Description
It also includes finding out the bottlenecks or problem areas in the process & providing workable solution for the overall improvement of the operation processes involved.
OPERATIONS MANAGEMENT
Group Project : Leaps & Bounds Pvt. Ltd.
Group 10: Shrirang Jadhav (09FT-064) Jasvir Singh (09FT-067) Lakshay Bhalla (09FT-074) Sameer Mahajan (09FT-078) Naval Jain (09FT-093) Rahul Aggarwal (09FT-111)
TABLE OF CONTENTS
i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii.
Acknowledgement: ............................................................. 3 Introduction/Background of the project: ............................ 4 Objectives of the study: ...................................................... 5 Processes involved in the shoe manufacturing:................... 6 Detail phases of production: ............................................... 7 Bottlenecks/ Problem areas identified ................................ 8 Solutions to work on: ....................................................... 10 Quality tool to decide factors ............................................ 11 Major reason for unsatisfactory quality: ........................... 12 Steps taken to improve quality of the shoes ...................... 12 Effect of quality management on productivity: .................. 15 Conclusion: ...................................................................... 17
Page 2 of 17
Acknowledgement:
This project has been an opportunity for all of us to gain a hands?on experience on a live project. First of all we would like to thank Mr. Yoginder Singh, MD, Leaps n Bound Shoe Company to show trust in the students of IMT Ghaziabad and entrusting us with the responsibility to study & improve the operations of their company. We would like to convey our heartfelt thanks to Prof Dr. R. K. Chakaraborty to give us the opportunity to take up this project. His suggestions have been the only source of guidance for us throughout.
Page 3 of 17
Introduction/Background of the project:
In any organization Operation is the most basic function, be it manufacturing or service. In fact, one cannot imagine an organization without an operation function. As a study project our objective is to apply the concepts & techniques learned in the class to real life problems in the industry. We have selected local shoe manufacturing company for this particular project. The rationale behind selecting the industry is significance of the operations management as an effective strategic tool for this particular industry. The company operates is a monopolistically competitive market. There are many planning & control issues in operations which plays important role in deciding overall competitiveness of the final product in the market. Operations Management holds the key to competitive advantage for such organizations. Unorganized nature of processes & demands create many challenges in terms of operations management. We intend to tackle the specific problems related to quality & pricing of the product which are the driving factor for the competitiveness in the particular market.
About the Company:
Company selected for the project work is “Leaps & Bounds Pvt. Ltd.”. Company is in its nascent stage of growth with a capital investment of Rs. 6 million.The firm is a shoe manufacturing company based out of Ghaziabad. The firm produces only two types of products: PT shoes & Jungle shoes. It plans to develop more types of footwear in the coming years.
Page 4 of 17
Objectives of the study:
1. To study the processes involved in shoe manufacturing firm. 2. To find out the bottlenecks/ problem areas in the processes. 3. To narrow down the areas to work on for the overall improvement of the process. 4. To suggest the improvement plan in the processes: which might help the firm to gain competitive advantage in the market.
Scope of the study:
Scope of this project includes the understanding of the basic processes involved in the shoe manufacturing. It also includes finding out the bottlenecks or problem areas in the process & providing workable solution for the overall improvement of the operation processes involved.
Page 5 of 17
Processes involved in the shoe manufacturing:
1. Raw Material Purchase
All the raw material viz. cloth, threads, laces, PUC, adhesives etc are purchased before the start of the production process. Most of the purchases are from the local manufacturers.
2. Hire Contract Labourers
Labors are hired for two main processes viz. stitching and sole fabrication. The hired labor charges at per piece rate for each of the two products. As more effort goes into stitching of Jungle shoe, the rate per piece is high. Also, amount of time spend in stitching per piece is also more as compared to P.T Shoe. The labor for the two above mentioned processes is different. The amount of work performed for sole creation of both the products is same and thus same charges are applied. The working hours per day are 10 hours. Due to high demand fluctuation; Labourers are hired on daily/ monthly wage basis for short durations. Firm has requirement of the both skilled & non skilled labourers.
3. Production Process
Production process for manufacturing shoes involves four basic steps. 1. Preparation of the shoe upper. 2. Preparing the die frame for sole fabrication 3. Sole fabrication
Page 6 of 17
4. Quality testing, packaging and delivery The detailed production process is given below
Detail phases of production:
1. Cutting and stitching the shoe Cloth as per different size & specification. 2. Punching tack holes in the shoe upper. 3. Melting the PUC. Grinding PUC, the material used for sole creation 4. Fixing the shoe upper on the die frame. 5. Transferring grinded PUC to the machine 6. Affixing the die frame to the machine 7. Poring molten PUC in the die. 8. Removing the die frame from the machine 9. Removing shoe from the die. 10. Checking the quality of the shoe. 11. Addition of accessories to the shoe (like laces). 12. Final finishing & quality checks. 13. Packaging the shoe 14. Transporting to distributors/ inventory. Though the overall process looks simple, there are many bottlenecks & problem areas in the process. A few identified bottlenecks are listed below.
Page 7 of 17
Bottlenecks/ Problem areas identified
1. Availability of skilled labourers:
Machine used in the production process is semi automatic. Melting of PUC takes places automatically but injecting the same into die frame requires the proper application of pressure which is manual. Skilled labourers required for this are not easily available in the market.
2. Quality of PUC:
PUC is prepared from the scrap material obtained from different industries. Hence it is very natural that there is large variation in the quality of the PUC obtained from the local vendors.
3. Price flexibility of PUC:
Prices of the PUC material vary to large degree depending on the quality. As PUC is most extensively used raw material, it has major effect on the final cost of the product. Local shoe market in India is monopolistically competitive market. There are few major players which covers the most of the market share. Leaps & Bounds is a start up venture hence cost & quality are important drivers in the competition.
Page 8 of 17
4. Wear & tear of die affecting the quality of final product:
We found that one of the important reasons for the poor quality of shoes is the quality of die. Die undergoes wear & tear with time affecting final quality.
5. Availability of electricity supply:
Electricity supply is one of the key requirements for the production process. Continuous supply of electricity is main problem in Ghaziabad. The company has installed a generator to counter this particular problem. The generator installed is capable of supporting one machine only. However, if the load of both the machines is shifted on the same, the melting process takes a hit and in turn the quality of the sole thus produced suffers.
Page 9 of 17
Solutions to work on:
1. Further study intends to work on the improving overall quality of the shoes produced. This will create competitive advantage in long term for Leaps & Bounds Ltd.
2. The firm is price taker mainly because of the competitive nature of the industry. As Price cannot be changed much our focus is on increasing production efficiency to reduce overall cost of the processes.
3. This study also aim to provide the calculations to measure the overall changes in terms of cost & quality which will be benefited from the new processes suggested.
4. To create & study the production chart of the company.
Page 10 of 17
Quality tool to decide factors
Pareto Analysis:
Cause Raw material Generator Defective Die Misalignment Transportation
No. Of defects 84 59 15 10 8 176
Percentage 48 34 9 6 5 100
50 45 40 35 30 25 20 15 10 5 0 Series1
Page 11 of 17
Major reason for unsatisfactory quality:
1. Quality of raw material. 2. Products manufactured using the generator. 3. Misalignment of die. 4. Product produced with a die which have undergone wear & tear.
Steps taken to improve quality of the shoes
1. Quality of scrap:
Quality of scrap is one of the reasons for poor quality of shoes. To improve the quality we suggest a chemical test to be performed on PUC material taken from market this test will reduce the chances of defective raw material by 80 to 90%.
2. Quality of die:
It usually takes 6 months for die to wear. Hence checking of die after every month after first 3 month of die is completed for replacement is must. This will take care of bulk lesser quality products because of die wear & tear.
Page 12 of 17
3. Inferior quality due to generator usage:
Production schedule is revised & attempt is made to reduce the machine usage on generator.
Timing 7 -8 am 8 - 9 am 9 - 10 am 10 - 11 am 11 - 12 am 12 - 1 pm 1 - 2 pm 2 - 3 pm 3 - 4 pm 4 - 5 pm 5 - 6 pm 6 - 7 pm 7 - 8 pm 8 - 9 pm 9 - 10 pm Break
Monday
Tuesday
Wedenesday
Thursday
Saturday
Sunday
(12-1pm) (6-7 pm) (12-1pm) (6-7 pm) (11-12pm) (4-5 pm) (11-12pm) (4-5 pm) (12-1pm) (5-6 pm) (12-1pm) (5-6 pm)
Total Generator hours in a week = 37 Total Hours saved = 8 Defects under generator usage = 59 Forecasted defects = 46
Page 13 of 17
4. Misalignment of Die
One of the main reasons for defective quality of shoes is misalignment of die. To solve this problem we are proposing a fixed frame which will resolve this problem. Though it will involve some initial investment it will help in resolving quality issues in long term.
Page 14 of 17
Effect of quality management on productivity:
1. Productivity & Yield
Input
Output
Productivity
Yield
1180 1070
1000 1000
84.75 93.46
1000.05 1102.83
? ?
Productivity increased from 84.75% to 93.5%. Yield increased from 1000 to 1103.
2. Product Cost
S.No 1 2 3 4 5 6 7 8 9 10 11
Particulars P.T. Shoe (in Rs.) Jungle Shoe (in Rs.) Raw Material Cost 20.00 30.00 Direct Labour Cost 5.00 6.00 Indirect Labour Cost 6.67 8.33 Electricity Cost 0.69 0.81 Generator Operating Cost 0.23 0.27 Communication Cost 0.25 0.25 Machine Depreciation 1.14 1.36 Maintainance Cost 1.25 1.25 Inspection Cost 1.67 0.83 Miscellaneous Cost 1.25 1.25 Delivery Cost 2.50 1.25 Cost per Unit 40.64 51.61
Page 15 of 17
P.T. Shoes Current Kd I Yield Product Cost 41 1176 1011 48 Forecasted 41 1067 1105 40
Jungle shoes Current 52 1176 1011 61 Forecasted 52 1128 1105 54
Kd :- Direct manufacturing cost per unit I :- Input units
? ?
Product Cost for P.T. shoes has improved from 48 to 40 Product Cost for Jungle shoes has improved from 61 to 54.
3. Forecasted Percentage of defective pieces
Cause
No. Of defects
Percentage
Forecasted defects
Percentage
Raw material Generator Defective Die Misalignment Transportatio n
84 59 15 10 8 176
48 34 9 6 5 100
12 47 0 0 8 67
7 27 0 0 5 39
? ?
Significant reduction in percentage of defective pieces after the application of suggested quality measures. Percentage change is almost equal to 60%.
Page 16 of 17
4. Quality Productivity Ratio
Kd
I
O/P
QPR
P.T. Shoes
41 41
1176 1067 1176 1067
1000 1000 1000 1000
2.08 2.29 1.64 1.81
Jungle Shoes
52 52
? ?
QPR for the P.T. shoes increased from 2.08 to 2.29. QPR for the jungle shoes increased from 1.64 to 1.81
Conclusion:
All the suggested quality measures if implemented will help the firm to achieve the objective of producing better quality shoes at low cost. Even if purchasing a fixed frame is a costly affair & firm cannot take up that in its infancy period it is definitely a measure to be taken up some year down the line. All other measures are effective & almost cost nothing. We hope Leaps & Bounds benefits from our study.
Page 17 of 17
doc_869476201.docx
It also includes finding out the bottlenecks or problem areas in the process & providing workable solution for the overall improvement of the operation processes involved.
OPERATIONS MANAGEMENT
Group Project : Leaps & Bounds Pvt. Ltd.
Group 10: Shrirang Jadhav (09FT-064) Jasvir Singh (09FT-067) Lakshay Bhalla (09FT-074) Sameer Mahajan (09FT-078) Naval Jain (09FT-093) Rahul Aggarwal (09FT-111)
TABLE OF CONTENTS
i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii.
Acknowledgement: ............................................................. 3 Introduction/Background of the project: ............................ 4 Objectives of the study: ...................................................... 5 Processes involved in the shoe manufacturing:................... 6 Detail phases of production: ............................................... 7 Bottlenecks/ Problem areas identified ................................ 8 Solutions to work on: ....................................................... 10 Quality tool to decide factors ............................................ 11 Major reason for unsatisfactory quality: ........................... 12 Steps taken to improve quality of the shoes ...................... 12 Effect of quality management on productivity: .................. 15 Conclusion: ...................................................................... 17
Page 2 of 17
Acknowledgement:
This project has been an opportunity for all of us to gain a hands?on experience on a live project. First of all we would like to thank Mr. Yoginder Singh, MD, Leaps n Bound Shoe Company to show trust in the students of IMT Ghaziabad and entrusting us with the responsibility to study & improve the operations of their company. We would like to convey our heartfelt thanks to Prof Dr. R. K. Chakaraborty to give us the opportunity to take up this project. His suggestions have been the only source of guidance for us throughout.
Page 3 of 17
Introduction/Background of the project:
In any organization Operation is the most basic function, be it manufacturing or service. In fact, one cannot imagine an organization without an operation function. As a study project our objective is to apply the concepts & techniques learned in the class to real life problems in the industry. We have selected local shoe manufacturing company for this particular project. The rationale behind selecting the industry is significance of the operations management as an effective strategic tool for this particular industry. The company operates is a monopolistically competitive market. There are many planning & control issues in operations which plays important role in deciding overall competitiveness of the final product in the market. Operations Management holds the key to competitive advantage for such organizations. Unorganized nature of processes & demands create many challenges in terms of operations management. We intend to tackle the specific problems related to quality & pricing of the product which are the driving factor for the competitiveness in the particular market.
About the Company:
Company selected for the project work is “Leaps & Bounds Pvt. Ltd.”. Company is in its nascent stage of growth with a capital investment of Rs. 6 million.The firm is a shoe manufacturing company based out of Ghaziabad. The firm produces only two types of products: PT shoes & Jungle shoes. It plans to develop more types of footwear in the coming years.
Page 4 of 17
Objectives of the study:
1. To study the processes involved in shoe manufacturing firm. 2. To find out the bottlenecks/ problem areas in the processes. 3. To narrow down the areas to work on for the overall improvement of the process. 4. To suggest the improvement plan in the processes: which might help the firm to gain competitive advantage in the market.
Scope of the study:
Scope of this project includes the understanding of the basic processes involved in the shoe manufacturing. It also includes finding out the bottlenecks or problem areas in the process & providing workable solution for the overall improvement of the operation processes involved.
Page 5 of 17
Processes involved in the shoe manufacturing:
1. Raw Material Purchase
All the raw material viz. cloth, threads, laces, PUC, adhesives etc are purchased before the start of the production process. Most of the purchases are from the local manufacturers.
2. Hire Contract Labourers
Labors are hired for two main processes viz. stitching and sole fabrication. The hired labor charges at per piece rate for each of the two products. As more effort goes into stitching of Jungle shoe, the rate per piece is high. Also, amount of time spend in stitching per piece is also more as compared to P.T Shoe. The labor for the two above mentioned processes is different. The amount of work performed for sole creation of both the products is same and thus same charges are applied. The working hours per day are 10 hours. Due to high demand fluctuation; Labourers are hired on daily/ monthly wage basis for short durations. Firm has requirement of the both skilled & non skilled labourers.
3. Production Process
Production process for manufacturing shoes involves four basic steps. 1. Preparation of the shoe upper. 2. Preparing the die frame for sole fabrication 3. Sole fabrication
Page 6 of 17
4. Quality testing, packaging and delivery The detailed production process is given below
Detail phases of production:
1. Cutting and stitching the shoe Cloth as per different size & specification. 2. Punching tack holes in the shoe upper. 3. Melting the PUC. Grinding PUC, the material used for sole creation 4. Fixing the shoe upper on the die frame. 5. Transferring grinded PUC to the machine 6. Affixing the die frame to the machine 7. Poring molten PUC in the die. 8. Removing the die frame from the machine 9. Removing shoe from the die. 10. Checking the quality of the shoe. 11. Addition of accessories to the shoe (like laces). 12. Final finishing & quality checks. 13. Packaging the shoe 14. Transporting to distributors/ inventory. Though the overall process looks simple, there are many bottlenecks & problem areas in the process. A few identified bottlenecks are listed below.
Page 7 of 17
Bottlenecks/ Problem areas identified
1. Availability of skilled labourers:
Machine used in the production process is semi automatic. Melting of PUC takes places automatically but injecting the same into die frame requires the proper application of pressure which is manual. Skilled labourers required for this are not easily available in the market.
2. Quality of PUC:
PUC is prepared from the scrap material obtained from different industries. Hence it is very natural that there is large variation in the quality of the PUC obtained from the local vendors.
3. Price flexibility of PUC:
Prices of the PUC material vary to large degree depending on the quality. As PUC is most extensively used raw material, it has major effect on the final cost of the product. Local shoe market in India is monopolistically competitive market. There are few major players which covers the most of the market share. Leaps & Bounds is a start up venture hence cost & quality are important drivers in the competition.
Page 8 of 17
4. Wear & tear of die affecting the quality of final product:
We found that one of the important reasons for the poor quality of shoes is the quality of die. Die undergoes wear & tear with time affecting final quality.
5. Availability of electricity supply:
Electricity supply is one of the key requirements for the production process. Continuous supply of electricity is main problem in Ghaziabad. The company has installed a generator to counter this particular problem. The generator installed is capable of supporting one machine only. However, if the load of both the machines is shifted on the same, the melting process takes a hit and in turn the quality of the sole thus produced suffers.
Page 9 of 17
Solutions to work on:
1. Further study intends to work on the improving overall quality of the shoes produced. This will create competitive advantage in long term for Leaps & Bounds Ltd.
2. The firm is price taker mainly because of the competitive nature of the industry. As Price cannot be changed much our focus is on increasing production efficiency to reduce overall cost of the processes.
3. This study also aim to provide the calculations to measure the overall changes in terms of cost & quality which will be benefited from the new processes suggested.
4. To create & study the production chart of the company.
Page 10 of 17
Quality tool to decide factors
Pareto Analysis:
Cause Raw material Generator Defective Die Misalignment Transportation
No. Of defects 84 59 15 10 8 176
Percentage 48 34 9 6 5 100
50 45 40 35 30 25 20 15 10 5 0 Series1
Page 11 of 17
Major reason for unsatisfactory quality:
1. Quality of raw material. 2. Products manufactured using the generator. 3. Misalignment of die. 4. Product produced with a die which have undergone wear & tear.
Steps taken to improve quality of the shoes
1. Quality of scrap:
Quality of scrap is one of the reasons for poor quality of shoes. To improve the quality we suggest a chemical test to be performed on PUC material taken from market this test will reduce the chances of defective raw material by 80 to 90%.
2. Quality of die:
It usually takes 6 months for die to wear. Hence checking of die after every month after first 3 month of die is completed for replacement is must. This will take care of bulk lesser quality products because of die wear & tear.
Page 12 of 17
3. Inferior quality due to generator usage:
Production schedule is revised & attempt is made to reduce the machine usage on generator.
Timing 7 -8 am 8 - 9 am 9 - 10 am 10 - 11 am 11 - 12 am 12 - 1 pm 1 - 2 pm 2 - 3 pm 3 - 4 pm 4 - 5 pm 5 - 6 pm 6 - 7 pm 7 - 8 pm 8 - 9 pm 9 - 10 pm Break
Monday
Tuesday
Wedenesday
Thursday
Saturday
Sunday
(12-1pm) (6-7 pm) (12-1pm) (6-7 pm) (11-12pm) (4-5 pm) (11-12pm) (4-5 pm) (12-1pm) (5-6 pm) (12-1pm) (5-6 pm)
Total Generator hours in a week = 37 Total Hours saved = 8 Defects under generator usage = 59 Forecasted defects = 46
Page 13 of 17
4. Misalignment of Die
One of the main reasons for defective quality of shoes is misalignment of die. To solve this problem we are proposing a fixed frame which will resolve this problem. Though it will involve some initial investment it will help in resolving quality issues in long term.
Page 14 of 17
Effect of quality management on productivity:
1. Productivity & Yield
Input
Output
Productivity
Yield
1180 1070
1000 1000
84.75 93.46
1000.05 1102.83
? ?
Productivity increased from 84.75% to 93.5%. Yield increased from 1000 to 1103.
2. Product Cost
S.No 1 2 3 4 5 6 7 8 9 10 11
Particulars P.T. Shoe (in Rs.) Jungle Shoe (in Rs.) Raw Material Cost 20.00 30.00 Direct Labour Cost 5.00 6.00 Indirect Labour Cost 6.67 8.33 Electricity Cost 0.69 0.81 Generator Operating Cost 0.23 0.27 Communication Cost 0.25 0.25 Machine Depreciation 1.14 1.36 Maintainance Cost 1.25 1.25 Inspection Cost 1.67 0.83 Miscellaneous Cost 1.25 1.25 Delivery Cost 2.50 1.25 Cost per Unit 40.64 51.61
Page 15 of 17
P.T. Shoes Current Kd I Yield Product Cost 41 1176 1011 48 Forecasted 41 1067 1105 40
Jungle shoes Current 52 1176 1011 61 Forecasted 52 1128 1105 54
Kd :- Direct manufacturing cost per unit I :- Input units
? ?
Product Cost for P.T. shoes has improved from 48 to 40 Product Cost for Jungle shoes has improved from 61 to 54.
3. Forecasted Percentage of defective pieces
Cause
No. Of defects
Percentage
Forecasted defects
Percentage
Raw material Generator Defective Die Misalignment Transportatio n
84 59 15 10 8 176
48 34 9 6 5 100
12 47 0 0 8 67
7 27 0 0 5 39
? ?
Significant reduction in percentage of defective pieces after the application of suggested quality measures. Percentage change is almost equal to 60%.
Page 16 of 17
4. Quality Productivity Ratio
Kd
I
O/P
QPR
P.T. Shoes
41 41
1176 1067 1176 1067
1000 1000 1000 1000
2.08 2.29 1.64 1.81
Jungle Shoes
52 52
? ?
QPR for the P.T. shoes increased from 2.08 to 2.29. QPR for the jungle shoes increased from 1.64 to 1.81
Conclusion:
All the suggested quality measures if implemented will help the firm to achieve the objective of producing better quality shoes at low cost. Even if purchasing a fixed frame is a costly affair & firm cannot take up that in its infancy period it is definitely a measure to be taken up some year down the line. All other measures are effective & almost cost nothing. We hope Leaps & Bounds benefits from our study.
Page 17 of 17
doc_869476201.docx