A Case Study on

Operations and Quality Management Practices

at

ABC Narrow Fabrics (Pvt) Ltd

Course of Study: MBA Weekend - General

Subject Code : MBA 5112

Subject: Operations and Quality Management

Group No: 2.5

Table 1: Individual Member Contributuion Matrix

Individual Member Contribution Matrix

Registration
Name Focus Area/ Contribution
Number

Introduction – Organization, Operations

2020/MBA/WE/105 LAR Rukshika & Quality Management, Products,
Processes and Org Structure
Strategic Capacity Planning -
2020/MBA/WE/119 EKSH Siriwardhana Forecasting and Aggregate Planning, Job
Design & Facility Layout

Inventory Management MRP, MRPII,

2020/MBA/WE/073 APEN Mendis
ERP, Supply Chain Management

Introduction to Quality Management –

2020/MBA/WE/077 MAHP Nawarathna Quality Management Systems, Total
Quality Management (TQM)
Tools and Techniques for Quality
2020/MBA/WE/123 P Vathsalyan Management, Statistical Quality Control
and Process Capability

Lean Operations ,Summary of findings

2020/MBA/WE/096 MH Prageeth
and recommendations

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Acknowledgement
We take this opportunity to express our gratitude to those who gave an idea to do the case study
in Operations and Quality Management Practices at ABC Narrow Fabrics (Pvt) Ltd (hereafter
referred to as ABC Tapes) and provide the support in collecting information.

First, we would like to thank Prof. Chandana Perera and Mr. Mohamed Naeem for providing
guidance to design and prepare this case study through the Course Outline and briefings in
Lectures.

Also, we would like to thank the management and employees of ABC Tapes for giving consent
to do the case study in their organization and providing company information for the success
of analysis and helping throughout this study.

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Contents

Acknowledgement ..................................................................................................................... iii

Contents ..................................................................................................................................... iv

List of Tables ............................................................................................................................. vi

List of Figures .......................................................................................................................... vii

List of Annexures .................................................................................................................... viii

1. Introduction ......................................................................................................................... 1

1.1. Overview of the Organization and Products ................................................................... 1

1.2. Organization Structure ................................................................................................. 2

1.3. Production Process ...................................................................................................... 2

1.4. Operations and Quality Management .......................................................................... 3

2. Critical Analysis.................................................................................................................. 4

2.1. Methodology ................................................................................................................ 4

2.2. Strategic Capacity Planning......................................................................................... 4

2.3. Forecasting and Aggregate Planning ........................................................................... 4

2.4. Job Design ................................................................................................................... 5

2.5. Facility Layout ............................................................................................................. 6

2.6. Inventory Management ................................................................................................ 7

2.7. MRP, MRPII, ERP ...................................................................................................... 8

2.8. Supply Chain Management ......................................................................................... 9

2.9. Introduction to Quality Management (QM) .............................................................. 10

2.10. Quality Management Systems (QMS) ................................................................... 10

2.11. Quality Cost ........................................................................................................... 11

2.12. Total Quality Management .................................................................................... 12

2.13. Quality Management Techniques .......................................................................... 12

2.14. Quality Management Tools.................................................................................... 13

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 2.15. Lean Operations ..................................................................................................... 17

3. Conclusion / Summary of findings ................................................................................... 18

4. Recommendations / Executive Report .............................................................................. 18

References ................................................................................................................................ 20

Annexures................................................................................................................................. 21

v
List of Tables

Table 1: Individual Member Contributuion Matrix ................................................................... ii

Table 2: Performance Measurement .......................................................................................... 9

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List of Figures

Figure 1: Organization Structure ................................................................................................ 1

Figure 2: Process Flow Chart ..................................................................................................... 2
Figure 3: Cellular Layout ........................................................................................................... 6
Figure 4: Flowchart .................................................................................................................. 14
Figure 5: Fish Bone Diagram ................................................................................................... 15
Figure 6: Pareto Chart; Reasons for Batch Rejections ............................................................. 15
Figure 7: Process Capability Sixpack Report for Oil Content (%) .......................................... 17

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List of Annexures

Annexure 1: Inventory Matrix of ABC Tapes ......................................................................... 21

Annexure 2: Supply Chain KPIs of ABC Tapes ...................................................................... 22

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1. Introduction

1.1. Overview of the Organization and Products

ABC Narrow Fabrics (Pvt) Ltd (Here after referred as ABC Tapes) was established in 1989,
incorporating a complete winding, dyeing, covering and finishing process to manufacture and
supply elastics and tapes for high-end intimate apparel solutions. ABC Tapes brings customers’
benefits of superior capabilities backed by its coercive, shared experience and capabilities in
Narrow Fabric Manufacturing spanning over three decades. They believe that their People,
Quality, Speed and Flexibility are their core-drivers, which enable them to emerge as a leading
supplier to local and international markets.

Figure 1: Organization Structure

Organization Structure

ABC Tapes specialized in manufacturing and exporting a wide range of Narrow Fabrics, used
in various apparel forms from Casual-wear, Sportswear, Sleepwear, to Lingerie and Intimate-
wear. There is a wide range of products produced in ABC Tapes such as Wovens, Knits,
Jacquards, and Covered Elastomeric Yarn. These are used by the clients in a wide array of
products from pants, skirts, tops, briefs, knickers, brassieres, gloves, socks and hosiery and
many more products in the global apparel industry. In order to deliver the best output the
company consists of a dedicated and widely experienced staff from marketing, to product
design & development, manufacturing, dyeing, finishing, finance and administration, make up
the backbone of the company.

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All the products are tested for and maintained at optimum quality-levels that meet international
standards. This is proved through the quality standards and accreditations the has received, this
far. With a wide array of clients, ABC Tapes serves the stylistic fantasies of each and every
client, customizing products with their innovation. Simply put, ABC Tapes is where the
innovation meets the true connoisseurs of narrow fabric production.

1.2. Organization Structure

Organizational structure aligns and relates parts of an organization, so it can achieve its
maximum performance. The structure chosen affects an organization's success in carrying out
its strategy and objectives. Leadership should understand the characteristics, benefits and
limitations of various organizational structures to assist in this strategic alignment.

Below chart depicts the organization structure of the ABC Tapes. Where the company is headed
by Managing director and under him, other seniors managers of all the divisions are reporting
to him. The entire production process which is discussed in this report is directly comes under
the purview of the operations director.

1.3. Production Process

Figure 2: Process Flow Chart

Process Flow Chart An organization's organizational structure integrates and

connects its various pieces in order for it to work at its best. The
structure chosen has an impact on an organization's ability to
achieve its strategy and objectives. It is a strategic decision on
which types of manufacturing processes should be included in
the operating system. It essentially entails technology selection
and related concerns, and it has significant consequences for
capacity planning, facility layout, equipment, and work system
design. When a new production system is being planned,
process selection is a given. It does, however, occur on a regular
basis as a result of technological advancements in equipment
and changes in customer demands (Perera, 2011).

As shown in the process flow chart of the ABC Tapes, the

production process starts with receiving the raw material for the
production. In the soft winding section, the yarns are transferred
from paper cones to perforated tubes to make soft packages or
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cheeses to facilitate the dyeing process. Next, the colour department uses the dyes and
chemicals to dye the yarns into particular colour requested by the customer. After dyeing, the
dyed packages are being extracted and drying using the extractors and Radio Frequency (RF)
dryers. After the yarns are being dried, it is then transferred to the final winding area, where the
yarns are being wound again for the covering. Covering yarn, or covered yarn, simply refers to
a base yarn or the spandex is being covered with another yarn. Covering can be done by many
different possibilities, like air blowing or entwining. After that, in the beaming stage, yarns are
getting wound into the weaving beam to facilitate the warping process. The warp yarns can be
wound from either a creel or a warping beam. In the knitting step interlocking a series of loops
made from using yarns. In the finishing stage final quality check is done and then the final
product is packed and finished good is stored in the stores.

1.4. Operations and Quality Management

Operations traditionally refer to the production of goods and services separately, although the
distinction between these two main types of operations is increasingly difficult to make as
manufacturers tend to merge product and service offerings. More generally, operations
management aims to increase the content of value-added activities in any given process.
Fundamentally, these value-adding creative activities should be aligned with market
opportunity for optimal enterprise performance.

Quality management is the act of overseeing all activities and tasks needed to maintain a desired
level of excellence. Quality management includes the determination of a quality policy, creating
and implementing quality planning and assurance, and quality control and quality improvement.

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2. Critical Analysis
2.1. Methodology
To carry out the critical analysis, we primarily gathered information by conducting online
interviews with the Production Manager and Quality Assurance Manager of ABC tapes and
visiting their official website. The collected data was critically reviewed based on the theoretical
knowledge gained through classroom studies, and strengths and weaknesses in their operations
and quality management system were perceived. Finally, based on our analysis,
recommendations were made for further improvements.

2.2. Strategic Capacity Planning

Capacity planning is important for any organization as it allows for the quantification of
production capabilities and decision making (Perera, 2011). ABC Tapes consider factors like
the market and industry growth based on market intelligence and they use Order Frequency
Analysis (OFA) and Capacity Requirement Analysis (CRA) to identify the requirement for long
term capacity and infrastructure enhancement and to plan manning budget. For medium term
capacity planning, they consider factors such as current trends in demand and supply, inputs
from customers and brands regarding new developments and organic growth etc. Factors such
as back orders and open orders for the month against the inventory and production capacity are
considered in short term capacity planning. As the strategic capacity planning process, firstly,
they evaluate the utilization of existing capacity and possibilities to increase current utilization.
Then they estimate future capacity requirements and look alternatives. After carrying out
financial analyses of alternatives they make the decision. For automatic machines they have 90
– 95% capacity utilization and for manual machines 88 – 92% utilization currently. The only
capacity flexibility they have is flexible workers working on holidays using over time. ABC
Tapes has done both one step and incremental capacity enhancements. Recently the have made
a one-step capacity expansion when their Vietnam factory was down due to the pandemic. And
also they have a fully automated method support by Artificial Intelligence (AI) tools available
in SAP for strategic capacity planning.

2.3. Forecasting and Aggregate Planning

ABC Tapes uses Trend Projection using past data from SAP, Market Research on Industry
Growth, Share Gain from Competitor, Marketing Team Inputs for forecasting. Sales &
Marketing Team Members, Demand Planning Team and Supply Chain, Manufacturing and
Finance Team involve in forecasting. ABC Tapes faces seasonal fluctuations in demand and
usually there is a boost in December due to Christmas and New Year. Seasonal Trends are
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considered during the demand planning and sudden fluctuations occur especially during these
pandemic and volatile market situations.

Aggregate planning creates a medium-term (intermediate-term) production plan that normally

spans 6 to 18 months. It is beneficial to businesses that encounter seasonal or other types of
demand changes (Perera, 2011). ABC Tapes has medium term plan for next quarter based on
current quarter numbers. To match the capacity with the demand, they don’t go for hiring and
firing as their jobs are more technical and skilled. Similarly due to various compliance
restrictions they never subcontract. However they go for over time option. During low demand
period, they do stock building up to manage the peak months. Sometimes they import finished
goods from other sister companies from other countries.

2.4. Job Design

At ABC Tapes, Industrial Engineering (IE) department and HR department are involved in the
job designing. Usually trainers or selected staff work in newly created jobs to verify the work
study targets and methods prior to assign the workers.

ABC Tapes has 10 – 15 different types of job roles in shop floor in manufacturing department.
Initially employees trained on 3 job roles in onboarding. When they get confirmation in 6 – 9
months period they get trained in all the job roles to become multi skilled employees. They do
these trainings through 70:20:10 rule where major part is in on the job training. They use job
rotation as well.

They do job enrichment for selected candidates after providing them necessary training and
skill development. They have Individual Development Plan (IDP) programs where they give
opportunity for individuals to develop themselves to progress in their career. As an example,
they promote machine operators to team leaders. As they allocate jobs based on IE study, they
rarely do job enlargement and they face issues due to collective bargaining agreement (CBA)
with the trade union. However during the introduction of automation and technological
improvement, they go for job enlargement through work study. They consider the environment,
location/layout, type of machine or equipment to be operated, flow of information and
materials, tasks or elements involved in that job, movements of people and materials,
knowledge and skills required in job designing process and they carry out work studies, method
studies and time studies as well. They have IE department to carry out work studies. If any
dispute is raised by employees or trade union, they seek support from third party institutions
like University of Moratuwa. When installing a new machine or equipment, they start with the

5
recommendation of the Original Equipment Manufacturer (OEM). While operation, they carry
out method study and change the method accordingly. In these studies, they consider the H&S
aspects, ergonomics, duplicate and unnecessary movements, detailed evaluation of each and
every tasks effectiveness etc. They use the Value Stream Mapping (VSM) to analyze the
process and use process flow charts and motion studies as a part of it. Since they have a
unionized work force, they cannot use video recording in the shop floor to study the motions of
employees. However their IE department members observe the processes and record the
motions and timings as part of motion study. Each and every task or job is designed based on
IE study. Standards and targets are established through the work study and agreed with the
union as production norms through the CBA.

2.5. Facility Layout

Figure 3: Cellular Layout

Cellular Layout

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ABC Tapes uses the process layout in their main factory. They usually use VSM in the entire
operation to identify the non-value added activities and movements and to improve process
layout. But they have cellular layout (Figure 3) in their sample development area which
operates like a mini factory. Winding machines, yarn, dyes & chemical preparation area, dyeing
machines, extractors & dryers, covering machines, knitting machines and packing are located
and organized in the sample development area. This section has dedicated customer care team
and messengers who collect customer fabrics and standards as well as deliver developed
samples. Entire sample process is captured to "ABC Sample Express" Web Based Application
(WBA) which gives transparency to the customers about their sample development.

2.6. Inventory Management

The inventory of any item or resource employed in an organization is referred to as inventory.
In both manufacturing and service firms, inventory is available. Raw materials, final goods,
component parts, supplies, and work-in-process are all included in manufacturing inventory.
An inventory management system is a set of policies and control mechanisms that monitor
inventory levels and establish inventory levels to be maintained, order size, and order placing
time (Perera, 2011).

The inventory of ABC Tapes consists of Raw / Greige Yarn (PES & PA), Spandex & Lycra,
Dyestuffs, Chemicals, Dyed Yarn (Cone dyed, hank dyed & dope dyed), Make Up Materials
(MUM) – Paper cones, plastic cones, bobbins, covers, labels, boxes, separators, perforated dye
centers, Spare Parts, Finished Goods – Narrow fabrics, Elastics, Tapes (Refer Annexure 1).
The stock cover duration is approximately one month and it is mentioned in Annexure 1.

Inventory systems depend of Inventory systems depends on type/nature of the product,

inventory location, demand pattern and number of different items. It also depends on
consumption, safety stock levels derived from historical data, off the shelf availability;
supplier’s manufacturing lead time, shipping and clearance time. In ABC Tapes, the inventory
system used is SAP.

Sales & Operation (S&OP) Process of ABC Tapes

SAP Material Management (MM) and Production Planning Modules are used. Forecasting for
next 15 months is based on history data and market inputs (Article level forecasting and item
level forecasting). This is reviewed every month through demand planning and S&OP process.
Seasonal fluctuations also captured through the Demand Planning & S&OP planning process.
Suppliers get high-level forecast for 6-9 months and dynamic forecast for 3-6 months. This

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ensures the smooth raw material inflow. Most of the raw materials 1 month stock in hand, 1
month in transit and 1 month in stock at supplier’s end.

History data analysis reveals the demand patterns and fast moving items to be maintained in
stock. In addition to this, most of the customers of ABC Tapes follow the contract orders where
their goods were produced and kept in stock to allow them to withdraw whenever they needs.

Inventory Control Systems

Since ABC Tapes have the fully automated SAP platform to capture the consumptions and
GRNs, they use the Perpetual Inventory System. It continually updates inventory records and
accounts for additions and subtractions when inventory items are received, sold from stock,
moved from one location to another, picked from inventory, and scrapped. They have the fully
automated Purchase-to-pay system to purchase the goods and mostly follow the Fixed Reorder
Quantity System for fast moving raw materials (yarns) to order full container goods to minimize
the costs. Due to Covid situation, ABC Tapes keep 50% additional stocks to avoid run out
situations due to vessel and port delays.

2.7. MRP, MRPII, ERP

The concept of dependent demand underpins material requirements planning (MRP). Raw
materials, components, and sub-assemblies are all commodities that have fluctuating demand.
Demand for a higher-level product causes dependent demand. Manufacturing Resource
Planning II (MRP II) is an integrated information system that expands on MRP to include all
aspects of company. The MRP II system uses a unified database to plan and update activities
in all functions, including sales, purchasing, manufacturing, finance, and engineering (Perera,
2011).

Enterprise Resource Planning (ERP) solutions are the next step in the evolution of
manufacturing systems. ERP systems cover a wide range of business activities and data storage
requirements. ERPs bring together all of an organization's functional areas into a single system.
It allows a company to focus on enterprise operations rather than functional barriers by
integrating (Perera, 2011).

ABC Tapes initially used MS Access and Excel based on manual inventory control system.
However SAP was implemented in 2006 to give fully automated process. Different MRP
controllers such as Stock Items (MAA, MSA, MSB, MSC), Make to Order (MTO) and MSP
(Make to Special) are used for finished goods. Introduction to SAP Dashboards and Power BI

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Dashboards from Data lake in ABC Tapes give more visibility of the entire supply chain
process.

2.8. Supply Chain Management

The phrase "supply chain" refers to all of the operations involved in getting a product or service
to a customer. It is the network of companies that are involved in the various processes and
activities that deliver value in the form of products and services to the final consumer via
upstream and downstream linkages. The complete chain leading to the ultimate customer is
called supply chain management, and the company involved is merely one link in that chain
(Perera, 2011).

Both supply and demand side considerations are considered while designing a supply chain.
Procurement, outsourcing, distribution, and production are the main factors that are managed
in SCM. The bullwhip effect refers to the variation in order size upstream in the supply chain
as a result of fluctuating client sales, and this condition raises inventory levels in the supply
chain. Information technology aids in the integration of organizational operations and supply
chain aspects. Supply chain performance can be measured using inventory and financial metrics
(Perera, 2011).

Currently, the Supply Chain of ABC Tapes is managed by SAP. The performance of the Supply
Chain (Table 2) is measured using monitoring below KPIs (Refer Annexure 2 for KPIs used in
ABC Tapes) daily, monthly and benchmarking with other units and market norms.

Table 2: Performance Measurement

Performance Measurement

Finish
Forecast OTIF AA
Goods SID A Strike B Strike C Strike
Market accuracy AT Order LFR Strike
(stock in rate rate rate
level Line rate
Days)

Sri Lanka 74.9% 14.3 93.7% 97.7% 90.0% 77.5% 81.9% 78.1%

Transportation modes used by ABC Tapes and how does the Cost is reduced

ABC Tapes use the road transport for all the customers. They have 14 number dedicated routes
to cover all the customers in the island. Customer acceptance calendar - Based on the agreement
9
with the customers they deliver daily, on specific days or weekly. Since the roots and delivery
calendar fixed, they could manage the costs effectively. But there are occasions ABC Tapes
need to arrange special delivery. This should be approved by Commercial Director and
Operations Director case by case. Special delivery costs and reasons were analyzed monthly
and actions on reducing them.

2.9. Introduction to Quality Management (QM)

Some quality definitions include "totality of features and characteristics that satisfy needs,"
"fitness for use," and "free of defects." Quality of design and quality of Conformance are two
general aspects of quality (Perera, 2011)

Quality of design refers to the level of service that the manufacturer or supplier intends to
provide to the consumer. When the producer is creating the product's quality of design, it should
be considered the customer's needs in order to satisfy them with the product's suitability for
usage.

Quality of conformance is the level of the quality of product actually produced and delivered
through the production or service process of the organization as per the specifications or design.
When the quality of a product entirely conforms to the specification (design), the quality of
conformance is deemed excellent.

2.10. Quality Management Systems (QMS)

ABC Tapes focused on more inspections and identify the defects at the early stage of the
operations. After obtaining the ISO 9000 certification in 1997, company started to follow more
strategic and structured approaches in quality management. Automation and digitalization and
SAP QM Module implementation give more robust platform to the QMS in the company.

Quality Issues
ABC Tapes has several fully automated and semi/manual monitoring and data capturing
technologies using the digital technologies which are getting converted to visual patterns and
trends to understand the deviations from standards.

Sporadic Problem – Sudden drops in performances are investigated through 5Y, cause and
effect or fish bone methodology identify the root cause (Real time). Based on the findings
corrective and preventive actions are taken immediately and the results on the actions are
closely monitored to ensure appropriateness of the actions.

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Chronic Problem – Using trend analysis through control charts and process capability analysis
of historical data, chronic problems are identified. 80:20 rule is used in decision making to take
actions to resolve issues.

2.11. Quality Cost

Internal Failure Costs

Since Right First Time in the dyeing is around 95%, 5% of the batches are going for rework.
When compare with similar industries and across other sister companies, this is in acceptable
level. Average rework cost in a month is around 15000 – 20000 USD. Similarly the in process
waste is around 0.80% which contribute nearly USD 3000 – 5000 per month.

External Failure Costs

Customer returns due to quality defects, cost of replacing of faulty products, some laboratory
testing through third party and customer claims are categorized under this cost category.
Average is USD 7500 per month.

Appraisal Costs

Since most of the raw materials are sourced through well-known suppliers, incoming
inspections is very minimal. Most of the occasions, depends on the quality certificate or
certificate of conformity (COC) issued by the suppliers along with each shipments. However
there are certain tests are carried out to some raw materials of premium products and random
quality tests triggered through SAP QM module as part of the Quality Assurance process. Some
of these tests required specific chemicals and involved destructive tests which cost around USD
5000 per month.

Prevention Costs

ABC Tapes will spend more money for prevention activities such as training the people, process
control such as kaizen projects, data collection through IoT devices and analyze the trends.
Quality activity plan is prepared at the beginning of each year along with the annual quality
objectives. Each department in the manufacturing have quality objectives which are monitored
and evaluated daily basis through various Power BI dashboards and in forums. Company use
the “Gemba Walk Tool” for process audits and reports the process issues which lead to quality
defect and waste generation. In addition to these company have many certifications such as ISO
9001:2015, Oeko-TEX, Global Recycled Standard (GRS) and Trim Quality Supplier
Performance (TQP), to ensure the process and products are align with the high level standards.
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Company spends around USD 25000 per months for these activities to prevention part of
Quality management.

2.12. Total Quality Management

Customer-Driven Quality – Mission statement of the Quality Policy “We are committed to
meet expectations of our internal and external customers by delivering world class products and
services” is the very good evidence for customer driven quality.

Top Management Leadership and Commitment – Quality Department is an independent

department directly reports to Operation Director and Managing director of the company.
Senior management attends the monthly MR meeting as part of QMS System.

Continuous Improvement – Have separated Continuous Improvement team under QA to

focus in the PDCA. Company is focusing on Lean Six Sigma and 5(+1) S concepts

Fast Response – Quality issues and complaints are dealt through the complaint management
portal of SAP QM Module. All the complaints should be investigated, decision to be taken and
Corrective Actions and Preventive Actions (CAPA) to be released within 48hrs upon the receipt
of a complaints. This process and performance are monitored through Power BI dashboards by
the commercial team and senior management.

Actions Based on Facts – Have enough analyzed data obtained from Power BI dashboards are
used in action planning and execution.

Employee Participation – All the employees in the shop floor have the quality related
objective rewarded through incentive scheme linked with their monthly earning. Employees are
given opportunity to visit customer premises to hear the voice of customers. This give
understanding what a customer expects from the company in terms of quality.

TQM Culture – “One Team One Vision” is the mantra everyone is following in the
organization. There are several forums and committees such as product development
committee, service and quality teams, Lean SS Teams and Kaizen Teams supports to bring all
the people together to works towards the common objectives of the company.

2.13. Quality Management Techniques

Quality Management Tools and Techniques facilitate a process of continuous and company-
wide improvement through planning, monitoring, analyzing and controlling activities to ensure
that the service or product is fit for the purpose (Dale et al., 1996). Quality Improvement Teams
(QIT)/Quality Circles (QC), Statistical Quality Control (SQC), Failure Mode and Effects
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Analysis (FMEA), Fault Tree Analysis (FTA), Pokayoke (error proofing), Quality Costing and
Benchmarking are the most popular QM Techniques used in the manufacturing sector. ABC
Tapes uses the Quality Circles, SQC and Benchmarking more often in their operations to ensure
robust QM platform.

Quality Circles (QC)

Quality Circle is a small group of employees of the same work area, doing similar work that
meets voluntarily and regularly to identify analyses and resolve work related problems. At ABC
Tapes, QC Teams are formed in department or task level under the sponsorship of the
department manager to focus on specific issues or potential process improvement. Members are
getting selected independently from different levels involved in that particular process. QC
team will follows the steps of defining the problem, analyzing the problem, data collection and
analysis, identifying root cause, developing solutions through brainstorming, foreseeing
possible resistance, trial run, implement and checking performance adhere to the PDCA cycle.
QC will increases the engagement and process ownership culture among the workforce. Since
there is a competition and attractive rewarding mechanism in place to promote the QC culture,
many people are joining to QC Teams. Department manager will evaluate the contribution and
performance of the individual member and nominate for the employee of the month, quarter or
year awards.

Benchmarking

Benchmarking is the process of measuring the overall quality aspects of the products, services,
and processes against those of organizations known to be leaders in one or more aspects of their
operations. In simple terms, benchmarking means the comparison of the quality parameters and
performance with the standards of similar industry (Dale et al., 1996). ABC Tapes usually do
benchmarking by comparing their performance with their sister companies located in other
countries through fully automated Power BI dashboards. These benchmarking help individual
sites to get and share the best practices and procedures to build a competition and performance
driven group culture.

2.14. Quality Management Tools

Quality management tools have a lot of benefits when implemented correctly to create an
environment that encourages productivity, quality and achievement of business goals. There
are seven popular quality control tools are used by leading organizations such as Flowcharts,
Histograms, Fishbone diagram or cause and effect diagram, Pareto analysis, Check sheets,

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Scatter diagrams and Control charts. ABC Tapes use the Flowcharts, Fishbone diagram, Pareto
analysis, Check sheets and Control charts as part of their quality management process (Dale et.
al., 1996).

Flowcharts

Flowchart is a visual representation tool for a sequence of operation and easily identifies the
improvements areas. Flowcharts are the most popular of the seven tools. Flowcharts make it
easy to visualize the sequence of steps in a process and the relationship between various steps
or processes and the quality parameters to be focused and checked. QA Department of ABC
Tapes develops the detailed process map with the support of IE Department to cover entire
operation including the QA process and parameters to be checked (Figure 4).

Figure 4: Flowchart

Flowchart

Fishbone Diagram

The Fishbone diagram lists out a problem and then lists out the possible causes for the problem
and its effect or result. Fishbone diagram or cause and effect diagram is another popular tool
used by ABC Tapes for root cause analysis and problem-solving purposes. Since the causes are
captured completely, standardized and categorized under 5Ms & 1E (Man, Machine, Material,
Measurement & Method and Environment), they’re identifying the causes easily and taking
actions to resolve problems (Figure 5).

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Figure 5: Fish Bone Diagram

Fish Bone Diagram

Pareto Analysis

Pareto chart is a combination of a line graph and a bar graph where the values are shown by the
bar graph and the line graph shows the total impact.

Figure 6: Pareto Chart; Reasons for Batch Rejections

Pareto Chart; Reasons for Batch Rejections

Reasons for Batch Rejections

120%

100%

80%
Rejection (%)

60%

40%

20%

0%
GT Poor Dirty
Shade Wrong Damage Tempera Soiled Dyeing Reproce
Uneven Oligome Two Thread Missing Compres Impleme Package
Others Variatio Identific d Dye ture Dyed Vessel ssed
Thread r Issue Tones Mix Up Tally sion ntation s/
n ation Centre Issue Thread Issue Lots
Poor of SOP Soiling
Failed (%) 30% 24% 17% 11% 6% 4% 2% 1% 1% 1% 1% 1% 1% 1% 0% 0%
Cum Failed (%) 30% 54% 71% 82% 88% 92% 93% 95% 96% 97% 98% 98% 99% 99% 100% 100%

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This way, organizations can find the biggest causes of their problems with quality and
implement measures to reduce them. Pareto chart is also known as the 80-20 rule of quality
management where the organizations assume that most of the problems face with quality
management in any process is caused by the biggest factors. These problems are listed out as
80% of all problems, and their causes are listed out to be 20% of the biggest factors. We’ve
noticed effective usage of system driven Pareto analysis in the dyeing section where they used
to identify the major causes for batch failures and taking actions. Similarly “Gemba Walk”
observations in winding and knitting sections are analyzed through Pareto to prioritise the
actions to get quick and effective results (Figure 6).

Second major failure reason is others which indicates that they still didn’t identify the reason
for majority of the failures. Ideally others should be minimal.

Statistical Quality Control (SQC) and Process Capability

Statistical process control (SPC) is the use of statistical techniques to control a process or
production method. SPC tools and procedures can help you monitor process behavior, discover
issues in internal systems, and find solutions for production issues. Statistical process control
is often used interchangeably with Statistical Quality Control (SQC) (Dale et al., 1996). ABC
Tapes mainly use the control charts generated through MiniTab software under SQC for quality
or process improvement purposes. Measurements and readings are automatically getting
captured through the IoT devices in the production machines and measuring equipment and
saved under SAP QM module database. Colour consistency, length of the cones and the oil
level in the yarn are mainly analysed through control charts and process capability charts. Each
products and processes have specific Lower Control Limits (LCL) and Upper Control Limits
(LCL). Products or processes resulting low Cp and Cpk were taken into immediate consideration
and prioritise to improve the process capability.

High fluctuations in the Oil Content (%) levels and the Cpk value of 0.51 is showing the Lub
application process is not within the control limits which need to be addressed (Figure 7)

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Figure 7: Process Capability Sixpack Report for Oil Content (%)

Process Capability Sixpack Report for Oil Content (%)

2.15. Lean Operations

The Lean manufacturing concept was primarily introduced by Japan, Toyota production
system. It is not a fine tuning of the existing manufacturing process and the Lean philosophy is
based on three levels such as eliminating waste in all forms, continually improving the process
and system and maintaining respect for all workers (Perera, 2011).
The ABC Taps introduced the Lean concept to its operations in sometimes back and has led to
many improvements in the production process, such as optimizing the way of producing goods
through an increase in productivity, improving product quality and manufacturing cycle time,
reducing lead time, and minimizing waste. The ABC Taps use lean tools and techniques such
as value steam mapping, cellular layout, standardization and setup reduction.

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3. Conclusion / Summary of findings
According to the analysis of operations and quality management practices of ABC Tapes, it
was found that the company was adapting and practicing industry operations and quality
management tools/methods such as TQM, Pareto Analysis Lean and Quality Circles etc. which
have brought many positive results to the company, but in our detailed analysis, we have found
the below findings which create problems/issues with the efficient execution of the production
and quality processes.

• High quality costs result in 5% of the batch going for rework on every production and
similarly, process waste is around 0.8% which contributes to higher quality costs.
• The Company maintains high inventory levels such as keeping 50% additional stocks of
materials to avoid stock run out situations due to order delays.
• The company has not properly identified the major reasons for the failures indicated in the
Pareto analysis.
• Statistical quality control process capability, High fluctuations in the Oil Content (%) levels
and the Cpk value of 0.51 is showing the Lub application process is not within the control
limits which need to be addressed

4. Recommendations / Executive Report

Based on the summary of findings highlighted above, we suggest the following
recommendations to the senior management of ABC Tapes to further improve the practices or
methods used in operations and quality management, so that the company will be able to
provide high quality products and services at a low cost and maximize customer value. Finally,
the overall profitability of the company will increase and maximizing the returns to its
shareholders.

• Capacity utilization levels of automatic and manual machines shows significant difference,
and it indicates there is 88% -92% capacity utilization in manual machines. As a result, it is
suggested to evaluate financial viability of replacing the existing manual machines with
fully automated machines in order to improve the capacity utilization, which will help to
reduce overall product costs and to face seasonal demand increases.
• In order to reduce the quality cost, it is required to minimize wastage. Therefore, it is
recommended to take actions to cut down on waste and deliver the best quality products to

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 its customers in the most efficient way, which will help to develop smooth obstacle free
manufacturing process with minimal waste.
• The company was maintaining high inventory levels to meet fluctuating customer demand
which had incurred a high cost to the company. Through the implementation of the lean
concept, the company could save inventory, materials and equipment’s associated holding
costs.
• Our analysis shows that some existing TQM efforts have not addressed some lapses in the
quality process. Therefore, it is recommended to introduce Six Sigma as a replacement to
the TQM technique, since Six Sigma could be used to overcome the shortages that were
evident in the TQM and bring competitive advantage to the company through world class
quality.
• The company could also use Deming’s PDCA cycle as a tool for continuous improvement,
which will help to identify the reasons for failures and how to address such failures through
continuum improvements. The PDCA cycle has four steps: Plan, Do, Check, Act.
1. Plan: Recognize an opportunity for improvement and plan for change.
2. Do: Implement the change on a test basis.
3. Check: Check the implemented, analyze the results and determine whether it made a
change
4. Act: Take actions based on what was learnt in the check step, if the change did not work,
go through the cycle again. Use what you have learnt to plan new improvements.

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References
Dale, B. G., Boaden, R. J., Wilcox, M., & McQuater, R. E. (1996). The Effectiveness of Quality

Management Tools and Techniques: An Examination of the Key Influences in Five Plants.

Proceedings of the Institution of Mechanical Engineers, Part B: Journal of Engineering

Manufacture, 210(4), 329–339. https://doi.org/10.1243/pime_proc_1996_210_125_02

Perera, C. (2011). Operations Management: Concepts and Applications

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Annexures
Annexure 1: Inventory Matrix of ABC Tapes

Inventory Matrix of ABC Tapes

Materials Sourced from Stock Lead Inventory Inventory #

Cover Time Location System Items
Days
Raw / Greige Sri Lanka, 30 – 45 2–4 Raw SAP WH 94
Yarn (PES & China, days weeks Material Module
PA) Thailand, India WH -
Factory
Spandex & China, Turkey 30 – 45 3–6 Raw SAP WH 14
Lycra days Weeks Material Module
WH -
Factory
Dyestuffs India, 30 – 60 2–6 Chemical SAP & 87
Singapore, days weeks WH - MS Excel
China, Factory
Germany
Chemicals Sri Lanka, 30 days 1–5 Chemical SAP & 55
India, China Weeks WH - MS Excel
Factory
Dyed Yarn Sri Lanka, 30 – 45 1–5 Raw SAP WH 36
(Cone dyed, India & China days Weeks Material Module
hank dyed & WH -
dope dyed) Factory
Make Up Sri Lanka, 2 weeks – 1–5 Raw SAP & 32
Materials India & China 1 month Weeks Material MS Excel
(MUM) – WH -
Paper cones, Factory
plastic cones,
bobbins,
covers, labels,
boxes,
separators,
perforated dye
centers
Spare Parts Sri Lanka, 2 weeks – 1–6 Engineering SAP & 218
Germany, UK, 1 month Weeks Warehouse MS Excel
Taiwan
Finished 15 – 25 Third Party SAP WH 4835
Goods – days (Only FG WH Module
Narrow MRP –
fabrics, Stockable
Elastics, Tapes Items)

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Annexure 2: Supply Chain KPIs of ABC Tapes

Supply Chain KPIs of ABC Tapes

• OTIF - Order on time and in full on Order line level

• LFR - Line Fill Rate on sales order line level, is captures our true service performances
in terms of on time delivery with the right volume.
• Strike Rate - This measure records the percentage of order lines placed by customers
for stock items (*AA,*SA,*SB, *SC) that were covered by stock availability when the
customer placed the order. A “hit” is when a stock item order line has stock cover at the
time that the order is entered into the system. If there is no stock available, to dispatch
the order line complete, it is a “miss”. Orders will only be considered, if they are inside
the replenishment lead time (material master)
• Forecast BIAS - Actual demand and Actual sales compared with Forecast CLU
numbers(1CLU = 10Km)
• Forecast accuracy - Overall forecast accuracy on Article ticket and Material level
• This show in one number how close is the forecast against the actual demand. The
calculation is done from the lowest levels. Example when we calculate the Article ticket
level accuracy, first we calculate the absolute difference between the Forecast and
Actual demand {abs (Forecast-Demand)}. On total level we will add up all these
differences and we will compare with the demand {Absolute Forecast accuracy=1-
(SUM(ABS(Forecast-Actual demand)/Actual demand)}
• SID = Stock in Days = (90 – elapsed days in the month) * Net stock / (Forecast +
Requirement).

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