felt was that it would be listed after DomiNick
in the directory. Domino's philosophy rested on two principles - limited menu
and delivering hot and fresh pizzas within half-an-hour. In 1967, it opened the
first franchise store in Ypsilanti, and in 1968, a franchise store in Burlington,
Vermont.

However, the company ran into problems when its headquarters (the first
store) and commissary were destroyed by fire. In the early 1970s, the
company faced problems again when it was sued by Amstar, the parent
company of Domino Sugar for trademark infringement. Thomas started
looking for a new name and came up with Red Domino's and Pizza's Dispatch.
However, there wasn't any need for it because Domino's won the lawsuit in
1980.

In 1982, Domino's Pizza established Domino's Pizza International (DPI) that

was made responsible for opening Domino's stores internationally. The first
store was opened in Winnipeg, Canada. Within a year, DPI spread to more
than 50 countries and in 1983, it inaugurated its 1000th store (Refer Exhibit II
for worldwide revenues). Around the same time, new pizza chains like Pizza
Hut and Little Caesar established themselves in the US. Domino's Pizza faced
intense competition because it had not changed its menu of traditional hand-
tossed pizza. The other pizza chains offered low-priced breadsticks, salads
and other fast food apart from pizzas. Domino's faced tough competition from
Pizza Hut in the home delivery.

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segment also. Little Caeser was eating into Domino's market share with its
innovative marketing strategies.

By 1989, Domino's sales had reduced significantly and cash flows were
affected due to the acquisition of assets. In 1993, Thomas took measures to
expand Domino's product line, in an attempt to revive the company and tackle
competition. The company introduced pan pizza and bread sticks in the US. In
late 1993, Domino's introduced the Ultimate Deep Dish Pizza and Crunchy
Thin Crust Pizza. In 1994, it rolled out another non-pizza dish - Buffalo Wings.
Though Domino's did not experiment with its menu for many years, the
company adopted innovative ways in managing a pizza store. Thomas gave
about 90% of the franchisee agreements in the US to people who had worked
as drivers with Domino's. The company gave ownership to qualified people,
after they had successfully managed a pizza store for a year and had
completed a training course. Domino's also gave franchises to candidates
recommended by existing franchisees. Outside the US, most of Domino's
stores were franchise-owned. Domino's was also credited for many
innovations in the pizza industry and setting standards for other pizza
companies. It had developed dough trays, corrugated pizza boxes, insulated
bags for delivering pizzas, and conveyor ovens.

In 1993, Domino's withdrew the guarantee of delivering pizzas within 30-

minutes of order and started emphasizing on Total Satisfaction Guarantee
(TSG) which read: "If for any reason, you are dissatisfied with your Domino's
Pizza dining experience, we will re-make your pizza or refund your money."
Domino's entered India in 1996 through a franchise agreement with Vam
Bhartia Corp2 in Delhi. With the overwhelming success of the first outlet, the
company opened another outlet in Delhi. By 2000, Domino's had outlets in all
major cities in India. When Domino's entered India, the concept of home
delivery was still in its nascent stages. It existed only in some major cities and
was restricted to delivery by the friendly neighborhood fast food outlets.
Eating out at 'branded' restaurants was more common. To penetrate the
Indian market, Domino's introduced an integrated home delivery system from
a network of company outlets within 30 minutes of the order. Goutham
Advani (Advani), Chief of Marketing, Domino's Pizza India, said, "What really
worked its way into the Indian mind set was the promised 30-minute
delivery." Domino's also offered compensation: Rs.30/- off the price tag if

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there was a delay in delivery. For the first 4 years in India, Domino's
concentrated on its 'Delivery' strategy.

Domino's Logistics Model

Analysts felt that Domino's took a cue from McDonald's supply chain model
(Refer Box and Exhibit III for McDonald's model). However, they opined that
the level of complexity in McDonald's system in India was not as high as that
of Domino's. Commented Bhatia, "McDonald's operations are not as spread
out as ours. They are in four cities while we are in 16. Centralizing wouldn't
work on such a geographical scale."

McDonald's had one of the best logistics models in India. To

maintain consistency and quality of its products, McDonald's
shipped all the raw materials—lettuce, patties et al to a cold
storage close to the main market (Refer Exhibit IV for
McDonald's outsourcing). Based on a daily demand schedule
that was prepared a day in advance, the required amount of
raw material was transported to individual outlets.

Thus in early 2000, Domino's came out with its own logistics model. It began
at the point Domino's purchased wheat for making the pizza dough. Domino's
first decided the procurement strategy for its key raw materials: wheat, baby
corn, tomatoes and spices.3 For instance, wheat was cheapest in Jalandhar's
(Punjab) wholesale markets. Domino's refrigerated trucks got the wheat back
to the commissary in Delhi. Commissary processed the wheat and prepared
the pizza dough.

The pizza dough and other items prepared in commissaries were then sent to
the retail outlets again in refrigerated trucks. The temperature inside the
truck was fixed based on the distance between the retail outlets and the
commissaries. This was to set the dough at a particular level when it reached
the outlets. The retail outlets had to use up the processed dough within three
days of delivery. If they failed to do so for some reason the entire quantity was
discarded. To get to Jalandhar, the trucks had to pass Chandigarh. Chandigarh
with a cosmopolitan population, was a potential market for Domino's
products.

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Therefore, Domino's opened an outlet there. The cost of entry was low
because there was no additional costs incurred on transportation of products.
Domino's opened an outlet in every potential market, which fell enroute
between the commissary in Delhi and Jalandhar, it prime sourcing base. The
same logic was extended to Shimla. Shimla was just a three-hour drive away
from Chandigarh; it had a large market, especially in the tourist season. On the
way back to Delhi, the trucks could pick up cheese from Karnal, a town on the
Chandigarh-Delhi highway, and transport it to its commissaries across the
country.
Earlier, if Domino's had to open a new outlet, the commissary in Delhi would
have to process the raw material and send it to the outlet. The truck would
return empty. With the revamped supply chain, Domino's was able to leverage
its fleet much better (Figure I explains how Domino's new hub-and-spoke
model worked. There were two hubs in the northern region—the commissary
in Delhi and the principal sourcing area in Jalandhar. The spokes were Shimla
and Chandigarh).

The logistics model adopted by Domino's offered some obvious benefits

including lower transportation costs, cheaper procurement and economies of
scale. Domino's had already cut out the duplication in procurement and
processing of raw materials across each of the three commissaries. The old
model of self-contained commissaries had another disadvantage: adding new
outlets did not translate into greater economies of scale.

Bhatia planned to extend the model to other parts of the country as well. The
commissary was to be located near the largest market in that region. Bhatia
said, "Our roll-out began only after we mapped out our procurement
strategy." Based on the agricultural map of India, Domino's looked for the best
product at the lowest cost. Thus, tomatoes would come from Bhubaneshwar,
spices from the south, baby corn from Nepal (where it's 40% cheaper than in
India) and vegetables from Sri Lanka (Refer Table I). Similarly, Domino's India
planned to extend its operations to Nepal, Sri Lanka and Dhaka. The company
planned to establish a commissary in Sri Lanka.

Domino's also identified specialty crops in each region. The commissary in

that region was entrusted with the task of processing that specialty crop. For
instance, the commissary for the eastern region in Kolkata was responsible for
buying tomatoes, processing them and then sending them

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to all the other commissaries. Similarly, the northern commissary had to
deliver pizza bases. This way, Domino's minimized duplication as well as the
dangers of perishability. Once the new model was formalized, Bhatia planned
to use Domino's 25 refrigerated trucks4 to transport products for other
companies on the same route. For instance, if an operator in Kochi (Kerala)
needed to transport specialty cheese, he could use the Domino's fleet to
transport his products.

Said Bhatia, "Not too many people have refrigerated trucks in the country.
And we can offer them quality service because we will be giving them
standards we use for ourselves." Company sources said that enquiries from
clients for such transport facilities had started coming in. Bhatia said he was
in the process of selecting a person to head the logistics operation, which
would be spun off as a separate profit centre. Bhatia seemed confident that
the profit centre had the potential to bring in Rs 10 bn by 2006. However, he
said the profit center would not be allowed to impede the growth of the pizza
business, Domino's core operation. Only those deliveries that did not delay or
deroute the truck would be considered.

Table I
Outsourcing the Ingredients
Jalandhar
Wheat
(Punjab)
Cheese Karnal, Haryana
Bhubaneshwar,
Tomatoes
Orissa
Spice South India
Baby Corn Nepal
Exotic
Sri Lanka
Vegetables
Pepperoni Australia
Jalapeno Spain

Domino's hoped to lower its prices by saving from the logistics model and
third-party transportation. In April 2000, Domino's announced a cut in pizza
prices to Rs 49. Domino's was also targeting large corporate offices, railway
stations, cinema halls and university campuses for faster growth. It had
already established an outlet at Infosys corporate office in Bangalore and at
three cinema halls - PVR in Delhi, Rex in Bangalore and New Empire in
Kolkata.
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Domino's also classified its outlets into Super stores, Express stores and
Regular stores. Super stores were those, which generated high traffic and
therefore had more counters than the regular outlets (the outlet in
Churchgate, Mumbai).

Express stores were those where people were expected to walk in and order
rather than ask for home delivery (university campuses, offices or cinema
halls).
Questions for Discussion
1. Why did Domino's decide to revamp its supply chain operations in India?
How was the new logistics model superior than the old model? Briefly explain
the benefits Domino's derived after the revamp.

2. Analysts felt that Domino's took a cue from McDonald's supply chain model
in India. Compare the supply chain models of both companies. Why do you
think Domino's model was considered more complicated?

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 FREQUENTLY ASKED QUESTIONS

Operational or Situational Questions:

1. Explain the decisions Operation manager takes?

 Operations managers must plan the production schedule. This entails

deciding how much to produce and in what order. This information
would be used to make purchasing and staffing decisions. Operations
managers must manage inventory. They must arrange the inventory in
the warehouse. They also facilitate the movement of inventory from the
warehouse to the retail facilities or the customer. Operations managers
also must manage quality levels. This may include inspection of
materials, and the use of quality tools such as control charts.

2. Describe a Transformation process of a business. What constitutes the

Transformation process at an Advertising Agency, a Bank and a TV
station?

 The transformation process involves taking the various inputs and

transforming them into outputs. An advertising agency would transform
the time of its staff into an advertising campaign. A bank may use the
time of a teller, an input computer, and a bank branch to accept a
deposit. A TV station could use the time of its production crew, the video
equipment, and the studio to produce a news story.

3. Which are any three current trends in Operations Management?

 The lean systems concept is a current trend in operations management.

This involves taking a total system approach to creating an efficient
operation. This includes concepts such as just-in-time (JIT), total quality
management (TQM), continuous improvement, resource planning, and
supply chain management (SCM). Large information systems, called
Enterprise Resource Planning (ERP) systems, are allowing companies to
increase efficiency. These large, sophisticated software programs
coordinate, across the entire enterprise, the activities involved in
producing and delivering products to customers.
4. Define the terms Total Quality Management, Just-In-Time, and Re-
engineering. What do these terms have in common?

 Total quality management (TQM) is a philosophy that focuses on

meeting the needs of the customer. TQM is not inspection, but actually
the prevention of defects. It involves everyone in the organization. Just-
in-time is a philosophy that focuses on reducing inventory and other
wastes and on the production of the right number of items at the right
time. Reengineering focuses on improving business processes in order
to improve efficiency. Each of these techniques strives to allow more
responsive and more efficient production leading to higher quality and
higher customer satisfaction.

5. What experiences do you have with presentations?

 As an operations manager, it is important that you are able to

communicate effectively. Not just to people inside of the company, but
also outside of the organization. An operations manager may be asked
to represent the company in meetings and conferences. Because these
operations managers are qualified to speak about the details of possible
prospects, plans, expansion and growth, and any current projects, it is
important that they are able to speak to a diverse audience.

6. What are the benefits of Quality Management System?

 Improvement in internal quality (reduction in scrap, rework
and non-conformities in the shop).
 Improvement in external quality (customer satisfaction, claims
of non-conforming products, returned products, warranty
claims, penalty claims etc).
 Improvement in Production reliability (number of break
downs, percentage down time etc).
 Improvement in Time performance (on-time delivery, time to
market etc).
 Reduction in the cost of poor quality (external non-
conformities, scrap, rework etc)
7. What are some skills that you would bring to the table as an Operations
Manager? What are your strengths?

 A few of the needed skills in operations management include excellent

communication skills, leadership skills, problem solving ability, and
quick learning/thinking. Rather than spew out key phrases that you
think people want to hear, make these relevant to your experience. One
example might be that you managed changes and communicated said
changes to all levels of personnel using your communication skills and
leadership abilities. You might also be able to highlight the fact that you
are able to communicate messages across all levels of the organization
and external parties, whether these include members of senior
management or sub-contractors.

8. What do you know about Managing Budgets?

 Operations managers are typically involved in budget planning. Their

goal is to learn how much has already been spent, how much will be
spent, and how to spend the remaining budget so as to acquire
necessary resources within budget limits. Operations managers may be
even involved in financial issues such as loans for the company.

9. What skills do you consider crucial for success in this position?

 Some obvious examples include quick learning/thinking and problem

solving agility, leadership and communication skills. Describe how you
really have a background in these. For example: You’ve used your
communication skills and leadership abilities to manage changes and to
deal with all levels of personnel. You can talk about your job skills for
instructing and communicate messages clearly at all levels of the
organization, from sub-contractors to senior management.
 10. What are the risks in procurement? How to minimize these risks?

 The procurement and contract administration process are prone to

risks. There are risks in determining need and planning procurements,
developing specifications, selecting the appropriate procurement
methods, preparing solicitation documents and calling for offers,
evaluation and selection of firms and individuals, negotiating the
contract, and contract administration. Procurement management is
about solving problems and managing risks.
 You and your prospective vendor should reach an agreement on service
levels and how those levels will be measured. Then, all parties should
ensure that the SLA language is written into the contract before signing.
This clarifies everyone's understanding of performance expectations
going into the agreement, and it gets your working relationship with the
vendor off to a good start.
 Cultural compatibility is a prime driver of collaborative success between
organizations. You should make it your upfront business to understand
your vendor's business culture, and whether it will mesh with your own.
Cultural incompatibility can "break" any project—even if the solution
itself is good!

11. What is Quick Response Manufacturing?

 Quick Response Manufacturing (QRM) is a method to reduce lead times
in the entire company. QRM helps you to implement a competitive
strategy, which provides shortest delivery times and high delivery
reliability as an (additional) distinguishing feature. Because short
delivery times are not bought with respective warehousing, a side effect
of QRM is the significant reduction of costs and a clear rise in
profitability as well as product quality. For example, on one hand non-
value-adding activities and unnecessary storage of materials,
intermediate and end products is reduced, on the other hand, turnover
is raised due to higher market shares and product sales.
12. Explain Procure-to-Pay Cycle.

 Procure to Pay, also known as P2P, is the process of obtaining the raw
materials needed for manufacturing a product or providing a service,
and making payment for these. Every manufacturing concern or service
provider needs to run this cycle efficiently if they are to continuously
manage their cash flow, build goodwill with suppliers and make profits.
With the Procure to Pay process being fraught with the possibility of
risk and inefficiency, which would have an adverse impact on the
business in a competitive market, many companies are now finding
ways of streamlining the procure-to-pay process. Outsourcing key tasks
in the Procure to Pay process allows managers to maintain tighter
control over the system, and save cost by reducing manpower and
closing down redundant and wasteful role.

13. Why would you choose Rail over Road transportation and vice versa?
 Transporting Goods via Road Freight

Adv: Flexibility is one of its unique features in terms of final destination

and volume of goods to be transported. Road transportation is available
24 hours a day and is often more affordable than other methods of
transportation. Shipping specialty services are not uncommon in the
trucking industry either. Whether you are shipping dry freight; frozen,
fresh, or refrigerated; heavy or oversized, there are an array of
companies available to you.
DisAdv: The downsides to choosing road freight are the restrictions caused
by traffic and speed limits, as well as the unpredictability of weather
conditions causing delays in shipping schedules. Trucks are constantly
moving on the road but from time to time there can be some hiccups
causing delays. The best solution is to plan ahead or use a company that
has track and tracing capabilities!

 Transporting Goods via Rail Transportation

Adv: It is much faster and more reliable as it is least affected by weather

conditions and traffic jams. Railway transport can carry larger volumes
over greater distances, making it more economical, and much quicker
for transporting.
 DisAdv: The downsides to choosing rail transport are its lack of
flexibility and convenience, as routes and times cannot be adjusted. Not
only is the scheduling of rail transportation inconvenient but it does not
provide door-to-door services, as it is tied to a particular track.

14. What is a SKU?

 By definition, a Stock Keeping Unit (or SKU) is a number assigned to a

product by a retail store to identify the price, product options and
manufacturer of the merchandise. A SKU is used to track inventory in
your retail store. For example, 25-10xxx are gas ovens and 25-20xxx
are electric ovens. They next number might be a color indicator. So, 25-
1001x are white ovens and 25-1002x are black ovens. And the list can
go on from there. Did you ever wonder how Amazon.com was able to
pick the perfect item to display as a "suggestion" for another idea when
you are shopping? These SKUs are how they do that. Amazon.com has
simply attached a unique SKU with all of its identifying traits to each
product. So when you are looking at a blender, it can display other
blenders you might like. But you won't see just any blender, you'll see
ones that have the same features based on the SKU information.

15. What is Cell Manufacturing?

 Cellular manufacturing uses the principle of group technology by

grouping parts with similar characteristics into part-families and
corresponding machines into machine cells in order to achieve higher
production efficiency compared to traditional manufacturing. Cellular
manufacturing considerably reduces total manufacturing cost, time and
area of manufacturing industries. Manufacturing industries who adopt
cellular manufacturing get improvement in profit, productivity and
production quality.

16. Explain the six sigma process in Mumbai Dabbewalas.

 Mumbai’s 5000 plus Dabbawalas are world famous for their impeccable
service standards. They pick up lunch boxes/ tiffin carriers from over
2,00,000 homes/ apartments, deliver them to some 80,000 destinations
and again ensure their safe return to those homes/ apartments – all on
the same day with each lap of journey en route accomplished within the
specified time limits.
 The people at work are not from any high academic background; rather
many of them are almost illiterate. They face the same crowded
pavements, on-road dense vehicular traffic and overloaded suburban
trains, which normal office goers often give excuses for their late
comings. No matter how perfect a process is, no product/ service will
come conforming to exact targeted specifications. It would always vary.
However, when it varies within certain Lower Specification Limit (LSL)
and Upper Specification Limit (USL) as acceptable/ agreed to or
specified by the customers, then it is considered to be defect free or
quality product/ service. Mumbai Dabbawala’s error is 1 in 16 Million.

17. What is the difference between Distribution centre and Fulfilment

centre?

 The difference between a DC, distribution centre and fulfilment centre is

ultimately who the customer is that each centre is working towards. The
DC’s main customer are typically retail shops or other businesses who
attend on selling the merchandise coming from the DC to another
customer directly or part of another product like what is found in
manufacturing processes. Wal-Mart use DC’s to get product to their
retail stores who then typically sell to the individual customer. Amazon
on the other hand is a prime example of who use fulfilment centre.
Fulfilment centres are where products are picked and then are sent
directly to the end customer. DC usually deals in cases or bulk
shipments while fulfilment centres usually deal with EA.

18. How is logistics industry currently faring in India?

 It is a universally acknowledged fact that the cost of logistics is very

high in India. Some estimates put it at about 13 per cent of GDP, which is
higher than the US (9) and Germany (8). A study by Assocham-
Resurgent India (2016) stated that the country can save $50 billion if
logistics costs reduce from 14 per cent to 9 per cent of GDP. Reduced
logistics costs would bring down prices of products. Transportation
services form a third of the cost of a logistics chain. Roads carry about
60 per cent of the freight cargo in India. The Dedicated Freight Corridor
Corporation of India (DFCCIL) should plan to develop logistics parks as
points for aggregation/disaggregation of cargo for movement by DFC.
19. Explain difference between Process Stability and Process Capability.
 Process Stability refers to the consistency of the process with respect to
important process characteristics such as the average value of a key
dimension or the variation in that key dimension. If the process behaves
consistently over time, then we say that the process is stable or in
control. Statistical Process Control Charts are utilized to determine if the
process is stable or not. Process Capability is a measure of the ability of
the process to meet specifications. It tells us how good the individual
parts are. There are several methods to measure process capability
including an estimation of the ppm (defective parts per million).
20. Explain Economic Production Quantity.
 Economic production quantity (EPQ) is the quantity of a product that
should be manufactured in a single batch so as to minimize the total cost
that includes setup costs for the machines and inventory holding costs.
With increasing batch production quantity, the number of batches to be
produced in the year decreases and thus the setup cost decreases but at
the same time the inventory holding cost goes on increasing. At the EPQ
value, the total cost comprising of both these costs is at its minimum
value.

21. Explain Make to Stock and How Dell revolutionized the PC business?

 Make to order (MTO) is a business production strategy that typically

allows consumers to purchase products that are customized to their
specifications. The make to order (MTO) strategy only manufactures the
end product once the customer places the order, creating additional
wait time for the consumer to receive the product but allowing for more
flexible customization compared to purchasing directly from retailers'
shelves. Dell’s make-to-order philosophy once stood out remarkably
from the make-to-stock processes of the other computer makers.
Dell famously avoided retail channels, instead offering every
customer the opportunity to order a unique product built to their
specifications. The genius behind the “direct model” is that every
PC that Dell built had already been sold, a concept that proved
attractive to other companies and industries as well, such as
consumer packaged goods and automobile manufacturers.
22. Explain Poka Yoke with an example.

 Poka Yoke or Mistake proofing is a simple technique that developed out

of the Toyota Production system through Jidoka and Autonomation. It is
normally a simple and often inexpensive device that prevents defects
from being made or highlights a defect so that it is not passed to the
next operation. This applies to any environment, be it in manufacturing,
hospitals or even in the home. Automatic breaking system stops the
vehicle in case the driver fails to brake when an obstacle suddenly
appears on the road. If the system above is used with this device, it will
be a better preventive measure as the system will note that a warning
has been ignored. The sensors will then kick in and stop the vehicle - a
key component of poka yoke is at play here.

23. What is Warehouse Management System?

 A warehouse management system (WMS) is software and processes

that allow organizations to control and administer warehouse
operations from the time goods or materials enter a warehouse until
they move out. Operations in a warehouse include inventory
management, picking processes and auditing. For example, a WMS can
provide visibility into an organization's inventory at any time and
location, whether in a facility or in transit. It can also manage supply
chain operations from the manufacturer or wholesaler to the
warehouse, then to a retailer or distribution center. A WMS is often used
alongside or integrated with a transportation management
system (TMS) or an inventory management system.

24. What is Slack time? How it can be used to predict critical path?

 In project management, float or Slack is the amount of time that a task in

a project network can be delayed without causing a delay to subsequent
tasks and project completion date. Slack time is always zero on the
critical path.
Behavioural Questions:

25. Describe your management style

 Try to avoid labels. Some of the more common labels like progressive,
salesman or consensus, can have several meaning or descriptions
depending on which management expert you listen to. The situational
style is safe, according to the situation, instead of one size fits all.

Some more Questions:

1. What is budget planning and how to handle it step-by-step?

2. What is your experience with Logistics Management?
3. Have you ever negotiated contracts with vendors? What is the most
effective approach?
4. Which management information system have you previously used?
5. Are you familiar with Cost Analysis Tools? Mention any statistical tools
you have experience working with.
6. If your manager asked you to make a report about production costs,
what method would you use?
7. Which are in your opinion, the most important financial management
best practices?
8. What does successful communication between different organizational
functions/departments mean to you?
9. How do support services contribute to business goals? Give some
examples.
10. How big was the last team you worked with and what problems did you
face?