Operations and Production Management Chapter 9

Leading U.S. Manufacturing States 9-2 California New York Illinois Ohio Pennsylvania Texas Michigan Source: Britannica Student Encyclopedia, 2006 The U.S. is regaining its losses in manufacturing.

Top Ten US Manufacturers ExxonMobil 2. Chevron 3. General Motors 4. ConocoPhillips 5. Ford Motor 6. General Electric 7. Altria Group 8. IBM Corp. 9. Hewlett-Packard 10. Valero Energy Source: Industry Week, June 1, 2006

How Manufacturers Have Become More Effective 9-4 Focus on customers Maintain close relationships Continuous improvement Focus on quality Save costs Rely on the Internet New production techniques

An Efficiency Example Labor Hours / Vehicle Ford – hours Ford – hours Daimler/Chrysler – hours Daimler/Chrysler – hours GM – hours GM – hours Honda – hours Honda – hours Toyota – 29.4 hours Toyota – 29.4 hours Nissan – hours Nissan – hours 9-5 Source: Detroit Free Press, June 2, 2006

An Effectiveness Example: Profit/ Vehicle Ford – ($590) Ford – ($590) Daimler/Chrysler – $223 Daimler/Chrysler – $223 GM – ($2496) GM – ($2496) Honda – >$1200 Honda – >$1200 Toyota – >$1200 Toyota – >$1200 Nissan – >$1200 Nissan – >$ Source: Detroit Free Press, June 2, 2006

Plant Capacity Used Ford – 79% Ford – 79% Daimler/Chrysler – 94%-106% Daimler/Chrysler – 94%-106% GM – 90% GM – 90% Honda – 91% Honda – 91% Toyota – 94%-106% Toyota – 94%-106% Nissan – 94%-106% Nissan – 94%-106% 9-7 Source: Detroit Free Press, June 2, 2006

From Production to Operations Management 9-8 Production Creation of value using wealth drivers Production Management Overseeing the change of capital into goods Operations Management (OM) Overseeing the change of capital into goods and services

Production Processes 9-9 All come together to make form utility. Process Manufacturing Physically or chemically changing materials. Assembly Process Puts together components. Continuous Process Same process over and over. Intermittent Process Custom design, runs stop frequently

Three Requirements For Production Quick response to the demands of the customer 2. Acceptable quality level 3. Lowest possible cost

Production Efficiency 9-11 Krispy Kreme Doughnuts – 5,208 a minute Twinkies – 972 a minute LifeSavers 5 Flavor Roll – 100 rolls a minute Jell-O Gelatin Boxes – 764 a minute Chips Ahoy! – 4,000 a minute Hershey’s plant tour Hershey’s plant Source: World Features Syndicate

What Is Increasing Productivity? 9-12 Source: 2005 National Innovation Survey, Council on Competitiveness

Product Improvements With Computer Technology 9-13 Computer-Aided Design – CAD The computer helps to design the product. Computer-Aided Manufacturing – CAM A robot puts together parts. Computer-Integrated Manufacturing – CIM Design on the computer, then robot manufactures.

Production Techniques 9-14 Flexible Manufacturing Designing machines to do multiple tasks/switch out Lean Manufacturing Continually whittling down the inputs to production Mass Customization Adjusting the manufacturing process to be able to tailor it to a vast number of market segments.

Operations Management Planning 9-15 Facility Location Facility Layout Materials Requirement Planning Purchasing J-I-T Inventory Control Quality Control

Six Sigma Quality Statistical Quality Control (SQC) Statistical Process Control (SPC) The Baldrige Award ISO 9000 ISO

Control Procedures 9-17 Program Evaluation & Review Techniques (PERT) Gantt Chart

PERT Steps Analyzing and sequencing tasks that need to be done 2. Estimating the time needed to complete each task 3. Drawing a PERT network illustrating the information from steps 1 and 2 4. Identifying the critical path

Learning from Failure 9-19 Formalize forums for analyzing failure Move the goalposts Share personal stories Bring in outsiders Prove yourself wrong, not right Celebrate smart failures Source: Business Week Online, July 10, 2006