Managing Operations

Managing Operations

1. Introduction to tire retreading and its process

Arpico is in the business of tyre retreading, distribution and trading. Tire rebuilding basic procedure is tire old rubber is removed then cement added and at last new rubber is fixed in place. 70% to 80% of all radial truck tires today are retreaded. All major airlines use retreads. Just as tires are undergoing constant innovation, so are retreads. New tread compounds, tread, and application techniques are constantly being developed. The reason for retreads is simple: money. Retreads save a lot of money, because retreading worn tire costs far less than buying a new tire.

1.1 Operations problems and relationship to operations practice

Main problem is responding to changing environment to be in the business (survival) Changes are mainly changing technology, changing government, and regulations changing in economist situations. Profitability is the second thing. Many organisations fail to adjust according to environment change.

Tire casing failures

After receiving wasted tires to the factory each tire shall be carefully inspected. The tyre shall be placed on a mechanical spreader which distorts the nature contour of the tyre sufficient to expose any evidence of ply separation, sidewall separation impact breaks or any other defects, without damaging the bead. Adequate lighting shall be providing to examine the carcass. As the casing is rotated, the inspector checks inside and outside with his hands and eyes. Here the decision is made whether to retreat or not. Therefore, initial inspection may be the most important part of the retreat process. Tire failures happens because of tire body failing. There are several reasons such as ply separation, sidewall separation, bead damage, tyres having circumferential cracks to chord and damaged which sometimes never identified during initial inspection.

ü Solution for this problem is Tire X ray machine which identify many ply separations, damages and avoid tire body failures.

ü Issue job card for each tire about faulty of the tire

Process Failure

Any tire failures on the road on or before 200miles can be identified as process failure. There are number of reasons for this failure such as damages under the tread, bad injury repairs, and bad repairs, curing failures because of tire chambering problems and any other failures not according to the recommended quality standard reprocessed them. On completion of tire retreading process inspector check by hands and eyes, there is no any mechanical or machinery equipment to check the processed tires. As a result company get more customer complaints and have to recall many tires in order to re-process them.

ü This problem can be solved by observing the chamber charts and by using tire X-Ray machine for good final inspection.

Customer Tire maintenance

This is because of customer ignorance of proper tyre maintenance. Kerb the sidewalls, over or under inflation, wrong application, overloading, run over objects, puncture and run flat cause lot more damages to new rebuild tires.

ü Issue customers tire maintenance guideline leaflet with the retreated tires.

Repair material contaminations

Contaminant repair materials can go into patches in the production process, faulty cements, and out of date filling gums.

ü Expiry date check list and correct temperature control storage facilities

Employee lack of knowledge

Employees have not got proper training on production line and customer service which effect to quality of service and product

ü Training and education should be provided

Rejected Tire storage and environmental problems

Storage of rejected tires are stacked open area which rainy days water build up inside the tires cause environmental problems such as mosquitoes. It is really effect to health and safety of the workers and neighbours.

ü Company is needed to implement ISO 14000 Environmental Management system to conserve the natural resource to build an eco-friendly environment for future generations.

Arpico does not follow maintenance schedule properly which production line delays all the time due to machine break down and rework all the time. The average production capacity of the company is 240 tires per day. Employees work 24/7 throughout the year this production line as not functioning and fulfils the customer's needs regularly the tire retreading process. [Retread Manufacturers Association (2009) [Internet]

2. Tire Retreading process map

Tyre receiving The wasted tyres are received to the factory at this stage. An identification job number is also painted.

Storage The tyres are stacked according to size and required by date.

Take to production

Initial inspection Thorough inspection of the tyre for defects and damages. Unsuitable tyres are rejected. Venting A series of small holes are made on the tyre in designated areas to remove trapped air in the plys

Storage The tyres are stacked ready for buffing

3.1 Fish bone theory

Project planning tools and techniques can be used in process improvement one of them known as fish bone theory. It is very simple and open theory of problem solving. Data such as timing, cost and quality matters need to be collected external and internal customers it has to be done with great care. Defects of tires retreading detects and finally find source for the problem. This can be assessed by using fish bone theory.

Problem

Or Effect

Factors

[Chapman A, Businessballs.com TQM process improvement tools 2010]

3.2 Total Quality Management

TQM approach to quality is clearly different from traditional quality control function practice in organisation. However the Total Quality Management approach to quality which develop about 21/2 decade ago does not view quality management as an isolated function of one department instead it use quality from strategic point of view with the involvement of top management is guiding Philosophy that direct the activities of the whole organization. It has a wider focus and view quality in the contest of continuous improvement of products, process, system, structure of the company procedure, policy, etc.

Total quality management can be summarized and explain as follow

1. Prevention Maintenance

This is a kind of maintenance done proactively; i.e. remedial action is taken before a plant is actually broken down. It is a strategy to prevent unexpected or sudden break down of tire retreading equipments. The aim is to increase the plant availability, reduce breakdowns, streamlines maintenance, reduce maintenance cost. Continuous practice of prevention maintenance will lead to reduction in corrective maintenance. There are three categories of prevention maintenance as follow On-condition maintenance, Condition Monitor and Scheduled

2. Zero Defects (Improvement Maintenance)

This is an attempt to reduce or eliminate the need for maintenance. This aims at tackling the issue at the source itself. Continuous improvement of technology and fair amount of research and development are involved in searching for technologies which require very little or no maintenance. Arpico production line uses many tools and their bearings can be permanently lubricated, self adjusting, etc. Always the technology is advancing towards developing maintenance free equipment.

3. Getting things right for the first time

Identify early defective and not to produce something defective. Arpico some tires never been identified at the initial inspection and end after chambering process end result of the tire is useless tire. Required ultrasonic or tire x-tray machine for good initial inspection.

4. Quality involves everybody

Quality is not just involved with production. Quality involves everybody, as well as human resources marketing, and finance. Arpico need to Implement ISO 14000 Environmental system to conserve the natural resources. Arpico need to fulfill this main objective to build an eco-friendly environment for future generation.

5. Continuous Improvement

Organizations must always be searching for ways to develop processes to assist quality. Prevention maintenance programme should be undertaken on a continuous improvement basis. This is best achieved through a continuous improvement process where elements of a prevention maintenance programme are implemented in a cycle manner.

6. Employee involvement

Employees involved in production have a very important role to take part in noticing development opportunities for quality and in recognizing quality problems. [Tutor2u 2009 [Internet]]

4. Comparison theory with the practice

Capacity Planning

Arpico daily tire retreading target is 240 but the demand is 400. In order to fulfil the demand Arpico has to plan the capacity by adding new machinery like tire baking chambers, add another production line, hire new staff and more extra shift but stopping over capacity. Implementing new technology equipment save the space because smaller and accurate such as ultrasonic or x-tray for tire inspection.

1 Cost has to balance with tire demand and new capacity in order to avoid high unit cost.

2 In order to minimize revenue lost ,production should be balanced with new capacity

3 Completed tires should be delivered fast to customer by contacting them or delivery promise to reduce working capital and make extra space for finished tires.

4 Quality must be up to the standards even there is high demand. Employees who recruiting for new demand should be enough for production otherwise temporary employees can affect for quality of tires in the future.

5 New machinery and equipment should be able to fulfil customer demand which 400 tires a day. They should be build extra room for receiving tires

6 New capacity level should close to demand in case of problem in supply.

7 Arpico should try to minimize extra capacity. It can be done by good market research for future demands

Capacity planning Considerations

Forecast tires demand and supply of raw materials according to seasons, daily and weekly basis. Time of required tire operation, speed and quality depend on entire new and existing machinery effectiveness. In order to avoid unit cost, capacity planning team should have good training about future excess capacity.

Facility location and transportation

Location is perfect for this production line due to following reasons. Close to city and industrial zone, easy accessibility of customers, quality of working conditions, and walking distance for restaurants and shops, which helpful for employees and customers, close to motor way, and harbor. Cheap labour is available because of high unemployment of the area. Arpico owned the land and construction.

Queuing theory and system

In tire retreading production line there is a queues of partly – made tires waiting until there are curing chambers ready, tires has to be dried before go to next process, wait to be carried out the next of the production and queues of finished and tires waiting for customers as shown on tire retreading process. Over head queuing rail required for effective queuing.

Scheduling

Production is weekly forecasted according to customer requirement. Then, raw materials are purchased from suppliers. Each tire can be marked as date of received, process time schedule, date of dispatched as well as job sheet. Most common tool will be a grant chart. As example before apply new tread for tire need to be buffing to removal of previous tread material and the shaping sizing and texturing of the casing surface. Volume is always high production has failed to meet customer requirement. The average production capacity of this factory is 240 per day and demand is 400 tires per day.

Inventory management

Arpico should build three type of Inventory management for its operation. First one is finished tires gone through production process but not collected. Secondly working in progress inventory tires is not completed. Work in progress inventory in a tire production before initial inspection tires have to be stored. Thirdly Raw material inventory includes rubber for tire repair, thread, cements (shouldn't oxidized before used), and gum are raw materials.

Just in time inventory

Just-in-time (JIT) inventory control materials should reach just as they are required in production line. Rubber threads arrive for application for repaired tire when they are ready for curing process. [RDI [2009] Chapter 2.2: TQM process improvement tools]

Implementing total quality management in Arpico

Quality Circle Consider, analyze, investigate and resolve production and quality problems.

How service quality characteristics apply in practice

* Employees, who meet customers, must have a good training and interpersonal skills. Training and motivation make staff to achieve budgets and brief the daily targeted budget. Make a chart for internal customer (staff) of their performance and award employee of the month.

* Every supplier or staff must say something about the tire production

* Tire should be well finished in attractive manner

* Tires should deliver on time to satisfy the customer

* Get customer feedback from customer survey to improve the service and respond to customer complaint promptly

How product quality characteristics of the tire apply in practice

* Functionality – road holding, and reduce fuel consumption

* Appearance – shape of the tire

* Reliability – time of failure of the tire

* Durability - during retreading process makes the tire useful life and reusable.

* Recovery – making less mistake at the initial inspection make it easy to repair

* Contact – employee knowledge and understanding of the product

Decide how to measure each quality characteristic

* Check the production each stage and pre-production check such as material rubber contamination before repair the tire.

* Do a random sample check such as tread hardness, repair checks etc,

* Service check can be done by mystery shopping at Arpico outlets and distribution

* Quality assurance mark such as ISO 9001 and 14001 stamped on the tire ensure the quality of the tire retread.

TQM is hard to introduce to a company if the company is not really aware of customer needs and production process. Main challenge of TQM is; it has to be introduced to whole Arpico including every step of process of external and internal customers.

As an example, management of Arpico has to emphasis employees that they are involving with production line by providing adequate resources and training for employees. There are advantages of that which are low employee turnover, low grievance rate, and low accident which increase performance with means of profit. Identify improvement by introducing customer service chart for employees and customers

Effective implementation of TQM requires:

* Combination of true anxiety of quality into whole Arpico

* Design additional business systems in order to make quality strong

* Continuous exploration for latest and improved ways of retreading tires

* Research and development on manual tire inspection and new ultrasonic tire inspection in quality issues

* strategic objectives can be achieved by targeting integration of quality

* Obligation from Arpico senior supervision

* Make change happen by flexible attitude of staff

Practical quality control techniques are statistical quality control, inspection, quality assurance, etc.

1. Arpico Senior management knowledge of quality control techniques in tire retread

2. Build a team and recognized pilot projects need to be done in problem areas

3. Make all Arpico employees aware of TQM and explained commitment of senior management

4. Introduce Arpico training programmes

5. Introduce Total Quality Management plan for rubber suppliers

6. New quality planning and organizing connecting to prevention maintenance, continuous improvement, decrease in variation, etc, should be introduced.

7. Arpico scheme need to be audited and monitored.

Arpico employees need to understand their problem solving skills, senior managers find solutions for problems; develop present way of working system. Senior managers should understand Arpico internal customers needs and wants and should provide as required facilities. Mangers need to identify well performed staff and grad them accordingly. Educate the staff about continuous improvement and how it is important of value of Arpico. Workers should be shown how their individual action effect on Arpico goals and objectives

Quality on supplier (To stop repair material contamination problem)

* Assess quality of supplier commitment

* Find out raw material supplier quality standards

* Issue supplier a guideline of quality Arpico expect if the supplier can't full fill them go for another supplier.

If the supplier quality standard fulfil Arpico standards,

* Monitor the quality of raw rubber, cement, other chemicals and expiry dates. Service wise: servicing the machines according to right stand like prevention maintenance.

* Do a comparison between Arpico customer service and supplier customer service to Arpico.

* If there any continuous negative impact on customers about tire retreading Arpico has to move to another supplier.

(De Silva S. (2010) Phone Interview)

5. Consideration of its impact on quality focus

Company quality policy is to delight their customers by providing product and services that not only meet their needs but also exceed their expectations. They are committed to provide training to their employees and provide safe environment while satisfying the stakeholder interest.

Quality of consistent of tires

Encourage customer to repeat, which help company to reduce investing on marketing, promotion and sales promotion cost that generate new customers. These things make Arpico more profitable. By increasing 5% customer satisfaction Arpico can achieved 100% profit. Issuing loyalty cards and offer loyalty points each time they retread tires and issue gift vouchers and discount for the points

Measures of new operational performance

* Layout facility – space availability for each unit

* Stands of working place and its methods can be measured throughout accident rate, and extra hour's requirement.

* Capacity management – full percentage of equipment availability and overtime availability

* Activity planning and scheduling – work progress level and average customer queuing for tire retread and repair

* Quality management – rate of rejection of tires, customer refunds and exchanges, customer complaint rate, rejected batch of tires rate, tire recalls, and tire rework due to failure at the production line.

* Performance feedback can get from benchmarking

New quality of a tire and how these effect to Arpico brand name

1. Performance – tire balance on high speed which less maintenance for wheel balancing of the vehicle which less fuel consumptions.

2. Features – Tube tire can be made tubeless tire

3. Reliability - ability of withstand on rough conditions such as extreme hot conditions.

4. Conformance – tire tread should be made according ISO 9000 and 9001 standards and need to implement ISO 14000 for waste tires.

5. Durability – 2 years Guaranty of the retread tire

6. Serviceability – free guild line for tire maintenance and free tire maintenance within guaranty limit.

7. Aesthetics – Treads are made to latest design

8. Perceived quality – Reputation of Arpico tire

New service quality of Arpico

1. Reliability –Accuracy of making the tire with balance to make less fuel consumption vehicle perform well.

2. Responsiveness – Service tires as promise on time and Tires should deliver on time to satisfy the customer

3. Competence - Employee's meets customers must good training and good interpersonal skills. Train, motivate and make staff fast to achieve budget, explaining the daily targeted company budget. Make a chart for internal customer (staff) of their performance and award employee of the month

4. Access - Open 24hours outlet for customer for service and remind customers via a online service

5. Courtesy – Friendly customer service, smile, knowledge of product and service

6. Communication - Communication with customer effect the quality – quality customer service, clear, straight forward.

7. Credibility – trustworthiness and honest of Arpico and its employee.

8. Security – All vehicle depend on the safety of a tire therefore they have to low risk

9. Understanding the customer – Extra service for regular customers.

10. Tangibles – provide waiting area, refreshing place, reading magazine or news paper for customer who come collection

How Technology can help for quality

Introducing new ultrasonic or x-ray machine for tire inspections identify even minor defects. To manage inventory efficiently provide online facility for customers to inform when retread tires are ready to be collected.

Investors in people (liP)

Arpico greatest asset is people and their quality can be achieved by workplace pride at different stage of Arpico, motivation, training, and give more responsibility for employees. Arpico should invest in its staff improvement which directly affect on customer repeat.

(Nugegoda D. (2010) Phone Interview)

6. Improve by Project planning

* Transport – New machinery, tools, etc has to be transported the location

* Supply – supply of raw material has to be increased with the new lay out of the production line

* Service – maintaining more tool and equipment there should good scheduling for maintenance

New project characteristics

Arpico objective is meeting the customer demand by retreading 400 tires a day. There should be skilled staff and required raw materials for production. Estimate the cost for establishment and development of new production line. There is no new product on this new production line but there are new equipments therefore tests need to be carried out. It is really worth high investment on this project because high demand is already there.

All parties in every stage as follow proper legal contract with the contractor's specification of covering details, recordings, costs, project management, termination, development, finalization and transportation should agree.

Activity plan for expected start and finish times for all construction and materials need for new plant. Evaluate project direction by monitoring closely with scheduling and planning. After completing the project cost and budget. The evaluation and review will decide the achievement of the project's accomplishment.

Activity planning

Activity scheduling technique – Design Grantt chart tire retreading activities completing according set finished date. Arpico got operational risk which is not fulfilling customer demands

Process of the project

1. Controlling activities

2. Monitored measures

* Costs beyond funds, enough cash for the project, and supplier price change of materials effects cost again, too much overtime for employee effect cost of the project.

* Alterations in project scale, poor technical performance, monitoring failures, errors and mistakes in information effect of quality time and cost

* Material and supplier delay for project, consumer's delivery date changes effect on time and cost of the project

* Project activities not started and finished and lost milestones

3. Bring the project back to original position

Quality control process

Tires inspecting machines, material use for repair tires, employee's knowledge, etc, effect quality of final retread tire. Quality control is very important to Arpico.

Check quality characteristics

Statistic process control (SPC) attaches to control chats to check quality characteristics of each stage of the tire production line. The power control charts are capable set control limits of variation of the process of each stage (+3 is the limit).This chart can be used as right or wrong measurement of quality characteristics of process. Manager can identify whenever any process goes out of control.

Sampling methods help manager to understand risk of this operation when they take make decisions and these samples risk can be drawn on operating characteristics curve. (Chapman A, Businessballs.com TQM process improvement tools, Silva H.D.K. (2010) Phone Interview)

7. Recommendations and conclusion

1. Setting standards of performance of employees - Explain employees what customers expecting from them how the management is going to evaluate them. Give more training and experience difficult area on production line and these things assist for positive goal.

2. Quality Assurance system set minimum quality standards such as ISO 9000, 9001 and ISO14000. With these standards check list comes to measure the standards. This can be issued to raw material providers such design of tire tread, durability of repairing rubber materials and machinery maintenance.

Environmental Management ISO14000

Arpico is committed to provide a safe and comfortable environment to their employees, neighbours and customers by maintaining environmental friendly conditions.

Being aware that energy is an essential part of their input, they will have to conserve energy, reduce and recycle their waste, be environmentally sensitive in their purchasing in order to encourage sustainable development of the company.

They will also have to continuously review and improve their commitment to promote an environmentally conscious culture within the company and thereby safe guard their eco-systems, promote efficiency and create use of resources to increase productivity and profitability of the company.

Their objectives are as follow;

1. Conserve the natural resources around the factory

2. Take all steps to prevent environmental pollution (e.g. waste tires)

3. Reduce industrial; waste and consumption of resources relatively to manufacturing (Material such as rubber, cement, etc/Energy mainly electricity)

4. Work towards a continual sustainable development

5. To maintain an accident / injury free work place comply with current regulations worldwide set internal standards and requirements

Introducing special area for error tire instead of putting them back again on the production in order to achieve constants demand.

Preventative action

Prevention is better than cure. Collect data on capacity planning, employee training, production layout design and maintenance and analysis them to find out the problem that give solution for true problems finally implement solutions for development of process performance.

8. References

1. Retread Manufacturers Association [Internet] Available at: http://www.retreadingbusiness.com/technical/tyrefailures.asp (Accessed 18th January 2010)

2. RDI [2009] Chapter 2.2: TQM process improvement tools

3. RDI [2009] Chapter 2.2: TQM process improvement tools, p1

4. RDI [2009] Chapter 3.1 Project and operational control, p10

5. Tutor2u [Internet] http://tutor2u.net/business/production/quality_tqm.htm (Accessed on 18th January 2010)

6. Chapman A, Businessballs.com http://www.businessballs.com/qualitymanagement.htm; England, Leicester: TQM process improvement tools (Accessed on 18th January 2010)

7. Nugegoda D. (2010) Phone Interview with Arpico Company Sri Lanka Personal Manager (5th January 2010)

8. Samarathna L. (2010) Phone Interview with Arpico Company Sri Lanka Manufacturing Manager (5th January 2010)

9. Silva H.D.K. (2010) Phone Interview with Arpico Company Sri Lanka Marketing Manager (15th January 2010)

10. De Silva S. (2010) Phone Interview with Arpico Company Sri Lanka Quality Assurance and Technical Training (15th January 2010)

9. Bibliography

1. Tompkins E., (1981) The History of the Pneumatic Tyre; Clark S.K. (ed.) (1981), Mechanics of Pneumatic Tires, rev. ed.; A.N. Gent and D.I. Livingston, “Automobile Tires,” in Anthony Kelly (ed.) (1994), Concise Encyclopedia of Composite Materials, rev. ed., pp. 21–24; James E. Mark, Burak Erman, and Frederick R. Eirich (eds.) (1994), Science and Technology of Rubber, 2nd ed. United Kingdom, Birmingham.

2. Bandage Incorporation and Truck tire retreading (1995) Tire Wear Condition: USA

3. Institute of Sri Lankan standard (2009) ISO Standard: Sri Lanka


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