1 OPERATIONS MANAGEMENT ABSTRACT
In the the pres presen entt busi busine ness ss worl world d ther theree has has been been a signi signifi fica cant nt conc concent entra rati tion on on serv servic icee base based d industries industries.. This paper presents the way one of the world’s world’s second biggest biggest employer employer INDIAN RAILWAYS RAILWAYS has been operating operating and together analyzing its various issues/ problems, problems, and its relati relations onship hip to operat operation ionss practi practice ce in the organi organizat zation ion.. Though Though there there have been been many many issue issuess subjected subjected to operations operations management management practice, practice, in the interest of word limitation limitation a few issues relating to the concepts below has been discussed throughout. Consequently, incorporating some of the Operations Operations Management theory like process(es) process(es) structure, structure, quality quality dimensions, TQM, capa capaci city ty plan planni ning ng,, impa impact ct anal analys ysis is,, and and impr improv ovem emen entt conce concept pts. s. The The study study is base based d on the the comparison of theories with actual practice, evaluating the applicability of these theories in real time progression of the organization, consideration of its impact on quality and customer focus. Finally, a proposal as to how the practice (es) could be enhanced.
TABLE OF CONTENTS
2 Page
ABSTRACT.....1 ABSTRACT.....1 TABLE OF CONTENTS.........2 CONTENTS.........2 1 INTRODUCTION................................4 1.1 Definition....................................................................4 1.2 Basic Model of Operations Management...................................................5 1.2.1 Change of State..................................................................................5 1.2.2 Change of the Place...........................................................................5 1.2.3 Processes That Involve In Delivering the Processes........6 2 THEORY..........................................................................................................................6 2.1 IR Satisfaction............................................................................................6 2.2 Quality........................................................................................................7 2.3 Sponsor Satisfaction...................................................................................8 2.4 Personal Satisfaction................................................................................8 2.5 Society and Community Satisfaction9 3 ROLES AND RESPONSIBILITIES OF OPERATIONS MANAGER.........................10 4 ISSUES AND CHALLENGES......................................................................................13 4.1 No Market Segmentation Prospective......................................................13 4.2 Indian Politics...........................................................................................14 4.3 Railways Safety........................................................................................14 4.4 Poor Capacity Planning.........................................................................15 4.5 Lack of Benchmarking.............................................................................16 5 CUSTOMER REQUIREMENTS/ SERVICE QUALITY.............................................17 5.1 performance…………………… performance………………………………………………..17 …………………………..17
3 5.2 realibility ……………………………………………………..17 ……………………………………………………..17 5.3 feature ………………………………………………………..17 ………………………………………………………..17 5.4 conformances………………………… conformances………………………………………………….17 ……………………….17 5.5 Serviceability………… Serviceability……………………………………… ………………………………………………17 …………………17 6 ANALYSIS OF TQM....................................................................................................18 7 RECOMMENDATIONS PROSPECTIVE/ SOLUTIONS................................................
4
1. INTRODUCTION
Indian Indian Railways Railways reputedly known as IR is the nationa nationaliz lized ed railwa railway y company company of India India which which owns owns and operat operates es most most of the country country's 's rail rail transp transport ort.. “IR “IR is the world’ world’ss second second larges largestt employer
behind
Chinese
army”,
source
(:http://www.sustainable-
sourcing.com/2009/06/29/nhs-procurements-10-carbon-challenge/ ).
“Indian
Rai Railway lwayss has has one one of the large argest st and and busi busies estt rai rail net networ works in the worl orld”, d”, sour source ce (
www.wikipedia.org ). “ Indian Railways have an extensive network, which is spread over 63,028 Route Kilometre, Kilometre, comprising comprising Broad Gauge (44,776 (44,776 RKm), Metre Gauge (14,987 RKm) and Narrow Gauge (3,265 RKm).Approximately, 24 per cent of the network is electrified. The Indian Indian Railways Railways have played an integratin integrating g role in the social and economic development of the country”
http://indiabudget.nic.in/es2001--02/chapt2002/chap98.pdf “Tra http://indiabudget.nic.in/es2001 “Trans nspo port rtin ing g
over over
18
million passengers and more than 2 million tonnes of freight daily, it is the world's largest comm commer erci cial al
or
util utiliity
empl employ oyer er,,
wit with
mor more
than han
1.4 1.4 mill illion ion
empl employ oyee ees. s.””
sour ource
(http ://e ://en.wi n.wikiped kipedia. ia.org/w org/wiki/ iki/India Indian nRailw Railways ays ). The function carried out by the IR in the country’s socio- political development is indisputable. Besides its stated function of transporting men and goods across the length and breadth of the country, it also enhances the country’s econom economy. y.
Hence Hence the role of the Indian Indian Railwa Railways ys has become become even even more decisive decisive to the
development of the Indian economy. As the country is emerging as one of the rapidly growing economies economies in the world, the need for a well- organized organized transport transport infrastructu infrastructure re would become more vital. Although there have been other modes of transport available in the country, IR is still able to maintain its competitive position due to many advantages like geographical diversity, world’s largest networks, and above all its economical fares in delivering the services.
5
1.1 Definition
“Operation “Operationss Management Management is defined defined as the management of products products and processes that convert input input into into goods goods and servic services. es. The input input proces processs and output output transf transform ormati ation on frame frame work work constitutes a perspective of organizations.” cited in ‘Operations Management’ By Nigel Slack et al. 2e
Applyi Applying ng the below below model model to our presen presentt organi organizat zation ion i.e. i.e. Indian Indian Railways, Railways, a servic servicee based based organi organizati zation, on, the users/cu users/custo stomer merss of the IR are in fact fact helpin helping g to make make the services services and conseq consequent uently ly they they become become the co- creators creators of the servic service. e. Most of the operat operation ionss involv involvee consumers in executing the service referring to the figure below and definition we hinted that the “transformati “transformation on of inputs” depicts depicts the change of state and change of place category of operation for the current organization.
Fig: Basic Model of Operations Management. 1.1.1 Change of State
Thes Thesee coul could d be tran transf sfor orma mati tions ons or opera operati tion onss whic which h rela relate te to what what we migh mightt call call stat state. e. Sometimes this involves maintenance repair and restoration. 1.1.2 Change of Place
The major role of Operation Management in IR involves the change of place category operation which involves key issues like passenger passenger safety& comfort, comfort, and quality quality of the service that has been offered during the process.
6 As we proceed further, we identify that these two types of changes function together in every phase of Operation Management on analyzing value chain of IR. 1.1.3 Processes That Involve In Delivering the Service
“Process is the task which you put thought energy materials and labor so that you get something out of every kind of business business whether it manufacturing manufacturing or service service provider is based upon the process and every kind of organization whether private, public or voluntary sector requires staff to deliver through the process.” cited www.rdi.co.uk/learningmaterial 2. THEORY
Operat Operation ionss Manage Managemen mentt is influe influenced nced by detail detail format formation ion of the organi organizat zation’ ion’ss aims aims and object objective ives. s. As IR is a public public sector organizat organization, ion, all the operation operationss must must contrib contribute ute to the satisfaction of its stake holders. They are:
•
Users/customers or the public,
•
The government,the guardian of the legislation and the statesmen,
•
The The pers person onne nel. l. Who Who have have righ rightt to obta obtain in the the prid pridee and and sati satisf sfac acti tion on out out of the the organization.
•
The society and citizens.
Figure below gives us the design of IR Operations Management function.
7
Fig: Design of IR Operations Management Function. 2.1 IR Satisfaction
This is one of the main objectives objectives of any business business that is either either product based or service service based. Customer satisfaction is the core thing that customers want from the services/products they purchase. They are quality, price, speed, and flexibility. flexibility . If an organization organization can meet up to needs of these customer constraints, it can be on the competitive edge in the industry.
2.2 Quality
This will occur when the services offered is being well specified and meets up to the terms that have been promised prior to offering the service. In Indian Railways, there has been a question of
8 quality in offering services. “Apart from the cost angle, the poor quality of the services that the rail railwa ways ys prov provid idee have have also also led led to its its losi losing ng mark market et shar sharee to its its comp compet etit itor ors” s”,, sour source ce
http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf [accessed on 18.10.2009]page 4 Referring to the basic operations model in the product service design cycle, the consequences of planning& planning& control, and design are called called the quality characteristi characteristics cs of the service. service. The quality quality issue in IR needs to be addressed and lay down more attention on quality characteristics of the service service being offered, thus Matching Matching Customer Customer Requirements. Requirements. The railways have to provide higher reliable service i.e. safer transportation, and winning back its competitive edge that they have have lost lost to other other segmen segments ts of transp transport ort market market.. Qualit Quality y means means seeing seeing the servic services es from from consumer perspective. As such the whole organization should see the customer at the centre and all the operation operation has to function towards the customer customer aspiration aspiration from the organization. organization. The theory of TQM total quality management is being discussed as we progress in understanding the role of Operations Management and try to gain good hold on quality theory. 2.3 Sponsor Satisfaction
''The Railways is bankrupt. There is no other way to describe it.'' Sums up Y.P. Anand, 65, former chairman of the Railway Board: Source
http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf page 15. To satisfy the sponsor i.e. the Indian government, it is essential that the operations achieve adequate focus on resources like personnel technology information and its core competencies so that the operations generate value for money and time for the productivity and efficiency. 2.4 Personal Satisfaction
9 Staff satisfaction is a vital prerequisite for an organization success. When happy at work, Personnel generally become more active, effective, and productive. Dissatisfaction could lead to underp underperf erform ormance ance and block block the organi organizat zation ion`s `s succes success. s. So, there there should should be a contin continuous uous dialogue process between the personnel and the management. Whilst increasing staff strength of the railways proportional to its agreed level of delivering quality standards and demand of serv servic ices es,, Comp Compen ensa sati tion on (bonu (bonuse ses, s, arre arrear ars, s, and trav travel el priv privil ilege eges) s) acco accord rdin ingl gly y has has to be impl impleme ement nted ed.. It is anot anothe herr outl outlin inee to make make empl employ oyee ee comm commit itte ted d to the the orga organi niza zati tion. on. Compensation should be given not only by increasing pay but also empowering the employee by providing adequate facilities to lead a handsome lifestyle. 2.5 Society and Community Satisfaction
Corporate Social Responsibility (CSR), or Sustainable Responsible Business (SRB), ideally, IR policy would function as a mechanism whereby business would watch and ensure its obedience to law, ethical standards, and state instructions. IR should not exploit the resources available for its own benefit. All the operations would clinch responsibility for the impact of their activities on the atmosphere, consumers, employees, and communities. Indian Railways should consider the issues issues like like enviro environme nmenta ntall depriv deprivati ation, on, pollut pollution ion,, and energy energy costs costs to be exploit exploited ed fully fully for promoting promoting Railways. Railways. Furthermor Furthermore, e, Indian Railway operations operations would positively positively promote promote the public awareness by its own accord, eliminating ex ercises that harm the society. In course of achieving these operation objectives there might be some conflicting constraints that arise, like processing the new technology i.e., replacing the locomotives with TGV. This may need a complete restructuring of track and the signal system and adopt a contemporary use of IT by ERP (Enterprise resource Planning) solutions with the aid of many ERP packages like SAP, People Soft, BAAN JD Edwards, ORACLE Applications. Looking at the past history of the
10 other successful rail operating companies like German Rail and British Rail, IR woke up to the situation fast and started on reforms to ensure the survival and growth of the railways. 3. ROLES AND RESPONSIBILITIES OF OPERATIONS MANAGER
•
Develop Develop a busine business ss plan plan that that suppor supports ts operati operationa onall sales sales and financi financial al aspect aspectss of the organization,
•
Ensuring the safety standards and compliance of law according to the state,
•
Train staff and empower them in their functional systems,
•
Liaising with the sponsors and the management and supply the required management function,
•
Operations sometimes also include delivering the promotional plan (like seasonal trains and discounted travel for students and senior citizens etc.) that drives the agreed revenue and sales targets,
•
•
•
Liaising with suppliers, suppliers, design and using facilities, Quality control, Be able to adapt and deliver the business expectations.
In the service organization sectors, the supplier and consumer meet face to face. This is known as consumer interface. As an Operations Manager, it is essential to create the consumer interface and maintain them i.e., during the transformation of inputs, the actual type of transformation that has been taking place is change of state type of operations. Hence, in IR, the consumer consumer comes face to face in many instances instances which are called called as multiple interfaces. In transport industry, the supplier (IR) has many interfaces with the passengers. The passenger’s first point of contact is the ticket counter/enquiry, then perhaps a luggage porter, a security security officer, officer, the train train conductor, conductor, food vendor, and so on. It is essential essential as an Operations Operations
11 Manage Managerr that that during during the course course of passen passenger ger interac interactio tion n with with all the interf interface aces, s, consum consumer er satisfaction has to be achieved and it is also must that during each process the passenger must feel that he/she is dealing with a right supplier. This entails consumer loyalty. So, an Operations Manager has to be vigilant whilst delivering the services. If any of the interfaces fails to provide the required satisfaction, then the entire view of the customer towards the organization is marred. Hence, to achieve the customer satisfaction through the multiple interfaces, all the personnel of the organization organization have to be trained well in accordance accordance with the service service that has been promised. This also means adherence to the health and safety standards required by the state. As an Operations Operations Manager, Manager, it is a fundamental fundamental role to maintain the IR on the competitive competitive edge. Where does IR achieve its competitive edge? Management’ By Nigel Slack et al. 2e”, “competitive “competitive advantage is a According to “Operations Management’ merge of three core functions. They are product/ technology, marketing, and operations”. operations”.
Fig. gaining competitive advantage In figuring out the business competitive competitive edge, the initial step is situationa situationall analysis. analysis. It gives us the picture of the relevant strategic forces that a re operating against the Indian railways. •
“In recent years there has been increasing increasing levels levels of competition competition from other sources of transport
within
economy”,
source
http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf page http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf page 5. •
Post deregulations of the trucking industry, the road ways have captured a huge chunk of railwa railways ys market market share. share. This This has been been achiev achieved ed with with increa increased sed custom customer er orient orientati ation, on, flexibility, and lower costs for short distance routes.
•
The development of expressways and six lane highways have only led to the level of competition being offered by the road sector increasing. With the announcement of the
12 ‘Golden Quadrilateral’ (a road map that is connecting all the corners of the country) project,
the
competition
to
the
railways
can
only
increase.
http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf page http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf page 5, 6. Identifying important strategic forces, Operations Manager can then design and determine the firm’s distinctive advantage. Thus formulation of key strategic objectives follows this consideration. 4. ISSUES AND CHALLENGES
•
No market segmentation perspective,
•
Indian politics,
•
Railways safety,
•
Poor capacity planning, and
•
Lack of benchmarking.
4.1 No Market Segmentation Perspective
“The Rakesh Mohan committee report identified some areas of concerns for viability of IR”. http://www.esocialsciences.com/data/articles/Document1612009310.2725336.pdf page http://www.esocialsciences.com/data/articles/Document1612009310.2725336.pdf page 40. According According to this report IR has not come up with a culture culture of generating generating strategies strategies rooted in an unde unders rsta tand ndin ing g of the the cons consum umer er requ requir irem emen ents ts.. As IR has has been been oper operat atin ing g sinc sincee 1853 1853 (http ://en.w ://en.wikipedi ikipedia.org/w a.org/wiki/Ind iki/Indian ian Railways Railways), ), since then IR has not been able adapt much of a change in its operations. IR is offering a very fundamental services focussing only on the traffic and new routes/ routes/ trains and it implicitly implicitly considers only passengers passengers as the source and nothing nothing beyond beyond it. However, transportatio transportation n industry industry is based on originorigin- destinatio destination n based service. service. IR failed failed to look its functions functions in other dimensions dimensions of trade. trade. Looking Looking back into the history, many railway organizations in different countries, for instance British Rail has evolved to competition
13 with its ongoing demand of passenger requirements in accordance with time. “British Railways (BR), which later traded as British Rail, was the operator of most of the British railway system from the nationalization of the 'Big Four' British railway companies in 1948 until privatization in stages from 1994 to 1997. At first, the trading brand of the Railway Executive of the British Transport Commission, it became in 1962 an independent statutory corporation, the British Railways Board.”, Source http://en http://en.wi .wi kipedi kipedia.org/w a.org/wiki/Britis iki/British h Rail. Rail. 4.2 Indian Politics
“Pol “Polit itic ics, s, not not the the mark market et,, dict dictat ates es the the pric pricin ing g stru struct ctur uree in Indi Indiaa curr curren entl tly. y.”” Cite Cited d in http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf
“politici “politicians ans in India
subsidise subsidise many profitable profitable routes which are potentiall potentially y profitable profitable like Bombay suburban route that
carry
six
million
passengers
daily
for
the
sake
of
http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf .
political Du e
to
benefit” political
obligations, Indian railways railways have been losing a huge passenger and freight freight revenue. However in recen recentt year yearss Indi Indian an rail railwa ways ys had awak awaken en in this this vici vicini nity ty by incr increa easi sing ng the the pric prices es whic which h previously
used
to
offer
as
10%
rebate
to
its
customers.
http://www.livemint.com/2009/06/23000844/Railway-ministry-to-increase-p.html 4.3 Railways Safety
Presently, this has been a major issue that railways have been facing. “The problems in railway safety are well known. Rail fractures have been the main cause of derailments and are in turn due to the condition of the track.” States the Hindu leading Indian news paper Tuesday, December 05, 05,
2000 2000 http://www.hinduonnet.com/thehindu http://www.hinduonnet.com/thehindu/2000/12/05/stories/05052511.htm /2000/12/05/stories/05052511.htm [acessed
19.oct.2009]
14 Safety is on the whole the product of proper practices at all levels of operation i.e. maintenance, operations planning, and design. Safety comprises of standard protocols that need to be followed throughout the execution of task. “A detailed probe identified the absence of basic safety equipment, poor track maintenance and the use of substandard steel (bought from a state-run plant) as the main reasons for the accident. While there was much fuss about using ultrasonic techniques to detect these cracks, barely b arely eight months later a goods train derailed an d slammed into an express train near Mathura because of track fractures. To repeat the same error time and again seems to be a compulsive disorder of the Indian Railways.” The Hindu V olume20 olume 20 - Issue 15, July 19 - August 01, 2003. http://www.theh http://ww w.thehindu. indu.com/flin com/fline/fl201 e/fl2015/storie 5/stories/2003 s/200308010 08010 069119 6911900.htm 00.htm.. [Accessed on 19.10.2009]“Similarly, many wagons and coaches which are considered ``unfit'' for use on the rails continue to be in service”. http://www.esocialsciences.com/data/articles/Document1612009310.2725336.pdf . “The coaches are not fitted with safety equipment like fire alarms or emergency exits. Vinyl flooring
with
walls
and
ceiling
in
mica
are
risky
during
fires.”
http://www.outlookindia.com/article.aspx?217336.. The above articles in the India’s biggest news http://www.outlookindia.com/article.aspx?217336 papers depict the flaws in Indian railway safety system. There have been many questions against the safety in Indian railways. This could be due to heavy traffic, and lack of funds concentration from government agencies. In addition to all the above there IR has been a victim of vandalism when ever communal riots takes place IR has suffered severe vandalism. 4.4 Poor Capacity Planning
Capacity planning is the calculating, determining, and shaping the organization’s resources and its ability to produce its services to meet its on growing demand. Organization can do several
15 things things to increase increase capacity capacity and consequently consequently gaining competitive competitive advantage. advantage. Indian railways railways have to increase increase the number of coaches to reduce packed trains besides besides increasing increasing the length length of the platforms.
4.5 Lack of Benchmarking
As discussed earlier, IR is lacking or ignoring its competitive edge and it has failed to emerge as the competitor to the private companies offering similar services. In the competitive market, it is esse essent ntia iall to comp compar aree the the perf perfor orma manc nces es with with the the comp compet etit itor or.. Here Here begin beginss the the conc concept ept of benchmarking i.e. adopting the similar performance standards of the competitors and stimulating creative ideas in which the organization can well perform and better serve the customer.
5.Customer requirements/quality:requirements/quality:In “competing “competing on the eight dimension of quality” quality” David Garvin Garvin states states that( Harvard Harvard Business Business Review December 1987) customers customers are interested interested in following following Eight quality quality characteri characteristics stics.. They are performance, features, reliability, conformance, durability, serviceability, aesthetics, and perceived quality 5.1 Performance:- the customer expectation from the IR is its ability to provide trains which stick on to the agreed standard of time table 5.2 Reliability Reliability::- the quality characteri characteristic stic of reliability reliability in relation to the performance performance of the service in present case it it the safety mark that that IR observes
16 5.3 Feature: - Value-added Value-added services like online ticket ticket booking tourist tourist packages packages and discounted discounted travel for round trips internet facilities , cash points on the platforms and so on. Differentiate the organization organization from competitors competitors and helps to builds builds relationshi relationships ps that bind customers customers to the firm in a encouraging way 5.4 conformances: - this characteristic simply implies whether the organisation is implementing the ISO safety standards 5.5 serviceability: - customer expectation from the organisation whether the IR is able to meet the quality standards and be able to deliver it in a right way at right time
6. ANALYSIS OF TQM
“TQM “TQM is the implem implement entati ation on of strate strategie gies, s, tactic tactics, s, and operat operation ion methods methods for integr integrati ating ng practical quality control techniques (statistical quality control, inspection, and quality assurance, etc.) with organizational cultures conducive to the continuous improvement of quality. It focuses on the totality of the system rather than its individual parts, seeking to identify the cause of failure rather than the simple fact that failures have occu rred.” IR, IR, in achi achiev evin ing g TQM. TQM. Ther Theree needs needs to be qual qualit ity y conf confor orma mance nce to the the serv servic icee spec specif ifie ied. d. Conformance to quality standards means producing a service to a specific design specification. Quality conformance can be achieved by following these sequential steps
17 Defining the quality characteristics of the service i.e., delivering the service as it has been promised with respect to all the rules terms agreed whilst making an accord with customer. As a operation manager it is essential to measure the characteristic of the quality at every step during the user interface. Secondly by controlling the quality of the services like passenger safety and trains arrival-departure etc, etc, against the preset standards. And continue to make improvements 10. RECOMMENDATIONS PROSPECTIVE/ SOLUTIONS:-
IR considering some the issues issues errors and defects and contious contious monitoring would be helpful this
means pursuit of of qulity is ongoing and contionus and the standards are to be contionusly examined against the KPIs key performance indicators. Indian railways msut recognise that ana organistion striving to please its users ust embarce the quality standards anf continue to improve and benchmark them against its competetiorrs . some recomnedations are given to to enhance the services in IR
18
19
References :1) ‘Operations Management’ By Nigel Slack et al. 2e http://www.thehindubusinessline.com/2003/09/19/stories/2003091900090900 .htm customer service IT http://news.bbc.co.uk/1/hi/business/3835525.stm
•
•
•
Railways improving future
1) http://news.bbc.co.uk/1/hi/world/south_asia http://news.bbc.co.uk/1/hi/world/south_asia/6287152.stm /6287152.stm 2) http://news.bbc.co.uk/1/hi/business/7265287.stm •
Ranking of Indian railways
https://www.cia.gov/library/publications/the-worldfactbook/rankorder/2121rank.html
• •
Indian culture and the culture for TQM: a comparison
www.emeraldinsight.com/10.1108/09544780710730014 •
A performance benchmarking study of Indian Railway zones zones
www.emerald www.em eraldinsi insight.c ght.com/10 om/10.1108 .1108/1463 /1463 577081 7708109031 0903178 78 •
Restructuring Indian railways
http://www.iitk.ac.in/3inetwork/html/reports/IIMStudReport2001/A8.pdf •
Issues performance and challenges
http://www.esocialsciences.com/data/articles/Document1612009310.272533 6.pdf •
http://www.esocialsciences.com/articles/displayArticles.asp? Article_ Article _ID=1831
