PRODUCTION AND OPERATIONS MANAGEMENT https://www.youtube.com/watch?v=garZ8KkuBds – Ford Trucks https://www.youtube.com/watch?v=jLud5XYfY_c – Ford promo production video.
OBJECTIVES Introduction to Production Function and Operations Management Mass Production Approach Toyota Production System (TPS) Approach Just in Time approach. Supply Chain Management
MASS PRODUCTION Labor Specialization Mechanization Standardization Mass Production: Makes Outputs available in Large Quantities at Lower Unit Costs than Individually- Crafted Items Characteristics of Mass Production Labor Specialization Mechanization Standardization First Model T’s were produced one per worker for a 12 hour day. The assembly line technique slashed the number of work hours to 1.5
ASSEMBLY LINES Used Ideas of Specialized Labor and Engineering Standards (Tolerances)
HENRY FORD Introduced Moving Assembly Line: Dramatically Reduced Manufacturing Costs While Delivering Consistent, Low-Priced Product
FORD MODEL “T” First Produced: October 1908 By 1927, 15,000,000 Produced Any Color so long as it’s Black…
ASSEMBLY LINE BENEFITS Initially, took 14 hours to Assemble Model T - Mass Production reduced Time to 1 Hour and 33 Minutes Model T’s Price dropped from $1,000 in 1908 to $360 in 1916 Assembly line became dominant production method.
FORD ASSEMBLY LINES Assembly Line pulled by Ropes
MASS PRODUCTION “PUSH” Strategy – Driven by Inputs and Objectives Control of Raw Materials and Labor plus Profit Goals = Production Rate -Not driven by customer demand. Performance measured by Quantitative Results (Defects or Unit Costs per Day/week/month), not Quality Standards
MASS PRODUCTION Low Product Variety; Small Orders Not Feasible Specialized Machinery and Centralized Manufacturing “Economies of Scale” – High-Speed Sequential Production i.e the Pringles “How its made” show. Development Costs Spread Over Large Volume: Low Cost per Unit Produced Low-Skill/Low-Wage Work Force Large Advertising and Marketing Budgets
MASS PRODUCTION Flaws of Mass Production Approach Production Levels cannot Stop or Slow: Defects resolved outside Production (Added Costs of Rework)
TOYOTA’S ORIGINS 1956 – Taiichi Ohno went to US to study Ford’s Manufacturing Facilities Found Mass Production Principles not Applicable because of: Scale of Japanese Markets Desire for Product Variety Unable to Afford Resources and Inventories
TOYOTA’S 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**
TOYOTA PRODUCTION SYSTEM In 1961, Toyota adopts “Systems Perspective” –Adopted a Continuous Improvement Attitude that Minimizes Waste and Emphasizes High Quality Processes are analyzed to eliminate flaws rather than fixing defective products Waste Eliminated – Comprehensive View that includes Time, Resources and Materials Over-Production Time Spent Waiting Unnecessary Movements of Items
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.
TOYOTA PRODUCTION SYSTEM - Downstream (Consumer) Demand drives Upstream (Business) Activity (“Pull Strategy”) Orders flow “Up” System, not from Top-down Only what is Needed is Ordered and Produced
TOYOTA PRODUCTION SYSTEM – 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. -Employees are empowered to help in the development and improvement process.
TOYOTA PRODUCTION SYSTEM Result of TPS is “Just-in-Time” Inventory System JIT relies on Supplier Relationships that Integrate Inventory Arrivals and Production Needs JIT depends on Mutual Commitment of Toyota Loyalty and Supplier Performance
TOYOTA PRODUCTION SYSTEM Why Hasn’t TPS Been Universally Adopted? Equipment Transition Costs: If you want to change your product it can take a long time to change machine’s. Different Management Paradigm: To empower or not to empower?
World’s Second Largest Manufacturer of Automobiles About 240,000 Employees Produces a Vehicle about every Six Seconds Consistently Profitable GM: $1.1 Billion Quarter Loss
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)
SUPPLY CHAIN MANAGEMENT