Complete a 10 page (minimum) double-spaced paper as follows: Select an Operation
ID: 450321 • Letter: C
Question
Complete a 10 page (minimum) double-spaced paper as follows:
Select an Operations Management topic. Relate this topic to an existing company. For example, Total Quality Management at Toyota – JIT at Ford – Supply chain Management at Home Depot, Inventory Control at Wal-Mart, Forecasting at a local bakery, 6-Sigma at GE, etc.
This is a research project and it is expected that each paper addresses the following:
Company background.
How large (sales, employees).
Product or service mix.
Who is the competition. ( max 2 pages)
What conditions lead the company to implement to the selected topic.
When did the company implement the Operations Management tool.
Document results of the implementation of the Operations Management tool. Profit/productivity improvement etc. ( one page of supporting graphs or charts is allowed)
Future of the company. How has the success of the implementation affected the plans of the company going forward.
HOW PROJECT WILL BE GRADED
Company background – must include sales and employment data. Products or services provided. Size vs. major competition.
Conditions that lead to selection of Operations Management tool. What were the conditions in the company that lead to the decision to select and implement the management tool?
When did the company implement the management tool?
What were the results of implementation - Document cost savings, productivity improvement, workforce reduction etc.?
Future of the company – What has the successful implementation allowed the company to do? Expand, take market share, offer a new line of products etc.
Project presentation - grammar, spelling, neatness (think of this as giving a report to your boss at work) 15 points
Explanation / Answer
Just In Time ( JIT) Ford Motors.
Company History: Ford Motor Company. Ford MotorCompany is an American automaker and the world's fifth largest automaker based on worldwide vehicle sales. Based in Dearborn, Michigan, a suburb of Detroit, the automaker was founded by Henry Ford, on June 16, 1903.
Total Employees: 199,000
Revenue: ( 2015): $ 149.5 Billion
Ford is the second largest autmobilecompany in US after General Motors.
JUST IN TIME ( JIT)
Ford has manufacturing operations worldwide, including in the United States, Canada, Mexico, China, the United Kingdom, Germany, Turkey, Brazil, Argentina, Australia and South Africa. Ford also has a cooperative agreement with Russian automaker GAZ.
Currently, JIT production methods are widely used in the USA and other Northern American Countries. This approach is also taught in business schools and described in many business administration and management textbooks. The following textbook definition is typical. JIT is:
A system popularized by the productivity of Japanese industry that attempts to reduce costs and improve workflows by scheduling materials to arrive at a work station or facility “just in time” to be used (Schermerhorn, 1996, p. G5).
This approach can reduce carrying costs of inventories and levels of inventories, maximize the use of space, and in some cases improve the quality of results. One author (and noted consultant in operations management subjjects) considers that “the JIT approach may be the most important productivity enhancing management innovation since the turn of the century” (Schonberger, 1982, p. 24). While Schonberger’s claim that JIT may be a bit excessive, there is general agreement that JIT is a valuable production management approach.
Another advantage of this approach is that purchasing and productionprocurement can be accomplished on a small scale and no earlier than necessary. Anyhow, extra caution is very much needed because without the use of backup inventories, the arrival of material must be accurate and continuously fine-tuned and also has to be tracked very well.. In addition, the material must be of usable quality and workers must use this material properly in the production process. Schermerhorn suggests that a wide range of special support is needed for the JIT production method to work effectively. Essential factors include the following:
The technique was first used by the Ford Motor Company as described explicitly by Henry Ford's My Life and Work (1922): "We have found in buying materials and other supporting items that it is not worthwhile to buy for other than immediate needs. We buy only enough to fit into the plan of production, taking into consideration the state of transportation at the time. If transportation systems were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever. The car loads of raw materials would arrive on schedule and in the planned order and amounts, and go from the railway cars into production. That would save a great deal of money anyhow , for it would give a very rapid turnover and thus decrease the amount of money allocated for materials. With bad transportation one has to carry larger stocks." This statement also describes the concept of 'dock to factory floor' in which incoming materials are not even stored or warehoused before going into production. The concept needed an effective freight management system (FMS).
The technique was subsequently adopted and publicised by Toyota Motor Corporation of Japan as part of its Toyota Production System (TPS). Japanese corporations cannot afford large amounts of land to warehouse finished products and parts. Before the 1950s, this was thought to be a disadvantage because it forced the production lot size below the economic lot size. (An economic lot size is the number of identical products that should be produced, given the cost of changing the production process over to another product.) The undesirable result was poor return on investment for a factory.
The chief engineer at Toyota in the 1950s, Taiichi Ohno, examined and analysed accounting assumptions and realized that another method was possible. The factory could easily implement JIT system which would require it to be made more flexible and reduce the overhead costs of retooling and thereby reduce the economic lot size to fit the available warehouse space. JIT is now considered by Ohno as one of the two 'pillars' of the Toyota Production System.
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