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Value of Information Sharing Between and Among the Functional Departments: An Insight*

CASE STUDY, OPERATIONS MANAGEMENT
ET Cases, 11 pages
AUTHOR(S) : T. Radha Ramanan (Assistant Professor, IIM Indore)

Case Preview

Value of Information Sharing Between and Among the Functional Departments: An Insight

 

The General Manager – Operations (GM) of a small scale company M/s XYZ Company had was employing most of his working hours resolving conflicts between various functional departments than to focus on planning for the capacity addition, modernizing of the shop floor and identifying ways of improving the competitiveness of the company. Apart from the conflicts the other problems that he was facing was long lead time, delay in deliveries, customer complaints regarding the quality, high inventory
of raw materi.

XYZ Limited: Company Background

M/s XYZ Limited was an ISO certified small scale manufacturing company. The company had ten departments namely, Marketing, Design, Personnel, Finance, Purchase, Production Planning and Control, Production, Stores, Quality and New Product Development. The firm produces products in a made-toorder environment. The lead time for delivery ranges between 45 days and 10 months depending upon the type of products. The production of the company can be divided into three divisions. There was a fabrication shop that includes painting and plating, a machine shop that had manually operated machine tools and an assembly shop. There were 80 shop floor employees and around 40 administrative employees. Currently the firm M/s XYZ Limited had multiple suppliers and the company had decided to prune the number of suppliers.........

Teaching Note Preview

Value of Information Sharing Between and Among the Functional Departments: An Insight

 

Synopsis

The case study provides snapshot of the various activities, and also various problems in the process, carried out by the different departments of a hypothetical company. The firm produces panel assemblies and switch assemblies that are used by HT and LT consumers. Their order position is quite comfortable. The marketing department is doing a good job and so is the planning department. The Production Manager utilizes his resources well with redeployment of labor among his sections.

Marketing department which is in interface with its customers has seized the GM about the problems that customers face. Apart from the customer side delivery problems, GM has a gut feeling that the inventory in the stores/shop floor is high and hence the cost. As a first step to identification of the cost the GM has instructed the finance department to work out the standard cost. He has also asked the Purchase Department to identify the nature the procurement, go for the lowest quote, and to estimate the cost of moving to a newer type of procurement method.

The data for the calculations of the ordering cost, carrying cost are provided. The previous year demand and the price details are provided for analysis. The case study illustrates the problem regarding the non-sharing of information among the departments, the errors that may occur in calculation of the capacity requirements, the need for inventory policies and the approaches of evaluating them.

Requirements

A technical note is required on Inventory management and Lot sizing techniques. The focus of the technical note should be on economic order quantity, and other lot sizing methods. Rough cut capacity planning and introduction to capacity calculations are also required to be addressed in the technical note.

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Product code: OM-1-0029, OM-1-0029A

Abstract



Executive Summary

The General Manager (operations) was seized with the perennial problem of facing conflicts among the departments. All the departments individually seem to work well but collectively there seems to poor service level with respect to the delivery delays, high quality complaints, higher level of inventory, etc. The case was to be seen from the perspective of how the GM can analyse the problem and where could be the potential solution.

The case provides snapshot of the various activities, and also various problems in the process, carried out by the different departments of a hypothetical company. The firm produces panel assemblies and switch assemblies that were used by HT and LT consumers. Their order position was quite comfortable. The Marketing Department was doing a good job and so was the planning Department. The production manager utilizes his resources well with redeployment of labor among his sections.

Marketing Department which was in interface with its customers had seized the GM about the problems that customers face. Apart from the customer side delivery problems, GM had a gut feeling that the inventory in the stores/shop floor was high and hence the cost. As a first step to identification of the cost the GM had instructed the finance Department to work out the standard cost. He had also asked the Purchase Department to identify the nature the procurement, go for the lowest quote, and to estimate the cost of moving to a newer type of procurement method.

The data for the calculations of the ordering cost, carrying cost were provided. The previous year demand and the price details were provided for analysis. The case illustrates the problem regarding the non-sharing of information among the departments, the errors that may occur in calculation of the capacity requirements, the need for inventory policies and the approaches of evaluating them. The case could be used for discussion as a part of operations management and supply chain management introductory sessions.


Abstract


The objective of the case was to drive in the point each of the department within a firm try to optimize its own activity and the decision taken by them was restricted to information that each department possess. In the process of individual department optimization, the case wants to illustrate that the synergy was lost and also the optimization of the cost incurred by the company. The case had been developed with the scope for discussion about the need and importance of information sharing among intra company interdepartmental interaction. The case would help in understanding the capacity planning; lot sizing and importance of information sharing. The areas where the case can be discussed were Operations Management and Supply Chain Management.


* GSMC 2014, IIM Raipur



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 - Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)
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