Unit-1Introduction of production

and operations management

Nature and scope of production managementTypes of manufacturing systemDifferences between manufacturing and

service operationsRole of production and operations

managementStrategic planning decision for operationsDemand forecasting for operationsContribution of henryford ,deming, crossby,

taguchi

contents

Operations management is often used along with production management in literature on the subject. It is therefore, useful to understand the nature of operations management .Operations management is understood as the process whereby resources or inputs are converted into more useful products .A second reading of the sentence reveals that, there is hardly any difference between the terms produ7ction management and operations management . of the subject. Operation management is the term that is used now a days .

Scope of Production and Operation Management

The scope of production and operations management is indeed vast .Commencing with the selection of location production management covers such activities as acquisition of land, constructing building ,procuring and installing machinery ,purchasing and storing raw material and converting them into saleable products.

Nature and scope of production management

MAINLY DEPENDS UPON THE NATURE OF GOODS & SERVICES TO BE PRODUCED PURPOSE OF THE PRODUCT AND NATURE OF PRODUCTION PROCESS STOCK --- SALES FORECAST PRODUCED TO ORDER --- RAW MATERIAL MATERIAL NOT CARRIED TO STOCK --- NATURE AND SIZE OF ORDER

Types of manufacturing system

RECEIPT AND STORAGE OF RAW MATERIALS

MEANS OF TRANSPORTATION

INSPECTION OF IN-PROCESS AND FINISHED GOODS

STORAGE OF FINISHED GOODS

ACTIVE THROUGHOUT BY INFORMATION AND CONTROL FUNCTION

MANUFACTURING SYSTEMS INTERACTS BOTH INTERNAL AND EXTENAL ENVIRONMENT

INTERNAL– MARKETING,ACCOUNTS, PERSONNEL,AND FINANCE

EXTERNAL- CUSTOMERS,LABOUR UNIONS,SUPPLIERS

MANUFACTURING SYSTEMS

Service Operations:The service-profit chainService recovery and empowermentService Recovery and Empowerment:Restoring customer satisfaction to strongly

dissatisfied customersEmpowering workers is one way to speed up

service recovery

Differences between manufacturing and service operations

Amount of processing in manufacturing operations

Flexibility of manufacturing operationsAmount of Processing in Manufacturing

Operations:Make-to-order operation

manufacturing does not begin until an order is received

Assemble-to-order operationused to create semi-customized products

Make-to-stock operationmanufacture standardized products

Manufacturing Operations

Continuous-flow productionproduces goods at a continuous rate

Line-flow productionPre-established linear processes that produce one type of

productBatch production

operation that produces goods in large batches in standard lot sizes

Job shopsoperation that handles customer orders or small batch jobs

Project manufacturingoperation that produces large, expensive, specialized

products

Manufacturing Operations

Operations Management or often referred as productions and operations management ,relates to the management of such systems

Transformation Approach. Value Driven Approach.Value Chain Model.

Role of production and operations management

S

Strategic planning decision for operations

Demand ManagementQualitative Forecasting MethodsSimple & Weighted Moving Average

ForecastsExponential SmoothingSimple Linear RegressionWeb-Based Forecasting

Demand Managementobjects

Demand Management

A

B(4) C(2)

D(2) E(1) D(3) F(2)

Dependent Demand:Raw Materials, Component parts,Sub-assemblies, etc.

Independent Demand:Finished Goods

Can take an active role to influence demand

Can take a passive role and simply respond to demand

Independent Demand: What a firm can do to manage it?

Qualitative (Judgmental)

QuantitativeTime Series AnalysisCausal RelationshipsSimulation

Types of Forecasts

Average demand for a period of time

TrendSeasonal elementCyclical elementsRandom variationAutocorrelation

Components of Demand

Finding Components of Demand

1 2 3 4

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xxx x x x

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Year

Sal

es

Seasonal variation

Linear

Trend

Qualitative Methods

Grass Roots

Market Research

Panel Consensus

Executive Judgment

Historical analogy

Delphi Method

Qualitative

Methods

Henry Ford (July 30, 1863 – April 7, 1947) was a prominent American industrialist, the founder of the Ford Motor Company, and sponsor of the development of the assembly line technique of mass production. His introduction of the Model T automobile revolutionized transportation and American industry. As owner of the Ford Motor Company, he became one of the richest and best-known people in the world. He is credited with "Fordism": mass production of inexpensive goods coupled with high wages for workers. Ford had a global vision, with consumerism as the key to peace. His intense commitment to systematically lowering costs resulted in many technical and business innovations, including a franchise system that put a dealership in every city in North America, and in major cities on six continents. Ford left most of his vast wealth to the Ford Foundation but arranged for his family to control the company permanently.

He was known worldwide especially in the 1920s for a system of Fordism that seemed to promise modernity, high wages and cheap consumer goods, but his antisemitism in the 1920s has been a source of controversy.

Henry Ford

An assembly line is a manufacturing process in which parts (usually interchangeable parts) are added to a product in a sequential manner using optimally planned logistics to create a finished product much faster than with handcrafting-type methods. The assembly line developed by Ford Motor Companybetween 1908 and 1915 made assembly lines famous in the following decade through the social ramifications of mass production, such as the affordability of the Ford Model T and the introduction of high wages for Ford workers. Henry Ford was the first to master the assembly line and was able to improve other aspects of industry by doing so (such as reducing labor hours required to produce a single vehicle, and increased production numbers and parts). However, the various preconditions for the development at Ford stretched far back into the 19th century, from the gradual realization of the dream of interchangeability, to the concept of reinventing workflow and job descriptions using analytical methods (the most famous example being scientific management). Ford was the first company to build large factories around the assembly line concept. Mass production via assembly lines is widely considered to be the catalyst which initiated the modern consumer culture by making possible low unit cost for manufactured goods. It is often said that Ford's production system was ingenious because it turned Ford's own workers into new customers. Put another way, Ford innovated its way to a lower price point and by doing so turned a huge potential market into a reality. Not only did this mean that Ford enjoyed much larger demand, but the resulting larger demand also allowed further economies of scale to be exploited, further depressing unit price, which tapped yet another portion of the demand curve. This bootstrapping quality of growth made Ford famous and set an example for other industries.

Henry Ford.

INTRODUCTION OF DEMING

Dr. W. Edwards Deming

1900-1993“We have learned to live in a world of mistakes and defective products as if they were necessary to life. It is time to adopt a new philosophy in America.”

Deming was born in a small town, in Iowa state in 20th century. He later moved from Iowa to Wyoming and in 1917 he entered the University of Wyoming. He was working as a janitor to fund his education. He graduated in 1921 and went on to the University of Colorado, where he received a M.S. in Physics & Mathematics. He got a doctoratre in Physics from Yale University.

He gravitated towards statistics. Completion of the 1940 census, Deming began to introduce Statistical Quality Control into industrial operations. After one year, he and two other experts began teching Statistical Quality Control to inspectors and engineers. He started his own private practice in 1946. For more than forty years, his firm served its clientele—manufacturers, telephone companies, railways, trucking companies, census takers, hospitals, governments and research organizations. With his ideas, product quality improved and thus also popular satisfaction. His influential work in Japan, instructing top executives and engineers in quality management, was a driving force behind that nation’s economic rise. He contributed directly to Japan’s phenomennal export-led growth and its current technological leadership in automoblies, ship-buliding and electronics. In 1960, the Emperor of Japan bestowed on Dr. Deming the Second Order Medal of the Sacred Treasure.

The American Society for Quality Control awarded him the Shewhart Medal in 1956

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In 1983, Dr. Deming received the Samuel S. Wilks Award from the American Statistical Association and election to the National Academy of Engineering. President Reagan honoredhim with the National Medal of Technology in 1987 and in 1988, the National Academy of Sciences lauded him with the Distinguished Career in Science award.

He was elected in 1986 to the Science and Technology Hall of Fame in Dayton. From the University of Wyoming, Rivier Colloege, the University of Maryland , Ohio State University, Clarkson College of Technology, Miami University, George Washington University, the University of Colorado, Fordham University, the University of Alabama, Oregon State University, the American University, the University of South Carolina, Yale University, Harvard University, Cleary College and Shenandoah University, he received the degrees L.L.D and Sc.D. honorius causa. From Yale University, he won the Wilbur Lucius Cross Medal and the Madeleine of Jesus from Rivier College.Dr. Deming authored several books and 171 papers. His books, Out of the Crisis

(MIT/CASE,1986) and The New Economics (MIT/CASE,1994) have been translated into several languages. Myriad books, filmsand videotapes profiles his life, his

philosophy and the siccessful application of his worldwide teachings.

PHILOSOPHY OF DEMING

Constancy of purpose

Create constancy of purpose for continual improvement of products and service to society, allocating resources to provide for long range needs rather than only short term profitability, with a plan to become competitive, to stay in business, and to provide jobs.

The new philosophy

Adopt the new philosophy. We are in a new economic age, created in Japan. We can no longer live with commonly accepted levels of delays, mistakes, defective materials, and defective workmanship. Transformation of Western management style is necessary to halt the continued decline of business and industry.

Cease dependence on mass inspection

Eliminate the need for mass inspection as the way of life to achieve quality by building quality into the product in the first place. Require statistical evidence of built in quality in both manufacturing and purchasing functions.

End lowest tender contracts

End the practice of awarding business solely on the basis of price tag. Instead require meaningful measures of quality along with price. Reduce the number of suppliers for the same item by eliminating those that do not qualify with statistical and other evidence of quality. The aim is to minimize total cost, not merely initial cost, by minimizing variation. This may be achieved by moving toward a single supplier for any one item, on a long term relationship of loyalty and trust. Purchasing managers have a new job, and must learn it.

Improve every process

Improve constantly and forever every process for planning, production, and service. Search continually for problems in order to improve every activity in the company, to improve quality and productivity, and thus to constantly decrease costs. Institute innovation and constant improvement of product, service, and process. It is management's job to work continually on the system (design, incoming materials, maintenance, improvement of machines, supervision, training, retraining).

Institute training on the job

Institute modern methods of training on the job for all, including management, to make better use of every employee. New skills are required to keep up with changes in materials, methods, product and service design, machinery, techniques, and service.

Institute leadership

Adopt and institute leadership aimed at helping people do a better job. The responsibility of managers and supervisors must be changed from sheer numbers to quality. Improvement of quality will automatically improve productivity. Management must ensure that immediate action is taken on reports of inherited defects, maintenance requirements, poor tools, fuzzy operational definitions, and all conditions detrimental to quality.

Drive out fear

Encourage effective two way communication and other means to drive out fear throughout the organization so that everybody may work effectively and more productively for the company.

Break down barriers

Break down barriers between departments and staff areas. People in different areas, such as Leasing, Maintenance, Administration, must work in teams to tackle problems that may be encountered with products or service.

Eliminate exhortations

Eliminate the use of slogans, posters and exhortations for the work force, demanding Zero Defects and new levels of productivity, without providing methods. Such exhortations only create adversarial relationships; the bulk of the causes of low quality and low productivity belong to the system, and thus lie beyond the power of the work force.

Eliminate arbitrary numerical targets

Eliminate work standards that prescribe quotas for the work force and numerical goals for people in management. Substitute aids and helpful leadership in order to achieve continual improvement of quality and productivity.

Permit pride of workmanship

Remove the barriers that rob hourly workers, and people in management, of their right to pride of workmanship. This implies, among other things, abolition of the annual merit rating (appraisal of performance) and of Management by Objective. Again, the responsibility of managers, supervisors, foremen must be changed from sheer numbers to quality.

Encourage education

Institute a vigorous program of education, and encourage self improvement for everyone. What an organization needs is not just good people; it needs people that are improving with education. Advances in competitive position will have their roots in knowledge.

Top management commitment and action

Clearly define top management's permanent commitment to ever improving quality and productivity, and their obligation to implement all of these principles. Indeed, it is not enough that top management commit themselves for life to quality and productivity. They must know what it is that they are committed to—that is, what they must do. Create a structure in top management that will push every day on the preceding 13 Points, and take action in order to accomplish the transformation. Support is not enough: action is required!

Philip B. Crosby (1926-2001):Zero Defects Effectively this concept implies that “poor” or “high” quality has little or no meaning and that in fact it is either conformance or non- conformance to customer/product requirements which is of central importance. Quality management equates to defect prevention.

• Make it clear that management is committed to quality

• Form quality improvement teams with representatives from each department

• Determine how to measure where current and potential quality problems exist

Crosby’s 14 Stepsto Quality Improvement

• Evaluate the cost of quality and explain its use as a management tool

• Raise the quality awareness and personal concern of all employees

• Take formal actions to correct problems identified through previous steps

Crosby’s 14 Stepsto Quality Improvement

• Establish a committee for the zero defects program

• Train all employees to actively carry out their part of the quality improvement program

• Hold a “zero defects day” to let all employees realize there has been a change

Crosby’s 14 Stepsto Quality Improvement

• Encourage individuals to establish improvement goals for themselves and their groups

• Encourage employees to communicate to management the obstacles they face in attaining their improvement

Crosby’s 14 Stepsto Quality Improvement

• Recognize and appreciate those who participate

• Establish quality councils to communicate on a regular basis

• Do it all over again to emphasize that the quality improvement program never ends

Crosby’s 14 Stepsto Quality Improvement

Crosby’s Absolutes• Quality means

conformance to requirements – if you intend to do it right the first time, then everyone must know what it is

Crosby’s Absolutes

• Quality comes from prevention. Vaccination is the way to prevent organizational disease. Prevention comes from training, discipline, example, leadership, and so forth.

Comprehension (understanding)Commitment (by all).Competence (Improvement).Correction (Elimination of errors).Communication (Support of all people,

customers, suppliers etc)Continuance (Improvement).

Crosby’s 6 C

1. Quality is defined as conformance to requirements and not “goodness”.

2. The system for achieving is prevention and not appraisal.

3. The performance standard is Zero defects, not “that is” close enough

4. The measurement of Quality is the price of non-conformance, not indexes.

Absolutes of quality management

1. Management commitment2. Quality improvement team.3. Establish Quality measurements.4. Establish the Cost of Quality.5. Corrective actions.6. Quality awareness7. Zero defect planning8. Employee education.

14 steps towards Quality improvements.

9. Zero defects day.10. Employee goal setting.11. Error cause removal.12. Establish recognition.13. Establish and hold regular meetings of

Quality councils.14. Do it all over again.

Uncertainty.Awakening.Enlightenment.Wisdom.Certainty.

The Management Maturity Grid (Quality Maturity Grid)

Crosby’s Triangle (Crosby’s Quality Vaccine)

Communication Systems, operations

Integrity, policies

CONTRIBUTION OF TAGUCHI TO TOTAL QUALITY MANAGEMENT

Genichi Taguchi born on January 1, 1924 in Tokamachi, Japan is an engineer and statistician. From 1950s onwards, Taguchi developed a methodology for applying statistics to improve the quality of manufactured goods. Genichi Taguchi, was an engineer and author of the Taguchi statistical methods

LIFE AND CAREER

Taguchi is famous for his pioneering methods of modern quality control and low-cost quality engineering. He is the founder of what has come to be known as the Taguchi method, which seeks to improve product quality at the design stage by integrating quality control into product design, using experiment and statistical analysis. His methods have been said to fundamentally change the philosophy and practice of quality control.

In 1962, Taguchi was awarded his doctorate by Kyushu University. He worked for ECL in a consulting role and became part of the associate research staff of the Japanese Standards Association, where he founded the Quality Research Group. In 1964, he took up a professorship at Aoyamagokuin University in Japan, where he spent the next 17 years developing his methods.

Throughout this time, Taguchi methods Taguchi methods are statistical methods developed by Genichi Taguchi to improve the quality of manufactured goods and more recently to biotechnology marketing and advertising.

He developed his concept of the quality loss function in the early 1970s, but it was during the 1980s that Taguchi methods became established, when he revisited AT & T Bell Laboratories in the US, as director of the Japanese Academy of Quality.

CONCEPT OF TAGUCHI

Taguchi developed methods for both online (process) and offline (design) quality control. This formed the basis of his approach to total quality control and assurance within a product's development life cycle. His approach emphasised improving the quality of product and process prior to manufacture (that is, at the design stage) rather than the more traditional approach of achieving quality through inspection.

TAGUCHI METHODS

He developed a concept of quality loss occurring as soon as there is a deviation away from the target value, and worked in terms of quality loss rather than just quality. He defined quality loss as `the loss imparted to society from the time the product is shipped', and this related the loss to society as a whole. Thus, it included both company costs such as reworking, scrapping and maintenance, and any loss to the customer through poor product performance and lowered reliability

a. QUALITY LOSS FUNCTION

Taguchi associates a simple, quadratic (mathematical expression of the second degree in one or more unknown loss function with deviations from the target). Thus: * The smaller the performance variation, the better the quality of the product. * The larger the deviation from the target value, the larger the loss to society. A loss will occur even when the product is within the specification allowed, though it is minimal when the product is on target.

One of Taguchi's most innovative ideas was to utilise a `quality' measure called the signal to noise ratio, which was then used by communications engineers to find the strength of an electrical signal. Taguchi applied this measure to everyday products, and used it as a measure to choose control levels that could best cope with changes in operating and environmental conditions, or noise.

b. SIGNAL TO NOISE RATIO

On the basis of the signal to noise measure, Taguchi was able to develop the concept of robustness, which enables a product to be designed to be less affected by noise. Given normal variations in process operations, the product in question would be less likely to fail acceptable quality criteria.

c.ROBUST QUALITY OF DESIGN

During the product design and production engineering phases, Taguchi set out three steps that must be followed.

PRODUCT DESIGN IMPROVEMENT

This may involve the development of a prototype design and will determine the materials, parts, and assembly system to be used. The manufacturing process has also to be considered.

1. SYSTEM DESIGN

Taguchi's parameter design aimed to find the most cost-effective way of controlling noise.

Taguchi process and design improvements are gained by identifying easily controllable factors and settings that minimize performance variation. Controllable factors are design factors that a designer can set or easily adjust. Uncontrollable factors are noise, or external variations, and a higher signal to noise ratio means better quality. Taguchi found that if controllable factors were set at optimal levels, the product would be robust to external changes. This was achieved through parameter design applied at the design (offline) stage to reduce or remove the effect of noise factors, and design in robustness. His new approach dramatically reduced the number of experiments and prototypes required and, in consequence, costs were much lower. He developed various experimental designs which allowed the variability of the noise factors on each controllable factor setting to be simulated. The settings that minimised variability could then be determined.

2.PARAMETER DESIGN

If parameter design failed, Taguchi suggested using tolerance design to identify the most crucial noise factors. Tolerances could be reassigned so that the overall variability was reduced to acceptable levels.

3. TOLERANCE DESIGN

Taguchi moved quality control even further back, to the design stage, thus completing the total quality loop. Taguchi's techniques and statistical experimental designs have complemented many for quality improvement. It has been said that Deming's work inspired a revolution in the old management culture whilst Taguchi inspired evolution. Certainly, Deming provided mainly a theory for management, while Taguchi provided important techniques for improving a process at every stage, from design to production, and for keeping the improved processes under control.