Analysing the leaders in Electric Automation

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It has been mentioned in leader electric automation is of ABB, who had made a series of acquisition since 1990's.In mid 2002, company was around a serious trouble. There was need for quick decisive action to succeed in endeavour. This company was established by the merger in 1988 r between Asea of Sweden and Brown Boveri of Switzerland, ABB growth was rapid due to acquisitions of several well-known companies which weren't related to industrial automation. The company had won several businesses Honors Corporation of the Year (R&D Magazine, 1993), and one of the Most Admired Companies in the World (Fortune Magazine, 1998). By the turn of the century, revenues exceeded $35 billion, employment topped 200,000 and share prices were rising steadily.

The ABB Blahs

In spite of having a series of well placed success in acquisition ABB was in brink of failure .It was in mid 2002,there was complete change in scenario ,where there was huge quarterly loss if 25 % by overnight. The company was facing a mounting debt and maintain an organization with complex organization hierarchy and there's been potential destabilizing claims by subsidiary company called Combustion Engineering .The ABB under the chairmen ship of Juergen Dormannin 2002 started up a program for right size up to focus on company growth . (Jim Pinto,, 2003)

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There has been a clear turnaround for ABB ,which wasn't done by pain.ABB was able to work a strategy by decentralizing and taking up local managers of various entrepreneurial company taking up shot for smaller units. The strategy which has been taken up in crafting the comeback has been 2000 customers surveyed in mid 2003and responses of users having deep respect for ABB technologies found out company having complex efficient business dealings and taking new management overlook.

Issues

Understand the organizational problems faced by ABB India in the late 1990s.

Examine the restructuring exercise implemented by ABB India to revive its financial performance.

Critically analyse the strategies adopted by Ravi Uppal to enable the makeover of ABB India.

Chart a growth strategy for ABB India in the near future. (Rk Uppal, 2010)

In this assignment as we are looking for better operation management case scenarios and process, it further combines all the due resources of production operations and other subsystem of organizational value add product and service .These process needs to be taken up in a controlled manner as per the policy agreement of the organization. Therefore, it is part of an organization, which is concerned with transformation of range of inputs into required obligatory quality level.

Concept of Operations

An operation is defined in terms of the mission it serves for the organization, technology it employs and the human and managerial processes it involves. Operations in an organization can be categorised into manufacturing operations and service operations. Manufacturing operations is a conversion process that includes manufacturing yields a tangible output like of a product, conversion process which includes service yields and intangible output deed or performance effort. (Crandall R. &., 2008)

The main work lies upon operation manager of ABB to work on strategies given by company board to bring back its stable position .But, due to heightened management operations for international ,it do have different cultures workforce .In order to overcome these managers needs to require an understanding for consequences interms of language ,religion and value system. They need to work on different Customs and education in cross-cultural organizations within reach. Cultural factors can be least concrete but in ways factors which International business must take into account. Culture has been defined by Czinkota et al. (1996) as integrated system of learned behaviour patterns, which are characteristic of members of any given society (p.298). The elements, and variations differ from one nation or region to another, which also be viewed as sources of cultural differences and conflict. This has obvious implications both in the transfer of technology from one country to another, but also in the day to day operations of the factory. (Lawrence, 1969)

Distinction between Manufacturing Operations and Service Operations

Following characteristics can be considered for distinguishing manufacturing operations with

Service operations:

1. Tangible/Intangible nature of output

2. Consumption

3. Nature of work

4. Degree of customer contact

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5. Customer participation in conversion

6. Measurement of performance.

In manufacturing sector ,it is mainly characterised b tangible outputs and customer need to take more time to consume for product taken up .There are works which uses less laour and more equipment and little customer contact. It also takes up customer participation and process of conversion and sophisticated methods for better measureable process of product activities and resource consumption as products are made up. (Wustenhoff, 2005)

Operation Management

Framework for Managing Operations

In order to framework a clear process of operation management ,it is generally taken into consideration different technical issues faced in ABB .It generally a enclose d in a frame of management procedures taken up for better planning and organization ,controlling of activities and affect human behaviour through models. (Crandall R. &., 2008)

Planning

There have been a lot of activities, which make up in due course for action in guide for decision making and planning .The operation manager needs to plan objectives and other operational subsystem in an organization. There are varied stages which includes taking up clarifying roles and take up a clear role for focus of operation. It mean time involves a clear product planning and facility designing and conversion process.

Organizing

It's an activity which takes up or establishes a clear case of tasks and authority level. It is clearly defined by the operational managers for having a clear structural roles and information flow and operations subsystems. They determine activities required to achieve the goals and assign authority and responsibility for carrying them out.

Controlling

Activities that assure the actual performance in accordance with planned performance. To

Ensure that the plans for the operations subsystems are accomplished, the operations manager

Must exercise control by measuring actual outputs and comparing them to planned operations

Management. Controlling costs, quality, and schedules are the important functions here.

Behaviour

Operation managers are concerned with how their efforts to plan, organize, and control affect

Human behaviour. They also want to know how the behaviour of subordinates can affect management's planning, organizing, and controlling actions. Their interest lies in decision-making behaviour. (Crandall R. E., 2008)

Models

As operation managers plan, organise, and control the conversion process, they encounter many

Problems and must make many decisions. They can simplify their difficulties using models like

aggregate planning models for examining how best to use existing capacity in short-term, break even analysis to identify break even volumes, linear programming and computer simulation for capacity utilisation, decision tree analysis for long-term capacity problem of facility expansion, simple median model for determining best locations of facilities etc. (Rk Uppal, 2010)

Objectives of Operations Management

Objectives of operations management can be categorized into customer service and resource Utilization .The first objective of operating systems is the customer service to the satisfaction of customer wants. Therefore, customer service is a key objective of operations management. The operating system must provide something to a specification which can satisfy the customer in terms of cost and timing. Thus, primary objective can be satisfied by providing the 'right thing at a right price at the right time. (Rk Uppal, 2010)

Another major objective of operating systems is to utilise resources for the satisfaction of customer wants effectively, i.e., customer service must be provided with the achievement of effective operations through efficient use of resources. Inefficient use of resources or inadequate

Customer service leads to commercial failure of an operating system. Operations management is concerned essentially with the utilisation of resources, i.e., obtaining maximum effect from resources or minimising their loss, under utilisation or waste. (Wustenhoff, 2005)

Operations management is also concerned with the achievement of both satisfactory customers

Service and resource utilisation. An improvement in one will often give rise to deterioration in the other. Often both cannot be maximised, and hence a satisfactory performance must be achieved on both objectives. All the activities of operations management must be tackled with these two objectives in mind, and many of the problems will be faced by operations managers because of this conflict. Hence, operations managers must attempt to balance these basic objectives.

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Managing Global Operations

The term 'globalization' describes businesses' deployment of facilities and operations around the

World. Globalization can be defined as a process in which geographic distance becomes a factor of diminishing importance in the establishment and maintenance of cross border economic, political and socio-cultural relations. It can also be defined as worldwide drive toward a globalized economic system dominated by supranational corporate trade and banking institutions

That is not accountable to democratic processes or national governments. (Rk Uppal, 2010)

There are four developments, which have spurred the trend toward globalization. These are:

1. Improved transportation and communication technologies;

2. Opened financial systems;

3. Increased demand for imports; and

4. Reduced import quotas and other trade barriers.

When a firm sets up facilities abroad it involves some added complexities in its operation. Global markets impose new standards on quality and time. Managers should not think about domestic markets first and then global markets later, rather it could be think globally and act. Operation management concern with conversion of inputs into outputs, using physical resources, so as to provide the desired utilities to the customer while meeting the other organizational objectives of effectiveness, efficiency and adoptability. It distinguishes itself from other functions such as personnel, marketing, finance, etc., by its primary concern for conversion by using physical resources.'

Following are the activities which are listed under production and operations management functions:

1. Location of facilities

2. Plant layouts and material handling

3. Product design

4. Process design

5. Production and planning control

6. Quality control

7. Materials management

8. Maintenance management.

Location of Facilities

Location of facilities for operations is a long-term capacity decision which involves a long term commitment about the geographically static factors that affect a business organization. It is an important strategic level decision-making for an organization. It deals with the questions such as

Where our main operations should be based?' The selection of location is a key-decision as large investment is made in building plant and machinery. An improper location of plant may lead to waste of all the investments made in plant and machinery equipments. Hence, location of plant should be based on the company's expansion and policy, diversification plan for the products, changing sources of raw materials and many other factors. The purpose of the location study is to find the optimal location that will results in the greatest advantage to the organization. (Process Understanding & Improvement, 2005)

Plant layout and Material Handling

Plant layout refers to the physical arrangement of facilities. It is the configuration of departments, work centres and equipment in the conversion process. The overall objective of the plant layout is to design a physical arrangement that meets the required output quality and quantity most economically. (Sousa, 2008)

According to James Moore, Plant layout is a plan of an optimum arrangement of facilities including personnel, operating equipment, storage space, material handling equipments and all other supporting services along with the design of best structure to contain all these facilities .Material Handling refers to moving of materials from the store room to e machine and from one machine to next during process of manufacture. It is also defined as science of moving, packing and storing of products in a form. It is specialised activity for modern manufacturing concern, with 50 to 75% of the cost of production. This cost can be reduced by proper section, operation and maintenance of material handling devices. Material handling devices increases the output, improves quality, speeds up the deliveries and decreases the cost of production. Hence, material handling is a prime consideration in the designing new plant and several existing plants. (Swamidass, 2001)

Product Design

Product design deals with conversion of ideas into reality. Every business organization has to

Design, develop and introduce new products as a survival and growth strategy. Developing the

New products and launching them in the market is the biggest challenge faced by the organizations.

Process Design

Process design is a macroscopic decision-making of an overall process route for converting the

Raw material into finished goods. These decisions encompass the selection of a process, choice

Of technology, process flow analysis and layout of the facilities. Hence, the important decisions

In process design are to analyse the workflow for converting raw material into finished product

And to select the workstation for each included in the workflow. (Sousa, 2008)

Production Planning and Control

Production planning and control can be defined as the process of planning the production in advance, setting the exact route of each item, fixing the starting and finishing dates for each item, to give production orders to shops and to follow up the progress of products according to orders.

The principle of production planning and control lies in the statement 'First Plan Your Work and then Work on Your Plan'. Main functions of production planning and control includes planning, routing, scheduling, dispatching and follow-up. (Wustenhoff, 2005)

Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. Planning bridges the gap from where we are, to where we want to go. It makes it possible for things to occur which would not otherwise happen. Routing may be defined as the selection of path which each part of the product will follow, which being transformed from raw material to finished products. Routing determines the most advantageous path to be followed from department to department and machine to machine till raw material gets its final shape. Scheduling determines the programme for the operations. Scheduling may be defined as 'the fixation of time and date for each operation' as well as it determines the sequence of operations to be followed. (Rk Uppal, 2010)

Some companies have a manufacturing strategy development process that is biased towards the top-down planning paradigm originally proposed by Skinner (1969, 1974). Yet, many companies that we studied recently do not use such a process. Upon closer investigation, while a top-down process may be absent, they use one or more successful alternatives. Thus, there appears to be

No single universal process for manufacturing strategy development. The purpose of this paper is to capture and document the alternative to top-down planning for manufacturing strategy. Our method, which is illustrated in-depth by a UK case, unearths successful alternatives to the top-down planning process. (Ketokivi, 2006)

Some companies have a manufacturing strategy development process that is biased towards the top-down planning paradigm originally proposed by Skinner (1969, 1974). Yet, many companies that we studied recently do not use such a process. Upon closer investigation, while a top-down process may be absent, they use one or more successful alternatives. Thus, there appears to be no single universal process for manufacturing strategy development. The purpose of this paper is to capture and document the alternative to top-down planning for manufacturing strategy. Our method, which is illustrated in-depth by a UK case, unearths successful alternatives to the top-down planning process.

Process mapping consists of constructing a model that shows the relationships between the activities, people, data and objects involved in the production of a specified output. One reason why process mapping methods are so widespread today is that t has been widely recognised that such models can offer useful, and relatively inexpensive, descriptions which can help towards improving and re-designing business processes: one aspect of the successful management of change for re-engineering manufacturing enterprises is to employ practical, accessible, proven approaches to modelling that systems engineers can use routinely for the analysis and design of complex established human/machine/object systems .

The socio-technical approach to the analysis of a work system consists of two parallel studies. One aims to scrutinise variances - the conditions that could go awry and undermine the conversion process and focuses on the technical system. The other seeks to gather all the information required in order to design and set up jobs in such a way as to encourage worker participation and commitment. (Crandall R. &., 2008)

The traditional methodology of socio-technical analysis usually Proceeds as follows (Emery and Trist, 1978; Trist, 1982):

(1) Initial scanning. The aim, in this phase, is both to identify the main characteristics of the production system and its specific environment and to elucidate the main problems on which subsequent analyses must focus. The main ``outputs'' of this phase are: the physical layout of the production system; a definition of the organisational structure; the identification of the most important inputs and outputs of the system and of the main processes of transformation; the aims of the system, both the production and the social aims; the history and the relevant social aspects of the system; and, lastly, identification of the main variances.

(2) Technical analysis. Identification of unit operations, that is, of the main phases in the production process; where possible the purpose of each unit operation should be specified in terms of its inputs, its transformations, and its outputs; identification of key process variances (which originate either from the materials or from the nature of the process of transformation as

currently being carried out) and their interrelationships (by constructing variance matrixes).

(3) Social analysis. The aim here is to analyse the main characteristics of the existing social system, in order both to understand how the network of roles contributes to checking on the previously identified variances and to evaluate each role in relation to the psychological needs of the workers.

(4) Analysis of external systems.

(5) Work system design proposals.

Both theory and methodology of socio-technical analysis have met with considerable success and have greatly benefited efforts to design new manufacturing systems featuring well-defined mechanical technologies. Notwithstanding this, the main challenge supporters of the socio-technical approach had to face at the end of the 1970s was how to redefine the method so as to widen the area in which it could be applied in order to include those organisational areas which are characterised by work of a different type of office work. (Process Understanding & Improvement, 2005)

The stages of this top-down process are:

(1) Define corporate objectives. Corporate objectives may include items such as frequent introduction of new products, low costs, or product customization, which have profound implications for manufacturing.

(2) Select product families. Group products by the similarity in their competitive requirements and establish strategic manufacturing priorities in terms of differentiation, cost, quality, delivery and flexibility.

(3) Audit of external conditions. This audit addresses market requirements and competition for each group. This stage uses input from the marketing function of the company. Benchmarking may assist in understanding competitors and the nature of competition.

(4) Audit of internal capabilities. Evaluate the manufacturing capability of the firm in the context of the manufacturing strategy priorities established in Stage 2 above. This stage assesses the state of the current manufacturing facilities, technology and infrastructure with respect to

The priorities.

(5) The gap between actual and desired performance (gap analysis). Evaluate the manufacturing capabilities of the firm in the context of the strategic manufacturing priorities.

(6) Prioritize and set objectives for manufacturing. Use the results of the gap analysis to address the shortcomings of the manufacturing system through a set of tangible objectives.

(7) Choose manufacturing strategies. The objectives from the previous stage are translated into specific action plans. The planning approach described above is an elegant process.

Some companies have a manufacturing strategy development process that is biased towards the top-down planning paradigm originally proposed by Skinner (1969, 1974). Yet, many companies that we studied recently do not use such a process. Upon closer investigation, while a top-down process may be absent, they use one or more successful alternatives. Thus, there appears to be

No single universal process for manufacturing strategy development. The purpose of this paper is to capture and document the alternative to top-down planning for manufacturing strategy. Our method, which is illustrated in-depth by a UK case, unearths successful alternatives to the top-down planning process. (Sousa, 2008)

Result

The restructuring programme yielded positive results. On April 27, 2004, ABB India declared that for the first quarter ending March 2004, the net profits nearly doubled compared to the corresponding period the previous year.

The company registered a 56 per cent rise in revenues, amounting to Rs 4413.6 mn for the same period. However, improvement was not merely in terms of financial performance. Bearing testimony to its all round business performance, ABB India won the 'Asiamoney's Award' in February 2004, for the best small capitalization company from India for 2003. Commenting on the 'best to date' quarterly performance of the company, Uppal said, "ABB India continues on its committed path of profitable and sustainable growth, with a constant quest for higher productivity and operational efficiencies. Our focus on value based projects, exports, standard products and services have paid good dividends and shall continue unabated...". (Rk Uppal, 2010)

From the customer's view, output is the result of the exchange process between a service firm and the customer. From the firm's view, output is the result of a particular transformation process (Hornbrook, 1982). Firms have a tendency to look at the utilization of resources during the transformation process. Customers, when evaluating the service process and outcomes, will

Take into account considerations other than productivity and its implications for the price level.

Process analysis forms the base for the developed methodology; in a next step, elements from activity-based management will be brought in to document productivity issues. This will be illustrated by the first case, where it will become clear that productivity as a perspective is too narrow to include all views involved. In a next step, the same approach is enriched by introducing quality function deployment principles resulting in a scorecard on service Productivity as well as quality. (Wustenhoff, 2005)

Looking Ahead

When Uppal initiated the restructuring exercise at ABB India, the market for capital goods was stagnant and power sector reforms had not yet begun. These reforms, started in 2001, shifted the focus from power generation to power transmission and distribution. As part of the reforms, the Indian Government allotted nearly Rs 90 bn to the Accelerated Power Development and Reforms Programme (APDRP) to improve power distribution in the southern states of Andhra Pradesh, Karnataka and Tamilnadu. (Crandall R. E., 2008)

Recommendation

By taking up these case analysis feature, we would consider different technical issues which has to be taken up for better analysis on work ethics. Here recommendation for better operation management takes place only, when due importance to highly skilled resources and also consider some of the basic aspects of work to be taken up by use of advance technology. It also brings greater prosperity in making out clear level of work ethics and work overview conditions.