Operations Management
Project report
by
N. Other (Index Number)
I. O. Sirisena (Index Number)
M. A. L. Kanthi (Index Number)
U. S. Jayewardene (Index Number)
An Analysis of Manufacturing System of Kelani Cables PLC.
A Project report submitted in partial fulfilment of requirements of the subject
Operations Management and competitive advantage conducted by the
NSBM
2019
Abstract
The purpose of this report is to identify one process relating to a product and to perform a walkthrough the process with the intention of understanding the strengths and weakness in the process. In the given context, we have analyzed a cable manufacturing company namely Kelani Cables PLC. In this project, we were able to understand the process in detailed with its respective management concepts and were able to understand its strengths and weaknesses. The identified managerial concepts are been explained in the literature section of this report.
As the next part of the project, we have given recommendation to the Company based on the weaknesses we identified in the detailed analysis for company to move forward with them. Those recommendations are referred in the recommendation section of this report.
This has concluded the literature by concluding the facts collected in the detailed analysis report and the recommendations which we have suggested in the report. In conclusion, KCL has followed well known management concepts throughout its years in service and were able to gather number of trusts in customers over years.
Keywords – Kelani Cables, TQM, Lean manufacturing, Quality, operation management.
Acknowledgement
The project team is most grateful to the Operations manager of Kelani Cables PLC Mr. Upul Mahanama for the process explanation and walkthrough of the factory premises. His extremely constructive answers helped to improve the presentation of the project considerably. Moreover, we would also grateful for all the authors of other researches cited in this paper.
Table of Contents
Contents
2. Selected organization the function within the organization. 6
4. Detailed analysis of the selected function. 10
5. Recommendations for improvements 12
Introduction
In this project, the team will be analyzing the business functions relating to operation management and the competitive advantage gained through such business functions. In the first part of the project we will be analyzing the strengths and weaknesses in their manufacturing system and the second part will be to analyses and provide recommendations to the areas which requires improvements. The Company we have selected to this analysis is Kelani Cables PLC which is currently operates in the cable and wire industry of Sri Lanka.
Kelani Cables Ltd incorporated back in 1969 as an import company during controlled-economic era. Though the Company started to import and distribute cables, lately the Company identified a niche market for cable manufacturing in Sri Lanka. As a result, they started manufacturing cables and became a success story in Kelniya region. In 1973, Kelani Cables Ltd turned into a public listed entity under the name of Kealni Cables PLC (KCL) due to its growing business potential. As a result, the Company started manufacturing power cables, manufacturing cables and enameled wire cables in Sri Lanka.
KCL was a subsidiary of an Australian business group until 1996. They have invested and initiated high standard cable manufacturing machines in KCL in order to develop its potential further. In 1996, ACL group acquired a majority of KCL by giving wings to the Company.
Selected organization the function within the organization.
KCL currently located in Kelaniya Sri Lanka and it has a separate small factory complex in Siyambalape, Sri Lanka. Both its mother factory and its main warehouse is situated at the same place as mentioned above. KCL started its business with 12 employees and currently it has provided job opportunities for over 500 employees’ across the country. KCL has a wide range of product categories namely, overhead lines, indoor cables, outdoor cables – unarmored, outdoor cables – armored, control cables, panel wire kelani lighting, auto cables, boat cables, coaxial cables, enameled winding wires, iron cables, screened cables, speaker cables, submersible cables, welding cables, trailer cable, telephone cables, kelani CCTV camera cable, and also they proved cables to Australia / New Zealand.
There are primarily six companies in Sri Lanka work on cable industry and trading business namely Kamal Cables, ACL Cables, Sierra Cables, Kelani Cables, Ruhunu Cables and Orange Cables. Since both ACL Cables and Kelani Cables are in the export market, they manufacture cables by complying with oversees Standards. In the basis of revenue for the financial year ended 31 March 2019, ACL holds the market leadership in cable manufacturing by recording a revenue of LKR 18 Bn and the second place holds by KCL by recording a revenue of LKR 8 Bn and the third place protects by Sierra Cables by recording a revenue of LKR 4 Bn.
KCL's customers comprise key government departments such as Sri Lanka Telecom, Ceylon Power Board, Sri Lanka Power Company, local contractors, builders, investment board approved corporations, and island-wide dealers.
KCL has created a significant position in the export market and significant quantities of products have entered India, Maldives and Bangladesh. Kelani enamel windings are indirectly exported to European transformer producers through Sri Lanka's EPZ.
KCL was able to bag quite a lot of awards and certifications over its time through its inception due to its excellent quality and innovation. SLIM Brand Excellence Awards – B2B Brand of the Year 2018 / CSR Brand of the Year 2018 – Silver Award, SLIM Brand Excellence Awards 2017 – Gold Award, Kelani Cables was awarded the World Class Award (Highest) in the large manufacturing category at the Global Performance Excellence Awards 2017, Kelani Cables wins Silver at National Green Award 2015 and National Safety Awards (National Safety Awards 2010 – Manufacturing and Processing Sector) are few remarkable achievements among the lot. The quality and manufacturing process of KCL also is a remarkable one so that its production system also won major achievements such as,
Best process of standardization in new comer organization category
1st Runner up in new comer organization category
2nd Runner Up in new comer organization category
Best description of Intangible benefits in new comer organization category
KCL consists with all the usual business functions which can be observed within a general manufacturing company like, supply chain and procurement department, sales and marketing, quality assurance and electrical engineering, factory engineering and maintenance, and also support functions such as finance and planning, IT departments and human resource management.
Literature
As noted in the information, the Company uses 5S concept, Kaizen and Manufacturing process in their production lines.
5s Concept
5S is not a new concept to Sri Lankan context. Japanese concept of 5S is about eliminating waste and to retain only what is needed. Hence this is the basic step for lean manufacturing. 5S stands for Sort, Set in order, Shine, Standardize and Sustain. According to Carmen Jaca, 5S is a very effective method to initiate lean production and continuous improvement strategies. 5S methodology is a best tool to make a difference in worker attitudes, Perform improvement activities in the workplace. Some researches point out Japanese ancient living style was inspired for 5S concept. Japan's value of cooperation, respect, trust and harmony are the core values of 5S. Therefore, it is vital to appreciate what the philosophies behind the 5S policy are frequently includes only the implementation of a method, aside from its overall meaning. The 5S method or methodology is described by two different but complementary methods from two different authors, Nagata. And plain. Considering 5S as an organizational development strategy, Takashi Osada's vision is more conceptual, Learning and change to improve efficiency and working conditions. Simple method on the further hand, it is supplementary real that it sees the 5S as a tool that industries can use as a means of removing leftover difference from opponents (Baker 2001; Kobayashi, Fisher and Gap 2008).
Lean Manufacturing philosophy
After WWII, especially Japanese producers in the locomotive industry we faced a scarcity of materials, financial capitals and human capitals. Eiji Toyoda Taiichi Ohno of Toyota Motor of Japan, Toyota Production System production concept, or what is known in the United States today State as "lean manufacturing".
The basic idea behind the system is (Muda Hunting or Hunt for loss). Muda is all names that do not add value to the finished product Client perspective.
Lean is based on the philosophy, concepts and equipment of the Toyota Production System (TPS), but it all started in 1913 with a lineup of Henry Ford and his famous T model. Lean's main goal is to support manufacturers who want to improve their processes Implement a variety of lean production tools to increase market competitiveness and techniques.
Following the rapid success of the manufacturing process in Japan, other companies and Industries, especially the United States, have adopted this amazing system.
The term "lean", defined by Womack and Jones in 1994, all inputs and resources. Produces the same output that traditional mass provides. Production systems while contributing to and increasing the diversity of end users. Lean means producing only what the customer needs, in the quantity ordered when needed only customers and minimal resources. More specifically,
Products are produced in a way that minimizes the time required to deliver the finished product. The amount of work required and the space required for storage, but everything is by eliminating these seven losses, at the highest quality and usually at the lowest cost.
All functions can be implemented absolutely in all business activities, at low cost, and Effective immediately.
Kaizen Manufacturing philosophy
Kaizen or the "all-around, continuous improvement" technique is collaboration methodology used to solve problems methodically and put on development resolutions. You can't declare a process complete, but we assume that it can continuously be enhanced. Actual development means that all team followers in all parts of the organization watching for ways to improve their processes, employees at all levels of the company goes through this development process.
Detailed analysis of the selected function.
In order to initiate the objective of the project, we have selected the production management system with the assistant of quality assurance policy. As KCL produces a number of products under few categories, we have selected the product of indoor cable which is the most popular product under consumer category.
As part of the analysis, a walkthrough of production process has also been done. Accordingly, the Company imports copper wire from its set of registered suppliers. Before using the raw materials to the production line, KCL staff will check samples on each batch they purchased. Moreover, each milestone of the production line KCL checks for quality compliances which they have developed to cope up with industry best practices. If the quality team passes the batch to process, they will proceed to production floor. As these cables are armored with PVC coating, a fire resistant PVC plastic chips in different colors based on the properties of each type of indoor cables. Company’s supply chain is responsible for supplier evaluation and management. However, there is no evaluation of supplier performance on a timely basis.
The company budgets for next year budgeted sales based on previous years actual demand and future projects that the company will be supplying for. Based on the budgeted production plan, supply chain will be requesting the raw materials by considering the lead times as well. It is noted that the company projects its demand based on past date and only its future projects. Once the goods are being issued to the floor, workers will start inserting raw copper cables to large coating machines to cote its outer layer of PVC plastics to protect both lives and house hold properties. This PVC is a fire resistant and also helps the copper wire to sustain a longer period.
KCL provides a through training to its employees on a timely manner. This will enable KCL to maintain its quality in both products as well as employee status quo.
Moreover, the company provides a free meal to all its employees and all KCL employees including chairman takes their meal with all employees. This is a quite best practice from employee perspective.
As mentioned above, the Company follows 5S concept and each and every part of the factory floor is marked and demarcate separately. Each and every tool has its own space to reside and all are located in strategic places to ensure employee movement is reduced.
It was noted that the Company holds monthly production planning meetings to plan next month production. However, as KCL is the 2nd market leader in cable manufacturing, their inventory consists a higher turnover. When it comes to waste management, the Company is practicing 3R concept which stands for Reduce, reuse and recycle. This helps the company to reduce its wastage costs in many ways.
One of the major feature of KCL sales pattern is that the company consists of many government projects. With the trust of more than 50 years, KCL has supplied best quality electrical instruments to major government institutions such as Ceylon Electricity Board, Sri Lanka Telecom and Road Development Authority.
Finally, it is noted that the Company is a subsidiary of ACL groups which is the market leader in cable manufacturing in Sri Lanka. Being a subsidiary of market leader, itself is s synergy which KCL gained from its ownership change. ACL and KCL both share the same quality standards and manufacturing processes. KCL sometimes provides for goods to ACL for their lacks in supply.
Recommendations for improvements
As in the previous section discussed, it was noted that KCL does not practice a timely evaluation of supplier performance. This is a weakness in their manufacturing system as they do not evaluate their suppliers on timely manner. This will lead KCL to unexpected supply interruptions. Hence it can be recommended to KCL to initiate a supplier evaluation system which will ensure that supplier continuity is guaranteed and changes to supplier pattern can identify well ahead.
Since KCL is a PLC company, they do not incorporate demand planning methods to forecasts its demand. As a result, the company had experienced some excess inventory which costs the company for non-value adding activities. This will be a highlight as a weakness in the manufacturing system as they do not support their forecasting systems with effective methods. As a result KCL will end up with over or under supply situations. Hence it is also recommended to re visit KCL’s demand forecasting methodologies which will enable company to reach to untapped market opportunities.
We further noted that due to rapid changes in the current economy and the political environment there is a risk of stock obsolesce and having non- moving inventory items which will lead to non-value adding costs to the Company. The Company currently does not have a research division which ensures that market changes are identified well ahead and are addressed in a timely manner by making modifications to the production process.
Lastly it can be recommended that the company to have a process in place where government projects are closely monitored for their performance against its cash inflows. As Sri Lanka is currently facing to a rapid change in governmental and controlling parties, the recoverability of cash flows from government projects are threaten. Hence this will lead to a loss of reputation as well as inventory and logistics costs which are not recovered in future.
Conclusion
In this project, we have selected a renowned public listed company which is engaged in cable manufacturing industry namely Kelani Cables PLC. The purpose of the project is to analyses the production process of a selected product and to analyses strengths and weaknesses in the process. Accordingly, we have selected the product of indoor wires which is the most popular in the domestic market currently.
KCL practices three popular operation management concepts namely 5S, Kaizen and Lean manufacturing. The main purpose of these practices is to mainly reduce lead time in the manufacturing process and maintain an efficient flow in the process. This will ideally ensure that KCL will maintain a competitive price by reducing non-value adding activities and its respective cost components. KCL, however, managed to maintain their process for these fifty years of experience in the market and to gain huge customer trust over years. Hence, KCL managed to modify their production systems with the help of continuous improvement methodologies all for these years.
As analyzed in Section 04 in this report, KCL planned and produced its indoor wire segment in such a way which gained the customer trust which is not an easy task to achieve. It is also noted that the synergies which KCL has gained from its parent company has also helped KCL to achieve this.
In the recommendation section, we have given few recommendations for loopholes we identified in the detailed analysis of production process.
As a conclusion, it could say that KCL has managed to initiate best manufacturing process in order to cater to current competitive market demand. Although there are lapses in the management process, KCL is maintaining its management practices to increase sales as well as shareholder wealth. It is also noted that the Company has won many awards compared to its competitors which is a witness to prove KCL quality standards over its products and its production process.
References
About Kelani Cables. http://www.kelanicables.com/quality-system/#scope_of_the_eMS . Last accessed on 20 Feb 2020
Bayo-Moriones, A., A. Bello-Pintado, and J. Merino-Diaz de Cerio. 2010. “5S Use in Manufacturing Plants: Contextual Factors and Impact on Operating Performance.” International Journal of Quality & Reliability Management 27 (2): 217–230.
Carmen Jaca, Elisabeth Viles, Luis Paipa-Galeano, Javier Santos & Ricardo Mateo (2014) Learning 5S principles from Japanese best practitioners: case studies of five manufacturing companies, International Journal of Production Research, 52:15, 4574-4586
Ghobadian, Abby, and David Gallear. "TQM and organization size." International Journal of operations & Production Management, vol. 16, no. 1-2, Jan. 1997, p. 121
Gapp R, Fisher R, Kobayashi K. Implementing 5S within a Japanese context: an integrated management system. Manage Decis 2008; 46: 565.79.
Shogo Kanamori, Marcia C. Castro, Seydou Sow, Rui Matsuno, Alioune Cissokho & Masamine Jimba (2016) Impact of the Japanese 5S management method on patients’ and caretakers’ satisfaction: a quasi-experimental study in Senegal, Global Health Action, 9:1, 32852
Ho SK, Cicmil S, Fung CK. The Japanese 5-S practice and TQM training. Train Qual 1995; 3: 19.24
http://www.kelanicables.com/financial-information/annual-accounts/ Annual report for the year ended 31 March 2019. Last accessed on 20 Feb 2020.
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