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
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