Manufacturing Flexibility in a Filter Manufacturing Enterprise-A Case Study

Abstract

Flexibility has become a key factor in the successful and profitable operation of business enterprises. Globalization of markets, rapid technological developments and intense competition has made it imperative for all manufacturing enterprises to be responsive to changes. Therefore, flexibility is needed. At the same time, a high productivity is desired in the face of resource crunch and severe competition. This paper presents a case study of Purolator India Limited, Parwanoo, India and is a part of exhaustive survey covering aspects related to flexibility. The relationships between various types of flexibility and productivity have been established. The values of different types of flexibility have been found at various intervals of time for the enterprise. Various types of productivity have been calculated for the corresponding time intervals. The trends of flexibility and productivity have been determined. An approach has been suggested for managing flexibility in future. A hierarchy of flexibility, listing the order in which various types of flexibility should be focused in future, is also given. SAP (situation-actor-process) analysis has been carried out leading to identification of learning issues and conclusions.

Keywords: manufacturing flexibility, productivity, SAP analysis

Introduction

In the era of liberalization and globalization, achieving high quality and low cost is not enough. In the face of fierce competition, organizations are looking for flexibility to quickly adopt to environmental changes and thus gain an advantage over their competitors (Leana and Barry, 2000), Flexibility will enable them to respond to customers' needs quickly, provide a broad product range or introduce new products to the range effortlessly. Flexibility is a nuilli-facelcd concept with different connotations (Sushil, 1999), Strategic, organizational, financial, information systems and manufacturing flexibility have been identified as the cornerstones of enterprise flexibility (Sushil, 2000). Flexibility is the ability of a system to respond or react to a change with little penalty in time, effort or cost (Upttin, 1994). According to Buzacott (1982), the change may be internal (equipment breakdown, workers1 absenteeism etc.) or external (change in product design, demand and product mix). Flexibility is also the ability to do things differently or do something else should the need arise (Bahrami, 1992). According to Upton (1995), flexibility is about increasing range, increasing mobility or achieving uniform performance across a specified range. Flexibility is the ability of a system to take different forms. Flexibility is the exercise of free will or freedom of choice on the continuum to synthesize the dynamic interplay of thesis and antithesis in an interactive and innovative manner, capturing the ambiguity in systems and expanding the continuum with minimum time and efforts (Sushil, 1997), On the one hand, flexibility means being agile and versatile, while on the other, it means being robust and resilient so as to withstand shocks when negatively a flee ted by changes. There are various types of flexibilities. Brownc et al (1984) provided a comprehensive classification of flexibility by describing eight types of flexibilities - machine flexibility, process flexibility, product flexibility, routing flexibility, volume flexibility, expansion flexibility, process sequence flexibility, and production flexibility.

To accommodate flexibility, various companies are experimenting with novel organizational structures and management processes. Some of the prevalent developments include de-layering, team-based network, alliances and partnerships.

Besides flexibility, proper utilization of resources is essential due to unprecedented competition coupled with acute resource crisis. Enhancement in productivity is the key to success. One of the method of improving productivity is to measure productivity level and subsequently take corrective action. Productivity can be measured either as total productivity or partial productivity, i.e. material productivity, labor productivity, energy productivity, and equipment productivity. The paper presents an approach for managing flexibility in Purolator India Limited, Parwanoo, a filter manufacturing firm, keeping productivity improvement in mind.

Methodology for Measurement of Flexibility and Productivity

For measuring flexibility, various parameters contributing towards a particular type of flexibility arc identified. A paired comparison of these parameters has been carried out to find out their weight by drawing a position matrix. Further, questions have been framed related to these parameters in a specially designed questionnaire to know the response of the filler manufacturing firm to these parameters. Information lias also been collected through personnel discussions with persons at different levels in the company to know the levels of flexibility at different times. Various types of flexibililies have been measured on 0-1 scale as explained in Appendix 1. The trends in various types of flexibilities have been measured by comparing their values wilh the values of the last year and with that of five years back. At the same time, productivity values (partial as well as total) of the filter manufacturing firm have been found out for the corresponding periods by finding actual output and various types of inputs in monetary terms. The trend of various types of productivities has also been determined. Correlation have been established between flexibilities and productivities. Based on the past trends and existing levels of flexibilities and keeping in mind the correlation between flexibilities and productivities, an approach has been suggested for managing flexibility in future. A hierarchy of flexibilities, listing in the order in which various types of flexibilities should be focused in future, is also given.

Relationship Between Various Types of Flexibility and Productivity

The relationships between different types of flexibility and productivity have been determined by finding out product moment correlation. Data has been collected from 50 enterprises in India regarding levels of flexibilities and values of productivity. The results of the correlation are shown in Table I. The results depict that routing flexibility is positively and significantly related with material pfoductivity (r = 0.296, significant at p

Volume flexibility is positively and significantly related with energy productivity (r = 0,363, significant at p

Product-mix flexibility is significantly and positively related to total productivity (r = 0.318, significant at p

Labor flexibility is significantly and positively related with total productivity (r = 0.287, significant at p

Design-change flexibility is significantly and positively related to labor productivity (r = 0.279. significant at p

The correlation matrix depicts chat machine flexibility is not significantly related with any factor productivity or total productivity.

Planning flexibility is significantly and positively related with material productivity (r = 0,285, significant at p

Communication flexibility is positively and significantly related with total productivity (r = 0.281, signifieant at p

Total flexibility is positively and significantly related with material productivity (r = 0.305) at p

Present Status

Purolator India Limited (PIL) was established at Parwanoo (Himachal Pardesh) in 1976, in technical and financial collaboration with Purolator USA, for manufacturing air filters, lubricant oil filters, and fuel fillers. The filters are used for applications in diverse fields such as automotive, industry, railways, and aviation.

The total turnover of the company was INR 630 million in 1994 95 and it rose to INR 860 million in 1995-96. The domestic market share of the company went up from 26% in 1994-95 to 29% in 1995-96. The company is also exporting filters to many countries including Germany, Italy. Japan, USA and Spain, The export sales went up by 55% from 1991-92 to 1995 96. The increase in market share has been due to introduction of new types of filters that include filters for taicks. coil type filters, and oil fillers for Cielo car and a variety of fillers for overseas market.

Table 2 gives the values of various flexibilities of the enterprise for the years 1991-92, 1994-95. and 1995-96 respectively. The percentage changes in these values in 1994-95 and 1995-96 as compared to that in 1991-92 are also shown.

Table 3 shows values of various types of productivity along with percentage changes in the values for the year 1994-95 and 1995-96 as compared to that in 1991-92.

Status and Trends of Flexibility

The changes in flexibilities that have occurred at PIL in the last five years are discussed below:

Routing flexibility: Nearly 75% of the machines employed in the plant are special purpose machines, and the rest are rigid special purpose machines. This factor limits the routing flexibility of the plant. Process change in the plant is a continuous and on-going activity. For example, pack curing of the filters was earlier done through heating by making use of diesel. LPO was then tried as an alternative fuel. Then, electrically heated ovens were tried, which were subsequently replaced by ovens with circulating air motion. The plant has got 7 separate lines for manufacturing filters. In case of machine breakdown, work-in-process can be shifted on other lines, thus contributing to routing flexibility. However, sequencing of operations cannot be changed due to process constraints. Due to these factors, the routing flexibility of the plant increased by 12.5% from 1991-92 to 1994-95 and further by 0.06% in 1995-96,

Volume flexibility: The production levels of the plant have been continuously increasing. The production level was 12 million units in 1991-92. It increased by 16% to 14 million in 1994-95. In 1995-96, the production ftirther increased by 7% to 15 million. To meet these increasing demands, the company has been continuously going in for expansion. The company established separate lines for production of filters for Ashok Leyland Company and MlCO company. The company paid lot of attention towards vendor development to meet increasing production demands. Presently, there are around 35 vendors in Parwanoo supplying various components as compared to only 2 vendors in 1991-92.

The volume flexibility of the plant has increased by 31.89% in 1994-95, and by 49.53% in 1995-96 as compared to 1991 -92.

Product flexibility: The company undertakes me development of filters based on the specifications supplied by the customers. The plant has a comprehensive system of designing and developing rhe filters. Changes in fdter design, .major as well as minor, take place from time to time but the plant in itself does not come out with revised model of any filter. Il is only when a customer comes out with a new vehicle, the filters suiting the customer requirements are made. All these factors led to improvement in product flexibility, which improved by 3,68% and 9.23% in 1994-95 and 1995-96 respectively as compared to that in 1991-92.

Product mix flexibility: As there are many categories of filters being manufactured in the plant, there is lot of product mix flexibility. Fuel filters iirc made for aviation purpose whereas for industrial ;md automotive applications air filters, lubricant oil filters and fuel fillers are mudc, Al present, the plant is manufacturing around 300 types of filters. Every year, fifteen to twenty new filters arc added to the product range to meet the customer needs. The variation in the share of different types of filters has not shown much change in the trends from 1491-92 to 1995-96. The product mix flexibility of the plant has improved by 45,23% and 57.19% respectively in 1994-95 and 1995-96 as compared to 1991-92.

Labor flexibility: The company has trained its workers for currying oui various processes. The workers are provided with necessary tools, testing equipment, and work instructions in order to ensure accurate, efficient, and controlled process. The company has a system of providing comprehensive in-house training to its personnel. Training needs of all the personnel are assessed, and suitable training programs are organized, In this way, all employees develop necessary skills 10 carry out their assigned tasks, and achieve quality requirements. Training and education is a continuous process and 2% of the sales is devoted to training and education. Around 20% of the workforce is trained to work on more than two machmes to meet any situation arising out of worker's absenteeism. The company is focusing at downsizing of workforce as the workforce reduced by around 25 percent from 1991-92 to 1W-96. Based on above factors, the labor flexibility of the plant increased by 32.18% from 1991 92 to 1994-95. In 1995-96, there was only marginal increase in labor flexibility.

Design change flexibility: The phuit is using computer software for developing new filters and for making design changes. The plant has already stored a data base related to design of a wide range of filters and their components. Design changes are generally made in terms of dimensional parameters to achieve functional qua lilies. Sometimes, changes are also made in the filter paper, e.g., changing the number of pleats in a !liter. The design change flexibility improved by 16.63% in 1994-95, and by 21.18% in 1995-96 over its value in 1991 92.

Machine flexibility: All the machines'and equipment in the plant are special purpose machines and are designed to do a specific lype of work. Therefore, there is not much machine flexibility. With the setting up of various lines to meet specific requirements of customers, the machine flexibility has further decreased as a particular line is used for manufacturing fillers for a particular company. Due to (he installation of special purpose machines, the machine flexibility has decreased by 33.26% from 1991-92 to 1995-96.

Planning flexibility: The production planning is done for the plant us well as lor the dedicated vendors, who supply complete filters to the plant. The annual master plan is tentative. Based on that, a monthly schedule is made. The monthly schedule can be changed based on customer urgency, and specific orders can he preponed. Similarly the monthly schedules also get postponed if there are some material problems. Finally, daily schedules are made, based on individual customer needs and plant capacity, livery line has got specific capacity.

Planning flexibility has slightly improved by 0.103% due to the installation of more lines in the last five years.

Communication flexibility: The conventional information system leads to only limited communication flexibility. It has improved by around 20% in last five years due to increasing ILSC of computers.

Total flexibility: The value of total flexibility of the plant was 0,546 in 1991-92. It rose to 0.687 in 1944 95, and became 0.738 in 1995-96. Thus, the plant is showing increasing trends in total flexibility change in the last live years. The increase in total flexibility is attributed to increase in volume flexibility, product mix flexibility, labor flexibility, and design change flexibility.

Status and Trends of Productivity

The equipment productivity increased in 1994 95 by 1.80% as compared to that in 1991-92. This is due to installation of special purpose machines in 1991-92. The trends in 1995-96 are showing a further increase.

The labor productivity is also showing increasing trends. It increased hy 38.99% in 1994-95. and 56.93% in 1995-96 as compared to that in 1991-92. Hfforts are being made right from the start to eliminate excessive workers on various lines by induction of automatic machines to optimize human resources, and Io increase labor productivity. Further, introduction of production based incentives has led to an increase in labor productivity.

The material productivity rose by 20.32% in 1994-95 as 'compared to that in 1991-92, but fell by 3.6 % in 1995-96 Similarly, changes in energy productivity have shown lluctuating trends. It decreased by 2.27 % in 1994-95 but went up by 7.27 % in 1995-96 as compared to that in 1991 92.

Due to different inputs at different times, the total productivity first went up by 7,58% in 1994-95 as compared to that in 1991 92, but then fell by 2.46% in next year. seeing the above trends, the plant should focus on increasing energy productivity and total productivity in the coming years.

Future Order of Flexibility Acquisition

The future order of flexibility acquisition for the company has been determined keeping in mind the relationships between various types of flexibility and productivity. The market trends and present flexibility levels of the company have also been taken into account. I-'rom the trends of ^various types of flexibility in the lust live years, as shown in Figure 1, it is clear that volume flexibility, product mix flexibility, labor flexibility, and design change flexibility of the company have increased significantly. This is justified as the production levels of the company have risen by around 3 ,million filters in the last 5 years with a corresponding increase in the turnover by around INR 500 million. Every year, fifteen to twenty new filter types are introduced, thus, justifying the need for product mix flexibility and design change flexibility. On the productivity frout, energy productivity of the plant declined by 2.27% frorfi 1991-92 to 1994-95, but it improved in 1995-96. The material productivity and total productivity of the plant decreased by 3.6 and 2.46%, respectively in 1995-96.

Due to the increasing demand of filters of various types, the piant should continue to improve its product mix flexibility and volume flexibility. Figure 1 shows the future approach that needs to be adopted by the plant to manage flexibility.

The plant should focus on planning flexibility in the future. This can be made possible by using computers for production planning and scheduling. It may also contribute towards routing flexibility and communication flexibility. Planning flexibility may help improve material productivity and eriLTgy productivity, which had shown declining trends.

The plant should also concentrate on increasing communication flexibility. Higher communication flexibility may contribute towards design change flexibility as both are correlated. In addition, it may lead to an increase in total productivity, which was showing downward trends in 1995-96. It is proposed that, in the future, the plant should focus on various types of flexibilities in the following order:

(i) Product-mix Flexibility

(ii) Volume Flexibility

(iii) Planning Flexibility

(iv) Communication Flexibility

(v) Design change Flexibility

(vi) Labor Flexibility

(vii) Routing Flexibility

(viii) Product Flexibility

(ix) Machine Flexibility

SAP Analysis

SAP (situation-actor-process) analysis has been carried out tn determine the approach adopted by tbe enterprise for rmnaying ilexibilily. SAP analysis (Sushil, 1994, 1997) is a method of analyzing a case study. In SAP analysis, the case has been described tIirough three basic components (situation, actor and process) that define the dynamic interplay of reality. From the analysis, learning issues have been explored.

Situation

* PlL, Parwanoo established in collaboration with Purolator USA.

* PIL is an ISO 9002 certified company.

* The demand for filters increasing from various customers including foreign countries.

Actor

* Ex-President of PIL

* General Manager (Exports) as a visionary leader.

* Managers and executives of the company as a dedicated lot,

* Employees of the plant as the head and soul of the firm.

* Vendors of the plant as a source of new ideas.

Process

* Focusing on vendor development and alliances with other enterprises. Developing sub-contractors who are completely dedicated to the plant.

* Setting up different lines to meet specific requirements of customers.

* Increasing the number of shifts from one to three for increasing volume flexibility.

* Introducing automation in the plain to inccrease production levels.

* Introducing various productivity improvement schemes with workers' participation.

Learning issues

* Volume flexibility can be increased through subcontracting, vendor development, and by having alliances with other industrial firms.

* Production based incentive schemes to workers also help in achieving higher volume flexibility.

* Special purpose machines, and automatic machines, help in increasing volume flexibility.

* The ability to expand continuously leads to increased volume flexibility.

Concluding Remarks

Flexibility is a polymorphous phenomenon. Flexibility is visualized as a way thai will enable to meet customers' demands quickly, provide a broad product range or introduce new products to the range easily. There are various types of flexibility, namely, routing, volume, product, product-mix, labor, design change, machine, planning, communication and total flexibility. A particular type of flexibility can be measured by identifying various parameters contributing towards that flexibility, determining the weight of various parameters contributing to it and the response of an enterprise to these parameters. The paper highlights the fact that it is possible to plan for flexibility keeping productivity in mind. Howe ver. the type of flexibility to be acquired will also depend on the present levels of Hexibility, cost aspects and management view towards acquiring flexibility. For that, detailed cost-benefit analysis has to be carried out.

References

Bahrami II. 11992) The Emerging Flexible Organization: Perspectives from Silicon Valley, Californie Management Review. 33-51.

Browne J., Dubais D., Rathmill K., Sethi S.P. and Stecke K.I;. (I'J84) Classification of Flexible Manufacturing Systems, The !-'MS Magazine, 114-117,

Buzaeott J.A, (I9K2I Fundamental Principles of Flexibility in Manufacturing System. Proceedings of hi inici-niuitmal Conference on I-'MS. Brighton, UK. 23-30.

Leana C.R. and Barry Ii. (2Dl)U) Stability and Change as Simuluineuu-s Experience in Organizational Life, Academy nj" Management Review, 25 (4). 753-759.

Sushil (1994) Flexible System, Methodology. System Pi'uclk'f, 7(6). 633-651.

Sushil (1997) Hlexible Systems Management: An Evolving Paradigm, System Research & Behavioral Science. 14 (4), 259-275,

Sushil (1W9) Flexibility in Afantigemeui, Olubal lnstitule of Flexible Systems Management. Vikas Publishing House PvL Limited, New Delhi.

Sushil (2000) Cornerstones nj Enterprise Flexibility, Global lnsttluie of Flexible Systems Management. Vikas Publishing Mouse Pvt. Limiled, New Delhi.

Upton D.M. (1994) The Management of Munufiieiuring l;lcxibility. California Management Review, 36(2), 72-89.

Upton D.M. (1995) Whal Really Makes Faetdries Flexible?. Harvard Btiximrxs Review. 74-84.

A. B. Gupta

Assisram Professor, Curriculum Development Centre Technical Teachers' Training Institute. sector 26, Chandigarh (India)

E-mail: arvindbaigupta@yahoo,cam

T. P. Singh

Professur, Department of Mudianitiil and Industrial Engineering Thapar Institute til' Engineering and Technology. Patiala (India)

Copyright Global Institute of Flexible Systems Management (GIFT) Jan-Mar 2002
Provided by ProQuest Information and Learning Company. All rights Reserved