“PRODUCTION MANAGEMENT CONCEPTS WITH RELEVANCE TO MODERNISATION OF MACHINES’

By: V S RANGARAJAN Posted on: 2008-02-27 ** Print Article ** ** Copy Article ** - Category Feed

Article Summary: Modernise or Perish is the success word today. Companies need to keep spending their Reserves and Surplus funds towards modernizing their Plants to survive and grow in the industry.

“PRODUCTION MANAGEMENT CONCEPTS WITH RELEVANCE TO MODERNISATION OF MACHINES’



1) What is Modernisation ?

2) Need for Modernisation

3) Benefits due to Modernisation

4) Types of Modernisation for implementation

5) Factors to be considered while implementation of Modernisation Program

6) Modernising the existing Unit / Plant Vs Establishing a New Unit using latest Technology Plant

7) Case study examples

8) Conclusion

1) Introduction

Modernisation is up gradation of Technology

This Modernisation Process could be implemented in any of the following departments of the business Viz Production, Administration, Marketing and Finance where equipments, machines, tools, infra structure, furniture, etc are used

The author of this article has used modernization methodology adopted by the Indian Textile industry to explain in detail the “Production Management concepts with relevance to Modernisation of Machines’

2) Need for Modernisation

On one hand New industrial units with latest technology machines are coming up and on the other many of the existing units are modernizing its Plant & Machines with latest sophisticated machines.

Every company to sustain in the market and to grow has to be unique from its competitors in terms of value addition to the customer, cost benefit, etc

This modernization process helps the units in serving the customers better, minimizing the consumption of natural resources, taking care of society welfare, protecting the stake holders interest, etc

Modernization process implemented in a company on a continuous basis will eliminate the unit becoming sick due to technology obsolescence, thereby ensuring permanent employment to the workers

The company needs to keep its technology of the production facility on pace with the industry to ensure efficient functioning of the department. Hence the company is always in search of latest / most suitable technology which could be implemented on continuous basis to get required results from Production department.

The Production department has to achieve the target fixed by the company management by working with the co ordination of other departments ultimately to contribute to the overall profitability of the company.

To achieve the target the Production department has to work towards the following

Reduction in Cost of Production
Improvement in Quality of production to increase Selling Price
Increased yield
Increasing the Market Share ( export market / market penetration / etc )
Increased capacity utilization of Plant & Machines / Production
Minimising Production overhead expenses, etc


The cost, effort and time required in establishing a new unit is many more times than modernizing an existing unit. Hence many companies prefer to modernize their Plants than setting up a new unit. This minimizes the wastage that occurs in destroying the already created / developed industries

Government in order to provide support and encouragement for the existing units ( Government provides support for setting up new units ) has come out with lot of incentives like subsidized rate of interest on the term loan taken for modernizing the machines / purchase of land and building, etc. Hence the promoters who are interested in entering the field prefer to purchase existing company ( with its assets and liabilities ) to avail the benefits given by the company

Hence there is urgent need for all the people concerned Viz Companies, Government, Society, Allied companies, Consumers and others to encourage Modernisation process of the company in every field ( manufacturing, office automation, transportation, communication, storage, effluent treatment and other fields ) to encourage and implement modernization process without delay

2) Types of Modernisation

1) Replacement of parts of machines with high tech parts towards up gradation of machines . Here the frame of the machine is kept unchanged replacing only the parts of the machines
2) Replacement of obsolete technology machines with latest technology machines
3) Additional purchase and installation of accessories, equipments, tool kit, etc to the machine to improve the Ergonomics, ultimately to improve the productivity of the machine
4) Additional Purchase and installation of Waste recovery plant, effluent treatment plant, material handling equipments, etc to improve the efficiency of the production system
5) Total replacement of the Plant ( scrapping the entire Plant and Machinery and installing a new )

Based on factors like funds availability, Customer expectations in terms of Quality / Price / value, suitability of the technology, etc company plans for any one of the above Modernisation program

3) Benefits of Modernisation

One of the ways to achieve the above objectives is by Modernising the existing Plant & Machinery, equipments, infra structure, etc

Better Ergonomics

Example
By introducing tools / equipments / etc which is used to operate the machine by the worker to increase the productivity
By introducing hand knotters in the place of manual hand knotting in Textile cone winding machines

Increased Productivity
Example
By automation of the parts of the machines
Introducing Automatic feed mechanism in the place of manual feeding in Textile Blow room line

More Safety
Example
Safety fire alarms
Magnets are used to arrest the iron particles entering the cotton fibre material to the machine

Efficient Effluent Treatment
Example
Modernized effluent treatment plant in the place of conventional storage tanks
In Textile Processing units Efficient recovery plants are used against tanks

Increased out put
Example
Replacing the conventional bush bearings with Improvised hi tech bearings to run the machines at increased speeds

Better working condition
Example
Effective Air conditioning / Humidification / etc in the factory premise
Textile Ready made garments are Air conditioning their Premise to avid the garments becoming dirty

Space saving
Example
Vertical type of machines in the place of horizontal type

Saving Energy / Utilities steam ( like Power, water, steam, compressed air, humidification, air conditioning, etc )
Example
Heating of water / production of steam using Solar energy system


Labor saving
Example
In modernized Plants raw material is fed at one stage / in the first department of the Product Line Production process and the finished product is obtained at the final stage. No men involved in feeding the out put of first department material to the second department machines as could be seen in modern Textile Spinning mills. Labour requirement is reduced to one tenth

Increase the Yield realisation / Waste minimization / rejects reduction
Example
The yield could be increased by minimizing the wastages of material which occurs during procurement / process / finished warehouse. One of the ways to improve the yield realization is by adapting improved technology in the purchase / production / storage departments. Rejects could be reduced by producing quality product using modernized machines. Particularly in companies which are engaged in production of Silk Textiles ( costly material ) cannot afford to waste material than allowed


Waste recovery
Example
Waste recovery not only helps to realize more material used in production. ‘Wealth from Waste’ It also helps to maintain the premise clean and tidy.
Open end Spinning machines uses waste cotton fibre for production of coarse count cotton yarn. Recovery plants used in chemical factories helps to recover chemicals and also facilitating the companies to let harmless chemical effluent in the rivers

Quality improvement
Example
Modernised machines have in built features to ensure quality production as required. Avoids human element involvement
Increased capacity utilization
Example
Modernised machines minimizes break downs. Most of the machines have self lubricating mechanisms minimizing break downs. Thus idle capacity is reduced. Un utilization of the capacity is minimised
Modernised machines could be worked at higher speeds. This reduces the under utilization of workers and machines
The modernised Ring Frames are made to work at 25000 rpm whereas old conventional Ring Frames were working at 15000 rpm

Reduction to maintenance cost
Example
As the age of the machine increases the maintenance cost increases. Modernised latest machines will help the company to reduce the maintenance cost


To attract customers
Example
Customers get attracted if the company utilizes Hi tech machines for production of their products. This may be due to that the usage of these type of machines indirectly conveys that the company adopts good production practices
The usage of modernised Schlafost Auto coner cone winding machine of West Germany by the Textile spinning mills creates an impression to the buyer that the company follows good production practices

To produce varieties
Example
When the company wants to produce high value products different from the existing product mix to cater to the different segment may go in for modernizing its machines.
The Textile mill producing coarse count cotton yarn ( suitable for the production of bed sheets / towels /etc ) may be interested to produce medium count cotton yarn ( used knitting sector for the production of knit wear )

To process all varieties of raw materials
Example
Here modernization is done by the companies to facilitate the flexibility of processing of varieties of raw materials
Textile Spinning mills when plan for production of Polyester Cotton yarn from the present Cotton yarn production may consider installation of different modern machines removing beaters

To minimize air / noise / skin irritation pollution
Example
To avoid the occupational diseases to the employees working, which are caused due to air pollution, noise pollution during production of product modernizing of machines is adopted
Textile mills install suction fans to suck the flies, impurities in the air, flying cotton waste fibres, etc

To increase export earnings
Example
Foreign buyers ask for eco friendly products. Companies to cater to their requirement go for modernization of plants to produce eco friendly textiles
In Germany Textiles produced with Azo dyes are banned. Hence to produce dyed textiles using dyes not of Azo dye the companies require modernized plants

To increase import substitution
Example
Sometimes companies want to be Self reliant. Not depending on foreign companies.
The companies try to import technology along with the modernized machines.
Textile companies to produce many varieties of Non woven Textiles used in Automobile industries, road laying, etc

To up grade the technology of the machine from (i) non automatic to semi automatic or ( ii )semi automatic to automatic
Non automatic means fault identification and rectification by man
Semi Automatic means fault identification and signaling by machine and rectification has to be done by man
Automatic means fault identification and rectification all by machine ( in built )

4) Factors to be considered while Planning for Modernisation Program


1) Customers requirements in terms of variety, quantity, price, etc. Any market tie up letter to the extent of production proposed
2) the level of technology of the existing machines
3) the skill of the employees in operating and maintaining the proposed machines
4) The technology level of the machines in the previous department and the subsequent department
5) Quality standards of the product required to be produced
6) Type of raw material to be processed – tie up arrangements made
7) The operating cost / cost of labour in the proposed technology
8) Availability of funds / own and borrowed
9) Infra structure availability to install and operate the proposed machines – arrangements made
10) The time required to implement the proposed modernization program
11) The production problems that may occur to the existing production activity during implementation of the modernization program
12) Standardisation concept – if the proposed machines are from the same company who supplied earlier will facilitate this company on Standardization, thereby resulting in benefits like reduced inventory, increased productivity, easy maintenance due to familiarity with the machines, etc
13) The Banks and Financial Institutions opinion on the proposed machines to avail finance.
14) The capability of the company in implementing and managing the modernization program from the existing level of operation to the proposed in terms of investment, turn over, working capital requirement, customer handling, etc.
Normally the banker who provides the loan considers this aspect by seeing last
five years turn over, assets and liabilities, etc
15) Workers co operation in the proposed modernization program
16) Necessary Government approvals required to implement the program
17) The utilities like air conditioning, humidification, compressed air, steam, heat treatment, etc required and their cost
18) The rate of change of technology taking place in the related field to evaluate the life time of the proposed technology machines
19) The cost benefit analysis of setting up a new plant instead of modernizing the existing capacity
20) While modernizing the Plant, the output of the unit is bound to increase at least to the extent of 10% unlike 25% and more in the case of capacity expansion. Company has to make sure that there is market for selling the extra production which is likely to be produced as the outcome of the modernization program



5) CONCLUSION

‘Modernise or Perish’ is the success word today. Companies need to keep spending their Reserves and Surplus funds towards modernizing their Plants to survive and grow in the industry. The stake holders of the company should give priority in spending the earnings of the company in modernizing the existing machines to ensure that the earnings are invested in the same company unlike investing in expansion / diversification / integration where earnings are diverted somewherelse

Article Source: http://www.upublish.info

About the Author:
V S RANGARAJAN
EDUCATIONAL QUALIFICTION B TECH , MBA, M PHIL, ( PH D ) EXPERIENCE INDUSTRIAL CONSULTANCY 18 YEARS INDUSTRY 3 YEARS TEACHING 5 YEARS

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