Ref. No.

: OM0021

Crisis at Strocem RMC: Significance of Operations Management

It was 10.30 AM when Rajesh Pawar reached the Civil Engineering Society, IIT Delhi the venue for a seminar on Corrosion of Reinforcement in HVFA Concrete. After the seminar, when the participants were discussing in groups, he spotted Deepak Kumar among the participants. Rajesh and Deepak had been classmates in the engineering college. Later both of them did their M.Tech in different universities and had joined the industry. Deepak had joined a well known construction company as a structural engineer, while Rajesh took up an additional 6 month diploma course in operations management before joining the industry. He joined a Ready-Mix Concrete (RMC) manufacturing company as an operations manager. Rajeshs company was an industry leader with many manufacturing plants in various locations all over the country. Deepak had worked for the construction company for 2 years and then sensing the boom in the construction industry and the rising demand for RMC by the builders in the city he established a RMC plant located on the outskirts of the city. However, Deepak was currently going through a bad phase in his business. After the initial greetings, they decided to catch up at the coffee shop after the days activities. Later in the evening they met at the coffee shop. Rajesh: How are you? Its been a long time since we met. Deepak: Im fine. Its been more than 6 years now that we have met. How are you and what are you doing? Rajesh: Im doing great. Im working as an operations manager for an RMC manufacturing gaint. What are you doing? Deepak: Last year I quit my job with the construction company I was working for and I have established an RMC plant on the outskirts of this city. Strocem RMC, you might have heard the name. Rajesh: Wow, thats great. And of course I have heard about it. How is it going then?

This case study was written by Syed Abdul Samad under the guidance of Dr. V. Srinivas, IBSCDC. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was prepared from generalised experiences. 2009, IBSCDC. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.

Crisis at Strocem RMC: Significance of Operations Management

Deepak: Its ok, but with a few hiccups. Rajesh: Why? What seems to be reason for that? Deepak: I have done every possible thing I could think of, but nothing seems to work to make my business run smoothly. Rajesh: Where exactly are you facing the problem in raw material procurement, quality of the product, manufacturing, timely delivering and fulfilling orders or your firms brand image? Deepak: I have established my plant on the outskirts because the required raw material would be easily, abundantly and cheaply available. As far as the quality of the product is concerned, I am an engineer and I would not compromise in this regard. And concerning the brand image of my company, it was established just last year and it needs time for people and builders to prefer my product. However, I have established a good rapport with some clients who are regular customers for my product. Moreover, I have implemented CRM in my company to maintain good relations with customer and increase my brand image. I also try to gain feedback, regarding the product and services of my firm, from all my customers But I received some complaints about the processing and time of delivery of the product to the clients. Sometimes there is lack fo enough workforce while at times there is excess of it. Therefore, I think there is some problem with the manufacturing process, the manufacturing capacity, number of workers or the order fulfillment process. Rajesh: Who looks after the manufacturing operations at the plant? Do you have an operations manager? Deepak: Since I have the knowledge of all the processes I personally take care of them. And I didnt feel the need to appoint an operations manger. Do you think an operations manager is essential for the plant? Rajesh: The success of any business lies in the fact as to how the company manages its operations. All the operations be it marketing, finance, accounting or manufacturing are needed to be quick, accurate and inexpensive. This means that all the operations need to be done efficiently, effectively and in a timely fashion. Taking care of these three at the same time may create conflicts in the overall operations of the company. As an engineer, you are supervising the operational day-to-day activities necessary to run the firm. You are only focused on the management and coordination of the technical aspects of operating the plant. However, these activities should be coordinated with othjer departments like marketing, HR, etc., and therefore you need to focus more on managerial activities. However, these should be coordinated with the other departments activities like marketing, HR, etc. Therefore a better understanding of the processes is needed and an operations manger does this in a systematic way. Operations manager will help you design, plan and control the operations processes according to the fluctuating market demand and design the performance improvement of the firm. Moreover, coordination with other functional areas of the firm leading to the overall development of the company will also be taken care of by the operational manager. Deepak: But, I think that all the processes in the plant are in place and in order. So what is going wrong here then? 2

Crisis at Strocem RMC: Significance of Operations Management

Rajesh: Deepak, your company deals not only with the product, but also offers the customers a combination of the product and service. The product is the RMC and the service is its transportation of the product to the construction site at the required time in the least possible cost. While the product is of concern to your customers, service is also of utmost concern as any delay or malfunction of your equipments will cause a greater delay in your clients projects and in turn affects your companys reputation. To gain reputation, you have to distinguish yourselves from other players in the industry. Deepak: How? Rajesh: Look, the product you are dealing with is similar to the product offered by many others in the industry and which can not be differentiated much, except maintaining the right quality. You need to bring differentiation in the services you offer to your customers. Apart from the core services like delivering the product at the required site, you need to have value added services like timely delivery, etc., to create a differentiation for your company. Deepak: What will an operations manager take care of in the company? Rajesh: Generally he will be responsible for the materials control, manufacturing, purchasing, quality check and engineering support. However, the activities that are taken care by an operations manager may change with the industry and type of product produced. Deepak: How will an operations manager improve the overall performance of a company? Rajesh: He can help in strategic short-term or long-term planning of the companys operations. Apart from that, he can help in taking decision regarding project management, decisions regarding facility location and workers, etc., quality management, supply chain management, e-commerce decisions, etc. Deepak: Are there any methods that applied so that I can be sure of my processes efficiency, effectiveness and timeliness. Rajesh: Of course there are. Over a period of time, historical developments have taken place in the field of OM. There are systems like Just-in-Time (JIT), Total Quality Management (TQM), etc., developed by the Japanese that are popular since the 1980s. These philosophies have revolutionised the production processes. Deepak: What are the other things that can be of concern in managing the operations? Rajesh: There are a few other issues that need attention. For example, our company had acquired another local RMC plant but was unable to handle the workers and the systems that were in place in that plant. So, integration issues in such cases become more important. Efficient use of internet, timely enhancement of services, etc., form other major issues that are of concern to an effective operations management. Deepak: You have given valuable inputs and suggestions; Ill make sure that I implement them in my manufacturing plant. Thank you, Rajesh. Ill be in touch with you for some more discussions.

Crisis at Strocem RMC: Significance of Operations Management

Suggested Questions for Discussion

I. What is Operations Management (OM)? Explain the purpose and significance of OM in an organisation. Referring to the case study, bring out the differences between the production systems and operations of products and services. What is the difference between OM, Operations Research and Management Science (OR/MS) and Industrial Engineering (IE)? Rajesh lists out the tasks of an operations manager in a manufacturing firm. Similarly list out the tasks of an operations manager in an airline industry? How can services form an important part of operations in any firm?

II.

III. How can an operations manager help Strocem RMC in the short- and long-run? Referring to the case study, discuss the historical developments in the field of OM. List the current issues that an operations manager needs to take care of apart from those mentioned in the case study?

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