Compendium for Placements

Operations Management
1. Explain the role of Operations in Manufacturing industry........................................ 3
2. Explain the role of Operations in Banking industry .................................................. 4
3. Explain the concept of Total Quality Management? ................................................. 5
4. What is ERP (Enterprise Resource Planning)? ......................................................... 7
5. What is the difference between BPR and ERP? ...................................................... 10
6. Discuss the importance of quality circles in total quality management? ................ 11
7. Explain the 5‐M Model of Operations Management ............................................ 13
8. Explain the Japanese concept of JIT (Just in Time). How would it help in reducing
the overall costs? ......................................................................................................... 15
9. In which industries/ conditions the concept of JIT fails? (Limitations of JIT) . 17
10. What is Project Management? Which PM tools are used in industry? ................. 18
11. What is CPM? Explain using an example............................................................. 21
12. Explain the Program Evaluation and Review Technique (PERT)? ...................... 23
13. Draw a PERT chart and explain various terminologies like lead time, slack
period, milestone, event etc......................................................................................... 25
14. Apply Pareto's principle in real business scenario and how does it affect the target
customer segments? .................................................................................................... 29
15. What is Project Life Cycle? .................................................................................. 32
16. What do you mean by BOO, BOT, BOOT? Which model is widely used in India
for Private-Public partnership? ................................................................................... 33
17. Explain Work Breakdown Structure (WBS) as a tool related to project planning
and scheduling. ........................................................................................................... 34
18. Explain 6 Sigma tool for quality Management ..................................................... 37
19. Explain RCA (Route Cause Analysis) using Ishikawa/ Fishbone/ Herringbone
diagram. ...................................................................................................................... 39
20. Is logistics and Supply Chain different? Explain with reason. ............................. 42
21. What are HR-Operations Interface Issues? Explain using an example................. 43
22. Explain the importance of Supply Chain Management in an FMCG/ Automobile
industry? ...................................................................................................................... 46
23. What is Lean Management?.................................................................................. 48

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Introduction to Operation Management

Operations management is the area concerned with the efficiency and effectiveness
of the operation in support and development of the firm’s strategic goals. Other areas
of concern to operation management include the design and operations of system to
provide goods and services. To put it simply, operations management is the planning,
scheduling, and control of the activities that transform inputs (raw materials and labor)
into outputs (Finished goods and services). While the term operations management
conjures up views of manufacturing environments, many of these concepts have
been applied in service settings, with some of them actually developed specifically
for service organizations.

1. Explain the role of Operations in manufacturing industry.

Role of operations management can be understood very clearly by the diagram
given below:
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In short, Operations in Manufacturing Industry can be grouped as follows:

• Production planning: During production planning, operations managers
determine how goods will be produced, where production will take place, and
how manufacturing facilities will be laid out.
• Production control: Once the production process is under way, operations
managers must continually schedule and monitor the activities that make up
that process. They must solicit and respond to feedback and make
adjustments where needed. At this stage, they also oversee the purchasing of
raw materials and the handling of inventories.
• Quality control: Finally, the operations manager is directly involved in efforts
to ensure that goods are produced according to specifications and that quality
standards are maintained.

2. Explain the role of Operations in Banking industry.

A core function of Operations is to control and manage the processing of trades made by the
various other divisions of the bank – chiefly Sales and Trading. And with such huge number
of trades being made every second of the day, operations management has a complex but
incredibly important role to play in the successful functioning of the bank.

Operations is a non-revenue making division but it couldn’t be more vital. In

helping to streamline the processes used by the front office (the revenue
generating part of the bank) it can save the bank billions. A key aim, for example,
is to allow traders to receive confirmations of trades and statements earlier and
quicker than anyone else in the market. With market prices changing in a
millisecond you can see why this is so important.

Broadly, Operations consists of

 Processes: includes payment/settlement, documentation,
valuation/pricing, project management and internal/external reporting
 People: unauthorized activity, loss/lack of key personnel
 Systems: includes development, implementation and failure of systems
 External: outsourcing, managing natural and other disasters and managing
regulatory and political risk
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In summary, it shouldn’t be surprising that Operations is often viewed as the engine

of the bank. It works across the whole company to meet the operational challenges
of processing transactions, settling trades and satisfying the needs of colleagues and
clients across multiple time zones in all major currencies. In a large bank this is a
huge undertaking with responsibility for millions of transactions every day.

3. Explain the concept of Total Quality Management?

Total Quality Management/TQM is an integrative philosophy of management for
continuously improving the quality of products and processes.
TQM is based on the premise that the quality of products and processes is the
responsibility of everyone involved with the creation or consumption of the
products or services which are offered by an organization, requiring the
involvement of management, workforce, suppliers, and customers, to meet or
exceed customer expectations.
The common TQM practices are
 cross-functional product design
 process management
 supplier quality management
 customer involvement
 information and feedback
 committed leadership
 strategic planning
 cross-functional training
 employee involvement

It is a management approach that originated in the 1950s and has steadily

become more popular since the early 1980s. Total quality is a description of the
culture, attitude and organization of a company that strives to provide customers
with products and services that satisfy their needs. The culture requires quality in
all aspects of the company’s operations, with processes being done right the first
time and defects and waste eradicated from operations.

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To successfully implement TQM, an organization must concentrate on the eight key

elements to describe a philosophy that makes quality the driving force behind
leadership, design, planning, and improvement initiatives. These elements can be
divided into four groups according to their function. The groups are:
 Foundation – It includes: Ethics, Integrity and Trust.
 Building Bricks – It includes: Training, Teamwork and Leadership.
 Binding Mortar – It includes: Communication.
 Roof – It includes: Recognition.

The Concept:
TQM views an organization as a collection of processes. It maintains that
organizations must strive to continuously improve these processes by incorporating
the knowledge and experiences of workers. The simple objective of TQM is "Do the
right things, right the first time, every time". TQM is infinitely variable and adaptable.
Although originally applied to manufacturing operations, and for a number of years
only used in that area, TQM is now becoming recognized as a generic management
tool, just as applicable in service and public sector organizations. There are a number
of evolutionary strands, with different sectors creating their own versions from the
common ancestor. TQM is the foundation for activities which include:
 Commitment by senior management and all employees
 Meeting customer requirements
 Reducing development cycle times
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 Just In Time/Demand Flow Manufacturing

 Improvement teams
 Reducing product and service costs
 Systems to facilitate improvement
 Line Management ownership
 Employee involvement and empowerment
 Recognition and celebration
 Challenging quantified goals and benchmarking
 Focus on processes / improvement plans
 Specific incorporation in strategic planning

This shows that all personnel, in Manufacturing, Marketing, Engineering, R&D,

Sales, Purchasing, HR, etc. must practice TQM in all activities.
The core of TQM is the customer-supplier interfaces, both externally and internally,
and at each interface lay a number of processes. This core must be surrounded by
commitment to quality, communication of the quality message, and recognition of the
need to change the culture of the organization to create total quality. These are the
foundations of TQM, and they are supported by the key management functions of
people, processes and systems in the organization.

4. What is ERP (Enterprise Resource Planning)?

Enterprise resource planning (ERP) systems integrate internal and external
management of information across an entire organization—embracing
finance/accounting, manufacturing, sales and service, customer relationship
management, etc. ERP systems automate this activity with an integrated software
application. ERP facilitates information flow between all business functions inside the
organization, and manages connections to outside stakeholders.
Enterprise system software is a multi-billion dollar industry that produces components that

support a variety of business functions. IT investments have become the largest category of

capital expenditure in United States-based businesses over the past decade. Enterprise

systems are complex software packages that offer the potential of integrating data and

processes across functions in an enterprise. Although the initial ERP systems

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Focused on large enterprises, there has been a shift towards smaller enterprises
also using ERP systems.
Organizations consider the ERP system a vital organizational tool because it
integrates varied organizational systems and enables flawless transactions and
production. However, an ERP system is radically different from traditional systems
development. ERP systems can run on a variety of computer hardware and network
configurations, typically employing a database as a repository for information.
ERP (Enterprise Resource Planning) systems typically include the following
characteristics:
 An integrated system that operates in real time (or next to real-time),
without relying on periodic updates[citation needed]
 A common database, which supports all applications
 A consistent look and feel throughout each module
 Installation of the system without elaborate application/data integration by
the Information Technology (IT) department, provided the implementation
is not done in small steps

All system efforts and business functions are generally categorized into one of
three “value proposition” buckets:
 Operational excellence (ERP)
 Innovation (ERP II)
 Customer focus (ERP III)

The ERP context is almost exclusively focused on the “operational excellence”

portion of business “back office” transactional processing.
ERP II and ERP III Future enterprise Applications
 ERP II (or ERP 2) applications extend supply functionality to external enterprises
(generally vendor-affiliated companies or enterprises) to reduce cost, improve supply
chain efficiency, and to perform collaborative innovation. Through collaboration, SOA,
and other interface, data exchange, or interaction methods the ERP II systems move
beyond Enterprise boundaries (or a basic ERP system) and into the vendor space
including the supply, design, and engineering collaboration areas. ERP II systems
continue to enhance operational excellence and start to introduce a measure of the
innovation value proposition.

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 ERP III (or ERP 3) enterprises go to the next level of integrating the ERP and ERP I
functionality to include customers and the sales side of the marketplace into
enterprise operations. Your customers become active participants in your business.
Through collaboration, direct contact, social media, and various data streams within
and outside of the enterprise ERP III integrates marketplace fans and critics into the
extended ERP and ERP II organizations. From this integration of the customer and
vendor a constructive dialog and exchange of information is created to innovate,
produce, and then sell / distribute better products or services. This closes the value
proposition loop by going outside of the enterprise boundaries and finding ways to
bring customer input, needs, wants, and insight into the enterprise. ERP III system
creates a strong synergy between innovation and customer focus.

SAP implementation of ERP II System and the future of ERP III

SAP has created an entire collaboration network called the SAP Community Network
or SCN where customers, vendors, consultants, and any interested party can
exchange information, ideas, or dialog. SAP has implemented ERP II systems
internally through the development of specialized vendor partnerships it calls an
“Ecohub”. This is a place where vendors, partners, or other firms with specialized
SAP solutions can integrate and promote their offerings to enhance SAP’s various
software offerings. Along with that there are code exchanges, “how-to” articles,
discussion forums, and many other types of collaborative information exchanges.

Within the extended SAP enterprise (which is my area of expertise) I see many of
the seeds of ERP III germinating and beginning to grow. Even though the initial
“green shoots” are there for an ERP III revolution I don’t anticipate that occurring
for several years within SAP. Today SAP has:

 Very active, country specific SAP User Groups (xSUG, in America is it

ASUG) with “influence councils”
 Community forums (previously mentioned)
 “Mentor Groups” within the community network.

ERP III will create the “borderless enterprise” by bringing together a host of technology
Sources such as:
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 Collaboration tools (within the enterprise and across the supply chain and
marketplace)
 Social media
 Internet technologies
 SOA
 Smart information integration and synthesis (specialized search with analytics or
within specific information domains). An early example of this type of search is a
web service called “Lijit”. Lijit allows you to manually assign searchable
information sources for a customized, high value “search engine.”
 Extended marketing analytics that are “like” tracking cookies but less invasive and
use additional sources of information and research beyond the web (a good
example is like grocery store checkout programs that automatically print coupons
on the back of your store receipts based on what you just purchased).

 Direct customer collaboration (we see early examples of this in the Dell
“designed by me” and “I made Windows 7” television commercial
marketing campaigns).

5. What is the difference between BPR and ERP?

ERP is Enterprise Resource Planning and BPR is Business Process Reengineering. ERP
integrates the primary business applications and provides a customized solution. It
covers areas such as human resources, sales and distribution, quality management,
production management, accounting, project management and plant maintenance.
Business Process Reengineering is redesigning of the business process for improvement
of performance. It aids to eliminate wasteful tasks and reorganize procedures to prevent
unnecessary expenses. The process involves defining the work order and restructuring
of the redundant tasks. It helps to streamline the business process, which enhances the
performance of the company. One has to study the current business process for
redesigning and reengineering.

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Business process re-engineering is a business management strategy,

focusing on the analysis and design of workflows and
processes within an organization. BPR
aimed to help organizations fundamentally
rethink how they do their work in order to
dramatically improve customer service,
cut operational costs, and become world-
class competitors. BPR is used to analyze
the business process and thereby take the
necessary steps to realize the potential growth
of the organization. ERP on the other hand is
an application used to meet the potential
growth by integrating the various

functional departments of the organization. The various functional departments

are productions, accounting, sales, etc. BPR is used to identify the trouble areas
of the process and ERP is used to handle these troubled areas in simple terms.

6. Discuss the importance of quality circles in total quality management?

In simple words, quality circles can be defined as a way of capturing the creative
and innovative power that lies within the work force.
A quality circle is a small group of volunteers (usually 3 to 12 employees) doing similar
work. They meet regularly under the leadership of their immediate supervisor, or
someone chosen among the circle to identify problems, set priorities, discover causes
and propose solutions. These may concern quality, productivity, safety, job structure,
process flow, control mechanism, aesthetics of the work area etc.
The Quality Circle concept has three major attributes; those are:

1. QC is a form of participative management.

2. QC is a human resource development technique.
3. QC is a problem solving technique.
Objectives of Quality Circles
Objectives, which contribute to the improvement and development of the
enterprise and indirectly the interest of the employees, are:
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1. To improve the quality and productivity and thus contribute to the

improvements and development of the enterprise
2. To reduce the cost of products or services by waste reduction, safety, effective
utilization of resources, avoiding unnecessary errors and defects
3. To identify and solve work related a problem that interferes with production
4. To tap the creative intelligence of the persons working in the organization and
to make full use of its human resources
5. To permit employees to develop and use greater amount of knowledge and
skill and motivate them to apply to a wide range of challenging tasks
6. To improve communication within the organization
7. To increase employees' loyalty and commitment to the organization and its goals
8. To respect humanity and build a happy bright work place environment which
is meaningful to work in
9. To enrich human capability, confidence, moral, attitude and relationship
10. To satisfy the human needs of recognition, achievement and self-development

Advantages of Quality Circles

The organization can accomplish one or more of the following advantages by
establishing quality circles:

1. Promote high level of productivity and quality-mindedness

2. Self and mutual development of employees
3. Creating team spirit and unity of action
4. Increased motivation, job satisfaction and pride in their work
5. Reduced absenteeism and labour turnover
6. Developing sense of belongingness towards a particular organization
7. Waste Reduction
8. Cost reduction
9. Improved communication
10. Safety improvement
11. Increased utilization of human resource potential
12. Enhancement in consciousness and moral of employees through recognition
of their activities

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13. Leadership development

14. Trained staff

7. Explain the 5-M Model of Operations Management

Production management’s responsibilities are summarized by the “five M’s”: men,
machines, methods, materials, and money.

Man Material Machine Methods Money

Man hours Resource Design Technology Utilization

Proficiency Maintenance Flexibility

etc. Information e, etc. etc. WPI, etc.

“Men” refers to the human element in operating systems. Since the vast majority of
manufacturing personnel work in the physical production of goods, “people
management” is one of the production manager’s most important responsibilities.
The production manager must also choose the”machines and methods” of the
company, first selecting the equipment and technology to be used in the
manufacture of the product or service and then planning and controlling the
methods and procedures for their use. The flexibility of the production process
and scheduling are important for Production.
The production manager’s responsibility for “materials” includes the management
of flux —both physical (raw materials) and information (paperwork), the
smoothness of resource movement and data flow.
The manager’s concern for “money” is explained by the importance of financing
and asset utilization to most manufacturing organizations. A manager who allows
excessive inventories to build up or who achieves level production and steady
operation by sacrificing good customer service and timely delivery runs the risk
that over investment or high current costs will wipe out any temporary competitive

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advantage that might have been obtained.

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Example (automation at Toyota)

5M’s (Man, Material, Machines, Management and Mission) Model harmonizes or helps
orchestrates 5Ms together for the best possible outcome in your manufacturing
operations.
1. Man: When a direct employee (The ones actually making your company
money) interfaces with a piece of equipment they must be comfortable working
at a specific station for extended periods of time. Thus, making the factory
automation equipment ergonomically compliant will help ensure a safe and
productive environment for your direct labor force.
2. Methods: Every product has a process or multiple processes that it must go through
before it is ready to be delivered as a final product to a customer. The methods used to
perform value added work to the product must be consistent and controlled. The machine
should verify that each process took place properly and that each part or assembly being
processed is correct or meets the quality specifications of the part.

3. Machines: Each machine used in a process must be able to perform its

intended function or task with precision and reliability. Making machines that
are robust, flexible and scale-able are the key to following the Toyota
Production System mentality. Machines can also include in process
inspections, self-diagnostics and mistake proofing features that only allow
perfect parts to be passed down stream to subsequent process.
4. Materials: Every process has materials coming into the work area to be
processed or assembled. Making equipment that facilitates easy material flow
can pay huge dividends to those who understand that minimizing material
movements is vital to being a successful implementer of lean. In-coming and
outgoing material flows should be heavily considered when developing an
automated solution for use on the shop floor.
5. Money: When you invest in a piece of automation/equipment, you must be certain,
before purchasing, that it will pay for itself. If the machine solves issues and helps
you realize the results you are hoping for in your business, you should see a great
payback and realize immediate positive impacts on your bottom line

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8. Explain the Japanese concept of JIT (Just in Time). How

would it help in reducing the overall costs?
It is a conceptual framework, developed by Toyota, “producing or stocking
necessary item in necessary quantity at necessary time”. The philosophy of JIT is
simple: the storage of unused inventory is a waste of resources.
It is a form of pull system and backbone of Japanese manufacturing system-
‘Kanban’. In a push system the amount and time of material flow at each stage of
production is forecasted in advance, while in pull system the succeeding stage
orders and withdraws materials from the preceding stage of production.
JIT is all about reducing the in-process inventory and its associated carrying cost
to maintain a lean process. It focuses on balanced rapid flow.
JIT usually identifies seven prominent types of waste to be eliminated:
 Waste from Overproduction
 Transportation Waste
 Processing Waste
 Waste from Product Defects
 Waste of waiting/idle time
 Inventory Waste
 Waste of Motion

Building blocks of JIT

Product design Process Design Personnel ElementsManufacturing
Planning
Standard Parts Small lot sizes Workers as assets Level loading
Modular design Limited work in Cross-trained Pull systems*
process Workers
Highly capable Quality Continuous Close vendor
production improvement improvement relationship
systems
Improved
Information flow

Major benefits of JIT include:

Reduced setup and lead time
Eliminate disruptions in the production process
Eliminate Waste
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 Minimize the inventory and storage needed

 Make the system flexible
Critical Points to be considered (JIT is prone to):
 Supply Shocks
 Stock-outs
 Lack of Responsiveness

Case examples- (Page 12-19) google book:

http://books.google.co.in/books?hl=en&lr=&id=Q6zO-
UwJ1i0C&oi=fnd&pg=PR9&dq=just+in+time&ots=O3ckon0qFK&sig=4LKLvqGY4Ss
CspBDMoaXOpPtFoY#v=onepage&q=just%20in%20time&f=false
Extra Read :
http://ehis.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=7&sid=4d42bd43-8169-402f-
baac-c701ce32b00d%40sessionmgr15&hid=15
Video Links: https://www.youtube.com/watch?v=ujBfXF5beo0

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9. In which industries/ conditions the concept of JIT fails? (Limitations of

JIT)
Limitations of Just in Time Inventory:-

1) Just-in-time manufacturing provides zero tolerance for mistakes, as it makes

re-working very difficult in practice, as inventory is kept to a bare minimum.

2) There is a high reliance on suppliers, whose performance is generally outside

the purview of the manufacturer.

3) Due to there being no buffers for delays, production downtime and line idling
can occur, which would bear a detrimental effect on finances and on the
equilibrium of the production process.

4) The organization would not be able to meet an unexpected increase in orders,

due to the fact that there are no excess finish goods.

5) Transaction costs would be relatively high, as frequent transactions would be made.

6) Just-in-time manufacturing may have certain detrimental effects on the

environment, due to the frequent deliveries that would result in increased use
of transportation which in turn would consume more fossil fuels.

7) Difficulty of predicting market demand. While JIT may present cost savings for
businesses, this advantage should be weighed against the difficulty of
predicting market demand, which consistently fluctuates for most

Industries in which JIT does not work:-

1) Automobile industries: - Just-in-time manufacturing system is vulnerable to
unexpected disruptions in supply chain. A production line can quickly come to
a halt if essential parts are unavailable. Toyota, the developer of JIT, found this
out the hard way. One Saturday, a fire at Aisin Seiki Company’s plant stopped
the delivery of all break parts to Toyota. By Tuesday, Toyota had to close down
all of its Japanese assembly line. By the time the supply of break parts had
been restored, Toyota had lost an estimated $15 billion in sales.

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2) Commodity based industries: - With uncertainty in price and production,

manufacturing industries can get a hit in its lead times and miss the production
schedules.

3) High technology industries – Supply chain disruptions can lead to effect the
launch dates and times which will hurt its brand image and the sales numbers

10. What is Project Management? Which PM tools are used in industry?

Project management is the methodology of initiating, planning, scheduling,
controlling and closing the project to achieve specific goals.
Key constraints for project completion are time, scope, quality, budget &
resources. The challenge here is to optimize assignment of resources to the tasks
to meet the objectives and goals.
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1) Project Planning:-
Project management requires a commitment of resources and people to an
important undertaking that is not repetitive and involves a relatively short period
of time, after which the management is dissolved.

Project Planning Purpose:-

1) Commit resources to time
2) Commit Individual work to bigger project
3) Break projects into manageable chunks and monitor process

2) Project Scheduling:-
Project scheduling consists of
1) Define the Activities
2) Sequence the activities
3) Estimate the time required
4) Develop the schedule based on sequencing and time estimates of the activities

Project Scheduling Tools:-

GANTT chart:-
A Graph or Bar Chart with a bar for each project activity that shows passage of
time and the progress of activities are tracked with respect to schedule.
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3) Project Control

Project Control is the process of making sure the project processes toward a
successful completion. It requires that the project be monitored and progress be
measured so that any deviations from the plan.
The Key activities include:-
1) Time Management
2) Cost Management
3) Quality Management
4) Performance Management
5) Communication

Project Management Tools:-

1) Critical Path Method (CPM) :- Critical Path Method or Critical Path Analysis,
is mathematically based algorithm for scheduling a set of project Commonly
used with all forms of projects, including construction, software development,
research projects, product development, engineering, and plant maintenance,
among others activities.
Float (slack) - amount of time that a task can be delayed without causing a delay to:

- Subsequent tasks (free float)

- Project completion date (total float)
Critical path is the sequence of activities which add up to the longest overall
duration. It is the shortest time possible to complete the project. Any delay of an
activity on the critical path directly impacts the planned project completion date
(there is no float on the critical path). A project can have several, parallel, near
critical paths. An additional parallel path through the network with the total
durations shorter than the critical path is called a sub-critical or non-critical path.
- Critical activity – activity with zero float
- Resource levelling – iterative process of assigning crews to activities in order
to calculate their duration

2) Project Evaluation and Review Technique (PERT) :-

In PERT activities are shown as a network of precedence relationships using
Activity-on-arrow network construction for non-repetitive jobs (research and
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development work), where the time and cost estimates tend to be quite
uncertain. This technique uses probabilistic time estimates.
Three times are considered for the project
Optimistic time: Time required under optimal conditions
Pessimistic time: Time required under worst conditions
Most likely time: Most probable length of time that will be required
Expected time of completion
E = (O + (4 X ML) + P) / 6

E = expected time
O = optimistic time
M = most likely time
P = pessimistic time

11. What is CPM? Explain using an example.

The critical path method (CPM) is an algorithm for scheduling a set of project activities.
It is an important tool for effective project management.CPM is commonly used with all
forms of projects, including construction, aerospace and defense, software development,
research projects, product development, engineering, and plant maintenance, among
others. Any project with interdependent activities can apply this method of mathematical
analysis. The US Navy developed the method in the 1950s

Basic Technique
The essential technique for using CPM is to construct a model of the project that
includes the following:

1. A list of all activities required to complete the project (typically categorized

within a work breakdown structure),
2. The time (duration) that each activity will take to completion, and
3. The dependencies between the activities.

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Example

Step 1. List the Activities

CPM analysis starts when you have a table showing each activity in your project.
For each activity, you need to know which other activities must be done before it
starts, and how long the activity takes.
Activity Description Required Predecessor Duration

A Product design (None) 5 months

B Market research (None) 1
C Production analysis A 2
D Product model A 3
E Sales brochure A 2
F Cost analysis C 3
G Product testing D 4
H Sales training B, E 2
I Pricing H 1
J Project report F, G, I 1

Step 2: Draw the diagram

Draw by hand a network diagram of the project known as “ activity-on-arc(AOA)”
diagram that shows which activities follow which other ones. An AOA diagram has
numbered "nodes" hat represent stages of project completion. You make up the
nodes' numbers as you construct the diagram. You connect the nodes with arrows
or "arcs" that represent the activities that are listed in the above table.
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Some conventions about how to draw these diagrams:

 All activities with no predecessor come off of node 1.

 All activities with no successor point to the last node, which has to have
highest node number.

Step 3: Find all the possible paths

The paths in this example are A D G J, A C F J, A E H I J, and B H I J. Also,
calculate the path times for each of the paths.
Step 4: Identify the critical path
The critical path is the path that takes the longest. In this example, the critical path
is the one in row 10, which takes 13 months. The project will therefore take 13
months, if everything is done on schedule with no delays.
As managers, we must be sure that activities on critical path i.e. A, D, G, and J are done
on time. If any of those activities is late, the project will be late. Other paths are not critical
because they can waste some time without slowing the project. For example, activity C,
in path A C F J, can take up to two extra months and not hold up the project.

Useful Links
1. http://www.stanford.edu/class/cee320/CEE320B/CPM.pdf
2. http://hadm.sph.sc.edu/courses/J716/CPM/CPM.html

12. Explain the Program Evaluation and Review Technique (PERT)?

The Program (or Project) Evaluation and Review Technique, commonly abbreviated
PERT, is a statistical tool, used in project management, that is designed to analyze
and represent the tasks involved in completing a given project. It is commonly used
in conjunction with the critical path method (CPM).It is more of an event-oriented
technique rather than start- and completion-oriented, and is used more in projects
where time is the major factor rather than cost. It is applied to very large-scale, one-
time, complex, non-routine infrastructure and Research and Development project.
A distinguishing feature of PERT is its ability to deal with uncertainty in activity
completion time. For each activity, the model usually includes three time estimates:

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1. Optimistic time – generally the shortest time in which the activity can be
completed. It is common practice to specify optimistic time to be three standards
deviations from the mean so that there is a approximately a 1% chance that the
activity will be completed within the optimistic time.
2. Most likely time – the completion time having the highest probability. Note that
this time is different from the expected time.
3. Pessimistic time – the longest time that an activity might require. Three
standard deviations from the mean is commonly used for the pessimistic time.
PERT planning involves the following steps:
1. Identify the specific activities and milestones.
2. Determine the proper sequence of the activities.
3. Construct a network diagram.
4. Estimate the time required for each activity.
5. Determine the critical path.

Key concepts and Definitions in PERT

1. Slack Time - The amount of time that a non – critical path activity can be
delayed without the project is referred to as a slack time
2. Project Crashing - The critical path determines the completion date of
the project, the project can be accelerated by adding the resources
required to decrease the time for the activities in the critical path. Such a
shortening of the project is referred to as Project Crashing
3. If the critical path is not immediately obvious, it may be helpful to determine
the following four quantities foe each activity:
ES – Earliest Start time
EF - Earliest Finish time
LS – Latest Start time
LF - Latest Finish time
4. The variance in the project completion time is calculated by summing the
variances in the completion times of the activities in the critical path.
5. Given the above variance, probability that the project will be completed by
the certain date is calculated assuming a normal probability distribution for
the critical path
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6. As the project unfolds, the estimated times can be replaced with actual times. In
cases where there are delays, additional resources may be needed to stay on
schedule and the PERT chart may be modified to reflect the new situation.

Advantages
 Facilitates identification of critical path, start date, end date and slack time
for each activity
 Provides potential for reduction in project time
 The Complex data can be organized in diagram which aids in decision making

Disadvantages
 Potentially hundreds or thousands of activities and individual dependency
relationships
 PERT is not easily scalable for smaller projects
 The network charts tend to be large and unwieldy
 The lack of a timeframe on most PERT/CPM charts makes it harder to
show status

Difference Between PERT and CPM

The major difference is that PERT uses a Probabilistic approach and is useful
situations where estimate of time for activities are not so accurate and definite
(Realistic Situations). On the other hand CPM, another project management
technique use a Deterministic Approach i.e. where duration of activities can be
estimated with a fair degree of accuracy.
Useful Links
http://www.improhealth.org/fileadmin/Documents/Improvement_Tools/PERT.pdf

http://civilengineersforum.com/pert-cpm/

13. Draw a PERT chart and explain various terminologies like

lead time, slack period, milestone, event etc.
Definition: PERT Chart is a statistical tool in project management that provides a graphical
representation of a project's timeline. PERT, or Program Evaluation Review Technique, was
developed by the United States Navy for the Polaris submarine missile program in the 1950s.
PERT charts allow the tasks in a particular project to be analysed,

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with particular attention to the time required to complete each task, and the
minimum time required to finish the entire project.
A PERT chart is a graph that represents all of the tasks necessary to a project's completion,
and the order in which they must be completed along with the corresponding time
requirements. Certain tasks are dependent on serial tasks, which must be completed in a
certain sequence. Tasks that are not dependent on the completion of other tasks are called
parallel or concurrent tasks and can generally be worked on simultaneously. PERT charts
are preferable to Gantt charts because they more clearly identify task dependencies;
however, the PERT chart is often more challenging to interpret. As such, project managers
frequently employ both methodologies.

When to use it: Because it is primarily a project-management tools, a PERT chart

is most useful for planning and tracking entire projects or for scheduling and
tracking the implementation phase of a planning or improvement effort.
How to use it:
1. Identify all tasks or project components. Make sure the team includes people
with first-hand knowledge of the project so that during the brainstorming
session all component tasks needed to complete the project are captured.
Document the tasks on small note cards.
2. Identify the first task that must be completed. Place the appropriate card at the
extreme left of the working surface.
3. Identify any other tasks that can be started simultaneously with task #1. Align
these tasks either above or below task #1 on the working surface.
4. Identify the next task that must be completed. Select a task that must wait to begin
until task #1(or a task that starts simultaneously with task #1) is completed. Place the
appropriate card to the right of the card showing the preceding task.
5. Identify any other tasks that can be started simultaneously with task #2. Align
these tasks either above or below task #2 on the working surface.
6. Continue this process until all component tasks are sequenced.
7. Identify task durations. Using the knowledge of team members, reach a
consensus on the most likely amount of time each task will require for
completion. Duration time is usually considered to be elapsed time for the task,
rather than actual number of hours/days spent doing the work. Document this
duration time on the appropriate task cards.
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8. Construct the PERT chart. Number each task, draw connecting arrows, and add task
characteristics such as duration, anticipated start date, and anticipated end date.

9. Determine the critical path. The project’s critical path includes those tasks that
must be started or completed on time to avoid delays to the total project.
Critical paths are typically displayed in red.

Figure 1: An example of PERT Chart

Important Terminologies:
 PERT event: a point that marks the start or completion of one or more activities.
It consumes no time and uses no resources. When it marks the completion of
one or more tasks, it is not “reached” (does not occur) until all of the activities
leading to that event have been completed.

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 Predecessor event: an event that immediately precedes some other event

without any other events intervening. An event can have multiple predecessor
events and can be the predecessor of multiple events.

 Successor event: an event that immediately follows some other event without
any other intervening events. An event can have multiple successor events
and can be the successor of multiple events.

 PERT activity: the actual performance of a task which consumes time and
requires resources (such as labor, materials, space, machinery). It can be
understood as representing the time, effort, and resources required to move
from one event to another. A PERT activity cannot be performed until the
predecessor event has occurred.

 Optimistic time (O): the minimum possible time required to accomplish a task,
assuming everything proceeds better than is normally expected

 Pessimistic time (P): the maximum possible time required to accomplish atask,
assuming everything goes wrong (but excluding major catastrophes).

 Most likely time (M): the best estimate of the time required to accomplish a
task, assuming everything proceeds as normal.

 Expected time (TE): the best estimate of the time required to accomplish a task,

accounting for the fact that things don't always proceed as normal (the implication

being that the expected time is the average time the task would require if the task
were repeated on a number of occasions over an extended period of time).

TE = (O + 4M + P) ÷ 6
 Float or slack is a measure of the excess time and resources available tocomplete
a task. It is the amount of time that a project task can be delayed without causing a
delay in any subsequent tasks (free float) or the whole project (total float). Positive
slack would indicate ahead of schedule; negative slack would indicate behind
schedule; and zero slack would indicate on schedule.

 Critical path: the longest possible continuous pathway taken from the initial event to
the terminal event. It determines the total calendar time required for the project;
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and, therefore, any time delays along the critical path will delay the reaching of the
terminal event by at least the same amount.

 Critical activity: An activity that has total float equal to zero. An activity with zero float

is not necessarily on the critical path since its path may not be the longest.

 Lead time: the time by which a predecessor event must be completed in order
to allow sufficient time for the activities that must elapse before a specific
PERT event reaches completion.

 Lag time: the earliest time by which a successor event can follow a specific
PERT event.

 Fast tracking: performing more critical activities in parallel

 Crashing critical path: Shortening duration of critical activities

14. Apply Pareto's principle in real business scenario and how does
it affect the target customer segments?
The Pareto Principle is named after Italian economist Vilfredo Pareto, who in 1906
observed that 80% of land in Italy was owned by 20% of the population. He
expressed this surprising observation in a mathematical formula that is now
commonly known as the 80/20 rule. The 80/20 rule states that in any given
situation 80% of the outcome is produced by 20% of the input. Otherwise known
as the vital few and trivial many, the Pareto Principle can be applied to a range of
areas in business to ensure that the business is functioning to its full potential.
The distribution is claimed to appear in several different aspects relevant to
entrepreneurs and business managers. For example:
 80% of your profits come from 20% of your customers

 80% of your complaints come from 20% of your customers

Hence we can see that the Pareto principle can be very useful for identifying and
focusing on the right target customer segments for any company. By implementing
the Pareto principle, we can get the following 5 benefits as an organization:

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1. INCREASED PRODUCTIVITY
The Pareto Principle is extremely useful for determining which areas to focus your
efforts and resources on in order to achieve maximum efficiency.
By utilizing the 80/20 rule, individual employees can prioritize their tasks so that they
can focus on the critical 20% that will produce 80% of the results. Of course, this is
not an indisputable figure, but the Pareto Principle teaches employees to not waste
time on the ‘trivial many’ that will not contribute to the long term goal and to focus
their resources on the ‘vital few’ that will produce the majority of the results.
Similarly, the Pareto Principle can be used to identify the causes of
unproductiveness in the workplace.
As a manager, you can utilize the 80/20 rule to establish the 20% of causes that
result in 80% of the unproductivity and subsequently take appropriate measures
to resolve the issues causing unproductivity.
Common examples of causes of unproductivity in the workplace include: social media
distractions, unskilled workers in their field or an unsuitable work environment. Of
course, the issues for unproductivity vary with each individual employee, but the
Pareto Principle can help you identify and resolve these issues.
2. INCREASED PROFITABILITY
Regardless of the type of your business, it is a common occurrence in any
business that roughly 20% of your salesmen produce 80% of your sales.
Depending on your end goals, the Pareto Principle can be utilized to determine
whether you need to focus your effort and resources on the 20% of staff that
produce most of your sales to further improve their skills or to focus on the 80%
of other employees that are struggling to bring in any sales.
Also, the Pareto Principle indicates that a small percentage of your total amount of
customers produce the majority of revenue. Similarly, only a handful of your products
and/or services attract the most sales. As such, analyzing the leads and current
customers you have can help you determine which ones have produced the most
revenue in the past so that you can focus on pursuing only the most valuable leads.
Further, discontinuing the products/services that don’t generate revenue and focusing on
improving the ones that do can be ultimately more beneficial for the business.

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3. WEBSITE OPTIMIZATION
The 80/20 rule suggests that a standard overview at your business’s website
analytics will indicate that roughly 80% of traffic lands on 20% of your website pages.
The 20% of pages that attract the most views are generally the critical pages that
display content in relation to the purchasing process of your product or service. Using
the Pareto Principle to analyze how traffic flows through your website will allow you
to optimize it to ensure that it is straight forward for your viewers to access the critical
pages of your website. This is not only proven to increase sales, but it also allows
your business to grow at a faster rate with lower amounts of traffic.
The marketing efforts you conduct on your website can be analyzed to show that
roughly 20% of your marketing strategies bring in 80% of the results. So, by
building upon the marketing strategies that are proven to be effective you can
draw more attention towards your business.
4. IDENTIFY AND FIX PROBLEMS
A Pareto chart is highly useful for prioritizing problems so that you can determine
which issues have the greatest effect on the outcome of a given situation. This not
only allows you to identify problems, but it also enables you to take appropriate
actions to resolve the most important issues concerning your business.
The appearance of a Pareto chart is quite straight forward with vertical bars
plotted in decreasing order in relevance to their relative frequencies. The higher
the frequency, the greater the impact it will have on your business – so, it is crystal
clear where you need to focus your attention on to improve your business. The
Pareto chart is an excellent way to pinpoint the issues affecting your sales,
productivity and overall success of the business.
5. IMPROVE CUSTOMER SERVICE
Customer support is a crucial aspect of any business so it is prudent to ensure that
your customers are satisfied with the customer service they receive. The Pareto
Principle indicates that 80% of customer complaints are related to 20% of your
products/services, so a proper analysis of which products/services are causing
problems for your business can help you to permanently sort out customer service
issues. Also, by utilising the 80/20 rule you can identify which particular customer
service staff is associated to the majority of customer complaints so that you can
focus on altering the way in which the associated staff interact with customers.
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By acting upon the above-mentioned 5 processes, one can serve the target customer
segment in a better way.

15. What is Project Life Cycle?

The Project Life Cycle refers to a logical sequence of activities to accomplish the
project’s goals or objectives. Project activities are grouped into phases so that the
project manager and the core team can efficiently plan and organize resources
for each activity. All projects go through a life cycle that starts at the initial project
inception through project shutdown. There are many types of project life cycle.
Traditionally, project management includes a number of elements: four to five
process groups, and a control system.
 Initiation - The initiating processes determine the nature and scope of the
project.[26] If this stage is not performed well, it is unlikely that the project will
be successful in meeting the business’ needs.
 Planning or design - After the initiation stage, the project is planned to an
appropriate level of detail (see example of a flow-chart).[25] The main purpose
is to plan time, cost and resources adequately to estimate the work needed
and to effectively manage risk during project execution.
 Production or execution - Executing consists of the processes used to
complete the work defined in the project plan to accomplish the project's
requirements. Execution process involves coordinating people and resources,
as well as integrating and performing the activities of the project in accordance
with the project management plan.
 Monitoring and controlling - Monitoring and controlling consists of those
processes performed to observe project execution so that potential problems
can be identified in a timely manner and corrective action can be taken, when
necessary, to control the execution of the project.
 Closing - Closing includes the formal acceptance of the project and the ending
thereof. Administrative activities include the archiving of the files and
documenting lessons learned. This phase consists of
o Project close
o Contract closure

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Links –
http://www.slideshare.net/ashutosh_bangalore/project-managementlife-cycle-
phases https://en.wikipedia.org/wiki/Project_management
http://www.iil.com/downloads/Archibald_Di_Filippo_ComprehensivePLCModel_FI
NAL.pdf
http://projectmechanics.com/project-mechanics/program-management-office--pmo-
/project-life-cycle

16. What do you mean by BOO, BOT, BOOT? Which model is

widely used in India for Private-Public partnership?
a) BOT – It is Build, Operate and Transfer - a company builds a facility, an infrastructure
project, gets to operate it for a while and is paid for that, and finally transfers it back
to the public sector at the end of sometime - determined by when the construction
company is believed to have been paid a satisfactory amount.
b) BOO - Build, Own, Operate - is maybe the trickiest of these because here
there's at least, up front, no government involvement whatsoever. The private
sector builds the project, owns it, and operates it.
c) BOOT - Build, Own, Operate and Transfer. So the story here is the constructor
builds the project, they then get to own and operate it for some period of time
(like 20 or 25 years) during which they collect revenues. At the end of the day,
the project is handed back over to the government.

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Model mostly used in India for Private-Public partnership is BOT

Links –
http://www.rbi.org.in/scripts/BS_VIEWContent.aspx?ID=1912
http://www.uq.edu.au/economics/johnquiggin/Conference/BOOT.html

17. Explain Work Breakdown Structure (WBS) as a tool

related to project planning and scheduling.
Dividing complex projects to simpler and manageable tasks is the process
identified as Work Breakdown Structure (WBS).The concept of work breakdown
structure developed with the Program Evaluation and Review Technique (PERT)
in the United States Department of Defence (DoD).

Usually, the project managers use this method for simplifying the project
execution. In WBS, much larger tasks are broken-down to manageable chunks of
work. These chunks can be easily supervised and estimated.

WBS is not restricted to a specific field when it comes to application. This

methodology can be used for any type of project management.

Following are a few reasons for creating a WBS in a project.

 Provides a framework for organizing and managing the approved project scope
 Helps ensure you have defined all the work that makes up the project

 Accurate assignment of responsibilities to the project team.

 Indicates the project milestones and control points.

 Helps to estimate the cost, schedule and risk.

 Illustrate the project scope, so the stakeholders can have a better

understanding of the same

Additionally, when you work for a company or organization that has many projects
being performed simultaneously, each of the projects is competing for the limited
resources available. The WBS enables to review project details and distinguish one

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project’s needs from others within the company or organization. It enables to

identify resource requirements and allocate resources more effectively.

WBS is a hierarchical decomposition of the project into phases, deliverables and

work packages. It is a tree structure, which shows a subdivision of effort required
to achieve an objective

Construction of a WBS

Identifying the main deliverables of a project is the starting point for deriving a
work breakdown structure.

This important step is usually done by the project managers and the subject matter
experts (SMEs) involved in the project. Once this step is completed, the subject
matter experts start breaking down the high-level tasks into smaller chunks of work.

In the process of breaking down the tasks, one can break them down into different
levels of detail. One can detail a high level task into ten sub tasks while another
can detail the same high level task into 20 sub tasks.

Therefore, there is no hard and fast rule on how you should breakdown a task in
WBS. Rather, the level breakdown is a matter of the project type and the
management style followed for the project.

In general, there are a few "rules" used for determining the smallest task chunk.
In "two weeks" rule, nothing is broken down smaller than two weeks work of work.
This means, the smallest task of the WBS is at least two week long. 8/80 is
another rule used when creating a WBS. This rule implies that no task should be
smaller than 8 hours of work and should not be larger than 80 hours of work.

One can use many forms to display their WBS. Some use tree structure to
illustrate the WBS, while others use lists and tables. Outlining is one of the easiest
ways of representing a WBS.

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In preparing a WBS there are a number of steps that need to be taken to make
sure the WBS developed will help manage your project. Below are these steps.

1. Identify final project products necessary for achieving project success.

– The WBS should assist the project manager in developing a clear vision of the
end product. You need to answer the following question: – What must be
delivered to achieve project success?

2. Identify the major deliverables necessary for project success.

– These are items that by themselves do not satisfy the project need but combined
make up a successful project .Examples: a design completion, generator delivery,
or acceptance test completion

3. Incorporate additional levels of detail until management requirements for

managing and controlling the project are met.

– Remember that each project is different, thus each WBS will be different

4. Review and refine the WBS until the stakeholders agree with the level of project
planning and reporting.

Conclusion:

The efficiency of a work breakdown structure can determine the success of a project. The
WBS provides the foundation for all project management work, including, planning, cost
and effort estimation, resource allocation, and scheduling. Therefore, one should take
creating WBS as a critical step in the process of project management.

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References:

http://www.srs.gov/general/EFCOG/04Training/DOETutorials/Module2WBS.pdf

http://www.tutorialspoint.com/management_concepts/work_breakdown_structure.htm

http://www.projectmanagementdocs.com/project-planning-templates/work-
breakdown-structure-wbs.html

18. Explain 6 Sigma tool for quality Management

Six Sigma is a set of tools and strategies for process improvement originally
developed by Motorola in 1985. Six Sigma became well known after Jack Welch
made it a central focus of his business strategy at General Electric in 1995, and today
it is used in different sectors of industry. It is a statistical term that measures how far
a given process deviates from perfection. The central idea behind Six Sigma is that
if you can measure how many "defects" you have in a process, you can systematically
figure out how to eliminate them and get as close to "zero defects" as possible. To
achieve Six Sigma Quality, a process must produce no more than 3.4 defects per
million opportunities. An "opportunity" is defined as a chance for non-conformance,
or not meeting the required specifications.
Six Sigma is a disciplined, data-driven approach and methodology for eliminating
defects in any process – from manufacturing to transactional and from product to
service. Six Sigma quality is a movement that inherits directly from TQM, or Total
Quality Management. It uses much the same toolset and the same concepts. Six
Sigma Quality has two new emphases, which are its distinguishing characteristics:

1) Six Sigma Black Belts - well-trained experts in quality, process improvement,

and statistical process control - who work within companies as "problem-solvers
for hire". They lead process improvement projects, and focus on areas which will
have the highest impact on the bottom line.

2) A focus on reducing variation to very low levels.

At its core, Six Sigma revolves around a few key concepts

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1. Critical to quality: Attributes most important to the customer

2. Defect: Failing to deliver what the customer wants
3. Process Capability: What your process can deliver
4. Variation: What customer sees and feels
5. Stable operation: Ensuring consistent , predictable process to improve
what the customer sees and feel
6. Design for six Sigma: Design to meet customer needs and process capability

Six Sigma projects follow majorly two project methodologies inspired by Deming's
Plan-Do-Check-Act Cycle. These methodologies, composed of five phases each,
bear the acronyms DMAIC and DMADV.

DMAIC is used for projects aimed at improving an existing business process.

DMADV is used for projects aimed at creating new product or process designs. DMAIC

The DMAIC project methodology has five phases:

1. Define the problem, the voice of the customer, and the project goals, specifically.

2. Measure key aspects of the current process and collect relevant data.

3. Analyze the data to investigate and verify cause-and-effect relationships.

Determine what the relationships are, and attempt to ensure that all factors have

been considered. Seek out root cause of the defect under investigation.

4. Improve or optimize the current process based upon data analysis using
techniques such as design of experiments, poka yoke or mistake proofing,
and standard work to create a new, future state process.

5. Control the future state process to ensure that any deviations from target are
corrected before they result in defects. Implement control systems such
as statistical process control, production boards, visual workplaces, and
continuously monitor the process.

DMADV or DFSS: The DMADV project methodology, known

as DFSS ("Design for Six Sigma"), features five phases:

1. Define design goals that are consistent with customer demands and the
enterprise strategy.
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2. Measure and identify CTQs (characteristics that are Critical To Quality),

product capabilities, production process capability, and risks.

3. Analyze to develop and design alternatives

4. Design an improved alternative, best suited per analysis in the previous step

5. Verify the design, set up pilot runs, implement the production process and
hand it over to the process owner(s)

References: http://www.isixsigma.com/new-to-six-sigma/getting-

started/what-six-sigma/ www.ge.com/sixsigma/

www.skymark.com/resources/methods/sixsigmaquality.asp/

https://en.wikipedia.org/wiki/Six_Sigma

19. Explain RCA (Route Cause Analysis) using Ishikawa/ Fishbone/

Herringbone diagram.
Root Cause Analysis is a common problem solving technique used in operations
where emphasis is laid at finding the root causes for the occurrence of identified
problems. RCA practice tries to solve problems by attempting to identify and correct
the root causes of events, as opposed to simply addressing their symptoms. By
focusing correction on root causes, problem recurrence can be prevented.
The general process for performing RCA based process improvements is as follows:

Identify
Gather corrective Monitor
data/ Use actions/ outcomes
De`ine collect RCA solutions to to ensure
evidence of Tools to prevent Solutions effective
problem `ind Root recurrance
Cause
of causes tion

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In the process described above the 3rd step of using RCA tools to identify the root
causes is the most important step.
Fishbone Diagram:
The Fishbone Diagram (also known as the Ishikawa Diagram) is one of the most effective
tools of identifying root causes. The fishbone helps to visually display the many potential
causes for a specific problem or effect. It is particularly useful in a group setting and for
situations in which little quantitative data is available for analysis.
To construct a fishbone, start with stating the problem in the form of a question,
such as “Why is the mess food’s quality so poor?” Framing it as a “why” question
will help in brainstorming, as each root cause idea should answer the question.
The team should agree on the statement of the problem and then place this
question in a box at the “head” of the fishbone.
The rest of the fishbone then consists of one line drawn across the page, attached
to the problem statement, and several lines, or “bones,” coming out vertically from
the main line. These branches are labeled with different categories that determine
the probable causes. The categories you use are up to you to decide. There are
a few standard choices:
Service Industries Manufacturing Industries
(The 4 Ps) (The 6 Ms)
 Policies  Machines
 Procedures  Methods
 People  Materials
 Plant/Technology  Measurements
 Mother Nature
(Environment)
 Manpower
(People)

You should feel free to modify the categories for your project and subject matter.
Once you have the branches labeled, begin brainstorming possible causes and
attach them to the appropriate branches. For each cause identified, continue to
ask “why does that happen?” and attach that information as another bone of the
category branch. This will help get you to the true drivers of a problem.

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Once you have the fishbone completed, you are well on your way to understanding
the root causes of your problem. It would be advisable to have your team prioritize in
some manner the key causes identified on the fishbone. If necessary, you may also
want to validate these prioritized few causes with a larger audience.
Example:
Let us take an example of “High waiting times at the Delhi Gurgaon Expressway
Toll Plaza”

The RCA through Fishbone diagram helped us identify a host of causes for high
waiting time at toll plaza out of which the following causes were considered critical
or of high priority needing immediate attention.
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 Unclear demarcation of lanes and invisible signboards lead to customers

frequently changing lanes leading to jams and blockages
 Majority of the customers preferring cash payments instead of RFID Cards
leading to high payment time per customer
 Primitive RFID detection and Database technologies preventing the
expansion of customer base using cards

Once the critical causes have been identified we can proceed towards finding
feasible solutions to address the causes.
For More information on RCA tools and models logon to the following
website: http://www.isixsigma.com/

20. Is logistics and Supply Chain different? Explain with reason.

The difference between logistics and supply chain has for long been a highly debated
topic. Some industry professionals and scholars considered supply chain to be a part of
logistics while others considered the opposite. Some believed logistics and supply chain
to be two words having the same business definition while others believed that they were
two separate entities having some overlapping functions.
But off late with supply chain being more widely accepted and its complete scope
being realized, both industry stalwarts and scholars alike have started considering
logistics to be a part of a much broader supply chain management.
According to the Council of Supply Chain Management Professionals (CSCMP)
that was until 2004 known as the Council of Logistics Management (CLP) defines
Logistics Management and Supply Chain Management as follows.

CSCMP’s Definition of Supply Chain Management

Supply chain management encompasses the planning and management of all
activities involved in sourcing and procurement, conversion, and all logistics
management activities. Importantly, it also includes coordination and
collaboration with channel partners, which can be suppliers, intermediaries, third
party service providers, and customers. In essence, supply chain management
integrates supply and demand management within and across companies.

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Supply Chain Management – Boundaries and Relationships

Supply chain management is an integrating function with primary responsibility
for linking major business functions and business processes within and across
companies into a cohesive and high-performing business model. It includes all of
the logistics management activities noted above, as well as manufacturing
operations, and it drives coordination of processes and activities with and across
marketing, sales, product design, finance, and information technology.

CSCMP’s Definition of Logistics Management

Logistics management is that part of supply chain management that plans,
implements, and controls the efficient, effective forward and reverses flow and
storage of goods, services and related information between the point of origin and
the point of consumption in order to meet customers' requirements.

Logistics Management – Boundaries and Relationships

Logistics management activities typically include inbound and outbound
transportation management, fleet management, warehousing, materials handling,
order fulfillment, logistics network design, inventory management, supply/demand
planning, and management of third party logistics services providers. To varying
degrees, the logistics function also includes sourcing and procurement, production
planning and scheduling, packaging and assembly, and customer service. Logistics
management is an integrating function, which coordinates and optimizes all logistics
activities, as well as integrates logistics activities with other functions including
marketing, sales manufacturing, finance, and information technology.
For More information on RCA tools and models logon to the following
website: http://cscmp.org/
http://www.scmr.com/

21. What are HR-Operations Interface Issues? Explain using an example.

A. Main Issues:
Issues can range across a large set and some issues are: Manpower Planning, Manpower

Training & Development and Performance Appraisal.

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Manpower Planning
The operations management domain may require a set number of professionals for a
particular job but the costs involved in such a requirement may prove to be a hindrance
in the company’s employee cost structure which is the domain of the human resources
area. If there is no common ground achieved with respect to controlling costs and hiring
expert labour for the execution of a job, then the company as a whole will suffer both from
inadequate levels and standards of a particular job as well as rising costs, resulting more
from inefficient and ineffective work and cost overruns in project execution. Thus, there
has to be an active common ground to achieve a balanced trade-off between hiring expert
professionals at a higher employee cost and eliminate the chances of large project cost
overruns or not hiring and controlling employee costs while not having a rein on the
project costs while execution is on.
Manpower Training & Development
The operations domain may require its personnel to be trained in equipment specific
routines or in process management techniques while the human resources
department may be looking at training the employees in soft skills and would try to
improve the psychological skillsets of the employees through dedicated mental
training programmes. This causes a clash in the minds of the employees and can
lead to reduced productivity due to a loss of focus on the core requirements.
Performance Appraisal
HR of a company tries to appraise a particular employee with respect to the
compliance they have with company policies and generally rates them on a
company wide scale. This scale is generally a “one size fits all” approach and can
lead to erratic ratings for employees due to the basic fault in measuring
performances of two employees in different spheres on the same base.
Operations Department of a company would appraise its employees more on the
technical aspect and the execution ability rather than people skills and ability to deal
with human issues. Thus, there is a basic underlying rift between the two.

The fields of Human Resources and Operations are highly separated and focused on
completely different areas in the functional matrix of management. Rarely do we see any
transfer from the Operations area to the HR domain or vice versa, simply due to the

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huge cultural and functional differences in outlook towards a particular issue, that
exists between the two. Even in academic circles, the two subjects are studied
and knowledge dissemination takes place through scholars and experts who
publish and learn in completely disjoint arenas. However, the two fields are not
as far apart in their scope as imagined. There is a fundamental linkage between
Operations Management and Human Resources Management.
Example: The case of a Big-3 auto manufacturer in the USA (Ford/Chrysler/General
Motors) which had a factory that was not performing as per the required standards. There
was a loss in its productivity and was performing poorly in budget compliance. The factory
focused on lean management and had certified 6-sigma operators working but this had
not been able to solve the problem till 2001 when a new manager was appointed to help
turn around the factory. He recognised that the primary cost driver was “throughput” (a
failure to produce the required amount in a particular period resulted in expensive
overtime) and he zeroed in on the biggest source of output loss; Blocking and Starving
in the line. But because he knew that the majority of the problems were due to people-
related issues and not technical, he involved the operators in the problem solving arena
instead of focusing on equipment-related issues, which is a primary concern and
problem-solving mind-set that operations managers have. The workforce was educated
on the performances drivers for the next several months, like the importance of removing
bottlenecks; and setting up ways to identify and reward people for their successes in non-
monetary ways(as it was a union-dominated facility). The end result was that the plant
was turned around and became one of the best plants of the company in the entire
country.

The lesson from this example is that human considerations are vital in the quest
for operational improvement.
But simply acknowledging human considerations such as motivation is not enough.
Consider the case of a circuit board plant of a large computer manufacturer that
was also plagued by low throughput. Recognizing that worker contributions were
essential, management embarked on a motivational campaign, which included
shirts, pep talks and illuminated signs with slogans such as “I love my job.” Not only
did these efforts fail to promote higher output, but also the workforce was put off by
them and became cynical about improvement efforts in general.

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Eventually, the circuit board plant adopted an alternate approach, which made
use of both OM principles and a more sophisticated understanding of motivation.
It included training the workers in the principles and key success variables of pull
systems, investment in additional capacity that gave work teams more ways to
share and combine tasks, and installation of new control systems that the
workforce understood. Throughput was doubled within months; total cycle time
was slashed by three quarters in a year.
The lesson from this story is that a clear operational focus can be critical to the
success of human relations initiatives. Only when the workforce was provided with
appropriate vision and tools were people really motivated to make changes.

22. Explain the importance of Supply Chain

Management in an FMCG/ Automobile industry?
A. FMCG Industry
a. Food & FMCG Supply Chain in India can be classified as Perishable and Non-
Perishable, and both are distinctly unique from each other.
b. The complexity for Food Supply Chain arises out of perishable nature of food
items, shorter shelf life of products, food safety, regulatory requirements, etc.
The non-perishable FMCG products have shelf life ranging from 3 to 18
months that requires strict monitoring of FEFO so that products reaching the
consumers are left with enough shelf life.
c. Lack of consumer loyalty in this sector makes it all the more important for this
sector to ensure availability of products at the selling locations, else lose sale.
It needs demand driven and responsive supply chain solutions.
d. Capabilities are required to study the company’s supply chain processes and
re-engineer, build & implement customised supply chain processes for the
company if there is divergence found in the best practices and the current
supply chain processes.
e. A leading edge Warehouse Management System is generally required to be
implemented which supports food specific processes like cross dock, shelf life
tracking and FEFO.

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f. The presence of a sorting system in the supply chain itself removes the need
for further sorting downstream at the retailer end.
g. Inbound and Outbound Weight Check System can ensure 100% Inventory
accuracy at the time of receiving and dispatch.
h. A country-wide distribution and “Last Mile Fulfilment Network” through Express and
Customised Movement Solutions is a highly valuable component of the entire
supply chain management process.
B. Auto Industry

On the canvas of the Indian economy, auto industry occupies a prominent place.
Due to its deep forward and backward linkages with several key segments of the
economy, automotive industry has a strong multiplier effect and is capable of
being the driver of economic growth. A sound transportation system plays an
essential role in the country’s speedy economic and industrial development.
Many factors play a dominant role and affect decisions made in the automotive world.
Consumer preferences decide the current styles, consistency, and presentation
standards of vehicles. Government trade, safety, and environmental regulations found
incentives and requirements for upgrading and change in design or production.
Competitive rivalries and corporate strategies provide equally important momentum for
research, design innovations, and changes in the manufacturing process. All automakers
are continually under pressure to recognize consumer preferences, national biases, and
new market segments where they can sell vehicles and gain market share. Their
capability to be stretchy enough to quickly react to all these pressures is determining their
prospect in the industry. The implications of these factors are enormous and propagate
along the supply chain of the automakers in India
One of the major issues in a supply chain is ensuring hassle free and suave functioning of

inventory and so the role of inventory as a cushion against uncertainties and unforeseen

oddities has been established for a long time. The figure below represents the uncertainties

that are explored and solved by successful implementation of supply chain.

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Uncertainties
Internal Conflicts

Policies
Information Flow
Systems

To reduce the impact of these inventory uncertainties, supply chain managers

must first understand their sources, the targeted market size, researched
feasibility outcome and the magnitude of their impact. Surprisingly many supply
chains do not document and track these variables, which may result into over-
stock or under-stock, miscalculation of the lead-time and invest in the wrong
resources for performance improvement. Besides these factors SCM covers
inventory planning, replenishment planning, production scheduling, warehouse
management, transportation and logistics management in auto sector.

23. No index entries found.What is Lean Management?

"Lean", is a production practice that considers the expenditure of resources for any goal
other than the creation of value for the end customer to be wasteful, and thus a target for
elimination. Working from the perspective of the customer who consumes a product or
service, "value" is defined as any action or process that a customer would be willing to
pay for. The core idea is to maximize customer value while minimizing waste. Simply,
lean means creating more value for customers with fewer resources.
A lean organization understands customer value and focuses its key processes
to continuously increase it. The ultimate goal is to provide perfect value to the
customer through a perfect value creation process that has zero waste.

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Execution
To accomplish this, lean thinking changes the focus of management from
optimizing separate technologies, assets, and vertical departments to optimizing
the flow of products and services through entire value streams that flow
horizontally across technologies, assets, and departments to customers.
Eliminating waste along entire value streams, instead of at isolated points, creates
processes that need less human effort, less space, less capital, and less time to make
products and services at far less costs and with much fewer defects, compared with
traditional business systems. Companies are able to respond to changing customer
desires with high variety, high quality, low cost, and with very fast throughput times. Also,
information management becomes much simpler and more accurate.
Lean for Production and Services
A popular misconception is that lean is suited only for manufacturing. Not true.
Lean applies in every business and every process. It is not a tactic or a cost
reduction program, but a way of thinking and acting for an entire organization.
Businesses in all industries and services, including healthcare and governments, are
using lean principles as the way they think and do. Many organizations choose not to use
the word lean, but to label what they do as their own system, such as the Toyota
Production System or the Danaher Business System. Why? To drive home the point that
lean is not a program or short term cost reduction program, but the way the company
operates. The word transformation or lean transformation is often used to
characterize a company moving from an old way of thinking to lean thinking. It requires a
complete transformation on how a company conducts business.

PRINCIPLES OF LEAN
The five-step thought process for guiding the implementation of lean techniques
is easy to remember, but not always easy to achieve:
• Specify value from the standpoint of the end customer by product family.

• Identify all the steps in the value stream for each product family, eliminating
whenever possible those steps that do not create value.

• Make the value-creating steps occur in tight sequence so the product will
flow smoothly toward the customer.
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• As flow is introduced, let customers pull value from the next upstream activity.

As value is specified, value streams are identified, wasted steps are removed,
and flow and pull are introduced, begin the process again and continue it until a
state of perfection is reached in which perfect value is created with no waste.

What are the benefits of Inventory Management and Control?

The top benefits for inventory management are:
1) Inventory Balance. Good inventory management helps you figure out exactly
how much inventory you need. This makes it easier to prevent product
shortages and keep just enough inventories on hand without having too much.
2) Inventory Turnover. You need to keep a high inventory turnover ratio to
ensure your products aren’t spoiling, becoming obsolete or sucking up your
working capital. Calculate how many times your inventory sells in a year
and see where you can make better use of your resources.
3) Repeat Customers. Good inventory management leads to what every business
owner wants – repeat customers. You want your hard-earned customers to
keep coming back to your business to meet their needs. One way to do this is to
make sure you have what they’re looking for every time they come.
4) Accurate Planning. Using smart inventory management, you can stay ahead of
the demand curve, keep the right amount of products on hand and plan ahead for
seasonal changes. This goes back to keeping your customers happy all year long.
5) Warehouse Organization. If you know which products are your top sellers and what
combinations of products your customers often order together, you can
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optimize your warehouse setup by putting those products close together and in easily
accessible places. This speeds up the picking, packing and shipping processes.
6) Employee Efficiency. You can empower your employees to help you manage
inventory. Training employees to use barcode scanners, inventory management
software and other tools helps them make better use of their time, and it helps
your business make better use of its resources, both human and technological.
7) Inventory Orders. If you’ve done a good job keeping track of how much
inventory you have on hand, you can make smarter decisions about when
and what to order. Inventory management software lets you speed up the
ordering process. You can simply scan a product barcode and type in some
information to place an order and generate an invoice.
8) Inventory Tracking. If you have multiple locations, then inventory management
becomes even more important because you need to coordinate your supplies at
each location depending on differences in demand and other factors.
9) Time Saving. Inventory management is a great timesaving tool. By keeping
track of all the products you have on hand and on order, you can save
yourself the hassle of doing inventory recounts to make sure your records
are accurate. This once again requires inventory management software.
10) Cost Cutting. When your inventory is humming along efficiently through
your facilities, you can bet you’ll save a lot of money. Inventory
management helps you avoid wasting money on slow-moving products so
you can put it to better use in other areas of your business.

Additional Links: http://www.mindovercorp.com/ACCU-

DART%20White%20Paper.pdf

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