Lakshya is an initiative by Club Kaizen which is our monthly supplement designed for people who dare to think above the average and believe in connecting the dots. In an age where technology has taken over every sphere, information is abundant and data is omnipresent, we have conspired to bring to you a collection of thoughtfully created and carefully curated pieces of work by some bright aspiring minds of ICFAI Business School, Hyderabad on the current trends and hot topics in the field of Operations Management and their relevance in different industries. Everything is growing at the pace of nanosecond and hence it is quintessential to know about every minute change in the eco system. With Lakshya we aim to present our readers with compact yet explicit articles on vivid topics such as Internet, Banking, IT, IoT, etc. A fair share of this edition focuses majorly on the banking systems and payment gateways. With the constantly evolving technology it will be interesting to ponder over changes that could be seen in the near future. We look forward to providing the students with some valuable insights and inculcate the passion for reading once again within our readers. Lakshya is an amazing platform for readers as well as aspiring readers to showcase their talent and pen down their thoughts which in turn will be a gold mine for information for the students of not only IBS but from the outside world too.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
1
OUR KNOWLEDGE PARTNER
Club Kaizen is privileged to have The International Supply Chain Education Alliance (ISCEA, USA) as the Knowledge Partner from this Edition of Lakshya. To be a single source for Total Supply Chain Knowledge through Education, Certification, and Recognition is the mission of ISCEA. Many workshops/events are conducted by ISCEA to improve the knowledge of manufacturing and service industry professionals. ISCEA provides a platform to explore leadership potential to the aspiring leaders in the supply chain industry while developing the skill sets and knowledge desired by corporations, through SCNext (ISCEA Young Supply Chain Professional Association). Some of the internationally recognized certification programs developed by ISCEA include1. Certified Supply Chain Analyst (CSCA). 2. Certified Demand Driven Planner (CDDP). 3. Supply Chain Case Competition. To know more about ISCEA, visit http://www.iscea.net/india. We look forward to working with ISCEA in spreading knowledge and reaching greater heights together.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
2
EDITOR’S LETTER “"With Evolution, Changes happen in every part of the world every day, every time."” Welcome to the twenty-fourth edition of “LAKSHYA”, our monthly supplement designed for people who dare to think above the average and believe in connecting the dots. In an age where technology has taken over every sphere, information is abundant and data is omnipresent, we have planned to bring to you a collection of thoughtfully created and carefully crafted pieces of work by some bright aspiring minds of ICFAI Business School, Hyderabad on the current trends and receiving close review in the field of Operations Management and their relevance in different industries. From the ninth edition, we created a new segment, ‘The Corporate Angle’ where article will be featured from prominent business leaders which will enlighten minds of young managers and business enthusiasts. IBS Hyderabad and Club Kaizen express a sign of gratitude to all corporate leaders for taking out time and scripting their thoughts for our magazine. We have introduced 'Faculties Insight’ from the eighteenth edition, where the articles will be featured from experienced faculties from all over the world that will shed light on the minds of young managers and business enthusiasts. Club Kaizen is grateful to all faculties for taking time out and writing their thoughts for our publication. We hope that you like this issue and please let us know if there are any subjects you 'd look forward to be addressed in upcoming editions. Please write to us and become a part of this discussion. Email ID: kaizenclub.ibs@gmail.com
LVS SAI CHARAN JOINT SECRETARY – KORE Kaizen – IBS Hyderabad Batch 2019-21
KAIZEN’S OPERATIONS & RESEARCH ENTITY
3
CONTENTS
S. NO.
TITLE
PAGE NO.
1
From the Mentor’s Desk
5
2
Customer Relationship Management | The Key to Sustain Post 2020
6
3
Bridging the Gaps
9
4
Disaster Driven Advancement - COVID-19
11
5
Supply Chain Disruption in Digital Era
13
6
The New Normal Strategy: Demand Driven Material Requirement Planning (DDMRP)
16
7
Airlines Makeover: COVID - 19 Pandemic
20
8
The History of Operations Management
23
KAIZEN’S OPERATIONS & RESEARCH ENTITY
4
From the Mentor’s Desk In the era of competition, it is imperative for students to be prepared for the ever-changing business environment. Knowledge creation plays an important role to learn to tackle the dynamic nature of business. I appreciate and congratulate the initiative of club KAIZEN for bridging the gap between corporate world and academia through LAKSHYA which is an excellent platform where industry practitioners, academicians and researchers can share their knowledge and experience, acting as a beacon guiding students to reach their goal. My best wishes to club KAIZEN in their endeavour of knowledge creation through LAKSHYA.
Nishit Kumar Srivastava Mentor, Club Kaizen
KAIZEN’S OPERATIONS & RESEARCH ENTITY
5
The Corporate Angle
Mr. Hrushi Kulkarni CX Consultant, LitmusWorld
Customer Relationship Management | The Key to Sustain Post 2020
“Customer centred management is the conduct of all marketing activities with a strong belief that the individual customer is the central unit of analysis and action.� A decade old process to target customer segments (rather than individual customers), calls for a shift especially with the move towards digitalization and a far-reaching internet access. With availability of customer database and the cost of servicing customer going down drastically, an individualised offering of product/ services followed with the post-sales relationship building is imaginable now. This silver lining, has a few challenges as we will see that managing customers post the lockdown will be critical than ever before.
behaviours. Markets will feel the impact of such demographic movements in the form of consumer choices, such as outsourcing of some activities due to time constraints, more consumption on demand (24/7), and on the basis of symbolism and social group values. A segment of consumers may also seek out products and services that offer them social and emotional value. This will lead to increased consumer heterogeneity, calling for a further need to look at data driven decision making. 2.Rise of health and sustainability consciousness
Customers are increasingly conscious today towards health and sustainability issues. The belief is stronger today that brands should care about profits, but also operate responsible and address Sharing some thoughts related to consumers, social and environmental issues. market and marketing domain: However, simply communicating a sustainable 1.Increasing individualization goal will not be sufficient, the goal also has to fit to the brand, must be credible, and executed. The need to define a separate existence or space Consumers furthermore look for fresh, healthy and will encourage highly individualistic lifestyles and less processed options while shopping.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
6
instantaneously. We didn’t wait for the newspaper each morning during the lockdown; rather we simply checked different news pages online/ their apps, enabled with notifications (friends sharing pfd versions of news as well). This will lead to a paradigm shift, with advertisers bidding for space real time. This will assist brands with real time data 3. Increasing use of social media for better decision making, target the right TG, redirect web traffic and to justify ROI (Return on Customers will increasingly engage in WOM Investment). (Word of Mouth) on different social media platforms with friends, acquaintance and strangers. 6. Priority for convenience and self-service Brands will realize this fundamental shift in mindfulness consumer behaviour and will have to change their strategies, especially to take advantage of the new With constrains of being at home, but ordering opportunities- learn by listening to consumers essentials at finger tips, consumers will seek more online, social media will offer ways to improve the and more convenience, which will have impact on timeliness of customer feedback. This will allow all aspects of customer relationship. companies to execute new forms of communication strategies and advertising that will enhance the Convenience will eventually lead to the rise of selfvalue of data sharing, by engaging with customers. service options. Whenever they can, customers want to take care of their own needs (without 4. Increasing use of apps hassle). Online banking platforms will give consumers the means to buy more structured and Smartphones will be critical as the prime screen customized products. (ask yourself are you reading this article on your mobile or on that laptop?) with innovations, better Companies will have to empower consumers to UI/ UX, being connected on the go will all ensure perform minor services themselves by offering that app usage increases even further in the coming convenient self-service options, but be always years. Brands will have to ensure ways to build available when customer problems grow more loyalty here, we all are evident to the fact that many complex and demanding in nature. apps opened up their “premium services” for free during this lockdown. Can the brands capitalise on 7. Increased demand for experience and this and make it an exclusive experience especially authenticity for their high CLV (Customer Lifetime Value) segments, later? Would some customers move up Amplified adoption of technological advances will the ladder & subscribe for these premium services, make customers more demanding. They will strive then what should be the communication like? for individuality and self-realization. Brands will need to create memorable events and experiences 5. Use of real time data that engage the consumer. Relationship building over a time frame will be a key, rather than a oneBrands have focused on customers to stay time transaction. Offering experiences is one way connected anytime and to receive/ send data, for brands to position and differentiate themselves Mobile technologies allow shoppers to scan barcodes, get all the information they need about the product including their sustainability and conduct a price comparison on the go. It will be a new form of transparency, and brands must get habituated to it.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
7
when the physical product and service will no longer be sufficient. Another trend will be consumers’ quest for authenticity. The improved information transparency in the digital age will provide consumers with a better understanding of marketers’ persuasion tactics.
brand communication. Thus, brands will need to be transparent, honest, and consistent in their communication as well as reflect the brand values. The article is an afterthought having read various articles on internet in public domain and CRM books.
As a result of all these factors, consumers will become increasingly sceptical towards any form of Author Bio: Mr. Hrushikesh Kulkarni, He works as a CX Consultant at LitmusWorld, with more than 15 years’ experience in Marketing domain. He is an author to various research articles & teaches Research Methodology, Market Research, Brand Strategic Management, Digital Marketing, and International Marketing as visiting faculty at leading MBA colleges. An MBA in Marketing & BSc Mathematics is an avid traveller & also writes a blog.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
8
The Corporate Angle
Mr. Hardik Gupta Head of operations, Influnc
Bridging the Gaps
What does it take for an organization to become which I believe the organizations need to bridge successful? this gap efficiency to satisfaction and maintain a positive work environment. Firstly, an organization Many of you would think about words like ‘hard is comprised of people, that is, its employees. If work’, ‘dedication’ and ‘100% efficiency’ which is they don’t feel motivated, there is no way an not entirely wrong but this is just the half of what it organization may achieve its goal. Secondly, with takes for an organization to be on the top. To keep increased competencies within different it in a simple and precise manner, it is not just about organizations, the employees tend to feel distressed do’s and don’ts in an organization but also about and they might not work up to their potential. what can be done. Thirdly, with such rapid changes in the world, the With the increasing competitiveness within the organizations need to bring in effective innovations organizations due to globalization and fast and changes with the creative mind within their communicative responses, most of the workgroups. Fourthly, organizations work with real organizations lag on just one aspect that is people from diverse cultures and beliefs and for all maintaining a positive work culture within the of them to work in unity, the organization needs to office. Oh yes, of course, we need to maintain the have a positive environment. task force, make sure everything is on time but there has to be ‘employee satisfaction’ to fulfil the What can be done to achieve a positive work achievements. environment? Our traditional organizational methods have proven There could be various ways to ensure a positive to be good and efficient but honestly, they need to work culture within the organization. Appreciating be evolved with time. There are various reasons for the employees: you know when we were in school
KAIZEN’S OPERATIONS & RESEARCH ENTITY
9
our teacher used to give us 5 stars in our notebook, which made us even more motivated to study for the next test. Something similar happens when your boss praises you for your effort. The sense of recognition not only makes you happy but ignites that drive to motivation which leads to hard work. Build their trust: employees who work under you should trust you completely with the decisions you make. For that, you need to listen to their ideas and comprehend and then work accordingly. Enjoy at work: having some fun activities and contests within the organizations not only helps the employees to trust you but also builds their trust among themselves. They support each other and help each other in a crisis. Crisis management: the most important aspect is helping the employees believe in themselves, even when there is not much scope. In a crisis, you need to lead them away which makes them feel more passionate about their work and the organization. Have seminars: this is a very good way to make the employees informed and motivated. Seminars are mostly educational and this would help the employees deal with minor ups and downs of their lives and the organization. Talk to them: yes, just talk to them, even when there is nothing very important. This makes employees less conscious and more open and acceptable. Just imagine what if the organization had a bad day and there is not much anyone can do. Just talk to them! Google is one such organization which started from trash and now has reached where everyone wants to reach.
It’s because they believe in hard work, dedication, 100% efficiency and employee satisfaction. The traditional methods of marketing and business have not been everyone’s cup of tea, maybe, therefore, a lot of corporations are not satisfied with their work and eventually quit. Focusing on employee satisfaction and having a positive work culture is something which needs to be in every organization the priority. Especially in these times when the word is dealing with a pandemic and people have lost all hope, positive work culture would make them more inclined to the organization. Many organizations, therefore, like to have workshops, seminars and lectures regarding the positive environment and employee satisfaction. Therefore, a budding profession has been observed which is called an organizational psychologist. This profession enables a trained psychologist to be posted in an organization and help the employees in any difficulty or problem they face. Having a person to consult and share the problems with is all that an employee needs if the organization is unable to deal with every employee. This helps in the cases of the employees who feel uncomfortable talking about their problems and feel dissatisfied with the job. I believe that it has to be an important part of every organization to look after its employees because an organization is not a place or a building or an institution, its ideas and people!
KAIZEN’S OPERATIONS & RESEARCH ENTITY
10
The Corporate Angle
Mr. Siddardha Hejeebu Functional Consultant, TCS
Disaster Driven Advancement - COVID-19
The Unfortunate Disaster in Mankind, the changed their way of operations. A school is not COVID – 19 has changed many things in day to only a place having a class room, black board, a day life. playground and a computer lab but, nowadays it is also defined as a 4GB RAM and 64GB Memory It all started with a transformation from smelling device with an Internet connection at home. the fresh breeze and scent of the greenery around to Talking to friends has changed way from having protecting ourselves from the Nature with Masks arms around each other to having arms around an and reached a stage where people stay indoors. The electronic gadget. Class room is not only the one disaster has really been in the driver seat for with black board, benches, tables and friends but Digitalization, specifically in terms of business and now, it is a virtual room having a User name and its operational models. password and you can only see the teacher and their presentation. This has driven digitalization at a pace rapid than the pace Lewis Hamilton had when he won the The Educational institutions are forced to use the Formula One Driver’s Championship in 2019. We emerging applications like Microsoft Teams, have till date heard about Technology driven Google Classrooms and Cisco Webex which have Advancements, Growth Driven Advancements, now changed the meaning of a Class Room and the and People Driven Advancements but, now we are pattern of Education. However, the key point to be in the phase of Disaster Driven Advancement considered is the consequences of children’s access which as per the name indicates that the to the Electronic Gadgets and with Internet which Advancement is due to the disaster occurrence and is a concerning fact. The IT companies have it has both positive and negative outcomes. adopted an approach to Borderless Workspace provision to run the operations in Business as Usual With the restrictions in place to save the people Mode rather than to go for Business Continuity from the Pandemic, the businesses have also Mode. Offices have moved from a cubicle in an
KAIZEN’S OPERATIONS & RESEARCH ENTITY
11
Air-Conditioned zone with high speed internet to the centre tables in many houses with mobile internet. The meeting applications and mobile phones have been the key in initiating team interactions to strengthen the Borderless workspace method by removing the borders of communication between people. People at-least have a threshold time of 2 hours saved from travelling to office and the companies are now collaborating with online learning platforms like LinkedIn Learning, Udemy, Coursera, etc. for up-skilling the resources and to enhance learning and development within the same time slot. The Management has been engaging the teams in professional and personal development activities thereby helping the resources for personal and professional growth and development. Even the access of Film Industry has moved from a vast area of a theatre to OTT (Over the Top) in everyone’s hands making content accessible to the users and platforms like YouTube, Amazon prime and Netflix have traded their mark in engaging customers. As per the statistics of Department of Telecommunications, Government of India, the research on data usage statistics for a week after imposing the first lockdown in India shows that there was a spike of 13% in the data usage along with a drastic increase in the users streaming videos on the internet. Morgan Stanley has projected a growth in Indian Internet users from 670 million to 914 million due to the pandemic and its aftermath.
increase in the deliveries and thereby raising the bar of employment in e-commerce. As per the research from Mc. Kinsey and Company on Consumer Sentiment and Behaviour, digitalization has already moved the Customer base as well with an increase in 10% growth of online customers during the pandemic. However, one major concern to digitalization is the Security aspect. We are highly prone to vulnerabilities and breaches leading to data hacking and data base corruption and virus attacks. So, the primary agenda of Digitalization is to ensure 100% secure digitalization aspect. But there is the other side of the coin for the disaster which had some job cuts and as per the research of the International Food Policy Research Institute (IFPRI), there are large declines in household expenditures on durables by 29.4% and discretionary items by 10.7%. The unemployment has also led to the decrease in the consumption in health by 15.3%, 12.9% in Education and 3.6% in Food which will lead to Long term consequences. The same research says that an episode of job loss leads to an immediate reduction in household consumption expenditure by 6.2%, but the decline is twice as large in urban areas (11.1% vs 5.1%). Similarly, a 1% decline in family income leads to an instantaneous 0.05% and 0.29% decline in consumption expenditure for rural and urban households respectively which is alarming.
One such interesting point to be shown here is the level of Investment flow in Jio during the pandemic from tech giants like Google, Facebook, Vista, KKR, etc in order to cash and drive the expected provision of digital services to more than 60 million businesses across India from Jio.
So, all that we can conclude is that we are in the phase of Disaster Driven Advancement and definitely we have outcomes like digitalization which are commendable going forward in terms of the change in operations but, there are problems that should be addressed by the Governing Authorities to prevent the upcoming damage in The Jio fibre services are rapidly expanding across terms of Health and other aspects. geographies with a scope of all digital connectivity in one go which is a major driver for Digitalization. Essentials are being bought online and led to rapid
KAIZEN’S OPERATIONS & RESEARCH ENTITY
12
Faculties Insight
Dr. Sachin Modgil Assistant Professor International Management Institute (IMI), Kolkata Supply Chain Disruption in Digital Era
In the last few decades supply chain have become have to focus on the design of supply chain from
complex due to their increasing scope and reach, while the chances of their disruption seems enhancing. Therefore, today firms are concerned now a days towards developing a resilient supply chain for their business.
physical and soft infrastructure view. Physical structure involves the supplier, firms and, logistic providers, distributors and retailers, whereas soft infrastructure includes the information analysis and sharing capability across the supply chain.
Not only extreme weather conditions or natural calamities are threats to the supply chains, but universal resistances towards adoption of modern information systems, technologies, cyber-crime, legal framework and rising cost of insurance poses more serious risks. In today’s volatile, uncertain, complex and ambiguous (VUCA) world it is extremely difficult for the firms to predict the future scenarios and situations for those firms can plan to reduce the impact of disruption.
This information analysis and sharing capability depends upon the adoption and utilization of current technologies and tools. Today the modern supply chain is ensuring end to end visibility through artificial intelligence (AI) and preventing the fraud with blockchain applications.
The elements of dynamic operations need to be embedded in the supply chain to ensure the desired degree of resilience in supply chain systems. The professionals and working executives in supply chain should be able to extract, analyze and make logical decisions to minimize the disruption impact. Professionals and stakeholders in a value chain
Speed in delivery and actions determines the success of a supply chain. Along with speed and coordination between departments with mentioned responsibilities will reduce the confusion in case if disruptive event occurs in the supply chain. Apart from the application and utilization of modern information systems, top executives need to ensure the balance between efficiency and effectiveness and it will depend upon many indicators ranging from supplies of raw materials to the point of consumption.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
13
The efficiency can be insured via 100 % involvement of all the stakeholders and help in minimizing the impact of disruption, whereas effectiveness can be ensured via sharing the common goal of the supply chain and stocking the emergency fuel or components required to run the supply chain in the case of disruption.
between BDA and blockchain can bring the order visibility with tracking and verified transactions. Sensor generated data is linked and can be tracked to know the exact location of the shipment and current condition. Next area which is hear of any supply chain and logistics is transportation. The automation in transportation systems is critical to address the supply chain disruptions and planners of transportation are in frontline of supply chain disruption. Therefore, they need to be the first to tackle with the situation. The robotics and automated systems have number of applications in right from traffic management to ensuring route optimization to safety mechanism. For smart traffic management, China recently introduced a system that collects the real time data and displays on the screen of drivers of cargo vehicles as well as regular commuters and hence such a system can be extrapolated to a value chain with information like weather conditions and traffic delays. Much have been talked about autonomous and driverless vehicles, whereas current situation is about only human drivers.
Many believe that injecting the resilience into supply chain will incur the cost and have an impact on possible rewards, but in reality, efficiency and resilience can co-exist. Many firms are still focusing on reducing costs and increasing rewards rather than leveraging on risk management as a competitive advantage in disruption events. Resilience in the supply chain can be realized with the development of risk management culture across the supply chain and enhancing the capability of each stakeholder with improved alert and warning systems, better identification capability of supply chain bottlenecks and faster sharing of information between firms, agencies and government. Hence, companies can be in better position not only to spring back from possible disruption, but to turn and obtain a competitive advantage from such The new technologies can evaluate and estimate the events. driver’s fatigue by identifying the vital signs and can advise them to stop or take rest or make other Moving to modern technologies like big data alternatives. This will help to avoid the accidents analytics (BDA), internet of things (IoT), on the road and avoid delay in deliveries. Apart Blockchain, machine learning and augmented from this, truck drivers are at the very end of reality are few those are making the difference in downstream supply chain or at early start of the modern value chains. These technologies are supply chain and acts as an important link between having a crucial role in managing vulnerabilities in suppliers to the firms or firms to the distributors via the case of supply chain disruptions. For instance, logistics providers. BDA today is used in ensuring the supplies with the help of real-time information. Data analytics make At the beginning of 2019 American Trucking it easy for executives to track the production Associations (ATA) mentioned that, there is a timelines and match between supply and demand shortage of around 50,000 qualified truck drivers. by identifying the market patterns and more. Many In the present time most of the commercial logistics firms are using BDA in product life cycle is carried by truck drivers in India also and management, where the process optimization, enhancing safety mechanism and road regulations degree is risk calculations and intelligent decisions push logistic firms to hire qualified drivers and this can be made. In addition to this the integration non-availability or shortage can also bring another
KAIZEN’S OPERATIONS & RESEARCH ENTITY
14
disruption to the supply chains. Therefore, while focusing everything from customer view and designing the supply chain for that, we need to design the supply chain from driver welfare view also to decrease the impact of disruption and to enhance their participation to maximum in the events of disruption in supply chain. Moreover, the empowerment of truck drivers to take certain decisions in the events of disruption and their continuous training for the use of new technologies can help supply chains to bounce back quickly. This engagement of truck drivers can become a strategic tool and competitive advantage to the value chain if utilized in a structured way. The logistics firms need to innovate while designing
such technologies for integrating multiple stakeholders and communication system between them. This will bring the end to end transparency, visibility and authorization of each and every single transaction needed to deliver the consignment from point A to B. Further truck drivers at the fore front of the supply chain disruption can help in measuring the depth and breadth of the incident and therefore, business can plan their strategy to get their supply chain to the normal track as fast as possible. In summary, the technologies, means (Constrainers), people and processed needs to be in synchronization to address the supply chain disruption in today’s era of VUCA world.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
15
Emerging Managers
Mr. Vaibhao Bende Coordinator, OPEP - Operations and Supply Chain Club, IIM Raipur The New Normal Strategy: Demand Driven Material Requirement Planning (DDMRP)
A revolution is occurring in operations and supply chain management in new normal. During the last few decades, some important approaches— materials requirements planning (MRP), kanban (JIT), and optimized production technology (OPT)—have invaded operations planning and control in quick succession, one after the other. Planning, execution, production and supply chain is the heart of any business. The essence of operations and supply chain in general is the flow of information and material. According to George Plossl’s (a founding father of MRP) first law of manufacturing, all benefits will be directly related to the speed of flow of information and materials. But why there is a need of new method? Is the conventional MRP, Kanban and others are not living up to their potential? Yes. The answer is simple, the world changed and they did not. The rules behind the MRP are inappropriate and outdated. In new normal it is causing bullwhip
effect, distortions of relevant information and materials, nervousness and requirement explosion due to pushed approach.
Asset performance degradation, Source: Deloitte University Press (Article: Success or struggle)
While pull lean approach through its kanban positioning provide oversimplified independent solution causing misrepresentation, misconception or error with regards to supply, demand and onhand inventory. This makes lean approach less visible in terms of dependencies and relationships. Is there any evidence of a problem? Yes, evidences are given by return on asset performan.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
16
degradation, work around proliferation and inventory bimodal distribution.
This variability can be systematically minimized and managed, but variability will never be eliminated. Changing “New Normal” supply chain circumstances:
1. Supply chain complexity 2. Product life cycles 3. Customer tolerance time 4. Product complexity 5. Product customization 6. Product Variety Bullwhip Effect: 7. Long lead time parts 8. Forecast accuracy APICS dictionary defines bullwhip effect as, an 9. Transactional friction extreme change in the supply position generated in supply chain generated by a small change in What is the solution? demand downstream in the supply chain. This caused inventory being backordered to being The solution is DDMRP. By its pull methodology, excess. In the below diagram, wavy arrow moving it has an ability to sense customer demand and from right to left is the distortion to relevant adapt planning and production while pulling from information which cause distortion in the flow of supplier all in real time. DDMRP protect and material. This is shown by wavy arrow moving promote the flow by allowing decoupling in order from left to right. The only way to stop nervousness to compress lead times. It has processes such as and the bullwhip effect is to stop variation being positioning decoupling point, creating and passed between he linked parts of supply chain in adjusting buffer, order generation, demand driven both directions. planning and execution and S&OP. It is mainly divided into three parts: positioning, protecting and pulling.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
17
attributes. Item type (manufactured, purchased, intermediate, distributed), lead time (short, medium, long) and variability (low, medium, high) are the parts of buffer profile. Individual parts attributes consist of part average daily usage, part lead time, part minimum order quantity and part location. Buffer represent in three color zone: green, yellow and red. Each zone has its own importance.
Positioning It is also called as strategic inventory positioning, decoupling positioning or buffer positioning. APICS defines decoupling as creating Independence between supply and use of materials. Decoupling isolates one structure from another and keeps them from impacting the system. It acts as a firewall in BOM. The places at which the system is decoupled are called decoupling points. This is the place where strategic inventory is placed to create independence between BOM. This address the problem created by bullwhip effect and at the same time helps to compress lead time. This
Buffer adjustment factors helps to resize buffer in extreme planned conditions such as product introduction, product deletion, product transition. Adjustment factor also helps to keep buffer in optimum position during seasonality and promoteonal campaigns.
helps is exploitation of market opportunities, while working capital used in inventory can be minimized. Pull
Protect At the next stage, DDMRP is deal with number of buffer quantity required and adjustment factor to position and protect the flow. Calculation of buffers depends upon buffer profile and individual part
The fourth component of DDMRP is a proven and intuitive method of supply order generation which is called as demand driven planning. The supply order generation recommendation signal (timing and quantity) is identified by net flow equation. Net flow equation is calculated on the basis of on hand and on order inventory along with qualified sales order demand. The final stage in DDMRP deal with execution. It is the management of open supply orders against relevant criteria. Criteria helps to generate alerts against open supply orders to inform another supply order generation and expedite the previous one. DDMRP planning screen with multiple buffered items, Source: Carol Ptak, Chad
KAIZEN’S OPERATIONS & RESEARCH ENTITY
18
Smith - DDMRP - Demand Driven Material significantly or eliminated. Thus, DDMRP is the Requirements Planning- Industrial Press (2016). solution for VUCA world. The New Normal has radically altered what it takes to sustain and improve a company’s competitive advantage. This alteration requires a new form of strategic and tactical management, one that allows a company to see, learn, and adapt its resources to the complexity and volatility of the New Normal. DDMRP passed these all strategic and tactical test to handle the disruption.
The results of the demand driven approach speak for themselves. Typical results include: Service level above 95 percent, inventory reductions of 30 to 50 percent, expedite-related expenses down Reference: 1. https://www.demanddriveninstitute.com/ddmrp 2. https://www.inc.com/encyclopedia/material-requirements-planning-mrp.html 3.https://www2.deloitte.com/content/dam/insights/us/articles/success-or-struggle-roa-as-a-truemeasure-of- business-performance/DUP505_ROA_vFINAL2.pdf 4. https://hbr.org/1985/09/mrp-jit-opt-fms 5. Carol Ptak, Chad Smith - DDMRP - Demand Driven Material Requirements Planning-Industrial Press (2016).
KAIZEN’S OPERATIONS & RESEARCH ENTITY
19
Emerging Managers ABHISHEK SRIVASTAVA President, Operencia The Operations club of NMIMS Hyderabad
Airlines Makeover: COVID - 19 Pandemic
We all are aware that Aviation is among the worstaffected sectors amidst the COVID Pandemic. It is a fact that Airlines are selling only services and not a product. Indian aviation industry has been running since last three decades but unfortunately, it is still not matured enough to survive even few days without flying. Airlines industry works in very low profit margin, which can’t afford even small jerk to hit the business – COVID may go in next couple of weeks’ times but fear factor of COVID will take few years to go or until everyone got vaccinated. Today, most of airlines are on ventilator, some of them already filed for bankruptcy including Air Mauritius, Virgin Australia, Jet Suite and no surprises if any Indian carrier may also declare for the bankruptcy, but the positive side is if they survive, they will be winner to enjoy rest of the passenger traffic.
that is, expenses exacted on aircrafts and travelers. The staying 40% originated from non-aeronautical income, for example, travel retail, stopping and property advancement. How about we start with the awful news: carriers are in a bad way. With essentially no clients noticeable all around and obligations accumulating, they're battling to take care of their tabs. Many are depending on stopping and landing expense waivers to overcome the emergency. That has huge ramifications for air terminals. By and large, they gain about 20% of their income from those carrier charges. Air Income sources? terminals in North America, where aircraft Preceding COVID, air terminals determined about energizes make nearer to 40% of complete income, 60% of their income from aeronautical charges – are particularly uncovered.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
20
Extend air terminals' client base
and passengers, to include customers on the ground. They search out salary creating exercises As travellers begin flying once more, they will that are not reliant on-air traffic for their growth. evade exercises that include offering kept spaces to outsiders. That will negatively affect terminal Some Air terminal is at present working one to two concessions. As shops and food outlets adjust to flights for each hour, leaving take off runways social removing rules, income per square foot will shockingly in silence. drop. A few concessions administrators may request lower rents. In a day, traveller income vanished but, in any case, shops are still in business. That is on the grounds Yet, there could likewise be some concealed that they take into account to nearby people who advantages. To bring back lost clients, aircrafts will live in encompassing networks. Outside the emphasize hygiene, well-being and bodily comfort terminal, many places of business house several big in their ad campaigns. That could convert into and small organizations. That is a major assistance expanded interest for terminal space, as carriers at the present time. grow squeezed lounges so as to charm premium travellers. We'll likewise observe more interest for Final thoughts pay-for-use work and unwinding rooms where rare travellers can escape from the groups. Meanwhile, airlines can also focus more on strengthening the supply chain business, even it Simultaneously, shops and F&B outlets should was witness by many airline industries where they focus more digitalizing the stores. were putting cargos in the seat of passenger and indirectly were converting the passenger airplanes Physical separating will oblige air terminals to to shipping airplanes. upgrade their parlours and concessions territories. It will likewise extend internet business openings Also, effective air terminals will likewise gain from inside the terminal. Driving centers effectively the current emergency by enhancing their client offer pre-requested and on-request delivery base, going to non-traveller income to make up for choices. A lot more will go along with them soon. the decrease in air traffic. Concentrating on nonThat will require large changes in shop structure traveller income sources – products and ventures and staff the board. It will likewise compel air for nearby purchasers, alongside business land for terminals to digitize on the off chance that they neighbourhood organizations – will convey need to come back to pre-pandemic degrees of significant advantages to the whole business. Air business income. terminals will develop stronger in the midst of emergency, and less reliant on aeronautical charges As the current emergency makes very clear, to take care of their expenses. aeronautics is an unusual business. The initial step is to ask who our clients are. In the event that you Today, we can see, as COVID pandemic start ask some air terminal executives that inquiry, spreading out, airlines couldn’t wait a single day they'll offer you a basic response: carriers and and start laying-off employees, cutting salary, can’t travellers. Yet, the appropriate response isn't afford to survive even for a week or so, because of unreasonably basic. Successful airports have wrong planning, no contingency fund created to expanded their customer base, beyond just airlines deal with the situation. In the last but not least, I am
KAIZEN’S OPERATIONS & RESEARCH ENTITY
21
optimistic and expecting very soon we will come out from the current situation and one more time will fly touch the sky.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
22
Emerging Managers
Mr. Vaibhav Joshi Kirloskar Institute of Advanced Management Studies, Pune
The History of Operations Management
Although people have been producing and selling products since the very beginning of civilization, the implementation of operations management is a relatively new phenomenon. The history of production and operation systems began around 5000 B.C. when Sumerian priests developed the ancient system of recording inventories, loans, taxes, and business transactions. The next major historical application of operation systems occurred in 4000 B.C. It was during this time that the Egyptians started using planning, organization, and control in large projects such as the construction of the pyramids. By 1100 B.C., labour was being specialized in China; by about 370 B.C., Xenophon described the advantages of dividing the various operations necessary for the production of shoes among different individuals in ancient Greece. Pre-Industrial Revolution: One of the first people to address the issues of
operations management was the Scottish philosopher -- and father of modern economics -Adam Smith. In 1776 Smith wrote "The Wealth of Nations," in which he described the division of labour. According to Smith, if workers divided their tasks, then they could produce their products more efficiently than if the same number of workers each built product from start to finish. This concept would later be used by Henry Ford with the introduction of the assembly line.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
23
Post-Industrial Revolution:
Although operations management has typically dealt with the manufacturing process, the growth of During the industrial revolution, machinery the service industry has created a field of service allowed factories to grow in capacity and greatly operations management. increased their output. Despite this growth, there was considerable inefficiency in production. Indian Perspective on Operations Management: Two individuals helped to overcome these inefficiencies in the early 20th century: Frederick The application of operations to manufacturing is Winslow Taylor and Ford. Taylor developed a still relevant, however, since India is also home to scientific approach for operations management, a rapidly growing automotive sector. Operations collecting data about production, analysing this principles which can be applied to the automotive data and using it to make improvements to industry include just-in-time (JIT) production, total operations. Ford increased efficiency in production quality management (TQM), total productive by introducing assembly line production and maintenance (TPM), lean product development improved the supply chain through just-in-time (LPD), and Six Sigma. delivery. Still, it’s important to note that operations Post-World War II: principles are applied different in India to the way in which they are in Western countries, because of Technological developments during the second their differing economic climates. As one might world war created new possibilities for managers expect, operations MBA curricula in India are more looking to improve their operations. Specifically, customized to the needs of its immediate the development of computational technology surroundings. “India is a country of ‘Jugaad’ allowed for a greater degree of data to be analysed (innovative fixes or work-around) and, to that by firms. extent, all management concepts need to be adapted to Indian conditions and realities,” as stated by The abilities of computers have continued to Haritha Saranga (Professor at Production and increase exponentially, allowing for a high degree Operations Management Area at Indian Institute of of data analysis and communication. Modern Management Bangalore.) producers are now able to track their inventory from raw materials, through production and While India’s large population lend itself to a largedelivery. scale economy in matters of production and operations, the relatively lower maturity level of Modern Day: widely available technologies and the traditionally smaller scale of industries in India pose challenges. Quality management systems are popular in today's Yet, this creates interesting opportunities for lean operations management. Quality management is a and agile operations. These are operations system for mapping, improving and monitoring challenges that are unique to India, and applying operations processes. A variety of quality operations management to region-specific issues management systems are in use among top firms, helps teach MBA students how to use operations to the most notable systems being the ISO systems solve business problems that are specific to India. and Six Sigma. These systems aim to increase the efficiency of business processes.
KAIZEN’S OPERATIONS & RESEARCH ENTITY
24
Table 1: Historical Summary of Operations Management References: 1. For general History of Operations Management : https://bizfluent.com/info-7811298-historyoperations-management.html 2. The Table summary: https://www.wisdomjobs.com/e-university/production-and-operationsmanagement-tutorial-295/historical-evolution-of-production-and-operations-management9434.html 3. For Indian Perspective: https://www.topmba.com/jobs/career-trends/operations-managementview-india
KAIZEN’S OPERATIONS & RESEARCH ENTITY
25
ABOUT US The word “Kaizen”, where “Kai” = change “Zen” = good, simply means “change for better”. In English Kaizen is typically applied to measures for implementing continuous improvement. It is an approach to activity organisation based on common sense, self-discipline, order and economy and is a strong contributor and fundamental part of a lean production process model in lean manufacturing. Kaizen- The Official Operations Club of IBS Hyderabad believes in relishing in the essence of "Constant Change and Evolvement" and hence we, as an organization work willingly for the betterment of the student community. KORE- Kaizen’s Operations and Research Entity, one of our primary wings which flaps to cater to the needs of students and motivate them to soar high by polishing their technical competencies. KORE’s area of expertise includes Case Based Research, Consultancy, Live Projects and Workshops. LAKSHYA, an initiative taken by KORE primarily focuses on the concepts of operations management and various articles based on the day to day operations and logistics of an organisation.
NISHU KUMARI KEJRIWAL EDITOR IN CHIEF - KORE Kaizen – IBS Hyderabad Batch 2019-21
KAIZEN’S OPERATIONS & RESEARCH ENTITY
26
LAKSHYA is an academic print and is not for any commercial sale. Reliability and Responsibility, for sources of data for the article vests with the respective authors. Please feel free to drop in your suggestions at kaizenclub.ibs@gmail.com KORE: Kaizen’s Operations & Research Entity. Kaizen – The Official Operations Club of IBS Hyderabad All Rights Reserved
Designed by
KAIZEN’S OPERATIONS & RESEARCH ENTITY
27