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Operations Management I
Group Project
(Final report)
Submitted to Prof. Neeta Gupta
Submitted by
Group 7
Ajai Govind G 191065
Ambika Gupta 191067
Ankit Jain 191074Bhanupriya Deswal 191081
Chandrika Mittal 191082
Kulvir Singh Gill 191092
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Company Profile
Saint-Gobain SA (Euronext: SGO) is a French multinational
corporation, founded in 1665 in
Paris and headquartered on the outskirts of Paris at La Dfense
and in Courbevoie. Originally amirror manufacturer, it now also
produces a variety of construction and high-performance
materials.
The company has its head office in Les Miroirs in La Dfense and
in Courbevoie. The 97-metre
(318 ft) building served as the company head office since
1981.
Products offered
Construction product
The Construction Products division manufactures acoustic and
thermal insulation, faadecoatings, roofing, interior and exterior
products and pipes. It employs 45,000 people worldwideand in 2006
had sales revenues of 10.9 Billion Euros.
Flat glass
The Flat Glass division manufacturers glass products including
self-cleaning, electrochromic,and low-emissivity and sun-shielding
glass. It is active in 39 countries targeting emerging
economies, a market that now accounts for more than one third of
the divisions sales. It employs
a global workforce of 37,100 and in 2006 had sales revenues of
5.1 billion Euros.
The Flat Glass division is currently building a plant to produce
photovoltaic cellsjointly withShell, and is developing a pilot
factory for the production of electronic glass in Spain.
High performance materials
The High Performance Materials division conducts research into
various areas ofmaterialsscience, energy, the environment and
medicine; such as fuel cells or particle filters. It operates
centers in Cavaillon, Northborough and Shanghai employing 35,800
people. Overall, the
division's sales are made up of at least 30% new products, in
2006 total sales revenue was 4.9billion Euros.
http://en.wikipedia.org/wiki/Euronexthttp://www.euronext.com/quicksearch/resultquicksearch-2986-EN.html?matchpattern=SGO&entryType=symbolhttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Parishttp://en.wikipedia.org/wiki/La_D%C3%A9fensehttp://en.wikipedia.org/wiki/Courbevoiehttp://en.wikipedia.org/wiki/Mirrorhttp://en.wikipedia.org/wiki/Materialhttp://en.wikipedia.org/wiki/La_D%C3%A9fensehttp://en.wikipedia.org/wiki/Courbevoiehttp://en.wikipedia.org/wiki/Photovoltaic_cellshttp://en.wikipedia.org/wiki/Royal_Dutch_Shellhttp://en.wikipedia.org/wiki/Materials_sciencehttp://en.wikipedia.org/wiki/Materials_sciencehttp://en.wikipedia.org/wiki/Medicinehttp://en.wikipedia.org/wiki/Fuel_cellhttp://en.wikipedia.org/wiki/Cavaillonhttp://en.wikipedia.org/wiki/Northborough,_MAhttp://en.wikipedia.org/wiki/Shanghaihttp://en.wikipedia.org/wiki/Shanghaihttp://en.wikipedia.org/wiki/Northborough,_MAhttp://en.wikipedia.org/wiki/Cavaillonhttp://en.wikipedia.org/wiki/Fuel_cellhttp://en.wikipedia.org/wiki/Medicinehttp://en.wikipedia.org/wiki/Materials_sciencehttp://en.wikipedia.org/wiki/Materials_sciencehttp://en.wikipedia.org/wiki/Royal_Dutch_Shellhttp://en.wikipedia.org/wiki/Photovoltaic_cellshttp://en.wikipedia.org/wiki/Courbevoiehttp://en.wikipedia.org/wiki/La_D%C3%A9fensehttp://en.wikipedia.org/wiki/Materialhttp://en.wikipedia.org/wiki/Mirrorhttp://en.wikipedia.org/wiki/Courbevoiehttp://en.wikipedia.org/wiki/La_D%C3%A9fensehttp://en.wikipedia.org/wiki/Parishttp://en.wikipedia.org/wiki/Multinational_corporationhttp://www.euronext.com/quicksearch/resultquicksearch-2986-EN.html?matchpattern=SGO&entryType=symbolhttp://en.wikipedia.org/wiki/Euronext
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Packaging
The Packaging division produces glassware for the food and
beverage industry. The division's2006 sales revenue was 4.1 billion
Euros and it employs 20,000 people worldwide.
Saint Gobain IndiaSaint-Gobain established its presence in India
by acquiring a majority stake in Grindwell Norton
in 1996, and thereafter went on to consolidate and strengthen
its presence within the country.
The Group has adopted a systematic focus in launching its
individual businesses in India and
currently operates in three business sectors: Flat Glass &
High Performance Materials
(collectively known as Innovative Materials) and Construction
Products.
Within these sectors, a variety of products are manufactured by
eight different companies:
FLAT GLASS
Saint-Gobain Glass India Ltd. (SGGI), which manufactures and
markets float glass and mirrors
from its plant near Chennai
Saint-Gobain Sekurit India Ltd. (SGSI),
which offers a range of automotive glass products.
HIGH PERFORMANCE MATERIALS
Grindwell Norton Ltd. (GNO), which manufactures and markets
abrasives, silicon carbide, high
performance refractories and performance plastics from its six
manufacturing locations.
Saint-Gobain Crystals & Detectors India Ltd. (SGCD), which
manufactures and markets
radiation detection and measurement products, and SEPR
Refractories India Ltd. (SEPR), which
manufactures and markets electrofused refractories.
CONSTRUCTION PRODUCTSSaint-Gobain Weber (SGW), which offers
facade and tiling solutions and technical mortars
Saint-Gobain SEVA Engineering India Ltd. (SGSEIL), which
manufactures top rolls, tempering
furnaces and tooling for the automotive sector, moulds for
containers and some building
hardware products, and
http://en.wikipedia.org/wiki/Beveragehttp://en.wikipedia.org/wiki/Beverage
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Saint-Gobain Gyproc India (formerly India Gypsum), which
manufactures an extensive range of
Gypsum boards and plasters systems and solutions for partitions,
wall panels, ceilings and
internal wall linings.
In order to further its business growth in the Indian
sub-continent, Saint-Gobain also established
the General Delegation for India, Sri Lanka and Bangladesh in
1996. The Delegation facilitates
the establishment of new businesses in India, ensures synergy
and co-ordination between the
businesses and companies in India and functions as a link
between the Compagnie and the
businesses in India.
Saint-Gobain places great emphasis on developing its businesses
and strengthening its presence
in the Indian market. This combined with its investment in
manufacturing activities to fuel
growth, makes it possible to bring in advanced technological
competency in providing stateof
the-art products to our customers.
For this project, we would keep our attention focused on Saint
Gobain Glass India Limited.
Saint-Gobain Glass India is a 100% subsidiary of Saint Gobain
France, one of the leading float
glass manufacturers in the world. It manufactures and markets
solar control glass, fire resistant
glass and other various types of float glasses in India from its
World Glass Complex which is
located at Sriperumbudur 40 km from Chennai. It manufactures
following products:
Mirror Clear glass Tinted glass Reflectasol Automotive glass
(Saint Gobain Sekurit)
The major raw materials procured for the manufacturing of glass
are:
Sand Soda Ash Dense Calcite Dolomite Silver Nitrate Metal
Oxides
The raw materials for packaging include
Aluminium foils Paper / Thermocole products Wood
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Company has focused primarily on its core competency and has
outsourced all the activities in
which they dont hold the competitive advantage. The activities
outsourced are as follows:
Utilities - Mc lellan Power generation - Wartsilla Forks lift
operation - TVS Outsource service providers (man power) - Victius
SecurityG4S
Role of operations in the corporate strategy of the
firmOperation has a huge role to play in the corporate strategy of
the firm. The quality of the product
is the source of competitive advantage of the firm. And the
process developed for manufacturing
ensures that every piece of glass sold by the company is free
from defects and conforms to
industry norms. There is numerous quality checks right from
procurement of the raw material to
dispatch of the final product. Company has adopted forward,
backward as well as vertical
integration so as to do away with distribution problems, raw
material quality and availability and
cutting down on costs. Their operation management team has
helped them has helped Saint
Gobain Glass India Ltd. to develop a process which has made them
the only glass manufacturing
company to get a clarity level beyond 95%. This feature has
served as their USP since many
numbers of years.
Interaction between various departmentsAt Saint Gobain, inter
function interaction is given a large importance. Operations
department
communicates with almost all of the departments, either
directly, or indirectly.
The flow of information, as elaborated below, which leads to
decision making at various steps
will help in better understanding communication between
operations and other departments.
The whole cycle starts with marketing team taking the
requirements from the consumer by
market research. This survey goes to the planning team which
releases monthly production planfor the operation department.
Operation department then prepares a daily plan and communicate
the same to procurement/store department for raw material.
Operation team further interacts with
the Quality team for ensuring the quality of the raw material
and also for quality feedback of the
final product. All this communication happens through MRP
software and everything is
documented also. Interaction of Human Resource department with
operations is something
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which is there in every firm. And operation also interacts with
Finance department to analyze the
financial impact of any technological change which they plan to
bring.
Operations and strategic decisionsOperation has been the
backbone of a lot of the strategic decisions taken by the
company.
Company has decided to set up a new and advanced manufacturing
line of almost double the
current capacity at Biwari Rajasthan. This is being done
primarily to have advanced
manufacturing techniques to meet ever increasing demand of the
product in the industry and to
attain a competitive edge with high quality product. Company
also launched a marketing
campaign based upon their operational edge. They highlighted the
clarity of their glass which is
also their USP because of their manufacturing process. Company
thrive to achieve operational
excellence and to be class apart in terms of manufacturing
process from the competitors. SGGI
has been continuously using its world class operational
processes to rope in more and more
customers. Since glass is a high involvement product, SGGI
ensures that it gives customers
enough reasons to choose their product as compared to the
competitors. For this, they arrange
field visits for potential customers to make them cognizant of
the product they are buying and it
becomes difficult for the customer to refuse the order after
seeing the world class manufacturing
process. Company also tries to bring down its bottom line
thereby increasing margins by
operational excellence. Incorporating processes such as lean
manufacturing, six sigma, poka-
yoke, Jishu-Hozen, the operation team has tries to reduce all
the mudas and achieve the same
quality at a lower price level. There has been a considerable
improvement in the productivity
level due to these efficient operational principles adopted by
the company. By now, it has beenwell established that operations
form an integral and inseparable part of the strategic decisions
of
the company.
Process DesignManufacturing glass needs a continuous process set
up and this is what company has established.
The production is done on an assembly line. A brief overview of
how glass is manufactured
would help in further clarifying why continuous process design
is used with an assembly line.
The glass manufacturing process comprise of various steps which
can be better understood with
the help of the following block diagram.
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Lets understand the processes cited in the above mentioned block
diagram from an operational
point of view.
The raw material procured for the manufacturing process includes
Sand, soda Ash Dense, calcite,
dolomite, silver Nitrate, metal Oxides. Company has followed
vertical integration for most of
these raw materials. The company has its own sand mines in Hosur
from where the sand of a
high quality is transported to SGGI unit in Chennai. The sand is
processed also at the facility at
Hosur itself. For Dolomite also, SGGI has its own Dolomite
processing unit located in Chennai
itself. Dolomite is processed and delivered to SGGI from the
Dolomite processing plant. Other
chemical raw materials are procured from various vendors and
used in the manufacturing
process.
These materials are mixed in the required proportion and are
melted in a furnace where
temperature reaches a maximum of 1600 degrees. The color of
glass is also controlled in this
step by adding various colorants to the mixture. The furnace is
lighted by Heavy Fuel Oil (HFO)
which is stored in large fuel tanks in the company premises
itself. The furnace will stop and will
become dysfunctional in case the fuel supply is interrupted. So
a considerable amount of
inventory is maintained for fuel. (The exact details cant be
furnished because of the policy
reasons)
From furnace, the molten sand reaches the forming area where the
solidification process happens
over a tin bath. Liquid silicon is poured over molten tin and
since these two dont mix with each
other, the molten glass cools and takes raw shape over here. The
thickness and width of the glass
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being manufactured for any particular run is controlled in this
step. Temperature over here is
controlled using electric heaters. Here also, supply of
electricity becomes very critical. For this
purpose, company has direct power line from TNSEB supplying
uninterrupted power. In case of
a power failure, Diesel Generators are also there for backup
purposes.
Glass leaves the Tin bath and goes for annealing purposes in the
Annealing Lehr after this. Thisis the zone where glass is cooled in
a controlled manner and the desired qualities such as tensile
strength etc are induced in it. This zone has coolers which blow
air over the glass at a fixed
temperature in order to cool it in a gradual manner.
After the annealing process, the glass goes to the inspection,
testing and cutting area. This area is
known as the Cold end. Here in, the glass sheets are inspected
for any defects which may have
arisen during the manufacturing process. This is done by a
laser. The cutting operation also
happens in this area and the glass is cut into the desired
sizes, is stacked into racks and sent to
warehouse. Product mix is decided in the cold end area for any
run. The decision of what all
sizes to manufacture is taken by the operations team with the
planning department.
Having a broad idea about how the process of manufacturing the
glass is accomplished, it
becomes easier to understand why continuous manufacturing
process is used in the production.
Following points will make this selection clearer
1. The quantity which is to be manufactured is large enough so
as to have a continuousproduction line economically
2. Since there is a very long period for which one run is there,
the variety to bemanufactured is comparatively less. Hence,
continuous production line becomes even
more viable option.3. Glass manufacturing is a very
sophisticated and highly automated process. It isimpossible to
manufacture this kind of product without an assembly line
manually.
4. Furnace once lit cannot be stopped for whole of its life.
Hence the process has to becontinuous in order for furnace to stay
lit.
Demand Forecast
Glass production being a continuous process, the production has
to be forecasted with aconsiderable level of accuracy. At SGGI, the
shift people get the production plan which tells
them how much they have to produce. The production of glass is
measured in tonnes. Lets work
out bottom-up to understand how the production forecast is done
in SGGI. The operations team
gets a daily demand plan from the planning department. This
daily demand plan is broken into
shift plan. This is done keeping in mind the maintenance
activities if any in any particular shift.
If there is any maintenance going on in any particular shift,
then that shift is allotted
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comparatively lesser work load. The planning department gets a
forecast from the sales and
marketing team who are the guys closest to the consumer and
knowing inside out of the market
scenario. Planning department gets a yearly demand forecast
(which is not to the nearest tonne)
which they try to fit into various months and weeks depending
upon the variants of glass to be
manufactured. A point to be noted here is that it is not the
case that the marketing team gives
demand forecast once in a year and then stays aloof from the
planning team. There are three
teams involved in this forecast process- Marketing team,
Planning team, Warehouse team.
Warehouse team is involved to give an account of the current
inventory in the warehouse and the
product mix also. Based upon these inputs, the planning team
decides how much has to be
produced and what is there in the inventory.
The sales and market team has the job of predicting the next
years sales and conveying the same
to the planning department. The glass market is primarily of two
types-
1. Regular market2. Forced market
Regular market is constituted of the regular costumers like
processors, construction houses etc.
They have their own set of forecast based upon which they
predict the materials which they
need. Marketing team takes in the demand from them which serve
as one part of the forecast.
Second is the forced market. This is the market which is not
comprised of regular customers.
Here in, the sales are more via push method. For this market,
the forecast is done by the
marketing people with experience coupled with industry and
competitors analysis. Saint-Gobain
is a renowned and well established brand in flat glass market in
India. So, market analysis-
market growth as well as competitor analysis- serves as a good
method to predict the sales level
for SGGI. Moreover, there is an internal market also. SGGI has
mirror, coater and automobileglass manufacturing units also. Hence,
the sales of these divisions are also predicted and based
upon the same; the production plan is made and given to the
operations department.
LayoutThe layout which we observed in the plant was product
layout. Since the company is into
manufacturing lesser variety, large volume of product, this kind
of layout is the most beneficial
one. A product layout benefits in lowering the cost, increasing
the productivity and increasingthe yield of a process in case of a
lower variety and a high yield product. The company has two
float lines manufacturing glass and each has a capacity of 800
odd tonnes per day. Since the
volume is very high, product or batch layout is rules out
completely. And the flow of the product
is unidirectional which makes it even more beneficial to have a
product layout. The line is a
straight one with furnace on one end and stacking operation
happening at the other end. We
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found out that the layout which has been selected for the
process is the most efficient and perfect
one. There is no scope of improvement in this particular layout
as was observed by the group.
Capacity planningThe capacity for the plan is done keeping in
view the demand and the production plan. Since it is
a continuous process, and because of technical intricacies,
there is a minimum level of pull
which has to be maintained during the process. The capacity
planning is done while the set up of
the plant once as to ascertain how much is the maximum output
that can be obtained from the
plant. For this, a market analysis is required. Based upon the
demand which can be generated, the
capacity of the plant is set. Then based upon the production
plan, the plant is operated at various
levels of this capacity. In a glass manufacturing unit, capacity
is restricted by various factors
which include-
1. Range of thickness of the glass to be manufactured2. Width of
the glass to be manufactured3. Size of the furnace.4. Length of
annealing Lehr5. Size of warehouse.
These are some of the specifics in case of the glass industry
which are to be taken into
consideration while planning capacity of a plant.
Inventory ManagementInventory in any unit can be of 3 types.
1. Finished goods2. Work in progress3. Raw materials
In SGGI, handling inventory is a very laborious and important
task. There is a very heavy
volume of inventory which is to be managed. Since the process is
a continuous one, there is a
heavy stock of raw material which is needed to be maintained.
Certain raw materials have a lead
time as high as 6 weeks while certain others have a lead time as
low as 1 day. With a raw
material range as high as this, it becomes very difficult to
manage the same. SGGI manages its
inventory using ITES. It has SAP implemented for inventory
management purposes. The raw
material stock has been assigned a minimum level, and SAP
prompts to order the raw material as
soon as the inventory level goes below the prescribed level.
Since SGGI cant take any chances
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related to the supply of raw materials-life of furnace is
directly dependant on it- there is a
considerable level of inventory which is maintained as far as
raw material is concerned.
The inventory of finished goods is needed to be handled is
highly fragile and is needed to be
handled with care. The finished goods are stacked in the
warehouse and FIFO is followed while
dispatching goods. A wide variety of products is needed to be
present in the warehouse. Theproduct mix includes variety according
to size, color, thickness, clarity etc. It becomes essential
to be able to trace a particular product whenever the same has
to be dispatched. SGGI does the
same with a considerable level of accuracy using bar codes on
the glasses that are stacked. A bar
code is assigned to a particular rack and the same is recorded
in the central warehouse system.
This barcode is generated corresponding to the particular
variety of the glass and it contains all
the relevant information about the particular glass. When a
particular variety is required, the
system generates the barcode number meeting the specifications
along with the detail as to where
the glass is placed. The system also makes relevant entries when
the glasses are dispatched and it
no longer show that particular barcode available in the
warehouse. WIP is also glass only. The
only difference being that this includes the glass which has to
go to mirror and coater plant.
Since there are certain process requirements, the glass to be
supplied to coater is stacked in a
dehumidification chamber from where it is dispatched to the
coating unit as and when required.
The methodology of locating a glass sheet is same as has been
explained above.
As far as material handling devices are concerned, material
handling has been outsourced by
SGGI. There are fork-lifts, overhead transmission devices,
cranes and various custom made
equipments for the handling the material in transit. Conveyor
belts are used to transport raw
materials from source to destinations. A small amount of manual
labor is also involved in
stacking smaller size of glass.
Just in Time practicesImplementing Just-In-Time practices is
next to impossible in case of a glass industry. The
manufacturing process is highly sensitive to raw material
availability. Even a single days
shortage in supply of raw materials can be fatal for whole of
the plant. Hence, procurement of
raw materials in a JIT format is out of question. On supply side
also, an ample amount of stock
has to be maintained since the orders which they supply are of
JIT nature. In simple words, they
have to supply on a JIT principle to various customers for which
they need to keep a large stock.
Moreover, the process is such that it is not possible to
manufacture any variety of glass after any
other variety. There is a proper sequence which is to be
followed. It is not feasible to
manufacture 2.1 mm glass right after 8 mm glass. But the
requirement of 2.1 can come while 8
mm run is going on. Hence, keeping a large stock becomes very
important since the volume of
order which comes is also high. Thus it is pretty clear that JIT
is not possible to be implemented
in this particular industry.
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FutureThe future of SGGI seems to be really bright. It is
setting up a plant in Biwari now. This has
been done in order to have presence in north as well as to cut
down on the transport cost which
they had to incur as freight while sending glass from Chennai to
northern part of India. This will
also increase their capacity which in turn would lead to a
greater top line. The company isinvesting hugely in training its
resources in various operational programs like six sigma
training,
TQM training etc. This has given them an operational edge over
their competitors and
operational excellence has become their USP now. It has made
inroads into many businesses
where their competitors had a strong hold earlier. Hence, Saint
Gobain Glass India Ltd is on an
upward curve and is growing really fast in the wake of booming
economy in India.
