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Q.2What is Operations Management?

Role of the Operations Manager

Benefits of Operations Management

The Transformation Process

Operations management refers to the activities, decisions and responsibilities of managing the resources which are

dedicated to the production and delivery of products and services.

The part of an organisation that is responsible for this activity is called the operations function and every

organisation has one as delivery of a product and/or service is the reason for existence.

Operations managers are the people who are responsible for overseeing and managing the resources that make up

the operations function. The operations function is also responsible for fulfilling customer requests through the

production and delivery of products and services.Depending on the type of industry or business, other titles can be used interchangeably, such as a fleet manager'

in a distribution company or a store manager' in retail businesses.[1]

Although the operations function is central to any organisation, it is only one of the three main core functions, the

others being marketing and finance. The marketing function is responsible for communicating the organisation's

products and services to its markets and researching customer wants and needs.[2]

The finance function is

responsible for providing information to assist in economic decision making and the overall management of

financial resources.[3]

There are also other functions which are not core to an organisation; however, theircontribution is crucial to the

smooth running of any organisation. Commonly known as support functions, they include accounting, information

systems, human resources and engineering.

Often, there is no clear division between the various functions and one of the biggest difficulties faced by

management is the ability to work effectively with other parts of the organisation. It is critical to the success ofyour business that functional boundaries do not interfere with efficient internal processes.

Being a small business owner, you may feel as though operations management does not app ly to your business.

However, this is far from the truth and in reality, the concepts and principles behind operations management is

applicable to all businesses. The only difference is that you may have to take on several roles as many smaller

organisations simply don't have the resources to dedicate individuals to specialised roles.

Q.3The Industrial RevolutionThe Industrial Revolution began in the 1770s in England and spread to the rest of

Europe and to the United States during the 19th century. Prior to that time, goods were produced in small shops

by craftsmen and their apprentices. Under that system, it was common for one person to be responsible for

making a product, such as a horse-drawn wagon or a piece of furniture, from start to finish. Only simple tools were

available; the machines that we use today had not been invented.

Then, a number of innovations in the 18th century changed the face of production forever by substituting machine

power for human power. Perhaps the most significant of these was the steam engine, because it provided a source

of power to operate machines in factories. The spinning jenny and the power loom revolutionized the textile

industry. Ample supplies of coal and iron ore provided materials for generating power and making machinery. The

new machines, made of iron, were much stronger and more durable than the simple wooden machines they

replaced.

In the earliest days of manufacturing, goods were produced usingcraft production: highly skilled workers using

simple, flexible tools produced goods according to customer specifications.

Craft production had major shortcomings. Because products were made by skilled craftsmen who custom fitted

parts, production was slow and costly. And when parts failed, the replacements also had to be custom made,

which was also slow and costly. Another shortcoming was that production costs did not decrease as volume

increased; there were no economies of scale, which would have provided a major incentive for companies to

expand. Instead, many small companies emerged, each with its own set of standards.

A major change occurred that gave the Industrial Revolution a boost: the development of standard gauging

systems. This greatly reduced the need for custom-made goods. Factories began to spring up and grow rapidly,

providing jobs for countless people who were attracted in large numbers from rural areas.

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Despite the major changes that were taking place, management theory and practice had not progressed much

from early days. What was needed was an enlightened and more systematic approach to management.

Scientific Management

The scientific management era brought widespread changes to the management of factories. The movement was

spearheaded by the efficiency engineer and inventor Frederick Winslow Taylor, who is often referred to as the

father of scientific management. Taylor believed in a science of management based on observation,

measurement, analysis and improvement of work methods, and economic incentives. He studied work methods in

great detail to identify the best method for doing each job. Taylor also believed that management should be

responsible for planning, carefully selecting and training workers, finding the best way to perform each job,

achieving cooperation between management and workers, and separating management activities from work

activities.

Taylors methods emphasized maximizing output. They were not always popular with workers, who sometimes

thought the methods were used to unfairly increase output without a corresponding increase in compensation.

Certainly some companies did abuse workers in their quest for efficiency. Eventually, the public outcry reached the

halls of Congress, and hearings were held on the matter. Taylor himself was called to testify in 1911, the same year

in which his classic book, The Principles of Scientific Management, was published. The publicity from those

hearings actually helped scientific management principles to achieve wide acceptance in industry.

A number of other pioneers also contributed heavily to this movement, including the following:

Frank Gilbreth was an industrial engineer who is often referred to as the father of motion study.

He developed principles of motion economy that could be applied to incredibly small portions of

a task.

Henry Ganttrecognized the value of nonmonetary rewards to motivate workers, and developed

a widely used system for scheduling, called Gantt charts.

Harrington Emersonapplied Taylors ideas to organization structure and encouraged the use of

experts to improve organizational efficiency. He testified in a congressional hearing that

railroads could save a million dollars a day by applying principles of scientific management.

Henry Ford, the great industrialist, employed scientific management techniques in his factories.

www.ford.com

During the early part ofthe 20th century, automobiles were just coming into vogue in the United States. Fords

Model T was such a success that the company had trouble keeping up with orders for the cars. In an effort to

improve the efficiency of operations, Ford adopted the scientific management principles espoused by Frederick

Winslow Taylor. He also introduced the moving assembly line, which had a tremendous impact on production

methods in many industries.

Among Fords many contributions was the introduction ofmass productionto the automotive industry, a system of

production in which large volumes of standardized goods are produced by low-skilled or semiskilled workers using

highly specialized, and often costly, equipment. Ford was able to do this by taking advantage of a number of

important concepts. Perhaps the key concept that launched mass production wasinterchangeable parts,sometimes attributed to Eli Whitney, an American inventor who applied the concept to assembling muskets in the

late 1700s. The basis for interchangeable parts was to standardize parts so that any part in a batch of parts would

fit any automobile coming down the assembly line. This meant that parts did not have to be custom fitted, as they

were in craft production. The standardized parts could also be used for replacement parts. The result was a

tremendous decrease in assembly time and cost. Ford accomplished this by standardizing the gauges used to

measure parts during production and by using newly developed processes to produce uniform parts.

A second concept used by Ford was thedivision of labor, which Adam Smith wrote about in The Wealth of

Nations (1776). Division of labor means that an operation, such as assembling an automobile, is divided up into a

series of many small tasks, and individual workers are assigned to one of those tasks. Unlike craft production,

http://www.ford.com/http://www.ford.com/http://void%280%29/http://void%280%29/http://void%280%29/http://void%280%29/http://void%280%29/http://void%280%29/http://void%280%29/http://void%280%29/http://void%280%29/http://void%280%29/http://void%280%29/http://void%280%29/http://www.ford.com/

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where each worker was responsible for doing many tasks, and thus required skill, with division of labor the tasks

were so narrow that virtually no skill was required.

INTRODUCTION

Operations is that part of a business organization that is responsible for producing goods and/or services. Goods

are physical items that include raw materials, parts, subassemblies such as motherboards that go into computers,

and final products such as cell phones and automobiles. Services are activities that provide some combination of

time, location, form, or psychological value. Examples of goods and services are found all around you. Every book

you read, every video you watch, every e-mail you send, every telephone conversation you have, and every

medical treatment you receive involves the operations function of one or more organizations. So does everything

you wear, eat, travel in, sit on, and access the Internet with. The operations function in business can also be

viewed from a more far-reaching perspective: The collective success or failure of companies operations functions

has an impact on the ability ofa nation to compete with other nations, and on the nations economy. The ideal

situation for a business organization is to achieve a match of supply and demand. Having excess supply or excess

capacity is wasteful and costly; having too little means lost opportunity and possible customer dissatisfaction. The

key functions on the supply side are operations and supply chains, and sales and marketing on the demand side.

While the operations function is responsible for producing products and/or delivering services, it needs the

support and input from other areas of the organization. Business organizations have three basic functional areas,

as depicted in Figure 1.1 : finance, marketing, and operations. It doesnt matter whether the business is a retail

store, a hospital, a manufacturing firm, a car wash, or some other type of business; all business organizations have

these three basic functions. Finance is responsible for securing financial resources at favorable prices and

allocating those resources throughout the organization, as well as budgeting, analyzing investment proposals, andproviding funds for operations. Marketing and operations are the primary, or line, functions. Marketing is

responsible for assessing consumer wants and needs, and selling and promoting the organizations goods or

services. Operations is responsible for producing the goods or providing the services offered by the organization.

To put this into perspective, if a business organization were a car, operations would be its engine. And just as the

engine is the core of what a car does, in a business organization, operations is the core of what the organization

does. Operations management is responsible for managing that core. Hence, operations management is the

management of systems or processes that create goods and/or provide services. Operations and supply chains are

intrinsically linked and no business organization could exist without both. A supply chain is the sequence of

organizationstheir facilities, functions, and activitiesthat are involved in producing and delivering a product or

service. The sequence begins with basic suppliers of raw materials and extends all the way to the final customer, as

seen in Figure 1.2 . Facilities might include warehouses, factories, processing centers, offices, distribution centers,

and retail outlets. Functions and activities include forecasting, purchasing, inventory management, information

management, quality assurance, scheduling, production, distribution, delivery, and customer service. Figure 1.3

provides another illustration of a supply chain: a chain that begins with wheat growing on a farm and ends with a

customer buying a loaf of bread in a supermarket. Notice that the value of the product increases as it moves

through the supply chain.

Q.6KEY ISSUES FOR TODAYS BUSINESS

OPERATIONS There are a number of issues that are high priorities of many business organizations. Although not

every business is faced with these issues, many are. Chief among the issues are the following:

Economic conditions. The lingering recession and slow recovery in various sectors of the economy has made

managers cautious about investment and rehiring workers that had been laid off during the recession.

Innovating. Finding new or improved products or services are only two of the many possibilities that can provide

value to an organization. Innovations can be made in processes, the use of the Internet, or the supply chain that

reduce costs, increase productivity,

expand markets, or improve customer service.

Quality problems. The numerous operations failures mentioned at the beginning of the chapter underscore the

need to improve the way operations are managed. That relates to product design and testing, oversight of

suppliers, risk assessment, and timely response to potential problems. Risk management. The need for managing

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risk is underscored by recent events that include the crisis in housing, product recalls, oil spills, and natural and

man-made disasters, and economic ups and downs. Managing risks starts with identifying risks, assessing Lean

system System that uses minimal amounts of resources to produce a high volume of highquality goods with some

variety. Lean system System that uses minimal amounts of resources to produce a high volume of highquality

goods with some variety.

SUPPLY CHAIN

ste25251_ch01_002-039.indd 27 11/11/10 5:28:46 PMConfirming Pages

28 Chapter One Introduction to Operations Managementvulnerability and potential damage (liability costs,

reputation, demand), and taking steps to reduce or share risks. Competing in a global economy. Low labor costs in

third-world countries have increased pressure to reduce labor costs. Companies must carefully weigh their

options, which include outsourcing some or all of their operations to low-wage areas, reducing costs internally,

changing designs, and working to improve productivity. Three other key areas require more in-depth discussion:

environmental concerns, ethical conduct, and managing the supply chain

CONCEPT OF PRODUCTION

Production function is that part of an organization, which is concerned with the transformation

of a range of inputs into the required outputs (products) having the requisite quality level.

Production is defined as the step-by-step conversion of one form of material into

another form through chemical or mechanical process to create or enhance the utility of

the product to the user. Thus production is a value addition process. At each stage of

processing, there will be value addition.

Edwood Buffa defines production as a process bywhich goods and services are created.

Some examples of production are: manufacturing custom-made products like, boilers with a

specific capacity, constructing flats, some structural fabrication works for selected customers,

etc., and manufacturing standardized products like, car, bus, motor cycle, radio, television, etc.

Fig. 1.1 Schematic production system

1.4 PRODUCTION SYSTEM

The production system of an organization is that part, which produces products of an organization.

It is that activity whereby resources, flowing within a defined system, are combined and transformed The

production system has the following characteristics:

1. Production is an organized activity, so every production system has an objective.

2. The system transforms the various inputs to useful outputs.

3. It does not operate in isolation from the other organization system.

4. There exists a feedback about the activities, which is essential to control and improve

system performance.

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1.4.1 Classification of Production System

Production systems can be classified as Job Shop, Batch, Mass and Continuous Production

Systems JOB SHOP PRODUCTION

Job shop production are characterised by manufacturing of one or few quantity of products

designed and produced as per the specification of customers within prefixed time and cost. The

distinguishing feature of this is low volume and high variety of products.

A job shop comprises of general purpose machines arranged into different departments.

Each job demands unique technological requirements, demands processing on machines in a

certain sequence.

Characteristics

The Job-shop production system is followed when there is:

1. High variety of products and low volume.

2. Use of general purpose machines and facilities.

3. Highly skilled operators who can take up each job as a challenge because of uniqueness.

4. Large inventory of materials, tools, parts.

5. Detailed planning is essential for sequencing the requirements of each product, capacities

for each work centre and order priorities. Advantages

Following are the advantages of job shop production:

1. Because of general purpose machines and facilities variety of products can be produced.

2. Operators will become more skilled and competent, as each job gives them learning

opportunities.

3. Full potential of operators can be utilised.

4. Opportunity exists for creative methods and innovative ideas.

Limitations

Following are the limitations of job shop production:

1 Higher cost due to frequent set up changes.2. Higher level of inventory at all levels and hence higher inventory

cost.

3. Production planning is complicated.

4. Larger space requirements.

BATCH PRODUCTION

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Batch production is defined by American Production and Inventory Control Society (APICS) as

a form of manufacturing in which the job passes through the functional departments in lots

or batches and each lot may have a different routing. It is characterised by the manufacture

of limited number of products produced at regular intervals and stocked awaiting sales.

Characteristics

Batch production system is used under the following circumstances:

1. When there is shorter production runs.

2. When plant and machinery are flexible.

3. When plant and machinery set up is used for the production of item in a batch and

change of set up is required for processing the next batch.

4. When manufacturing lead time and cost are lower as compared to job order production.

Advantages

Following are the advantages of batch production: 1. Better utilisation of plant and machinery.

2. Promotes functional specialisation.

3. Cost per unit is lower as compared to job order production.

4. Lower investment in plant and machinery.

5. Flexibility to accommodate and process number of products.

6. Job satisfaction exists for operators.

Limitations

Following are the limitations of batch production:

1. Material handling is complex because of irregular and longer flows.

2. Production planning and control is complex. 3. Work in process inventory is higher compared to continuous

production.

4. Higher set up costs due to frequent changes in set up.

MASS PRODUCTION

Manufacture of discrete parts or assemblies using a continuous process are called mass production.

This production system is justified by very large volume of production. The machines are arranged

in a line or product layout. Product and process standardisation exists and all outputs follow the

same path.

Characteristics

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Mass production is used under the following circumstances:

1. Standardisation of product and process sequence.

2. Dedicated special purpose machines having higher production capacities and output rates.

3. Large volume of products.

4. Shorter cycle time of production.

5. Lower in process inventory.

6. Perfectly balanced production lines.

7. Flow of materials, components and parts is continuous and without any back tracking.

8. Production planning and control is easy.

9. Material handling can be completely automatic.

Advantages

Following are the advantages of mass production:

1. Higher rate of production with reduced cycle time2. Higher capacity utilisation due to line balancing.

3. Less skilled operators are required.

4. Low process inventory.

5. Manufacturing cost per unit is low.

Limitations

Following are the limitations of mass production:

1. Breakdown of one machine will stop an entire production line.

2. Line layout needs major change with the changes in the product design.

3. High investment in production facilities.

4. The cycle time is determined by the slowest operation.

CONTINUOUS PRODUCTION

Production facilities are arranged as per the sequence of production operations from the first

operations to the finished product. The items are made to flow through the sequence of operationsthroughmaterial handling devices such as conveyors, transfer devices, etc.CharacteristicsContinuous production is used

under the following circumstances:

Q.2 UNIT 2 Design for manufacturability (also sometimes known as design for manufacturing)- (DFM) is the

general engineering art of designing products in such a way that they are easy to manufacture. The basic idea

exists in almost all engineering disciplines, but of course the details differ widely depending on the manufacturing

technology. This design practice not only focuses on the design aspect of a part but also on the producibility. In

simple language it means relative ease to manufacture a product, part or assembly.

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The design stage is very important in product design. Most of the product lifecycle costs are committed at design

stage. The product design is not just based on good design but it should be possible to produce by manufacturing

as well. Often an otherwise good design is difficult or impossible to produce. Typically a design engineer will create

a model or design and send it to manufacturing for review and invite feedback. This process is called a design

review. If this process is not followed diligently, the product may fail at the manufacturing stage.

If these DFM guidelines are not followed, it will result in iterative design, loss of manufacturing time and overall

resulting in longer time to market. Hence many organizations have adopted concept of Design for Manufacturing.

Depending on various types of manufacturing processes there are set guidelines for DFM practices. These DFM

guidelines help to precisely define various tolerances, rules and common manufacturing checks related to DFM.

While DFM is applicable to the design process, a similar concept calledDFSS(Design for Six Sigma) is also practiced

in many organizations.

Here are examples:

Design for manufacturabilityforintegrated circuits. Design for manufacturabilityforprinted circuit boards. Design for manufacturabilityforCNCmachined parts.Q.3 B.What is Robust Design?

In todays automotive industry where simulation and virtual prototyping are increasingly used to reduce time to

market, the design process has changed considerably since Taguchi invented the quality planning concept [1]. He

found that it is often more costly to control the causes of manufacturing variation than making a process

insensitive to these variations. By using simple experimental designs and loss functions, he often succeeded in

greatly improving product performance by building in quality, in other words, implementing the quality -by-

design idea.

Robustness analysis aims at providing an accurate estimation of the sensitivity of outputs to the variability on

the inputs, described in terms of random variables characterized with probabilistic distributions. In general,

standard deviation is used as a measure for the robustness of the outputs: the smaller the output standard

deviation, the more robust the output.

The core ideas Taguchi elaborated on are still valid, although in a different design context. Today, product

designers increasingly experiment using computer models instead of physical prototypes. These experiments

typically involved Monte Carlo simulation, although robustness is suitable as a criterion for evaluating discrete-

event simulation systems as well. Using simulation instead of experimenting with physical prototypes yields system

performance improvements and cost savings, only when design robustness is evaluated properly. As a robust

design optimization software solution, Optimus incorporates the Taguchi method for robust design to deliver

designs that are more robust with respect to manufacturing and geometric tolerances.

http://en.wikipedia.org/wiki/DFSShttp://en.wikipedia.org/wiki/DFSShttp://en.wikipedia.org/wiki/DFSShttp://en.wikipedia.org/wiki/Design_for_manufacturability_(IC)http://en.wikipedia.org/wiki/Design_for_manufacturability_(IC)http://en.wikipedia.org/wiki/Integrated_circuitshttp://en.wikipedia.org/wiki/Integrated_circuitshttp://en.wikipedia.org/wiki/Integrated_circuitshttp://en.wikipedia.org/wiki/Design_for_manufacturability_(PCB)http://en.wikipedia.org/wiki/Design_for_manufacturability_(PCB)http://en.wikipedia.org/wiki/Printed_circuit_boardhttp://en.wikipedia.org/wiki/Printed_circuit_boardhttp://en.wikipedia.org/wiki/Printed_circuit_boardhttp://en.wikipedia.org/wiki/Design_for_manufacturability_for_CNC_machininghttp://en.wikipedia.org/wiki/Design_for_manufacturability_for_CNC_machininghttp://en.wikipedia.org/wiki/CNChttp://en.wikipedia.org/wiki/CNChttp://en.wikipedia.org/wiki/CNChttp://www.noesissolutions.com/Noesis/robust-optimization/taguchi-robust-design.htmlhttp://www.noesissolutions.com/Noesis/robust-optimization/taguchi-robust-design.htmlhttp://www.noesissolutions.com/Noesis/robust-optimization/taguchi-robust-design.htmlhttp://www.noesissolutions.com/Noesis/robust-optimization/taguchi-robust-design.htmlhttp://en.wikipedia.org/wiki/CNChttp://en.wikipedia.org/wiki/Design_for_manufacturability_for_CNC_machininghttp://en.wikipedia.org/wiki/Printed_circuit_boardhttp://en.wikipedia.org/wiki/Design_for_manufacturability_(PCB)http://en.wikipedia.org/wiki/Integrated_circuitshttp://en.wikipedia.org/wiki/Design_for_manufacturability_(IC)http://en.wikipedia.org/wiki/DFSS

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In reality, robust design is rarely applied. In particular in the automotive industry, where time to market and cost

control are crucial competitive aspects, calls for design methods that integrate design quality and safety in the

design process. This process should be based on simulation-driven robustness assessment techniques that trained

engineers can leverage to gain a deeper insight into the influence of real-world conditions and uncertainties on the

functional performance characteristics of a vehicle. This is extremely important for critical vehicle design aspects,

such as dynamics and safety. In fact, vehicle dynamics impact all aspects of vehicle drivability and performance,

ranging from fuel emissions to comfort and NVH and to ageing and durability, whereas safety aspects represents

an extremely sensitive attribute, for which crash simulations serves as the most effective design and analysis tool.

Q.3 AReverse engineering is taking apart an object to see how it works in order to duplicate or enhance the object.

The practice, taken from older industries, is now frequently used on computer hardware and software. Softwarereverse engineering involves reversing a program'smachine code(the string of 0s and 1s that are sent to the logic

processor) back into thesource codethat it was written in, using program language statements.Software reverse

engineering is done to retrieve the source code of a program because the source code was lost, to study how the

program performs certain operations, to improve the performance of a program, to fix a bug(correct an error in

the program when the source code is not available), to identify malicious content in a program such as avirusor to

adapt a program written for use with one microprocessor for use with another. Reverse engineering for the

purpose of copying or duplicating programs may constitute a copyright violation. In some cases, the licensed use of

software specifically prohibits reverse engineering.

Introduction

In the middle of the 1960s, market competition became more intense.During 1960 to 1970 costwas the primaryconcern. Later qualitybecame a priority. As the market became more and more complex, speed of deliverybecame

something customer also needed.A new strategy was formulated: Customizability. The companies have to adapt to

the environment in which they operate, to be moreflexible in their operations and to satisfy different market

segments (customizability).Thus the innovation of FMS became related to the effort of gaining competitive

advantage.First of all, FMS is a manufacturing technology.Secondly, FMS is a philosophy. "System" is the key word.

Philosophically, FMS incorporates a system view of manufacturing. The buzz word for todays manufacturer is

"agility". An agile manufacturer is one who is the fastest to the market, operates with the lowest total cost and has

the greatest ability to "delight" its customers. FMS is simply one way that manufacturers are able to achieve this

agility.An MIT study on competitiveness pointed out that American companies spent twice as much on product

innovation as they did on process innovation. Germans and Japanese did just the opposite.

In studying FMS, we need to keep in mind what Peter Drucker said: "We must become managers of technology notmerely users of technology".Since FMS is a technology, well adjusted to the environmental needs, we have to

manage it successfully.

Advantages and disadvantages of FMSs implementation

Advantages

Faster, lower- cost changes from one part to another which will improve capital utilization Lower direct labor cost, due to the reduction in number of workers Reduced inventory, due to the planning and programming precision Consistent and better quality, due to the automated control Lower cost/unit of output, due to the greater productivity using the same number of workers Savings from the indirect labor, from reduced errors, rework, repairs and rejects

Disadvantages

Limited ability to adapt to changes in product or product mix (ex. machines are of limited capacity and thetooling necessary for products, even of the same family, is not always feasible in a given FMS)

Substantial pre-planning activity Expensive, costing millions of dollars

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Technological problems of exact component positioning and precise timing necessary to process acomponent

Sophisticated manufacturing systemsQ.7The importance of a layout would be better appreciated if one understands the influence of an efficient layout

on the manufacturing function: it makes it smooth and efficient. Operating efficiencies, such as economies in the

cost of handling materials, minimization of production delays and avoidance of bottlenecksall these depend on

a proper layout.

An ideally laid out plant reduces manufacturing costs through reduced materials handling, reduced personnel and

equipment requirements and reduced process inventory.

The objectives or advantages of an ideal layout are outlined in the paragraphs that follow. The advantages are

common to all the plants, irrespective of age; and whether a plant employs 50 workers or 50,000 makes no

difference in so far as the applicability of the plant layout advantages is concerned. Some of these advantages are:

Economies in Handling

Nearly 30% to 40% of the manufacturing cost is accounted for, by materials handling. Every effort should,

therefore, be made to cut down on this cost. Long distance movements should be avoided and specific handling

operations must be eliminated. A cynic may say that the cheapest way to handle materials is not to handle them at

all. But, in a factory, materials have to be handled; and therefore, it all depends on the layout.

Effective Use of Available Area

Every inch of the plant area is valuable, especially in urban areas. Efforts should therefore be made to make use of

the available area by planning the layout properly. Some steps for achieving this end are: location of equipment

and services in order that they may perform multiple functions; development of up-to-date work areas andoperator job assignments for a full utilization of the labor force.

Minimization of Production Delays

Repeat orders and new customers will be the result of prompt execution of orders. Every management should try

to keep to the delivery schedules. Often, the deadline dates for delivery of production orders are a bug-a-boo to

the management.

Plant layout is a significant factor in the timely execution of orders. An ideal layout eliminates such causes of delays

as shortage of space, long-distance movements of materials, spoiled work and thus contributes to the speedy

execution of orders.

Improved Quality Control

Timely execution of orders will be meaningful when the quality of the output is not below expectations. To ensure

quality, inspection should be conducted at different stages of manufacture. An ideal layout provides for inspection

to ensure better quality control.

Minimum Equipment Investment

Investment on equipment can be minimized by planned machine balance and location, minimum handling

distances, by the installation of general purpose machines and by planned machine loading. A good plant layout

provides all these advantages.

Avoidance of Bottlenecks

Bottlenecks refer to any place in a production process where materials tend to pile up or are produced at a speed,

less rapid than the previous or subsequent operations. Bottlenecks are caused by inadequate machine capacity,

inadequate storage space or low speed on part of the operators. The results of bottlenecks are delays in

productions schedules, congestion, accidents and wastage of floor area. All these may be overcome with an

efficient layout.

Better Production Control

Production Control is concerned with the production of the product of the right type, at the right time and at a

reasonable cost. A good plant layout is a requisite for good production control and provides the production controlofficers with a systematic basis upon which to build organization and procedures.

Better Supervision

A good plant layout ensures better supervision in two ways:

1.Determining the number of workers to be handled by a supervisor and

2.Enabling the supervisor to get a full view of the entire plant at one glance.

A good plant layout is, therefore, the first step to good supervision.

Improved Utilization of Labor

Labor is paid for every hour it spends in the factory. The efficiency of a management lies in utilizing the time for

productive purpose. A good plant layout is one of the factors in effective utilization of labor. It makes possible

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individual operations, the process and flow of materials handling in such a way that the time of each worker is

effectively spent on productive operations.

Improved Employee Morale

Employee morale is achieved when workers are cheerful and confident. This state of mental condition is vital to

the success of any organization.

Morale depends on:

(a)Better working condition;

(b)Better employee facilities;

(c)Reduced number of accidents;

(d)Increased earnings.

Plant layout has a bearing on all these.Avoidance of Unnecessary and Costly Changes

A planned layout avoids frequent changes which are difficult and costly. The incorporation of flexibility elements in

the layout would help in the avoidance of revisions.

2. Reverse logistics

Logistics is defined by The Council of Logistics Management as the process of planning,

implementing and controlling the efficient, cost-effective flow of raw materials, in-process

www.intechopen.com358 Supply Chain Management - New Perspectives

inventory, finished goods and related information from the point of origin to the point of

consumption for the purpose of conforming to customer requirements.

Reverse logistics includes all of the activities that are mentioned in the definition above. The

difference is that reverse logistics encompasses all of these activities because they operate in

reverse. Therefore, reverse logistics is the process of planning, implementing, and

controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished

goods and related information from the point of consumption to the point of origin for the

purpose of recapturing value or for proper disposal.

More precisely, reverse logistics is the process of moving goods from their typical final

destination for the purpose of capturing value or proper disposal (Rogers & Tibben-Lembke,

1998). The re-manufacturing and refurbishing activities may also be included in this

definition of reverse logistics. Reverse logistics is more than re-using containers and

recycling packaging materials. Redesigning packaging to use less material or reducing the

energy and pollution from transportation are important activities, but they might be better

placed in the realm of green logistics. If no goods or materials are being sent backwards,

the activity is probably not a reverse logistics activity. Reverse logistics also includes the

processing of returned merchandise caused by damage, seasonal inventory, restock, salvage,

recalls and excess inventory. It also includes recycling programs, hazardous material

programs, obsolete equipment disposition and asset recovery.

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An extended study undertaken in 1998 (Rogers & Tibben-Lembke, 1998) aimed at defining

the state of the art in reverse logistics and to determine the trends and best reverse logistics

practices. Part of the research charter was to determine the extent of the reverse logistics

activity in the U.S.A. Most of the literature examined in preparation for this research

emphasized the green or environmental aspects of reverse logistics. In this project, green

issues were discussed, but the primary focus is on the economic and supply chain issues

relating to reverse logistics. The objective was to determine current practices, examine those

practices and to develop information surrounding the trends in reverse logistics practices.

To accomplish this task, the research team interviewed over 150 managers that had a

responsibility for reverse logistics. Visits were made to firms to examine, firsthand, the

reverse logistics processes. Also, a questionnaire was developed and mailed to 1,200 reverse

logistics managers. There were 147 undeliverable questionnaires. From among the 1,053 that

reached their destinations, 311 usable questionnaires were returned for a 29.53% response

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Squeezing cost and inefficiency out of the supply chain has been one of the recurring mantras of the

industrialised world for the past 50 years.

The concept, as we would recognise it, has its roots in the Toyota Production System (TPS) of the 1950s and has

been refined and improved significantly over the years to the point where one might expect that the most

sophisticated devotees today have optimised their supply chains.

The journey towards perfection, however, never ends. In the very near future, the adoption of sensor-based Radio

Frequency Identification (RFID) technology will allow the creation of the real-time, sensor-connected

manufacturing plant. By adding RFID tags to every product, tool, resource and item of materials handling

equipment, manufacturers will be able to get better demand signals from customers and the market.

At its core, RFID is simply an enabling technology that has the potential of helping retailers provide the right

product at the right place at the right time, thus maximising sales and profits. RFID provides the technology to

identify uniquely each container, pallet, case and item being manufactured, shipped and sold, thus providing the

building blocks for increased visibility throughout the supply chain.

The technology will bring benefits to a wide range of industries, as we shall see, but one of the main drivers of RFID

adoption has been the retail sector, led by Wal-Mart in the US. Phillip J. Windley, an Associate Professor of

Computer Science at Brigham Young University, estimates that US retail giant Wal-Mart alone could save $8.35

billion annually with RFID - that's more than the total revenue of half the companies in the Fortune 500.

His massive total is made up as follows: $600 million through avoiding stock-outs; $575 million by avoiding theft,

error and vendor fraud; $300 million through better tracking of a billion pallets and cases; $180 million through

reduced inventory; and a huge $6.7 billion by eliminating the need to have people scan barcodes in the supply

chain and in-store. Small wonder, then, that Wal-Mart is investing $3 billion in RFID over several years and is one of

the leading proponents of RFID implementation.

RFID is a system of small electronic tags (comprising a tiny chip plus an antenna) that transmit data via a radio

signal to RFID readers and related hardware and software infrastructure. The transmitters can be placed anywhere

that tracking the movement of goods adds value to the commercial process: on containers, pallets, materials

handling equipment, cases or even on individual products.

The information on tags is read when they pass by an RFID reader, and that movement is captured and managed

by the infrastructure. In this way, organisations are able to link the physical world to the digital world without any

human interaction. Whatever actions are then triggered depends on the individual application, from basic stock

replenishment at one end of the spectrum to facilitating the ultimate lean supply chain at the other.

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Impact of E-Commerce on Supply Chain Management

By M Sreenivas | Published 08/2/2007 | ECommerce |

A production supply chain refers to the flow of physical goods and associated information from the source to the consumer

supply chain activities include:

v Production planning

v Purchasing

v Materials management

v Distribution

v Customer service

v Sales forecasting

These processes are critical to the success of any operation whether theyre manufacturers, wholesalers, or service provider

Electronic commerce and the Internet are fundamentally changing the nature of supply chains, and redefin

consumers learn about, select, purchase, and use products and services. The result has been the emergence of new bu

business supply chains that are consumer-focused rather than product-focused. They also provide customized prod

services.

E-commerce impacts supply chain management in a variety of keyways. These include:

Cost efficiency: E-commerce allows transportation companies of all sizes to exchange cargo documents electronic

the Internet. E-commerce enables shippers, freight forwarders and trucking firms to streamline document handling

the monetary and time investment required by the traditional document delivery systems.By using e-commerce, companies can reduce costs, improve data accuracy, streamline business pr

accelerate business cycles, and enhance customer service. Ocean carriers and their trading partners can exchang

lading instructions, freight invoices, container status messages, motor carrier shipment instructions, and other do

with increased accuracy and efficiency by eliminating the need to re-key or reformat documents. The only tools n

take advantage of this solution are a personal computer and an Internet browser.

Changes in the distribution system: E-commerce will give businesses more flexibility in managing the increasingly

movement of products and information between businesses, their suppliers and customers. E-commerce will close

between customers and distribution centers. Customers can manage the increasingly complex movement of prod

information through the supply chain.

Customer orientation: E-commerce is a vital link in the support of logistics and transportation services for both

and external customers. E-commerce will help companies deliver better services to their customers, accelerate the

of the e-commerce initiatives that are critical to their business, and lower their operating costs. Using the Intern

commerce will allow customers to access rate information, place delivery orders, track shipments and pay freight b

E-commerce makes it easier for customers to do business with companies: Anything that simplifies the p

arranging transportation services will help build companies' business and enhance shareholder value. By maki

information available about the commercial side of companies, businesses will make their web site a plac

customers will not only get detailed information about the services the company offers, but also where they can

conduct business with the company.

Ultimately, web sites can provide a universal, self-service system for customers. Shippers can order an

and access the information they need to conduct business with transportation companies exclusively online. E-co

functions are taking companies a substantial step forward by providing customers with a faster and easier w

business with them.

Shipment tracking: E-commerce will allow users to establish an account and obtain real-time information aboshipments. They may also create and submit bills of lading, place a cargo order, analyze charges, submit a freight c

carry out many other functions. In addition, e-commerce allows customers to track shipments down to the i

product and perform other supply chain management and decision support functions. The application uses en

technology to secure business transactions.

Shipping notice: E-commerce can help automate the receiving process by electronically transmitting a packing list

the shipment. It also allows companies to record the relevant details of each pallet, parcel, and item being shipped

Freight auditing: This will ensure that each freight bill is efficiently reviewed for accuracy. The result is a greatly

risk of overpayment, and the elimination of countless hours of paperwork, or the need for a third-party auditing

intercepting duplicate billings and incorrect charges, a significant percent of shipping costs will be recovered. In

carrier comparison and assignment allows for instant access to a database containing the latest rates, discou

http://www.ezilon.com/articles/authors/2065/M-Sreenivashttp://www.ezilon.com/articles/categories/ECommerce/http://www.ezilon.com/articles/categories/ECommerce/http://www.ezilon.com/articles/authors/2065/M-Sreenivas

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allowances for most major carriers, thus eliminating the need for unwieldy charts and tables.

Shipping Documentation and Labeling: There will be less need for manual intervention because standard bills o

shipping labels, and carrier manifests will be automatically produced; this includes even the specialized

documentation required for overseas shipments. Paperwork is significantly reduced and the shipping departm

therefore be more efficient.

Online Shipping Inquiry: This gives instant shipping information access to anyone in the company, from any

Parcel shipments can be tracked and proof of delivery quickly confirmed. A customer's transportation co

performance can be analyzed, thus helping the customer negotiate rates and improve service.

ADVANTAGES OF ECOMMERCE

Faster buying/selling procedure, as well as easy to find products. Buying/selling 24/7. More reach to customers, there is no theoretical geographic limitations. Low operational costs and better quality of services. No need of physical company set-ups. Easy to start and manage a business. Customers can easily select products from different providers without moving around physically.

2. Material handling is fully automated.

3. Process follows a predetermined sequence of operations.

4. Component materials cannot be readily identified with final product.

5. Planning and scheduling is a routine action.

Advantages

Following are the advantages of continuous production:

1. Standardisation of product and process sequence.

2. Higher rate of production with reduced cycle time.

3. Higher capacity utilisation due to line balancing.

4. Manpower is not required for material handling as it is completely automatic.

5. Person with limited skills can be used on the production line.

6. Unit cost is lower due to high volume of production.

Limitations

Following are the limitations of continuous production:

1. Flexibility to accommodate and process number of products does not exist.

2. Very high investment for setting flow lines.

3. Product differentiation is limited.