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Volume 04, Issue 02, April, 2015
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“Lean thinking defines value as providing benefit to the customer; anything else is waste.”
Facility Management The Indian economy has always been inclined to be a service provider; the predominance of the manufacturing sector has rarely grown in substantially years. And surprisingly, operational efficiency is just as important in service industries as it is in manufacturing. When starting or expanding operations, businesses in the service sector must make a number of decisions quite similar to those made by manufacturers: What services should they offer? How will they provide these services? Where will they locate their business, and what will their facilities look like? How will they forecast demand for their services? Facility Management is such a business where business and services directly impact client operations. Hence, when starting or expanding a service business, owners and managers must invest a lot of time in selecting a location, determining its size and layout, scoping on services, manpower and forecasting demand. While a poor location or a badly designed facility can cost the customers, the inaccurate estimates of demand can result in poor service, excessive costs, or both. Overseeing operations in a service organization puts special demands on managers, especially those running facilities, such as IT or some Manufacturing Unit, that have a high degree of contact with clients business. Service firms provide customers with personal attention and must satisfy their needs in a timely manner. This task is complicated by the fact that demand can vary greatly over the course of any given day. Managers, therefore, must pay particular attention to employee work schedules and in many cases he also has to look equally into inventory management.
Estimating capacity needs for a service business is more difficult than for a manufacturer. Service providers can’t store their services for later use. Services must be delivered on an asneeded basis. In service organizations, for Best operation excellence one’s key focus should always be on scheduling 5M’s (Man, Machine, Material, Method and Money) to ensure the fluctuating customer demand and efficient operations. ~V Vinay Raju, Manager – Projects/Transition, Sodexo Facility Management Services
Quality Control and the Taguchi Loss Function Several industrial experiments in the 1980s focused on Taguchi’s method have demonstrated that the optimal factor settings for one performance characteristic are not always compatible with those of other performance. Taguchi developed the methodology for applying statistics to improve the quality of manufactured goods. The technic is based on three approaches: 1. Taguchi Loss Function: is used to measure financial loss to the society resulting from poor quality. Taguchi suggests that every process has a target value and as the product moves away from the target value there is a loss incurred by the society. 2. Signal to Noise: Taguchi technics introduce the effects or impact of the noise on the product quality. 3. Robust design: Taguchi robust design is used to make the system less sensitive to variations.
– Eric Ries, The Lean Startup
The attempt should be to meet the target value rather than being within upper and lower specifications. As you move away from the target value rather the loss increases. This loss is proportional to the square of the distance from the target value. Noise factors are classified into three categories: Outer noise, inner noise and between the products noise. Taguchi approach is not to eliminate or ignore the noise factors. Taguchi technics introduce the effect or impact of the noise on the product quality. The signal to noise ratio provides the measure of the impact of the noise factors on performance. The larger the ratio, the more robust the product is against noise. The Taguchi function can be explained by the following graph.
So what is the actual loss function? Let us now think for a moment about how the costs of quality would vary with the products deviation on the upper or lower limits (mean). The loss function for a given product would be: L= k(y-m) ^2, where: L(y) = Loss, k= constant (cost to correct ÷ tolerance), y= reported value, and m = mean value. To summarize, the better the product quality fits into the target specifications, the better for the company. In other words, the more the value of L(y) tends to zero, the more the product quality falls within the target specifications. ~Sandou Keita 13JGBS
Eight Technologies redefining the future of supply chains (SOURCE: 2015 MHI Annual Industry Report by Deloitte & MHI): •Network optimization tools •Sensors and automatic identification •Cloud computing and storage •Robotics and automation •Predictive analytics •Wearable and mobile technology •3D printing •Driverless vehicles and drones
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OCTANE-The Octaphi Newsletter
For previous issues visit: http://issuu.com/octaphi/docs
Crossword Puzzle
Necessity of Six Sigma in the Service Sector
A Definition: “BATNA”
It stands for "Best alternative to a negotiated agreement." The course of action that will be taken by a party engaged in negotiations if the talks fail and no agreement can be reached. Coined by Roger Fisher and William Ury in their 1981 bestseller, ‘Getting to Yes: Negotiating Without Giving.’
Do You Know? Bengaluru, India is ranked No.1 in the World’s top-10 list of Outsourcing Destinations. Amazingly, there are five other cites of India are listed in the World’s top-10 Outsourcing Destinations with Mumbai (3rd), Delhi (4th), Chennai (5th), Hyderabad (6th) and Pune (7th).
Editorial Board: Contact us:
Saurabh Sao, Karishma Wadhwa, Saroj Koul. Jindal Global Business School octaphi@jgu.edu.in
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Answers – Vol. 4, Issue 1:
~ Prashant Dwivedi, 13JGBS
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Across: 4. RECEIPTS, 8. EOY, 9. CUSTOMER, 13. DISTRIBUTOR, 16. REPLENISHMENT, 17. RACK, Down: 1. STOCKKEEPINGUNIT, 2. CARRIER, 3. TRANSFERORDER, 5. SALESORDER, 6. BOTTLENECK, 7. VENDOR, 9. CASHONDELIVERY, 10. HOUSEKEEPING, 11. ISO, 12. CONTAINER, 14. PARCEL, 15. OPENORDER
In this era of competition and survival of the fittest situations; every organization strives for achieving competitive advantage over other. For achieving this quality management has become the most significant business strategy. Six sigma is highly recognized in the manufacturing sector. The concept of six sigma was first introduced and promoted by Motorola in 1986. It enabled the manufacturing organizations to detect and hence minimize defects in the units. When it comes to service sector people used to argue that it is infeasible to implement six sigma in the service sector due to the intangible and unmeasurable nature of service processes. But in recent years it has been widely accepted that six sigma is as an effective approach for improving quality in the service sectors as well. Especially sectors, such as, healthcare, finance, banking, Call Centre, etc. needs very high level of accuracy. Statistics show that processes such as BPO’s health care or banking sectors show a sigma quality level of 3.5 which highly affects the revenue of those sectors. If the sigma level is improved in these sectors it will have a significant positive impact on the financials of the companies. This means that the customer satisfaction level will increase resulting in a sharp decrease in the customer complaints. Other benefits include effective decision making processes, elimination of non-value added processes resulting in faster delivery of services , encouraging proactive thinking in the organization, and enhancing cross functional teamwork in the organizations. There is an immense scope of six sigma implementation in the service industry such as in civil aviation sector mistakes in reservations, mistakes in baggage handling system, waiting time in check in counters can be reduced. In accounting and finance payment and invoicing errors, in banking the malfunction of ATM machines and in healthcare sector error in operation, waiting lines at the receptions, errors in diagnoses can be reduced.
Clues:
1) List of times at which possible tasks, events, or actions are intended to take place 2) System developed by Taiichi Ohno, at Toyota to control the logistical chain 3) Price at which a certain cargo is delivered from one point to another 4) Set of rules published by International Chamber of Commerce (ICC) which define the responsibilities of sellers and buyers for the delivery of goods under sales contracts. 5) The maximum amount that can be contained 6) Accumulation of uncompleted work or matters needing to be dealt with. ~ Saurabh Sao, 14JGBS What’s New? “Amazon’s supply chain is ‘more admired’ than Apple” A research, conducted by SCM World, asked 1,136 executives to rate the two companies on four supply chain attributes; agility, collaboration, execution and innovation. Amazon came out top on three of the four attributes, with Apple leading on innovation alone. Over 58 percent said they admired Amazon most overall for the way it operates its Supply Chain.
Corporate Feedback Corner I have been reading the OCTANE since last one years & I am really impressed by the simplicity & objectivity of the matters incorporated in the readings. It keeps me updated with the latest news & interesting facts of Supply Chain. I recommend OCTANE. ~ Divya Krishnan, Amazon
Student Feedback Corner Octane is a magazine which keeps us informed about the recent trends in Operations & Supply Chain. The special columns like ‘Do you know’, ‘What’s New’ and others are my key points of interest. ~Vivek Pant, 14 JGBS
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