Operational Challenges in Manufacturing Industry

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- COMPANY OPERATIONAL OBJECTIVES

For any Firm, Objectives in operations should be stated in specific, quantitative and measurable terms which will make them well aware, develop, improve and achieve operational excellence. On these lines, MC Bauchemie framed its own operations objectives and has been consistent in achieving success year after year. The objectives are:

- Optimal / Minimal Cost:

- Best Quality: Raw materials, Advanced technologies, R&D units

- On Time delivery : Wide distribution network and dedicated logistic tie-ups

- On – demand Inventory Management (Oxal product systems, Warehouses, WIP etc.)

- OPERATIONAL CHALLENGES

Any manufacturing unit should have long term sustainability perspective and should always focus on that. MC Bauchemie is always a step ahead to cater the best to the construction industry. Despite of all, Company still faced some challenges in departments / operations namely:

- Capacity (2010)

- Inter-state Logistics (2012)

- Bottlenecks (1997, 2014)

- CAPACITY ISSUES

Capacity Planning is crucial for any manufacturing company especially for a company with wide distribution network. It is the upper limit or ceiling on the load that a manufacturing unit can handle and it always impacts the ability to meet future demands. MC Bauchemie had its only manufacturing unit at Ankleshwar till 2011. By the end of 2009, they were already getting signs of increased demand beyond the plant’s output. As expected they faced certain issued in mid 2010 and they had to withdraw an order from Chennai Metro Rail (4500 tonnes of admixtures and curing compounds were needed by the time). So, they increased the pace of completing the Goa unit setup by 2011.

Capacity (2010):

∙ Design capacity of Ankleshwar Unit: 320.00 tonnes per day

∙ Effective capacity: 295.00 tonnes per day

(Effect due to strikes, holidays, periodic machinery maintenance and scrap)

∙ Actual output: 283.20 tonnes per day

(Avg. production as of March 2009 – March 2010)

∙ Design capacity of GOA Unit (2012): 240.00 tonnes per day

∙ Effective capacity: 212.40 tonnes per day

(Effect due to strikes, holidays, periodic machinery maintenance and scrap)

∙ Actual output: 207.00 tonnes per day

(Avg. production as of March 2012 – March 2013)

NOW, overall the company has been able to meet an average demand of about 425.00 tonnes per day. After having forecasted about the future demand i.e. about 750 tonnes a day, many departments in Ankleshwar unit and Goa units are being extended. Also, a new production unit is coming up in the eastern region of the country (undisclosed) and by 2020, the company aimed at catering an average production of 1200.00 tonnes a day.

- LOGISTICS

The Logistics department is divided into 4 departments:

- Intra Logistics Department (Raw materials transport, with in the Manufacturing unit, Unit - Godown logistics)

- Intra State Logistics department

- Inter State Logistics

Issues:

When the company had only one manufacturing unit i.e. in Ankleshwar, company faced logistic issues related to inter-state logistics during the stages of raw material procurement and post production.

Company used to procure raw-materials from Rajasthan, Karnataka and Uttar Pradesh. With the logistic network they had by then, sometimes company had to bear the VAT for goods procured /transferred several times (as it’s a well known fact that VAT is multi leviable) and also, Karnataka’s E-Sugam taxation was entirely different and used to charge high on interstate transactions to procure or to deliver chemicals to its distributors. This affected the margins of the company as well as its distributors.

- BOTTLENECKS

MC Bauchemie faced several bottlenecks during manufacturing process. But the company was always able to address them and by 2013, It had a History of about 7 improvements in its entire production line since its inception (1987). Most of the issues were in the department of semi finished (raw) material storage. During peak demand (august – September), ETO (engineer to order) requirements will be more due to which different products with different formulations had to be manufactured at the same time and hence the process rate of finished goods will be slow compared to that of processing semi-finished goods which requires less of iterations.

Due to this, semi finished goods /chemicals had to be stored for a long time creating a bottle neck. Also, due to the idleness that even made some batches to set and useless.

Other major bottleneck the company faced was during the packing. When the company introduced flexible packing system to attract more distributors / clientele, the company had to pack the finished goods in different Packings (12 size variants) but the conventional system could accommodate only 5 packing systems at a time and making the process a bottle neck.

How the company solved the bottleneck problems:

- Extended the storage capacity of semi finished goods and the storage unit got renovated with a controlled environment so that the stored material won’t set or lose their properties.

- Diverted all the semi-finished goods to the controlled (environment) storage department which has the ability to store with a shelf life of about 5 weeks.

- The conventional packing system was improved to cater 9 size variants

- The 3 remaining variants were packed manually for time being as such orders used to be a rare occurrence

- Later company stopped