Operations management (1)


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Operations management (1)

  2. 2. <ul><li>HB Contract Furniture established since 1964, prides itself as the leading Contract furniture manufacturer </li></ul><ul><li>HB Contract Furniture is providing B2B standard & customized furniture for its customers. </li></ul><ul><li>HB Contract Furniture offers a very wide range of products and services to meet the needs of today's changing workplace. </li></ul>Introduction
  3. 3. <ul><li>HB stands for Hasan Brothers. </li></ul><ul><li>Mr. Tahir Hasan Gardezi at the age of 23 years established Hasan Brothers, as a kitchen furniture manufacturing company. </li></ul><ul><li>In 1969, HB established its first Showroom for Kitchen Furniture & Office Furniture in Karachi. </li></ul>History of the Firm
  4. 4. <ul><li>In 1987, HB started using Autodesk AutoCAD for design and drafting purpose. </li></ul><ul><li>In 1992, HB opens a new furniture factory at Islamabad & eventually closed the one in Karachi. </li></ul><ul><li>In 1999, HB established a 3 story Furniture showroom for at a very vital location in Islamabad at I-10/3. </li></ul>History of the Firm (Contd…)
  5. 5. <ul><li>The main target customers are the offices, companies, hospitals and other businesses. </li></ul>Target Market
  6. 6. <ul><li>It is a consumer based market as the HB Contract based on the customers demand, makes the furniture using the finest wood imported from overseas. </li></ul>Type of Market
  7. 7. <ul><li>Rose Wood </li></ul><ul><li>Inter Wood </li></ul><ul><li>Bashir Design Furniture </li></ul><ul><li>Furniture Classifieds </li></ul><ul><li>Furniture City </li></ul><ul><li>Furniture Decorators </li></ul><ul><li>Studio Interiors </li></ul><ul><li>Infinity Interiors </li></ul><ul><li>Furniture Kingdom </li></ul><ul><li>Barry’s Furniture </li></ul><ul><li>Mechano Furniture </li></ul><ul><li>Premier Furniture </li></ul>Competitors
  8. 8. <ul><li>The current demand forecast of the firm for a simple chair is almost 1500 units per month </li></ul><ul><li>As the business of HB Contract is to make custom made furniture on the basis of the orders placed by the customers including the offices, hospitals and businesses. </li></ul><ul><li>So, the exact forecast cannot be made on the previous data. Still the HB Contract forecast the demand through intuition. </li></ul>Forecasting
  9. 9. <ul><li>The forecasting method of the firm i.e.; using the intuition only is not accurate. </li></ul><ul><li>It can be improved by applying the other qualitative method of forecasting. It is because the situation in the case of the custom making furniture is vague and the firm has little or no data available regarding the market of such business. </li></ul><ul><li>So, the best method of forecasting that can be used in current scenario is jury of executive opinion . </li></ul>Recommendation
  10. 10. <ul><li>The HB Contract keeps on improving its processes, strategies, methods just to improve its quality. </li></ul><ul><li>HB Contract have recently changed the equipment for manufacturing furniture from hand making to introducing CNC machines in 2007. </li></ul><ul><li>HB Contract imports wood and other raw material from international suppliers to ensure the quality of wood they are buying. </li></ul>Quality
  11. 11. <ul><li>The HB Contract to reduce the errors and improve on the data: </li></ul><ul><li>1) Offers site survey and measurements. </li></ul><ul><li>2) Keep in mind the errors that may occur while materializing the projects in future. </li></ul><ul><li>3) They use AutoCAD to create 3D scenes development so as to improve on errors. </li></ul><ul><li>4) They provides customer with different design options and unique tailoring also. </li></ul>Quality (Contd…)
  12. 12. <ul><li>They have bought two CNC machines for cutting the wooden sheets. </li></ul><ul><li>First CNC cutting machine which cuts 60 sheets a day while the second machine which is panel saw, cuts 900 sheets a day. </li></ul><ul><li>They use board optimization software to design different models as to how the wood can be cut and the wastage can be lowered then it depends on the personnel to decide which model is best for their purpose. </li></ul>Quality (Cont…)
  13. 13. <ul><li>The international standards like ISO 9000 have not yet been implemented in the company. </li></ul>ISO 9000 Implemented or Not?
  14. 14. <ul><li>HB started using AutoCAD for design and drafting purpose in 1987. </li></ul><ul><li>From 1987 onwards they have been improving on their products and furniture showrooms. </li></ul><ul><li>In 2007 they replaced the employees and introduced CNC machines to improve the quality of cutting, carving, finishing, laminating and printing. </li></ul>Has The Firm Achieved TQM?
  15. 15. <ul><li>The HB Contract have the capability of achieving six sigma. </li></ul><ul><li>But the problem is that they previously did not have the concept of achieving six sigma until they have been conveyed the problem. </li></ul><ul><li>Even in CNC machines requires the justification and correction. </li></ul><ul><li>The error can occur while adjusting the wooden sheet in the CNC cutting machine. </li></ul>TQM Achievement (Cont…)
  16. 16. <ul><li>The process that is implemented in the firm is close to the process focus. </li></ul><ul><li>The equipment used by the firm is very simple CNC machines which includes CNC cutting machine, CNC Panel Saw, Drilling machine (boring), Edging machine. </li></ul><ul><li>Operators are broadly skilled. </li></ul><ul><li>There are not many job instructions. </li></ul>Process Strategy
  17. 17. Process Structure
  18. 18. <ul><li>Cross Over Analysis of two cutting machines tells us that: </li></ul><ul><li>The company should use CNC Router when they have to cut sheets less than 3067. </li></ul><ul><li>For the order in which the sheets used are greater than 3067 they should use CNC Panel Saw. </li></ul>Recommendation
  19. 19. <ul><li>Design Capacity: </li></ul><ul><li>The capacity of a firm to produce maximum theoretical output is 150 units / day. </li></ul><ul><li>Effective Capacity: </li></ul><ul><li>The real time capacity that a firm wants to achieve is 120 units / day. </li></ul>Capacity Planning
  20. 20. <ul><li>Utilization: </li></ul><ul><li>Design Capacity = 150 units / day </li></ul><ul><li>Actual Output = 100 units / day </li></ul><ul><li>Utilization = Actual output/ design capacity </li></ul><ul><li>Utilization = 100/150 </li></ul><ul><li>Utilization = 0.667 ~ 67% </li></ul>Capacity Planning (Cont…)
  21. 21. <ul><li>Efficiency: </li></ul><ul><li>Effective Capacity = 120 units / day </li></ul><ul><li>Actual Output = 100 units / day </li></ul><ul><li>Efficiency = actual output/ Effective capacity </li></ul><ul><li>Efficiency = 100/120 </li></ul><ul><li>Efficiency = 0.833 ~ 83% </li></ul>Capacity Planning (Cont…)
  22. 22. <ul><li>The HB Contract takes order from their customers; sometimes there are huge contracts, so, they have to sign a legal document in which the time and place for the delivery of the furniture is mentioned. </li></ul><ul><li>HB Contract schedules such time that enables the firm to manufacture furniture that is closer to the customers’ needs and demands. </li></ul>How is the Firm Managing Demand Regarding Capacity?
  23. 23. <ul><li>Currently, they are furnishing the control panel of National Transmission Dispatch Company, who were given 2 months. But they are unable to furnish the control panel in time. </li></ul>Problem
  24. 24. <ul><li>If the demand of the products is less they should make an estimate and study that how much time the employees consume in each of the process, what are the difficulties and variations that the employees face. </li></ul><ul><li>After calculating each scenario they should redesign the processes as how the employees should complete each task and in what specified time. </li></ul>Recommendation
  25. 25. <ul><li>The firm is divided into 3 portions: </li></ul><ul><li>The 1st portion which is in front-middle is the furniture showroom. </li></ul><ul><li>The layout of the furniture showroom is more like the fixed position layout. </li></ul><ul><li>They don’t have to sell products from that showroom. This showroom fulfills the function of showing the customers how the product will look like in a certain arrangement. </li></ul>Layout of the Firm
  26. 26. <ul><li>The 2nd portion is in the front-left side which is the office section. </li></ul><ul><li>The layout of this portion is like the work cell layout. </li></ul><ul><li>The arrangement of the departments is such that it makes the movement of information easier with comfortable space and equipment. </li></ul><ul><li>The 3rd portion is in the rear- right corner which is the factory. </li></ul>Layout of the Firm (Cont…)
  27. 27. <ul><li>There is a problem in the layout of the 3rd portion (factory). </li></ul><ul><li>The movement of goods is not well managed and the cost of moving goods from one place to another is relatively higher. </li></ul>Problem
  28. 28. <ul><li>The firm should change its layout to process oriented layout. </li></ul><ul><li>So, that it becomes easier to transfer raw material and finished goods from the production department to the delivery / shipment department. </li></ul>Implication
  29. 29. <ul><li>There is no space for warehousing and stocking of finished goods. </li></ul><ul><li>As soon as the order is complete, it is delivered through the private transporters. </li></ul><ul><li>Until the production for the order is not finished the finished goods are placed in the production department as there is a lot of space available. </li></ul>Warehousing and Stocking
  30. 30. Assembly Line Balancing
  31. 31. <ul><li>Types of Inventory </li></ul><ul><li>Raw Material (Wooden sheets, Laminated board, Printed Sheets, Nails, Hinges e.t.c.) </li></ul><ul><li>Work in process (Not placed in the store but is left in the production department.) </li></ul><ul><li>MRO (Parts for repair and maintenance are kept in the store. Like cutting blades, fuses, bulbs, hammers, pliers e.t.c.) </li></ul><ul><li>Finished Goods (As soon as the order is complete the goods are delivered to the destination decided within the Contract.) </li></ul>Inventory Management
  32. 32. <ul><li>The firm is not using any of the demand models. </li></ul><ul><li>According to HB Contract the order of raw material is placed on the basis of the orders by the customers. </li></ul><ul><li>The firm keeps safety stock in case of uncertainty because the current situation of almost all the businesses in Pakistan is not favorable. </li></ul>What independent demand model the firm is currently using?
  33. 33. <ul><li>Categories Cost in percentage </li></ul><ul><li>Building Depreciation 5% </li></ul><ul><li>Raw Material Depreciation 10% </li></ul><ul><li>Labor Cost 5% </li></ul><ul><li>Raw Material (Loss) 20% </li></ul><ul><li>___________________________________________________________________ </li></ul><ul><li>Total 40% </li></ul>Cost of Holding the Inventory
  34. 34. <ul><li>They should make the store or inventory room water proof. </li></ul><ul><li>The wood should be kept dry all the time. </li></ul><ul><li>Other option is that the wood that is of greater value should be stored in the least amount for that ABC Analysis should be done. </li></ul>Suggestions to minimize the cost of inventory
  35. 35. <ul><li>The HB Contract are not using any probabilistic model for safety stock but they are keeping the safety stocks on the basis of intuition. </li></ul>Probabilistic Models
  36. 36. <ul><li>The HB Contract should use the probability models for probabilistic demand and safety stock probability. </li></ul><ul><li>It will help them improve the quantity of safety stock required at the specific time. </li></ul><ul><li>It will also help minimize the cost of inventory held. </li></ul>Suggestion
  37. 37. <ul><li>It is possible to apply just in time to this firm if the economy of the country is improved. </li></ul><ul><li>Layout can be improved in the HB Contract to allow continuous flow of information from one department to another. </li></ul><ul><li>Inventory can be reduced to the lowest using the probabilistic models but still zero inventory cannot be achieved and there is a necessity of safety stock in this kind of business. </li></ul>Is It Possible For The Firm To Work On JIT Or Zero Inventory System?
  38. 38. <ul><li>Scheduling is common in the developing countries because of the unpredictability. </li></ul><ul><li>Six sigma can be applied in this firm if the adjustments are made in the CNC. </li></ul><ul><li>The employees are committed and dedicated to their work. </li></ul>Possibility of JIT (Cont…)
  39. 39. Thank You