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9-11-1
McGraw-Hill/IrwinUnderstanding Business, 8e 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Nickels McHugh McHugh
**Producing
World-ClassGoodsand
Services
9
CHA
PTER*
* *
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9-2
Leading U.S.Manufacturing States
0 100 200 Miles
WASHINGTON
OREGON
IDAHO
MONTANA
WYOMING
NEVADA
CALIFORNIA
UTAH
ARIZONA
COLORADO
NEWMEXICO
KANSAS
OKLAHOMA
MISSOURI
ARKANSAS
TEXAS
LOUISIANA
MISSISSIPPI
ILLINOIS
NORTHDAKOTA
SOUTHDAKOTA
MINNESOTA
WISCONSIN
IOWA
NEBRASKA
MICHIGAN
MICHIGAN
INDIANA
OHIO
WEST
VIRGINIA
PENNSYLVANIA
NEWYORK
VIRGINIA
DC
KENTUCKY
VTNH
MAINE
RI
MASS
CONN
NEW
JERSEY
DELAWARE
MARYLAND
NORTHCAROLINA
TENNESSEE
ALABAMA GEORGIA
SOUTH
CAROLINA
FLORIDA
HAWAII
ALASKA
0 600 Miles0 2 00 M il es
California
New York
Illinois
Ohio
Pennsylvania
Texas
Michigan
Source: Britannica Student Encyclopedia, 2006
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9-3
Top Ten US Manufacturers
1. ExxonMobil
2. Chevron
3. General Motors4. ConocoPhillips
5. Ford Motor
6. General Electric
7. Altria Group
8. IBM Corp.9. Hewlett-Packard
10.Valero Energy
Source: Industry Week, June 1, 2006
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9-4
How Manufacturers HaveBecome More Effective Focus on customers
Maintain close relationships
Continuous improvement Focus on quality
Save costs
Rely on the Internet
New production techniques
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9-5
Labor Hours / Vehicle Ford 35.79 hours
Daimler/Chrysler33.71 hours
GM 33.19 hours
Honda 32.51 hours
Toyota 29.4 hours
Nissan 28.46 hours
0 20 40
Nissan
Toyota
Honda
GM
Chrysler
Ford
Source: Detroit Free Press, June 2, 2006
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9-6
From Production toOperations Management Production
ProductionManagement
OperationsManagement(OM)
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9-7
Comparing Asian Giants
CHINA Driving Force:
Manufacturing
Largest CommunistCountry
Population: 1.3Billion
Economic GrowthRate: 9%
Financial/CommercialCapital: Shanghai
INDIA Driving Force:
Services
Largest Democracy
Population: 1.1Billion
Economic Growth
Rate: 7% Financial/Commercial
Capital: Mumbai
Source: Kiplinger.com December 19, 2005, BBC News, In Depth, accessed July 15, 2006
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9-8
Production Processes Form Utility
Process Manufacturing
Assembly Process
Continuous Process
Intermittent Process
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9-9
Three RequirementsFor Production1. Build and deliver products in
response to the demands of the
customer at a scheduled delivery time
2. Provide an acceptable quality level
3. Provide everything at the lowestpossible cost
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9-10
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
Source: World Features Syndicate
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9-11
What Is IncreasingProductivity?
42%
14%
12%
11%
8%Innovation
Capital
ImprovementStaffDownsizing
Outsourcing
Other
Source: 2005 National Innovation Survey, Council on Competitiveness
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9-12
Product Improvements WithComputer Technology Computer-Aided Design - CAD
Computer-Aided Manufacturing - CAM
Computer-Integrated Manufacturing - CIM
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9-13
Top Ten Tech Spenders
STATE $ in Billions California 38.9 New York 29.8 Texas 24.6 Illinois 15.1 Florida 13.9 Pennsylvania 12.8
Ohio 11.8 New Jersey 11.3 North Carolina 9.4 Georgia 9.3
Source: Business Week Online, December 5, 2005
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9-14
Production Techniques Flexible
Manufacturing
LeanManufacturing
MassCustomization
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9-15
Operations ManagementPlanning Facility Location
Facility Layout
Materials RequirementPlanning
Purchasing
J-I-T Inventory Control
Quality Control
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9-16
Quality Control Six Sigma Quality Statistical Quality Control (SQC)
Statistical Process Control (SPC) The Baldrige Award
ISO 9000
ISO 14000
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9-17
Baldrige Award Recipients
Sunny Fresh Foods, Inc.,Monticello, MN(Manufacturing)
DynMcDermott Petroleum Operations,New Orleans, LA (Service)
Park Place Lexus,Plano, TX (Small Business)
Richland College,Dallas, TX (Education)
Jenks Public Schools,Jenks, OK (Education)
Bronson Methodist Hospital,Kalamazoo, MI, (Health care)
Source: NIST News Release, November 22, 2005
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9-18
ISO
ISO was founded in 1947
At the end of 2004, the worldwide
total of certificates: ISO 9000 670,000 in 154 countries
ISO 14000 90,000 in 127 countries
Source: Business Week Online, March 17, 2006
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9-19
Control Procedures Program Evaluation &
Review Techniques(PERT)
Gantt Chart
*
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9-20
PERT Steps
1. Analyzing and sequencing tasks thatneed to be done
2. Estimating the time needed to complete
each task
3. Drawing a PERT network illustrating theinformation from steps 1 and 2
4. Identifying the critical path
*
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9-21
Gantt Chart
Named for its developer,Henry Gantt
A bar graph that clearlyshows what projects arebeing worked on and how
much has beencompleted at any giventime
*
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9-22
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