Production Planning and Control at Crompton Greaves

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REPORT
ON
OPERATIONS MANAGEMENT IN
CROMPTON GREAVES

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Table of Contents
1. Introduction 3
1.1 Project Methodology 3
2. Company Profile 4
2.1 Quality Certifications 5
2.2 Products and Services 5
3. Organizational Study of CG 7
3.1 Marketing 7
3.2 Materials & Stores 8
3.3 Production - Design, Manufacturing and Testing Equipment 9
3.4 Human Resource 11
3.5 Information Technology 12
3.6 Engineering and Maintenance 12
4. Production Plan and Control in CG 14
5. Resources 17

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1. INTRODUCTION
CROMPTON GREAVES LIMITED is a major player in the Transformer industry in India.
The objective of the project was to do a literary survey of the information brochures, case studies and other available web resources on the strategies employed by the company.
This report is an outcome of the study undertaken for assessing different production planning models are used in the company’s day to day manufacturing. The compilation of data collected under the topics that were covered in the course Production Plan and Control is the final section of this report.
1.1 PROJECT METHODOLOGY
 Literary Survey
 Compilation of data from web resources
 Study of related topics from textbook
 Establish relationship between data collected & the course
 Prepare final report and presentation

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2. COMPANY PROFILE
Col. R.E.B. Crompton founded R.E.B. Crompton & Company in 1878. The company was merged with F.A. Parkinson in 1927 to form Crompton Parkinson Ltd. Greaves Cotton and Company, established by James Greaves in 1859, was appointed as their concessionaire in India. In 1937, Crompton Parkinson established Crompton Parkinson Works Ltd. in Bombay as a wholly owned Indian subsidiary. In collaboration with Greaves Cotton, it also established a sales organization, Greaves Cotton & Crompton Parkinson Ltd. In 1947, just before India's independence, Lala Karam Chand Thapar, an eminent Indian industrialist, bought Greaves Cotton when the company was put up for sale. With this acquisition, Karam Chand Thapar gained control of several associated companies such as Crompton Parkison Works, Greaves Cotton and Crompton Parkinson Company. The name Crompton Greaves Limited was adopted on August 2, 1966, following a court-directed amalgamation of Greaves Cotton and Crompton Parkinson Ltd. Over the years, the company has evolved into one of India's largest private sector enterprises. After the acquisition of the Belgium-based Pauwels Trafo/Pauwels Group in May 2005, Crompton Greaves was ranked amongst the world's top ten electrical transformer manufacturers. The company subsequently acquired a host of companies outside India. These include Ganz (Hungary), Microsol (Ireland), Sonomatra (France), MSE Power Systems (USA) and ZIV (Spain). Crompton Greaves is a part of the US$4 billion Avantha Group, and is headquartered in a self- owned landmark building CG House at Worli, Mumbai. In 2009, reflecting its global presence and diverse businesses, Crompton Greaves adopted a new brand identity and is known as CG. Crompton Greaves made series of acquisitions overseas which includes - ZIV Group for Euro 150 Mn, QEI Inc, provider of SCADA and automation systems for $30.0 Mn and Emotron Group, a power electronics and engineering company, for $82.3 Mn (57.8 Mn Euros). In September 2012, HSBC Global Investment Funds raised its stake in Crompton Greaves from 1.29% to 2.68% through bulk deal on BSE for R92.73 Cr. In March 2009, Crompton Greaves acquired 41% stake in Avantha Power & Infrastructure Limited for Rs 227Cr. Mr Gautam Thapar is the Chairman of the Board and Mr Laurent Demortier is the Managing Director and CEO of the company.

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2.1 QUALITY CERTIFICATIONS
At Crompton Greaves there is always a passion for quality. The company has the unique distinction of being the first one to receive an ISO 9000 certification for finance and administration. The commitment has the unique distinction of being the first one to receive an ISO 9000 certification for finance and administration. The commitment to responsible business through quality, technology and productivity has helped the company to receive many certifications in the ISO 9000/9001:2000/14001 series. The company’s twenty three divisions/ regions have been accredited with ISO9001:2000 certification; seven manufacturing units have been accredited for ISOI 14001 and four units for OHSAS 18001. The Light sources division is one of the few business units in India in lighting industry to receive dual certificate of ISO 9000:2000 was well as ISO14001 and OHSAS 18001, Certification for Occupation Health and Safety management system .The company’s Fans, Motors, Automation and control products are approved by the CSA, BASEEFA, and CE.
2.2 PRODUCTS AND SERVICES
The company is organized into three business group viz. Power Systems, Industrial Systems and consumer products. Nearly, two-thirds of its turnover accrues from products lines in which it enjoys a leadership position. Presently, the company is offering wide range of products such as power & industrial transformers, HT circuit breakers, LT & HT motors, DC motors, traction motors; alternators/ generators, railway signaling equipment, lighting products. In addition to offering broad range of products, the company undertakes turnkey projects from concept to commissioning. Apart from this, CG exports it’s product to more than 60 countries worldwide, which includes the emerging south-east Asian & Latin American markets. Thus, the company addresses all the segments of the power industry from complex industrial solution to basic household requirements.
Thus, the company addresses all the segments of the power industry from complex industrial solutions to basic household requirements. The fans and lighting businesses acquired “Super brand" status in January 2004. It is a unique recognition amongst the country's 134 selected brands by "Super brands", UK.
Power Systems Industrial Systems Consumer Products Transformers and Reactors Motors: High/Low Voltage AC&DC Fans Switchgear Products- MV/HV/EHV/UHV Generators/Alternators Appliances

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Transformers- MV/HV/EHV/UHV Motors/Alternators/Control Electrics Lighting Power Quality Solutions FHP/Commercial Motors Pumps
T&D Systems/Engineering Solutions Railway Signaling and Coach Applications Home Automation Protection Control & Automation Drives and Automation Integrated Security Systems Services for Power Systems Stampings and Laminations Wiring Accessories Transformer & Switchgear Components Services for Industrial Systems LV Switches & Panel Products

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3 ORGANIZATIONAL STUDY OF CGL
I. Marketing
II. Materials & Stores
III. Production
IV. Human Resource
V. Information Technology
VI. Engineering & Maintenance
3.1 Marketing
The Marketing Department at CG operates in basically two modes:
A. Tendering
CG is a Job-Type production unit, the division takes order from the customers which vary according to the customer requirements. The Marketing Department takes following steps:
· Enquiry received from regions
· Preparation of design
· Costing Preparation
· Guaranteed Technical Particular or GTP Sheet Preparation
· Techno-Commercial Deviations
· Formal Offer Submission
· Order Finalization
· Order Received
· Contract Review

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B. Execution
Once the order is finalized by the customer, the marketing department begins the planning phase of the order. Each order takes about 21 days to get its basic designing done and this duration is divided according to the various steps involved in the complete production process. The marketing department keeps the customer informed about the progress of his order and coordinates the internal activities so as to get the order completed within the allocated duration. If the customer makes some post order changes, the designing team interacts with the customers about the concerned details and whatever technical and monetary changes should be made in the contract. After the transformer is ready to be delivered the Dispatch section sees to it that all the necessary precautions are taken while the final product is loaded on the truck to be delivered. Various accessories that are related to the products are also packed with the transformer and are delivered to the customer. The Marketing Section keeps track of the product till it is delivered to the customer.
3.2 Materials & Stores
It performs following major functions:
· It releases orders to the shop floor/vendor.
· Reschedules due dates of existing open orders.
· Analyze and update system planning factors like lot size, lead time, safety stock, scrap allowances.
· It reconciles errors in inconsistencies and tries to eliminate root causes of these errors.
· It identifies the key problem areas that require immediate action.
· It tries to solve critical material shortage problems so that corrective action can be taken which must act as an information for the next period.
1. Accuracy of information is most important for ERP system to act.
2. The second important issue is the precaution one has to take in order launching.

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3. Before releasing an order, it ensures that the components are physically available, so periodic checking of actual inventory status and the one available in the system is necessary.
In case of a discrepancy, then few people can be deployed in checking inventory from time to time physically in the shop floor. Any correction may be entered in the system and the process continues till the discrepancy disappears.
3.3 Production - Design, Manufacturing and Testing Equipment
CG use state-of-the-art technologies in their in-house design department, and strive to upgrade the products based on customer feedbacks and engineering expertise of their technical teams. Apart from continuous improvement, every effort are being carried out to reduce the input cost by increasing efficiency in manufacturing cycle, reduction of cycle time, reduction of raw material cost and procuring improved products/machines from third- party vendors and so on.

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Production Process Diagram
A. Product Design and Planning
Since all transformers are tailor made, on receipt of the customer order, the manufacturer commence designing the transformer as per customer needs. The drawing is then submitted to the customer for approval. The drawing and bill of material are then issued to various departments to carry out further work as per design.
The electrical designs are made using Excel software’s and mechanical drawings are made using the software’s AutoCAD, Inventor and ProE. Apart from continuous improvement, every effort are being carried out to reduce the input cost by increasing efficiency in manufacturing cycle, reduction of cycle time, reduction of raw material cost and procuring improved products/machines from third-party vendors and so on.

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3.4 Human Resource
The HR Department mainly performs the following functions:
Administrative & Statutory Compliances
These are the normal day to day activities which the HR Department has to perform in the company. They see to the regulatory organizational duties concerning the employees and the rules and regulations defined in the Factory Act.
Recruitment & Planning
The HR department forecasts the manpower needs of the company on the basis of the sales plan defined in the yearly budget plan. In order to fulfill the division’s manpower requirements the HR Department performs the functions of recruitment and training, the recruitment procedure consists of following basic steps: Questionnaire & Interview.
Salary & Wages
The salary and wages are basically divided as per the classification of the employees,
Trainees, workmen (blue collar) & executives (white collar).

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3.5 Information Technology
The company uses SAP3 as its ERP system for integrating various departments of the company. The company’s various departments float the data on the ERP system and the access to the information is provided to the employees on the basis of their departments and their positions. Various levels of access to the information are defined in the ERP system and the ERP system is operated through the servers at the Bombay center.
3.6 Engineering & Maintenance
The Engineering Department at this division takes care of the machinery needs of the plant, for which they perform the function of tendering to purchase machines. For this they prepare a detailed report on the use of machine and profits earned against usage of the machine.
The Maintenance Department takes care of the Spare Parts requirement at the plant and issues purchase orders of the spare parts. They also perform the function of maintenance of the machines.

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Pre-emptive Maintenance
The Department performs the regular functions of maintenance at the plant depending on the usage of the machines:
· 100% Usage
· Monthly basis
· 85% Usage
· Quarterly basis
· 75% Usage
· Half-yearly basis
If at all a breakdown occurs at the plant, the operator of the machine fills a breakdown format and lists the problem in it. The problem is identified as major or minor and accordingly a corrective action is taken to reduce the breakdown time.

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4. PRODUCTION PLAN AND CONTROL IN CG
In any manufacturing enterprise production is the driving force to which most other functions react. The ultimate objective of production planning and control, like that of all other manufacturing controls, is to contribute to the profits of the enterprise. Specific objectives of production planning and control are to establish routes and schedules for work that will ensure the optimum utilization of materials, workers, and machines and to provide the means for ensuring the operation of the plant in accordance with these plans.
The plan for the processing of materials through the plant is established by the functions of process planning, loading, and scheduling. The function of dispatching puts the plan into effect; that is, operations are started in accordance with the plant. Actual performance is then compared to the planned performance, and, when required, corrective action is taken. In some instances re- planning is necessary to ensure the effective utilization of the manufacturing facilities and personnel.
Many actions are taken by Crompton Greaves continuously from time to time in accordance with the course to improve efficiency of their manufacturing units.
PROJECT MANAGEMENT
Product Lifecycle Management (PLM)
An initiative of the Transformer Division, this software solution helps achieve significant reduction in development cycle time. With this tool, all Crompton Greaves transformer facilities will get access to a unified single source of data and design — which should help share design and production knowledge and reduce customer response time.
SERVICE DESIGN
Service Operation Management Application (SOMA)
This is a web-based after-sales service portal, which has been implemented across all the marketing offices of Crompton Greaves. It is a key tool in improving customer relationship on a real-time basis.
PROCESSES AND TECHNOLOGY
E-Commerce is in operation for a long time in CG, it has benefited from the introduction of new applications — which includes position of the unexecuted order books, dispatch reports and facility for ordering non-standard motors.
RESOURCE PLANNING As part of the plans to increase resource productivity, CG had its first total quality management program in December 1991 wherein CG emphasized that the entire approach should be changed to 'value added management.' In the earlier setup, CG followed a European model

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wherein the planning department worked out the optimum load based on capacities, and told marketing what mix of orders to bring in. CG found out that the steel brought into the factory was worked on for 1-48 hours, but was kept in the factory for as many as 147 days. Factory sources revealed that though the investments in new machinery brought down the working time by 50% from 48 to 24 hours, the efficiency could further improve if the above problem was tackled. CAPACITY AND FACILITIES DESIGN In the new setup, the marketing department gave the customer demand figures and everything was geared to deliver on the date the customer wanted. During 1993-95, the unit had over 21,000 kaizens, making it the unit with the highest number of kaizens in the country. The biggest change was regarding the reorientation of the production process itself. The unit began using the concept of single piece flow (SPF), which had been successfully used by different industries abroad. One group of machines was arranged so that work proceeded in an anti-clockwise, 'U' shape. Rather than one product being made at different points on an assembly line, one entire product was made from start to finish by one cell. INVENTORY MANAGEMENT CGL introduced the concept of kitting, (providing only enough material to produce one item at a time) which meant less wastage and better inventory control. The inventory carried declined from 2.87 months in 1992-93 to 2.35 months in 1994-95. The inventory-turnover ratio went up from 2 in 1992 to 7.5 in 1995. This was largely due to a computerized model installed for inventory control. Minimum, maximum and re-order levels were determined by this model and it covered all the 'A' and 'B' items. At any given point of time, the growth in sales was always greater than the inventory buildup. The above setup offered many other advantages. While production volumes were more or less the same, they now required only one-fourth the floor space. This released space for new products. Turnover or rotation of space therefore increased by three times. Also, smaller batches offered more flexibility and therefore higher customization. SPF also increased the pressure on processes by identifying problems and bottlenecks very quickly. For instance, one shop had a board with different-colored bulbs that indicated the reasons for various bottlenecks. For instance, if there was no material or no order, a red bulb lit up; if the basket was full, a yellow bulb lit up, and so on. This resulted in efficiency improving by 10%. SCHEDULING
CGL worked on the housekeeping front as well to make the unit more efficient. Material was organized so that no searching was required. All the items were allocated a place, close to where it was used, with the date and inspection status marked on it. The layout was correspondingly changed so that minimum transport was required. None of the machines were grounded, which meant that layouts could be changed easily. Several meters of pipe in different colors were put up so that problem lines could be easily identified. Fixtures were also colored according to the product they were used to make. Detailed instructions in both English and the local language

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Marathi were put up at various spots. Charts displaying the cost of energy per machine per hour were put up to reduce energy wastage.
HUMAN RESOURCE
CGL assured job security to the workers, the union agreed to productivity increases of 38% in 1991, and a further 20% in 1994. There were significant positive changes in the attitudes of the workers as well as the management. While skilled workers began contributing in routine tasks (such as unloading of material) if required, they were also given sufficient authority (such as to refuse to use inferior materials.) The management also began measuring managerial efficiency based on certain internally decided parameters. The efficiency was found to have gone up from 23% to 51% during the same period.

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5. RESOURCES
 Operations Management by Russell and Taylor
 Icmrindia.com
 cgglobal.com
 books.google.co.in
 Wikipedia.org
 Avanthagroup.com