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In todays world where environment protection and fossil fuel exhaustion are major concerns and where customers has to face constant upward price of fuel ,vehicles using alternative sources of energy are seen as a viable option. There is large untapped potential in this category to cover the need for cheap and environment friendly transportation facilities. In the current scenario electric vehicles are gaining popularity but there are many factors which are acting as hindrance to their popularity. The main problems with electric vehicles are: low mileage with each recharge, very long charging time, speculations about pulling power, service and spare part inadequacy.
THE COMPANY:
Neptune Bikes has come up with a hybrid bike, which uses electricity as primary fuel source
and small quantity of fossil fuel like kerosene to resolve the above problem related to electric bike. The product is named GO which is a short form for Green Oxygen which represents the environment friendliness and competitiveness of the hybrid scooter.
VISION STATEMENT:
A population empowered with power of mobility and care for nature.
MISSION STATEMENT:
To build a company synonymous with a genre of vehicle which provide transportation to common man at affordable cost with no harm to environment and attain financial objectives of the promoters.
QUALITY STATEMENT
We are committed at all levels to achieve high quality in whatever we do, particularly in our products and services which will meet and exceed customer's growing aspirations through: 1
Innovation in products, processes and services. Continuous improvement in our total quality management systems. Teamwork and responsibility.
THE PRODUCT
SPECIFICATIONS
Power train Battery Pack: Motor: Torque: Transmission: Chassis Suspension/Front: Suspension/Rear: Brakes/Front: Brakes/Rear: Wheels/Tires/Front: Wheels/Tires/Rear: Target Performance Top Speed: Range: Recharge Time: Interactive Feature: Service High Energy Lithium 3-phase AC Brushless Induction motor 60 lb-ft @ 0 to 1,500 rpm Single speed Ohlins 43mm inverted fork; fully adjustable, 4.5-in travel Ohlins Single shock w/piggyback reservoir; fully adjustable, 4.5-in travel Dual Brembo 310mm disc; Brembo radial-mount forged 4-piston calipers Brembo 220mm disc; single-piston caliper Marchesini forged aluminum 3.5" x 17", 120/70ZR17 - race Compound Marchesini forged aluminum 6.0"x17", 190/55ZR17 - race Compound 70 km/hr 80 kms per charge (est. EPA drive cycle) Under 12 hours Adjustable regenerative rear wheel braking 3 free services
THE MARKET
Population in low and middle income group with a salary above Rs 4000:Population who owns a bike from this population: There are nearly a million people earning above Rs 4000 per month in India. The majority of them although can afford a conventional petrol or electric bike deter from owning one because of high fuel price of petrol bikes and constraints of electric bike. There is a large customer base of low income and middle income group available in India who come in the bottom of the pyramid in India who are potential customers for our product. Globally, the company sees a huge potential in all the developing markets across the globe.
FINANCIAL VIABILITY:
The companys aim of reaching the low and middle income (Bottom of the pyramid) market is augmented by its tie up with rural banks and government banks to provide loan with an EMI rate of Rs 650-700 per month. The advantage for government is the empowerment of aam admi with no burden on environment. The viability of loan from banks point of view needs to be worked out. 3
ECONOMIC VIABILITY:
Through effective supply chain management the company can utilize low cost supply sourcing from across the globe. This strategy in addition to mass production can cover the R & D and production cost there by making it an economically viable project. The company can avail government grants and incentives for the development and popularization of an environmentally friendly product which helps in empowering rural population against the primitive transportation infrastructure of the country. Before implementing a testing face is launched where we take a customer survey of liking and attitude of people to this product and we would design our product accordingly.
FINANCIAL DETAILS
The cost of project is estimated at Rs 10 Crores. This is proposed to be financed to the extent of 3 Crore by means of a term loan from Banks. The promoters are experienced in the field and are capable of operating the new venture successfully and they will bring in 6 Crores as their contribution. Rs 1 Crore will be available as State Government subsidy. The unit proposes to provide employment to 52 persons. The proposal is technically feasible and economically viable. In mass production, the basic price of the product will be low and can provide a good profit margin.
In order to meet any unforeseen oscillation in any of the direct expenses, due to the economy recession and other possibilities, other than raw materials & consumables, a contingency provision at the rate of 5% is included in the cost. Depreciation will be charged in the profitability statement under the straight line method. But for the purpose of computation of income tax , adequate adjustments will be made in the computation so that depreciation is charged under the written down value method . Administrative overhead is worked out at 4% of sales revenue. Selling overhead including commission is worked out at 12%. Interest on term loan has been worked out at 18% on the amount outstanding. Interest on working capital loan is worked out at 18%.
Uses of Funds Creditors Bill Payable Total 3,12,50,000 62,50,000 15,00,00,000 Total 15,00,00,000
Cash Flow
The cash flow is sufficient even after withdrawal by the investors as dividend at the rate of 5% in the second year and 10% thereafter, to ensure the repayment of loan and to plough back a reasonable amount for the growth of the unit. CASH FLOW STATEMENT Inflow Share issued Loan received Cash from operation TOTAL Outflow Purchase of Land Purchase of Machinery Investment Net Current Assets (including cash balances) TOTAL 3,75,00,000 2,50,00,000 1,25,00,000 3,75,00,000 11,25,00,000
COST SHEET
Material Direct Expenses Factory overhead expenses Rent Salaries & wages Transportation Advertisement Brand Ambassador Commissions Profit Sales 2,18,75,000 15,00,000 1,00,000 22,50,000 63,00,000 6,75,000 75,00,000 3,00,000 15,00,000 1,05,00,000 5,25,00,000
innovative technology was licensed from Japan. The product design was outsourced from China. Most of the plastic body parts were shipped from Singapore considering the quality and cost advantage. Separate R&D department would be set up in future for facilitating an internal effort to develop the technology.
Specific-component choice
All the major components are imported from Singapore. These components are designed for easy assembly. At this initial stage, the degree of automation is very minimal. It is just restricted to the conveyor system in the main assembly section. In both Main assembly and Sub assembly, every process is manual. The material handling is through customized trolleys to carry the components from various sections. Later on, when the operation is converted to mass production, robotics and other automated material handling systems can be introduced.
Process-flow choice
Each vehicle will have different set of assemblies. Based on the assembly drawings the assembly charts are prepared for every vehicle. In addition to this, process flow chart is prepared by sequencing all the operations involved to reduce material handling and storage cost. In the factory, line flow layout is implemented as they have faster processing rate, lower inventories and less unproductive time lost to change overs and material handling. The major operations sequences involved are:
DESIGN
PROCURE
INCOMING INSPECTION
STORES
SUB ASSEMBLY
PRODUCTION
PRODUCT INSPECTION
DESPATCH
Time Study
In the main assembly, the time required for each activity is decided by the analysts according to industrial standards. Thus the following pre determined data approach is being followed, taking into account the productivity rate and other constraints. The normal time is fixed by trained workers of the company and has been recorded.
Sl no 1 2 3 4 5 6 7
Work element Taking Frame Handle bar Assembly Fork & Suspension Assembly Wheel Assembly with Brakes Wiring Harness Connection Headlamp Assembly Motor, Battery, Controller switch panels Seat Assembly Indicator & Toolbox Side panels & Main body
Samle Size 10 10 10 10 10 10 10
8 9 10
75 45 75
10 10 10
PLANT LAYOUT
The plant layout is made to be highly flexible enabling the smooth product flow across various departments within the factory. The plant layout is designed so as to obtain the maximum productivity from the men and the machines.
JOB DESCRIPTION
QUALITY MANAGER Ensure compliance to the companys quality control manual. Knowledge of PPAP, FMEA, MSA & Control Plan. Problem Solving Technique/Counter Measure. In-process Quality control activities/Rejection, Rework Analysis and Action. Customer Quality for handling customer compliant. Education: BE/BTECH mechanical preferably with MBA Experience: 3 to 5 years experience in related field. Should be able to withstand high level of pressure from customer end and should act swiftly. A good communication skill is highly required. FACTORY MANAGER Accurate coordination between the Head office and the Factory Involved in the monthly meetings between marketing and production Maintaining accurate levels of Inventory with the objective of keeping minimal stock levels Ensuring the proper turnaround time of executing orders within the stipulated delivery time to avoid delays and thus payment penalties Vendor development in coordination with the Purchase Department and good knowledge of AutoCad Ensure availability of spare parts at all times Ensure service contracts are renewed on time Education: BE/BTECH mechanical engineering, knowledge on AUTO CAD is a must. Experience: 8 to 10 years ASSEMBLY MANAGER Managing the production of assembly components. Optimum utilization of all resources. Leading the CFT. Multiskilling of engineers and the technicians to eliminate dependency. Ensuring good House keeping and Safety in the shop through daily shop rounds. Knowledge of Critical operations. 10
Good knowledge in different types of welding & fabrication processes. Education: BE/BTECH mechanical engineering Experience:3 to 5 years
AREA SALES MANAGER Channel Management Dealer Account Management with flair of Sales Target achievement. Connect with all the area dealers and deal with all the problems. Excellent communication skills are required with natural finesse to convince customers. Guiding to dealers and ensuring their profitability Education: BE/Btech mechanical engineering with MBA (marketing) Experience: 5 to 8 years in related field. AREA SERVICE MANAGER Monitor and support service activity at Dealer Network. Handling Customer Complaint Defect diagnosing Monitor , Control and Improve service performance Providing Technical support to dealer network Spares Parts management & support to dealer network Education: BE/BTECH any field Experience: 5 to 7 years in after sales service of an automobile company
HR POLICIES
RECRUITMENT POLICY
Neptune Autos is an equal opportunity employer. Selection is strictly based on experience and past performance. Natural attrition is usually taken care of by promotions and horizontal movements within the organisation to provide career opportunities for our employees. Occasionally, specific skill-sets may warrant lateral recruitment.
WORK
CULTURE
The work culture supports and enhances our brand. The GO bike brand signifies excitement. It strives to inspire confidence through excitement engineering. The culture is built on core values of learning, innovation, perfection, speed and transparency. Facilitative leadership style helps in developing leaders at all levels and establishes accountability.
COMPETENCY BUILDING
The company has a very flat organisation structure with three management levels. Each level represents a specific role and hence needs relevant competencies. Competency building at Neptune Auto is a combination of development for current and future roles. To cater to companys futuristic needs interventions like development centres, need-based training and job-rotation plans are used. We use different methods of imparting training like lectures, group-discussions, role-plays, seminars, outbound training, assignments and on-the-job tasks.
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COMPENSATION PHILOSOPHY
Neptune Autos strives to be amongst the top quartile in our compensation structure. Competence and performance are the key drivers of the compensation policy. A significant part of the compensation is in the form of variable pay linked to the individuals and the organisations performance
Annual Demand, D = 180 X 52 = 9360 units Cost of placing order with supplier, S = Rs 4500 Holding cost, H = 0.25 X Supplier Charges = 0.25 X Rs 6000 = Rs 1500 Economic Order Quantity, Q = =
( )( ) ( )( )
= 237 units
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MONTH 0 1 2 3 4 5 6
FORECAST
Trend Analysis
800
758 750 700 650 600 680 636 1 654 2 3 4 691.76 722 665.66
774.45
735.83 739
Month
implementation process of TQM including problem solving techniques and the basic TQM tools for problem identification and analysis. Training covers TQM background, internal and external customer and supplier relationships, quality, process variation, and measurement. They customized the training to the companys needs.
The following TQM elements based on measurement instruments were identified as follows 1. Top management commitment 2. Customer focus 3. Supplier quality management 4. Design quality management 5. Benchmarking 6. SPC usage 7. Internal quality information usage 8. Employee empowerment 9. Employee involvement 10. Employee training 13
OBSERVATIONS
Sample Number 1 2 3 4 5 1 2 3 4 R X
For constructing R chart, UCLR = D4 R = 2.282(0.0021) = 0.00479 mm LCLR = D3R = 0(0.0021) = 0 mm For constructing X chart, UCLX = X + A2R = 0.5042 mm LCLX = X A2R = 0.5012 mm 14
The A2, D3 and D4 value is the factors for calculating three sigma limit for X and R charts
R - Chart
0.005 0.0045 0.004 0.0035 0.003 0.0025 0.002 0.0015 0.001 0.0005 8E-18 -0.0005
Range
0.0022
3 Sample Number
X - Chart
30.5036
Average
Sample Number From the above two charts it is clear that process of inspecting the fork diameters is in control and the parts received are of required specification. The supplier is despatching excellent
quality parts.
USAGE OF p- CHARTS
The p chart is commonly used to know in the incoming inspection department if the supplies received are defective or not. After checking if the bulbs received are fused or not, we plot p charts for keeping a check on the proportion of defective supplies received. For inspection is by random sample of 500 bulbs is taken for each month. The observations for the first six months are shown below SAMPLE NUMBER NUMBER OF SAMPLE PROPORTION DEFECTIVE BULBS DEFECTS 1 6 0.012 2 4 0.008 3 5 0.010 4 6 0.012 5 3 0.006 6 7 0.014 Total Defects 31
Source: Incoming Quality Inspection Data
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p - CHART
Propotion Defects
0.015 0.01 0.005 0 0 1 2 3 4 5 6 7
Sample Numbers From the p chart it is seen that suppliers of the bulb received are ensuring enough quality in their dispatch and the process is in control.
USAGE OF c CHART
When the each of the vehicle rolls out after its final assembly, it is taken for road test. Final product testing is really important for the company to avoid the external failure cost. If the customer identifies any defect in the product after its delivery, it will affect the companys reputation and values in addition to dissatisfied customers. Usage of c Chart has aided the reduction in the warranty cost. After the final assembly, it is found that the number of defects averaged to about 7 defects when the process functions at 2 sigma level and when it is subjected to road test. Therefore, UCLc = c + z =7+2 = 12.29 LCLc = c - z =7-2 = 1.71 The numbers of defects found in the first 20 vehicles produced were found to be: 5, 6, 10, 8, 12, 7, 5, 6, 8, 7, 5, 9, 10, 4, 5, 9, 11, 8, 6, 5.
14 12 10
8 6 4 2 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Vehicle Number
From the c chart, it is evident that the defects per vehicle assembled is under control and can be corrected before showroom delivery.
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Hourly wage of worker = Rs 25 Thus preventive maintenance cost involved per week = 25 X 4 = Rs 100
MARKETING ACTIVITY
The Go bike is introduced mainly to reduce the smoke emitted considerably which in turn will helps to save the environment and also its a bike which runs on less expenses. So the major advertisements on radio and newspaper will highlight these key objectives. 17
The company has started its own factory outlet at three sites within the Coimbatore city at RS Puram, Gandhipuram and Peelamedu. Soon the showrooms will be extended to Tripur and Erode, since potential markets have been identified there. And with the predicted growth level, in another yearor two, we will extend showrooms in all the major centres in south India through our direct showroom and also franchisee in possible areas. The marketing department in the Neptune GO Bike has deviced their own plan of action. They have split their whole members into three teams with each team having their own distinctive strategy Showroom Activities Direct Marketing Rural Marketing Activities
SHOWROOM TEAM:
The teams main work is to market the products to the customers visiting the showroom. The Team will have 3 Executives and a person for handling test ride activities and another person for handling exchange of old bikes activities. The customers visiting the showroom will be provided with good hospitality, enough care and respect. The receptionist welcomes the customers and making necessary people to approach them, the Executives will take care of them by explaining the vehicles with the posters, books and other function of the vehicles, and clarifying the doubts of the customers and convincing them to buy the product. For enhancing the brand image of Neptune Auto, the following are practiced: Customers Waiting Lounge Complimentary gifts like Water bottles , Glasses, Pens, Diaries etc Notice board / Display board / Advertisement banners ID card for Employees Dresses /Uniforms
RURAL MARKETING:
We believe that rural customers are important and they are making the major sales ratio. Likewise this team also will have a Team leader and the team functions is to identify the market, sub-dealers etc to carry out the marketing activities.
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BIBLIOGRAPHY
CAPITALINE PLUS OPERATIONS MANAGEMENT PROCESSES AND VALUE CHAINS by Krajewski, Ritzman, Malhotra EBSCO DATABASE
www.scribd.com/doc/12384865/Production-and-Operations-Management www.scribd.com/doc/9672389/MB0028-P-OM-Set-1-2
www.scribd.com/doc/3974829/Facility-Planning
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