Operations and Production Management

Chapter 9

Leading U.S. Manufacturing States

9-2

0 100 200 Miles

WASHINGTON

OREGON

IDAHO

MONTANA

WYOMING

NEVADA

CALIFORNIA

UTAH

ARIZONA

COLORADO

NEW MEXICO

KANSAS

OKLAHOMA

MISSOURI

ARKANSAS

TEXAS

LOUISIANA

MISSISSIPPI

ILLINOIS

NORTH DAKOTA

SOUTH DAKOTA

MINNESOTA

WISCONSIN

IOWA

NEBRASKA

MICHIGAN

MICHIGAN

INDIANA

OHIO

WESTVIRGINIA

PENNSYLVANIA

NEW YORK

VIRGINIA

DC

KENTUCKY

VTNH

MAINE

RI

MASS

CONN

NEWJERSEY

DELAWARE

MARYLAND

NORTH CAROLINA

TENNESSEE

ALABAMA GEORGIA

SOUTHCAROLINA

FLORIDA

HAWAII

ALASKA

0 600 Miles0 200 Miles

CaliforniCaliforniaa

New YorkNew York

IllinoisIllinois

OhiOhioo

PennsylvaniPennsylvaniaa

TexaTexass

MichigaMichigann

Source: Britannica Student Encyclopedia, 2006Source: Britannica Student Encyclopedia, 2006

The U.S. is regaining its losses in manufacturing.

Top Ten US Manufacturers

9-3

1. ExxonMobil2. Chevron 3. General Motors

4. ConocoPhillips 5. Ford Motor

6. General Electric7. Altria Group8. IBM Corp.9. Hewlett-Packard10.Valero Energy

Source: Industry Week, June 1, 2006

How Manufacturers Have Become More Effective

9-4

Focus on customersMaintain close relationshipsContinuous improvementFocus on qualitySave costsRely on the InternetNew production techniques

An Efficiency ExampleLabor Hours / Vehicle

Ford – 35.79 hoursFord – 35.79 hours

Daimler/Chrysler – Daimler/Chrysler – 33.71 hours33.71 hours

GM – 33.19 hoursGM – 33.19 hours

Honda – 32.51 hoursHonda – 32.51 hours

Toyota – 29.4 hoursToyota – 29.4 hours

Nissan – 28.46 hoursNissan – 28.46 hours

9-5Source: Detroit Free Press, June 2, 2006Source: Detroit Free Press, June 2, 2006

An Effectiveness Example:Profit/ Vehicle

Ford – ($590)Ford – ($590)

Daimler/Chrysler – Daimler/Chrysler – $223$223

GM – ($2496)GM – ($2496)

Honda – >$1200Honda – >$1200

Toyota – >$1200Toyota – >$1200

Nissan – >$1200Nissan – >$1200

9-6Source: Detroit Free Press, June 2, 2006Source: Detroit Free Press, June 2, 2006

Plant Capacity UsedFord – 79%Ford – 79%

Daimler/Chrysler – Daimler/Chrysler – 94%-106%94%-106%

GM – 90%GM – 90%

Honda – 91%Honda – 91%

Toyota – 94%-106%Toyota – 94%-106%

Nissan – 94%-106%Nissan – 94%-106%

9-7Source: Detroit Free Press, June 2, 2006Source: Detroit Free Press, June 2, 2006

From Production to Operations Management

9-8

ProductionCreation of value

using wealth drivers

Production ManagementOverseeing 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 ManufacturingPhysically or chemically changing

materials.

Assembly ProcessPuts together components.

Continuous ProcessSame process over and over.

Intermittent ProcessCustom design, runs stop frequently

Three Requirements For Production

9-10

1. 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 tourSource: World Features SyndicateSource: World Features Syndicate

What Is Increasing Productivity?

9-12

Source: 2005 National Innovation Survey, Council on CompetitivenessSource: 2005 National Innovation Survey, Council on Competitiveness

Product Improvements With Computer Technology

9-13

Computer-Aided Design – CADThe computer helps to design the product.

Computer-Aided Manufacturing – CAMA robot puts together parts.

Computer-Integrated Manufacturing – CIMDesign on the computer, then robot manufactures.

Production Techniques

9-14

Flexible ManufacturingDesigning machines to do

multiple tasks/switch out

Lean ManufacturingContinually whittling down

the inputs to production

Mass CustomizationAdjusting 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

Quality Control Six Sigma QualityStatistical Quality Control (SQC)Statistical Process Control (SPC)

The Baldrige AwardISO 9000ISO 14000

9-16

Control Procedures

9-17

Program Evaluation & Review Techniques (PERT)

Gantt Chart

PERT Steps

9-18

1. 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 failureMove the goalpostsShare personal storiesBring in outsidersProve yourself wrong, not rightCelebrate smart failures

Source: Business Week Online, July 10, 2006Source: Business Week Online, July 10, 2006