Representative slides of the presentation made during the session on Operation sManagement for Goldman Sachs 10k WE Development Program, bangalore on 1st Mar, 2012. Its background paper is available at http://www.cvmark.com/?p=457

1. Operations Management
Partial Content of One Day Presentation made at
Goldman Sachs ISB AIMS 10k Women
Entrepreneur Development Program
1Mar2012, Bangalore

2. Introduction
• Feedback of last session
– Informative
– Applicable
– Actionable
– How many really started implementing
• Critical Business Issues
• Type of Operational Problems
• Expectations
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3. The team
• 38 + 1 Entrepreneurs
– Different Domains
– Size
– Age of Organization
– Revenue
– Offerings
– Background
• We have a challenge: Complexity of Divergence
– How much to generalize and how much to be specific
– Generalization will make it difficult to connect to your organization
– Specialization will not allow to do justice with all and it will not allow
you to develop your own concepts
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4. Methodology for the Session
• Objective: Get something that is actionable
– Make it a working session
– The coach picks up one company and guides the
entrepreneur
– All other follow the steps for their own company
– At the end every body has ones operations
described and understood
Let’s Co-create
this Session
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5. Content
• Business Excellence
• Operation Excellence
• Project Management
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Operation Management does not exist for moving the work just
at a movement of time, it must provide a growth option for the
organization on an ongoing basis. Hence, we cover the subject
of operation management, while seeking excellence!

6. Business
Excellence
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7. Business Excellence
• Every business has an Objective
• With time, a business must reach closer to its
Objective
• Every business sets its Goals on an ongoing
basis to measure its progress towards
Objective.
For Entrepreneurs:
What is the Objective of your business?
How do you Measure progress (Goal)?
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8. Time
Performance
Growth Curve-1
Growth Curve-2
Sustainable Growth
For Entrepreneurs:
Which is your
Growth Curve ?
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9. Biggest Dilemma
I want to Deliver as per
Green Curve
I want to Demand as per
Red Curve
Stability
Growth
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Don’t you need both! So what’s the secret?

10. Time
Performance
Organizations face
catastrophic failure when
the growth is lower than
the variability and noise
in the system.
Saturated Growth Curve
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11. Time
Performance
Growth due to
improvement-1
Growth due to
improvement-2 on
the base-1
Base created by
improvement-1
Base under
formation by
improvement-2
Inside Growth Curve
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12. Time
Performance
The underlying
phenomenon of
building
exponential
growth
Excellence is a Journey
Sustainable Business
is about Excellence
For Entrepreneurs:
What are the 3
improvement
initiatives in your
business.
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13. Business Strategy
• While there would be several opportunities and options to
pursue, resources of the organization would be limited.
• For a sustainable business, the company must have a unique value
proposition, (other things remaining the same).
• Business strategy
– provides intent and topmost decision for the organization and it foresees the
business over a longer horizon.
– uses internal and external factors and makes a choice on available options.
• Offerings, Technology, Product,/ Service customer segment, geography, resources
• Low cost, High Variety, High Quality, Fast Response, Availability, Innovativeness
For Entrepreneurs:
What do you offer ? Name Product or Service.
What is the Unique Value Proposition of your business?
Who are your customers ?
How do you create Value ?
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14. Operation
Excellence
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15. Definition
• Operations
– Management of Value Creation Process
– A systematic approach to transform input into
useful revenue generating output
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16. Building Blocks of Operations
Core Process
Innovation
Suppliers and
Partners
Customer End
Operation Support
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17. Functional Relationships
Operations
Finance
HRMarketing
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18. Operations Overview
• Operation Strategy
– Options exercised
• Operation Management
– Building the Operating System
– Planning , Control and Operating the system
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19. Operation Strategy
• What situation we want to be in
– To deliver as per over all strategy
– The Options made for Operations
• Input
– Product or Service
– Type, variety
• Options
– Process Design
– Supply Chain
– Technology
– Capacity, People
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20. Operation Management
• An Objective
– To deliver product or service
– Under certain Design Constraints
• Products, technology, supply chain, geography, Capacity
– Under certain boundary conditions
• Quality, Safety, Health, Environment, Cost, Regulations,
Value system
For Entrepreneurs:
What are the Boundary Conditions
of your Operations
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21. Operation Management Functions
Design Issue Operational Control Issue
Product / Service Design Forecasting
Process Design Production Planning and
Control
Quality Management Supply Chain Management
Location and Layout of facilities Maintenance Management
Capacity Planning Continuous Improvement of
Operations
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22. Architecture of Operation
Management
Processing
•Process and product design
•Material and Capacity Planning
•Operations planning and control
•Purchase and inventory control
Output
Input
Labor
Material
Capital
Goods
Service
Quality
Management
Maintenance
Management
Process
Improvement
Source: Mahadevan: Operation Management
Forecasting
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23. Elements of Operations
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24. Conversion Process
• Factors Affecting Process Design
– Volume, Variety
– Flow:
• Continuous
• Intermittent
• Mixed Flow
– Layout
• Group of activities organized in a way
– Flow Chart
For Entrepreneurs:
Draw the Value Creation Process
Is your process Volume driven or
Variety driven
Blending Compression Coating PackingRaw
Material
Warehouse
FG
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25. Product/ Service
• Development Process
– Concept
– Design
– Development
– Production
For Entrepreneurs:
Write 3 proposed improvements
in your product or services.
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26. Capacity
• The rate of throughput, #s per unit time
• Measurement
– Capacity: Throughput
– Process Time
– Cycle Time
– Lead Time
For Entrepreneurs:
What is design capacity of your process ?
What is the rough utilization ?
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27. Managing Capacity
Key dilemma :Match capacity and demand
Long term Medium Term Short term
Time frame 2-5 years 1 yr 1w-12w
Planning
Premise
Augment capacity Balance
demand
supply
Maximize availability,
productivity
Key
Decisions
Capital Budget
Exercise
Supply-
demand
management
Resource Deployment,
Maintenance routing,
Improvement Projects
Tools and
Techniques
Investment
Planning, Break
Even analysis,
Cash flow,
Decision Tree
Aggregate
Production
Planning,
Make or Buy
Decision
Planning and Scheduling,
TPM, Waste Reduction,
Debottlenecking
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28. Supply Chain Management
• Chain of Activities in creating and delivering
value
• Flow of Raw Material, Components, Service
– Inbound, In house , Outbound
For Entrepreneurs:
Who are your key partners?.
Draw your supply Chain.
RM
Warehouse
Regional
Warehouse
Distributors RetailersPlant 1:n 1:nWarehouse 1:nn:1
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29. Plant
Distributor
Distributor
Distributor
Distributor
Government, Hos
pitals &
Institutions
stock
stockstock
stock
stock
stock
RM
Warehouse
Retailers
Regional
WH
Regional
WH
Regional
WH
Regional
WH
stock
stock
stock
stock
Material
Suppliers
Non Stock
Supply
Direct
Supply
Supply Chain
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30. Supply Chain: Performance
• Availability
• Reliability
• Responsiveness
• Flexibility
• Cost
• Asset
For Entrepreneurs:
What is your supply chain designed for ?
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31. Location
• Factor Advantage
• Distance
• Regulatory & Policy Issues
• Infrastructure
• Cost Structure
For Entrepreneurs:
Why are you located where you are located?
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32. Inventory Planning and Control
• Material Waiting anywhere is Inventory.
• Why Inventory is needed
– Customer tolerance time is more than supply time
– Uncertainty
• Types of Inventory
• Pipeline Inventory
• Safety Inventory
• Decoupling Inventory
• Cyclic Inventory
• Seasonal Inventory
For Entrepreneurs:
Where are your material or work
waiting ?
What is the size of your
inventory ?
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33. Planning and Control
• Demand Forecasting
• Aggregate Planning
• Resource Planning
• Scheduling and Control
• Operation Improvements
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34. Operation Management Planning
Horizon
Planning Aspect Time Horizon
Facility 5-10 years
Capacity Augmentation 3-5 years
Design Decisions 1-10 years
Business Plan 1 year
Master Production Scheduling,
Material & capacity
requirement planning
3 months
Scheduling and Control 1 week
What are your planning Horizons?
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35. Planning Premise -Response time
• Type of Orders
– Made to Stock
– Made to orders
– Assemble to Order
– Made to Availability
– Time n Material
– Project
– SAS
For Entrepreneurs:
What are the type of Orders you
fulfill?
What promise do you make to
customers on delivery?
What is your peak order season
or time.
How do you deal with peak or
large orders.
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36. Quality management
• Definitions
– Conformance to Specification
– Fulfilling Customer Needs
– Fitness to Use
• Total Quality Management
– Organization wide effort
– Everyone, everywhere and everytime
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37. Maintenance
• Infrastructure
– Machines
– People
– Information System
• Maintenance Options
– Inspection
– Preventive Maintenance
– Predictive Maintenance
– Breakdown Maintenance
– Planned Shutdown / overhauls
– Equipment replacement
Measure:
OEE: Overall Equipment Efficiency
Availability x Efficiency x Quality
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38. Project
Management
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39. When do you Need
• Capacity Addition
• Capacity Improvement
• Business Plan
• And :Market expansion, Funds Infusion, Sales
Expansion, Building Distribution
Channels, New Product Development.
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40. Interdependent Set of Activities Conducted to
Deliver an Objective within a Time and Cost
For Entrepreneurs:
What’s your next project.
An improvement work can also
be a project.
Today 180th Day
Critical Path
T9 T10 T11
T4 T5 T8T7T6
T3T2T1
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41. Characteristics of Project Environment
• Variety
• More Uncertainty
• High Touch-time
• Less repetition
• Agreed Scope
• Committed Resource
• Agreed Date
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42. Project
• Scope
• Schedule
• Resources Project
Scope
TimeResource
For Entrepreneurs:
Which of the three elements is the most critical?
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43. Key Steps in Project Planning
• Work Break Down:
– Identify the Scope of Work
• Sequence the Work
• Rough Schedule the Work
• Allocate resources, (people and infrastructure)
• Re-sequence the work to avoid resource conflict
• Reschedule the work
• Estimate cost
Project
Initiation
Scoping Contract
Development
Design Implementation
Testing
Operation
Installation Launch
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44. Gantt Chart
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45. Project Control
• Monitor Progress of each step
• Monitor Cost
• Facilitate steps falling out of schedule
– Resource Management
– Material and Contract Management
– Risk Management
Project
Progress
Report
Project Cost
Report
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46. Truth about project
• More projects fail than they succeed.
– Over 80% of projects do not meet their full
scope, cost or time.
– Several of these are abandoned halfway
– Several of these create cultural backlash
• The current ways of doing projects have issues
that cause their failures
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47. Why 80% projects fail
• Estimations are estimations
– People are measured on Estimates
• Bad Multitasking
– Switching Between Tasks
• Project Review
– Review each and every activity
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48. BAD Multitasking
Days
0 5 10 15 20 25 30 35 40 45
Task-1
Task-2
Task-3
15 days
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49. Better Project Management
• Separate and Aggregate Uncertainty (buffer)
• Limit Number of Projects in execution
• Limit Number of Tasks Assigned to Task Owners
• Monitor and Control Uncertainty
A B C Buffer
A B C
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50. Integrating the Operating System
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51. Linking Operation Strategy and
Operation Management
• Business Model
– The Logic of Creating, Delivering, Capturing
Value of a Business
For Entrepreneurs:
Identify One Customer Segment
Identify significant need
Identify the Offer
Identify process of value creation
Identify key infrastructure
Who are your key partners supplier + sales + distribution
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52. 52
Building the Business Model
Value Proposition Customer SegmentInfrastructure
Deliver
Value
Create
Value
For Entrepreneurs:
Do you already have your business model visualized?
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53. Value Proposition
Sales and
Distribution
Channels
Customer
Relationship
Key Partners
Key Resources
Key Activities
Building the Business Model
Customer
Segment 1
2
3
4
5
6
7
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54. Capitalizing Operations
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55. Capitalize
• Assumption : There are enough sales and we need to
manage operations better, i.e. constraint is inside the
company.
• Otherwise:
• The capability built and the excess capacity revealed must
be capitalized
• At appropriate time, signal must be given to sales to
increase orders flow
• Sales must use the new found capability and capacity as its
key sales pitch and must make effort to increase margins
• The sales practice need to change due to new capability of
the plant.
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56. 56
Completing the Business Model
Reference: The Business Model Generation, Alex Osterwalder
Value Proposition Customer SegmentInfrastructure
Deliver
Value
Create
Value
Finance
Capture
Value
Invest
Value
CVMark Consulting - Shridhar Lolla

57. Value Proposition
Sales and
Distribution
Channels
Revenue
Customer
Relationship
Key Partners
Key Resources
Key Activities
Key Costs
The Complete Business Model
Customer
Segment 1
2
3
4
5
6
7
8
9
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58. Operating the System
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59. Revisit: Fundamentals of business
• Objective: To offer and grow the offering with time
(Sustainable growth)
– The quantum of offering is always with time.
• The value must be captured and reinvested
– Only then a business is sustainable i.e. the business must
make profit, more profit and faster profit.
For Entrepreneurs:
What is your order to cash time?
What is your process lead time?
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60. Revisit: Fundamentals of business
• Prime Goal: Faster # Units/time
• Speed / efficiency/ productivity is essence
• But efficiency without Effectiveness is
unsustainable
• Effectiveness is doing what is needed NOW.
For Entrepreneurs:
What does effectiveness mean in your business.
How do you know which work order to process.
How do you prioritize work orders.
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61. Effectiveness and Efficiency Drive
Operations
• Effectiveness: produce what needed
• Efficiency: productivity
• Effectiveness: Choice, Planning and control
• Efficiency: Utilization
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62. Limitations to Flow
• There are too many things…
• Material Not available, people not availability, absenteeism, no
capacity, defective parts, insufficient skills, break
downs, holidays, quality problems, no orders, too much of
orders, shut down, strike, long testing time, rework, pending for
decision, management bandwidth, traffic jam, flood
• hence we need a methodology, that gives us ever flourishing
company, without confusion, easily, without exhausting costly
resources, without taking risk, without creating imbalance in work-
life.
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63. Laws of Operations
Standing On the Shoulders of Giant: Eli Goldratt
• Law-1:
– Objective of Operations is to ever improve flow
• Law-2
– Do not over produce or over create before time
• Law-3
– Have single priority system
• Law-4
– Have a focused mechanism to deal with
disruptions.
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64. For Entrepreneurs
• How do you prevent doing of work that is not
needed.
• How do you set priority
• How do you identify where to improve ?
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65. Dealing with Limitations to Flow
• Flow Blockers and Disruptions
– Systemic
• Cause and Effect Analysis
• Identification of Root Cause
• Building of Solution
• Implementation of Solution
• Transformation
– Assignable
• Segregation of Causes
• Pareto
• Actions
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66. Practices in World Class Organizations
• Principles
– TQM : Quality
– TPM: Maintenance
– Just in Time (JIT)
– Employee involvement
– Simplicity
• Methodology
– Lean : Waste Reduction
– Six Sigma : Variation
– TOC : System Improvement
– Agile
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67. Quality Management Tools
Purpose Quality Control Tool
Problem Identification Control Chart
Identifying improvement
Opportunities
Histograms
Check Sheets
Pareto Diagrams
Scatter Diagram
Graphs
Analysis of Problem and Root
cause
Cause n Effect Diagram
CEDAC
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68. Quality Management Tools
Purpose Quality Management Tool
Operation Planning for
building Quality Into Product
or Service
Tree Diagram
Matrix Diagram
Process Decision Program
Chart
Arrow Diagram
Poke Yoke
Strategic Planning QFT
Quality Costing
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69. Lean Tools
• 5-S
• Pull Based System
• Kan Ban
• Poka Yoke
• SMED
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70. Quality Awards and Certification
• The Deming Prize
• CII-EXIM Business Excellence Award
• The Rajiv Gandhi National Quality Award
• ISO 9000 Series
• ISO 14000 series
• CMMI
• QS 9000 series
• TL 9000 series
• OHSAS 18001
Challenges to WCM
•Change Management
•Crisis
•Leadership
•Time and Effort
•Focuses Approach
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71. Inside each improvement initiative
P
P
P
P
D
D
D
D
C
C
C
C
A
A
A
A
Standardization
Institutionalization
Building Stronger base
Performance
S curve of a single
initiative
Time 71CVMark Consulting - Shridhar Lolla

72. Time
Performance
Growth due to
improvement-1
Growth due to
improvement-2 on
the base-1
Base created by
improvement-1
Base under
formation by
improvement-2
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73. Time
Performance
The underlying
phenomenon of
building
exponential
growth
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74. Time
Performance
Exponential Growth
Curve
The base created by
successive
improvements
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75. Summary
• Checklist
– Defined Business Objective and Goal
– Decided Products, Service and Value Proposition
– Designed Process, Capacity, Supply Chain
– Decided Operational Performance Parameters
– Designed Infrastructure
– Decided the type of Orders
– Designed Planning and Control Process
– Decided when to not work
– Got a priority system to handle orders
– Got a method to identify big problems
– Built a process of ongoing improvement
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76. Summary
• Operations Management
– Creating and Delivering Value
– Designing and Operating System
– Improving Performance with time
• Sustainability is about maintaining a decisive
competitive edge in an ever changing and
unpredictable business environment.
• Sustainable growth means Excellence
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77. Sustainability is About the Cyclic
Process of Ongoing Improvement
Business Idea
Business Model
Business Plan
Execution
Operation
Maintenance
Improvements
Business
Excellence
Operation
Excellence
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78. Where to Find More Information
10-Sep-2016
Copyrights ©2016 Shridhar Lolla. All Rights
Reserved. Highly Confidential!
78

79. Principal : Shridhar Lolla
Shridhar is a practitioner of Organizational
Effectiveness and handholds management teams
in dramatically improving impact of their effort
on business results. He holds a PhD degree from
IIT Delhi.
Early in his career Shridhar led leadership
positions at ABB –the Swiss industrial automation
conglomerate, in Manufacturing, R&D and Service
functions. For past decade he has been working
with operational teams in bringing paradigm shift
in implementing operational excellence programs.
He runs a fast paced operational innovation
program, ‘Revealing Hidden Capacity’ that
delivers dramatic improvements in less than a
lead time
He lives in Bangalore and can be reached at
lolla@cvmark.com and +91 9448 070081
12-06-2014 79Confidential