1) Pak Elektron Limited (PEL) manufactures printed circuit boards but has encountered problems with operations, productivity, quality, and delivery that have reduced profits and sales. 2) Key issues include production bottlenecks from shifting workloads, idle machines and workers, subpar quality inspection, and late deliveries averaging 9 days. 3) Recommendations include only accepting feasible orders, separating production into new and rework departments, and implementing quality management strategies like Six Sigma to improve processes, productivity, and performance.

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ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Commonwealth MBA / MPA Program)
Case study
Problems In Sustaining The Operations Of The
Pak Elektron Limited (Pel)
ASSIGNMENT No. 2
11/15/2011

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Abstract
The use of technology has become an essential part of the strategies of companies to increase
production and to check the quality of the product. Similarly, with the role of technology in their
development and growth, companies can properly evaluate the performance of their employees
and the opinions of their consumers regarding their products. As such, this essay aims to discuss
and analyze the problems of the Pak Elektron Limited, PEL Appliances, particularly of Mr.
Naseem Saigol (CEO), Mr. Murad saigol, Mr. Zeid Saigol, the president of the company. It also
provides recommendations or possible solutions for the problems to be discussed based on the
situation and the concepts in operations management.
Introduction
Operations management has its origins in the study of production or manufacturing
management. People can initially think of operations management as being part of a distinct
function producing a product and service combination, just as people have marketing and
accounting functions in many organizations. Every organization that offers goods or services has
an operations activity. As far as the organization structure is concerned, some firms will have a
discrete operations function. This might be called a manufacturing department, an operations
system, or have no identifiable name at all. However, like marketing and accounting, it is a
fundamental function of the firm with professionally trained operations or production managers
responsible for conversion of resources into the required product and service combinations. In
some organizations such managers will have different titles, a store manager for a retailer,
administrative managers within a hospital or distribution managers in a logistics company
Improving organizational productivity and quality are issues that have been showing for some
time and will continue to be important to any business and production organization. All types of
organizations need to be as productive as possible to best utilize their important resources, to
meet the needs and demands of their consumers, and to stay competitive with similar business
organizations. In today’s fast-changing and dynamic way of life, many organizations come up
with different strategies and ideas to improve and develop their products. The development of
science and technology has led to the improvement of many companies in terms of product
development and research.

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The operations of an organization are all of the activities directly related to
accomplishing the main purpose of the organization, whether it be producing some product or
providing some service. In either case the operations system will provide the conversion of
certain inputs, such as materials and labor, into certain outputs, either products or services. Thus,
the operations function can be distinguished from the other main functional areas of an
organization, such as marketing, finance, personnel, and accounting, which are no less vital for
the firm’s success but which are less directly related to the organization’s day-to-day pursuit of
its main business. Of course, all main functional areas of an organization are intricately
entwined; all interact with and provide support for the others, and the boundaries are not always
clear between them ( 1998). The paper will discuss about the company Toyota Corporation. The
paper will also discuss about the behavior and choices made by Toyota.
Company introduction
Pak ElektronLimited (Pel)
14 - KM, Ferozepur Road, Lahore.
PEL was founded in 1956 and has since been serving the Power utilities, industries, individual
customers, housing and commercial projects by providing reliable, customized and cost effective
solutions. Backed by the innovative genius of Saigol Group, PEL is now technology forerunner
and market leader in providing new products and services to meet ever changing and technology
intensive needs of its customers. Our EPC contracting division delivers custom designed and
built HV and EHV grid stations, electrification of housing projects, industrial parks and optimum
solutions for power utilization to all kinds of industries and commercial customers. We aim to
maintain this competitive edge and at the same time keep striving to improve it further by
continuous R&D, creating new knowledge and adapting to global developments in technology
and product design. Ever increasing local market share, growing export orders, numerous
successful power projects and greater than ever base of satisfied customers are evidence to these
aspirations.
Works of PEL are spread at two facilities in Lahore, the historical city and cultural hub of
Pakistan. The two facilities cover an area of 1,033,200 Sq ft and 614,252 Sq ft respectively. Both
are equipped with latest technology, state of the art testing facilities and environment friendly
production process. At the heart of our operations is our human resource. PEL invests heavily on
professional development, skill improvement and well being of its human resource. Our
employees are our most valuable asset and we keep them very dear.

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Case Study
Problems of the Pak Elektron Limited, PEL Appliances
The Pak Elektron Limited, PEL Appliances manufactures printed circuit boards to the
specifications of its different customers, the electronic manufacturers. It employs new designs
and prototype production techniques that enable the company to become more adept in
anticipating and resolving the problems of its consumers, over its competitors. However, despite
the effective maintenance of the company’s workers over its operations, several problems have
been encountered in sustaining the operations of the company, which become the source of its
loss of profit and sales. The problems identified and described by Mr. Mohsin Qayyum include
problems related to operations, productivity, quality and delivery.
Primarily, the operation of the company is declining, due to production bottleneck. The
shifting of workload from one operation to another without pattern causes this bottleneck. The
company is having a hard time anticipating the workload pile up in the shop daily because
individual orders from clients impose varying workloads on each operation. The variation in the
workload depends upon the differences in the size of the order that bypass some operations and
from the differences in circuit designs. In addition, the company entertains four-day rush orders,
which require rework at one or two operations, thus, delaying the process of delivering artwork
modifications of a client. This is because the company’s workers are shifted from one work
operation to another depending on the demand of the operation. In this sense, some workstations
are left vacant, while some workstations are overloaded. Moreover, disturbance in the operations
of the company is may be attributed to telephone calls from the customer’s engineers who had
encountered a design problem. As a result, the customer would be requiring redesigning and
rework on the products.
Another problem of the company can be encountered in terms of its productivity, as some
machines are left idle more often that expected. Another source of this problem is that the
standard labor hours do not include time spent in reworking parts that have failed inspection or
have been returned by clients. In addition, the time used for moving from one station to another
adds to the idle time used by workers, thus, further lessening their time for production. I also
believes that the job strategies used in the company are far from ideal, thus, not reflecting
improvements in its operations. This leads to the realization that operations and productivity

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method improvements are not being implemented due to the pressure for output, the constant
shifting of workers from one job to the next, and in inhibiting experimentation with new ideas.
Furthermore, the introduction and implementation of new ideas and methods has led to further
confusion, as the increase in the production of a particular station resulted to the piling up of
work in another, thus, rescheduling orders and reassigning workers. This further impeded the
productivity of the company.
Aside from operations and productivity problems encountered, the company also
encounters problems and failures in maintaining the quality standards of products and in
meeting promised delivery dates. The company’s sales manager, reported that since August, the
company has been receiving customer returns, which increased from under one percent to about
3%, and delay in product delivery, which averaged 9 days late. This would result to the
continuous loss of sales, as the company’s competitors are able to promise four-week deliveries
on small orders. In addition, the company fails to inspect the quality of their products more
effectively, thus, resulting to increase in returns and reprocessing. The problem occurs as the
president feels that a more strict inspection system would not be possible, as product standards
vary from customer to another and from one order to another. In September, the company’s
reshipments reject rates increased, resulting to a 6% total loss due to incomplete operations and
subsequent reworking and reprocessing of circuit boards. Moreover, due to the delay of
production and the increase in the reworking of products, the company has fewer shipments, with
actual deliveries delayed with an average of 9 days. This forced the company to hire an addition
of eight employees assigned in the production force. However, it would still take some time
before making the additional employees skilled in the business.
Possible Recommendations on the Problems
Possible recommendations must be made in order for the company to regain the loss of
their sales. Primarily, as a solution to the problem of the company regarding the production
bottleneck and the work pile up and run out in its operations system, the company should only
be accepting orders that are feasible to do and to deliver in time. In this way, the company
would be able to focus on the project and the specific demands of the client. Accepting feasible
orders from clients would also allow the production line of the company to focus on the quality
of the products, with due consideration of the amount of time required by the client. With this,
the idle time of employees would be reduced, because all of them have a particular task to do,
enough for the time and resources provided to them. This would also reduce the shifting of
workers from one job to the next, as each worker in the production line would have something to
do, given the enough number of orders compensating the enough time and resources provided to
them.

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Another possible recommendation that can increase the productivity, quality and delivery
of products is by separating the production line into two departments, where one department
would be responsible for processing new orders from client, while the other department would be
responsible for the rework and the redesign of previously done or accomplished projects. More
workers would be assigned to the department that would be responsible for processing new
orders, and less workers would be assigned to the department that would reworking and
redesigning the previously done products. The separation of the production line into two
departments would be “hitting two birds with one stone”, as both departments would be
simultaneously doing their jobs. This also reduces the idle time of employees, the piling up of
work, and the run out of things to do. This serves to be beneficial for the company because
employees would be more focused in doing their jobs, thus, ensuring the quality of the products,
the increase in productivity of the company, and the on-time delivery of products to clients.
The company’s expediter is in-charged of tracking orders in process and the initiation of
action if a particular order failed to progress through manufacturing. he is also responsible for the
investigation of delay, in determining the number of rush orders, in securing missing supplies or
instructions, and in calling the clients to advise them of possible delay in delivery.. Thus, in this
regard, it can be recommended that the company can hire or pull out an employee who would be
assisting her in accomplishing her responsibilities
Conclusion
This recommendation would be most effective if the company would be able to divide the
production line into two, as discussed previously. In relation to this, the company can also assign
someone to assist Production manager, who is responsible for the products’ quality control.
Having two individuals to be assigned for the inspection of quality of products, it would be
easier for the company to detect mistakes in production and to comply with the requirements of
the clients, given the separation of the two production lines. They can divide their tasks between
them, thus, one would be responsible for inspecting the quality of the new processed products,
while the other one would be responsible for inspecting the quality of the reworked or redesigned
products based on the requirements and demands of the clients. Moreover, the company can also
assign an assistant for, the company’s supervisor, and who is responsible for the manufacturing
and shipping of products. Supervisor and his assistant can divide their tasks between them, thus,
one would be responsible for the manufacturing and shipping of new processed products, and the
other would be responsible for the manufacturing and shipping of the reworked or redesigned
products.
Once these has already taken place in the company, then this would be the proper time to
implement and introduce method improvements, including employee training and development

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programs that would further enhance and develop the skills and talents of workers. In terms of
organizing, the company can introduce the strategies under Total Quality Management (TQM) or
Six Sigma. Total Quality Management is a management approach that improves the
effectiveness and flexibility of businesses by involving every department, every activity, and
every single person at every level of the organization. It creates a quality culture where the aim
of every member of the organization is to delight their customers, and where the structure of
their organization allows them to do so, thus, moving with changing customer expectations, to
fashion and design products that meet and exceed their demands . On the other hand, the Six
Sigma approach can also be inculcated in the employees, wherein it is defined as a disciplined,
data-driven approach and methodology for eliminating defects in any process, from
manufacturing to transactional and from product to service (“”, 2007). With such approaches, the
employees of Pak Elektron Limited, PEL Appliances would be able to adopt the strategies under
them, which could increase their productivity, creativity, quality of work and delivery.
Moreover, because the problems of the company have already been determined, it can be
recommended that the company can have its SWOT analysis, which aims to identify critical
strategic factors and to build on core strengths, to eliminate undermining weaknesses, to take
quick advantage of significant opportunities, and to circumnavigate or mitigate threats (, 2003).
The SWOT analysis would give the company relevant information on the strengths and
weaknesses it has and matches it with the competitive environment it engages in. It would help
the company create strategic plans that would help the company once it had encounter any
problem or threat from competitors. These possible recommendations would be helpful in
addressing the operational problems of the Pak Elektron Limited, PEL Appliances. However, it
would still be essential if careful study and planning would be done, depending on the changes
that are continually happening in the company.