Comparison Between Manufacturing Company and Service Company

I am going to analyze and discuses on behalf of manufacturing industry (ALKEM LABORATORIES) and service company (WALMART) on the basis of different operations and functions.

ALKEM LABORATORIES is INDIA based pharmaceuticals manufacturing company which formulate different types of medicines. it is rated the No 2nd company in the overall antibacterial segment, No.1st in cephalosporin formulation and No.3rd in over all Indian market. Alkem laboratories operates different operations like process design (arranging the stores layout to give smooth and effective flow of customers), product design (designing stylist products that can be flat packed efficiently), job design (making sure that all staff can contribute to the company’s success), supply design (locating stores of an appropriate size in the most effective place), etc during manufacturing process as well as other operations. Alkem has many customers in domestic markets (India) and international market (Kenya, Nigeria, south Africa, Sri Lanka, Vietnam, Mongolia, Malaysia, Myanmar, Cambodia, Yemen, America, Eurasia, etc.)

TRANSFORMATION / MANUFACTURING PROCESSES

As per the consideration of TABLET MANUFACTURING process fig.1 shows the basic block diagram of tablet TRANSFORMATION PROCESS FLOW CHART.

VISUAL INSPECTION & METAL DETECTION

SECONDARY PACKING MATERIAL

SECONDARY PACKING

TRANSFER TO FINISING GOODS STORE

GRANULATION 1&2

COMPRESSION

BLISTER OR STRIP PACKING

PRIMARY PACKING MATERIAL

COATING IF APPLICABLE

RM RECEIPT & TRANSFER TO MFG AREA

Fig. 1 transformation or manufacturing process flow diagram.

Granulation is a process by raw materials are mixing as per the required for tablet specification. Granulation take more time in tablet manufacturing process so we can say that this is internal part of bottleneck process. After granulation, compression perform to give specific required shape & desired size of tablets. After finish compression process tablets goes to coating area where reduce mask the unpleasant test and odour. Visual inspection machines are used for finding damaged core or coated tablets. The last but not least process is packaging and it divide into two ways i.e. primary packaging with blister and secondary packaging with strip. After completion all these process finishing tablets transfer to finishing goods store as per inventory management.

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WALMART

Wal-Mart is largest retailer service company in the world, headquarter in USA. The first Wal-mart store was opened by Sam Walton in 19961 in Bentonville, Arkansas. Wal-mart adopt different process management during operation like capacity management (coping with fluctuation in demand) , inventory (avoiding running out of products from sale) management, supply chain management (arranging for delivery of products to stores) etc. Wal-mart has worldwide customers. Wal-mart lays lots of values on different emphasis, example associate opportunity, sustainability, responsible sourcing, make large communities.

Fig 2 : Wal-mart format

Reference:- http://www.walmart.com/cp/All-Departments/121828

Accenture consulting (for fig 2,3,4)

Figure3:-wal-mart operating diagram

DIVISON WISE SALES

Fig4:- Wal-mart Supply Chain complexities

COMPARE BETWEEN ALKEM LABORATORIES AND WAL-MART ON THE BASIS OF COMPETITIVE PRIORITIES & CORPORATE STRATEGY

Comparison on the basis of COMPETITIVE PRIORITIES

COMPETITIVE PRIORITIES

ALKEM LEBORETORIES

WAL-MART

COST;

High cost

No

No

Low cost

Yes

Yes

QUALITY;

Top quality

yes

No

Consistent quality

Yes

Yes

TIME;

Delivery speed

No

No

On time delivery

Yes

Yes

FLEXIBILITY; customization

Yes

No

Variety

Yes

Yes

Volume flexibility

Yes

No

Competitive priorities is a factors that can deliver cost, quality, time, flexibility, etc. that define satisfy by internal and external customer requirements. It also has ability to maintain existing as well as new customer demand.

( Krajewski, page no.30)

The Similarity between ALKEM laboratories and Wal-mart on the basis of competitive priorities are;

Low cost

Consistent quality

On time delivery &

variety

ALKEM laboratories and WAL-MART has low cost, because ALKEM has its own industry to formulate many types of raw materials (granules). which is very near to product manufacturing unit and other reason that many customer in the market. Apart from this causes they have own biogas plant which produce half electricity of the total consumption. WAL-MART also has low cost priority because today market facing with too competition so they need to maintain customers and loyalty and it can only happen with provide low cost product without affecting quality. One reason for low cost is their world impact i.e. world no.1 supplier as supermarket services.

Consistence quality is all about expectations of the external customers specification on the consistent basis. ALKEM laboratories provide consistence quality because they have separate quality and control department to assure about quality. So that they always keep the defect free quality parameters due to update production process after every steps of manufacturing process. WAL-MART also carry consistent quality performance for that achieve customers loyalty. It provide defect less product in the selves they cannot compromise with customers faith. WAL-MAET always monitor consistently of defectively product and manufacturing date and its expiry date.

On time delivery is also an essential similarity of both company ALKEM and WAL-MART. In pharmaceutical company like ALKEM has on time delivery because it products has limited period of time, and protect market reputation so that it carry on time delivery to avoid product waste and customer unsatisfaction. Same condition is apply in WAL-MART because they also tend to fulfil all satisfaction of customers and their demand by product.

ALKEM laboratories provides different types of medicines (different types of tablets, injections, dry powder syrups, liquid syrups, etc ) as per the customer requirements and demand. ALKEM laboratories has cephalosporin formulation group and antibacterial segment group that is unique variety in Indian market. WAL-MART also provides large range of variety with different brands with different products as per all types of customers considerations regarding cost, variations etc.

The dissimilarity between ALKEM laboratories and Wal-mart on the basis of competitive priorities are;

Top quality

Customization

Volume flexibility

ALKEM laboratories provide top quality because ALKEM formulate cephalosporin formulation product which has high customer interaction and involvement. Customer interaction all about unique product like cephalosporin and antibacterial medicine that are only provide by ALKEM laboratories in Indian market with desired quantity, durability, hardness, etc. ALKEM product has more demanding by customers so it’s also one of reason to make top quality product company.

ALKEM try to satisfy each and every customer with their desirable medicine (with effective and quick action without any sidefect ). Their competitive priority is a customisation. They formulate medicine depend upon the age like children (0 – 11 years), teenagers (12 – 17 years), adults (18 – 32 years) etc. because every does of medicine is defend by parameters quantity of quality depend on age. Medicine also characterise by design shape and test which also depend on age, for example children likes sweets medicine with small size of tablets, etc.

ALKEM laboratories has large volume flexibility because they are able to expand product manufacturing capacity as per customer demand. The volume flexibility basically carry depend on demand and requirement.

Comparison on the basis of CORPORATE STRATEGY

Corporate strategy is a strategy which provides positions itself in its global, economic, political and social environment. In other words corporate strategy gives positioning of a corporation and the business. Corporate strategy consists with Environmental scanning, Developing core competencies ( workforce, facilities, market and financial, systems and technology ), developing core processes and global strategy.

(reference:- lecture slides notes & OM book by Robert Johnston 5th edition; page no 92 )

CORPORATE STRATEGY

ALKEM LEBORETORIES

WAL-MART

Cost leadership

Yes

Yes

Product leadership

Yes

No

Customer intimacy

Yes

Yes

Cost leadership

ALKEM laboratories and WAL-MART both caries cost leadership. ALKEM lab use cost leadership to increase maximum share. As I discussed in above, ALKEM deliver low cost product with high quality product because they have own generate raw materials by fully automated system so they also minimize labour cost. WAL-MART has worldwide branches with no.1 position in their field so certainly market share also increase by cost leadership technique. WAL-MART has gained maximum share price in USA market by the using cot effective technique as compare with other competitors. It has variety of items with variety of price so it able to satisfy customers with effective less cost. (reference by OM book page 47)

Product leadership

ALKEM laboratories is a product leadership company because they are providing effective unique quality of medicine in the market by considering each different types of customers need. So cost also differ from variation in but ALKEM never compromise its quality with cost. WAL-MART does not caries product leadership because it only concentrate on how to minimize cost of the product to stand up in the service market with customer satisfaction. (reference by OM book ‘8th’ page 47)

Customer intimacy

ALKEM laboratories as well as WAL-MART both has customer intimacy because they both have technique to understand and maintain existing and new customers requirements. WAL-MART use measuring card so that they are able to know customer interest. ALKEM lab also use measuring chart for that measure customer interaction, this can measure yearly or half yearly. So by this technique both companies are able to find customer intimacy.

PART B

Critically analyze

Capacity planning

Capacity planning which define excess level of output in operation, process, facility etc. of any organization. Information is very much acceptable to build a successful capacity plan or decisions for an organization.

Now, here I am going to critically describe timing and sizing expansions as wait-and-see strategy;

Timing and sizing expansion consists with expansion strategy and wait-and-see strategy. The expansion strategy which involves large infrequent jumps in capacity that is predictable. Wait-and-see strategy which involves smaller prediction or short term prediction. This type of capacity planning is preferred by many of organization but not in all organization.

wait-and-see strategy cannot be applicable in pharmaceutical (ALKEM laboratories) company, because during manufacturing medicine get expire date. so if company predict more or less during manufacturing and it cannot be sale after manufacturing than company get loss. Therefore pharmaceutical (ALKEM) company always aware about this condition and formulate product that are demanded by other parties.

(reference by notes & OM book ‘Krajewski’ 8th ed & ‘Nigel slack’ 5th ed, page no 320)

Inventory management

Inventory is nothing but it is stock of an organization where goods or finished goods are stored . Generally types of inventory depend on different organization because it change time to time as per demand requirement, but in general there are five types of inventory. Name them buffer or safety inventory, cycle inventory, decoupling inventory, anticipation inventory, and pipeline inventory.

Managing inventory is big challenge for every organization because excess inventory gives less profits but less inventory gives more profits.

Now, here I am going to critically describe cycle inventory and ABC control inventory;

cycle inventory:

Cycle inventory is for a product that having consistent demand or supply in market. We can also say that cycle inventory is a time bond inventory which supply demand at a specified time while product available in market or not. Example weekly, monthly, etc. organization specially retailer’s like wal-mart to have safety stock, and avoid the use of cycle inventory to protect themselves from running out of stock of products in excess demand or any discontinuity in supply chain. That will affect the trust and reliability factor that they have with their customer`s.

ALKEM laboratories also avoid cycle inventory because its demand not at a consistent level at all time by supplier or customer. For example in one week customer demand for 10 thousand tablets strips but in next week or any other week customer demand for 2 thousand tablets strips. So variation in demand cannot fulfill by the use of cycle inventory.

(reference by notes & OM book ‘Krajewski’ 8th ed & ‘Nigel slack’ 5th ed, page no 396 )

Supply chain

Supply chain is a network that connect firms core process it may be internal or external, like raw materials delivery from warehouse to manufacturing unit, customer and supplier relationship, etc. It provide to achieve competitive priorities. Supply chain gives the information about bottleneck process and try to minimize this concept. It also providing lower operating cost and reduce inventory. The main aim of supply chain is to meet the end customer requirements and satisfaction. Supply chain may also define as, the tier of organizations their facilities, functions, activities that are involved in producing and delivering a product or service.

Now, here I am going to critically describe outsourcing;

Outsourcing is a way of process by which a organization takes the services of other company or firm and pays them for their services or materials. This can be only happen when two firms has same kinds of product manufacturing.

AKKEM laboratories Pharmaceutical cannot use or prefer outsourcing because it will affect the quality parameters and if the quality parameters are not matched by even very small size, the results might be very big disasters. Medicine should be more perfection because it related with our life so ALKEM pharmaceutical company never want to be compromise with customer life. For example ALKEM company has 1.000% perfection products and other one pharmaceutical company has 1.001% perfection products. So ALKEM company never want be compromise with 0.001% less perfection.

(reference by notes & OM book ‘Krajewski’ 8th edition, page no 47)

Performance Measure

Performance measurement is a activity that measure whole performance of process operation. This performance objective consists with quality, speed, dependability, flexibility and financial these all are measure by composite with customer satisfaction, overall service & operation level. Performance measure also concern with constraint management like inventory, throughput, operating expense and utilization of all process. By using some techniques we can find performance measurement such as

Performance matrix

Six sigma technique

Balance score card (Kaplan and Norton)

Balance score card represent whole business strategic positions. It measure past financial conditions of an organizations. The balance scorecard measurement taken with the help of Kaplan and Norton. Balance scorecard provide important information about organization strategic so, that easy to measure performance of an organization. The only benefits of this process measurement is to give performance result in a single report.

fig 5. Measure used in the balanced scorecard

In financial performance, it performe past measurement of profits, shereholder interest, capital market structure, etc. this gives idea to make target plane for future market.

In internal process perfprmance, it measure efficiency of manufacturing production speed, employee perfomance, etc.

In Learning and growth performance, it measure and try to implement technological affect, innovative work, new product development, etc.

In customer performance, it tend to evaluate customer feedback, customer rate of satisfaction, etc.

Now, here I am going to critically describe about Balance score card;

The balance score card does not show any future aspects. It only gives the past financial aspects or can measure financial aspects along with the past financial performances. It does not indicate what problems will come or occurs in future and does not provide any solutions for those problem.

Balance scorecard not acceptable by ALKEM laboratories firm’s because it gives past financial measurement which is not quite good to make future plane . By the use of balance score card organization or company are not able to evaluate adequate future value through investment in customers, suppliers, employees, process, technology and innovation. So this performance measurement are also not accepted by ALKEM laboratories.

(Reference:- notes & Operations management, by Robert Johnston page no 613)

Total quality management (TQM)

Total quality management is a key of success of any organization or industry. In other words Total Quality Management is a way by which any organization or industry can get more quality and assurance with the help of three main principle that are Customer satisfaction, Employee involvement, and continuous improvement.

Customer satisfaction is very much important because, it is a path to that any organization can achieve high level of loyalty and product demand. This satisfaction is achieved by specification of product, values, durability, support, and mental attraction.

Employee involvement is a second success key for organization or industry. In this step every employee contribute his full potential work to develop cultural change i.e. time to time modification in production, technology, new innovation, etc in every sector and build a strong team to take effective decision. Quality at source “is main that describe inspect defected product and after solve and proceed it in process, where it created.”

Continuous improvement is an improvement that indicate performance increment which can be more and smaller. Continuous improvement is also known as ‘Kaizen’ which is Japanese words. Every organization’s aim is to build image in market by attractive product launch so modification is very much important with innovative machine & technology by this continuous improvement organization get accelerative benefits in less time.

Now, here I am going to critically describe about Quality at source;

TQM is applicable for more firm but not all firm. In the case of pharmaceutical company ‘quality at source’ which is part of TQM is not accepted by pharmacy company because Quality at source say that, at every step should need to provide required quality parameters without inspectors for rechecking the quality but when the matter of life & death as in considerable in ALKEM pharmaceutical firm this cannot be apply. So this part of Total quality management cannot apply in ALKEM laboratories, because it necessary to make sure at every step the exact quality maintained to avoid any disaster.

(reference by notes & OM book ‘Krajewski’ 8th ed & ‘Nigel slack’ 5th ed, page no 563 )

PART C

Evaluating mix

I have chosen wait-and-see, cycle inventory, outsourcing, balance scorecard, and quality at source in ‘part B’ so behalf of these topic, Now here, I am going to evaluate its impact on ALKEM laboratories firm on the basis of Competitiveness, Innovation and Sustainability.

Competitiveness

It provide services and product that full fill the criteria of quality, services standards with acceptable profits.

ALKEM pharmaceutical laboratories cannot prefer wait-and-see strategy because by expanding its production, it may result in over production and the product has limited self life and due to this the chances of expiring before consumption increase. So it loss the product and investment. In the cycle inventory concept, ALKEM can loss its competitiveness because in case of fluctuation in demand from market, they will not able to withstand and hence will causes customer unsatisfaction, delivery time failure and loss the customer loyalty. Outsourcing is another factor which should be avoided because it causes product quality variation but in case of ALKEM laboratories i.e. quality oriented firm, where quality is first goal. So they cannot compromise quality with cost. Balance scorecard also a part of competitiveness loss because it does not indicate future financial performance, customer target etc due to having past measurement ability. Similarly ALKEM laboratories cannot recommend quality at source technique because increasing the chance of quality decrease.

Innovation

It is idea that transfer economical cost and satisfy specific requirement.

Innovation is essential, it has to be used. Innovation has great impact on wait-and-see strategy because when higher production is required in short time than innovation and technology are the key points to be used together and improved to achieve the goals by increasing machine/ process efficiency. ALKEM laboratories should not used cycle inventory, but should innovate new process which are cost effective and productive for achieving customer satisfaction and market share. In term of outsourcing company cannot develop their ability in technology and innovation field with their product because in this term company develop their product with collaborate company. So ALKEM laboratories should not use outsourcing operation that might affect in quality as well as increase in cost and result will, loss customer faith. Balance scorecard gives the measurement of past financial performance, so that ALKEM laboratories should not use this technique that affect high financial, customer and process development target. New era and innovation technique use to achieve improvement and high performance and their set target. Quality at source should not use in ALKEM laboratories, here innovation play vital role that means company should inspect the protect after every process steps to find out any problems and can hence become able to innovate new process of resourcing and making sure they are not happening again.

Sustainability

It is way of Ability to maintain an activity or process over the long term.

Sustainability is main key to identify product durability, strength, etc. it growth is depend on natural condition or resources. Now in sustainability condition ALKEM pharmaceutical laboratories should need to prefer wait-and-see strategy, because it gives predictable production, so it is a way of continuous improvement or growth that affect the economy growth during natural disaster or unwanted natural condition, but apart from environment condition wait-and-see strategy should not be applicable in ALKEM laboratories. In the cycle inventory concept, ALKEM can loss its sustainability because in case natural disaster they will not able to maintain their customer demand so that result will causes like customer unsatisfaction, delivery time failure and loss the customer loyalty. Outsourcing is another one which should need to be avoided by ALKEM laboratories because they have limited time period of product and also it causes product quality variation so that it loss durability and strength over a long time period. Balance scorecard also a part of sustainability loss because it does not indicate future financial growth, customer target etc that indicate how sustain in market environment so ALKEM should not be use this concept. Similarly ALKEM laboratories should not recommend quality at source technique because increasing the chance of quality decrease that are not suitable for durability condition.

CONCLUSION

Thus, I have studied and evaluate different operation technique use in an organisation to make and maintain effective operation. I have also analyse all different operation which is not applicable / suitable for all type of company or organisation. So after this study, I have analysed that without operation management technique, organization cannot stay in challenging market. Indeed operation management is the effective weapon.

SUMMARY

The aim of this task is to elaborate different concept, approach and important of management operations, which are apply or may be apply in two different organization. The description contain, Comparison on the basis of competitive priorities i.e. cost, quality, delivery speed, volume, variety, etc. and corporate strategy i.e. customer relationship, product development, service modification, order maintain, etc. Apart from comparison this description also elaborate different theoretical concept and its evaluation and impact such as capacity planning, inventory management, supply chain, performance measurement, and total quality management. evaluation impact description based on new era and environment.