Tuesday, March 8, 2011

Pit Stop Strategy and Management in F1 Racing

Speed, technology and affluence are the three words that characterize motor sport and the most popular among motor sports is F1 racing. Formula One cars are considered to be the fastest circuit-racing cars in the world. Formula One cars race at high speeds – up to 360 km/h (220 mph) – with engines the performance of which is limited to a maximum of 18,000 revolutions per minute (rpms). The race is not just limited to the race-track, but it extends beyond to technology. A handful of companies that are highly advanced in technology compete fiercely in manufacturing the engine for the race cars and designing superior aerodynamics model. For single racing season, formula 1 teams put together spend around $3 billion. So winning becomes important as reputations and money is at stake. Winning of races just don‟t depend on driver‟s ability but also on the team strategy. The team that works in the back-ground monitors the vitals of the car and the driver in real time and takes decisions on critical areas like pit stop.

A pit stop is located in a garage by-lane that runs parallel to the race track and each team is allotted a stall in the by-lane for their pit management. A camera and wireless communication is fit into the car to monitor the vital statistics and for relaying orders to the driver when to make a pit stop. Pit stop plays an important role in the race, though a layman may perceive it to be losing out on time in the race. But the fact is all teams follow this practice at one point or the other in the race. A pit stop can cost the team a lead time of around 10 seconds. So it is important to time the pit stop too. Some may argue that teams could use more durable tires and a tank full of fuel to avoid pit stops. But that would make the cars heavier and slower. By making pit stops cars can carry less fuel, and therefore be lighter and faster, and use softer tires that wear faster but provide more grip. Pit stops are strategic in gaining time on the race track and the gain makes up for the time lost on pit stop.

Pit stop scheduling need not be rigid as they can be changed according to the demand of the race. The main controller has to communicate clearly to the driver when he has to go for a pit stop. Similarly, the driver has to communicate to the controller if he feels that the car has to go through a pit stop. Once the pit stop strategy is clear, the driver moves his car to the garage by-lane towards his pit. During a scheduled pit stop, the team's pit crew services the car as swiftly as possible, completing a number of different services. The most visible services performed are refuelling the car and changing tires. Other services performed in routine pit stops include removing debris from radiator air intakes; cleaning the windshield; and making adjustments to tire pressure, suspension settings, and aerodynamic devices to optimize the car's performance for the current conditions.

The pit crew stands in position as the car rolls in to the slot. Only person who is not in the working po-sition when the car enters the pit stall is the rear jack man due to location of duties directly behind the car. The job of front jack man is considered the most hazardous, as it requires standing directly in front of the car as it enters its pit stall. In F1 racing, there are around 17 crew members. The first being “Lollipop man” who holds the team's pit sign, helping the driver identify his pit stall on a possibly crowded pit road.

During the stop, he holds the sign in position signaling the driver to keep his brakes on while tires are being changed, and then to shift the car in first gear once the jacks are lowered. He also gives the driver the sign to depart his pit stall by raising the sign from in front of the driver. Apart from that there are four tire changers and eight tire carriers all in position ready to act once the front and rear jack men lift the car. Other two members, the fire extinguisher man and the starter man don‟t actually work on the car but are all poised for any kind of emergency like fire or an engine halt.

The timing and synchronization of pit crew con-tributes to the reduction in lead time gained by other racers during the car‟s pit stop. Hence the pit crew is as critical to the team as the driver.

Agile Supply Chain: An Analogy

The concept of an agile supply chain can be explained with the help if an analogy, by taking the example of a pit stop, wherein parts need to be changed the moment the formula car enters it thereby working towards a collective goal, i.e. to improve the timeline each time.

An Agile supply chain replicates the Pit stop model. If one is not able to deliver the right goods, to the right place at the right time, there are other competitors out there on the look out to replace you. Agility and visibility are the two key aspects that need to be given most importance while running your supply chain as they are crucial for business success and competitive advantage.

Depending on the type of race the structure of the pit crew varies. Pit stop work is carried out by indi-viduals, each one a specialist in performing their duties but working together as the ultimate team. In fact, pit stop strategy has become one of the most important components of the racing strategy. The pit stop strategy can be exemplified by using car as a metaphor for an organization with each specialist represented in the pit crew.

Therefore, the implication of pit stop strategy lies in the importance to maintain focus on business operations and the need of standard based solutions that enable organizations to gain visibility of specific assets and how this in turn is driving process improvement through the entire supply chain.

Monday, March 7, 2011

Can Recessions be Avoided ??

         A country is said to be in recession if its economy experiences two successive quarters of what is known as "negative growth". For this to happen, the total amount of goods and services produced by the country - known as gross domestic product (GDP) - would have to contract on a quarter by quarter basis for a total period of six months.
        There are different degrees of Recession according to the time and its impact on the economy. If the economy contracts in two consecutive quarters but then recover and actually see growth for the year as a whole. then, most commentators would label it a mild recession. However, there is also the danger of a full-blown or severe recession when there is an absolute decline in economic growth on a year-by-year basis.
Over a long period of time a lot of Recessions had come and gone affecting the world economy and there is a discussion among the economists for the reasons behind them and for ways of their avoidance.
        Can Recessions be really avoided?? It is a difficult question to answer and to some extent de-pends upon the economy. The following factors influence the recession.

1. Global Dependency :Due to forces of globalization and the interdependence of world economies, a recession in one country often causes a recession in others. For ex-ample, a recession in the EU, would definitely affect the UK economy because the EU is UK‟s main export partner. When the world economy slows down, a recession is harder to avoid in an export oriented economy. However, individual countries may deviate from the global trends depending on the internal environment. For example, in the subprime crises India was not affected compared with other countries like US, Japan etc. due to the internal policies and huge domestic consumption.

2. Natural Cycle:  It was felt that economic growth was subject to a natural cycle of high growth followed by low growth or recession. It was felt that it was not possible to prevent these cycles. However, in recent decades, it appears that economic cycles have become less pronounced; i.e. booms less noticeable, but re-cessions shorter and deeper. Therefore, it is possible to minimize fluctuations so as to avoid an actual downturn.

3. Economic Stability: The best way to avoid a boom and bust, is for the government / monetary authorities to avoid a boom; if the economy expands too rapidly and inflation occurs, there comes a point when it is almost impossible to avoid a recession. If economic growth is kept close to the long run trend rate and you avoid speculative bubbles, this is the best way to avoid a recession. If the economy is allowed to grow above the long run trend rate, then bust becomes almost inevitable. But in a Capitalistic economy avoidance of a boom or bust is not much practically feasible.

4.International rise in prices: Some economic factors are beyond the control of governments. A rapid rise in oil prices creates a situation of stagflation; rising inflation and fal-ling living standards. It presents a difficult situation. There is a limit to what can be done, when there is a supply side shock. Whatever policy is implemented there is likely to be a worse trade off.

5.Fiscal Policy: In a recession, the aim is to boost Aggregate demand through cutting tax and increasing government spending. In theory, this injection into the economy can boost demand and stimulate the economy. To be effective expansionary fiscal policy requires:
  •  Low government borrowing. If you already have very high levels of government borrowing, it becomes difficult to finance further expansionary fiscal policy.
  • Responsiveness of consumers. Cutting taxes may not always boost consumer spending, if people prefer to save the money.
Fiscal policy may not be able to avoid all recessions; but, in some circumstances can help minimise the severity of a recession and wrong Fiscal policies can make the Recession even more worse as seen in the Great Depression US Fiscal policies instead of controlling the recession, made it even worse.

6.Monetary Policy:
  • Cutting interest rates should make borrowing cheaper and stimulate demand. However, lower interest rates don't always work
  • If confidence is very low, people may not want to borrow, even if borrowing is cheaper. E.g. Japan had 0% interest rates in the 1990s, but, failed to stimulate the economy.
The US government and Federal Reserve have tried hard to avoid a recession in the 2008 crisis, even at the risk of moral hazard. And the steps have minimised the severity of a recession; but, factors like the credit crunch and housing boom and bust made that very difficult. This would have required a different policy several years previously. And such policies could have stopped the Subprime crisis.

Saturday, March 5, 2011

Industrial Trip to ONGC Dehradun

Oil and Natural Gas Corporation Ltd. provided the students of DoMS IIT Roorkee with an excellent opportunity for exposure to oil industry and corporate culture by inviting us to ONGC Academy Dehradun. ONGC Academy is also the incubation centre for fresh graduate trainees.

A bunch of excited and enthusiastic students accompanied by our faculty Dr.Rajat Aggarwal and Dr.Zillur Rahman started off from IIT Roorkee in two buses to ONGC Academy, Dehradun. We were received by Dr.R.K.Mishra and Mr. Monu Bhatnagar, Superintending Chemist and EA to Head ONGC Academy. We were offered tea to freshen ourselves after a two and half hour journey by bus.

We were then addressed by Dr.Tarun Chakraborti, Head, ONGC Academy at Nehru Auditorium. He gave us insights into upstream oil industry, the major concern of ONGC and the challenges faced by the industry. Upstream oil industry is basically concerned with exploration, drilling and production of oil. He started off with the milestones achieved by ONGC and also stated that ONGC is currently ranked as No.1 company in Exploration and Production in the world. He gave us an overview of the industrial processes and exploration techniques employed by upstream Oil industry. A comprehensive picture of Sagar Samrat, the offshore station at Bombay High was presented to us. He also put light on the risks and hazards faced by the officers and scientists in oil industry. He also gave details on the HR practices being followed by ONGC and the leadership development program employed by ONGC. He spoke in detail on the challenges faced in Human Resource Management and the factors that influence human resources. He then came up with measures on how these challenges are met. He stressed on Industry academia interface for promoting the awareness on importance of petroleum sector. His presentation was followed by a Q&A session which satisfied our curiosity about the petroleum industry.

We were then directed to a delicious lunch at the executive canteen. We were really overwhelmed by the hospitality and professionalism of ONGC employees. It wasn’t just an academic learning for us but it was also a lesson on the corporate behaviour and practices.

 Post lunch we were guided to ONGC museum at Tel Bhawan, Dehradun. This visit was enlightening as well as we were guided through various models that demonstrated oil extraction and a series of photographs that depicted the milestones achieved by ONGC and oil industry in India. We were also demonstrated different types of crude oil extracted from various parts of the country and the differences in their viscosity. We were told that oil extracted from Ankleshwar, Gujarat was best in the country in terms of quality. Also on display were fossilized bones of a dinosaur named Saurapod and a mammoth which were found by the exploration teams of ONGC. The museum tour concluded with a short documentary on the life of a normal ONGCian.

As our day ended fruitfully at Dehradun, we hit the road again to make it back to our campus, our beloved IIT Roorkee.