* * *

**
Producing World-Class Goods and Services

9
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Nickels

McHugh

McHugh

McGraw-Hill/Irwin Understanding Business, 8e

2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

CHAPTER

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Leading U.S. Manufacturing States

W AS H IN G TO N

Michigan
MO N T AN A NO R TH D AK O T A

New York
MAIN E VT NH NEW Y O R K MAS S CO N N RI

OR E GO N

Illinois
MIN N ESO T A ID AH O SO U TH D A K O T A WY O M IN G IO W A NEV AD A NEBR A SKA

MIC H IGA N

WIS C O N S IN

MIC H IG AN

PEN N SY L V AN IA NE W JER S EY OH IO DELA W AR E ILLIN O IS IN D IA N A WES T VIR G IN IA DC MAR Y LAN D

UT AH

CO LO R AD O KAN SA S

VIR G IN IA

CALIFO R N IA

MIS SO U R I KEN TU C KY

TE N N ESS EE AR IZO N A NEW M EXIC O OKLA H O M A AR KAN SA S

Ohio
GE OR G IA

NO R TH C A R O LIN A

SO U TH C AR OLIN A

California
TEX AS
ALASKA

ALA BAM A LO U ISIA N A MISSIS SIPP I

Pennsylvania
FL O R ID A

HAWAII 0 600 Miles 0 200 Miles

Texas

100

200 Miles

Source: Britannica Student Encyclopedia, 2006

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Top Ten US Manufacturers

1. 2. 3. 4. 5. ExxonMobil Chevron General Motors ConocoPhillips 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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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
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* * *

Labor Hours / Vehicle

Ford 35.79 hours
Ford Chrysler GM Honda Toyota Nissan 0 20 40

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

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From Production to Operations Management

Production

Production Management
Operations Management (OM)
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Comparing Asian Giants

CHINA Driving Force: Manufacturing Largest Communist Country Population: 1.3 Billion Economic Growth Rate: 9% Financial/Commercial Capital: Shanghai INDIA Driving Force: Services Largest Democracy Population: 1.1 Billion Economic Growth Rate: 7% Financial/Commercial Capital: Mumbai
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Source: Kiplinger.com December 19, 2005, BBC News, In Depth, accessed July 15, 2006

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Production Processes
Form Utility Process Manufacturing Assembly Process Continuous Process Intermittent Process
9-8

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Three Requirements For Production

1. 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 lowest possible cost
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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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11%

What Is Increasing Productivity?

8% Innovation Capital Improvement Staff Downsizing Outsourcing Other 14%
Source: 2005 National Innovation Survey, Council on Competitiveness

42% 12%

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* * *

Product Improvements With Computer Technology

Computer-Aided Design - CAD Computer-Aided Manufacturing - CAM

Computer-Integrated Manufacturing - CIM

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* * *

Top Ten Tech Spenders

STATE California New York Texas Illinois Florida Pennsylvania Ohio New Jersey North Carolina Georgia $ in Billions 38.9 29.8 24.6 15.1 13.9 12.8 11.8 11.3 9.4 9.3
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Source: Business Week Online, December 5, 2005

* * *

Production Techniques
Flexible Manufacturing Lean Manufacturing

Mass Customization
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* * *

Operations Management Planning

Facility Location

Facility Layout
Materials Requirement Planning Purchasing J-I-T Inventory Control Quality Control

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* * *

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

9-16

* * *

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

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PERT Steps
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

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Gantt Chart
Named for its developer, Henry Gantt
A bar graph that clearly shows what projects are being worked on and how much has been completed at any given time
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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

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