Final Consulatncy

7/28/2019 Final Consulatncy

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Instructors Team Members

Project Supervisor (MSD) :Mr. Najaf Yawar

Director

Project Coordinator (MSD) :Mr. Hassan Raza

EMBA- Program Lead

Project Supervisor ( ORIENT):

Mr. Kashif Shareef Production Manager

Ahmed Waqas1201-EMBA-09

Nuzhat Jahan1214-EMBA-09

Faheem A. Hameed1203-EMBA-09

Farhan Ahmad1204-EMBA-09

Consultancy Project



Table of Contents

EXECUTIVE SUMMARY .......................................................................................................................................................... 3 COMPANY PROFILE .......................................................................................................................................................... 4

V IS ION ..................................................................................................................................................................................... 5 M ISSION .................................................................................................................................................................................. 5

COMPANY M ANAGEMENT ............................................................................................................................................. 5 M IAN MUHAMMAD FAZAL CHAIRMAN O RIE NT GROUP OF COMPANIE S ........................................................... 5 M IAN T ALAT M AHMOOD FAZAL MANAGING D IR EC TOR ........................................................................................... 5 M IAN AHMED FAZAL EXEC UTIVE D IR EC TOR ............................................................................................................... 6 M IAN ZUB AIR FAZAL D IR EC TOR PHOTO D IVISION .................................................................................................... 6 M IAN AB DUL R EHMAN TALAT D IR EC TOR MAR KETING ............................................................................................ 6 MR . HOMAEER W AHEED D IR EC TOR OPER ATIONS ...................................................................................................... 6

MANDATE ................................................................................................................................................................................... 8 DELIVERABLES.......................................................................................................................................................................... 8 FIELD WORK (STARTING POINT) ....................................................................................................................................... 8 CAPACITY LIMITATION ........................................................................................................................................................ 8 REDUCTION OF WASTES ....................................................................................................................................................... 9

MATERIAL WASTE: .................................................................................................................................................................... 9 E NERGY WASTAGES................................................................................................................................................................... 9 TIME STUDY............................................................................................................................................................................... 9

FINAL WORK DIRECTION ..................................................................................................................................................... 9 METHODOLOGY ADOPTED ................................................................................................................................................ 10

ASSEMBLY LINE BALANCING................................................................................................................................................... 11 ERGONOMICS....................................................................................................................................................................... 11 WORK FATIGUE ................................................................................................................................................................. 12 SOLUTION... .......................................................................................................................................................................... 12 USE OF HUMAN BODY.............................................................................................................................................................. 12 ARRANGEMENT OF THE WORK PLACE...................................................................................................................................... 13 DESIGN OF TOOLS AND EQUIPMENT......................................................................................................................................... 13

OPTIMIZATION MODEL ....................................................................................................................................................... 14 WORK MEASUREMENT QUANTIFICATIONS ................................................................................................................. 16 BALANCING THE LINE AND SYNCHRONIZATION ......... ........... .......... ........... .......... ........... .......... .......... ........... .......... 19

BALANCING LINE...................................................................................................................................................................... 19 LINE SYNCHRONIZATION ......................................................................................................................................................... 19

Performance (Testing) loop Capacity............................................................................................... 19 EMPLOYEE MOTIVATION THROUGH INCENTIVE SCHEME FOR PRODUCTIVITY IMPROVEMENT .......... 21 WORK ENVIRONMENT ......................................................................................................................................................... 27

TEMPERATURE ......................................................................................................................................................................... 27 VENTILATION........................................................................................................................................................................... 29 LIGHTING ................................................................................................................................................................................. 30

PREVENTIVE MAINTENANCE ............................................................................................................................................ 32 ADVANTAGE OF PREVENTIVE MAINTENANCE.......................................................................................................................... 32

OBSERVATIONS AND RECOMMENDATIONS:................................................................................................................ 35 REFERENCES ........................................................................................................................................................................... 36



EXECUTIVE SUMMARY

Being student of EMBA in Management science department of GC University, doing a

consultancy project is a mandatory aspect of this program. Students are supposed to

search and work with an organization with whom they can tackle with real life problems. The idea is to give EMBA students a flavor of issues that people in industry

face on day to day basis and learn how to find a solution for them.

Keeping the above idea in mind, we took out consultancy project with OrientElectronics. The task assigned to us was to improve the efficiency of their Air

Conditioner assembly line and identify and reduce any wastes. The project falls into the

category of ―Operations Management‖.

We used the methodology of work study which comprises of two aspects. 1st is Method

Study (simplified work method) and 2nd

is Work Measurement (Standard Operationstime). We gathered and data and quantified the activities performed by the workers on

the assembly line. Once done, we found out there are places at which the line is not

balanced. We gave recommendations for balancing the assembly line. This will not only

increase the output of the Assembly line and Work force line to reduce manpower andcost.

We also calculated the optimum performance of the system without any stress.According to that system was able to generate 90 units per hour. The statistics reflects

that currently they are producing 72 units per hour. We devised an incentive plan for the workers by which each worker will get benefit if the production level rises to

certain limits.

Last we also studied the process of their maintenance teams and figured out lack of

documentation and slow response. We gave certain recommendation that help inimproving the response time. Secondly we worked on preventive maintenance routine

which needed to be carried out so a lot of break down can be avoided before they

happen during the production and cause wastage of time and resources.

We have studied various aspects of Lean Manufacturing at Orient’s assembly plant and

identified various areas where our client can make the significant improvements andenhance the effectiveness of their resources and achieve the optimum output.

In the growing competition of Home Appliance industry, many new entrants are making

their mark, so in order to get the competitive advantage over its competitors, they

should accelerate their efforts to achieve the standard of excellence in operational areasand quality. They should also strengthen and rejuvenate their operations & systems for

the efficient use of the resources for sustainable growth and maintaining their position

of market leader.

Summary



COMPANY PROFILE

Established in Lahore in 1957 with Photo Goods Business, today the Orient Group of

Companies is one of the largest consumer goods companies of Pakistan. In 1975, the

company launched its imports division. With hard work, excellent services, honesty and

strongly integrated business ethics, the imports business grew consistently and resultedin the formation of M/S Orient Enterprises.

In 1983, Orient Enterprises became a private limited company, and established minilabs all across the country. In 1985, Orient Group of Companies began marketing and

distributing various products nationwide. By sheer hard work and diligence, today

Orient enjoys a remarkable reputation throughout the nation.

Today, Orient Group of Companies is the sole distributor of the world’s most renowned brands like Mitsubishi Air Conditioners, Samsung Home Appliances & Samsung

Consumer Electronics. Orient also offers Mitsubishi Electric Mr. Slim air Conditioner,

which is the only 100% Japanese imported brand in Pakistan.

Orient Group of companies has also diversified into manufacturing by assessing

consumer insights & preferential trends. Orient Group of Companies also manufacturesan exclusive range of state of the art products like air conditioners, refrigerators,

microwave ovens water dispensers and vacuum cleaners.

The products are manufactured and assembled at the state of the art establishment at

Multan Road, just 26 kilometers away from the Lahore city centre. It comprises of the

manufacturing plant; corporate and sales offices, warehouses, and assembly line for allits products. The factory not only manufactures all of Orient Group of Companies’

product range, but also assembles Samsung air conditioners, televisions, home theatres

and Mitsubishi air conditioners on location. The Orient Factory is completely

automated and has incorporated a proprietary SAP ERP solution to meet its operationaland functional demands.

Product NaIntroduction

Introduction



The Orient Factory is completely automated and has incorporated a proprietary SAP

ERP solution to meet its operational and functional demands.

Vision Our vision is to be the leading provider of consumer electronics & in Pakistan. We aimto become the number one name in customer care and to deliver our best to the nation.

MissionOrient Group of Companies will achieve its vision

By keeping keen consumers insight

By assessing changing preferential trends to stay ahead of its competitors

By developing a loyal and steady consumer base through unparalleled service andcare

By implementing aggressive sales strategies through heavy promotions

By introducing cutting edge innovations in technology, ultimately improving the

lives of its consumers

COMPANY MANAGEMENT

Mian Muhammad Fazal

Chairman

Orient Group of Companies

Mian Talat Mahmood Fazal Managing Director

Mian Talat Mahmood Fazal is the Managing Director of Orient Group of Companies.

With over 30 years of experience in the consumer electronics business, Mr. Talat

Mahmood Fazal is a strategic thinker with an eye towards the bigger picture. As the

captain of the ship, he has steered Orient Group of companies through the tides of time.

Under his guidance and leadership, The Orient Group of companies has transformed

into one of the largest consumer electronics group in Pakistan.

Introduction



Mian Ahmed Fazal Executive Director Mian Ahmed Fazal is the Executive Director of the Orient Group of Companies. A

target driven mind, Mr. Ahmed Fazal keeps a keen sight towards the current and future

trends, and technological advancements, all the while setting challenging deadlines and

creating a benchmark for excellence that is shaping Orient Group of Companies as one

of the leading names in the business. He is particularly instrumental in automating the

Sales module of Orient Group of Companies with the current state of the art proprietary

ERP (SAP), thus channelizing the sales infrastructure that has efficiently streamlined

the revenue generation for the company.

Mian Zubair F azal Director Photo Division Orient Group of Companies began with the Photo Goods Industry. Even after 50 years,

and many divisions, the photo business remains very near to its core. Mr. Zubair Fazal

oversees the state of the art photographic business of Orient Group of Companies. Now

with the partnership with Samsung electronics, the innovative range of Samsung

photographic appliances are now part of the of the Orient’s family of products , being

managed brilliantly by Mr. Zubair Fazal

.

Mian Abdul Rehman Talat Director Marketing

Coming from the world of Information technology, Mr. Abdul Rehman Talat is arelatively new entrant in the consumer electronics business. However, with a tech savvy

background, this field is right up his alley. No company today can survive without an

integrated marketing strategy, especially using digital media to create user awareness

effectively and Mr. Abdul Rehman’s creative ideas in this regards are paving the way

for the Orient Group of Companies’ b right and shining future.

Mr. Homaeer Waheed Director Operations

Mr. Homaeer Waheed is the backbone of Orient Group of Companies’ ever expandingenterprise. Whether it be tackling administrative matters, managing the human and

technical resources, procurement of the best materials for manufacturing, channelizing

distribution, Mr. Homaeer Waheed has ensured a robust operational infrastructure that

lies at the core of Orient Group of Companies’ well oiled business machine.

IntroductionIntroduction



Mandate & Deliverable



Mandate

Productivity improvement on Air conditioners Assembly Line for Efficiency improvement andProcess improvement through Time Balancing.

Deliverables

To Identify Process Losses on the Assembly Line.

To identify Man and Machine Idle Times.

To identify Material Wastes.

To present Workable Solutions for the Balancing of Assembly Line and improve the overall performance of manpower and enhance the productivity of Resources.

FIELD WORK (STARTING POINT)

We started with visiting the Orient plant and we were appointed on the productivity enhancement of the

Air Conditioner assembly line. We observed all the stepwise processes through which an AC undergoes

to take the form of final product. Orient manufactures Split-type Air Conditioners which are in 2 separate pieces.

1. Indoor Unit

2. Outdoor Unit

Both the units are separately built on 2 different conveyor belts. They have altogether separate mechanism

and process flow. Our 1st task was to identify the system capacity and which process is exactly definingthe system hourly production rate.

Capacity Limitation

In the assembly of the outer unit of AC, there is a loop named as Vacuum loop on which there are 22

stations on which vacuum pumps are mounted. While moving on the assembly line, each unit has to go

through one of those stations so as to vacuum all the air inside the compressor and that later can becharged with the coolant.

Now that vacuum loop serves as the technical limitation of the hourly production that cannot be exceeded

more than a certain limit. The maximum speed that can be used it 15 min/revolution which is a minimumtime in order to essential create a vacuum in the compressor. Any less time will effect the performance of

the system.

Mandate & Deliverables

Reduction of Wastages



Hourly Vacuum Loop Capacity

Standard Time to Vacuum 1 unit 15 Min

No of Stations in the loop 22

No of complete rotations for loop in an Hour 60/15 =4

Total number of units in Hour 22*4=88

Reduction of Wastes

Material Waste:Since these are CKD and SKD unites and all components are in finished forms, so no such wastes are

applicable in case.Incase of any damaged parts, these are replaced by supplier

Energy Wastages

(A) Electricity…… We have observed, during lunch breaks, most of the lights and fans kept running (B) Compressed Gas…….Many connections were found leaking (specific places)

Time Study

We did ―Time study‖ with two aspects;

In order to identify the idle times, we observed work time on each workstation for each unitincluding waiting time and transport time.

In order to study the possibility of reducing the time or manpower on line, we observed theactual time being spent on each unit by each worker.

Final Work Direction

Considering the time frame and recommendation of supervisor of our project, we selected towork on Indoor unit’s assembly line.

Methodology



Methodology Adopted

Fig – I: Relationship between Method Study and Work Measurement

An Assembly line is a form of mass production where components are added in a specific, efficient

order to create a finished product at the end of a line.

The most basic assembly line consists of a simple conveyor belt which carries the products, through a

series of work stations until it is finished.

Henry Ford found this system of moving assembly lines for Mass Production and produced cars quickly

and efficiently; so efficiently that it considerably lowered the cost of assembling the cars.

The development of the assembly line revolutionized manufacturing, and contributed to the substantial

fortunes of several major players in the Industrial Revolution.



Fig – 2: First moving Assembly Line at Ford Motor Company 1914

Assembly Line Balancing

Line Balancing and Work Cell Balancing is an effective tool to increase the output of the Assembly line

and Work Cell line to reduce manpower and cost. Assembly Line Balancing is nothing but the Simple

Line Balancing is the calculation of assigning works to workstation alongside an Assembly Line.

ERGONOMICS

Study the Impact of Fatigue and Optimizing Productivity of an Assembly Line

Abstract — Improving productivity is one of the main concerns of every industry. This report provides theidea how productivity levels changes at different time during normal working hours in apparel industries.

There are many factors which act as obstacles to higher productivity. Unskilled workers, physical fatiguefrom extended working hour without rest, misplacement of worker at workstation, lack of training, lack of knowledge, awareness are few factors related to worker which directly affect the productivity.

Ergonomics



WORK FATIGUE

Fatigue lowers average productivity, measured as output per worker hour, for almost all of the industries.

As the overall daily performance of each worker is not same and the change in their performance defer

from one worker to another worker bottleneck creates in the assembly line.

During the investigation attention is concentrated on how physical fatigue of workers influences the daily

production rate and how to optimize the productivity.

The term "ergonomics" is derived from two Greek words: "ergon," meaning work, and "nomoi," meaning

natural laws. Ergonomists study human capabilities in relationship to work demands.

In recent years, ergonomists have attempted to define postures which minimize unnecessary static

work and reduce the forces acting on the body. We can significantly reduce worker’s fatigue and

strain on muscles if we follow the following ergonomic principles:

SOLUTION

The principles of motion economy can be classified into three groups:

1. Principles related to the use of human body,

2. Principles related to the arrangement of the work place,

3. Principles related to the design of tools and equipment .

Use of Human Body

The two hands should begin motions at the same time. The two hands should not be idle at the same time except during rest periods.

Motions of the arms should be made in opposite and symmetrical directions and should be madesimultaneously

Hand motions should be confined to the lowest classification with which it is possible to perform the

work satisfactorily:

1. Finger motions

2. Wrist motions3. Forearm motions

4. Upper arm motions

5. Shoulder motions

Momentum should be employed to assist the worker whenever possible, and it should be reduced

to a minimum if it must be overcome by muscular effort.

Smooth continuous motions of the hands are preferable to zigzag motions or straight-line motions

involving sudden and sharp changes in direction.



Arrangement of the Work Place

There should be a definite and fixed place for all tools and materials.

Tools, materials, and controls should be located close in and directly in front of the operator. Drop delivers should be used whenever possible.

Materials and tools should be located to permit the best sequence of motions.

Arrange the height of the workplace and chair for alternate sitting and standing, when possible.

Provide a chair of the type and height to permit good posture.

Design of Tools and Equipment

Combine tools whenever possible.

Preposition tools and materials.

Where each finger performs some specific movement, the load should be distributed in accordance

with the inherent capacities of the fingers. For light assembly, a screwdriver handle should be smaller at the bottom.

Momentum should be used to help the worker in doing their task not to increase their task.

Optimization Model



OPTIMIZATION MODEL

It is developed based on the overall daily performance of each worker. Due to the physical fatigue of

worker, performance of worker changes with time and the label of performance of each worker do notremain same.

Assumptions are continuous flow of material through the assembly lines, efficient workers are placed at

bottleneck points where bottleneck point’s workers are placed at less processing time taken operation’s

and can do that operation at its own efficiency, replaced bottleneck point workers have the capability of

reaching the line target at 100% efficiency or more, one workstation can be half, one or a group, there is

no effect on performance due to change in weather, variation in working environment, no effect of fatigue

of data collector in collecting whole day data.

At first by using stop watch, the observed processing time and average processing of each operation has

been obtained. Standard processing time of each operation is considered as factory standard. Then using

average processing time of each operation of each time segment, the performance of individual worker

has been found. Standard processing time of each operation is different. Then workers are assigned

randomly at different workstations without considering their level of performances. Number of workers at

each workstation depends on standard time of the corresponding operations.

Then identify bottleneck points based on more processing time taken operations. The efficient workers are

placed at bottleneck point where less efficient worker occupied by less processing time took operation.

Then again the new bottleneck points are identified and the process is repeated until decreases the

assembly line efficiency as well as increase the processing time at bottleneck points.

The production capacity of each workstation of each time segment has been calculated based on

processing time of bottleneck points. Then excess capacity has to remove by releasing inefficient worker

or increasing capacity or distribute works as well as balancing assembly line.

Un-necessary workers increase the production cost and the workers have no contributions in improving

production capacity. Finally the optimum production capacity, loss due to fatigue, line utilization and line

efficiencies are calculated. In the following figure 1, shows the steps necessary for optimizing

productivity.



Figure 3: Steps for optimizing assembly line productivity

Steps



WORK MEASUREMENT QUANTIFICATIONS

We performed the time measurement of each activity performed by each worker in different times of theday’s i.e. morning, afternoon and evening.

We collected 20 different samples at different timings and different dates and finally took an average of

all the values so as to remove any discrepancies. Following below is the sheet we produced on which we

made further recommendations.

No

Process DescriptionWorker

Name

Readings (seconds)

Comments

1st 2nd 3rd 4th

5thAvg.

time

1

Putting Unit on assembly lineand removing card box from

the unit.

Qaiser 9 6 9 6 8 7.6 This work

can be

done by a

single person2

Getting pallet board from downlane and adjusting it on the top

M. Ishfaq 7 7 13 6 8 8.2

3

Hold unit and rotate it on Z-

axis. Cut the tape with blade.

Put the remote and pack of screws in the box and remove

tape

Shoaib 19 13 24 25 24 21

4

Take off packing material and

put it in box and take the

mounting plate out from the packing and put it on top of

Box and remove tapes

Nasir 12 11 12 13 15 12.6

5

Holding unit box and putting it

on the separate pallet. Remove

plastic cover and put it in box

and remove tape from his side

Khadim

Bhutta19 18 23 16 12 17.6

6

Hold unit, remove top part, putthe drain assembly and air filter

in the box, Unscrew 2 screws.

KaramatAli

20 22 25 16 22 21

7

Hold unit and remove 6 screws

help removing top part of unitM. Naeem 30 16 29 16 16 21.4

Work Measurement Quantificatio



8

Pick the thermo sensor andtake it to separate table where

evaporator placed. Fit the

sensor with evaporator

Ali Nazir 26 18 16 20 25 21

9

Fit blower and remove the

motor cover and pasteassembly card on the box

Amir

Waqas25 23 24 18 21 22.2

10Evaporator Fitting andadjusting it in the unit.

NaeemAhmad

16 15 16 16 12 15

11

Motor fitting into motor cover

and putting /fixing it back in

the unit

Shaukat

Iqbal27 25 28 22 24 25.2

12 Put in 4 screws

Nasir

Mehmood15 14 13 13 10 13

13

Adjusting jig to balance the blower, screw in 3 screws and

put a small side cover

M. Faryaad 19 24 21 15 24 20.6

14

Fit the electrical panel and

adjust the motor wiring

connection as well as LCDconnection

Ishtiaq

Hussain20 19 23 27 18 21.4

15

Fit the drain assembly and fitthe connection of air loover

and adjust LCD panel

Ghulam

Rasool22 18 17 17 14 17.6

16

Adjust cable and connect inearthing wire and screw in 1

screw

Abid 32 27 29 33 30 30.2

Max Value

referencefor line

balancing

17

Connect thermo sensor wireand adjust emergency ss

witch. Also put the electrical

panel cover

Basharat 30 25 25 26 24 26

18

Check the earthing by

clamping unit to computer toverify the short circuit test

Saad Sohail Machine was out of order

19

Clamp power cable and

perform the resting and check

voltage, watt and Amperes

Ahsen 25 27 28 30 25 27

20

Put the top of unit back on the

body and put tape on the sides

to seal

M Shakeel 11 12 20 14 17 14.8

21

Screw in 3 screws and fit the

cover of LCD and electrical panel

Imdaad Ali 15 14 15 16 15 12



22

Put 2 screw clips

1 cover clip1 Air filter

Adeel

Malik 22 16 16 14 16 16.8

23Putting the 3 tapes to seal the body

Javaid Iqbal 20 18 20 20 19 19.4

24 Clean unit with cloth M Bilal 12 18 14 18 18 16

25

Final inspection and note Bar code on the assembly card and

remove assembly card from the

unit

M Usman 13 14 16 15 20 15.6

26

Put the cover sheet back on the

unit and put 2 side packingmaterials

M Iqbal 22 24 23 25 25 23.8

27

Put the wall mounting plate inthe packing and make/rotate

unit vertical and put inside card

box

Tasneem

Nawaz25 25 26 27 25 25.6

28

Tape the plastic cover and putremote control in packing ,

rotate unit vertically and putthe unit in the the box

Shahnawaz 22 20 21 23 24 22

29

Moving pallet to down lane

and moving unit forwards to packing machine

Mohsin Ali 22 13 16 15 12 15.6This work

can be

done by asingle

person30

Rotate box and adjust the striprole machine to put the strip on

box

Ahmad

Freed10 11 12 11 14 11.6



BALANCING THE LINE AND SYNCHRONIZATION

Balancing line

From the above work measurements we identified that there are a total of 30 workers in the line and the

maximum time taken by any activity is 30 Seconds. So in order to balance the line, we have to assign

each worker amount of work that is either equal or close to 30 seconds so all workers work in a balanced

line.

We identified 2 instances in the above table when 2 adjacent workers jointly working less than 30

Seconds and we recommended that the work of those 2 workers can be performed by an individual guy. It

saves 2 resources and line workers reduces from 30 to 28 without affecting any quality or time delays.

Line SynchronizationPerformance (Testing) loop Capacity

Current time set for the 1 complete cycle 20 Min

Number of working Stations in the loop 38

No of Complete rotations in an hour 60/20=3

No. of units that can be handled in 1 Hr 38*3=114

Note: We know that feed for the performance loop is coming from vacuum loop whose maximum

capacity is 80 units/Hr.

Balancing the line

Balancing the line



So we need to reduce the speed to optimize the solution

Proposed time set for the 1 complete cycle 25 Min

Number of Stations in the loop 38

No of Complete rotations in an hour 60/25=2.4

No. of units that can be handled in 1 Hr 40*2.4=91

We can see, even reducing the speed to 25 min, still we can handle 91 units in the performance loop.

The above work measurement table also gives us the optimum speed of work that can be done on the line

if there is no maintenance or unforeseen issues arise.

Below are the calculations for the optimum output for the indoor assembly line.

Max Activity time by a worker in line : 30Sec

Total time to make a unit in line :576 Sec = 600 Sec

600 Sec = 10 Min (Activity time)

We assume (including 10% tolerance) 10 Min for transport and wait time so time to make a

single unit by a single worker: 10 + 10 =20 Min

In 20 min 1 unit is producedIn 1 Hour 3 Units are produced

If Orient have 30 workers in line, they should produce (3*30=90 Units / Hr)

Employee Motivation

Balancing the line



The stats which we got from the hourly production sheet are 72 units / Hr.

So in spite of all the push and efforts of strict supervision, the average amount of hourly production is 72.

So we proposed an incentive model for the workers so as to enhance the production to at least 85 units

/Hr.

EMPLOYEE MOTIVATION THROUGH INCENTIVE SCHEME FOR

PRODUCTIVITY IMPROVEMENT

When employees feel valued and appreciated, they do their best to keep their employers pleased with their work. They will work harder, knowing that they have raises, promotions, days off and other perks, in

their future because of it.

The success of any business depends largely on the motivation of the employees. Human resources are

essential to the prosperity, productivity and performance of any company. Motivation is the key to

creating an environment where optimal performance is possible.

Perhaps the most significant impact of increased employee motivation is that of increased productivity.

This is a central aim when adopting an incentive program. If we can increase employee motivation and

high productivity will follow.

To motivate employees to do their best, they should be motivated through incentives and rewards.

During our visits we observed and also confirmed with the several months production record that the

maximum units produced per hour never exceed from 80 units. We mathematically calculated and logical

assumption is that there is still margin of 6-15% increase in production.

We propose that if company offers additional incentive on each marginal unit produced after 80 units,

they should be given incentive @ Rs. 5, however, in case they are able to deliver production beyond 85-

90 units, they should be given incentive of Rs. 10 on each marginal unit produced.

We have prepared a comparative statement of this incentive scheme, that how much contribution margin

(profits) company is going to make even after paying an incentive payment.

Employee Motivation



Proposed Incentive Scheme to Increase the Productivity of

Split Air conditioners at Orient Factory

Assumed Profit Margin per unit (Rs.) 4,000

Number of worker on indoor line 30

Number of worker on outdoor line 55

Number of Maintenance staff 5

Total Workers 90

Current Production units/hour 80

Current Profit margin per day*(Rs.) 3,520,000

*11 working hours

Proposed Incentive Scheme 1 (If per hour production increses to85 unit)

Minimum Incentive to each worker Rs. 5/hour on every additional

unit produced 5

Improved Production per hour 85

Per Day Production 935

Gross Profit per day 3,740,000

Additional Expenses (incentive to workers) per day

Extra Payment to each worker per day (11 x 5 x 5) 275

Amount to be paid to all workers in one day (275x90) 24,750

Net Income (profit minus expenses) 3,715,250

Per Day Additional Profit 195,250Per Week Profit 1,171,500

Per Month Profit 4,686,000

Incentive Scheme 2 (If production increses to 86-90 unit/hour)

Minimum Incentive to each worker Rs. 10 /hour on every additionalunit produced 10

Improved Production per hour 90

Per Day Production 990

Gross Profit per day 3,960,000

Additional Expenses (incentive to workers)

Extra Payment to each worker per day (11 x 5 x 10) 1,100Amount to be paid to all Workers in one day (550 x 1x90) 74,250

Net Income per day (profit minus expenses) 3,885,750

Per Day Additional Profit 365,750

Per Week Profit 2,194,500

Per Month Profit 8,778,000

Proposed Incentive Scheme



0

100,000

200,000

300,000

400,000

Pak Rs.

Incentive Scheme for Workers

Expense vs Profit Ratio

Expense

Profits

Expense 24,750 74,250

Profits 195,250 365,750

Scheme 1 Scheme 2

Expense v/s Profit Ratio



Working

80 units

per Hour

and 11

workinghours Profit

85 units per

Hour and 11working hours

Profit and

subtraction of

Dailyincentive

90 units per

Hour and 11working hours

Profit subtraction of Daily incentive

1 3,520,000 1 3,715,250 1 3,885,750

2 7,040,000 2 7,430,500 2 7,771,500

3 10,560,000 3 11,145,750 3 11,657,250

4 14,080,000 4 14,861,000 4 15,543,000

5 17,600,000 5 18,576,250 5 19,428,750

6 21,120,000 6 22,291,500 6 23,314,500

7 24,640,000 7 26,006,750 7 27,200,250

8 28,160,000 8 29,722,000 8 31,086,000

9 31,680,000 9 33,437,250 9 34,971,75010 35,200,000 10 37,152,500 10 38,857,500

11 38,720,000 11 40,867,750 11 42,743,250

12 42,240,000 12 44,583,000 12 46,629,000

13 45,760,000 13 48,298,250 13 50,514,750

14 49,280,000 14 52,013,500 14 54,400,500

15 52,800,000 15 55,728,750 15 58,286,250

16 56,320,000 16 59,444,000 16 62,172,000

17 59,840,000 17 63,159,250 17 66,057,750

18 63,360,000 18 66,874,500 18 69,943,500

19 66,880,000 19 70,589,750 19 73,829,25020 70,400,000 20 74,305,000 20 77,715,000

21 73,920,000 21 78,020,250 21 81,600,750

22 77,440,000 22 81,735,500 22 85,486,500

23 80,960,000 23 85,450,750 23 89,372,250

24 84,480,000 24 89,166,000 24 93,258,000

25 88,000,000 25 92,881,250 25 97,143,750

26 91,520,000 26 96,596,500 26 101,029,500

Days 80 Units 85 Units 90 Units

1 3.52 3.71525 3.885755 17.6 18.57625 19.42875

10 35.2 37.1525 38.8575

15 52.8 55.72875 58.28625

20 70.4 74.305 77.715

25 88 92.88125 97.14375

Days Diff 85 - 80 Diff 90 - 80



1 0.19525 0.36575

5 0.97625 1.82875

10 1.9525 3.6575

15 2.92875 5.48625

20 3.905 7.315

25 4.88125 9.14375



0

10

20

30

40

50

60

70

80

90

100

P r o f i t ( M i

l l i o n P K R )

1 5 10 15 20 25

Days of Month

Profit Comaparison

80 Units

85 Units

90 Units

0

1

2

3

4

5

6

7

8

9

10

P r o f i t D i f f e r e n c e ( P K R

M i l l i o n )

1 5 10 15 20 25

Working Days of Month

Profit Difference

Diff 85 - 80

Diff 90 - 80

Profit Comparison & Difference



WORK ENVIRONMENT

Now we shall look at three types of physical hazards in more detail:

• Temperature;

• Ventilation;

• Lighting

All of above have an impact on workers’ health and their productivity, therefore, require a variety of

control mechanisms.

Temperature

ObservationWe observed that about 20% low productivity after lunch hours was observed on hourly basis. Following

are the random dates when this data was collected:

17-05-2011

12-05-2011

21-05-2011

20-06-2011

13-06-2011

11-06-2011

We observed that it was due to high temperature and high humidity which was badly affecting the

performance of the workers and they were slowing down with every passing hour.

During hot and humid season which is peak production season and workers work 8-12 hours shift,

workers face extremes of temperature as part of their daily work and may suffer - fatigue and dizziness; -

- heat stress/strain (distress);

- sweating palms (become slippery); -

- heat cramps;- lower performance/alertness;

Work Environment



A worker’s ability to do his/her job is affected by working in hot environments. One of the most

important conditions for productive work is maintaining a comfortable temperature inside the workplace.

Of course the temperature inside the factory varies according to the season and several methods can beused to address the problem. There are two main ways in which heat (or cold) gets into the factory:

• Directly – through windows, doors, air bricks etc;

• Indirectly – by conduction through building namely the roof, walls and floor.

These warm up through the day as the sun shines and the heat is transferred to the internal environment

often making it hot and sticky for the workers.

There are a number of measures that management can take to try to reduce the sun’s heat from entering

the factory. These include:

Ensuring that the external walls are smooth in texture and painted in a light color to help to reflectthe heat;

improving the heat reflection of the roof;

improving heat insulation of walls and ceilings (investigate the possibility of dry lining walls or adding an insulated ceiling below the roof.

There are a number of basic approaches to tackling heat hazards in factories. All involve reducingexposure by keeping heat away from workers through:

the use of increased general ventilation throughout the factory by openingwindows, by ensuring that air bricks, doors etc are not blocked.

the use of ―spot cooling‖ by the use of fans to reduce the temperature in certain sections of the

factory

The use of air conditioners/coolers.

The use of Industrial size exhaust fans in the assembly hall.

increasing the duration of rest periods;

Whatever method is used to reduce workplace temperature, it is important that adequate supplies of drinks

are made available to workers. These drinks could be lemonade, energile, tang or Qurshi /Rohafza drinksand lemon tea - water alone will lead to muscle cramps.

Work Environment



VENTILATION

It is not only essential to provide a comfortable temperature inside the factory, but also ensure an adequate

supply of fresh air in the working area.

It is important not to confuse ventilation and air circulation inside the factory, air circulation, namely

moving the air around inside the factory without renewing it with fresh air from outside. In the case of air

circulation, fans are placed near workers to improve thermal comfort . In essence this means that you aresimply circulating stale air plus any contaminants around the factory. Ventilation refers to replacing stale

air with fresh air at regular intervals.

In an average workplace, the air needs to be changed between 8 and 12 times per hour and that there should be at least 10 cubic meters of air per worker

.

The general ventilation can be achieved by allowing the free flow of air through the factory from oneside to the other – referred to as horizontal air-flow, this can be achieved by opening doors and windows

and putting more air bricks in the walls to take advantage of any prevailing wind. However it is all too

common to find doors and windows etc., locked for security reasons or blocked with excess stock or boxes of finished goods awaiting despatch. As a result, ventilation is limited.

We think the general ventilation in your factory can be improved with few simple

suggestions that can help:

if you have ventilation systems or free standing fans in the factory, make sure that they increasethe natural flow of air through the factory and not try to blow air against any prevailing wind .

ensure that hot, stale air that rises to the factory roof can easily be removed and replaced withfresh air.

make sure that all fans are well maintained and regularly cleaned so that they work efficiently;

ensure that the air-flow to and from fans is not blocked.

Ventilation



LIGHTING

From the workers’ perspective, poor lighting at work can lead to eye strain, fatigue, headaches, stress and

accidents. On the other hand, too much light can also cause health and safety problems such as ―glare‖

headaches and stress.

Both can lead to mistakes at work, poor quality and low productivity. Various studies suggest that good

lighting at the workplace pays dividends in terms of improved productivity, and a reduction in errors.

Improvements in lighting do not necessarily mean that you need more lights and therefore use more

electricity – it is often a case of making better use of existing lights; making sure that all lights are clean

and in good condition; and that lights are positioned correctly for each task. It is also a case of making the best use of natural light.

Factories have a combination of natural and artificial lighting. However, little attention appears to be paid

on the nature of the work – it is as though all work in the factory requires the same degree of lighting. Aswe will see, this is not the case.

Let us look at some common lighting problems in the factory:

There is also a need to make sure that all windows, skylights, etc., are clean and in the best position to

allow the maximum amount of natural light into the workplace.

Similarly, all lights (and reflectors) in the factory should be well maintained and cleaned on a regular

basis.

It has been known for companies, when the order books are low, to introduce ―energy saving‖ programs

to save costs. In the case of lighting, ―non essential‖ light bulbs may be removed or reduced in number,

flickering fluorescent tubes which need changing are left in place – this proves to be a false economy asquality and productivity fall.

One simple way to improve the lighting levels in the factory is to paint the walls and ceilings with light, pale, matt colors – the use of matt paint avoids reflection of light.

By brightening up the workplace, this helps to produce a more pleasant place to work which impacts on

wor kers’ well-being and, ultimately productivity.

Lighting



The level of light is measured in LUX using a light meter. Unfortunately, few factories or the Labour

Inspectorate have any of these meters. The table below gives an indication of some typical light levels:

Very bright sunny day : Up to 100,000 lux

Overcast day 30,000 : 40,000 lux

Dusk : 1,000 lux

Shady room in daylight: 100 lux

There are a number of general guidelines which can be used for reference. These give recommendations

for the amount of light that should be available for the type of work – for example:

Lighting



For Assembly Shops

Rough Work e.g frame and heavy machine assembly 200 - 300 - 500

Medium Work, e.g., engine assembly, vehicle body assembly 300 - 500 - 750

Fine Work, e.g., Office machinery assembly 500 - 750 - 1000

Very Fine work, e.g., instrument assembly 750 - 1000 - 1500

Minute qork, e.g., watch making 1000 - 1500 - 2000

PREVENTIVE MAINTENANCE

• Preventive maintenance is a schedule of planned maintenance actions aimed at the prevention of breakdowns and failures. The primary goal of preventive maintenance is to prevent the failure of

equipment before it actually occurs. It is designed to preserve and enhance equipment reliability

by replacing worn components before they actually fail and result into Business loss due to production delays. However, it needs a more organized, planned environment

Advantage of Preventive Maintenance

• Reduced production downtime, resulting in fewer machine breakdowns.• Better conservation of assets and increased life expectancy of assets, thereby eliminating

premature replacement of machinery and equipment.• Timely, routine repairs circumvent fewer large-scale repairs.

• Reduced cost of repairs by reducing secondary failures. When parts fail in service, they usually

damage other parts.• Better quality products

• Identification of equipment with excessive maintenance costs

• Improved safety and quality conditions.

• • Preventive Maintenance makes sense• This is a logical choice that considers two conditions

– 1. The component in question has an increasing failure rate.

– 2. The overall cost of the preventive maintenance action must be less than the overall

cost of a corrective action.

Preventive Maintenance



HOW TO DETERMINE THE OPTIMUM AGE OF REPLACEMENT?

The key for a successful PM system

• Scheduling – Should be automated to the maximum extent possible

• Execution – Should be done before the actual break down occurs.

Execution

• The Bath Tub Model – Three stages of new parts

1. Infant morality stage

2. A fairly long run stage3. Wear out stage

• Traditional View according to Bath Tub Model – Replace components just before they entered

wear out stage

Optimum age of Replacement

Optimum age of Replacement



• Traditional view says – Wear out stage = Increased rate of failure.

Since, wear out stage represents increased rate of failure, it be advisable to execute the PM program at this stage

What really should Preventive Maintenance focus on?

• Cleaning Found through testing

• Lubrication and inspection

• And correcting deficiencies

Predetermined parts replacement should be minimal and done only where statistical evidence clearlyindicates wear-out characteristics

Motivating Preventive Maintenance Workers

• Training programs – most effective

• Establish inspection and preventive maintenance as a recognized, important part of the overallmaintenance program.

• Assign competent, responsible people to the preventive maintenance program.

• Follow-up to assure quality performance and to show everyone that management does care.

• Provide training in precision maintenance practices and training in the right techniques and procedures for preventive maintenance on specific equipment.

• Set high standards.

• Publicize reduced costs with improved up-time and revenues, which are the result of effective

preventive maintenance.

• It is an essential part for cost reduction.

• The biggest benefits of a PM program occur through painting, lubrication, cleaning and adjusting,and minor component replacement to extend the life of equipment and facilities.

One of the major reason for frequent down times the absence of PMR (preventive maintenance schedule).

Recommendations



OBSERVATIONS AND RECOMMENDATIONS:

The access to maintenance staff is time taking task. It is recommended to get a permanentresource from the maintenance team so that he will be available in the assembly hall all the

time during the production hours. In case of emergency shut downs, (i.e. chain of assemblyline is broken), staff is difficult to trace. Secondly, once they are contacted, some one from

maintenance departs comes, check the problem and goes back. Then later on he or his

supervisor comes with the tool and start working for trouble shooting.

There are some repetitive faults on the line. Therefore, we recommend the following:

There should be daily and weekly maintenance schedule especially for the peak season whenline is over loaded.

Conveyor belt, its related electric motors, pneumatic guns and others accessories should be

inspected.

There should be dedicated manpower for A/C assembly are especially during peak hours Mar-June.

Each complaint, i.e. mechanical or electric should be fully documented and repetitive issuesshould be addressed on permanent basis.

There should be a separate work order against each maintenance complaint which should bemaintained.

The quality of maintenance service provided should also be observed and feedback from

operations and quality department should be obtained, in order to know the quality of maintenance work.

In conclusion, we can say that efficiency improvement is not single shot game, it is continuous and

permanent process with dedicated efforts & firm commitment by management and employees.

Though our client Orient is one of best performing assembly plant in the Industry. However, still there is

lot of room to perform efficiently and effectively with the given resource and manpower. In Operation

management, 80% of problem & issues can be resolved by making 20% extra efforts and resource. While

only remaining 20% needs relatively higher degree of attention and resources.



REFERENCES

www.betterfactories.org/c

Marriat school of management sciences

Business encyclopedia

Operation Management text Books

International Journal of Scientific & Engineering Research

References

Documents

Final Consulatncy