OPERATIONS

CASEBOOK

1
2024-25
SPONSORED BY

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Acknowledgement PRAKRIYA - The Operations Club

We extend our sincere gratitude to everyone who contributed to the development of this Operations Casebook. Their
collective efforts and insights have played a crucial role in creating a comprehensive resource for future batches to strengthen
their understanding of operations management and case-solving techniques.

A special appreciation goes to our Senior Coordinators – Aswathy R, Jithin R, and Surya Prasanth V (PGP 2023-25) for their
leadership and dedication in shaping this initiative. Their strategic direction has been instrumental in curating relevant and
insightful content for this casebook.

We also acknowledge the diligent efforts of our Junior Coordinators – Inzamam Tahasildar, Jishnu Panathala, Palak
Srivastava, Shivani Bandiwadekar, and Tanya Poddar (PGP 2024-26) for their significant contributions in compiling the
casebook. Their hard work has helped build a structured and diverse collection of cases that reflect real-world operational
challenges and solutions.

A special mention to the Casebook Task Force (PGP 2024-26) for their dedication and support in bringing this casebook to life:
Arihant Mishra, Ashish Kullu, Chandan Jitendra K, Deeksha Agarwal, Karan Chatrani, Kavya Pandey, Kiran Suthar, KS Pranathi,
Naimeesha K, Poola Vinod, Raghavendra Sai Rakshit T, Sai Sarath Chandra V, Sai Suma Gudapatti, Soniya Bokil, Sourav
Sharma, Sowmya B, Tanmay Wasu, Trishal Khandelwal, Vasundhara N

We extend our heartfelt gratitude to Ayyappa Dass, the sponsor of this casebook. A seasoned professional with over 30 years
of experience, he has made significant contributions in the fields of Branch, Divisional, and Area Operations, Territory Sales,
Marketing, and Team Management. His support has been invaluable in bringing this initiative to fruition.

Finally, we express our appreciation to the entire IIM Visakhapatnam community for their encouragement and involvement in
this initiative. The IIM V Operations Casebook stands as a testament to collaboration, analytical thinking, and problem-solving.
We hope this resource serves as a valuable guide, equipping students with the knowledge and frameworks necessary to tackle
operational challenges effectively in both academic and professional settings. 3
 THE TEAM

Surya Prasanth. V Jithin R Aswathy R

Jishnu Panathala Inzamam Tahasildar

Palak Srivastava Shivani Bandiwadekar Tanya Poddar

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 THE TASKFORCE

Naimeesha Karan Arihant Vinod Tanmay

Kiran Kavya Pranathi Sourav Chandan

Ashish Suma Rakshit Vasundhara Soniya

Sai Sarath Trishal Sowmya Deeksha 5

 PRAKRIYA - The Operations Club

CONTENTS
INTRODUCTION

KEY ASPECTS IN OPERATIONS

MANAGEMENT

KEY TERMS AND JARGON

ROLES AND OPPORTUNITIES

KEY AREAS TO FOCUS

SUPPLY CHAIN MANAGEMENT

CAPACITY UTILISATION
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 PRAKRIYA - The Operations Club

CONTENTS
INVENTORY MANAGEMENT

FORECASTING

QUALITY FUNCTION DEPLOYMENT

LOGISTICS COMPANY

VASTRAFAB LTD.

HYDRAFORGE PVT. LTD.

SYNCOVIA PVT. LTD.

OPTIMIZING LOGISTICS FOR ABC LTD

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 PRAKRIYA - The Operations Club

CONTENTS
TURBO MOTORS LTD.

BANK OF TAF

AUTOCORP SUPPLIER RELATIONS

IT SERVICE PROVIDER

SLOW PATIENT TRANSPORTATION IN A HOSPITAL

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 Introduction PRAKRIYA - The Operations Club

OPERATIONS MANAGEMENT

Operations management is a critical area within business administration that deals with designing, overseeing, and controlling the production processes and the redesign of
business operations in the production of goods or services. It ensures that an organization’s operations are efficient in terms of using as few resources as needed, and
effective in terms of meeting customer requirements. It is concerned with managing the process that converts inputs (in the forms of materials, labor, and energy) into
outputs (in the form of goods and/or services).

Operations management involves planning, scheduling, and controlling all activities that directly affect an organization’s goods and services. Key functions include product
design, production planning, process design, quality control, capacity, inventory management, and logistics. These functions require constant monitoring and evaluation to
enhance productivity and quality while reducing costs.
The scope of operations management ranges from strategic to tactical and operational levels. Strategically, it involves the long-term decisions related to production
processes and technology. Tactically, it involves the organization and coordination of activities necessary to achieve the desired quality, cost, and timing of goods and
services. Operationally, it includes the day-to-day management of resources, troubleshooting, and continuous improvement.

In essence, operations management is central to maintaining a competitive edge in the global market, ensuring that operations are run effectively, and adapting
innovatively to changing market and technological demands.

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 Introduction PRAKRIYA - The Operations Club

OPERATIONS MANAGEMENT

Operations management is like the behind-the-scenes work that makes sure things run smoothly in a business. It's about planning, organizing, and controlling how a
company produces goods or services.

Imagine a factory making cars. Operations management is what makes sure the right parts are in the right place at the right time, the workers have the tools they need,
and the cars are built to the highest quality standards. It's about making sure everything is efficient, so the company can produce cars quickly and affordably.

But operations management isn't just about factories. It applies to all kinds of businesses, from restaurants to hospitals. For example, a restaurant's operations manager
might be in charge of scheduling staff, managing inventory, and ensuring food is prepared and served efficiently.

In short, operations management is the backbone of any successful business. It helps companies stay competitive, keep costs low, and deliver high-quality products and
services to customers.

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 KEY ASPECTS PRAKRIYA - The Operations Club

Capacity Planning: Reengineering:

This involves determining the capacity needed to meet the demand for products The process of restructuring a company's processes in order to improve efficiency,
or services. It includes decisions about the size of production facilities, quality and cut costs. Many businesses follow a set of procedures that have been
equipment, and workforce. passed down through the generations. In a company's reengineering initiatives,
operations management is a critical component.
Process Design and Improvement:
This encompasses designing efficient production or service processes and Environmental Sustainability:
continuously improving them. Techniques like Lean Six Sigma are often used to Incorporating practices that minimize the environmental impact of operations, such
identify and eliminate inefficiencies and defects. as reducing waste and energy consumption.

Quality Management: Supply Chain Management:

Ensuring that products or services meet or exceed customer expectations. Overseeing the entire supply chain, from suppliers to manufacturers to distributors,
Quality control and quality assurance processes are implemented to maintain to ensure smooth flow of materials and information.
consistency and excellence.
Scheduling:
Inventory Management: The process of agreeing on the scheduling and utilization of resources inside a
Managing inventory levels to ensure products are available when needed while business; it answers questions like who will work on what schedule and in what order
minimizing carrying costs and stockouts. jobs will be processed.

Project Management: Logistics:

Planning, organizing, and executing projects to achieve specific objectives within Managing the movement of goods, services, and information within an organization
defined constraints such as time, cost, and scope. or between organizations. This includes transportation, warehousing, and
Mass customization: The ability of a company's operations management division distribution.
to highly personalize its goods and services at large quantities.
Continuous Improvement:
Operations management (OM): Embracing a culture of ongoing improvement, often through methodologies like
OM used to be known as production and operations management (P&OM) or just Kaizen, to enhance processes and systems over time.
production. It is a corporate function that refers to the transformation process
of converting raw materials into finished goods and services. As the field Forecasting:
expanded from being mostly tactical (e.g., making inventory and scheduling Predicting future demand for products or services to make informed decisions
decisions on the manufacturing floor) to strategic (today, many CEOs coming about production and resource allocation.
from the OM field), the terminology began to refer to operations rather than just
production. Risk Management:
Identifying potential risks that could impact operations and developing strategies to
mitigate or respond to them.

Technology and Automation:

Leveraging technology and automation to increase efficiency, accuracy, and speed
in operations. This could include robotics, AI, and software solutions.
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 KEY TERMS AND JARGON PRAKRIYA - The Operations Club

Agile Operations: A flexible approach to operations that can quickly adapt to

changing market conditions. Just-In-Time (JIT): A strategy that involves producing and delivering products or
services just in time to meet customer demand, thereby minimizing inventory costs
Batch Processing: A method of processing tasks or orders in groups (batches)
rather than individually, often used to improve efficiency in manufacturing. Kaizen: A Japanese term meaning "continuous improvement," referring to the
practice of making small, incremental improvements to processes over time.
Bottleneck: A point in a process where the capacity is limited, causing a
slowdown in overall production. Kanban: A visual system used to manage and control production flow by signalling
when to produce or replenish items based on actual demand.
Capacity Planning: Determining the resources needed to meet demand.
KPI (Key Performance Indicator): Metrics used to evaluate the performance and
Capacity Utilization: The extent to which a company's production capacity is success of a specific aspect of operations, such as production efficiency, quality, or
being used to produce goods or services. delivery times.

Critical Path: In project management, the sequence of activities that determines Lead Time: The time it takes to complete a process from start to finish, including
the shortest time needed to complete a project. waiting time, processing time, and transportation time.

Demand Forecasting: Predicting future customer needs with help predictive Lean Manufacturing: A methodology focused on minimizing waste in production
mathematical tools processes, resulting in increased efficiency and reduced costs.

Discrete Manufacturing: Producing products in distinct units, such as cars or Lean Manufacturing: A philosophy aimed at eliminating waste and improving
electronics. efficiency.

Economic Order Quantity (EOQ): The optimal order quantity that minimizes total Lean Operations: An approach that focuses on minimizing waste, reducing
inventory costs. inefficiencies, and improving processes to enhance value and quality while reducing
costs.
Efficiency: The ability to accomplish tasks with minimal waste, including time,
resources, and effort. Location Analysis: Evaluating potential locations for facilities based on various
factors.
Enterprise Resource Planning (ERP): A software system that integrates various
business processes . Manufacturing Cell: A group of machines or workstations arranged to produce a
specific product or family of products.
Facility Layout: The physical arrangement of equipment and resources within a
facility. Manufacturing Process: The sequence of activities involved in transforming raw
materials into finished products.
Facility Location: The geographical location of a manufacturing facility.
Operations Strategy: Aligning operational activities with the overall business
Inventory Management: Controlling the level of inventory to balance supply and strategy.
demand.
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Lean Operations: An approach that focuses on minimizing waste, Six Sigma: A data-driven approach to quality improvement that aims to
reducing inefficiencies, and improving processes to enhance value and achieve near-perfect results by minimizing defects and variations in
quality while reducing costs. processes.

Location Analysis: Evaluating potential locations for facilities based on Strategic Sourcing: Identifying and selecting suppliers for materials and
various factors. services.

Manufacturing Cell: A group of machines or workstations arranged to Supply Chain Management: Coordinating the flow of goods and services
produce a specific product or family of products. from suppliers to customers.

Manufacturing Process: The sequence of activities involved in Supply Chain Network: The interconnected network of organizations
transforming raw materials into finished products. involved in the flow of goods and services.

Operations Strategy: Aligning operational activities with the overall Supply Chain: The network of organizations, people, activities, information,
business strategy. and resources involved in moving products or services from suppliers to
customers.
Outsourcing: Contracting with an external party to perform certain
business functions. Total Quality Management (TQM): A comprehensive approach to quality
that involves everyone in the organization.
Process Mapping: Visualizing the steps involved in a process to identify
inefficiencies. Value Stream Mapping: A visual representation of the steps involved in
delivering a product or service, highlighting areas of waste and inefficiency.
Project Management: Planning, organizing, and controlling projects to
achieve specific goals. Warehouse Management: Managing the storage and retrieval of goods in a
warehouse.
Quality Control: Inspecting and testing products to ensure they meet
quality standards.

Quality Control: The process of ensuring that products or services meet

specified quality standards through inspections, testing, and corrective
actions.

Service Operations: Managing the delivery of services, such as

healthcare or hospitality.

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 ROLES AND OPPORTUNITIES PRAKRIYA - The Operations Club

Roles and opportunities available in the Operations domain

Process Improvement Specialist: Analyzes existing processes,
identifies inefficiencies, and implements improvements using
Operations Manager: Responsible for overseeing the day-to-day methodologies like Lean or Six Sigma.
operations of a business. This includes managing resources, optimizing
processes, and ensuring production meets quality and efficiency
standards.
Operations Analyst: Analyzes operational data and trends to provide
insights that inform decision-making and drive operational
Production Supervisor: In charge of supervising the production improvements.
process, ensuring that products are manufactured efficiently, on time,
and according to quality standards.

Procurement Officer: Responsible for sourcing and acquiring the

necessary materials, goods, and services for the organization's
operations.
Supply Chain Manager: Manages the entire supply chain, from
sourcing raw materials to distributing finished products, to ensure
smooth and efficient flow of goods and information.

Demand Planner: Analyzes historical sales data and market trends to

forecast future demand, helping the organization plan production and
Quality Control Inspector: Monitors and tests products or services to inventory levels.
ensure they meet established quality standards and specifications.

Production Manager oversees production efficiency, schedules, and

quality standards. Manages teams, optimizes processes, and
troubleshoots issues.
Logistics Coordinator: Coordinates the movement of goods, manages
transportation and warehousing, and ensures timely delivery to
customers
Quality Assurance Manager: Ensures that products and services meet
or exceed quality standards. This role involves designing and
implementing quality control processes, conducting audits, and
Inventory Manager: Manages inventory levels, tracks stock continuously improving quality management systems.
movements, and optimizes inventory turnover to balance supply and
demand.

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Procurement Specialist/Manager: Focuses on sourcing and acquiring Service Operations Manager: Focuses on managing the operations of
the necessary materials, goods, and services for a business. This role service-based industries such as healthcare, hospitality, and financial
involves supplier selection, negotiation, and ensuring a reliable supply services, ensuring efficient service delivery and customer satisfaction.
chain

Continuous Improvement Manager: Leads efforts to establish a culture

of continuous improvement within an organization. This involves Project Manager: Manages specific projects within operations,
implementing strategies like Kaizen and driving initiatives to enhance overseeing resources, timelines, and budgets to successfully deliver
processes and systems. projects that improve processes or implement new technologies. .

Facilities Manager: Manages the physical assets of a business, including Logistics Manager: Manages the movement, storage, and distribution
buildings, equipment, and maintenance. This role ensures that facilities of goods. This role involves optimizing transportation routes,
are optimized for efficient operations. managing warehouses, coordinating with suppliers and customers,
and ensuring timely deliveries.

E-commerce Operations Manager: Manages the operations of online

businesses, including order fulfillment, customer service, and
optimizing the online shopping experience.

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2. Lean Management
Operations management is a vital field of management that focuses on designing,
planning, executing, and controlling the processes and resources involved in
producing goods and services. It aims to optimize efficiency, quality, and customer Developed by Toyota Production System (TPS), it is also known as Lean Manufacturing or
satisfaction while minimizing waste. Key terms and concepts include KPIs, Lean Lean Production, which mainly focuses on maximizing value by reducing or eliminating
manufacturing, Six Sigma, supply chain management, value stream mapping, and activities and practices that do not add value to the final product or service, thereby
more. Various roles within operations management include operations managers, enhancing efficiency, reducing costs, and improving overall quality. Lean management
supply chain managers, production managers, quality assurance managers, and involves different methodologies that streamline an agile operational environment that
logistics managers. Opportunities span industries like manufacturing, retail, responds effectively to customer needs and market changes. Some of the main
healthcare, and technology, offering a range of careers centred around optimizing principles are JIT(Just-In-Time), 5S Methodology, Kaizen, and Pull System. Etc.
processes, managing resources, and ensuring the effective delivery of products and
services.
A. Plan Do Check Act - PDCA Cycle

The Plan Do Check Act Cycle was suggested by Eduard Deming as a well-formed
Supply Chain Management Lean Management
approach for quality systems, problem-solving, and kaizen initiatives. The PDCA cycle is a
shortened version of the PDCA cycle. The PDCA cycle is an essential component of lean
manufacturing and continuous improvement projects. It's especially useful when dealing
Quality Management Logistics and Transportations with problems that are difficult to diagnose, have several core causes, and necessitate a
concentrated effort in performance management and long-term sustainability. The PDCA
cycle consists, as its name suggests, of the following stages or steps:
Green Operations and Data Analytics and Technology
Sustainability Integration Plan: The issue statement, objectives, data collection, and project scope specification
are all part of the planning process.

Production Planning and Do: Define the issue, problem, or quality concern with a process, product, or plant in
Supply chain management
Scheduling the do stage. Other problem-solving concepts and techniques, like fishbone diagrams,
Pareto charts, and root cause analysis, are frequently employed in the Do stage to
establish the most likely source of the problem, issue, or lack of performance.
1. Supply Chain Management:
This is one of the core areas in operations which deals with the strategic coordination Check: The validity of the possible causes of the issue or problem, as well as the
and integration of various processes, activities, and stakeholders involved in the outcomes of the activities and modifications proposed above, is examined at this
creation, movement, and distribution of goods and services from raw materials to step.
delivery of finished goods to the customer. The primary goal of supply chain
management is to optimize efficiency, cost-effectiveness, and customer satisfaction Act: This is the stage in which steps and activities are put in place to permanently
throughout the entire supply chain network. Key Components include Bullwhip Effect, address the problem, issue, or improve the process or plant.
Bottleneck, Supplier Relationship Management (SRM), Collaborative Planning,
Forecasting, and Replenishment (CPFR), Risk Management, Total Cost of Ownership After the Actions have been implemented, they are reviewed for efficacy and, if
(TCO) applicable, performance improvement. If the results are not satisfactory, the PDCA
cycle is repeated; in most circumstances, the process will back to the Do stage;
however, starting from the planning stage may be more feasible.
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B. Just in time - JIT and Kanban systems Kaizens focus areas The following are some of the areas where kaizen activities and
programs are more regularly used and can be very beneficial:
Just in time (JIT) production system aims to increase output by fulfilling customer orders Performance of individual plants and machines, including throughput and
promptly to reduce inventory costs such as handling, depreciation, and storage. JIT dependability
minimizes waste by producing goods only when needed, aligning with lean manufacturing Entire production lines, including bottlenecks, production rates, changeovers, etc
principles. Raw material procurement and utilization Labour utilization
Communication, including Andon systems
Quality
Production processes and tasks
Housekeeping and 5S
Inventory management and control
Inventory costs and warehousing
Supply chain management
Kaizen employs a variety of lean manufacturing and problem-solving tools, techniques,
communication, and interaction methods, including Kaizen boards, data collection and
analysis, root cause analysis, process flow charts, Pareto charts, fishbone diagrams, and
the 5 whys, among others, to achieve long-term improvements and efficiencies with the
same or fewer inputs into the production process. Kaizen, like many other lean
It is a manufacturing approach that tries to accomplish high-volume production while
approaches, is not restricted to manufacturing or production processes. It can be used in
keeping inventories to a minimum. The key to this strategy is to supply parts inventory to
any process in any business. The principles may be used across industries because the end
each workstation at precisely the right time. Combining the JIT mindset with TQM (total
goal is to make better use of inputs to produce better, more efficient outputs through a
quality management), which constantly monitors for the causes of defects and eliminates
focused team approach.
them all at once, is a good idea. JIT (just-in-time) delivery is a pull system delivery because
products are only delivered when an order or Kanban signal is received.

C. Kaizen and continuous improvement

Kaizen is a Japanese concept that refers to continuous improvement in a business,

operations, or manufacturing process. Kaizen is a Japanese concept that aims for
continual improvement in all parts of a manufacturing process, from raw material
procurement to production procedures. The term "Kaizen" is most often used to describe
focal projects or efforts aimed at addressing and improving process concerns. It is one of
the most significant phrases in lean manufacturing and operations management, and it
should be at the top of most corporate leaders' and managers' priority lists if they want to
maintain a competitive advantage in their market and become industry leaders.

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Kaizen initiatives and framework 3. Quality Management:

There are numerous approaches to fostering a continuous improvement culture and
emphasis among employees and management. It is highly dependent on the industry, staff
This area deals with the systematic processes, practices, and strategies which are
experience, resource availability, manager preferences, and drive to develop for everyone.
implemented to ensure that products, services, and processes consistently meet or
There is no one-size-fits-all approach to organizing a kaizen activity, plan, or program; what
exceed established quality standards and customer expectations. Its main aim is to
matters is that there is a clear framework that the entire team knows and can readily follow
enhance customer satisfaction by delivering products and services that are reliable,
in order to produce long-term results.
defect-free, and consistent in meeting specified requirements It is a crucial component
for maintaining competitiveness, building a positive reputation, and minimizing costs
associated with defects and rework. Some of the Key elements in Quality Management
Some general Kaizen general frameworks can include:
are Quality Control (QC), Quality Assurance (QA), Total Quality Management (TQM), and
 Individual-specific projects run by team leaders or managers.
Statistical Process Control (SPC)
 Focused initiatives run by managers in conjunction with team members.
 Team member-initiated kaizen initiatives supported by managers.
 Kaizen blitzes in specific areas.
Total Quality Management:
 Larger scale kaizen projects involving all staff.

TQM stands for Total Quality Management, which refers to the process of controlling
an organization's whole supply chain to satisfy both internal and external consumers. It
aspires to be the best in all elements of its operations and to give clients exactly what
D. Kanban System in Just-in-Time Production they want. It is a component of the value. No index entries were found. Stream's
Kanban or a Kanban is a sort of signalling system that is used in a process and/or an EOQ continuous improvement process, quality culture and should be ingrained in the
system to manage WIP and/or inventory between processes or tasks. The signalling system company's culture, involving all employees from executives to shop floor workers. TQM
can be cards, containers, or squares to denote where supplies are stored. When the acquired a lot of traction in the 1980s when the quality of American-made items was
containers or squares are empty, the cards or the container itself can be utilized to signal to inferior to Japanese-made products in several industries
the operators that an additional product is needed.

TQM aspires for quality at the source of production and puts the responsibility for
one's own work and the production process on the person. It strives to decrease
quality flaws through statistical quality control, internal quality audits, teamwork,
quality standards, and partnership with suppliers and consumers to ensure that the
final product meets all requirements. Total quality management is a road that requires
thorough data collection, process checks, analysis, resources, and dedication from
everyone in the organization to attain the ultimate aim of satisfying and exceeding the
expectations of customers.

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4. Logistics and transportation: 6. Data Analytics and Technology Integration:

These two play a critical role in operations by ensuring an efficient and effective flow By combining data analytics and technology integration, organizations can gain a
of products from suppliers to consumers. These components involve planning, competitive edge by making more informed decisions, improving resource
execution, and control of the movement, storage, and distribution of goods, allocation, reducing operational costs, enhancing customer experiences, and driving
materials, and information throughout the supply chain. Learning in Deep Logistics is innovation across their operations. In operations management, data analytics
a process of managing the flow of goods, services, and information from the point of focuses on using historical and real-time data from various sources to gain a deeper
origin to the point of consumption which involves inventory management, understanding of processes, identify areas for improvement, and make informed
warehousing, order processing, packaging, and distribution. decisions. Key aspects of data analytics involve Descriptive Analytics, Predictive
Analytics, Prescriptive Analytics, Real-time Monitoring, and Key Performance
Whereas Transportation is nothing but the physical movement of goods and Indicators (KPIs). Technology integration involves the seamless incorporation of
materials from one location to another by various means such as road, rail, air, sea, various technological solutions, such as software, hardware, sensors, and
and even emerging technologies like drones. It is mainly used in the supply chain. automation, into existing operational processes to enhance efficiency and
Effective management of these functions contributes to improved coordination, effectiveness. Key technologies include the Internet of Things (IoT), Cloud
reduced costs, and enhanced service levels throughout the entire product lifecycle. Computing, Big Data, Artificial Intelligence (AI).

5. Green Operations and Sustainability: 7. Production Planning and Scheduling:

It refers to the practice of integrating environmentally responsible and socially Production planning is the process of determining what products to produce, in what
conscious principles into various aspects of business operations to minimize negative quantities, and over what timeframe to meet customer demand while considering
impacts on the environment, society, and economic well-being. Its main aim is to available resources and capacity. It involves making decisions about production
minimize waste generation, reduce carbon emissions and contribute to the long-term levels, inventory management, and resource allocation. Key aspects of production
health of the planet and communities. The main key concepts of green operations are planning involve Demand Forecasting, Master Production Schedule (MPS), and
Carbon Footprint Reduction, Innovation and Technology, Green Marketing, and Materials Requirement Planning (MRP). Whereas Production scheduling is the process
Regulatory Compliance. of creating a detailed timetable for carrying out production activities based on the
production plan. It involves determining the order and timing of specific tasks and
activities to ensure that production runs smoothly and efficiently. Job Sequencing,
Machine Scheduling, Lead Time Management

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Advantages
8. Supply chain management
Supply chain management is critical in this era of globalization, as organizations
Supply Chain Management can be described as the control of the flow of goods and compete to give the greatest quality products to clients and meet all of their requests.
services from the point of manufacture to the point of consumption. It also includes All businesses rely heavily on a well-functioning supply network.
the transportation and storage of raw materials used in work-in-progress, inventories,
and fully furnished goods. Supply chain management's major goal is to keep track of
and connect the production, distribution, and shipment of goods and services. Let's take a look at some of the primary benefits of supply chain management. The
Companies having a good and tight grip over internal inventory, production, following are the main advantages of supply chain management:
distribution, internal productions, and sales can do this. Improves client service and relationships.
Develops more efficient distribution mechanisms for in-demand items and services
Enhances efficiency and business processes
Lowers the cost of storage and transportation
Producer Manufacturer Distributer Retailer Consumer Reduces both direct and indirect expenditures
Assists in the timely delivery of the correct products to the correct location.
Supports the successful execution of just-in-time stock models by improving
inventory management
Assists businesses in adjusting to globalization, economic turmoil, rising consumer
The flow of commodities, services, and information from the producer to the consumer demands, and other differences
is depicted in the diagram above. The illustration demonstrates the flow of a product Assists businesses in reducing waste, lowering costs, and increasing efficiencies
from the producer to the manufacturer, who then sends it to the distributor for throughout the supply chain
distribution. The distributor then sends it to the wholesaler or retailer, who then
distributes the items to various stores where customers can easily obtain them. Supply These are just a few of the many benefits of supply chain management. Let's have a look
chain management essentially combines demand and supply management. It employs a at the major goals of supply chain management after we've looked at the concept and
variety of tactics and methodologies to examine the complete chain and perform benefits of supply chain management.
efficiently at each and every phase. Every unit involved in the process should strive to
reduce expenses and assist organizations in improving their long-term performance Goals
while also adding value to their stakeholders and consumers. This method can help
reduce rates by eliminating superfluous costs, moves, and handling Every company attempts to match supply and demand as quickly
as possible while making the most efficient use of resources. The
It's important to understand that supply chain management and supply chain event following are some of the essential objectives of supply chain
management are not the same things. Supply Chain Event Management addresses the management:
reasons that could disrupt an efficient supply chain's flow; various situations are
evaluated, and remedies are designed appropriately. Supply chain partners collaborate at many levels to increase resource
productivity, standardize processes, eliminate duplication of effort, and
reduce inventory levels.
Minimizing supply chain costs is critical, especially when organizations are
facing economic uncertainty and want to save money.
While cost-effective and low-cost items are vital, supply chain managers must
focus on creating value for their consumers.
The best way to satisfy customers is to consistently exceed their expectations.
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KEY AREAS TO FOCUS PRAKRIYA - The Operations Club

Make:
Client expectations for more product variety, customized goods, off-season The production or making of customer-demanded products is the third step in the supply
inventory availability, and quick fulfilment at a price equal to in-store options should chain management process. The products are created, manufactured, tested, packaged,
be met. and synchronized for delivery at this step. The supply chain manager's job is to schedule
To achieve customer expectations, retailers must see inventory as a shared resource all of the tasks required for manufacturing, testing, packaging, and delivery preparation.
and use distributed order management systems to fulfil orders at the most efficient This segment of the supply chain is the most metric-intensive, with enterprises able to
node in the supply chain. assess quality levels, production output, and labour productivity.

Finally, supply chain management attempts to contribute to an organization's financial

Deliver:
performance. It aims at leading organizations leveraging the supply chain to improve
The delivery stage is the fourth stage. The provider delivers the merchandise to the
differentiation, grow sales, and reach new markets, in addition to all of the points
customer at the specified location. This is essentially the logistics stage, where consumer
mentioned above. The goal is to increase competitive advantage and shareholder value.
orders are approved and goods delivery is scheduled. The logistics stage, where
organizations collaborate to collect orders from clients, construct a network of
Process warehouses, select carriers to deliver products to customers, and set up an invoicing
system to receive payments, is often referred to as the delivery stage.
Companies employ supply chain management to guarantee that their supply chains are
efficient and cost-effective. A supply chain is the series of procedures taken by a Return:
corporation to convert raw materials into finished goods. The following are the five basic The return is the final and most important stage of supply chain management. The
components of supply chain management customer returns defective or damaged items to the provider at this step. Companies
must deal with client inquiries and concerns, among other things. For many businesses,
Plan:
this stage of the supply chain is a source of frustration. Supply chain planners must
The planning stage is the first step in the supply chain process. In order to address how
devise a responsive and adaptable network for receiving damaged, faulty, and additional
the products and services will satisfy the expectations and necessities of the customers,
products from customers, as well as expediting the return procedure for customers who
we must design a plan or strategy. At this point, the planning should primarily focus on
have concerns with delivered products.
devising a profit-maximizing approach. Companies must develop a strategy to manage
all of the resources required for designing products and offering services. The main
focus of supply chain management is on planning and generating a set of measurements. Warehousing

Develop (Source): Warehousing is an important part of the supply chain. The demands and expectations of
The development stage in supply chain management involves laying the foundation for a customers are changing dramatically in today's economy. We want everything to be just
robust and efficient supply chain network. This critical phase entails identifying and outside our door and at a reasonable price. We can state that warehousing function
selecting reliable suppliers, negotiating favorable terms and conditions, and building management necessitates a distinct fusion of engineering, IT, human resources, and
strong relationships with key partners. Additionally, it requires designing an optimal supply chain expertise. Accepting supplies in an immediately storable conveyance, such
supply chain structure, optimizing inventory management strategies, and implementing as a pallet, case, or box, is great for neutralizing the efficiency of inbound functions. The
effective transportation planning. By carefully considering these factors, businesses can types and quantities of orders processed are required for labelling the structure, tool
create a supply chain that supports their operations, minimizes costs, and delivers selection, and business process. In addition, the quantity of stock-keeping units (SKUs) in
exceptional value to customers. the distribution centre is an important factor to consider.The Warehouse Management
System (WMS) directs the products to the appropriate storage location. Following that,
the necessary functionality for the completion and optimization of receiving, storing, and
shipping functions are provided.

21
 c. Goals

KEY AREAS TO FOCUS PRAKRIYA - The Operations Club

Performance Measure Reshoring: This tendency has just lately emerged as a result of growing costs and other
factors. It is the process of returning outsourced items and services to the point of
A supply chain performance metric is a method for evaluating the efficiency of a
origin from where they were originally supplied. It explains how to return some or all of
supply chain system. There are two basic categories of supply chain performance
the production to its original location.
indicators:
• Qualitative indicators: Customer happiness and product quality, for example.
• Quantitative measures: order-to-delivery lead time, supply chain reaction time, Inventory Management
flexibility, resource usage, and delivery performance are just a few examples. Only
quantitative performance measures will be considered here. A multidimensional One of the main aims of supply chain management, as stated under the major objectives
approach, which addresses how the organization needs to provide services to varied of supply chain management, is to ensure that all operations and functions within and
consumer expectations, can improve the performance of a supply chain. across the firm are managed efficiently. There are times when inventory efficiencies, or
more precisely, maintaining inventory reduction efficiency, can assure supply chain
efficiency. Despite the fact that inventory is viewed as a liability in supply chain
Networks management, supply chain managers recognize the importance of inventory. The
unspoken guideline, however, is to maintain inventories to a bare minimum. Many
The physical organization, design, structural architecture, and infrastructure of the
solutions are being developed with the goal of reducing inventory investment and
supply chain are all determined by the network design. The number, location, and size of
simplifying stocks beyond the supply chain. Because of inventory investment, supply
production plants and warehouses, as well as the assignment of retail outlets to
chain managers try to keep stocks as low as possible. Owning inventories has a high cost
warehouses, are all key considerations to be taken here. Other key sourcing decisions
or investment associated with it. These expenses include the monetary expenditure for
are also made at this stage. Many significant decisions affecting the long-term location,
purchasing inventory, the costs of acquiring inventory (the cost of investing in inventory
capacity, technology, and supplier selection must be made while taking into account the
rather than something else), and the costs of inventory management.
potential for market expansion to be fraught with uncertainty, as well as changing
economic and regulatory situations.

The development of multi-stage stochastic optimization methods necessary for decision

support under demand, freight rate, and exchange rate uncertainty is the focus of
network design in the supply chain. We will cover numerous ways of studying
uncertainty and scenario modelling in this section.

Warehouse location: When a company expands its branches to new sites, it often needs
new storage facilities. The corporation is having trouble finding a warehouse facility.
Within the range of possible locations, the one that has the lowest fixed and operational
costs while meeting the demand is picked.

Traffic network design: Cities are becoming more congested as the population grows.
Because of the increased demand for transportation, traffic networks must also be
expanded. Because the cash available is frequently limited, the main challenge is
deciding which projects should be built to improve traffic flow inside a network.

22
 SUPPLY CHAIN MANAGEMENT PRAKRIYA - The Operations Club

Back Ordering Cross-docking

It is the process of sending a purchase order to a supplier for a product that is When a business owner receives items from vendors, he or she can send them to
temporarily out of stock in your warehouse but has already been requested by your clients with little to no storage time. This system often employs a single dock or
customers. Backorders are commonly used in high-demand situations and for slow- platform with the best access to both cargo loading and unloading zones, allowing
moving products that experience a sudden surge in demand. items unloaded from a single set of trucks to be inspected, sorted, and divided into
groups based on destination.
Bill of Lading
It is the process of sending a purchase order to a supplier for a product that is Electronic Data Interface (EDI)
temporarily out of stock in your warehouse but has already been requested by your It is a means of transmitting transactions from one computer system to another by
customers. Backorders are commonly used in high-demand situations and for slow- transforming the data into a standard that all systems can understand. It is most
moving products that experience a sudden surge in demand. employed in situations where two or more parties communicate information on paper.
It could be utilized in situations when a seller sends the third party printed copies of
Blanket Order invoices or orders.

A method in which the customer agrees to acquire a particular number of one or

more things over a specified time (which might range from a few days to many
Groupage
months) without specifying their exact shipment dates at the time of purchase. t is a means of combining many shipments from various sellers (each with their own bill
Within this time frame, the vendor can dispatch the products in pieces and on any of lading) into a single container. When individual shipments are less than the
dates that are convenient for him. container load or when they are not large enough to fill a full container, this is done.
The freight costs are divided between various sellers in this way.
Bonded Warehouse
The Harmonized Set of Codes (HS)
A facility where you can store taxable items and imports subject to tariffs for
commercial purposes that are overseen by the customs agency or government It is a set of internationally recognized codes that assist businesses and government
authority. Taxes must be paid only when the products are removed from the agencies in identifying things when buying or selling them around the world.
warehouse. This is especially beneficial for shops that import a large number of Depending on where they are used, these codes usually include four to ten digits.
items into the country, as it allows them to spread out their tax load by deferring it
Hitchment
Carnet This is the practice of connecting two or more shipments into a single shipment that is
A legal document that allows you to temporarily export things to another country identified by a single bill of lading, even though they did not originate from the same
and reimport them into the US without paying import duties within a year. Except location. Only if two conditions are met can this be done: All individual shipments have
for consumables (such as food, oils, and other liquids), agricultural products, mail, the same sender and receiver. It has been approved by the authorities in charge of
explosives, and disposables, this document is acceptable in over 80 nations. shipping tariffs.

Consignment
It is the process of sending a purchase order to a supplier for a product that is
temporarily out of stock in your warehouse but has already been requested by
your customers. Backorders are commonly used in high-demand situations and for
slow-moving products that experience a sudden surge in demand.
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 SUPPLY CHAIN MANAGEMENT PRAKRIYA - The Operations Club

The International Maritime Dangerous Goods Code (IMDG) 5S METHODOLOGY

A method in which the customer agrees to acquire a particular number of one or 5S is a system for organizing workspaces so that work may be done quickly, efficiently,
more things over a specified time (which might range from a few days to many and safely. This technique emphasizes putting things back where they belong and
months) without specifying their exact shipment dates at the time of purchase. keeping the workplace clean, making it easier for individuals to complete their tasks
Within this time frame, the vendor can dispatch the products in pieces and on without wasting time or causing damage.
any dates that are convenient for him.
The term 5S comes from five Japanese words:
● Seiri (Sort)
PADAG ● Seiton (Set in Order)
“Please authorize my delivery against guarantee” is a document that is used when ● Seiso (Shine)
a consignee is unable to provide the shipper with necessary shipping ● Seiketsu (Standardize)
documentation (such as the bill of lading). In exchange for releasing the items in ● Shitsuke (Sustain)
their care, the shipper receives a personal or financial guarantee from the
consignee.

Landed Cost
The overall cost of ownership of an item is known as the landed cost. This
includes the purchase price, delivery costs, customs duties, taxes, and any
additional fees the buyer was responsible for.

Waybill
A document prepared by the seller on behalf of the carrier that defines the
shipment's origin, the transacting parties (buyer and seller) information, the
route, and the destination address

Just-in-time (JIT)
It is a method of inventory optimization in which each batch of items arrives “just
in time” to meet the needs of the following stage, which could be a shipment or a
production cycle.

Knocked Down
An item that has been deconstructed into two or more components to make
transportation easier. Before delivery, these components will be fitted together.

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 SUPPLY CHAIN MANAGEMENT PRAKRIYA - The Operations Club

Six Sigma DMDV

Six Sigma is a quality-control methodology developed in 1986 by Motorola, Inc. It Define design goals that are consistent with customer demands and the
was originally developed as a management method to work faster with fewer enterprise strategy.
mistakes. It has now become an industry standard with certifications offered to Measure and identify CTQs (characteristics that are Critical to Quality),
practitioners. Six Sigma emphasizes cycle-time improvement while at the same measure product capabilities, production process capability, and measure
time reducing manufacturing defects to a level of no more than 3.4 occurrences risks.
per million units or events. Six Sigma projects follow two project methodologies, Analyse to develop and design alternatives
each with five phases. Design an improved alternative, best suited per analysis in the previous step
Verify the design, set up pilot runs, implement the production process and
hand it over to the process owner(s).
DMAIC
Define the system, the voice of the customer and their requirements, and the Six Sigma employs a variety of well-established quality-management methods
project goals inside the different phases of a DMAIC or DMADV project.

Measure key aspects of the current process and collect relevant data; ❖ 5 Whys
calculate the "as-is" process capability. ❖ Cause & effects diagram (also known as fishbone or Ishikawa diagram)
❖ Control chart/Control plan (also known as a swim lane map)/Run chart
Analyze the data to investigate and verify cause and effect. Determine what ❖ Cost-benefit analysis
the relationships are in an attempt to ensure that all factors have been ❖ Pick chart/Process capability/Rolled throughput yield
considered. Seek out the root cause of the defect under investigation. ❖ Quality Function Deployment (QFD)
❖ Root cause analysis ❖ SIPOC analysis (Suppliers, Inputs, Process, Outputs,
Improve or optimize the current process based upon data analysis using Customers) ❖ COPIS analysis (Customer-centric version/perspective of SIPOC)
techniques such as the design of experiment, poke yoke or mistake proofing, ❖ Taguchi methods/Taguchi Loss Function
and standard work to create a new, future state process. Set up pilot runs to
process capability.

Control the future state process to ensure that any deviations from the target
are corrected before they result in defects. Implement control systems such as
statistical control processes, production boards, visual workplaces, and
continuously monitor the process. This process is repeated until the desired
quality level is obtained.

25
CAPACITY UTILISATION PRAKRIYA - The Operations Club

Objective of Capacity Utilization Interpreting Capacity Utilization

The capacity utilization rate serves as a valuable tool for companies, offering
insights into production value and resource usage at any point in time. Above 85%: High efficiency, but may risk overuse of resources.
It assesses the company's capability to handle an increase in output without 70% - 85%: Ideal range for most industries.
Below 70%: Indicates underutilization and inefficiencies.
incurring additional costs.
A decline in the rate suggests an economic downturn, whereas an increase
indicates economic growth.
Maximum Production Capability

Capacity utilization is a key performance metric that measures how Rated Capacity: Theoretical output at full speed, with no downtime.
Effective Capacity: Adjusts for efficiency and utilization of scheduled hours.
efficiently a company is using its production capacity. The formula
for capacity utilization is:
Effective Daily Capacity
Basic Formula: Effective Daily Capacity = (No. of Machines or Workers)×(Hours per
Shift)×(No. of Shifts)×(Efficiency)
Capacity Utilization(%)=(Maximum Possible Output/Actual Output​)×100
Load Percent = (load / capacity) × 100%
Machine Utilization:

Machine Utilization(%)=(ActualMachine Utilization(%)=(Total Theoretical vs. Practical Capacity Utilization:

Available Machine Hours/Actual Machine Hours Used​)×100
Theoretical Capacity Utilization assumes 100% efficiency (no
breakdowns, idle time, or inefficiencies).
Labor Utilization: Practical Capacity Utilization adjusts for maintenance,
changeovers, and other operational realities.
Labor Utilization(%)=(Actual Labor Hours Worked/Total Available
Labor Hours)×100

Economic Capacity Utilization Rate (ECUR):

ECUR=(Observed Output at Lowest Cost/Capacity Output at Lowest

Cost)×100

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INVENTORY MANAGEMENT PRAKRIYA - The Operations Club

1. Objectives of Inventory Management

5. Optical Production Quantity (EPQ)
Minimize Costs: Holding, ordering, and shortage costs.
Formula
Maximize Service Levels: Ensure product availability for customers.
Optimize Inventory Levels: Balance between overstocking and understocking

2. Types of Inventory .
Raw Materials: Inputs for production. Where,
Work-in-Progress (WIP): Partially finished goods. d = Demand Rate
Finished Goods: Ready for sale. p = Production Rate
Maintenance, Repair, and Operations (MRO): Supplies for maintenance
6. Safety Stock
3. Inventory Costs Extra inventory to prevent stockouts due to demand variability or supply
Holding/Carrying Cost: Cost of storing inventory (e.g., warehousing, delays.
insurance). Formula
Formula
Holding Cost = Average Inventory × Holding Cost per Unit Safety Stock = Z * σLT
Ordering Cost: Cost of placing and receiving orders.
Formula: Where:
Ordering Cost = Number of Orders × Cost per Order Z = Z-score (based on desired service level).
Shortage/Stockout Cost: Cost of not having inventory when needed (e.g., lost σLT​= Standard deviation of demand during lead time.
sales).

7. Reorder Point (ROP)

4. Economic Order Quantity (EOQ)
Inventory level at which a new order should be placed.
Optimal order quantity to minimize total inventory costs.
Formula
Formula

ROP= d * L

Where:
d = Demand
​Where: L = Lead Time
D = Annual demand (units)
27
ROP = d * L + SS
S = Ordering cost per order Where,
H = Holding cost per unit per year SS - Safety Stock
 INVENTORY MANAGEMENT PRAKRIYA - The Operations Club

8. Total Inventory Cost Material Requirements Planning (MRP)

Material Requirements Planning (MRP) is a systematic approach for determining
Sum of holding, ordering, and shortage costs. what materials are needed, how manyare needed, and when they are needed, so
that production schedules can be met efficiently while minimizing inventory costs.
Formula MRP Processes
BOM Explosion: Expand the BOM to list all required components.
Inventory Netting: Subtract on-hand inventory and scheduled receipts from
gross requirements.
Netting: Compute net requirements by removing available quantities.
Where: Lot Sizing & Time-Phasing: Determine order quantities and timing.
Q = Order quantity
Projected On-Hand Inventory (End of Period t)

Projected On-Hand(t)=Projected On-Hand(t−1)+Scheduled Receipts(t)+Planned

9. Inventory Turnover Ratio Order Receipts(t)−Gross Requirements(t)
Measures how efficiently inventory is managed. Net Requirements (Period t)
Formula
Net Requirements(t)=max{0,[Gross Requirements(t)]−[Projected On-
Hand(t−1)+Scheduled Receipts(t)]}

In other words, if existing on-hand plus scheduled receipts cannot satisfy gross
requirements (plus any safety stock), the shortfall is the net requirement.

If Safety Stock (SS) is required, modify gross requirements as:

10. Maximum Inventoy Level
Net Requirements(t)= max⁡{0,[Gross Requirements(t)+SS]−[Projected On-
Formula Hand(t−1)+Scheduled Receipts(t)]}

If Safety Stock (SS) is required, modify gross requirements as:

Net Requirements(t)= max⁡{0,[Gross Requirements(t)+SS]−[Projected On-

Hand(t−1)+Scheduled Receipts(t)]}

Inventory Netting
Projected On-Hand(t)=On-Hand(t−1)+Scheduled Receipts(t)−Gross Requirements(t)

Lot Sizing & Time-Phasing

Planned Order Receipts(t)=Lot-Sizing Function[Net Requirements(t)]

Planned Order Releases(t−L)=Planned Order Receipts(t)

28
 FORECASTING PRAKRIYA - The Operations Club

1. Naive Forecasting Where:

Formula: = Smoothed level
= Trend component
Where: = Trend smoothing constant
= Forecast for next period
= Actual demand of current period 6. Seasonal Forecasting (Multiplicative Model)
Formula:
2. Moving Average (MA)
Formula (for n-period MA): Where:
= Trend component
= Seasonal factor
Where: 7. Simple Linear Regression (for Trend Forecasting)
n = Number of periods Equation:
= Actual demand in period
3. Weighted Moving Average (WMA) Where:
Formula: Y = Forecasted demand
X = Time period
a = Intercept
b = Slope
Where: Slope Formula:
= Weight assigned to each period (sum of all weights = 1)
4. Exponential Smoothing Intercept Formula:
Formula:

Where:
8. Mean Absolute Deviation (MAD)
= Smoothing constant (0 < < 1) Formula:

5. Trend-Adjusted Exponential Smoothing (Holt’s Method) Where:

Level Update: = Actual demand
= Forecasted demand

Trend Update:
9. Mean Squared Error (MSE)
Formula:

Forecast: 10. Mean Absolute Percentage Error (MAPE)

29
Formula:
 QUALITY FUNCTION DEPLOYMENT PRAKRIYA - The Operations Club

Quality Function Deployment (QFD) is a structured methodology used to translate customer requirements (CRs) into
appropriate technical requirements (TRs) at each stage of product or service development. It ensures that customer needs
are prioritized throughout the design, manufacturing, and delivery processes.

Customer Requirement Weighting Formula Relative Weight of Technical Requirements

I_j = ∑(w_i * r_ij) RW_j = I_j / ∑ I_j
Where: Where:
I_j = Importance score of Technical Requirement (TR) j RW_j = Relative weight of Technical Requirement j
w_i = Weight/importance of Customer Requirement (CR) i I_j = Importance score of TR j
r_ij = Relationship strength between CR i and TR j (values: 9-strong, 3-
medium, 1-weak) Quality Improvement Ratio (QIR)
QIR_j = TV_j / CP_j
Overall Quality Score Calculation Where:
Q = ∑(w_i * ∑(r_ij * x_j)) QIR_j = Quality Improvement Ratio for TR j
Where: TV_j = Target value for TR j
Q = Overall quality score CP_j = Competitive positioning score for TR j
x_j = Engineering characteristic j value
Final Decision Matrix Calculation
Normalization Formula for Competitor Benchmarking DM = ∑(TPS_j * TRV_j)
N_i = S_i / max(S) Where:
Where: DM = Final decision matrix score
N_i = Normalized score for competitor i TRV_j = Technical Requirement Value for TR j
S_i = Raw score for competitor i
max(S) = Maximum score among competitors Competitive Positioning Score
CP_j = (∑(r_ij * C_ij)) / ∑ r_ij
Target Value Calculation Where:
TV_j = (∑(r_ij * w_i)) / ∑ r_ij CP_j = Competitive positioning score for TR j
Where: C_ij = Competitor’s rating on TR j
TV_j = Target value for Technical Requirement j

30
 Logistics company PRAKRIYA - The Operations Club

Q: Good afternoon, how’s it going? They handle ~200 packages daily, averaging 35 lbs each.
Over the past six months, 35% of customers have complained about missed
timelines.
A: Good afternoon, ma’am It is going well. While customers appreciate the rebate, they prefer on-time deliveries.

Q: Excellent, so your resume says you have active interest in Operations Management. A: Sure sir, I made a pareto chart for the 7 problems that we are facing and what I
So, we have a delivery company as a client who is facing decline in his profits. Could would look at is the top 3 that have shown up which majorly impact our client.
you help us in resolving it? 1. Delay in getting right transport 20.71%
2. Difficulty in tracing addresses 17.85%
3. Scheduling errors 15.52%
A: Yes sir, I would like to contribute to resolving it. Could you provide me with more
specifics. What is the geography they operate in? Is it an impact due to cost side or
price side? Also, is it an industry wide phenomenon or only with our client?

Q: They operate in single country for now. The impact is due to cost side and this issue
is currently for our client only.

A: Okay sir, so I would like to proceed with the value chain analysis of it and therefore I
would seek problems in the inbound & outbound logistics and the operations part of it.
Do you want me to explore some other areas as well?

Q: Seems you are on track and surely you can work out with the operations and costing part
of it.
PUB Delivery operates in two locations, Downtown and Suburbia, offering package pickup
and delivery within a 15-mile radius.

Scan below QR for the excel sheet

31
They promise a 15-minute time window for service, with a full rebate if missed.
Pricing is $5 per package + $1 per pound (max 50 lbs).
Logistics company PRAKRIYA - The Operations Club

Q: You are on right track could you continue your analysis on it.

A: Sure ma’am, Furthermore I can see that the weight category 30-40 kgs is the main
problem causing segment for us. Part time Reminder Schedule
Employees Messages Dispatch
I can suggest assigning a fleet management SOP to ensure timely deliveries for
this segment that is choosing a right time slot and type of vehicle assigned.
Secondly due to our issues with tracing the right addresses we can form a Q: Fine, you have done a good job.
strategic alliance with a local partner and meanwhile resolve our technical issues.

A: Thanks ma’am, have a nice day.

Fleet Time Strategic

Management Slots Alliances

Q: You are right, could you also propose a solution for resolving scheduling errors as
well?

A: So the current data doesn’t specify as to why the scheduling errors might have
occurred and therefore I would like to assume that its either due to
1. Unavailability of delivery partners
2. Under staffing at dispatch
3. Customer unavailability or Revised schedule for delivery from customer
4. Smaller fleet to accommodate orders.

Q: Your assumptions are well aligned. What are the solutions that you can think of to
resolve them?

A: The Cost benefit analysis of our Strategic Alliances or procuring new fleet to resolve the scheduling of
vehicles and partners.
Hiring part time employees for the time slots that we have faced as bottlenecks for the processes.
For the problem related to the customer unavailability we can send a reminder message for the 32
confirmed slots of delivery and based on the response we can plan to load and dispatch their deliveries
accordingly.
Logistics company PRAKRIYA - The Operations Club

PUB Delivery, specializing in package pickup and delivery (≤50 lbs), is experiencing a rise in customer complaints.
Case Statement: 35% of customers report missed 15-minute commitment windows, impacting satisfaction despite the rebate policy.

Interviewee Notes Key Takeaways

Customers: Homes & Small Businesses
Delivery Mode: Trucks & Bicycles Customers value timeliness over rebates

Operations: Downtown & Suburbia (15-mile radius) Optimized routing & additional workforce can reduce delays

Key Issue: 35% late deliveries despite price rebate policy Live tracking & customer coordination enhance experience

Business Model: $5 per package + $1 per pound (max 50 lbs)

Customer Preference: Timely delivery > Rebates

Structure/Framework

33
 VastraFab Ltd. PRAKRIYA - The Operations Club

VastraFab Ltd., based in Surat, India, is a renowned textile manufacturing company specializing in high-quality cotton shirts. Over the past two decades, the company has earned a strong
reputation in both domestic and international markets for its superior craftsmanship, premium fabrics, and impeccable stitching standards. The company caters to global retail chains,
fashion brands, and wholesalers, making it a crucial player in the Indian textile industry.

CHALLENGES FACED BY VASTRAFAB LTD. PROBLEM STATEMENT

Despite its rich legacy and market presence, VastraFab has been facing increasing After conducting on-floor observations and data collection, Arjun identifies four major
operational challenges over the past few years. The shirting department, responsible for inefficiencies within the sewing operations:
nearly 40% of the company's total revenue, has become a bottleneck in production,
High Idle Time: Machines remain inactive due to material shortages and delayed
leading to:
fabric feeding.
Missed deadlines: Late deliveries resulting in penalties and strained client Long Changeover Times: Switching between different shirt styles takes too long,
relationships. slowing production.
Escalating operational costs: Unoptimized production processes leading to higher Frequent Downtime: Machines frequently break down due to poor maintenance
manufacturing expenses. practices.
Declining productivity: Inefficiencies in the sewing process causing wastage of time High Defect Rate: A significant percentage of garments are rejected due to stitching
and resources. defects.
Quality control issues: Rising defect rates impacting customer satisfaction and
These issues contribute to high operational costs, shipment delays, and lower
returns.
productivity, significantly affecting VastraFab's profitability and competitiveness.
To address these challenges, Arjun Mehta, a dynamic operations manager with expertise
in industrial engineering, is brought in to analyze and optimize the production process.
He embarks on a time and motion analysis to identify inefficiencies and drive systematic
improvements.
BACKGROUND AND DATA COLLECTION

To quantify the inefficiencies, Arjun collects 5 days of operational data for 10 sewing
KEY OBSERVATIONS machines, focusing on key performance indicators (KPIs) such as:
Average cycle time = 5.18 min/garment
Cycle Time: Average time taken to stitch one garment.
Average idle time = 42.5 min/day
Idle Time: Time lost due to lack of materials or operator delays.
Average changeover time = 30.6 min/day
Changeover Time: Time spent switching between different product types.
Average downtime = 56.5 min/day
Downtime: Time lost due to machine breakdowns.
Average defect rate = 2.08%
Defect Rate: Percentage of garments rejected due to quality issues.
Average machine utilization = 68.3%
Average operator defect rate = 1.45%
Average labor cost per garment = INR 11.90
34
 VastraFab Ltd. PRAKRIYA - The Operations Club

DATA IMPLEMENTATION PLAN: SOLUTIONS FOR IMPROVEMENT

Based on root cause analysis, Arjun formulates a structured improvement strategy
focusing on four key areas:

Reducing Idle Time

Root Cause:
Poor inventory management leads to material shortages.
Lack of coordination between cutting and sewing teams.

Solution:
Implement a Just-in-Time (JIT) system to ensure fabric is available exactly when
needed.
Improve coordination between the cutting and sewing departments.
Introduce a Kanban System where color-coded bins indicate material readiness.
Implement TAKT Time Analysis to reduce Idle Time.

Calculations:
New Idle Time = 42.5 × (1 - 0.5) = 21 min/day
Total Time Saved = 42.5 - 21 = 21.5 min/day
Additional Production Possible = 21.5 ÷ 4.8 = ~4.48 garments/day
SCENARIO: DEMAND EXCEEDS MANUFACTURING CAPACITY
Monthly Additional Production = 134 garments/month
Current Production Capacity:
Results:
Working Hours per Day: 480 minutes (8 hours)
Idle time reduced to 21 min/day
Available Production Time per Machine: 480 - (Idle Time + Changeover Time +
Extra 134 garments produced per month
Downtime) = 480 - (42.5 + 30.6 + 56.5) = 350.4 min/day
Daily Production per Machine: 350.4 / 5.18 = ~67.6 garments/day
Total Daily Production (10 machines): 67.6 × 10 = 676 garments/day

Customer Demand:

Daily Demand: 740 garments/day

Monthly Demand: 740 × 24 = 17760 garments/month

Gap Analysis:

Daily Shortfall: 740 - 676 = 64 garments/day

Monthly Shortfall: 64 × 24 = 1536 garments/month 35
This shortfall is causing missed deadlines, penalties, and strained client relationships.
 VastraFab Ltd. PRAKRIYA - The Operations Club

Reducing Changeover Time Reducing Downtime Reducing Defect Rate

Root Cause: Root Cause: Root Cause:

Operators lack standardized setup processes. Poor maintenance schedule leads to frequent Operator fatigue and lack of quality control training.
Frequent manual machine adjustments. breakdowns. Poor-quality raw materials causing stitching
Operators lack troubleshooting skills. defects.
Solution:
Implement SMED (Single Minute Exchange of Die) techniques. Solution: Solution:
Create pre-set machine adjustments for each shirt style. Implement a preventive maintenance schedule. Conduct operator training sessions on stitching
Train operators on rapid changeover processes. Train operators on troubleshooting basics. accuracy.
Stock essential spare parts to minimize repair Implement quality checkpoints at each stage.
Calculations:
time. Ensure better sourcing of high-quality raw
New Changeover Time = 30.6 × (1 - 0.5) = 15 min/day
materials.
Total Time Saved = 15.6 min/day Calculations:
New Downtime = 56.5 × (1 - 0.47) = 30 min/day Calculations:
Results:
Total Downtime Saved = 26.5 min/day New Defect Rate = 0.5%
Changeover time reduced to 15 min/day
Results: Results:
Downtime reduced to 30 min/day Defect rate reduced to 0.5%

Improved Production Capacity Batch Size Determination

New Production Capacity:
To optimize production, Arjun determines the
Available Production Time per Machine: 480 - (21 + 15 + 30)
batch size using the following formula:
= 414 min/day
Daily Production per Machine: 414 / 5.18 = ~80 Batch Size = (Demand × Lead Time) / Number
garments/day of Production Runs
Total Daily Production (10 machines): 80 × 10 = 800 Daily Demand: 740 garments
garments/day Lead Time: 1 day
Customer Demand: Number of Production Runs: 2 (to ensure
Daily Demand: 740 garments/day flexibility and reduce changeover time)
Monthly Demand: 740 × 24 = 17760 garments/month Batch Size = (740 × 1) / 2 = 370 garments per
Gap Analysis: batch
Daily Shortfall: No shortfall because of improved capacity. This batch size ensures efficient production
The improved production capacity now meets the daily and while minimizing idle time and changeover
monthly demand. time. 36
 VastraFab Ltd. PRAKRIYA - The Operations Club

Summary of Implementation Results

By implementing the proposed solutions, VastraFab Ltd. has successfully increased its
production capacity to meet the growing demand. The batch size of 370 garments per
batch ensures efficient production while minimizing idle time and changeover time. The
company is now better positioned to fulfill customer orders on time, reduce costs, and
improve overall profitability.

Overall efficiency improved by 20%

37
HydraForge Pvt. Ltd. PRAKRIYA - The Operations Club

HydraForge Pvt. Ltd., a medium-sized manufacturing company specializing in hydraulic press machines, has faced challenges in meeting growing customer demand. The
company operates a production plant in Andhra Pradesh, India. It has been experiencing inefficiencies in its assembly line, leading to high work-in-progress (WIP) inventory,
production delays, and an inability to scale output effectively.
The company’s leadership focuses on improving productivity by implementing lean manufacturing techniques and assembly line balancing. The plant manager, Sameer, and
the assembly manager, Shubham, have been tasked with identifying bottlenecks and proposing changes to streamline operations.

Process Overview
HydraForge Pvt. Ltd. manufactures hydraulic press machines for various industrial applications. The
production process involves multiple sub-assembly stations that feed into a final assembly line. The
current assembly line operates in two shifts of 8 hours each, with a daily production target of 30 units
per shift.
The assembly process is structured as follows:

Workstations: 4 existing workstations handle sub-assemblies, testing, and final assembly.

Workforce Allocation: Each shift has 3 workers handling sub-assembly, testing, and final assembly.
Material Handling: Workers move raw materials and replenish inventory at their workstations.
Batch Production: Sub-assemblies are produced in batches before moving to the next workstation.

The following table shows the activities and the worker allocated to each of the activity, also the table
shows the precedence of the activities: Note: Number in Precedence is per Sr. No. of the Sub-Assemblies.

Initial Layout of the Assembly Line

The movement of materials and across the four

workstations and the position of workers viz. A, B, and C
at their respective workstations is shown in Fig A. The
workers bring the required materials from the Bill of
Materials (BOM) room to the inventory at their
workstation and start assembling the sub-assemblies in
batches. The movement of the workers is shown in Fig. B.

Fig. A: Movement of Materials Fig. B: Movement of Workers 38

HydraForge Pvt. Ltd. PRAKRIYA - The Operations Club

Lean Manufacturing Implementation

Lean tools were applied to minimize waste and optimize workflows:

Eliminating Unnecessary Motion: Introduced a dedicated helper to replenish materials and prepare sub-assemblies, reducing worker movement.
Reducing Bottlenecks: An additional testing workstation was added to prevent delays in sub-assembly validation.
Standardizing Work Procedures: Defined fixed cycle times for each process to ensure consistency.
Implementing Just-in-Time (JIT) Inventory: Material replenishment shifted from batch production to a pull system based on demand.

Proposed Assembly Line

The assembly section will comprise five workstations: three for producing sub-assemblies and two for testing them before final assembly, which will occur at the last workstation. The
workforce will include five workers per shift: two for sub-assembly, two for both testing and sub-assembly, and one for sub-assembly and final assembly. Operations will run in two
eight-hour shifts. A designated ‘helper’ (H) will manage sub-assemblies 1 and 2, ensuring the required quantity per shift.

Worker A, stationed at workstation 2, will focus on sub-assembly 3 until its target is met. Once the first sub-assembly 3 is completed, Worker B will handle sub-assembly 4 and move it
to workstation 3 for testing, repeating this process for each completed unit. Worker C will follow the same steps as Worker B when the next sub-assembly is ready at workstation 2.
Both Workers B and C will continue this cycle until Worker A achieves the target for sub-assembly 3. After this, Worker A will take over sub-assembly 4, processing all queued sub-
assembly 3 units, while Workers B and C will shift exclusively to testing. Worker C’s routine remains unchanged. The ‘helper’ will also manage inventory replenishment and mark sub-
assemblies, ensuring other workers stay focused on their tasks without leaving their stations.

Standard time calculations were performed to

optimize efficiency by analyzing cycle times
and identifying tasks that can be done
simultaneously. Overlapping tasks were
assigned to Workers B and C to minimize idle
time and reduce downtime, ensuring a smooth
and balanced workflow. The table below
outlines the activities, worker allocations, task
durations, and operational sequence to
maintain an efficient assembly line.

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HydraForge Pvt. Ltd. PRAKRIYA - The Operations Club

Proposed layout of the assembly line

After thorough calculations and careful consideration of all constraints, a new and
improved layout for the assembly unit was developed. This redesigned layout ensures
optimal utilization of available space while maintaining an uninterrupted flow of workers
and materials, even with an extra workstation. The revised structure eliminates
bottlenecks, improves efficiency, and enhances the workflow, allowing seamless
coordination between different assembly stages.

The new layout effectively organizes the movement of materials across the five
workstations while strategically positioning the helper and workers—designated as A, B,
C, and D—at their respective stations. This arrangement minimizes unnecessary
movement, enhances productivity, and ensures a streamlined assembly process. The
movement of materials across the workstations while the movement of workers within
the assembly line showcases the optimized workflow and enhanced coordination within
the production environment.

Fig. A: Movement of Materials

Improvement in Productivity
The existing assembly line, hindered by unstandardized working methods, currently
produces approximately 30 units per shift. However, after implementing line balancing
and an improved assembly layout, the entire process has been optimized to enhance
efficiency significantly. The newly designed workflow eliminates inefficiencies by
reducing cycle times, wait times, downtime, excessive worker movements, and
production delays.
As a result, the proposed assembly line can now produce close to 45 units per shift,
marking a 50% increase in productivity. This substantial improvement ensures higher
throughput, better resource utilization, and a more streamlined manufacturing process,
ultimately enhancing the overall efficiency of the production system.

Fig. B: Movement of Workers

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HydraForge Pvt. Ltd. PRAKRIYA - The Operations Club

Management Concern Solution

Sameer, the Plant Manager, and Shubham, the Assembly Manager, recognize that the Identifying and Analyzing Inefficiencies
current production system is unsustainable given the increasing demand for hydraulic
presses. They are under pressure from senior management to increase production To enhance productivity at HydraForge Pvt. Ltd., an in-depth analysis of the current
capacity without adding significant costs. assembly line process was conducted, revealing the following key inefficiencies:
The goal is to optimize the assembly process, eliminate waste, and improve productivity.

Discussion Questions 1. Unbalanced Workstations: Unequal cycle times caused delays and bottlenecks.
1. What are the critical inefficiencies in HydraForge Pvt. Ltd.’s current assembly line 2. High Work-in-Progress (WIP) Inventory: Batch production led to excessive inventory
setup? between workstations.
2. Which operations management tools can be used to optimize the production 3. Excessive Worker Movement: Workers fetched materials instead of focusing on
process? assembly tasks.
3. What lean manufacturing tools can be applied to reduce WIP inventory and improve 4. Lack of Standardized Work Methods: Variability in operations led to inconsistent
workflow? production rates.
4. How can worker movements be minimized to enhance efficiency? 5. Lean Wastes Identified: Non-value-added tasks such as unnecessary waiting, motion,
5. What role does standardized work play in improving productivity? and overproduction impacted efficiency.

Implementation of Lean Manufacturing and Line Balancing

Current bottleneck is Testing workstation with Cycle time of 590 seconds After the addition of additional testing station with a new worker and helper that will
handle the sub-assembly 1 and 2 and replenishment of Bill of Materials (BOM), the new
Process Capacity = Total Available Work Time/Cycle Time = 420*60/590 = 42.71 units
bottleneck is now the workstation 4 with cycle time of 496 seconds

Effectively the system was able to handle the demand of 42 units per shift.
New process capacity = Total Available Work Time/Cycle Time = 420*60/496 = 50.8
Current utilization = 30/42 = 71.428%
Now the system will be able to handle a demand of 50 units.
To address these challenges, Lean Manufacturing and line-balancing techniques were
Expected utilization = 45/50 = 90%
applied.

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SYNCOVIA PVT. LTD. PRAKRIYA - The Operations Club

BACKGROUND Problem Statement

Syncovia Pvt. Ltd. is a mid-sized consumer electronics manufacturer specializing in Syncovia Pvt. Ltd. wants to:
smart home devices. The company faces challenges in inventory management and 1. Assign suppliers to products based on cost, capacity, and reliability.
supply chain operations, including supplier capacity constraints, demand uncertainty, 2. Determine optimal inventory levels (EOQ) for top-selling products while considering
multiple warehouses, and transportation costs. To address these issues, Syncovia Pvt. supplier capacity constraints.
Ltd. aims to optimize inventory levels, reduce lead times, and minimize total supply 3. Account for demand uncertainty and seasonal trends in inventory planning.
chain costs. This case study provides a detailed analysis of the steps required to achieve 4. Optimize inventory distribution across two warehouses to minimize transportation
these goals, including supplier assignment, EOQ calculations, reorder points, and costs.
inventory distribution. 5. Minimize total supply chain costs, including holding, ordering, stockout, and
transportation costs.

Data
Product Data Supplier Data

Warehouse Data

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SYNCOVIA PVT. LTD. PRAKRIYA - The Operations Club

Step-by-Step Calculations Product P001: Smart Thermostat

1. Annual Demand (DD): 10,000 units/year
Step 1: Assign Suppliers to Products 2. Ordering Cost (SS): $100/order
3. Unit Cost: $50
4. Holding Cost (HH): 20% of unit cost = 50×20% = 10 USD/unit/year

EOQ= √(2×10,000×100 =447.21≈447 units

Product P002: Smart Doorbell

1. Annual Demand (DD): 8,000 units/year
2. Ordering Cost (SS): $120/order
3. Unit Cost: $80
Smart Thermostat (P001) - S003 4. Holding Cost (HH): 20% of unit cost = 80 × 20% = 16 USD/unit/year
Justification: High reliability (98%) and fast lead time (5 days) reduce stockout costs
and ensure stable supply. EOQ = √(2DS / H) = √(2 × 8,000 × 120 / 16) = 346 units
Cost Impact: Minimizes emergency orders and excess holding costs.
Product P003: Smart Light Bulb

Smart Doorbell (P002) - S002 1. Annual Demand (D): 15,000 units/year

Justification: Lowest procurement cost ($48/unit) while meeting demand efficiently. 2. Ordering Cost (SS): $80/order

Cost Impact: Saves $2/unit over S001 and $4/unit over S003. 3. Unit Cost: $20
4. Holding Cost (H): 20% of unit cost = 20×20% = 4 USD/unit/year

Smart Light Bulb (P003) - S001

Justification: Balanced cost ($50 vs. $52 for S003) with reliable supply. EOQ = √(2DS / H) = √(2 × 15,000 × 80 / 4) = 775 units

Cost Impact: Saves $30,000 annually while maintaining order frequency.

Summary of EOQ for All Products

Step 2: Calculate Economic Order Quantity (EOQ)

The EOQ formula is:

EOQ = √(2DS / H)
Where:
D = Annual Demand (units/year)
S = Ordering Cost per Order ($/order)
H = Holding Cost per Unit per Year ($/unit/year)
H=Unit Cost × Holding Cost Percentage
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SYNCOVIA PVT. LTD. PRAKRIYA - The Operations Club

Step 3: Adjust EOQ for Supplier Capacity Constraints Smart Light Bulb (P003)
1. EOQ = 775 units
After calculating Economic Order Quantity (EOQ) for each product, we now compare the
2. Supplier: S001 (Tech Supplies)
EOQ values with each supplier’s maximum capacity. If the EOQ for a product exceeds a
3. Supplier Capacity = 1,000 units/month
supplier’s capacity, we adjust the order quantity to fit within the supplier’s limits and
4. EOQ (775 units) is within the supplier’s capacity (1,000 units/month), so no
increase the order frequency accordingly.
adjustment is needed.
5. Order Frequency Calculation:
Step-by-Step Adjustments for Each Product
Order Frequency=D/EOQ​=15,000/775​≈19.35 orders/year
→ Order every ~18.9 days
Smart Thermostat (P001)
1. EOQ = 447 units
2. Supplier: S003 (Smart Solutions)
✅ Final Order Plan: Order 775 units every 19 days from Supplier S001.
3. Supplier Capacity = 1,200 units/month Final Adjusted EOQ and Order Plans
4. EOQ (447 units) is within the supplier’s capacity (1,200 units/month), so no
adjustment is needed.
5. Order Frequency Calculation:
Order Frequency=D/EOQ=10,000/447≈22.38 orders/year
→ Order every ~16.3 days

✅ Final Order Plan: Order 447 units every 16 days from Supplier S003.
Smart Doorbell (P002)
1. EOQ = 346 units
2. Supplier: S002 (Global Gadgets)
3. Supplier Capacity = 800 units/month
Step 4: Calculate Reorder Point (ROP) with Safety Stock
4. EOQ (346 units) is within the supplier’s capacity (800 units/month), so no adjustment
is needed. The reorder point (ROP) is calculated Safety stock is determined using the
5. Order Frequency Calculation: using the formula: formula:
Order Frequency=D/EOQ​=8,000/346​≈23.12 orders/year ROP=(d×LT)+SS SS=Z×σd​×√LT​
→ Order every ~15.8 days Where: Where:
d = Average daily demand Z = Service level factor (Assume 95%
✅ Final Order Plan: Order 346 units every 16 days from Supplier S002. LT = Lead time in days service level, so Z≈1.645)
S = Safety stock σd = Standard deviation of daily demand
LT = Lead time in days
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SYNCOVIA PVT. LTD. PRAKRIYA - The Operations Club

Smart Thermostat (P001) Smart Doorbell (P002) Step 5: Optimize Inventory Distribution Across Warehouses

Supplier: S003 Supplier: S002 Allocate inventory to warehouses based on transportation costs and regional
Monthly Demand: 833 units (10,000 / 12) Monthly Demand: 667 units (8,000 / 12) demand.
Daily Demand: 833 / 30 ≈ 27.77 units Daily Demand: 667 / 30 ≈ 22.23 units Before Optimization (Initial Transportation Cost Calculation)
Lead Time: 5 days Lead Time: 10 days
Demand Standard Deviation (σ_d): 35 units Demand Standard Deviation (σ_d): 28 units

Safety Stock Calculation: Safety Stock Calculation:

SS = 1.645 × 35 × √5 SS ≈ 129 units SS = 1.645 × 28 × √10 SS ≈ 146 units
Reorder Point Calculation: Reorder Point Calculation:
ROP = (27.77 × 5) + 129 ROP ≈ 268 units ROP = (22.23 × 10) + 146 ROP ≈ 368 units

Final Values: Final Values:

Safety Stock: 129 units Safety Stock: 146 units
Reorder Point: 268 units Reorder Point: 368 units
P001 (Smart Thermostat) → Shifted 2,000 units from W002 to W001 → Saved
Smart Light Bulb (P003) $12,000
Supplier: S001 Reorder Point Calculation: Reason: W002 had a higher transportation cost ($7/unit), while W001 had a
Monthly Demand: 1,250 units (15,000 / 12) ROP = (41.67 × 7) + 217 ROP ≈ 508 units lower cost ($5/unit).
Daily Demand: 1,250 / 30 ≈ 41.67 units Effect: Moving 2,000 units to W001 reduced costs by $2 per unit, leading to
Lead Time: 7 days Final Values: $12,000 savings.
Demand Standard Deviation (σ_d): 50 units Safety Stock: 217 units
P002 (Smart Doorbell) → Shifted 1,500 units from W001 to W002 → Saved
Reorder Point: 508 units
$1,500
Safety Stock Calculation:
SS = 1.645 × 50 × √7 SS ≈ 217 units Reason: W002 had a higher transportation cost ($7/unit), while W001 had a
lower cost ($5/unit).
Effect: Moving 2,000 units to W001 reduced costs by $2 per unit, leading to
$12,000 savings.

P003 (Smart Light Bulb) → Shifted 2,500 units from W002 to W001 → Saved
$2,500
Reason: W001 had a lower cost ($5/unit), while W002 was more
expensive ($6/unit).

45
Effect: Moving 2,500 units to W001 reduced costs by $1 per unit,
leading to $2,500 savings.
SYNCOVIA PVT. LTD. PRAKRIYA - The Operations Club

After Optimization (Reallocation & New Cost Calculation) P002 (Smart Doorbell)

1. Ordering Cost = (8,000 / 346) × 120 = $2,776

2. Holding Cost = (346 / 2) × 16 = $2,768
3. Transportation Cost = 8,000 × 5 = $40,000
4. Stockout Cost = 146 × 15 = $2,190
5. Total Cost for P002 = $47,734

P003 (Smart Light Bulb)

1. Ordering Cost = (15,000 / 775) × 80 = $1,548

2. Holding Cost = (775 / 2) × 4 = $1,550
3. Transportation Cost = 15,000 × 5 = $75,000
4. Stockout Cost = 217 × 5 = $1,085
5. Total Cost for P003 = $79,183

Step 6: Calculate Total Supply Chain Costs Total Supply Chain Cost
Total Supply Chain Cost Calculation 1. Total Cost for P001 = $45,763
The total supply chain cost includes the following components: 2. Total Cost for P002 = $47,734
1. Ordering Cost = (Annual Demand / EOQ) × Ordering Cost per Order 3. Total Cost for P003 = $79,183
2. Holding Cost = (EOQ / 2) × Holding Cost per Unit per Year Grand Total Supply Chain Cost = $172,680
3. Transportation Cost = Annual Demand × Transportation Cost per Unit
4. Stockout Cost = Safety Stock × Stockout Cost per Unit
5. Total Cost = Ordering Cost + Holding Cost + Transportation Cost + Stockout Cost
Recommendations
1. Adopt EOQ and ROP: Use EOQ and ROP with safety stock to manage inventory
Cost Calculation for Each Product
effectively.
P001 (Smart Thermostat) 2. Supplier Selection: Prioritize suppliers with higher capacity and reliability (e.g., S003
1. Ordering Cost = (10,000 / 447) × 100 = $2,238 for Smart Thermostat).
2. Holding Cost = (447 / 2) × 10 = $2,235 3. Warehouse Optimization: Allocate inventory to warehouses with lower
3. Transportation Cost = 10,000 × 4 = $40,000 transportation costs.
4. Stockout Cost = 129 × 10 = $1,290 4. Demand Forecasting: Use historical data to improve demand forecasting and reduce
5. Total Cost for P001 = $45,763 uncertainty.
5. Continuous Monitoring: Regularly review supplier performance, demand patterns,
and inventory levels.
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OPTIMIZING LOGISTICS FOR ABC LTD
PRAKRIYA - The Operations Club

Problem Statement
ABC Ltd. recorded the following export sales over six months (in USD
Introduction
thousands):
ABC Ltd., the country's largest manufacturer of spun yarn, has been expanding its
operations into international markets. While its domestic logistics operations were
efficient, applying the same strategies to global shipments led to delays,
mismanagement, and customer dissatisfaction. The company faced challenges such
as poor coordination, lack of shipment visibility, and compliance issues, leading to a Month Sales (USD ‘000s)
decline in export sales.

January 250

Problem Identification
February 230
Lack of Coordination – No streamlined system for managing multiple logistics
entities.
Limited Visibility – No real-time tracking of shipments. March 210
Compliance & Documentation Errors – Regulatory complexities causing frequent
errors.
High Inventory Holding Costs – Inefficient stocking leading to excessive
warehousing expenses. April 190
Frequent Shipment Delays – Poor transporter selection and scheduling affecting
delivery timelines.

May 160

June 120
Solution
Demand Forecasting Using Moving Averages and Trend Analysis
To streamline logistics, accurate demand forecasting is essential.A moving
average method is employed to predict the company's future export demand. Using a 3-month moving average, the demand for July is predicted as:
Forecast for July=(April+May+June) /3
=156.67 (in USD thousands)
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OPTIMIZING LOGISTICS FOR ABC LTD PRAKRIYA - The Operations Club

The demand for the future is forecasted and represents in the graph below

Dubai London Shanghai

Carrier (Demand: (Demand: (Demand: Capacity
252 units) 329 units) 164 units)

Carrier A
? ? ? 400
($5/unit)

Carrier C
? ? ? 300
($6/unit)

Carrier E
? ? ? 200
($7/unit)

Northwest Corner Method (NCM) Application

Allocate Carrier A’s Capacity
Assign 252 units from Carrier A to Dubai.
Remaining capacity of Carrier A: 148 units.
Allocate Carrier A’s Remaining Capacity to London
Assign 148 units from Carrier A to London.
London’s remaining demand: 181 units. Please scan the QR
Allocate Carrier C to London’s Remaining Demand code to access the
Applying the Northwest Corner Method (NCM) for Shipment dataset for the Case
Assign 181 units from Carrier C to London.
Allocation Remaining capacity of Carrier C: 119 units.

The demand for each destination is fixed. Each carrier has a maximum
and continue the process till all demands are met.
capacity that cannot be exceeded. The transportation cost per unit differs
by carrier. The goal is to assign shipments to these carriers to meet all
demand while keeping costs low.

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OPTIMIZING LOGISTICS FOR ABC LTD PRAKRIYA - The Operations Club

Final Optimized Shipment Allocation Table: Preventing Stockouts Using Safety Stock Calculation

Lead time demand = 12,000 units

Standard deviation of demand = 1,500 units
Dubai (252 London Shanghai
Carrier Capacity Service level = 95% (Z-score = 1.65)
units) (329 units) (164 units)
Safety Stock Formula:
Safety Stock=Z×σd
Carrier A =1.65×1,500
252 148 0 0
($5/unit) = 2,475 unitsSafety Stock

Carrier C Maintain at least 2,475 buffer units to prevent shipment failures.

0 181 119 0
($6/unit)

Carrier E Conclusion
0 0 45 155
($7/unit)
By using the Northwest Corner Method, ABC Ltd. successfully:
Reduced total transportation cost by 20.8% (from $5,200 to $4,115).
Minimized delivery delays through better carrier selection.
Total Cost=(252×5)+(148×5)+(181×6)+(119×6)+(45×7)=4,115 USD Allocated shipments optimally without exceeding carrier capacity.
Improved supply chain coordination, leading to fewer logistics disruptions.

Inventory Optimization Using Economic Order Quantity (EOQ)

Annual demand (D) = 3,000,000 USD

Ordering cost per order (S) = 2,500 USD
Holding cost per unit per year (H) = 5 USD

Using the EOQ Formula:

EOQ= √ [ (2 x S x D) / H]
√ [2×3,000,000×2,500/5)]
=54,772 units per order

Optimal order size prevents excess inventory buildup.

Warehouse costs reduced by minimizing unnecessary storage.

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TURBO MOTORS LTD. PRAKRIYA - The Operations Club

Turbo Motors Ltd. (TML) which is renowned as a prestigious automobile company in India is best known for their innovative cutting-edge technologies and eco-friendliness. It was formed
in the year 1995 and since then TML has been in the list of major companies of the automobile industry with a series of passenger as well as commercial vehicles being available in Asia,
Europe, and North America. Managing a worldwide supply chain amid rapid changes in the economy as well as the environment is extremely challenging. On 20th September 2023, a
devastating cyclone struck the east coast of India and inflicted huge damage in various states.
The automotive manufacturing sector was also impacted, with supply chains disrupted, production halted, and logistics networks destroyed. In Odisha, which is one of the key
production hubs of TML, the company was one of the most affected brands. This case study sheds light on the difficulties TML faced of an operational nature just after the cyclone and
the strategic measures that were necessary for the company to recover and then reinforce its supply chain.

COMPANY BACKGROUND Inventory & Logistics Infrastructure

Turbo Motors Ltd. has structured its manufacturing and supply chain as follows: Annual demand for key components (electronics and batteries): 200,000
Manufacturing Location: TML owns and operates 12 production sites in India along with other units per year.
manufacturing locations in the USA, UK, and Germany. Ordering cost per batch (S): ₹50,000 per order.
Supplier Network: The company deals with over 600 global suppliers, and the majority of these Holding cost per unit per year (H): ₹1,000 per unit.
suppliers (65%) are located in India and the remaining are spread across major international markets. Breakdown of transport usage:
Logistics and Distribution are generally handled with centralized distribution centers to control 60% Road
inventories and speed the delivery process. 30% Rail
Production strategy that utilizes just-in-time concepts along with a lean manufacturing methodology 10% Air
ensures cost efficiency but makes the company more vulnerable to supply chain disruptions. Warehouse storage capacity: 10,000 units of key components.

CYCLONE DISASTER: IMPACT AND CHALLENGES

The cyclone halted operations, revealing critical weaknesses in the supply chain and logistics system:

1.Supply Chain Disruptions 2.Manufacturing Challenges 3.Inventory and Demand Imbalance

The Odisha production facility was out of operation for 8 The Odisha manufacturing facility remained Dealership vehicle inventory dropped by 45%,
weeks, resulting in a 35% reduction in production capacity. idle for eight weeks following flood damage. impacting sales performance.
Chinese and Taiwanese electronic components were Alternative factories encountered manpower Warehouses were saturated with unsold
previous models, raising storage expenses by
delayed by 6 weeks, causing bottlenecks in assembly of and capacity constraints, setting back the
18%.
vehicles. recovery of production.
Errors in demand forecasting resulted in poor
Major Indian suppliers experienced infrastructural damage A lack of skilled labor restricted attempts to stock allocation between markets.
resulting in long lead times and inventory shortages. scale up production in areas not affected by
Logistics transport costs increased 15% on account of the crisis.
infrastructure damage and price increases in fuel.
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TURBO MOTORS LTD. PRAKRIYA - The Operations Club

WORKFORCE AND OPERATIONAL OBSTACLES FINANCIAL IMPACT

More than 1,800 employees were affected, thus forcing a slowdown of productivity Revenue in Q4 2023 was expected to drop by 25% due to lost production.
and employees' retention in the workforce. Stock prices declined by 10% as investor confidence wavered.
Many workers looked for other jobs as they were unsure of their job security. Emergency expenditures on supplier recovery, plant repairs, and logistics re-
Absenteeism rose, and the production recovery slowed down. routing increased operational costs.
Storage costs increased by 18% due to unsold inventory.

TRANSPORTATION AND LOGISTICS CHALLENGES

Because of extensive highway and railway system damage, raw material delivery was delayed.
Overseas shipments were delayed due to damage to prime ports and extended export delivery schedules.
High logistics costs were caused by a dependency on few service providers and lacked flexibility in diversifying delivery
channels.

Impact of Disruptions on Costs & Lead Times

Pre-Cyclone Cost Post-Cyclone Pre-Cyclone Lead Post-Cyclone Lead

Transport Mode Increase (%)
(₹/unit) Cost (₹/unit) Time Time

+167% (Lead
Road ₹500 ₹550 1.5 weeks 4 weeks
Time)

+150% (Lead
Rail ₹400 ₹450 2 weeks 5 weeks
Time)

Air Freight ₹2,500 ₹3,500 3-5 days 7 days +40% (Cost)

+50% (Lead
Export (Sea) ₹1,200 ₹1,380 4 weeks 6 weeks
Time)

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TURBO MOTORS LTD. PRAKRIYA - The Operations Club

DATA INSIGHTS AND FINANCIAL SNAPSHOT

Exhibit 1: Financial Performance (in Million INR) Exhibit 2: Supply Chain Disruptions

2023 Normal Post-Cyclone

Metric 2022 (Projected Change (%) Component Lead Time Lead Time Impact
) (Weeks) (Weeks)

Revenue 500,000 375,000 -25% Steel 3 6 High

Net Profit 45,000 30,000 -33% Electronics 4 10 Severe

Operating Tires 2 5 Medium

400,000 365,000 -8.75%
Expenses

R&D Seats 3 5 Medium

20,000 18,000 -10%
Investment
Batteries 3 7 High
Logistics
40,000 46,000 +15%
Cost

CASE PROBLEMS
With recovery efforts underway, TML’s leadership faces crucial strategic decisions:
1. What measures should TML adopt to improve supply chain to reduce the disruptions in future which are caused by natural disasters and at the same time ensure least impact
on production and inventory?
2. To recover the production capacity and optimize What should the short-term and long-term strategies be to recover the production capacity and optimize resource allocation
across its manufacturing plants?
3. How should TML revamp its logistics and distribution network which can ensure cost efficiency, minimal delays and flexibility in lieu of disrupted infrastructure and increasing
transportation costs?
4. What measures can TML adopt in order to retain skilled labor, reduce absenteeism and ensure stability in the workforce in affected regions?
5. What cost-control strategies can TML adopt to balance increased operational expenses while maintaining profitability and investor confidence in the aftermath of the crisis?
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TURBO MOTORS LTD. PRAKRIYA - The Operations Club

CASE SOLUTION
1. What measures should TML adopt to improve supply chain to reduce the disruptions in future which are caused by natural disasters and at the same time ensure least impact on
production and inventory?

Supplier Diversification & Multi-Sourcing Strategy Present Risk: Inference:

Problem: Heavy reliance on domestic suppliers, i.e., 65%. Optimal Order Size: 4,472 units.
Proposed Solution:
TML should reduce its dependency on single regions by having a diversified sourcing Annual Order Frequency = EOQ/D = 4,472/200,000 = 22.36 orders per year.
structure. TML thus places up to 23 orders per year to keep supply levels efficient.
Partnering with secondary suppliers in Vietnam, Indonesia, and Eastern Europe to
ensure redundancy. Inventory Holding Cost versus Ordering Cost Trade-Off: When the orders are too frequent,
Maintaining a strategic buffer stock of critical components (electronics, batteries, higher ordering costs, meaning Rs. 50,000 per batch, lead to higher expenses. When the
steel) at alternative warehouses. order sizes are too large, this incurs a high holding cost of Rs. 1,000 per unit, resulting in
high storage costs. EOQ assures a balance between the two and ensures cost efficiency.
Optimization of Inventory Management Implication for TML: The EOQ method ensures TML does not overstock or understock key
We will optimize inventory management with an Economic Order Quantity (EOQ) Model. components, maintaining lean operations and avoiding any supply chain bottlenecks while
EOQ = √(2DS/H) ensuring ongoing orders and safety.
Where:
D is annual demand, which stands at 200,000 units. Financial Contingency & Risk Hedging:
S = 50,000, a batch ordering cost. Increase coverage of catastrophic disaster risk insurance for supply chain interruption.
H = 1,000, the holding cost per unit for one year. Pre-negotiate supplier contracts containing penalties for noncompliance with delivery.
Restructure working capital to set up a reserve of capital for emergencies.
EOQ = √((2 * 200,000 * 50,000)/1,000) = 4,472

2.What should the short-term and long-term strategies be to recover the production capacity and optimize resource allocation across its manufacturing plants?
Short-Term Strategies:
3.Adaptive Production Scheduling
Implement flexible manufacturing by reallocating production across unaffected
1.Immediate Crisis Management and Damage Assessment:
plants globally.
Deploy the Global Disaster Control Headquarters to evaluate the damage and prioritize
Optimize shifts and adjust employee schedules (e.g., moving planned vacation
facility restoration.
periods) to align with expected bottlenecks.
Assess the safety of employees and supply chain partners before resuming operations.
4.Supplier and Component Diversification
Engage suppliers in different regions to reduce reliance on Japanese
2.Supply Chain Optimization and Allocation of Limited Resources:
components.
Prioritize the production of high-margin vehicles by strategically allocating scarce
Work with tier-1 and tier-2 suppliers to restore operations faster and avoid
resources (e.g., GPS systems to premium models).
cascading supply disruptions.
Utilize Nissan’s global inventory buffers and in-transit stock to buy time while restoring
5.Financial Stability Measures
domestic production.
Cost control initiatives to manage cash flow while production levels remain low.
Use alternative logistics solutions, such as air freight, to accelerate critical component
deliveries.
Secure emergency financing if necessary to sustain operations during the crisis
period.
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TURBO MOTORS LTD. PRAKRIYA - The Operations Club

CASE SOLUTION
2.What should the short-term and long-term strategies be to recover the production capacity and optimize resource allocation across its manufacturing plants?

Long-Term Strategies :
3.Advanced Business Continuity Planning (BCP)
1.Resilient and Localized Supply Chain Development Extend the BCP framework to include tier-2 and tier-3 suppliers to minimize vulnerabilities.
Increase localization of production in key markets like North America to reduce reliance Conduct regular simulation drills to test disaster response effectiveness.
on Japanese exports (targeting 90% localized production by 2015).
Implement dual-sourcing strategies for critical components to ensure supply chain 4.Technology-Driven Production Flexibility
redundancy. Invest in smart manufacturing technologies, such as IoT-enabled real-time monitoring of
Strengthen supplier risk management, including mapping dependencies beyond tier-1 supply chains.
suppliers. Adopt modular manufacturing techniques to allow rapid reconfiguration of production
lines.
2.Infrastructure and Facility Upgrades
Invest in earthquake-resistant buildings and production facilities, ensuring structural 5.Sustainability and Risk Diversification
integrity in disaster-prone regions. Develop a long-term strategy to de-risk exposure to Japan-based production constraints.
Expand capacity in overseas plants to create buffer zones for future disruptions. Focus on electric vehicle (EV) expansion in global markets to align with future demand
shifts.

3.How should TML revamp its logistics and distribution network which can ensure cost efficiency, minimal delays and flexibility in lieu of disrupted infrastructure and increasing
transportation costs?
Optimized Logistics & Distribution Strategy Using Transportation Model
Key Challenges in TML's Supply Chain Post-Cyclone:
1. Manufacturing & Supply Chain Disruptions A. Optimize Multi-Modal Transport
Odisha plant not functioning for 8 weeks → Production down by 35%.
Electronic components (China, Taiwan) delayed by 6 weeks. Vehicle assembly affected. 1. Reduce Road Dependency and Utilize Rail & Air
Key suppliers in India have suffered damage to infrastructure, which has caused a Increase rail transport from 30% to 45% (cost ₹450/unit vs road ₹550/unit).
shortage of inventory. Utilize air freight for high-value electronics & batteries (increase from 10% to 15%).

2.Logistics & Transportation Delays 2. Enhance Diversification of Export Ports

Transport costs were up by 15% because of fuel price hikes and rerouting. Reduce dependency on Visakhapatnam (from 80% to 50%).
Road transport lead time shot up by 167% (1.5 weeks → 4 weeks). Use Chennai & Mumbai ports more to balance risks.
Port dependency (80% Visakhapatnam) → Shipment delays (4 weeks → 6 weeks).
3. Introduce Hub-and-Spoke model for Domestic Distribution
3.Inventory & Warehouse Constraints Establish regional warehouses in central & western India for faster last-mile deliveries.
Storage costs are up 18% due to unsold inventory. Optimize the inventory levels of warehouses to avoid transportation delays.
Demand forecasting errors → stock misallocation. 54
TURBO MOTORS LTD. PRAKRIYA - The Operations Club

CASE SOLUTION
3.How should TML revamp its logistics and distribution network which can ensure cost efficiency, minimal delays and flexibility in lieu of disrupted infrastructure and increasing
transportation costs?

Optimized Logistics & Distribution Strategy Using Transportation Model Financial Impact & Cost Savings

B. Supply Chain Resilience & Nearshoring Strategy Optimized

Metric Pre-Cyclone Post-Cyclone Savings
Strategy
1. Dual-Sourcing & Localized Procurement
Dependence on China & Taiwan for electronics should reduce → Increase ₹41,500 (Target:
internal sourcing. Logistics Cost (₹
₹40,000 ₹46,000 (+15%) 5% increase ₹4,500
Critical components such as from ASEAN & Indian suppliers must be jointly Million)
only)
sourced.
Road Transport ₹550 (No
₹500 ₹550 0
2. Inventory Buffer & Warehouse Optimization Cost/Unit change)
Safety stock level by 10,000 units for key components, such as batteries
and electronics. ₹450 (Increased
Rail Transport
Establish a temporary warehouse in central India for excess stock. ₹400 ₹450 share from 30% ₹6,000
Cost/Unit
to 45%)
Key Recommendations
₹3,500
1. Transport & Logistics Optimization Air Freight (Increased share
₹2,500 ₹3,500 -₹3,000
Use rail transport 30% vs. 45% to reduce costs. Cost/Unit from 10% to
Use air freight for priority components, 15% 15%)
Diversify export ports instead of using just Visakhapatnam.
2. Supplier & Manufacturing Resilience ₹1,200
Diversify dual sourcing of electronics and batteries with India and ASEAN. Warehouse (Optimized
₹1,200 ₹1,380 ₹1,500
Use nearshoring to reduce delay in imports Storage Cost inventory &
Increase local partnerships for flexibility in suppliers. safety stock)
3. Inventory & Warehouse Strategy
Increase safety stock to 10,000 units for critical parts. Export Lead 4.5 (Port
4 6 -
Build temporary central warehouse for efficient distribution. Time (Weeks) diversification)
Use AI-driven demand forecasting to optimize stock allocation.
4. Workforce & Production Recovery
Offer retention incentives to skilled labor.
Cross-train employees for flexible production recovery.
Reallocate workforce temporarily to unaffected plants.
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TURBO MOTORS LTD. PRAKRIYA - The Operations Club

CASE SOLUTION

4.What measures can TML adopt in order to retain skilled labor, reduce absenteeism and ensure stability in the workforce in affected regions?

Immediate Actions (0-3 Months)

TML should offer job security with a no-layoff policy, hardship allowances, and retention rewards to control attrition. Employees' welfare initiatives like medical aid, temporary
accommodation, and transport assistance will restrict absenteeism. In order to get back to business, flexible working schedules, hiring temporary staff, and rapid repair of
infrastructure needs to be given priority.

Mid-Term Initiatives (3-6 Months)

In order to sustain the morale of the workforce, TML will have to implement recognition schemes, open communication, and employee engagement in the recovery process. Cross-
training, reskilling, and partnerships with training schools will increase the flexibility of the workforce. Establishing supply chain resilience through supplier diversification, AI
forecasting, and overtime incentives will increase productivity.

Long-Term Strategies (6Months & Beyond)

TML will implement an employees relief fund, disaster insurance, and collaborative relationship with labor unions to improve the stability of the workforce. Crisis management
plan, remote control facilities, and diversified locations of manufacture will make TML more resilient. Improved local procurement, base of suppliers, and logistic infrastructure
will ensure long-run stability of supply chains.

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TURBO MOTORS LTD. PRAKRIYA - The Operations Club

CASE SOLUTION
5.What cost-control strategies can TML adopt to balance increased operational expenses while maintaining profitability and investor confidence in the aftermath of the crisis?

To make a cost cutting strategy, the company can allocate the different amount to recover from the losses made. This can be done by assuming 6 variables in place and by the help
of linear programming making decision variables and objective functions to achieve the amount required for allocation in each and every area taken.

Company should focus upon the following:

Prioritizing key suppliers: Invest in repairing the plants which suffered

losses so that it can avoid losses in future wrt production concerned.
Use Multiple routes and partners: Dependence on one plant can turn out
to be catastrophic for the company in case of any unforeseen events.
Hence, company should look to collaborate with new partners to get the
shipments from other routes as well.
Sell unsold models by offering discounts on them
Providing job security by engaging with the employees and keeping them
involved with the recovery bonuses and giving required temporary
bonuses in order to retain them
Preserving innovation: Though the company suffered losses due to the
natural disaster, but company should not prevent it from investing in the
R&D, otherwise that can make it loose in run with other companies.
Mitigating non-essential spendings: Company should with the immediate
effect put a closer look on the non-essential spendings and work upon
reducing it.

The cells under yellow and blue colour are solved

through solver.
The main objective is to get the minimum cost to
be incurred on the expenses and what all cost to be
distributed along the different areas.
Z is the objective function which is dependent on
Scan below QR for the excel sheet
the decision variables marked from X1 to X6.

Note: All the variables has been given weightage is assumptions based on the criticality.

57
Bank of TAF PRAKRIYA - The Operations Club

CASE PROBLEM: THE PROBLEM OF DELAY IN ACCOUNT OPENING TIME IN RETAIL BANKING
Bank of TAF, a major bank receives on an average 2500 new saving account opening customer application forms every day. 40 operators enter the application forms in a
database after cross checking the CAF (Customer Application Form) with Identity Proof details.

The entries are verified against the Identify Proof details by 15 Quality Assessors and further 5% sample is audited by 3 Quality Supervisors. The sales team promise the
account opening within 48 hours from receipt of the CAF. Bank of TAF usually achieves the account opening within average of 30 hours with a standard deviation of 5 hrs.

Recently, after a significant marketing effort, they started receiving over 4000 CAF, so the organization decided to increase the number of operators from 40 to 80 with same
3 Quality Supervisors. However, after the increase in number of operators, the % of defects in the CAF increased far more than the acceptable 10% of total opportunities for
error and processing time of CAF also increased, leading to account opening taking more than target of 48hrs.

The Customer Application has the following sections (Opportunities for Error):

1. Title and Gender of the customer

2. Name of the customer
3. Address of the customer
4. Date
5. Identity Proof No
6. Product Code
7. Email Address

Any incorrect section is considered a defect and must be re-processed. The Bank is losing $3750 every day primarily on rework and penalties. The customers are also
dissatisfied as the account opening is taking more time than promised. In the wake of the current business situation, the management team decides to initiate a Six Sigma
project to reduce defects and achieve target account opening time.

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Bank of TAF PRAKRIYA - The Operations Club

CASE SOLUTION: THE CASE HAS BEEN SOLVED USING THE DMAIC PROCESS OF SIX SIGMA

DEFINE PHASE: PROJECT CHARTER

Project Title: Streamlining the New Account Opening Process at Bank of TAF
Business Case: Deliverables:
Bank of TAF is experiencing significant delays in new savings account A streamlined and efficient new account opening process that meets
openings, exceeding the promised 48-hour timeframe. the 48-hour target
This results in: A reduction in CAF defect rates to below 10%.
Customer dissatisfaction and potential loss of customers. Improved customer satisfaction with the account opening process.
Increased rework and operational costs (estimated at $3750 daily). A documented process with clear roles and responsibilities.
Potential damage to the bank's reputation.

High-Level Process Map (SIPOC)

Problem Statement:
The customers of the Bank of TAF are facing excessive delays while opening
new savings accounts, which exceed the promised 48-hour timeline. This is
raising customer dissatisfaction, financial losses for the bank (estimated at
$3750 daily), & potential damage to the bank's reputation. The percentage
of defects in Customer Application Forms (CAFs) has increased beyond the
acceptable 10% threshold.

Goal Statement:
Reduce the average account opening time to meet the 48-hour target.
Decrease the percentage of defects in CAFs to below 10%.
Improve customer satisfaction with the account opening process.

Project in Scope:
The new savings account opening process at Bank of TAF.
All branches and regions involved in the process.
Customer Application Forms (CAFs) and associated documentation.

Project Out of Scope:

Other account types (e.g., checking accounts, business accounts).
Loan or credit card applications.
IT system upgrades or replacements.
External Factors affecting customer satisfaction
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Bank of TAF PRAKRIYA - The Operations Club

CASE SOLUTION: THE CASE HAS BEEN SOLVED USING THE DMAIC PROCESS OF SIX SIGMA

MEASURE PHASE
Analysis of the defects, defects and measurement accuracy is done using pivot tables and measurement system analysis. After analyzing the given data, the defects and processing
time was split in three different categories which are as follows:
New Recruits vs Vintage
Full Time vs Part Time Employee
Training 4hrs vs 16hrs.

The data of defects and processing time were further analyzed according to the sum, average and standard deviation of the same.

Defect Analysis:

As we can clearly see that the highest defects rate is contributed by the new
part-time recruits, with 4 hours of training indicating that all these three
factors are playing a significant role in high defect rates.
This indicates that new recruits might have a experience or training gap.
The observation of part time employees contribuuting to high defect rates
suggests lack of exposure or frequent role transitions leading to defects.
Furthermore, less training hours is leading to nearly double the defect rate of 60
those with 16 hours.
Bank of TAF PRAKRIYA - The Operations Club

CASE SOLUTION: THE CASE HAS BEEN SOLVED USING THE DMAIC PROCESS OF SIX SIGMA

MEASURE PHASE

Process Time Analysis:

Measurement System Analysis:

Below mentioned are the errors made by appraisers during the trials:

Trial 1 Trial 2
Appraiser 1 makes the most errors in the first
trial, but during recheck there are no
App 1 4 0 inconsistencies.
The processing time is similar for full-time workers irrespective Appraiser 3 is inconsistent in identifying defects
of their experience. even in the second trial. This suggests poor
The highest processing time is for new part-time workers who defect detection training or lack of standardized
received 4hrs of training. App 2 3 0 criteria.
Employee type seems to play a major role for processing time The system may require defect classification
as the part time employees have highest processing time for guidelines and recalibration of appraisers.
both new recruits and vintage employees.
App 3 2 2 61
Bank of TAF PRAKRIYA - The Operations Club

CASE SOLUTION: THE CASE HAS BEEN SOLVED USING THE DMAIC PROCESS OF SIX SIGMA

ANALYSIS PHASE Pareto analysis:

Cause and effect diagram: The Pareto Principle helps us analyze the causes of the delayed processing time at the bank.

Date, Email Address, Residence

Address, and Title account for
nearly 80% of total errors. Dealing
with these shortcomings to begin
with will optimize the process of
account opening.

The first four defects account for

almost 80% of all errors, so
correcting them will have the
greatest effect on eliminating
delays. The 80% rule helps
prioritize the issues. Solving 20%
of the defect types helps remove
80% of the issues.
WHY-WHY Analysis

#1 WHY #2 WHY #3 WHY #4 WHY #5 WHY

Why did the number of operators Why have defects in the CAF Why did the number of operators Why did the bank fail to scale Why did management not
double without doubling Quality increased? double without doubling Quality quality control along with the foresee the quality issues and
Assessors or Supervisors? Assessors or Supervisors? increase in operators? processing delays?

The bank saw an increase in the The emphasis was mainly on There was no proper
The number of operators was
number of daily applications from processing the higher volume forecasting and impact
doubled from 40 to 80
There has been a sharp rise in 2500 to over 4000 because of speedily and not on quality analysis prior to enforcing the
without the number of
defects in the Customer the large marketing campaign. To standards. Management boost in operators. The
Quality Assessors or
Application Forms (CAF) that handle the higher volume of believed that current Quality decision was reactively made
Supervisors being changed,
have caused rework and applications, the bank doubled Supervisors would be able to against the increased
resulting in inadequate
processing delays.
verification and more
mistakes going through.
the number of operators but did
not proportionally increase the
manage the workload even
with a greater number of
application volume without an
organized Six Sigma or process 62
scale of quality control. applications. improvement strategy.
Bank of TAF PRAKRIYA - The Operations Club

CASE SOLUTION: THE CASE HAS BEEN SOLVED USING THE DMAIC PROCESS OF SIX SIGMA

IMPROVE PHASE
The Improve phase is concerned with putting into effect the solutions to deal with the root causes that were determined in the Analyze phase. The objective is to simplify the
account opening process, minimize CAF defects, and comply with the 48-hour deadline.

1. Process Bottlenecks & Defects 2. Systemic Issues (Why-Why Analysis Findings)

A. New Recruits & Part-Time Staff Training Enhancement A. Enhancing Forecasting & Resource Planning
Enhance new recruits' training hours from 4 hours to 16 hours to minimize errors in Customer
Application Forms (CAFs). Adopt a forecasting system to predict application spikes from historical
Adopt standardized onboarding with a systematic training checklist for all staff. trends (e.g., marketing promotions, seasonal patterns).
A shadow period where new staff watch experienced staff process applications prior to Apply a capacity planning strategy to dynamically vary workforce size based
processing them independently. on forecasted demand.
Certification Program: Staff need to pass a test prior to processing live applications. Implement flexible staffing schemes, enabling trained part-time staff to ramp
up during peak seasons.
B. Enhancing Quality Control Measures
Hire more Quality Assessors (QAs) proportionate to the increase in operators (e.g., 1 QA per 10 B. Reengineering the Quality Control Structure
operators). Adopt a tiered supervision system, where veteran employees serve as
Employ automated validation tests in the system to mark incomplete or erroneous information mentors to manage newer employees.
(e.g., invalid emails, wrong date formats). Implement a weekly review of error reports to monitor error trends and vary
Real-time Quality Audits: Random reviews of CAF during processing to identify and fix errors training emphasis accordingly.
before submitting for final completion. Set KPIs for defect reduction and tie them to employee performance
incentives.
C. Redoing the Account Opening Workflow
Establish a dual-check system on essential data fields (Name, Date of Birth, Address, Email) to 3. Using Technology to Optimize Processes
avoid frequent mistakes. Automate data validation checks at the entry point, with accuracy before
Implement a pre-check process in which a specific team checks applications prior to submission, submission.
minimizing rework later. Use OCR (Optical Character Recognition) & AI-based verification to minimize
Classify applications into risk categories: High-risk applications (due to missing/incomplete manual entry errors.
information) must go through an extra review process prior to processing. Use a self-service portal for customers to pre-fill and validate their
information, minimizing manual corrections.
Use RPA (Robotic Process Automation) for repetitive tasks such as document
verification and approval tracking.
Pilot Testing:
Apply these solutions in a test environment with a smaller
group of employees.
Perform measurement of performance improvement before
rolling out fully. 63
Bank of TAF PRAKRIYA - The Operations Club

CASE SOLUTION: THE CASE HAS BEEN SOLVED USING THE DMAIC PROCESS OF SIX SIGMA

CONTROL PHASE: Maintain Improvements & Avoid Slippage Maintaining the Gains

Establishing Key Performance Indicators (KPIs) Introduction of Monitoring & Feedback Mechanisms Monitoring
To track the success of implemented solutions, we need to define measurable KPIs:
At regular intervals it is essential to make sure that the problems do not reoccur. The below-
mentioned practices should be instituted:
Baseline (Before Target (After Measuremen
Metric
Improvement) Improvement) t Frequency A. Dashboard Monitoring & Reporting Create real-time dashboards showing vital process
metrics like application processing time, system performance, and error rates. Employ
Average account automated alerts on deviation from target performance (e.g., in case of a deviation in error
10-15 days < 5 days Weekly
opening time rates beyond 10%, management is alerted).

B. Standard Operating Procedures (SOPs) & Checklists Write new process workflows and
Application rejection
distribute them among all concerned stakeholders. Utilize checklists for operators and quality
rate due to missing 30% < 10% Monthly
examiners to provide standard procedure enforcement. Carry out routine process audits on a
info
regular basis to confirm compliance with the new system.

Employee error rate C. Feedback Mechanism (Employee & Customer) Implement a feedback mechanism whereby
25% < 5% Weekly
in processing forms employees and customers report any challenges of the new system. Carry out quarterly
employee and customer satisfaction surveys to assess satisfaction levels. Incent employees
Training completion to propose process improvements through an internal idea-sharing portal.
60% > 90% Quarterly
rate

Frequent
System downtime Real-time
slowdowns/errors < 2% error rate
issues monitoring

Each KPI must be assigned to a process owner responsible for monitoring and ensuring
improvements remain effective.

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AutoCorp Supplier Relations PRAKRIYA - The Operations Club

CASE PROBLEM: AUTOCORP SUPPLIER RELATIONS: FIXING THE HORIZON CHASSIS

In late 2004, AutoCorp faced a critical crisis at FrameTech’s Delphi plant in Georgia, the exclusive supplier of rear suspension cradles for its new Horizon crossover vehicle.
Production was operating at only about 60% of its target, and quality issues were rampant. Major defects—ranging from nonconforming parts to assembly-critical welding flaws—
threatened not only the integrity of the chassis but also the overall success of the Horizon program.

FrameTech Horizon Horizon Rear Suspension Structure Similar to Rear Close Up of Structure and
Cradle Cradle Assembly Line Suspension Cradle Gap After Welding

Historically, AutoCorp had developed a reputation for operational excellence through its AutoCorp Production System (APS), which integrates principles such as jidoka (automation
with a human touch) and Just-in-Time (JIT) manufacturing. These principles emphasize continuous improvement, process integration, and close collaboration with long-term
suppliers.

FrameTech, with a history of serving major automotive producers, had previously met AutoCorp’s stringent standards during the 1997 Horizon and 1999 Resonance launches.
However, for the 2003 Horizon, AutoCorp expanded FrameTech’s responsibilities to include not only welding and assembly but also parts sourcing, inventory management, and
project management.

This expansion, intended as a natural progression of capabilities, exposed several critical weaknesses at FrameTech:

Project and Process Management Deficiencies: FrameTech lacked robust project management tools and standardized processes (such as a stage-gate system) to track and
manage the increased complexity of the Horizon rear suspension cradle, which comprised 85 distinct parts.

Resource and Organizational Constraints: A decentralized global structure and stretched engineering support meant that essential expertise from previous successful launches
was diluted. Consequently, FrameTech’s capacity to support new production demands was significantly weakened.

Inadequate Supplier and Quality Controls: The rapid increase in automation—evidenced by the jump from 13 to 102 robots—introduced challenges in tuning processes and quality
assurance. Additionally, cost-cutting pressures led to the selection of lower-capability second-tier suppliers, which further undermined parts quality and delivery reliability.

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AutoCorp Supplier Relations PRAKRIYA - The Operations Club

Breakdown of Communication and Feedback Mechanisms: Despite AutoCorp’s efforts to enforce the APS philosophy through frequent communication and on-site support,
critical issues such as the absence of an effective defect flowout control system and insufficient real-time quality feedback exacerbated the situation.

Mark Stevenson, AutoCorp’s director of production control, and other managers warned that if these issues were not promptly resolved, the entire Horizon program could be
jeopardized. On the supplier side, FrameTech’s plant manager Michael Turner acknowledged the overwhelming operational challenges, emphasizing that the plant was “bleeding
money” despite extensive overtime and additional resources.

Ultimately, the crisis at Delphi highlights a dual responsibility. FrameTech’s internal shortcomings—in project management, resource allocation, and quality control—played a
significant role, while AutoCorp’s ambitious delegation of complex responsibilities without ensuring that FrameTech was adequately equipped to handle them also contributed to the
breakdown. The case thus poses important strategic questions regarding the restructuring of supplier relations and the need for both partners to realign their capabilities and
expectations to restore production stability and quality.

AutoCorp Horizon production levels are expected to peak in October 2004 to approximately 790 vehicles/day. FrameTech Delphi current production is achieving 43 rear suspension
cradles per hour as of 8/23/04. Impact of this shortfall: approx. 4 hrs/day of production O.T. to produce 790 rear suspension cradles/day. FrameTech Delphi improvement trend does
not provide AutoCorp with confidence that FrameTech can meet AutoCorp quality & delivery expectations consistently & without disruption. Quality defects & unplanned downtime
are main contributors to current lack of confidence.

Without systematic improvement, Downward Spiral is possible

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AutoCorp Supplier Relations PRAKRIYA - The Operations Club

CASE SOLUTION:

What are the main contributors (causes) of the crisis at FrameTech’s Delphi plant in late 2004 (14 months after SOP)?

FrameTech’s Responsibility

Insufficient Project Management Capabilities: FrameTech lacks processes for managing tier 2 suppliers, tracking inventory, and quality assurance, leading to multiple
inefficiencies.

Crunched resources: The Delphi plant was critically understaffed, specifically in engineering and quality control (e.g., only two tool and die engineers for 102 sets of tools).

Supply Chain & Supplier Shortlisting Issues: Poor vetting of tier 2 suppliers, prioritizing cost over capabilities, resulted in non-conforming quality standard parts and logistical
inefficiencies frequently.

Over-Reliance on automation without adequate expertise: The transition from manual welding to a highly automated system introduced defects as operators lacked real-time
feedback mechanisms, which becomes critical in ensuring high yield.

Lack of quality control & standardization: Absence of a robust defect tracking system allowed defective parts to reach AutoCorp’s assembly plant.

AutoCorp’s Responsibility

Overestimated FrameTech’s readiness: AutoCorp assumed FrameTech could handle incremental responsibilities based on past performance without ensuring their
preparedness.

Insufficient early intervention: AutoCorp’s second-tier supplier audits and process checks were released too late, only recognizing systemic issues once production output was
already compromised.

Aggressive cost pressures: AutoCorp’s insistence on an ambitious target price led FrameTech to select particularly low-cost, underqualified suppliers and cut necessary
operational investments.

Engineering support gaps: AutoCorp had rotated engineering teams, weakening continuity in problem-solving and supplier training with FrameTech.

Failure to ensure a smooth knowledge transfer: Unlike the 1997 launch, AutoCorp did not embed an experienced production manager at Delphi to oversee the transition to the
new model.

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AutoCorp Supplier Relations PRAKRIYA - The Operations Club

A. What are FrameTech’s options for resolving the crisis?

2. Considering these causes:

Immediate Fire-Fighting Measures
Implement a real-time defect tracking and root cause analysis system to prevent defective parts from reaching AutoCorp.
Deploy additional engineering and quality personnel to address automation errors and supply chain bottlenecks.
Conduct an urgent supplier re-evaluation, replacing non-compliant second-tier suppliers and onboarding quality-certified suppliers.

Employ backtracking of materials to enhance traceability and defect resolution.

Operational Enhancements
Introduce Lean Six Sigma methodologies to streamline production and quality control processes.
Train employees in AutoCorp’s Technical Instruction Sheet (TIS) methodology to improve process conformance.
Establish a dedicated supplier management team to proactively oversee second-tier suppliers.
Implement stringent quality testing and sampling procedures to reduce Type II errors.

Strategic Repositioning

Engage AutoCorp in a transparent discussion on price adjustments, emphasizing the need for sustainable operational costs.

Advocate for a formalized supplier development partnership with AutoCorp, securing access to its engineering resources.

B. What would you do if you were in charge of FrameTech?

Involve executive leadership: Secure additional funding and engineering support to stabilize operations.

Implement an emergency supplier quality audit: Replace underperforming suppliers and introduce strict incoming part inspections.

Adopt a hybrid production approach: Reintroduce manual quality checkpoints in welding and assembly to mitigate automation defects.

Negotiate with AutoCorp for mutually beneficial cost adjustments: Present data-driven cost estimates and advocate for a pricing model that
enables long-term supplier viability.

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AutoCorp Supplier Relations PRAKRIYA - The Operations Club

C. What are AutoCorp’s options for resolving the crisis?

3. Considering these causes:

1. Immediate Corrective Actions

Deploy an AutoCorp Supplier Development Task Force to FrameTech for intensive TPS implementation and real-time problem-solving.
Establish joint defect-tracking dashboards to improve transparency and accountability.
Temporarily adjust production schedules to allow FrameTech to stabilize operations.

2. Mid and Long-Term Supplier Development Strategy

Revamp supplier selection criteria: Ensure that resource base capability assessment, not just cost, dictates supplier partnerships.

Implement a tiered engineering support model: Keep senior AutoCorp engineers embedded within key supplier facilities during major launches and avoid frequent project
team rotations.
Redefine risk mitigation mechanisms: Develop an early warning system to detect supplier struggles before they escalate into crises. Deploy client employees at vendor
sites/plants for supervision and reporting.

D. What would you do if you were in charge of AutoCorp?

Deploy an impactful supplier support team: Immediately embed AutoCorp engineers and supply chain specialists in Delphi to address systemic issues and provide technical
consultancy.

Restructure supplier development & oversight: Introduce a formalized supplier capability maturity model to assess and support key suppliers.

Redesign the costing model: Shift from a cost-cutting strategy to a value-based pricing approach, ensuring suppliers remain financially viable and compliant with the TIS
protocols.

Strengthen knowledge retention & transfer: Maintain continuity in supplier engagement teams, ensuring expertise is not lost due to internal rotations.

Host biennial meetings with key partners: Share the latest technology and innovations to foster collaborative growth and continuous improvement.
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Ops concepts Applied

TIMWOOD

TIMWOOD represents the seven types of waste in Lean Manufacturing:

Transportation – Unnecessary movement of materials/products.
Inventory – Excess stock leading to higher costs.
Motion – Unnecessary movement of people/tools.
Waiting – Idle time due to delays.
Overproduction – Producing more than needed.
Overprocessing – Extra work that adds no value.
Defects – Errors leading to rework or waste.

Theory of Constraints (TOC)

Total Quality Management (TQM)
Bottleneck Management: The crisis highlights engineering resource constraints
Focus on Defect Prevention: Implementing real-time defect tracking and root cause
(only 2 tool and die engineers for 102 tools), requiring an immediate increase in
analysis aligns with TQM’s goal of continuous improvement and reducing defects.
manpower and automation troubleshooting.
Standardization & Quality Assurance: Training employees in AutoCorp’s Technical
Identifying Weak Links in the Supply Chain: The non-compliant Tier 2 suppliers act
Instruction Sheet (TIS) methodology ensures standardized processes across
as bottlenecks, and the solution involves supplier re-evaluation and quality-
production.
certified onboarding.

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Kanban Approach for Production Stabilization Cost Leadership vs. Value-Based Pricing
Shift from Cost-Cutting to Value-Based Pricing: The recommendation to
The recommendation to temporarily adjust AutoCorp’s production schedules negotiate cost adjustments and move to a sustainable pricing model shows an
aligns with JIT, ensuring demand matches FrameTech’s output while stabilizing understanding of strategic cost management and the risks of excessive cost
operations. pressure.

Supplier Relationship Management (SRM)

Risk Mitigation & Supply Chain Resilience
Tiered Supplier Development: AutoCorp is advised to restructure supplier
oversight, creating a tiered support system for supplier engagement and Redefining Risk Mitigation: Proposing an early warning system and embedded
maturity assessment. engineers in vendor sites aligns with supply chain resilience strategies to prevent
Early Supplier Involvement (ESI): AutoCorp’s late supplier audits and future crises.
interventions indicate a failure in early supplier engagement, which could have Supplier Diversification: Re-evaluating and replacing non-compliant suppliers
prevented defects and disruptions. ensures a stronger, less risky supply chain.

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Q: Good afternoon, how is everything going? A: Understood. I would construct a Fishbone Diagram to break down the root
causes across six key categories:

A: Good afternoon, sir It is going well. Step 1: Define the Problem Statement
"Increase in project lead times, rising operational costs, and declining customer
satisfaction."
Q: Thanks for joining us today. Let's start with a case scenario. A mid-size IT services Step 2: Categorize the Possible Causes
provider is facing a 25% increase in project lead times, a 15% drop in customer satisfaction, Using the Fishbone Diagram (Cause-and-Effect Analysis), I would classify the root
and a 20% rise in operational costs due to inefficiencies in their processes. Additionally, causes into six categories:
external factors like intensifying competition and rapid technological advancements are 1. People: Unclear roles, resistance to change, poor collaboration.
adding pressure. How would you approach solving this issue using an Operational 2. Process: Inefficient tracking, scope creep, redundant tasks.
Excellence framework? 3. Technology: Outdated tools, poor integration, lack of automation.
4. Policy: Bureaucratic decision-making, lack of escalation processes.
5. Measurement: No KPIs, no real-time tracking, poor feedback mechanisms.
6. Environment: High competition, evolving client needs, rapid tech changes.
A: Given these challenges, I would use the Fishbone Diagram (Ishikawa Cause-and-Effect Would the company be open to a cross-functional brainstorming session to
Analysis) to systematically identify the root causes of inefficiencies. This method helps validate these root causes?
categorize issues into People, Process, Technology, and Policy, ensuring a holistic view of
the problem before implementing solutions.
To start, could you share more details on the key pain points affecting operations?

Q: Certainly. The company is struggling with:

- Delays in project execution due to unclear workflows.
- Process inconsistencies across different teams.
- Limited resource visibility, making it difficult to allocate manpower effectively.
- Fluctuating service quality, leading to customer dissatisfaction.
- Employee resistance to new process changes.

Q: Seems you are on track and surely you can work out with the operations and costing part
of it.
PUB Delivery operates in two locations, Downtown and Suburbia, offering package pickup
and delivery within a 15-mile radius.
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Q: Yes, leadership is willing to support the initiative. However, employee resistance remains a
concern.

A: That’s understandable. To address resistance, I would: RACI Matrix

- Conduct employee workshops to explain the benefits of process improvements. The RACI model brings structure and clarity to describing the roles that
- Identify internal champions who can drive change. stakeholders play within a project. The RACI matrix clarifies responsibilities and
- Start with a pilot project in one department before scaling across the company. ensures that everything the project needs done is assigned someone to do it.
Now that we’ve identified the root causes, let’s move to solutions. The four roles that stakeholders might play in any project include the following:
Responsible: People or stakeholders who do the work. They must complete
the task or objective or make the decision. Several people can be jointly
Q: How would you address these inefficiencies? Responsible.

Accountable: Person or stakeholder who is the “owner” of the work. He or she

must sign off or approve when the task, objective or decision is complete.
A: Step 3: Develop Solutions for Each Root Cause This person must make sure that responsibilities are assigned in the matrix for
1. People: Implement RACI Matrix, provide Agile training. all related activities.
2. Process: Standardize workflows, implement change request system.
3. Technology: Upgrade to integrated project management tools, automate repetitive tasks. Consulted: People or stakeholders who need to give input before the work
4. Policy: Establish clear decision-making structures, structured escalation process. can be done and signed-off on. These people are “in the loop” and active
5. Measurement: Define KPIs, implement real-time tracking dashboards. participants.
6. Environment: Continuous upskilling programs, improved customer engagement strategies. Informed: People or stakeholders who need to be kept “in the picture.” They
need updates on progress or decisions, but they do not need to be formally
consulted, nor do they contribute directly to the task or decision.

To address the inefficacies, by implementing RACI Matrix to these roles, the

matrix provides a more complete picture of who is responsible for each aspect of
the operational excellence initiative.

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Q: Yes, they are interested in measuring progress. How would you ensure that
these improvements are sustainable over the long term?

A: Step 4: Control & Continuous Improvement

- Establish a Continuous Improvement Team (CIT) to oversee process
enhancements.
- Implement bi-weekly stand-up meetings to track project progress.
- Review KPIs every quarter and adjust strategies as needed.
- Encourage feedback loops from employees and customers for ongoing
improvements.

Q: That’s a very structured and practical approach! If you had to summarize

your strategy in one sentence, how would you do it?

A: I would apply the Fishbone Diagram methodology to systematically identify

inefficiencies, implement targeted solutions, and establish continuous
monitoring to enhance process efficiency and customer satisfaction.

The goal is to ensure that each task has a clear owner and that all stakeholders understand Q:Interviewer: Excellent response! That concludes our discussion. Thank you for
their roles and responsibilities. Using a RACI matrix helps prevent confusion, improves your insights.
communication, and promotes accountability.

Would leadership be open to tracking these improvements through a quarterly

performance review?

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Slow Patient Transportation in a Hospital PRAKRIYA - The Operations Club

CASE PROBLEM: SLOW PATIENT TRANSPORTATION IN A HOSPITAL

MGX Hospital is a 300-bed chronic care hospital. Like many hospitals, it has had to deal with shrinking inpatient census and tight budgets. A few years ago, MGX
experienced a downsizing that reduced the hospital’s bed capacity from 500 to 300 and sharply decreased staff. As a by-product of the downsizing, increased
burdens were placed on all the hospital’s operating processes. Among those feeling stress was the hospital’s process for moving patients from one place to another.
As patient acuity increased, the need for a reliable transportation service also grew. Because the transportation process was not dependable, complaints about its
performance increased tremendously. Stories abounded about one-hour waiting times for transporters, personnel being lazy, dissatisfaction among patients, staff,
and physicians, and an inability to maintain department schedules because of the process's unpredictability.
Committed to maintaining the highest possible care, MGX chose to adopt the Lean Six Sigma approach to improve their health care delivery processes.
The MGX Quality Council commissioned a Lean Six Sigma team to address this vital issue and gave it the following mission: Significantly decrease physician, patient,
and staff complaints about the hospital’s patient transportation process.

Information Given:

Scan below QR for the excel sheet

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Slow Patient Transportation in a Hospital PRAKRIYA - The Operations Club

SOLUTION:
Defining Problem Statement:

The patient transportation process at MGX Hospital is unreliable, leading to long wait times, disruptions in departmental schedules, and dissatisfaction
among patients, staff, and physicians. This inefficiency has become critical due to increased patient acuity and reduced hospital resources following a
downsizing.

Goal Statement:
The goal of this project is to significantly reduce complaints from physicians, patients, and staff regarding the hospital’s patient transportation process.
The aim is to enhance efficiency, reliability, and satisfaction levels while ensuring timely movement of patients between departments.

Hospital Process Flow:

1. Admission Process:
· Patients are admitted to the hospital based on their medical needs.
· They are assigned to specific departments for treatment or diagnostics.
2. Departmental Care:
· Patients often need diagnostic tests (e.g., X-Ray, CT Scan) or therapeutic services (e.g., Physiotherapy).
· Transportation is required to move patients between departments efficiently.
3. Discharge Process:
· After completing their treatment or diagnostic procedures, patients are transported back to their rooms or discharge points.
4. Support Services:
· Ancillary services like Pathology and Sonography require frequent patient movement for tests and procedures.

Trip Time Distribution

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Hospital Transportation Time:

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Transportation Process Flow:

1. Request Generation:
A transportation request is initiated by a department when a patient needs to be moved.
Requests are typically made through a manual or semi-automated system.
2. Allocation of Transporter:
The request is assigned to an available transporter based on availability and priority.
Delays in assignment can occur due to limited manpower or inefficient systems.
3. Transport Execution:
The transporter moves the patient from the current location to the destination department.
Trip times vary significantly depending on the distance, department workload, and transporter availability.
4. Completion and Handover:
Once the transport task is completed, the transporter’s status changes back to "Available."
Feedback may be collected from staff or patients for process improvement.
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Slow Patient Transportation in a Hospital PRAKRIYA - The Operations Club

Measuring Phase:

In the measure phase of the DMAIC process, we analyze the descriptive statistics from the given data to gain insights into
the patient transportation process at MGX Hospital. Here's a detailed summary of the key descriptive statistics:

TRIP TIME STATISTICS:

Mean Trip Time: 46.11 minutes

Standard Deviation: 11.15 minutes
Minimum Trip Time: 13.05 minutes (for X-Ray)
Maximum Trip Time: 79.68 minutes (for Sonography)

These statistics indicate a wide range of trip times, with considerable variability around the mean.

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KEY INSIGHTS FOR THE ABOVE DESCRIPTIVE STATISTICS:

1. Trip Volume by Department:

· The highest number of trips occurred in the X-Ray department (24 trips), followed by Sonography (18 trips) and Physiotherapy (17 trips).
· Angiography had the lowest number of trips (6 trips), indicating less frequent use.

2. Average Trip Time:

· The overall average trip time across all departments is approximately 46 minutes.
· Sonography has the highest average trip time (49.74 minutes), while CT scan has the lowest (42.16 minutes).

3. Variability in Trip Times:

· The standard deviation for trip times is highest for Angiography (14.48 minutes), indicating significant variability in trip durations.
· Audiology has the lowest standard deviation (6.65 minutes), suggesting more consistent trip times.

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4. Maximum and Minimum Trip Times:

The longest recorded trip time is 79.68 minutes for Sonography, while the shortest is 13.05 minutes for X-Ray.
The range of trip times is also widest for X-Ray (52.82 minutes) and Sonography (51 minutes), highlighting potential inefficiencies or
outliers.

5. Sum of Trip Times:

X-Ray accounts for the highest total trip time (1113 minutes), followed by Sonography (895 minutes) and Physiotherapy (771 minutes).
Angiography has the lowest total trip time (257 minutes), reflecting its lower usage.

Additionally, the histogram shows a normal distribution of trip times, with most trips falling between 38–55 minutes. This suggests that
while the majority of trips are within a predictable range, outliers significantly affect the overall process.

1. Outliers:
Maximum trip times, like 79 minutes for Sonography, may indicate inefficiencies or special cases requiring further investigation.
Minimum trip times, such as 13 minutes for X-Ray, suggest that certain departments operate more efficiently.

2. High-priority departments:
Based on Pareto analysis, departments like X-Ray, Sonography, Physiotherapy, and CT scan contribute to the majority of transportation
activity and should be prioritized for process improvements.

OTHER DESCRIPTIVE STATISTICS:

Highest Standard Deviation: Angiography.

The outliers are Max of Trip Time for Pathology (64.97) and Min of trip time for X-Ray (13.05) highlight opportunities to investigate and
address bottlenecks or inconsistencies.
The trip time data follows Normal Distribution.
Departments like Sonography and X-Ray have high variability in trip times, leading to potential scheduling challenges.
Departments with higher volume (e.g., X-Ray) require additional resources to handle peak loads efficiently.

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Analyzing Phase:

The Analyze phase of the DMAIC process focuses on identifying root causes of inefficiencies in MGX Hospital's patient
transportation process by leveraging statistical tools, Pareto analysis, and ABC categorization.
First, looking upon the key observation across the different departments:

1. Trip Volume:
The X-Ray department has the highest number of trips (24), followed by Sonography (18) and Physiotherapy (17).
Angiography has the lowest number of trips (6), indicating less frequent use.

2. Average Trip Time:

Sonography has the highest average trip time (49.74 minutes), indicating inefficiencies or delays.
CT scan has the lowest average trip time (42.16 minutes), suggesting better efficiency.

3. Variability in Trip Times:

Angiography has the highest standard deviation (14.48 minutes), showing significant inconsistencies in trip durations.
Audiology has the lowest standard deviation (6.65 minutes), indicating more consistent performance.

4. Range of Trip Times:

The widest range is observed in X-Ray (52.82 minutes) and Sonography (51.06 minutes), highlighting potential outliers or
bottlenecks.
The narrowest range is in Audiology (18.67 minutes), reflecting stable operations.

5. Outliers:
Maximum trip time: 79.68 minutes for Sonography.
Minimum trip time: 13.05 minutes for X-Ray.

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Narrowing down to few analyses:

Hospital Transportation
1. Pareto Analysis: Time:
Pareto analysis identifies the departments contributing most to transportation
inefficiencies.
Key Findings:
Approximately 20% of causes contribute to 80% of issues.
Departments identified as critical contributors are:
1. X-Ray
2. Sonography
3. Physiotherapy
4. CT scan

These departments account for the majority of complaints and inefficiencies, making them high-priority
areas for improvement. 20% of causes contributing to 80% of issues originate from X-Ray, Sonography,
Physiotherapy, and CT Scan departments.

2. ABC Categorization: ABC analysis categorizes departments based on their criticality, variability, and
number of trips:

Key Findings:
Departments in Category A (X-Ray and Sonography) are critical and require immediate attention to address inefficiencies.
Departments in Category B (Pathology and CT scan) show moderate issues but are not as urgent.
Departments in Category C have lower criticality and can be addressed later.

X-Ray and Sonography departments in Category A are the top priority for issues to be addressed. They are identified as high-priority departments due to their high volume,
variability, and criticality scores.
Also, Variability in trip times across departments highlights inconsistent resource utilization pointing to the process inefficiency.
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Improve Phase:
The Improve phase focuses on implementing solutions to address the inefficiencies identified during the Analyze phase. The goal is to optimize MGX
Hospital's patient transportation process, reduce delays, and improve satisfaction among patients, staff, and physicians. Below is a detailed plan for
improvement:

1. Hire Additional Staff:

Assess peak-hour demand using historical trip data.

Recruit additional transporters to handle high-demand periods.
Train new staff on hospital protocols and efficient patient handling.

2. Implement a Token-Based Transportation System:

A token is generated automatically when a department requests transportation.

The system notifies the nearest available transporter.
The patient’s status changes to "On the way" when transportation begins, and "Completed" upon arrival.
The transporter’s status updates to "Available" after task completion, enabling automatic assignment of the next task.

Benefits:

1. Reduces manual errors in request handling.

2. Tracks every activity for accountability and future analysis.
3. Provides real-time data for monitoring and optimisation.

3. Plan Route Optimization:

Use hospital layout maps to identify the shortest paths between departments.
Develop optimized routes for transporters to follow.
Implement route-testing pilots to validate improvements before full-scale deployment.

4. Relocate High-Trip Departments:

Analyze department-wise trip volume (e.g., X-Ray: 24 trips, Sonography: 18 trips).

If outpatient flow is higher, consider relocating departments like X-Ray closer to outpatient areas to reduce travel distances.
Evaluate feasibility based on hospital infrastructure constraints.

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By implementing these solutions systematically, MGX Hospital can address its key transportation challenges effectively. The proposed measures will streamline
operations, reduce delays, and enhance satisfaction levels among all stakeholders. We can expect these following benefits from the implementation of the
solution:

Reduced the variability in trip times as standardized processes will minimize inconsistencies across departments (e.g., Angiography’s high variability).
Improving efficiency for high-trip departments like X-Ray and Sonography. They will benefit from optimized resource allocation and reduced travel times.
Enhanced patient satisfaction and faster response times to lead to fewer complaints from patients, staff, and physicians.
Data-driven decision-making in real-time will provide actionable insights for continuous improvement.

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Control Phase:

The Control phase ensures that the improvements implemented during the Improve phase are sustained over time. This involves
monitoring key performance indicators (KPIs), standardizing processes, and continuously refining the system to maintain efficiency
and satisfaction levels. Keys objectives would be to:

Standardize Processes: Ensure that all departments adhere to the new transportation protocols and SOPs.

Monitor Key Performance Indicators (KPIs): Regularly track metrics such as trip time, delay rate, and token completion rate to
measure the success of improvements.

Identify and Address Bottlenecks: Use data-driven insights to address recurring issues or inefficiencies.

Ensure Continuous Improvement: Incorporate feedback from patients, staff, and physicians to further refine processes.

The following are the steps to be taken during the control phase:

1. Document Standard Operating Procedures (SOPs):

Create detailed SOPs for using the token-based system, assigning transporters, and following optimized routes.
Clearly define roles and responsibilities for transport management staff to ensure accountability.

2. Define Key Performance Indicators (KPIs):

Average trip time for each department.

Delay rate (percentage of trips delayed beyond acceptable limits).
Token completion rate (percentage of trips completed as per schedule).
Transporter utilization rate (percentage of time transporters are actively engaged).

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3. Establish Control Limits:

Use Lower Control Limits (LCL) and Upper Control Limits (UCL) for each department based on historical data:

4. Monitor KPIs:

Ensure all departments use the token-based system for transportation requests.
Launch dashboards for real-time monitoring of transporter availability, trip status, and delays.
Visualize KPIs such as trip times, delays, transporter availability, and token completion rates in real time. Using dashboards to track average trip time, delay rates,
transporter utilization rates, and token completion rates.
Plot average trip times against LCLs and UCLs for each department to monitor process stability and analyze deviation trends from control limits (LCL/UCL) to identify
potential bottlenecks or inefficiencies. Investigate trips exceeding UCLs or falling below LCLs to identify root causes.

5. Gather Feedback:

Implement anonymous feedback forms for patients, staff, and physicians to report issues or suggest improvements. Conduct regular feedback sessions with staff, patients,
and physicians to assess satisfaction levels.
Identify recurring complaints or areas of non-compliance with SOPs. Conduct monthly review meetings with the Lean Six Sigma team to evaluate progress and discuss next
steps. Reinforce training for non-compliant staff or departments.
Perform periodic audits to ensure adherence to standardized processes. Update SOPs based on feedback or new challenges encountered during implementation.
Use insights from KPI tracking and feedback sessions to develop additional improvement initiatives.

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The Control phase ensures that all improvements made during the project are maintained over time through proper
monitoring, feedback collection, and iterative refinements. Some of the expected outcome for this implementation
could be:

1. Sustained efficiency as consistent adherence to SOPs will minimize variability in trip times across departments.

2. Improved satisfaction levels since there are faster response times and better communication through the token-based
system enhancing satisfaction among patients, staff, and physicians.

3. Data-Driven decision-making due to continuous monitoring of KPIs, hence providing actionable insights for refining
processes further.

4. Regular audits and control charts will gain process stability, help in maintaining stability within acceptable limits
(LCL/UCL).

5. The standardized processes can be scaled for its solution across other hospital operations if needed.

By implementing these measures effectively, MGX Hospital can sustain its improved patient transportation process
while enhancing operational efficiency and stakeholder satisfaction levels in the long term.

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The Control phase ensures that all improvements made during the project are maintained over time through proper monitoring,
feedback collection, and iterative refinements. Some of the expected outcome for this implementation could be:

1. Sustained efficiency as consistent adherence to SOPs will minimize variability in trip times across departments.

2. Improved satisfaction levels since there are faster response times and better communication through the token-based system
enhancing satisfaction among patients, staff, and physicians.

3. Data-Driven decision-making due to continuous monitoring of KPIs, hence providing actionable insights for refining processes
further.

4. Regular audits and control charts will gain process stability, help in maintaining stability within acceptable limits (LCL/UCL).

5. The standardized processes can be scaled for its solution across other hospital operations if needed.

By implementing these measures effectively, MGX Hospital can sustain its improved patient transportation process while
enhancing operational efficiency and stakeholder satisfaction levels in the long term.

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As you close this casebook, we thank you for exploring the dynamic world of
operations with us—a realm where precision, innovation, and continuous
improvement drive success. Your journey through these pages is not just an
end, but a stepping stone toward greater operational excellence. Please
share your valuable feedback so we can refine our strategies and continue
to innovate. Thank you for reading and for being an essential part of our
evolution.

-Team Prakriya 90
Success is a Journey, Goals are
but navigation points.

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