Chapter 9

1. Chapter 9 Operations and Production Management

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

3. Top Ten US Manufacturers • ExxonMobil • Chevron • General Motors • ConocoPhillips • Ford Motor • General Electric • Altria Group • IBM Corp. • Hewlett-Packard • Valero Energy Source: Industry Week, June 1, 2006

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

5. An Efficiency ExampleLabor Hours / Vehicle • Ford – 35.79 hours • Daimler/Chrysler – 33.71 hours • GM – 33.19 hours • Honda – 32.51 hours • Toyota – 29.4 hours • Nissan – 28.46 hours Source: Detroit Free Press, June 2, 2006

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

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

8. From Production to Operations Management • 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

9. Production Processes • 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

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

11. Production Efficiency • 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 Source: World Features Syndicate

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

13. Product Improvements With Computer Technology • 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.

14. Production Techniques • 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.

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

16. Quality Control • Six Sigma Quality • Statistical Quality Control (SQC) • Statistical Process Control (SPC) • The Baldrige Award • ISO 9000 • ISO 14000

17. Control Procedures • Program Evaluation & Review Techniques (PERT) • Gantt Chart

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

19. Learning from Failure • 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