Mba 7061 Operations Management

Cardiff Metropolitan University | Prifysgol Metropolitan Caerdydd

Operations Management Process of Fine Line Creations and Quality Measures

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Student Name :UWIC ID Number :ICBT ID Number :Subject Name : Operations ManagementSubject Code : MBA 7061

Operations Management deals with the design and management of products, processes, services and supply chains. It considers the acquisition, development, and utilization of resources that firms need to deliver the goods and services their clients want.

Master of Business Administration

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Master of Business AdministrationTABLE OF CONTENTS

1.0 INTRODUCTION 42.0 FINE LINE CREATIONS –OVERVIEW AND CURRENT STATUS 53.0 CURRENT PRODUCT DESIGN PROCESS AT FINE LINE 74.0 GOOD - SERVICE CONTINUUM AND OPERATIONS STRATEGY 9

4.1 Good-Service Continuum 94.2 Operations Strategy 9

5.0 PROCESS MANAGEMENT IN FINE LINE CREATIONS 115.1 Customer Service Strategies 115.2 Manufacturing Process Analysis and Improvement 125.3 Process Structure at Fine Line Creations 125.4 The Complete Process Chart for the Manufacturing Process (Start to End) 135.5 Improvements needed in critical processes 135.6 Relationships between Departments at Fine Line Creations 17

6.0 QUALITY MANAGEMENT PROCESS 186.1 Quality Dimensions Present within Fine Line Creations 18

6.1.1 Performance 186.1.2 Features 186.1.3 Reliability 186.1.4 Durability 196.1.5 Response 196.1.6 Serviceability 196.1.7 Aesthetics 196.1.8 Reputation 20

6.2 Design Quality 206.3 Conformance to Design 206.4 Process Quality 20

6.4.1. Inspection during the Pre–production Stage 216.4.2 Inspections during the Production 216.4.3 Finishing Inspection 226.4.4 Final Inspection 22

7.0 MANAGING CAPACITY AND DEMAND 237.1 Inventory Management, and Purchasing & Supplier Management 237.2 Challenges faced by Fine Line Creations 247.3 Sourcing of Materials 25

7.3.1 Foreign Suppliers 257.3.2 Local Suppliers 25

8.0 RECOMMENDATIONS FOR EFFICIENCY IMPROVEMENT AND COST REDUCTION 268.1 Gemba 26

8.1.1 Reduce Excess Movement 268.1.2 Ensure Proper Storing of Buffer Stock 26

8.2 Gembutsu 278.2.1 Equipment to Track Orders on Each Stage of Production and Delivery 27

8.3 Genjitsu 278.3.1 Installing a Dust Absorber 27

8.4 Effective Management of Technology Management Process 288.4.1 Technology Acquisition 288.4.2 Automation 288.4.3 Innovation and Creativity 29

8.4.4 Innovation in the Layout of the Production Unit 309.0 CONCLUSION 3110.0 REFERENCES 32

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Master of Business Administration1.0 INTRODUCTION

Gents’ office trousers are in demand these days with the increase in the number of working

people and the increase in formal organisations. How many local brands were in the market a

decade ago? Most of the people those days had to turn towards costly international brands or

look for custom tailored trousers. This was a hassle with the time constraint. But, this report

speaks about a local entrepreneur who identified the gap and made life easy for the local

people and not stopping at that he was able to widen the horizon by exporting them as well.

The objective of this report is to review “How a local, medium scale operator effectively

managed to maintain quality and manage other operational aspects in its design process with

minimum resources such as knowledge, technology etc.” This organisation maintains high

quality standards and compared to giants in the garments industry, it has been able to practice

a near zero defects policy. The main essence of this report is the design process and how each

of the other processes are carried to support the designs developed and how quality plays an

inherent part throughout the whole process.

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Master of Business Administration2.0 FINE LINE CREATIONS –OVERVIEW AND CURRENT STATUS

In the year 1998, a Sri Lankan mechanical engineer, Mr. Morris Liyanage who had carried

out various assignments with several foreign principles in various countries, thought of

starting his own business. Together with the expertise he had built up in the discipline of

mechanical engineering, he had thought of starting a company that carries out electrical work

on construction projects, and he had number of personal contacts at projects on various sites.

During mid-1998, when Mr. Liyanage went to purchase a gents office trouser, he had asked

the retailer the availability of a quality local brand. The response was negative and only

foreign brands were available. This incident created a spark in the mind of Mr. Liyanage and

it turned out to be a motivational factor for him to start a business to bridge the gap for the

need of branded gents office trousers manufactured locally. In October 1998, he started Fine

Line Creations (Private) Limited, together with his wife, to cater to the identified niche

market. Today Fine Line Creations (Private) Limited is the only local company which

manufactures branded gents office trousers, and over time it had established three brand

names–‘Nine to Five’ (9 to 5), ‘Hotline’ and ‘Zodiac’. The company is located in Peradeniya

and currently employs a work-force of 120. As the Managing Director (MD), Mr. Liyanage

overlooks the entire operations. There’s a manager who has been appointed to look after the

general management functions (administration, finance and operations) of the organisation,

and two supervisors (cutting and sewing divisions) who monitor the production line.

When we take a deeper look at the contribution made by the SME sector around the world to

95% of the enterprises across the world are SMEs while 60% of the global private sector

employees are from SMEs. Coming back to a more Sri Lankan context SMEs account for

70% of Sri Lanka’s GDP, 20% of industrial value added and 80% of total establishments of

Sri Lanka. However, it is a mystery that they are not showcased in the magazines and

newspapers as often as the imported brands and goods. Stokes (2003) reiterates that it may

not be incorrect to say that they are the forgotten entity of the Sri Lankan economy. But the

reality is that it is the SMEs are the real backbone of the Sri Lankan economy as SMEs are

the Engine of economic growth, innovation, employment generation and poverty reduction.

Fine Line Creations being an SME which has been in operation for more than a decade is

now in a situation where they have to compete with more well known branded office trousers

from abroad as well as local companies. And this is a competition that requires them to be in

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Master of Business Administrationtheir game shoes 24x7. While being the first local brand and being the pioneers is something

favourable towards Fine Line Creations’ brands, the attractiveness and hype created by the

foreign brands haven’t been matched by the company.

Therefore, it becomes imperative that the company sets things right for it to compete with

other players in the market and also to create a competitive advantage that cannot be matched

by the competitors. As the overseas brands and other local brands have a high marketing cost

and tax on top of their imports, Fine Line does not have that cost involved in their products.

Therefore, an area where they can easily create a competitive advantage is through cost

optimization. This report details how the management could increase the efficiency of the

operations in the garment manufacturing plant in order to reduce the operational expenditure,

the benefit of which can be directly shared with the consumers, whereby making Fine Line’s

products more economically attractive in the market.

Figure 2.1: Break-Even Diagram

As shown above a reduction in variable costs will increase the profits and this will be

beneficial for both the end consumers, as they will be able to buy a quality product at a lesser

price, beneficial for the company as they will be able to increase their sales volume. The

employees will benefit from both the high volume of production and by the share of profits

they get. This creates a win-win solution to everyone involved and over everything, it creates

a competitive advantage the other brands will find difficult to match because, if they try to

match it they will incur a loss. For the competitive advantage to be sustained, Fine Line

Creations has to establish itself as a reliable supplier, on time delivery, reduced quality failure

rate, and reduced writes-off.

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Master of Business Administration3.0 CURRENT PRODUCT DESIGN PROCESS AT FINE LINE

Figure 3.1: Trouser Designing Process Sequence

Customers

Product Concept

Manufacturing specifications

Supplier

Marketing Personnel

Design specification

Designer engineer

Performance specifications

PurchasePersonnel

ProductionPersonnel

Manufacturing engineer

Production Merchandiser

Source: Observation of the author

Each step mentioned in figure 3.1 can be described as follows:

Collecting the customer requirements. The merchandisers collect the requirements

from the retailers or corporates who make the orders. The collected information

includes the size, colour, specific design requirements, etc.

Analyse the market feasibility. Cost and timing factors are weighed in before starting

the process.

The designers draw several rough sketches and then they are analysed by a panel and

few are selected for further processing.

Pattern maker develops a pattern for one standard size to develop a sample for fit

testing.

Sample is stitched and it is reviewed by designers, pattern makers and sewing

specialists. The design is finalized at this stage after consulting the customers who

ordered the consignment. Any variations in cost or timing will be communicated at

this point.

Production pattern is done. Both manual and CAD systems are used at Fine line.

The designs are sent to manufacturing and merchandising departments

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Master of Business AdministrationThe products (trousers) are designed as per the requirements of customers. The information

related to design is obtained from the retailers (customer centric decision making) or from

corporate customers who contact Fine Line Creations directly and then passed onto the

designing department.

Once the design is selected, a pattern board is cut to fit the design and sent to the

merchandising department to purchase the necessary materials. Since Fine Line Creations

uses the same material for all the trousers the merchandising department orders the material

from suppliers and inspects the quality of samples before raising the purchase order. The

designing of the pattern board is a crucial aspect because a small mistake in design will lead

to the production of a trouser which will not fit the required specification. Although the

material used is the same, different customers request for different colours and different

stitching style. All these are taken into account when the orders are raised. And when the raw

materials are received, each item is inspected and tested, starting from the fabric to the zips

and loops that are used in the manufacturing process. These tests are done before these

materials are input into the production phase. This ensures a feed-forward control which

has been the secret behind the success story of minimal defects in Fine Line Creations, and

good quality in ensures good quality out.

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Master of Business Administration4.0 GOOD - SERVICE CONTINUUM AND OPERATIONS STRATEGY

4.1 Good-Service Continuum

Debates on what makes services different from goods have been happening for a longer

period of time. Economists from the 18th and 19th centuries have gone on to define goods as

objects or items over which a certain value can be prescribed and can be owned by a

particular person, and by ownership they meant that there is tangible possession of the item

which came from acquisition or barter system or as a gift or previous owner and was legally

identifiable as the property of the current owner. In his book “The Wealth of Nations”, Adam

Smith defines what he terms as ‘productive’ and ‘unproductive’ labour. And this led to a new

theme developed by Jean-Baptiste Say, a French economist, who said that there is now way

to separate production and consumption in services.

While in the modern world it is hard to find a business which lies in the pure extremes of

pure service or pure commodity, we find a lot in the middle-of-the-road businesses. A

common example would be a restaurant, where food is a physical good, but, at the same time

factors such as ambience, cleanliness, and time to response are considered services. Similarly

while Fine Line Creations delivers its customers with trousers as a good, there is a back-end

to services from the time they get the order and deliver it. However, we can confidently say

that it is more tilted towards the pure commodity side of the continuum.

4.2 Operations Strategy

The main customer value proposition of Fine Line Creations is “Everyday low pricing”

when it came to gent’s trousers and the respective operations strategy implemented was “Cost

Efficiency”. The figure below gives a clear idea of the operations strategy the organization

took and its standing towards the vision and mission of the company.

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Figure 4.1: Fine Line Creations Operations Strategy Snapshot

Source: Adapted from Slack et al., 1995

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Master of Business Administration5.0 PROCESS MANAGEMENT IN FINE LINE CREATIONS

5.1 Customer Service Strategies

The owner of Fine Line Creations is a firm believer of the phrase “Customer is King”, and

therefore he has developed a checklist of items which feeds into the overall customer service

strategy of the organization. The items in the checklist are:

To recruit the right people and train them, as it is very important to recruit the people with

the right attitude and who can easily fit into the culture of the organisation.

To have happy customers, first make your staff happy. When the staff is happy, they will

make the workplace a fun place to be, which will definitely show a good effect on the work

processes.

Lead from the front. The Managing Director and people in the management have to make

the first step and build the necessary platform so, that they inspire their workers / followers.

Listen to staffs ideas and suggestions. In big organisations more than 60% of the

breakthroughs come from staff, and 3M is such a company which has benefited a lot. Even

Google allows their staff to spend 20% of their work time to spend on new ideas. This will

lead to greater benefits for the organisation.

Complaints are never negative; they are the seeds for improvement. Complaints are

made by customers who really feel for the company, and therefore, they will give you the true

status of things.

The process should be viewed from a customer and staff point of view. This is another

way of looking quality, a customer’s point of view would be to look at quality characteristics

and the price of things, whereas, the staff’s point of view will be to look at the conformance

of specifications and cost. A balance has to be achieved between the two so that the product

or service is fit for consumer use.

Measure performance on a continuous basis. The monitoring of processes have to be

continuous as the historic data gives you a lot of insights as to whether the process results

have remained constant, deteriorated or improved.

Reward and appreciate good performance. Good performance should be rewarded

immediately which creates a good working environment and also motivates the staff to

perform better.

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Master of Business Administration5.2 Manufacturing Process Analysis and Improvement

The manufacturing (production) process is shown in figure 5.1.

Figure 5.1: Trouser Manufacturing Process Sequence

Design / Sketch

Pattern Design

Sample Making

Production Pattern Grading

Marker Making

Spreading

Cutting Sorting/

Bundling

Sewing/

Assembling

Inspection

Pressing/ Finishing

Final Inspection

Packing

Dispatch

Source: Observation of the author

Complete details of the process given in appendices.

5.3 Process Structure at Fine Line Creations

Figure 5.2: Characteristics were observed at Fine Line Creations

Substantially constant demand

Standardized product

Material to specifications and

to time

Clearly defined operations

Set quality standards

Correct plant with right

equipment

Inspections are carried out in line with operations

Overall balanced stages

Therefore, it is clear that Fine Line Creations follows ‘Flow Method’ process structure —

relatively high volume of production with little customization.

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Master of Business Administration5.4 The Complete Process Chart for the Manufacturing Process (Start to End)

Figure 5.3: The Complete Process Chart

Fabric Inspection

Spreading

Cutting

Ticketing / Bundling Fusing

Cutting Audit

Preparatory

Quality Check Assembly

Quality Check

Buttoning

Thread Trimming Ironing

Quality Check

Folding

Pinning Packaging

Packing

Shipment

Source: Observation by the author

By observation, nineteen main steps were identified in the trouser manufacturing process and

time taken at each step in producing 100 units was noted down during the observation period.

Process chart in figure 5.3 is a visual representation of the recorded time consumption at each

step. It takes around 20 labour hours to complete an order of 100 trousers.

5.5 Improvements needed in critical processes

The current situation at Fine Line Creations is a long table which is situated between the

machines which serves the material flow from one operation to another. Once the machine

operator has finished his/her operation he/she pushes the WIP to the next operator in the table

and this process continues to the end. However, the author thinks there can be a change in

this first set of processes which will helps increase the efficiency and also to reduce the

wasted time and resources.

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Master of Business AdministrationFigure 5.4: Proposed Change (Future) to the Initial Process Map

Fabric Inspection

Spreading Cutting

Ticketing / Bundling Fusing

Cutting Audit

Re-work Ready for stitching

Audit Fail Audit Pass

Source: Author’s Proposed Change to the Initial Process Map

This is a simple change in the layout, but, will save a lot of time and will avoid idling of

resources by identifying the audit failed components and sending them over for rework

immediately rather than waiting till the end of the day. This will save Fine Line Creations a

lot of money and reduces costs by 15% due to the increase in production volume per day.

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Master of Business AdministrationFigure 5.5: Proposed Change (Future) to Preparatory Section

Pant left section

Pocket making

Pocket hem

Pant sleeve making

Pant sleeve stitch

Pleats

Pant right

section

Pocket making

Pocket hem

Pant sleeve making

Pant sleeve stitch

Pleats

Pockets

Pocket marking

Pocket hem

Pocket stitch

Pocket press

Pant top buckle strap

Loop marking / loops

attached

Buckle attached

Button attached

Strap press

Ready Parts for Assembly

Source: Author’s Proposed Change to the Preparatory Section

In the current process only the left pant side and right pant side are done concurrently and the

preparation of pockets and the top strap are done after the left side and right side are stitched

together. But, with the new proposed process breakdown of the author all four sub-processes

can be carried out simultaneously which brings in a lot of efficiency and also helps the

company manufacture far more number of trousers per day. This change will bring down the

costs further as the resources will be utilized to full capacity and potential.

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Master of Business AdministrationFigure 5.6: Proposed Finishing Section (Future) Production Flow Chart

Buttoning / Buckling

Button / Buckle Attach

Thread Trimming

Thread Sucking

Pressing

Pleat Press

Strap Press

Body Press

Packing

Folding

Single Piece Packing

Carton Packing

Source: Author’s Proposed Change to the Finishing Section

When it comes to the finishing section at Fine Line Creations, they manage three major

operations: buttoning and thread cleaning, ironing and final packing. But, they do not have a

set process when it comes to washing. For some garments washing is needed and is

mandatory. They have been handling it in a very ad hoc way. In any case the proposed

process by the author states that washing should be done before buttoning to minimize

damages in garments for longer washing cycles. This helps the company in producing high

quality garments and also ensures that there are no wastages and omissions due to the wear

and tear in washing after buttoning.

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Master of Business Administration5.6 Relationships between Departments at Fine Line Creations

I identified six main sections in Fine Line’s manufacturing process and the relationships

between each section are elaborated in figure 5.6 below.

Figure 5.7: Relationship Chart for Fine Line Creations


All departments in Fine Line Creations coordinate as per the relationship chart above. It

indicates how closely it maintains inter departmental coordination to carry out the production

process effectively and efficiently, as timely communication is a feature which reduces

wastages, misconceptions and also takes out the problems that occur due to assumptions.

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Master of Business Administration6.0 QUALITY MANAGEMENT PROCESS

In manufacturing, a measure of excellence or a state of being free from defects, deficiencies

and free from significant variations, are brought about by the strict and consistent

adherence to measurable and verifiable standards to achieve uniformity of output that

satisfies specific customer or user requirements. In other words it is known as quality. The

product quality plays a crucial role for Fine Line Creations to manufacture and market a

better trouser to the market.

6.1 Quality Dimensions Present within Fine Line Creations

6.1.1 Performance

Performance refers to a product’s primary operating characteristics. In other words does the

product do what it is supposed to do, within its defined tolerances? Performance is often a

source of contention between customers and suppliers, particularly when deliverables are not

adequately defined within specifications. The performance of a product often influences

profitability or reputation of the end-user. In the export oriented garment industry there are

many instances where the buyer decides the design and also informs the manufacturer where

to purchase materials. In the case of Fine Line Creations, the buyer in Singapore specifies the

designs and where materials should be sourced. But, for local market there are no such

specifications and occasionally research is carried out to see the trends and design patterns.

6.1.2 Features

Does the product possess all the features specified, or required for its intended purpose? It

highlights whether the product is being done as per the specifications in the above stage 3.1.

There is a quality assurance team in Fine Line Creations who checks the quality of the

product in each stage of production to make sure that the product is tailored to set

specifications. The merchandising team acts as the source of information that obtains

customer specifications from the buyer and passes it to design team and QA team.

6.1.3 Reliability

Reliability refers to the likelihood of a product failure (malfunction) within a specified time

period. Reliability must be “designed” into a product. If a product, as designed, is inherently

unreliable, nothing can be done in the manufacturing process to improve it. As mentioned

earlier, Fine Line Creations practices zero defects policy (with a minimal defect rate).

Therefore, this probability of failure was not observed. However, for contingency reasons the

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Master of Business Administrationmerchandising team budgets for three to five defects on average for every 500 units, as a

margin of safety precaution.

6.1.4 Durability

Durability refers to the length of life of a product. In other words, How long will the product

perform or last, and under what conditions? It is difficult to predict the durability of a trouser

because the durability will depend on the usage. Suppose the same trouser is worn two times

per week, then it would be 104 times per year. And the person walks, sits, moves etc. So an

exact duration of use of a trouser cannot be forecasted. However, it was noted on a customer

survey that repeat purchases are done on average one and half years. Therefore it could be

predicted that durability is 18 months.

6.1.5 Response

Response refers to speed, courtesy and competence displayed in attending to the customer’s

problem. This is suited for electronic and technological products and does not apply into the

garment industry. Due to the high quality standards maintained no customer complaints

were received to date from end customer or retailer.

6.1.6 Serviceability

Serviceability refers to how easily the product could be repaired. This aspect also does not

align much with Fine Line Creations because, technically trousers last for quite some time as

mentioned above. Only way the serviceability feature applies to trousers is that since the

trousers are tailored to set standards on waist size and length, there is always a possibility of

the trousers being too lengthy. The management has identified this issue and trousers are

produced in a way so that the customer could easily alter the length with the help of a tailor.

6.1.7 Aesthetics

Aesthetics refers to “how a product looks or feels” It is the sensory need and is measured

through how much the customer is attached to the product. It carries equal weightage of the

emotional quotient and the association quotient. The trousers of Fine Line Creations are

regarded as the best local branded trousers and the general feedback from the customer

surveys have been positive towards the products.

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Master of Business Administration6.1.8 Reputation

It is the perceived quality that remains in customer’s mind. The reputation of ‘9 to 5’

emulates the point of it being of high quality and low cost, and a local branded trouser

readily available in the market.

Having looked at the quality aspects required in the products and how they are treated and

perceived at Fine Line Creations, it is imperative to look at how they are achieved through

quality infused systems. In short the quality aspects are divided into three main aspects from

the organisations’ point of view.

6.2 Design Quality

To produce a quality product it needs to have a design of superior quality. As the saying goes

if the design is of poor quality, no matter how superior, capital intensive and technology

savvy the production is the product won’t succeed. But, at the same time even if there are less

resources but, as far as the design is unique and of superior status the product will definitely

succeed. Therefore, developing a design which sticks to standards and requirements of the

customers (in other words sticking to quality standards) will be the key for Fine Line’s

operations. As mentioned above, the design of a trouser at Fine Line Creations is done as per

the requisition of customer. Also there are standard heights for each waist sizes and the

pattern boards are designed as per the standards.

6.3 Conformance to Design

Once the design is converted to a viable product, it is vital to check that the product meets the

design specifications. A panel consisting of three members checks the sample product to

verify the design specifications have been adhered to during the sample creation and

random checks are done during the production period as well.

6.4 Process Quality

The most important element in the garment manufacturing is the process quality, because if

there are errors due to carelessness or omission, created in process it would lead to issues

such as wastages in large chunks, and the orders being returned, and the customer losing faith

in Fine Line Creations. Therefore, it is important to identify each process and apply necessary

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Master of Business Administrationmonitoring and control measures to them. Fine Line Creations has been successful in this

aspect with the practice of near zero defects policy.

Figure 6.1: Inspection Levels for Guaranteeing Process Quality

5% 30% 80% Market Delivery

Pre-production inspection

During production inspection

Prior delivery inspection

Final random inspection

Identification of Quality Gaps

Verification before Market Delivery

% of finished production


6.4.1. Inspection during the Pre–production Stage

The pre-production inspections carried out at Fine Line Creations are the following:

Material Supply: All materials (fabric, buttons, zips, etc) received are inspected for

defects when they are received from the suppliers.

Pattern Board: To make sure the right pattern boards are set for each waist sizes.

Material: Although the same material is used on most occasions, there are few

retailers who specify certain materials from their sources to be used for trouser

production. Therefore, it is important to select the correct material depending on the

order and the type of trouser to be produced.

Colour Combination: The orders are received based on the colour book sent to the

retailers and Fine Line markets its products with thirteen different colours. For

example twelve (12) trousers from waist size 35 and from the colour code 12. So it is

important to set colours as per the orders received in order to carry out the production

process without any issues.

6.4.2 Inspections during the Production

The inspections that are carried out during the production at Fine Line Creations can be

outlined as follows:

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Master of Business Administration Inspection on cuts: As mentioned above in the earlier section, materials are cut as

per the requirements of the order. Each cutter is given one order at a time and is asked

to carry out the cutting process effectively and efficiently. The quality assurance team

inspects the cuts randomly to ensure the standards and specifications are adhered

according to the given order.

Sewing: When the trouser cuts are sent to the stitching department, the line manager

allocates cuts to each assembly line to make sure the sewing is done as per the order

and to make the sewing process as quick as possible, to deliver the order on time.

Before the sewing/stitching process begins, the quality assurance team inspects

whether all the cuts are set accordingly (size, colour, type, etc.). While the sewing

process continues, the team randomly checks trousers to make sure the quality

standards are met.

6.4.3 Finishing Inspection

After trousers are completed it is important that unnecessary threads are removed and they

are labelled according to the waist size with right colour labels being matched to make the

look more prominent and attractive. The quality assurance team inspects all these aspects to

ensure quality. On average, at this stage, quality assurance team comes across three to four

trousers per 100 units with unnecessary threads and those are sent back immediately for the

removal of extra threads. There are occasions where the labels sent by the external partly are

not in good quality. Therefore labels allocated for other orders are utilized for urgent orders,

as a contingency practice.

6.4.4 Final Inspection

The final lap on quality assurance is to make sure right products are sent to right customers.

Before and after orders are packed the team double-checks the orders, colours and quantity

etc. in order to make sure effective distribution.

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Master of Business Administration7.0 MANAGING CAPACITY AND DEMAND

Figure 7.1: Supply Chain of Fine Line Creations

Materials are stored Retailers place orders

Releases job orders

Issue materials and receive finished goods

Releases finished trousers as per job orders

Suppliers

Office

Customers (Importer &

Retail Outlets)

Manufacturing Unit

Stores

Office places orders for material and supplier sends


As depicted in figure 7.1, the office places orders for material (fabrics, other components and

labels) from suppliers, when stocks reach the reorder level. Generally Fine Line Creations

order materials every quarter from both suppliers who provide fabric material. The other

materials (labels, buttons and zips etc.) are purchased locally every quarter. When materials

are received they are checked and sent to stores. Depending on the job order received from

buyers, the office issues job orders to manufacturing unit to obtain necessary materials from

stores to carry out the production. The finished goods are sent to stores in order to be released

to the buyers (retailers).

7.1 Inventory Management, and Purchasing & Supplier Management

One of the most significant issues faced by local garment manufacturers who cater to local

customers is to source high quality material at affordable price. It was noted that there are

four ways that local manufacturers source materials.

Directly import material from China, India and Thailand etc.

Purchase materials in the black market.

Purchase materials imported by third parties (who import in an ad-hoc way).

Purchase through wholesalers who import material.

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Master of Business AdministrationBased on the financial ability of the manufacturers, there are only few players in the industry

who directly import materials. Around 70% of the local manufacturers purchase material

from groups who source materials from renowned export oriented garment manufacturers.

The issue those manufacturers face are:

Lack of colours

Bargaining power of groups

Will not be able to sustain the business, as they depend on third parties.

7.2 Challenges faced by Fine Line Creations

In the beginning, the management of Fine Line Creations imported material from Bangkok,

Thailand to manufacture trousers. This was a time consuming job for the MD, because, every

quarter he had to visit Thailand to purchase materials. But nine years ago, the MD met with

an Indian manufacturer through the commercial section of Indian High Commission who

agreed to supply high quality material, at relatively low price, and with a range of colours.

Based on the agreement reached, from August 2002 to date Fine Line Creations source

material from ‘Rising Star Exim Private Limited’ in India and the Indian partner supplies

solely to Fine Line Creations. One of the largest buyers from Fine Line Creations who is

situated in Singapore (for export orders) has specified a supplier in India where Fine Line

should source material for their (Singapore buyer’s) orders (not the original supplier

mentioned above but, a different Indian supplier). As per the agreement with the buyer in

Singapore, the material that is used to tailor trousers for them cannot be marketed in Sri

Lanka. On the other hand there are local suppliers who provide labels, clips, buttons etc. Few

years after its establishment, the management faced a challenge to find a supplier who could

provide quality zips, buttons etc. locally. In April 2001 the management was able to find a

supplier who provided the items mentioned above in relatively closer vicinity and at a more

reasonable price. The labels are done by one of the relatives of Mr. Liyanage. In total there

are only five suppliers for Fine Line Creations. All the information outlined above could be

depicted in a table as follow.

24


Table 7.1: Details on Supplier Relationship

Item Country Relationship DurationClothing Material for Trousers Sold Locally India Nine Years.Clothing Material for Export Orders India One YearZips and Buttons Sri Lanka Ten YearsLabels Sri Lanka Twelve YearsClips Sri Lanka Four Years

7.3 Sourcing of Materials

Since Fine Line Creations deals with five suppliers both locally and internationally, it is

important to know how materials are purchased.

7.3.1 Foreign Suppliers

The materials imported from India are purchased on a quarterly credit basis. Since the

management had been dealing with the Indian party for a long period, there has been no

issues regarding payments and on receiving materials at the correct time.

7.3.2 Local Suppliers

The materials are purchased on one month credit basis from the local suppliers who provide

zips, buttons and clips. The labels are sourced at a credit basis for a period of two weeks.

25

Master of Business Administration8.0 RECOMMENDATIONS FOR EFFICIENCY IMPROVEMENT AND

COST REDUCTION

8.1 Gemba

8.1.1 Reduce Excess Movement

It was observed that the distance between material stores and cutting room is high. Therefore,

it takes a considerable amount of time to obtain materials and start the production. Instead a

store room could be created using the excess space in both the office and cutting room and

that can be used to store materials, which would lead to reduction in wastage of time, by

reducing the movements.

Table 8.1: Recommendation to Reduce Movement

Issue Recommendation Outputs OutcomeExcess movement when obtaining materials internally.

Create a new store-room using the excess space available.

Reduction on time spent on obtaining materials.

Excess movement reduced and increase in efficiency that results in productivity.


8.1.2 Ensure Proper Storing of Buffer Stock

Due to large volumes of orders being received, the management had decided to maintain

buffer stock in order to deliver goods on time. However, it was noted that buffer stock is

stored in open plastic racks. The reason to store on open racks was because the average stock

turnover period is supposed to be three to four days. However, for some colours the stock

turnover is around eight to ten days. Therefore, the longer the material is stored in the rack

the more time spent on washing the fabric. In order to eliminate the time on washing fabrics,

it is suggested to store these trousers in closed cupboards. In addition, it was noted that even

though there were no issues with pests as of now, it is suggested to proactively adopt a pest

control system to secure buffer stock.

Table 8.2: Recommendation on Storing Buffer Stock

Issue Recommendation Outputs OutcomeNo proper storage of buffer stock

Store the buffer stock in closed cupboards.Adopt a pest control system.

Eliminate the time wasted on washing trousers.Eliminate the damages caused by to pests.

Deliver a good product on time, with minimal wastages, and with increased customer satisfaction.


26

Master of Business Administration8.2 Gembutsu

8.2.1 Equipment to Track Orders on Each Stage of Production and Delivery

As mentioned in the earlier stages, the trousers are produced according to the orders received

from retailers. Currently to move items from department to department after each process,

baskets are used. However there were few cases of confusion in some divisions and it had

taken a considerable time to correct these issues. Therefore, it is suggested to adopt a tracking

system to ensure the orders are not messed-up at each stage. This issue usually happens in the

sewing and packing divisions. When a system is implemented to track the progress of the

process, it ensures that everything is done as per the order. In addition to this, it will also help

the management to identify the progress of the order at any point of time.

Table 8.3: Tracking Orders on Each Stage of Production and Delivery

Issue Recommendation Outputs OutcomeOrders being misplaced Adopting a tracking

system.Effective communication between divisions for each order.Management will be able to track the progress of each order.

On time delivery.Right products to right customers.Increased customer satisfaction.Increased efficiency.


8.3 Genjitsu

8.3.1 Installing a Dust Absorber

The factory is located in the third floor in a building in the Colombo – Kandy road, which

attracts a lot of dust into the factory premises. Due to this, the entire production floor has to

be cleaned every week and it creates delays during the seasonal period. Also some workers

have been affected with dust allergies and cold due to this. Since it is located in the hill

country, where the temperature is low, management has not air-conditioned the factory.

Therefore it is suggested to install a dust absorber, which will prevent dust from getting into

the factory premises.

Table 8.4: Installing a Dust Absorber

Issue Recommendation Outputs OutcomeDust getting into production floor.

Installing a dust absorber.

Reduces cleaning time. Effective hygiene practice.

On time delivery.Hygienic factors to create a conducive working environment for the employees.

27

Master of Business Administration8.4 Effective Management of Technology Management Process

Fine Line Creations have been able to sustain their performance with the minimal amount of

technology they have been using, but, what will be more important is to create an

environment where technology put into use for a better purpose within the organization.

Figure 8.1: Proposed Technology Cycle by the Author

Source: Author’s observations

8.4.1 Technology Acquisition

An area where Fine Line Creations will greatly benefit is through an start-to-end

implementation of an ERP system which will greatly facilitate the planning process, help

them reduce wastage, and also help the managers to allocate resources in a more appropriate

manner.

8.4.2 Automation

Currently Fine Line Creations’ employees are doing the steaming process in a manual labour

process, but, with the possibility of automating this process through a steaming machine

which has been a new product in the technology market, it will free-up more resources and

will quicken the process further. However, there are certain instances where there can be

simple improvements done to the existing processes which will greatly improve the

efficiency of the factory operations. These instances have been mentioned throughout this

document and the implementation of these changes will lead to Business Process

28

Master of Business AdministrationReengineering, as the existing processes will be changed and a change management team

must be put in place. However, BPR will greatly benefit Fine Line Creations. Asian

Productivity organization (APO) reports that in tens of BPR projects in footwear and apparel

factories in recent years the following improvements were observed within 12 months:

Greater than 10% increase in units produced per man-hour;

Greater than 5% increase in the on-time delivery rate;

Greater than 50% decrease in lead time;

Greater than 50% decrease in work-in-process level;

Greater than 5% decrease in equipment down time; and

Greater than 3% decrease in unit cost.

Source: APO, http://www.apo-tokyo.org/productivity/pmtt_016.htm

The required changes in the processes have been detailed in section five.

8.4.3 Innovation and Creativity

From the inception Fine Line Creations have been focusing on the gents’ trouser market. But,

with the use of technology which will aid automation of several processes, freeing up

resources, and give enough time to assess the current process, it will lead the way to

innovative ideas and creative thinking among the core team and employees. For example, it

can even be a variation of the current product but, may lead FLC into a new market such as

Ladies office wear pants, etc. The implementation of an ERP system will help find the loop-

holes in the production process, increase efficiency and also see the trends in the market

which were not visible earlier. These trends will lead to new opportunities and creative

business propositions.

As mentioned above, the introduction more technology into the business will help the

business create a competitive advantage will greatly aid the future standing of the

organization. The proposed Technology Management Cycle by the author will help the

organization build a strategy around technology and also will help them make technology

part of their business competence. In addition to these, the technological arm will further play

a big role in matching the offerings of the competitors and also staying abreast the demand in

the apparel market.

29

Master of Business Administration8.4.4 Innovation in the Layout of the Production Unit

Figure 8.2: Proposed Production Unit Layout


As depicted in figure 8.2, when office receives an order the information is passed to the

designing and cutting department and they obtain necessary materials from stores. Once the

cutting is completed, all components are sent to the sewing line to stitch. Then it is sent to the

finishing division for labelling and packing department, which packs the trousers as per

orders received. Finally all the finished trousers are sent to the stores. The issue in the

existing layout is that both raw material and finished products are stored in the same room.

Some times when the finished stock increases it takes a considerable time to obtain new

raw materials due to the limitation in storage capacity.

30

Master of Business Administration9.0 CONCLUSION

Apparel manufacturing remains one of the most in-demand businesses today. Starting a

clothing business is just like any other business: we need to have the resources to jumpstart

our vision, skills and know-how in managing the business, and marketing savvy to promote

the business. There must also be a business plan that will serve as our detailed guide that will

walk us through our first couple of years in business. However, small businesses face an

increasing competition from big firms given their marketing muscles and economies of scale.

Plus, small companies need to have the resources to cope with the rapid changes in apparel

trends and styles. Despite all these challenges, a small scale business like Fine Line Creations

was able to overcome these difficulties, and even grow to become a pioneer in the segment of

local branded office trouser providers. Their success story has been a guide book for all

aspiring entrepreneurs who are thinking of entering the local apparel market. What is more

fascinating is how the company with very limited resources was able to infuse quality aspects

into all of its processes. And how all of this started with the designing process. It stands as an

example of how design quality becomes the shining light to ensure and guarantee the

achievement of all expected and set requirement standards. Competing with large stalwarts

Fine Line Creations has been in existence for more than 12 years since its inception and will

grow from strength to strength due to its unique feature of quality systems. The key process

activities that differentiates Fine Line Creations has been detailed out in this report and it has

also enriched me with a lot of knowledge on the apparel industry, the challenges faced and

the hardship the employees go through in achieving the delivery promises.

31

Master of Business Administration10.0 REFERENCES

1. Asian Productivity Organization, APO,

http://www.apo-tokyo.org/productivity/pmtt_016.htm

2. Daft, R. L. (2009), Principles of Management. New Delhi: Cengage Learning India Pvt.

Ltd.

3. Gable, C. (1998), Strategic Action Planning Now Setting and Meeting Your Goals (First

Edition). US: CRC Press.

4. Khanna, R. B. (2007), Production and Operations Management (Third Edition). New

Delhi: PHI Learning Private Limited.

5. Newstrom, J. W. & Davis, K. (1993), Organizational Behavior: Human Behavior at

Work, New York: McGraw-Hill.

6. Porter, M. E. (1998), Competitive Strategy: Techniques for Analyzing Industries and

Competitors (First Edition). US: Free Press.

7. Roos, J., & Victor, B. (1999, August 4), “Towards a New Model of Strategy-making as

Serious Play”. European Management Journal, Vol. 17 No 4.

8. Wheelen, T. L., & Hunger, J. D. (1996), Strategic Management. Paris: Addison-Wesley.

32

Master of Business Administration11.0 APPENDICES – PROCESS EXPLANATION

Design/ Sketch: For the production of trousers or any other garment it is of utmost

importance to have the design on paper. This helps to do random checks on an on-

going basis to make sure that they are up to standard and also helps identify errors in

advance and to make corrective actions, which reduces the wastage at Fine Line

Creations.

Pattern Design: In sewing and fashion design, a pattern is an original garment from

which other garments of a similar style are copied, or the paper or cardboard

templates from which the parts of a garment are traced onto a fabric before cutting out

and assembling (sometimes called paper patterns). The patterns developed at Fine

Line Creations consist of the following: seam allowance, trimming allowance, darts,

and pleats, ease allowance, any special design etc.

Sample Making: The pattern is selected and a prototype is stitched/produced. The

sample garment manufacturing is done by a very efficient and technically sound

person at Fine Line Creations as this acts as the basis as to whether they should go

ahead with the order or not.

Production Pattern: The patterns of the approved sample are used to develop the

production pattern. During production pattern development, sometimes it may be

necessary to modify or make slight adjustments to the design as per the customer’s

suggestions and requests.

Grading: Pattern grading is an essential part of pattern making. It decides how

patterns increase or decrease sizes. Generally, pattern grading adjusts for people of

different ages and genders. The fabric type also influences the pattern grading

standards.

Marker Making: All the component pieces of trousers, for all the required sizes are

arranged in the design boards in such a way that maximum number of garments could

be produced with minimum fabric wastage. In other words this is the process where

Fine Line Creation’s markers try to use their fabric optimally with minimum wastage.

Markers are made for 6, 12, 18, 24 etc. pieces. Marker is also used to estimate fabric

consumption calculations.

33


Spreading: It is the process of arranging fabrics on the spreading table as per length

and width of the marker in stack form. Normally height of the lay/fabric is limited up

to a maximum of six inches high. In Fine Line Creations, a four inch to five inch

height is used as the benchmark for the fabric spread.

Fabric Cutting: The cutting department cuts the material that has already been

spread, as per the pattern board designed in the earlier process. Primary activities of

cutting department are: cut materials as per the given pattern and cut the accurate

lengths as per the given waist sizes. In order to minimize the losses on cutting

materials, Fine Line Creations provide four to five pattern boards in each waist sizes

to the cutting team, where they will be able to cut the trouser as per set standards.

Through this they were able to reduce the defect rate to less than 0.1%. Once the

trousers are cut as per the given standards, the outputs of the process are sent to the

sorting and bundling section.

Sorting/ Bundling: After the fabric is cut into components, they are sorted and stored

separately according to the sizes, colours and designs. Because, the size of a pocket

for a waist size of 32 is different to that of 38. To avoid such errors Fine Line

Creations uses different code numbers for each design and they are stored separately.

Sewing: The sewing division stitches together all the different components of

trousers. The components are received as pockets, left / right sides of trouser, loops

etc. and all those items are put together to stitch a trouser. Due to the larger number of

orders received per day, it is vital to carryout sewing with minimum defects.

Therefore, sewing section is divided into three sections to sew pleat, pleat less and

slim pleat trousers. Three teams are assigned for each design and components are sent

accordingly to each team, to carry out the process. Each member of the team is given

a target of 50 trousers per day and there are instances where some members exceed

over 75 units per day. During the festival season, where the factory operates 24 / 7,

the number of units stitched is over 120 per member and it is important to note that all

sewing teams have been practicing a near zero defects policy for the past seven years.

The quality assurance team randomly checks trousers during the sewing process to

ensure the quality of the product.

Inspection: Each and every garment after the completion of the sewing process,

passes through the inspection table, where the garments are thoroughly checked to

34

Master of Business Administrationdetect any defect (if present in the garment). Examples of possible defects may be,

variation of measurement, sewing defect, fabric defects, spots etc. If the defect is

possible to be corrected, then the garment is sent to the respective person for

corrections. If the defect won’t be able to be corrected, then the garment is separated

and classified as wastage.

Pressing / Finishing: Once the trousers are stitched, it is sent to the finishing

department to carry out final operational activities. The core functions of finishing

department are:

o Cutting threads: when a trouser is stitched there are number of threads that come

out from certain areas and it is necessary to remove those before sending to

retailers. There are three staff members allocated to this task and during peak

times, an additional five or six people work on part time basis. Once the unwanted

threads are removed, the quality is inspected to make sure the trouser is free from

unwanted threads.

o Ironing: The next step is to iron the trousers. This is a fairly straight forward

aspect and no quality inspection is involved.

o Labelling: All the ironed trousers are sent to the labelling division to label the tags

9 to 5 (which provide information such as brand name, ironing temperature,

washing instructions etc.) and the tag on waist size. There are different labels to

match the colours of the trousers and it is the duty of the labelling section to put the

right label to the right trouser with the right waist size specifications. Inspection is

done during and after the process, in order to make sure labelling is done correctly.

Final Inspection: It is the last stage of inspection of the manufactured garments, to

detect any defective garments before packing. Thorough checking is done on every

trouser to ensure the delight of the customers and also to build the brand name.

Packing: The final lap of the production process is to pack the trousers as per the

orders received. The trousers are sent as per the orders received from retailers.

However, during and after the process the manager herself inspects the order to make

sure right products are sent to right customers. Fine Line Creations follows a ‘Job Lot

Storage’ method to store the produced trousers.

Dispatch: The cartons of the manufactured garments stored in a ‘job lot storage’

method are delivered or placed in the dispatch department, from where the garments

are transported for shipment.

35

Mba 7061 Operations Management

Leadership & Management

fine line

sri lankan

increased

authors proposed

pest control

asian productivity

quality assurance

complete process