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PRODUCTION AND OPERATIONS MANAGEMENT

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TOYOTA'S ORIGINS ... TOYOTA PRODUCTION SYSTEM ... JIT depends on Mutual Commitment of Toyota Loyalty and Supplier Performance. 26 ... – PowerPoint PPT presentation

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Title: PRODUCTION AND OPERATIONS MANAGEMENT


1
PRODUCTION AND OPERATIONS MANAGEMENT
2
OBJECTIVES
  • Introduction to Production Function and
    Operations Management
  • Mass Production Approach
  • Toyota Production System (TPS) Approach
  • Supply Chain Management

3
PRODUCTIONversus MANUFACTURING
  • Production is a Broader Term that Spans both
    Manufacturing and Services Functions
  • Production is the Application of Resources,
    People and Machinery, to Convert Inputs into
    Finished Goods and Services

4
MASS PRODUCTION
  • Mass Production Makes Outputs available in
    Large Quantities at Lower Unit Costs than
    Individually- Crafted Items
  • Characteristics of Mass Production
  • Labor Specialization
  • Mechanization
  • Standardization

5
ASSEMBLY LINES
  • Assembly Line first Introduced by Eli Whitney
    (Cotton Gin Inventor) to build Muskets for the US
    Government In 1799
  • Used Ideas of Specialized Labor and Engineering
    Standards (Tolerances) to produce Assemblies from
    Parts in Repeatable Manner

6
HENRY FORD
  • Introduced Moving Assembly Line Dramatically
    Reduced Manufacturing Costs While Delivering
    Consistent, Low-Priced Product
  • Factory based on Chicago Meat Cutting Plants

7
FORD MODEL T
  • First Produced October 1908
  • By 1927, 15,000,000 Produced
  • Any Color so long as its Black

8
ASSEMBLY LINE BENEFITS
  • Initially, took 14 hours to Assemble Model T -
    Mass Production reduced Time to 1 Hour and 33
    Minutes
  • Model Ts Price dropped from 1,000 in 1908 to
    360 in 1916
  • Result was Ford becoming Dominant Automobile
    Manufacturer and Assembly Line Method as
    Dominant Production Approach
  •  

9
FORD ASSEMBLY LINES
  •  
  • Assembly Line pulled by Ropes
    Magneto Assembly

10
MASS PRODUCTION
  • MODEL T Machine that Changed the World
  • 1914 Ford produced 308,162 cars, more than all
    299 other auto manufacturers combined
  • 1927 Automobile Produced every 24 seconds
  • Higher volumes ? Lower cost ? Lower Prices
    ?Increased Sales ? Higher Volumes

11
MASS PRODUCTION
  • PUSH Strategy Driven by Inputs and Objectives
  • Control of Raw Materials and Labor plus Profit
    Goals Production Rate separate from Customer
    Demands and Preferences
  • Performance measured by Budget Variances and
    Quantitative Results (Defects or Unit Costs per
    Day, Week or Month), not Quality Standards

12
MASS PRODUCTION
  • Low Product Variety Small Orders Not Feasible
  • Specialized Machinery and Centralized
    Manufacturing
  • Economies of Scale High-Speed Sequential
    Production
  • Development Costs Spread Over Large Volume
    Low Cost per Unit Produced
  • Low-Skill/Low-Wage Work Force
  • Large Advertising and Marketing Budgets

13
FORD WORKING CONDITIONS
  • Monotony of Assembly Line Work 300 Turnover
  • 2 per Day and a 9-Hour Shift
  • Fords Response to Working Conditions Dilemma
  • Increase Pay to 5 per Day and
    Reduce Shifts from 9 Hours to 8 Hours
  • The Chain System you have is a Slave Driver. My
    God, Mr. Ford! My Husband has come Home and
    Thrown Himself Down and wont Eat his Supper,
    Hes so done out. Cant it be Remedied? That
    5-a-day is a Blessing a Bigger One than you
    Know. But, Oh, They Earn It!
  • - Wife of Ford Assembly Line Worker

14
MASS PRODUCTION
  • Flaws of Mass Production Approach
  • Production Levels cannot Stop or Slow Defects
    resolved outside Production (Added Costs of
    Rework)
  • Long Changeover Times limits Product Variety
  • Erratic Finished Products Inventory Levels
  • Incentives and 0 Financing

15
MASS PRODUCTION Market Orientation Flaw
16
TOYOTAS ORIGINS
Toyoda Automated Loom Works
  • 1902 Modification Loom Stopped Automatically if
    Thread Broke or Spool Empty - Signal for
    Attention
  • Result No Waste from Defective Work and Lower
    Production Costs

17
TOYOTAS ORIGINS
  • During WWII, Toyoda became Toyota and
    manufactured Motorcycles and Delivery Trucks
  • After WWII, Japanese Industry needed to re-build

18
TOYOTAS ORIGINS
1956 Taiichi Ohno went to US to study Fords
Manufacturing Facilities
  • Found Mass Production Principles not Applicable
  • Scale of Japanese Markets
  • Desire for Product Variety
  • Unable to Afford Resources and Inventories

19
TOYOTAS ORIGINS
Before returning to Japan, Ohno went to an
American Grocery Store
  • Discovered Production and Operation Methods that
  • Were Linked to Customer Actions Inventories
    Replenished by Sales (PULL Strategy)
  • Delivered Product Variety and Scale
  • Minimized Waste

20
TOYOTAS ORIGINS
  • Toyota Exports its First Car The Forgettable
    Crown
  • Under-powered and Unstable at Freeway speeds,
    Production is stopped in 1959

21
TOYOTA PRODUCTION SYSTEM
  • In 1961, Toyota adopts Systems Perspective
  • KAIZEN Continuous Improvement Attitude that
    Minimizes Waste and Emphasizes High Quality
  • Processes are analyzed to eliminate flaws rather
    than fixing defective products
  • WASTE Comprehensive View that includes Time,
    Resources and Materials
  • Over-Production
  • Time Spent Waiting
  • Unnecessary Movements of Items

22
TOYOTA PRODUCTION SYSTEM

Waste is anything other than the minimum amount
of equipment, materials, parts, space, and
workers time which are absolutely essential to
add value to the product. - Shoichiro Toyoda
President, Toyota Motor Co.
23
TOYOTA PRODUCTION SYSTEM
  • KANBAN - Downstream Demand drives Upstream
    Activity (Pull Strategy)
  • Orders flow Up System, not from Top-down
  • Only what is Needed is Ordered and Produced

24
TOYOTA PRODUCTION SYSTEM
  • ANDON Work Stops when Problem Encountered
  • Counter-measures taken to Cure Cause, Not
    re-work Defective Result. Authority delegated
    to Production Team
  • Production and Problem-solving Functions
    combined. No Special Trouble-shooting Teams

25
TOYOTA PRODUCTION SYSTEM
  • Result of TPS is Just-in-Time Inventory System
  • Comes from Systems Operation, Not a Requirement
    of It Element of Waste Management Philosophy
  • JIT relies on Supplier Relationships that
    Integrate Inventory Arrivals and Production
    Needs
  • JIT depends on Mutual Commitment of Toyota
    Loyalty and Supplier Performance

26
TOYOTA PRODUCTION SYSTEM
  • Why Hasnt TPS Been Universally Adopted?
  • Equipment Transition Costs Short Turnover
    Times (High Variety) combined with High
    Quality
  • Different Management Paradigm Empower
    Assembly Line Workers to Stop Production and
    Order Process- correcting Counter-measures

27
  • Worlds Second Largest Manufacturer of
    Automobiles
  • About 240,000 Employees
  • Produces a Vehicle about every Six Seconds
  • Consistently Profitable GM 1.1 Billion
    Quarter Loss

28
SUPPLY CHAIN MANAGEMENT
  • A supply chain is a system through which
    organizations deliver their products and
    services to their customers."
    (Poirier and Reiter, 1996)
  • "A supply chain is an integrated process wherein
    raw materials are manufactured into final
    products, then delivered to customers (via
    distribution, retail, or both)."
  • (Benita, 1999)

29
SUPPLY CHAIN MANAGEMENT
30
SUPPLY CHAIN MANAGEMENT
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