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Bhawani Singh_ Operations Management

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Bhawani Singh_ Operations Management

  1. 1. MBA7061: OPERATIONS MANAGEMENT ASSIGNMENT SEMESTER 1: 2014 – 2015 SUBMITTED TO: PROF. SUNIL MALHOTRA SUBMITTED BY: BHAWANI SINGH RATHORE CARDIFF MET ID: ST20076707 COLLEGE ID: 1420 MBA (CARDIFF METROPOLITAN UNIVERSITY, UK) UNIVERSAL BUSINESS SCHOOL KARJAT, MUMBAI, MAHARASHTRA
  2. 2. Table of Contents Introduction Overview of Electronic Goods Industry Financial Statement Analysis of Onida Operations Management Process at Onida Stage-I: Auto Insertion Process Stage-II: Complete Knock Down Stage-III: Semi Knock Down Critical evaluation of operational techniques for a wide range of organizational problems Porter’s 5 Force Model Modern management practices implemented in Onida Key benefits of the ISO 14001 standard Supply Change Management Warehouse and Distribution Logistics Set of recommendations for Onida Bibliography Introduction
  3. 3. Onida is an electronic goods brand of MIRC electronics, which was founded in India. Onida was an initiative of innovation by its founders G.L. Mirchandani and Vijay Mansukhani in 1981 in Mumbai as a private limited company. In the year 1992, it altered into a public limited company. The company owns Akasaka Electronics Ltd and Imercius Technologies (India) Ltd which bought their major subsidiary company shadowed by Onida Saka and Monica Electronics as another two companies in the similar group of companies. Onida is the market front-runner in India for its colour CRT televisions, LED lights etc. In the “Brand Trust Report, 2014”, Onida was classified as 27th in the list of India’s most reliable brands. In the recent years, Onida has progressed as multi-product company in the Fast Moving Consumer Durables and appliances sector which comprises washing machines, microwave ovens, air conditioners, audio components, TV components-spares and tuners etc. MIRC electronics was conferred as ISO 9000 : 14001 certification for ecological and eminence management. The company was centering on the manufacturing of finest class products at reasonably priced prices for the Indian market. The accomplishment of the company during the decade of 1990s was maintained by seizing a large market share and revolution in every department of the company. Company Entertainment Mobile Phones Office Appliances A.V. Productc t Interactive Board A.C. Microwave Owens Induction Cooktops L.E.D. Lights Commercial A.C. Onida Home Appliances Commercial Appliances T.V. Home Audio
  4. 4. propelled numerous effective products but concentrated more on television section. The tagline “Neighbour’s envy and owner’s pride” was a big success in the Indian market. The company had launched WEBCRUISER- the world’s in the beginning Internet TV in the 25 inch segment. The Company also launched 29KY Thunder series which was world’s first television model in the 650 watt segment. The company also launched Plasma TV collections on collaboration with Fujitsu. Onida also launched 29 inch home theatre which is first in the category to change a mono recording to a 5.1 digital output surround sound home theatre. The company compound Onida Savak to MIRC electronics and later Electronic tuners became an important part of the product segment. Now the company is also attentive on home appliances like the microwave segment manufacturing various types such as Barbeque, Solo and Grill Models. The company has also launched the Induction cook top in race with other brands. Onida also manufactures washing machines. It also manufactures air conditioners for home as well as commercial usage. The company is also manufacturing mobile phones to make usage of the prospects of increasing demand. Company also manufactures LED lights for usage at commercial spaces and, is resolute to become the market leader in LED lights business as the LED lights are best spare for fluorescent bulbs. Overview of Electronic Goods Industry: Global Consumer Electronics manufacturing profits is set for reflection from the disorder of 2009, background the phase for a increase through the next four years. High consumer mandate is main strength driving the sales statistics to the driving evolution. The new competitors and the globalization has controlled to shrink in the market segment to a great degree. The multinational titans like Sony, LG, and Samsung have become a main competitor in the electronics industry. The ingestion of the electronics are diminishing with bigger number of new companies in the same industry, which is a main encounter for Onida which is endlessly fronting competition from the market. The production chart at Onida itself displays the weakening of production from 2007. This could be altered by executing proper marketing strategy along with some variations in product line with upgrading in its in effect product line and innovation of new products that forestall the consumers. 290 300 310 320 330 340 350 360 370 380 390 2009 2010 2011 2012 2013 2014 Consumer Electronics Revenue (Billions of U.S. Dollars)
  5. 5. BALANCE SHEET AS AT 31ST MARCH, 2014 Notes 31st March, 2014 31st March, 2013 Equity and Liabilities ` in lacs ` in lacs Shareholder's Funds Share capital 2 1,419.38 1,419.38 Reserves and surplus 3 12,476.87 18,473.99 Non-current Liabilities 13,896.25 19,893.37 Long-term borrowings 4 - - Deferred tax liabilities (Net) 5 - - Current Liabilities - - Short-term borrowings 7 26,755.34 27,293.86 Trade payables 8 21,077.93 19,385.22 Other current liabilities 8 4,813.44 5,530.30 Short-term provisions 6 402.78 410.83 TOTAL 53,049.49 52,620.21 66,945.74 72,513.58 Assets Non-current Assets Fixed assets Tangible assets 9 15,144.73 15,413.83 Intangible assets 9 11.62 6.32 Capital work-in-progress - 766.66 15,156.35 16,186.81 Non-current investments 10 2,624.85 2,624.85 Loans and advances 11 3,768.43 4,045.56 Other non-current assets 12 46.04 45.02 Current Assets 21,595.67 22,902.24 Current investments 14 18.64 16.68 Inventories 15 23,400.42 25,106.24 Trade receivables 13 12,463.41 13,254.48 Cash and bank balances 16 2,546.91 3,073.00 Loans and advances 11 3,402.95 3,159.49 Other current assets 17 3,517.74 5,001.45 45,350.07 49,611.34 TOTAL 66,945.74 72,513.58 Summary of significant accounting policies 1 The accompanying notes are an integral part of the financial statements. As per our report of even date For and on behalf of the Board of Directors of For S.R. Batliboi & Co. LLP MIRC Electronics Limited ICAI Firm Regn. No. 301003E Chartered Accountants Predeep K. Gupta G. L. Mirchandani Chief Financial Officer Chairman and Managing Director per Ravi Bansal Aashay Khandwala V. J. Mansukhani Partner Head Corporate Affairs, Managing Director Membership No. 49365 Legal and Company Secretary Place : Mumbai, Place : Mumbai, Date : May 15, 2014 Date : May 15, 2014
  6. 6. STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH, 2014 Notes 2013-14 2012-13 ` in lacs ` in lacs Income Revenue from operations (gross) 18 137,076.12 137,572.18 Less: Excise Duty 7,564.69 7,293.86 Revenue from operations (net) 129,511.43 130,278.32 Other Income 19 179.52 200.92 Total Revenue 129,690.95 130,479.24 Expenses Cost of raw materials and components consumed 20 49,865.59 47,924.37 Purchases of Traded Goods 21 53,536.93 53,734.73 (Increase) / Decrease in inventories of Finished Goods, 22 1,760.39 4,597.36 Work-in-progress and Traded Goods Employees benefits expense 23 8,234.68 7,723.21 Finance Costs 24 3,813.02 3,871.65 Depreciation and amortization expense 25 1,432.51 1,578.75 Other Expenses 26 17,044.95 15,736.71 Profit / (Loss) Before Tax (5,997.12) (4,687.54) Tax Expenses Income tax of earlier years - (279.04) Deferred Tax 5 - (1,544.79) Total tax expense - (1,823.83) Profit / (Loss) For The Year (5,997.12) (2,863.71) Summary of significant accounting policies 1 Earnings per Equity Shares [Nominal Value of share ` 1 each (31 March, 2013: ` 1 each)] - Basic and Diluted (`) 37 (4.23) (2.02) The accompanying notes are an integral part of the financial statements. As per our report of even date For and on behalf of the Board of Directors of For S.R. Batliboi & Co. LLP MIRC Electronics Limited ICAI Firm Regn. No. 301003E Chartered Accountants Predeep K. Gupta G. L. Mirchandani Chief Financial Officer Chairman and Managing Director per Ravi Bansal Aashay Khandwala V. J. Mansukhani Partner Head Corporate Affairs, Managing Director Membership No. 49365 Legal and Company Secretary
  7. 7. Place : Mumbai, Place : Mumbai, Date : May 15, 2014 Date : May 15, 2014 CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2014 2013-14 2012-13 ` in lacs ` in lacs Cash flow from operating activities Loss before tax (5,997.12) (4,687.54) Adjustment to reconcile loss before tax to net cash flows Depreciation / amortization on continuing operation 1,432.51 1,578.75 Loss / (profit) on sale of fixed assets (74.13) (3.18) Provision for diminution in value of investments (1.96) 2.78 Unrealized foreign exchange loss / (gain ) (204.61) (364.32) Interest expense 3,813.02 3,871.65 Interest income (32.74) (53.05) Dividend income (0.57) (0.97) Operating profit before working capital changes (1,065.60) 344.12 Movements in working capital : Increase / (decrease) in trade payables 1,897.55 (2,340.15) Increase / (decrease) in provisions (8.05) (286.28) Increase / (decrease) in other current liabilities 857.06 (309.66) Decrease / (increase) in trade receivables 791.07 (504.32) Decrease / (increase) in inventories 1,705.82 5,253.48 Decrease / (increase) in loans and advances (194.29) 872.49 Decrease / (increase) in other current assets 1,483.71 (588.38) Cash generated from /( used in ) operations 5,467.27 2,441.30 Direct taxes paid ( net of refunds ) (3.04) (168.45) Net cash flow from / ( used in ) operating activities (A) 5,464.23 2,272.85
  8. 8. Cash flows from investing activities Purchase of fixed assets, including CWIP and capital advances (457.34) (1,254.28) Proceeds from sale of fixed assets 129.42 6.42 Redemption / maturity of bank deposits (having original maturity of more than three months) 134.12 - Repayment of loans given 231.00 248.00 Interest received 32.51 48.57 Dividends received 0.57 0.97 Net cash flow from / ( used in ) investing activities (B) 70.28 (950.32) CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2014 2013-14 2012-13 ` in lacs ` in lacs Cash flows from financing activities Repayment of borrowings (9,012.91) (2,880.86) Proceeds from borrowings 6,974.25 5,534.52 Interest paid (3,869.30) (3,891.27) Unpaid Dividend deposited in Investor Eductaion and Protection Fund (17.50) (15.11) Net cash flow from / ( used in ) in financing activities (C) (5,925.46) (1,252.72) Net increase / ( decrease ) in cash and cash equivalents (A + B + C) (390.95) 69.81 Cash and cash equivalents at the beginning of the year 2,921.00 2,851.19 Cash and cash equivalents at the end of the year 2,530.05 2,921.00 Components of cash and cash equivalents Cash on hand 10.30 12.26 Cheques / drafts on hand - 19.60 With banks- on current account 46.13 289.26 Unclaimed Dividend Accounts 101.34 118.84 Bank Remittances in Transit 2,372.28 2,481.04
  9. 9. Total cash and cash equivalents 2,530.05 2,921.00 The accompanying notes are integral part of the financial statements. As per our report of even date For and on behalf of the Board of Directors of For S. R. Batliboi & Co. LLP MIRC Electronics Limited ICAI Firm Regn. No. 301003E Chartered Accountants Predeep K. Gupta G. L. Mirchandani Chief Financial Officer Chairman and Managing Director per Ravi Bansal Aashay Khandwala V. J. Mansukhani Partner Head Corporate Affairs, Managing Director Membership No. 49365 Legal and Company Secretary Place : Mumbai, Place : Mumbai, Date : May 15, 2014 Date : May 15, 2014 Financial Statement Analysis of Onida  Turnover of the Company stood at Rs 1370.76 Crores as against Rs 1375.72 Crores, during the previous year  Financial year suffered a decline in turnover by 0.36%.  The Company suffered a higher net loss of Rs 59.97 Crores compared to previous year loss of Rs 46.87 Crores.  Company had a setback due to economic shutdown and decrease in the overall purchase of electronics, however in the current financial 2014-15 year the company has started experiencing growth again.  Company’s current assets stood at INR 453.5 Crore against previous year’s INR 496.10 Crore  One of the main cause of such huge financial losses is fire at Rourkee plant which destroyed huge lots of inventory which directly affected overall production of company.  The decrease in the rupee value affected the company for exporting the finished good to other countries.  Because of the losses incurred in the company no dividend was paid to shareholders for the proposed year of 2013  The turnover ratios are losing its stance which is a bad sign for the Onida.  Investment valuation ratios need to improve to increase the stability of the company.  Management ratios are under proper section proving that the management is improving on providing shareholders with proper value for each share purchased. (Times India Group, 2013)
  10. 10. QA then the entire batch is rejected.  If the QA is passed then the board is moved to warehouse to be accepted by SKD department. Complete Knock Down (CKD) Figure 11: Complete Knock Down  The semi-finished PCB from the warehouse after the auto insertion process is taken as the input for this section for processing.  The PCB is fixed with the vertical components like Transistors, Cylindrical capacitors and Transformers,etc manually by the employees.  After this manual placement, employees place the finished board into the conveyer belt for wave soldering.  Each PCB is treated with a soldering gel on the lower section at the location where the components need to be wielded, which is then passed through the pre heated oven where the board is bought to a higher temperature.  The board then navigates automatically to the wave soldering machine where the led bath solders the components to the board.  This board is then placed into the heat sink which brings the board to room temperature.  This board is passed to the touch up line where the excess protrusions from the electronic components are cut off manually.  This board is then sent to QC team to check for any errors. Once the QC is passed then the board is moved to SKD section for merging with the other components.  The CKD process target for each employee is 1.75 sec for placing 1 component and every employee places 7 components in a PCB with minute components Manual Insertion Wave Soldering Touch Up QC
  11. 11.  PCB so,  1 component = 1.75 sec
7 component = 7 x 1.75 = 12.25 1 hour = 3600 sec  Then, every employee places = 3600/12.25 = 294 components per hour. Semi Knock Down (SKD)  The finished PCB from the Warehouse is transported to this section as the input.  The components are fixed manually by the Labourers on the moving conveyer belt.  Here the PCB is fixed to the Front component of the television set. Then the front part of the Television is fixed with CRT (Cathode Ray Tube)/ LED (Light Emitting Diode) Display components. This component is wired properly by workers and is moved to the shocking line which is at different level, where the television sets are kept switched on for 30 minutes to check for errors. Once the 30 min time is complete the television sets are brought down to the same level where the television display screen is aligned properly with an alignment marker.  Once the screen alignment is complete the television is shocked with 5000V for 5 sec to check the electrical stability of the components.  If either alignment or shock test fails the television components are moved to the rework line where the television is reworked and then its navigated back to the same line. Figure 12: Semi Knock Down  Once the television passes the shock test the back panel is fitted to the Television component.  This is navigated to pass customer testing, where the worker does the end user testing for every television.  If the finished television passes customer check then the Television sets are sent for labeling, where QC and ID labels are put along with the Television remote and are sent for packaging.  The suction cups picks up the finished televisions and is packed, that are sent to finished goods sections of warehouse. 
  12. 12. Critically Analysing Constraints Critically Analysing JIT In the present scenario of fast competitive world every company uses the Just In Time (JIT) model to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. This method requires that producers are able to forecast the demand accurately.  Figure 13: Sales & Operation Plan In Onida, the management uses SAP to forecast the demand and forecast for production and sales. The ERP system incorporated in SAP removes most of the manual errors committed by humans and restricts itself from major errors such as excess capacity. The SAP has one integrated system to monitor forecast and throughput reducing such errors. The SAP has achieved optimized the planning and control phase by monitoring the entire production in real time and comparing it with the forecast to achieve stable and efficient production. Sales and operation plan is used to analyze the production pattern that needs to be followed, which then suggests for the scheduling from which execution and monitoring of the production is done hence it gets full control over the production line matching it with plan regularly to produce goods that satisfy the demand but also avoiding the excess quantity. Excess Capacity and Demand Handling  It’s a situation where output capacity is very high compared to productive and protective capacity mentioned for the targeted capacity of production.    Every company needs to place itself in productive capacity or idle capacity region to minimize the cost of production.   This calculation is based on the demand forecasting and production Planning.    Any error in the planning increases the inventory increasing the cost of production and increases the risk in making goods obsolete.(Demand Solutions, 2014)   Onida uses SAP to forecast the demand and forecast for production and sales.    The ERP system incorporated in SAP removes most of the manual errors committed by humans and restricts itself from major errors such as excess capacity. The SAP has one integrated system to monitor forecast and throughput reducing such errors.  
  13. 13.  The SAP has achieved the planning and control phase by monitoring the entire production in real time and comparing it with the forecast to achieve stable and efficient production.   Sales and operation plan is used to analyze the production pattern that needs to be followed, which then suggests for the scheduling from which execution and monitoring of the production is done hence it gets full control over the production line matching it with plan regularly to produce goods that satisfy the demand but also avoiding the excess quantity. (sap-supply-chain-ideas.blogspot.in, 2014) Managing Time Constraints:  The Time is one of the most important factor in determining the productivity and the efficiency of a production line.  The employees are given a time scheduling for every work they carry out.  The various time scheduling followed in Onida are discussed below:  Onida Fortnight (OF) and Onida Month (OM) productivity target: Every production is planned on the Onida fortnight and Onida month to achieve the targeted output in the given specific time.  1 OF = 14 Days 1 OM = 2 OF
I Month = 1 OF  Labour output time in CKD: The CKD process target for each employee is 1.75 sec for placing 1 component and every employee places 7 components in a PCB so,  1 component = 1.75 sec
7 component = 7 x 1.75 = 12.25
1 hour = 3600 sec
Then, every employee places = 3600/12.25 = 294 components per hour.  The Onida monitors all the time related issues through SAP by incorporating ERP systems. The SAP calculates and determines the output and the time required for production. The ERP system continuously monitors the productivity of the company by focusing on the Onida fortnight night and Onida Month keeping its labour (Human Resource) in mind.  Here the SAP calculates the Operating resource, raw materials available and required along with the human resource available to get the production output target.  The time required for manual calculation is removed and the human error for calculation is completely removed. Quality Constraints: In Onida the Quality management team focuses on improving the quality of the products at every phase so the quality team of quality Assurance department by randomly picking one sample out of 200 samples. If product fails then the error is categorized into three sections. 1. Error A 2. Error B 3. Error C  In Error ‘A’ category, the product is rejected on the basis of any major physical damage like if there is no sound, no clear picture any other major physical damage.  In Error ‘B’ category, the product is rejected for minor scratches on the screen, missing button, or if remote is not attached etc.  In Error C category, the product is rejected for minute or negligible error, such as dust on the television set, packaging is not proper etc.  For Error A or two Error B, the entire lot is rejected.
  14. 14.  If one B error is detected then another random sample is picked up and if similar error is detected them then the entire lot is rejected.  If error type ‘C’ is detected then correction of error is done with each unit with similar problems. MODERN MANAGEMENT PRACTICES AND TECHNOLOGY DEPLOYED IN ONIDA Critical Analysis of the Quality: Rather than QA team focusing on testing the product from the finished goods section they can implement total Quality control by randomly sampling every semi-finished goods in a single batch. The total quality control is very advantageous when deciding the quality of the product. Quality can achieve extreme customer satisfaction by reducing the risk in production and lowing the rework and increasing the production, by which we can get better product in less time. Hence total Quality control in Onida is necessary.  Figure 14: Quality Being a consumer goods manufacturing unit Onida needs to embrace the technology as its blood and soul where every technology becomes obsolete at every 6 months. The Onida has incorporated many changes into its manufacturing process so that it eliminates risk and improves on productivity. The technology eases the management of resource both raw material and human and can lead to production of complete product that has both quality and cost constraints. Being a consumer goods manufacturing unit Onida needs to embrace the technology as its blood and soul where every technology becomes obsolete at every 6 months.
  15. 15. The Onida has incorporated many changes into its manufacturing process so that it eliminates risk and improves on productivity. The technology eases the management of resource both raw material and human and can lead to production of complete product that has both quality and cost constraints. ISO 9001-2008 Certification: ISO 9001:2008 specifies requirements for a quality management system where an organization needs to demonstrate its ability to consistently provide product that meets customer and applicable statutory and regulatory requirements, and aims to enhance customer satisfaction through the effective application of the system, including processes for continual improvement of the system and the assurance of conformity to customer and applicable statutory and regulatory requirements.(iso.org) The ISO 9001 certification proves that they adopt efficiency in quality management, which saves time cost and improve efficiency ultimately improving customer relationships. (iso9001.com, 2013) Benefits of ISO certification to Organization- • Cost savings - International Standards help optimise operations and therefore improve the bottom line • Enhanced customer satisfaction - International Standards help improve quality, enhance customer satisfaction and increase sales • Access to new markets - International Standards help prevent trade barriers and open up global markets • Increased market share - International Standards help increase productivity and competitive advantage • Environmental benefits - International Standards help reduce negative impacts on the environment. For Society  ISO has over 19 500 standards touching almost all aspects of daily life.    When products and services conform to International Standards consumers can have  confidence that they are safe, reliable and of good quality. For example, ISO's standards on road safety, toy safety and secure medical packaging are just a selection of those that help make the world a safer place.  For government • Expert opinion - ISO standards are developed by experts. By integrating an ISO standard into national regulation, governments can benefit from the opinion of experts without having to call on their services directly. • Opening up world trade - ISO standards are international and adopted by many governments. By integrating ISO standards into national regulation, governments help to ensure that requirements for imports and exports are the same the world over, therefore facilitating the movement of goods, services and technologies from country to country. (Iso.org) 
  16. 16. Lean Production: Onida uses 7s method to achieve lean production. The advantages of 7s Mechanism that is helping SIX SIGMA  Onida is implementing six sigma in its production to reduce the number of errors in the products, reduce defects and increase the quality of every product.  In order to improve the entire process, Six Sigma does the required things better and faster, that too at a much lower cost.  This quality improvement methodology can be employed in various facets of business, right from human resource to production and order entry to technical support with utmost ease and convenience.  The best part of adopting Six Sigma approach is getting a clear focus on quality improvement methods that are extremely crucial to the valuable customers. Productivity Increment Waste minimization Safe environment High morale Easier Training Teamwork Improvement
  17. 17. Figure 15: Six Sigma  It can wonderfully eliminate the process variation and also inconsistency.  This methodology is known to bring about active participation of top management.  Six Sigma lets you know what is crucial to your potential customers. The primary objective is to encourage focus on what is important for customers and how to achieve the same.  It also helps to acquire a robust foothold in the niche marketplace by enabling you to evaluate how well you are performing today.  If you know how to leverage facts and data, it becomes easier than ever to fulfill the quality improvement needs. They say facts and data are the backbone of Six Sigma. By leveraging facts and data, you can eliminate personal reactions and preferences that are considered as stumbling blocks.  Last of all, the Six Sigma approach is all about finding the best ways to sustain the improvement. ERP Implementation The ERP system is a single system that monitors and controls every aspect of production. Onida implements ERP systems to ease the production and improve the quality standards. Planning and forecasting is also done by ERP systems. There are MANY advantages in implementing ERP in the production. (Magal and Word, 2011)
  18. 18. Figure 16: ERP E- Waste Management System E-waste is a term used to cover almost all types of electrical and electronic equipment (EEE) that has or could enter the waste stream. Although e-waste is a general term, it can be considered to cover TVs, computers, mobile phones, white goods (e.g. fridges, washing machines, dryers etc), home entertainment and stereo systems, toys, toasters, kettles – almost any household or business item with circuitry or electrical components with power or battery supply.(Step-initiative.org)E-waste is one of the most polluting environmental hazardous residuals that are left behind while disposing the consumer or any other electrical equipment’s. Onida believes in saving the environment by reusing and recycling E-Waste that are produced by consumers. Onida follows a good program managing the E-Waste from the company. It’s called as “E-CARE”. The name itself shows that they care about the environment. In Onida E-Care Stands for:Environmental Commitment Achieved through Recycling. The process followed for E-Care are: Step 1: E-waste is dropped off in the recycle bin. Step 2: Inform for Collection of the goods from E-Bin. Step 3: SIMS recycling solutions is assigned contract for collection and segregation of recyclable parts. Step 4: Reproduces the product with reusable and recycled materials. Step 5: The same cycle continues. Packaging The packaging of the TV sets in the Wada plant of Onida is done in a very systematic manner. The TV sets after being tested technically in the SKD (Semi Knock Down), move to the end row via conveyor belt where the initial packaging is done. The TVs are lifted with the help of a vacuum handle and are dropped from a considerable height into a big polythene bag. This bag is again dropped inside a bid carton is made fixed inside the box with the help of thermocols. This packaged bag is then further send via conveyor belt to the bonded warehouse. From the bonded warehouse, the TV sets are again brought inside for quality check. The quality is checked using various tests such as heat test where the TV in packaged as well as without the packaged is subjected to 400 C continuously for about 8 to 12 hours. After that, the vibration test is done with the TV inside the carton just to make sure that nothing gets damaged while the TV is on move for delivery in a bumpy road. After all these tests been done, finally the TV is fully packaged with the trusted seal and is dispatched to the finished goods warehouse.
  19. 19. Supply Chain Management  The Supply chain management structure in Onida is followed with lean method.  The supply chain method starts from supply chain planning followed by supply chain strategy which is usually fed into Enterprise Application here its SAP in case of Onida and Supply Chain planning we get procurement of the materials from which the asset management plans for the order procurement from which the production management is done.  The Logistic planning is done next which ends the supply chain cycle in Onida. Figure 17: Supply Chain Management Procurement of Raw materials in Onida  Onida typically spends more than 60% of its revenue from sales for purchasing raw material inventory.    The starting point of supply chain management is the suppliers of raw materials. The suppliers of raw material to Onida are situated within India as well as outside India.            Figure 18: Procurement    
  20. 20.  Approximate 75% of the components that are required in CRT production are imported from China whereas only remaining 25% are purchased from domestic suppliers. The list of suppliers is given below.  The raw materials purchased are checked for quality and once the quality is passed then the material is stored in inventory at centralized warehouses until it’s used. Onida focuses on minimal inventory to reduce cost hence only the Order quantity is mentioned. List of Vendors        Stores The raw materials which is purchased from the vendors are kept in the store of the Onida. The Onida has sub stores where the bulk pack from vendor is broken and is kept in bin system for smaller products and in racks for the larger products. Figure 19: Stores
  21. 21. Warehousing and distribution The Semi-finished goods is stored in the ware house in the different section which are placed using the frequency of use method. Ease of access is considered as priority rather than implementing ABC analysis and XYZ analysis for product placement. (Mulcahy, 1993) (Richards, 2014) Onida’s Wada plant has one huge centralized warehouse which has a capacity to store approximately 50000 CRT TVs, 4000 Washing machines, 10000 microwave ovens and 10000 ACs. The warehouse has been again divided into: Bonded warehouse, Dispatch department/Logistics, Finished Goods Section,
Cross Docking Area. Figure 20:Warehousing Bonded Warehouse The bonded warehouse stores the goods that are finished and are labelled but are not tax paid. This section has all the finished goods that pass QC and are ready for dispatch. Finished goods Here the goods that are completely finished and packed are bought down from the production plant and are awaiting QC check. The QC team follows the strict instruction in making a bulk and packing the goods in the bulk for moving to bonded warehouse section. Cross Docking The Cross docking is done inside the warehouse where bulk is broken from the inbound finished goods that are manufactured in other manufacturing location and is packed along with the goods in the factory unit to form bulk which is shipped to other location or smaller decentralized warehouse Logistics: The Onida imports its finished Mobile phones and ACs from china. Hence sea is one the logistics that Onida uses for transportation. Since Wada is very near to Mumbai it’s easily accessible via Mumbai port and out bound exports to UAE and African countries are made easy due to the port location.
  22. 22. Figure 21: Cross Docking Road transport is used for the distribution to the distribution warehouse and to distributors. Rail transport is used by Onida to transport to the North-east and south India transportation. All inbound and outbound activities are performed in one single warehouse. The tracking of goods is done and recorded by stores manager with help of SAP such as goods that have arrived at warehouse, stored and that are dispatched to various destinations. Currently only 70% of the capacity is utilized due to decreasing demand of CRT TVs. Logistics Onida imports its finished Mobile phones and ACs from china. Hence sea is one the logistics that Onida uses for transportation. Since Wada is very near to Mumbai it’s easily accessible via Mumbai port and out bound exports to UAE and African countries are made easy due to the port location. Road transport is the most important mode of transport in India and it is used widely for the logistical purpose. Mainly it is used for the distribution of the goods to the distribution warehouses and distributors. The rail transport is used by Onida to transport to North- East and South India. Figure 22: Logistics
  23. 23. All inbound and outbound activities are performed in one single warehouse. The tracking of goods is done and recorded by stores manager with help of SAP such as goods that have arrived at warehouse, stored and that are dispatched to various destinations. Currently only 70% of the capacity is utilized due to decreasing demand of CRT TVs. Figure 23: Road way Logistics Critically Analysing with different Industrial parameters Porter’s Five forces model Figure 24: Porter’s Five forces
  24. 24. Degree of Rivalry: Chinese & Korean Players: Samsung, Philips, Toshiba, LG, Haier, and Sony etc. are a huge challenge to the Onida. Threat Of substitutes: Chinese electronic market: low cost and similar yet high tech equipment’s. Onida is surviving as it is producing the quality products. Threat of new Entrants: Liberalization of economy and low import duty on consumer durables has encouraged MNCs to enter this industry in India. This has high affected Onida and is facing intense competition. Bargaining power of Buyers: As switching cost is lower, it has adversely affected customer loyalty. Onida is customer centric and provides one of the best after purchase services to satisfy the customers. Bargaining power of Suppliers: As Onida imports 82% of its components from china it’s hugely dependent on the suppliers. This dependency may lead the suppliers dictate the norms to Onida hence it needs to be limited. (Reid and Sanders, 2012) SWOT ANALYSIS
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