introduction, about,production,operation, management,

1. 1
PRODUCTION AND
OPERATIONS
MANAGEMENT

2. 2
OBJECTIVES
Introduction to Production Function and
Operations Management
Mass Production Approach
Toyota Production System (TPS)
Approach
Supply Chain Management

3. 3
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

4. 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. 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. 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. 7
FORD MODEL “T”
First Produced:
October 1908
By 1927,
15,000,000
Produced
Any Color so long
as it’s Black…

8. 8
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

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

10. 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. 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. 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. 13
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

14. 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. 15
MASS PRODUCTION
Market Orientation Flaw

16. 16
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

17. 17
TOYOTA’S ORIGINS
During WWII, Toyoda became Toyota and manufactured
Motorcycles and Delivery Trucks
After WWII, Japanese Industry needed to re-build

18. 18
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

19. 19
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

20. 20
TOYOTA’S ORIGINS
Toyota Exports its
First Car: The
Forgettable
“Crown”
Under-powered
and Unstable at
Freeway speeds,
Production is
stopped in 1959

21. 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. 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.