ITFT--Production,operations, management
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Transcript of ITFT--Production,operations, management
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PRODUCTION AND OPERATIONS
MANAGEMENT
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OBJECTIVES
Introduction to Production Function and Operations Management
Mass Production Approach
Toyota Production System (TPS) Approach
Supply Chain Management
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PRODUCTION versus 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
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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
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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
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HENRY FORD
Introduced Moving Assembly Line: Dramatically Reduced Manufacturing Costs While Delivering Consistent, Low-Priced Product
Factory based on Chicago Meat Cutting Plants
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FORD MODEL “T”
First Produced: October 1908
By 1927, 15,000,000
Produced
Any Color so long as it’s Black…
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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
Result was Ford becoming Dominant Automobile Manufacturer and Assembly Line Method as Dominant Production Approach
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FORD ASSEMBLY LINES
Assembly Line pulled by Ropes Magneto Assembly
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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
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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
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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
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FORD WORKING CONDITIONS
Monotony of Assembly Line Work: 300% Turnover
$2 per Day and a 9-Hour Shift
Ford’s 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 won’t Eat his Supper, He’s so done out. Can’t 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
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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
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MASS PRODUCTION Market Orientation Flaw
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TOYOTA’S ORIGINS
1902 Modification: Loom Stopped Automatically if
Thread Broke or Spool Empty - Signal for
Attention
Result: No Waste from Defective Work and
Lower Production Costs
Toyoda Automated Loom Works
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TOYOTA’S ORIGINS
During WWII, Toyoda became Toyota and manufactured Motorcycles and Delivery Trucks
After WWII, Japanese Industry needed to re-build
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TOYOTA’S ORIGINS
Found Mass Production Principles not Applicable: Scale of Japanese Markets
Desire for Product Variety
Unable to Afford Resources and Inventories
1956 – Taiichi Ohno went to US
to study Ford’s Manufacturing
Facilities
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TOYOTA’S ORIGINS
Discovered Production and Operation Methods that Were Linked to Customer Actions: Inventories
Replenished by Sales (“PULL” Strategy) Delivered Product Variety and Scale Minimized Waste
Before returning to
Japan, Ohno went to an
American Grocery Store
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TOYOTA’S ORIGINS
Toyota Exports its First Car: The
Forgettable “Crown”
Under-powered and Unstable at
Freeway speeds, Production is
stopped in 1959
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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
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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.