Title: PRODUCTION AND OPERATIONS MANAGEMENT
1PRODUCTION AND OPERATIONS MANAGEMENT
2OBJECTIVES
- Introduction to Production Function and
Operations Management - Mass Production Approach
- Toyota Production System (TPS) Approach
- Supply Chain Management
3PRODUCTIONversus 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
4MASS 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
5ASSEMBLY 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
6HENRY FORD
- Introduced Moving Assembly Line Dramatically
Reduced Manufacturing Costs While Delivering
Consistent, Low-Priced Product - Factory based on Chicago Meat Cutting Plants
7FORD MODEL T
- First Produced October 1908
- By 1927, 15,000,000 Produced
- Any Color so long as its Black
8ASSEMBLY 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 -
9FORD ASSEMBLY LINES
- Assembly Line pulled by Ropes
Magneto Assembly
10MASS 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
11MASS 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
12MASS 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
13FORD 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
14MASS 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
15MASS PRODUCTION Market Orientation Flaw
16TOYOTAS 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
17TOYOTAS ORIGINS
- During WWII, Toyoda became Toyota and
manufactured Motorcycles and Delivery Trucks - After WWII, Japanese Industry needed to re-build
18TOYOTAS 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
19TOYOTAS 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
20TOYOTAS ORIGINS
- Toyota Exports its First Car The Forgettable
Crown - Under-powered and Unstable at Freeway speeds,
Production is stopped in 1959
21TOYOTA 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
22TOYOTA 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.
23TOYOTA 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
-
24TOYOTA 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 -
25TOYOTA 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 -
26TOYOTA 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 -
28SUPPLY 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)
29SUPPLY CHAIN MANAGEMENT
30SUPPLY CHAIN MANAGEMENT