Field Study Report

7/21/2019 Field Study Report

http://slidepdf.com/reader/full/field-study-report 1/29

Conestoga College Institute of Technology and

Advanced Learning

Kitchener, Ontario

Course No: OPER 3000

Section # 1

Course Name: Operations Management Professor: Ravi Sharma

Case!ield "ro#ectAssignment $ !ield %tudy &eport

'ue 'ate: (()*(+ Time: (:**pm

%umission 'ate: (()*(+ Time: (:**pm

-roup . (/

"ersonal 0or1 %tatementI 0e, the undersigned:

• 2arrant that the 2or1 sumitted herein is our 2or1 and not the 2or1 of others

• ac1no2ledge that 2e have read and understood the College "olicy on Academic

'ishonesty

• ac1no2ledge that it is a reach of College &egulations to give or receive

unauthori3ed andor unac1no2ledged assistance on a graded piece of 2or1

• ac1no2ledge that I am 42e are #ointly and e5ually6 responsile for the 2or1

sumitted herein

Name (Print/Type) Student # Sinature

Kelcey McCuaig /78)+++

Kaitlyn Mac1ie //9(99/

&achel 0il1inson /9+8(8)



Ta!"e o Contents

E$ecuti%e Summary p& '

Se"ection o Oraniation p& '

Company inormation p& 3

Summary o isua" *udit p& +

Summary o ,nter%ie-s p& +

10 O. decisions p&

Conc"usion p& 1+

Reerences p& 1

*ppendices

*ppendi$ One p& 1

*ppendi$ T-o p& 1

*ppendi$ T2ree p& 1

*ppendi$ 4our p& 15

*ppendi$ 4i%e p& '0

*ppendi$ Si$ p& ''

*ppendi$ Se%en p& '+

*ppendi$ Ei2t p& '

*ppendi$ Nine p& '

1



E$ecuti%e Summary

On Monday Novemer 8)rd 2e 2ere ale to ta1e a tour of the Air Li5uide 2arehouse located in

Camridge 0ritten permission of our selection of this company can e seen 2ithin appendi;

one <efore attending our tour, 2e prepared a visual audit chec1list 2hich is attached in appendi;

t2o, 2e used this chec1list to assess the asics of the 2arehouse and paired this chec1list 2ith a

5uestionnaire to find out more aout ho2 Air Li5uide functioned using of the (* OM decisions

After completing our tour, 2e came to the consensus that overall Air Li5uide operated very 2ell

according to the (* OM decisions 0e 2ere thoroughly impressed 2ith their layout and ho2 the

setup of their 2arehouse 2as designed to drastically reduce pic1er times for orders They also

operated 2ithin a very effective reordering system considering lead time and safety stoc1

=o2ever, 2e elieve that some items should come from different suppliers as their lead time 2as

several months due to an international supplier

Se"ection o oraniation

0hen narro2ing do2n our selections for our field study, 2e 2anted to consider companies that

2e 1ne2 2e 2ould e ale to otain permission from for a visual audit, to ensure that 2e 2ere

ale to complete our report on time The three companies 2e considered efore doing this field

study 2ere "aul 'avis %ystems, The City of 0aterloo, and Air Li5uide, 2e considered these

specific companies as each of us had some sort of connection 2ithin these organi3ations "aul

'avis %ystems is a franchised restoration company located in Kitchener The City of 0aterloo is

a government organi3ation in charge of many things 2ithin the community including

2



maintenance, recreation uildings, landscaping and more =o2ever, after thoughtful

consideration 2e ultimately chose Air Li5uide to do this field study ecause 2e felt it had the

most relevant operations applicale to 2hat 2e have learned in this course Air Li5uide 2as the

company 2e elieved that 2e could collect the most useful information from, since they operate

2ith a lot of inventory in a 2arehouse setting

Company ,no

Air Li5uide is the 2orld leader in gases, technologies and services for industry and health, they

sell oth gases and hard goods and have een uilding its leadership ever since the usiness 2as

founded in (>*8 'ay after day, innovation after innovation, they have gro2n continuously to

con5uer ne2 mar1ets Air Li5uide pursues a strategy of profitale gro2th over the long term,

ased on three pillars: operational competitiveness, targeted investments in gro2ing mar1ets, and

innovation This strategy is shaped y three ma#or long?term trends: industry gloali3ation and

resource constraints, evolving consumption and demographics and, lastly, the gro2ing appetite

for innovation of individuals, usinesses and society as a 2hole( On Novemer (7th, 8*(+ Air

Li5uide announced an agreement that they had purchased Airgas for a total of @() illion

4B%@68 This means that Airgas 2ill ecome a uni5ue partner, and together Air Li5uide and

Airgas 2ill continue to advance Air Li5uide current strategy ased on profitale gro2th and

innovation over the long?term Air Li5uide has forecasted for the companys healthcare usiness

1 Air Liquide Profle. (2015, January 19). Retrieved Novemer 2!, 2015, "rom#tt$%&''.airliquide.om'*rou$'$rofle

2 Air Liquide announe% a*reement to aquire Air*a%. (2015, Novemer 1+). RetrievedNovemer 2!, 2015, "rom #tt$%&''.airliquide.om'inve%tor%'airliquideannoune%a*reementaquireair*a%0

3



to e e;pected to doule in the ne;t five years to @/ illion 2ith a ma#or focus to e in India)

They carry a 2ide variety of 0elding products and they serve over >*,*** customers in several

industries in Canada and has over 8,8** employees

isua" *udit Summary

Arriving at Air Li5uide 2e 2ere ale to ma1e a lot of positive oservations solely ased on the

visual aspect of things, efore 2e 2ent deeper 2ith %teve and Craig using our 5uestions 0e

2ere very impressed upon arrival and the 5uestionnaires further reinforced their impressive

operation The Air Li5uide sho2room, offices, and 2arehouse 2ere all very tidy, organi3ed and

2ell run The Layout in the 2arehouse 2as 2ell thought out and practical, and it truly reduced

any ris1 of 2aste 4time6 2hen preparing orders The 2arehouse 2as 2ell laeled, and 2ell

stoc1ed Disually 2e sa2 no issues, so the ne;t step 2as to #ump into 5uestions 2e had prepared,

this 2ill e summari3ed ne;t

,nter%ie- Summaries

!or our intervie2 5uestionnaires 2e opted to intervie2 three people from Air Li5uide 4Appendi;

Three6 0e intervie2ed t2o managers 2ho 2ere present during our tour and 2or1ed 2ithin the

0arehouse %teve 2ho is the %hipping supervisor, and Craig 2ho is the Central distriution

shipping supervisor They 2ere oth very 1no2ledgeale aout the operations at Air Li5uide,

and 2ere ale to ans2er the 5uestions 2e had prepared In the time 2e 2ere there 2e got to

e;perience their corporate culture first hand Their relationship 2ith the staff 2as very positive

- Jao, . (2015, Novemer 2/). Air Liquide to doule it% #ealt#are u%ine%% in fve year%.Retrieved Novemer 2!, 2015, "rom#tt$&''.livemint.om'om$anie%'R%-*d5J340rv#-J'AirLiquidetodouleit%#ealt#areu%ine%%infveyear%.#tml

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and it seems li1e an en#oyale and empo2ering place to 2or1 As 2ell as the managers 2e also

intervie2ed one of the office employees, Marylou Marylou 2or1s in Accounts &eceivale and

2as very helpful 2ith the office side of things ecause of her first hand 1no2ledge A copy of

these 5uestionnaires and their ans2ers can e found in appendi; three

!rom the 5uestionnaires 2e have gathered plenty of insight into the inner 2or1ings of Air

Li5uide They have implemented many systems to ensure productivity is as high as it can e The

Layout of the 2arehouse is done to reduce the overall time is ta1es to fill an order in the

2arehouse Items that are ordered most fre5uently are in the ays closest to 2here orders are

prepared, and as you 2or1 ac1 to2ards the ac1 of the 2arehouse there are less common items

Along 2ith this, Air Li5uide have laeled every in across and do2n the 2arehouse to ensure

items are found easily 4appendi; four6 0hen Orders come in they have in numers printed

directly on them so that the pic1ers can easily locate items needed On top of 2or1ing to e

efficient, Air Li5uide is also cost effective Once orders are pic1ed they go to the employees 2ho

pac1age and prepare the orders, here they use a program that assesses the cheapest current

courier to ship their pac1ages They pac1age and ship roughly 8+* orders a day, 2ith only a (E

error, 2hen these errors occur Air Li5uide elieves in fi;ing the prolem immediately on the

premises that the customer is al2ays right

Air Li5uide elieves in cross training their employees in order to e ale to practice #o rotation

2ithin the 2arehouse, ecause of this they are ale to reduce the amount of hiring e;ternally they

do, and reduce the amount of shifts needed to fill all of the orders in a day The 2arehouse is

5



scheduled 2ith three shifts in order to ensure all orders are filled and to reduce the uncertainty of

orders not getting filled in one shift due to things li1e sno2 storms or ad traffic 2ith couriers

T2e 10 O. 6ecisions

7oods and Ser%ices 6esin

Air Li5uide provides high 5uality goods and services to their customers They use a ma1e or uy

decision 2hen it comes to the goods and services they offer They sell oth hard goods li1e

2elding material and parts such as cylinders, as 2ell as these hard goods they also sell different

types of gases such as helium, propane and even o;ygen They select their products from outside

suppliers li1e Lincoln and <lue Ma; ased on price, 5uality and guidelines they e;pect of their

suppliers They choose their suppliers ased on these factors ecause they 2ant to sell high

5uality products to their customers 2hile also eing cost efficient <y scoping out 2hat supplier

has the est prices they can compare each supplier to see 2hat sells the products for less !or

e;ampleF they purchase their 2elding 2ire from Italy ecause it is of a higher 5uality the est

2elding 2ire in their opinion They chose to purchase 2elding 2ire from across the 2orld

ecause they 1no2 the 5uality is the est and itGs 2orth it for them since they got to create their

o2n 2elding 2ire from <lue Ma; and it 2ill 1eep the customers coming ac1 and purchasing

more =o2ever, 2e elieve they should e loo1ing at local suppliers ecause the lead time on

this item is far too long ma1ing for a high ris1 of stoc1 out They also loo1 at the guidelines, this

means that some products need specific parts as 2ell as certified parts and if the supplier doesnGt

offer the correct part they 2onGt purchase from them Overall 2e 2ould say their goods and

services design is functioning 2ell, they are ordering things cost effectively as 2ell as ased on

customers direct needs

6



8ua"ity .anaement

Air Li5uide 2ould rate their 5uality a > ecause they have less than (E error on orders to their

customers =o2ever, 2hen these errors do happen their policy is that they must e dealt 2ith

immediately, Air Li5uide elieves that the customer is al2ays right 0hen filling cylinders 2ith

gases Air Li5uide uses a system called %ervitra; to 1eep trac1 of all their cylinders 0hen they

first get a shipment of ne2 cylinders they place a B"C arcode on them to 1eep trac1 of 2hat

stage the cylinder is in In the case 2here contamination happens to occur they 1no2 2hat e;act

ottles 2ere apart of the contamination %ervitra; 1eeps trac1 of the cylinder for 2hen they are in

process and finished, it also allo2s customers to 1eep trac1 of their orders process In the

2arehouse they do inspection on incoming materials and products, if they find a product is

damaged they 2ill remove the product out of the 2arehouse and send it ac1 to the supplier If a

customers order arrives damaged Air Li5uide 2ill issue a full refund or resendreplace 2ith a

rand ne2 product As 2ell as inspecting on incoming items, they do a second inspection as the

ne2 products are eing put a2ay in the 2arehouse, 2e elieve that this step could e eliminated

as it falls 2ithin one of the 7 2astes The second inspection seems redundant, they should have

trust in the first inspection to e done the first time 0e in5uired aout their 5uantity of inventory

they hold and if they have systems in place to deal 2ith perishing or osolescence issues 'ue to

the nature of the usiness they dont need to 2orry aout perishing items, ut they do revie2 for

osolescence %ince the ma#ority of their items are purchased and stoc1ed for specific things they

do tend to move parts 2ell enough for inventory to not e an issue, ho2ever if an item doesnGt

sell for ) years they 2ill dispose of it

7



Process and Capacity 6esin

The process that Air Li5uide carries out 2hen filling a typical customers order is receiving a

paper copy of the customer order, these orders are complete 2ith in numers to ma1e the ne;t

step very easy The pic1ers locate the items from the customer order 2ithin the 2arehouse and

then they ring the order to the pac1aging station 4appendi; five6 At the pac1aging area they

2ould pac1age it 2ith protective pac1aging to help reduce damage and add delivery laels, it is

here they revie2 courier costs to ensure the pac1age 2ill e sent the cheapest method and they

are then sorted into ins y courier The ins once full are loaded into the truc1 and the items are

sent out for delivery Air Li5uide uses 2hite oards ig customers li1e Aecon, these 2hiteoards

are located at the front of aisles and these large orders are gathered underneath on pallets

4appendi; si;6 This ma1es it easier to fill the orders ecause 2hen a ne2 shipment comes in

they can easily put aside the products these companies order on a 2ee1ly asis to a designated

spot for that customer There is no set numer on their capacity, since they are a 2arehouse they

say 2hen the rac1s are full they 1no2 they are at full capacity The 2arehouse is currently

running at a >*?>+E capacity utili3ation rateF this means that they are effectively using their

space for their inventory They do change their level of capacity depending on demand, and they

have forecasts in place to assess ho2 much inventory they 2ill need at any given time The t2o

methods they use to manage demand are a system 2hich they called MinMa; 2hen a 5uantity

level goes to2ards the minimum level it triggers a re?order 2hich 2ill order the 5uantity needed

to e in ma;imum 5uantity level again, or as 2e learned in class an HO Hach of their products

2ithin the 2arehouse has its o2n HO and reorder point, as 2ell as a safety stoc1 estalished

depending on the lead time associated 2ith that product %econdly, they do sometimes receive

insights from sales representatives that tell them 2hen there a large order eing placed so they

8



ensure they 2ill have enough product ready for those orders Overall 2e 2ere thoroughly

impressed at the process in place to fill orders, they have a very organi3ed and efficient system in

place =o2ever, some items had such a high lead time that their safety stoc1 2as large for these

items, 2e 2ould suggest trying to find a more local supplier in order to reducing stoc1 and

perhaps even increase the fre5uency of the orders

9ocation

Air Li5uide moved to their current location 8 years ago They choose this ne2 location ecause it

allo2ed them to have oth the distriution center as 2ell as the filling plant in one place 2hile

aiding 2ith 3oning re5uirements, due to the danger of 2or1ing 2ith compressed gases they can

only e 2ithin a certain distance of schools and residential houses The ne2 Camridge facility,

2hich includes a filling plant, a distriution center, a sho2room and an administrative office,

represents a t2o?million?dollar investment in the region and 2ill more effectively serve the

%outh2estern Ontario mar1et in industrial gases and 2elding products this location is the only

2arehousedistriution center Air Li5uide has in Ontario %ome factors that 2ere important 2as

the locali3ation the uilding had, it is located in Camridge 2hich is half2ay et2een t2o ma#or:

Toronto and London The ne2 facility is local for all their customers as 2ell as it has an easy

access route to oth 2est and eastound *( for their truc1s and couriers Air Li5uide

implemented the Center of -ravity Method 2hen searching for their ne;t location y locating

their retailers and then determining est area to move to %ince they only have one main

distriutionfilling plant they need to consider the distance et2een themselves and their

retailers Although they considered their retail stores 2hen selecting this location, they should

have also considered pro;imity to suppliers, as previously mentioned they do have some

4 http://www.airliquide.ca/en/air-liquide-invests-in-new-cambride-state-!"-the-art-"acilit#.html

$



suppliers that are a very far distance a2ay that does cause some issues 2ith lead times in their

inventory

9ayout 6esin

The layout that Air Li5uide implements is a 0arehouse Layout They have created a very

organi3ed and impressive layout for their inventory and this is the area 2here 2e 2ere most

impressed Their inventory is stored on shelves that are all laeled to ma1e finding parts much

easier to find 2hen they need to, left to 2rite they are laeled y letters, than front to ac1 they

are laeled numers 4appendi; seven6 0hen orders come in the pic1ers are ale to easily locate

items ecause each item on the order is complete 2ith these in numers Along 2ith this in

laelling they have organi3ed the items 2ithin the 2arehouse ased on popularity, items ordered

fre5uently appear at the front closest to the pic1ers to reduce the time needed to fill orders They

have not had to change the layout yet as they #ust opened this 2arehouse 8 years ago and find the

2ay they have it to e very efficient A prolem they mentioned aout their 2arehouse is that

they are sometimes starting to run out of storage space and that they have had to store some

inventory on the floor until there is room on the shelves This is an issue that could e perhaps

fi;ed y holding less inventory in the 2arehouse and moving more to2ards a leaner system

uman Resources and ;o! 6esin

0hen as1ed aout hiring %teve and Craig told us that they dont hire very often, ut 2hen they

do it is usually internal hiring The times 2hen they do need to hire they have 2ritten #o

descriptions and these are placed in the ne2spaper and on the internet 4appendi; eight6 They do

not tend to have seasonality so they do not need to hire additional staff often, ho2ever they do

1%



hire one student in the summer 2hich is generally to cover for employees ta1ing vacations

0hen they do need to hire someone Craig said that he 2ill conduct the intervie2 and then if

need he 2ill get a second opinion on the person from the =& department Ongoing training is

re5uired for each employee every year, employees are e;pected to do at least 8+ hours of training

per year, they can choose to do training in a variety of su#ects such as 0=MI%, dangerous

goods, for1lift operation, gases safety etc They do practice #o rotation so employees can easily

s2itch tas1s 2hen needed Hmployees in the 2arehouse seemed very motivated to e 2or1ing as

%teve and Craig seemed to ma1e them all feel empo2ered and have a good corporate culture

Orders vary too much to do y time and si3e to have a standardi3ed time e;pected, ut the goal

for the pic1ers in the 2arehouse is to do aout (+** orders per month

Supp"y C2ain .anaement

Air Li5uide outsources all of its products from different vendors, ut their main purchases are

from Lincoln Hlectric %ome 1ey products they purchase are 2elding machines as 2ell as parts

for these machines, and 2elding 2ire They select their suppliers ased on the prices the supplier

may offer, although they 2ant to e cost efficient they also 2ant to offer great 5uality in the

products they purchase Air Li5uide does all of its purchasing through catalogues and fa;, the

order si3e is ased on the 5uantity demanded y customer orders This means they purchases all

of their inventory li1e parts, 2ire, 2elding machines, etc through catalogues and fa; machines

they donGt do any of it online They pay for their purchases y certified che5ues 2hen they send

their formal purchase order to the supplier Overall 2e 2ould say their supply chain is good, they

have 5uality suppliers and do their est to reduce costs on every order

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,n%entory< .ateria" Re=uirements P"annin and ;,T

Air Li5uide forecasts their demand ased on the amount that has een ordered in the past They

use a MinMa; system to order inventory, essentially they are using an economic order 5uantity

2ith estalished reorder points for the items in their 2arehouse 0ith this system 2hen a

5uantity level goes to2ards the minimum level they order the 5uantity needed to e at ma;imum

desired 5uantity level again The have custom made 2elding 2ire that they order ecause of the

5uality, ho2ever it comes all the 2ay from Italy 0hen ordering the 2elding 2ire they use the

lead demand strategy %ince it ta1es eight 2ee1s to get to their 2arehouse from Italy they order it

in large 5uantities 1no2ing that people 2ho purchase the 2ire uy it very 5uic1ly and also in

large 5uantities ecause it is such a good 5uality product, ecause of this they need a large safety

stoc1 as 2ell as fre5uent orders 4appendi; nine6 They hold 5uite a it of inventory in their

2arehouse, and 2e elieve moving more to2ards a T"% leaner system could enefit them and

cut their costs They have the forecasting availale to implement a #ust in time 4JIT6 system y

increasing their order fre5uency and decreasing the order si3e to reduce the amount of inventory

held in the 2arehouse

,ntermediate and S2ort>term Sc2edu"in

The employees that are 2or1ing in the 2arehouse everyday are on three different shifts These

shifts include 9:**am?+:**, 9:)*? +:)*, and >:** to /:** There are three different shifts

scheduled ecause everyday they ship t2o truc1s out at :)*pm having three shifts ma1es it

more manageale for the shipments to go out on time, or if there is a prolem everyone isnt

leaving at +:** and leaving the prolem 2ith the shipment unresolved <y having three shifts it

allo2s employees to have their choice in 2hich shift they 2ant to 2or1 =aving a shift that stays

12



later helps to ensure the shipments for the day get sent on their 2ay smoothly, or prolems are

fi;ed 2ithout having to rush The 2or1 in the 2arehouse is scheduled ased on orders that need

to e shipped The shipments go out every day at :)* pm so there are certain things that need

to ma1e it onto the truc1 at the end of everyday and some employees 2or1 is scheduled around

this demand 0e see this as an effective system to deal 2ith uncertainties and 2ould suggest they

1eep using this scheduling system

.aintenance

Air Li5uide measures productivity y doing monthly reports, these reports consist of ho2 many

orders 2ere filled y this employee and ho2 long it ta1es to fill them Hach month they pull

reports on each employee to see ho2 many orders they filled and ho2 long it ta1es, ased on

these results they can see ho2 productive their employees are If there numers are too lo2 or

not in the range they 2ant them to e they 2ill then determine 2hat they can do to increase

productivity 0ays they can improve productivity 2hen the numers arent meeting e;pectations

they can s1ill training, re2ard system, employee empo2erment as 2ell as if a manager needs to

get involved These fe2 changes can help achieve results in improved 5uality and capacity as

2ell as continuous improvement Inventory maintenance occurs y chec1ing products for

osolescence, y disposing of products that do not sell for three consecutive years Maintaining

their employee performance is done y re5uiring employees complete at least 8+ hours of

training per year, this helps the company to 1eep up to date and continually improve

13



Conc"usion

In conclusion 2e elieve that Air Li5uide functions very 2ell 2ithin the systems 2e have

learned in this course, they comply 2ell 2ith the (* OM decisions 0e only have a fe2 small

suggestions that could reduce the amount of 2aste that occurs 2ithin the company If they use

closer suppliers, to estalish a etter #ust in time system, as 2ell as reduce the amount of 5uality

inspections they could create a leaner organi3ation

14



Reerences

&ir 'iquide ann!unces areement t! acquire &iras. (2%15) *!vember 17+. ,etrieved

*!vember 28) 2%15) "r!m https://www.airliquide.c!m/invest!rs/air-liquide-ann!unces-

areement-acquire-airas-%

&ir 'iquide r!"ile. (2%15) anuar# 1$+. ,etrieved *!vember 28) 2%15) "r!m

https://www.airliquide.c!m/r!up/pr!"ile

ac!b) . (2%15) *!vember 26+. &ir 'iquide t! d!uble its healthcare business in "ive

#ears. ,etrieved *!vember 28) 2%15) "r!m

http://www.livemint.c!m/0!mpanies/,bs30d5%rvh3/&ir-'iquide-t!-

d!uble-its-healthcare-business-in-"ive-#ears.html

15

https://www.airliquide.com/investors/air-liquide-announces-agreement-acquire-airgas-0


https://www.airliquide.com/group/profile

http://www.livemint.com/Companies/Rbs3gCdV5QQJWE0rvVFh3J/Air-Liquide-to-double-its-healthcare-business-in-five-years.html


https://www.airliquide.com/group/profile







*ppendi$ One

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*ppendi$ T-o

Disual audit 2ith original notes is attached on the ne;t page

17



*ppendi$ T2ree

Three intervie2s are attached, 2e used a general 5uestionnaire and they ans2ered the areas

they 2ere ale to

18



*ppendi$ 4our

1$



*ppendi$ 4i%e

2%



*ppendi$ Si$

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*ppendi$ Se%en

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*ppendi$ Ei2t

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*ppendi$ Nine

Documents

Field Study Report