Productivity

Development
 THE HOUSE OF MANUFACTURING
Cost Flexibility
Quality Innovation

Delivery
Order Order Velocity/Learning
Qualifiers Winners

Key Competitive Dimensions

Capacity Quality

Supply
Facilities
Chain

Equipment
New product
+ Process
Technologies Plant Practices Development

Information
Sourcing Management

External
Organisation Focus/
+ Systems People Learning

Vision Safety, Housekeeping Culture

Human
+ Health,
Resources
+ +
Alignment Environment Amenities Mindset

Decision Categories
ORDER WINNERS
Key Competitive Dimensions

Flexibility

• Ability to offer customised products

• Ability to adapt quickly to changes in product or volumes

Innovation

• Ability to invent and bring increased value products to market consistently and
quickly

Velocity/Learning

• Ability to respond to customer orders more rapidly than competitors

• Ability to learn and change more rapidly than customers and competitors
ORDER QUALIFIERS
Key Competitive Dimensions

Cost

• Low unit cost, delivered cost, life cycle cost

Quality

• Performance, features, aesthetics, tangibles, conformance, reliability, reputation,

assurance, service, durability, responsiveness, empathy, safety, environment

Delivery

• Reliability of delivery promises and meeting delivery schedule

• High service level and responsiveness
PEOPLE
Decision Categories

Safety, Health, and Environment

Approach to safety, health and environment

Housekeeping and Amenities

Plant housekeeping activities and internal environment for employees

Human Resources
Selection/training, compensation, security, degree of self management, involvement

Vision and Alignment

Firm’s values, beliefs, and view of various stakeholders

Culture and Mindset

Firm’s attitudes towards people, change, risk and involvement
PLANT
Decision Categories

Capacity
Amount, timing of additions, type

Facilities
Layout, size, location, specialisation

Equipment and process technologies

Scale, level of automation, flexible versus specialised

Sourcing
Direction, extent, number, relationships

Organisation and systems

Structure, number of levels, staff functions
PRACTICES
Decision Categories

Quality
Definition, roles, responsibility

Supply Chain
Inventory, flows, schedules, vendor relations

New Product Development

Interface with engineering, marketing, etc.

Information Management
Availability, ease of use, sharing, evaluation systems

External Focus/Learning
Understanding of key customers, suppliers, and competitors, use of benchmarking, exposure to current
management approaches and literature
WORLD CLASS MANUFACTURING
What is it ?
STAGES OF MANUFACTURING
Stage I - Internally Neutral Stage II - Externally Neutral
Minimise manufacturing’s negative impact Achieve parity with competitors

Top Management views manufacturing as incapable of Top Management seeks parity with its competitors, and
follows industry practice in its manufacturing methods
contributing to competitive success
Capital is used to buy up to date equipment
The objective is to manage manufacturing in a way
that will minimise its negative potential

Stage III - Internally Supportive, Leading Edge Stage IV - Externally Supportive, Potential World Class
Provide credible support to the business strategy Manufacturing as a significant contributor to the
competitive advantage
Top Management expects manufacturing to strengthen
Top Management views manufacturing as a source of
and support the company’s competitive position competitive advantage

A consistent pattern of manufacturing decisions results in

Careful business unit planning takes place and clear industry leadership in at least one specific aspect of
manufacturing capability
manufacturing decisions are reviewed for consistency
with the business unit strategy
9
 PQCDSM
What is PQCDSM ?

Involves improving key manufacturing or conversion

measures. Some examples of productivity measures could
be asset utilisation, capacity utilisation and OEE
Productivity

Involves improving quality. Some examples of quality

measures are product quality, package quality and
consumer complaints
Quality

Involves improving production/operating costs. Some

examples of cost measures are manufacturing COE and
usage variances
Cost
 PQCDSM
What is PQCDSM ?

Delivery involves factory dependability. It is a measure of

the plant’s ability to produce in a given time frame.
Examples of delivery measures include produce to plan
and OTIF
Delivery

Every production system should be operated in the safest

possible way. Some examples of SHE measures include lost
time injuries, water usage and energy usage ratios
Safety

Morale deals with shop floor enthusiasm. How well does

the company promote and enhance self-esteem?. Typical
morale measures are employee engagement survey
results, critical vacancies, absenteeism, number of before
Morale and after kaizens generated, OPL’s and tags per person
P Q C D S M Examples

12
 The History of
Scientific Management
for Productivity Developement
A Process of getting things done
Efficiently and Effectively through and
with other people

Management
A set of activities
planning and decision making, organising, leading, and controlling
directed at an organisation’s resources
human, financial, physical, and information

with the aim of achieving organisational goals

in an efficient and effective manner
doing the right thing in right way

What is Management?
 The Pre-modern Era
• Egyptians Pyramids?
• Great wall of China?

 Who told each worker what she or he was supposed to do?

 Did they had enough work to keep them busy?
 Regardless of what managers were called, someone had to
Plan, Organise, Direct and Control

1–16
Division of labour was first
introduced in 1770’s in the pin
manufacturing industry

Before the experiment

• Each worked separately and
independently
• 10 workers would be lucky to
make a maximum 200 per
day

After the experiment

• 10 individuals, each did a
specialised task
• Could produce about 48,000
pins per day among them
 Adam Smith “Division of Labor”
How?

• The logical breakdown of jobs into narrow

repetitive tasks

• Different jobs are required, different skill levels

(skilled/unskilled) are required

• Once division of work is done it will be more

economical to allocate labour
Eli Whitney
Interchangeable and
replaceable parts

• Tolerances and fits in manufacturing

parts

• if we maintain the tolerances in a

certain range, you could have part that
are Interchangeable and replaceable

• Standardising
 Scientific Management
by Frederick W Taylor
1856 - 1915

“Scientific Management” or “Taylorism” was a scientific method which

was used to optimise the way in which a task was performed to improve
labour productivity. One of Taylor’s philosophy was “In the past man
must has been first. In the future, the system must be first.”

Scientific Management

The use of scientific methods to define the ‘’one best

way’’ for a job to be done
 F W Taylor pig iron experiment
Before the experiment
• Measured that workers moved 12 ½ tons of pig iron per day at Midvale Steel
Company, USA
Experiment
• Selected physically strong employees for the trial which in fact were 12 ½ % of
men employed
• Offered $1.85 instead of $1.15 per day using money as a motivator
• Taylor experimented with rest periods, walking speed, carrying positions and
other variables

Result

• The employees moved 47 tones of pig iron per day without tiring. The work done
by 500 workers could now be done by 140 – a 350% productivity increase
 The General Concept of
Scientific Management
1. Develop a standard method for performing a task and
train workers to use these methods (Managers developed precise
procedures based each organizational task)
2. Provide workers with the proper tools needed to work
3. Selected employees were chosen for specific tasks (Workers
that were stronger both mentally and physically were assigned specific tasks)
4. Wage incentive were provided when output was
increased (Employees were motivated to increase their output with the use
of additional benefits)
 Scientific Management Pioneers
Frank and Lillian Gilbreth

Both developed techniques and

strategies for eliminating inefficiency

Frank reduced the number of movements in

bricklaying, resulting in increased output of
200%

Lillian made substantive contributions to the

fields of industrial psychology and personnel
management.
• Top: "The usual method of
providing the bricklayer with
material" (Gilbreth, Motion
Study, 1911)

• Bottom: "Non-stooping scaffold

designed so that uprights are
out of the bricklayer's way
whenever reaching for brick
and mortar at the same time"
 Henry Ford
The Assembly line
The first moving assembly line was set-up by Henry
Ford in the USA, for the automobile industry
It is not possible to setup an assembly line if they
didn’t have,
• a logical breakdown of work
• main tasks broken into smaller tasks and some tasks grouped
together and assigned to a work station or a machine

This breakdown of smaller tasks helps in the division

of labor to a large extent
https://www.youtube.com/watch?v=S4KrIMZpwCY
Henry Ford, 1913 Model “T” production at Highland
Park
Key Concept “The faster I flow product through the
factory the more money I make”
• one model
• unlimited demand
• move suppliers closer to the plant
 ASSEMBLY LINE BENEFITS
• Initially, it took 14 hours to Assemble the Model T
• Mass production reduced the time to 1 Hour and
33 Minutes
• Model T’s Price dropped from $1,000 in 1908 to
$350 in 1916
• The result was Ford becoming a dominant
automobile manufacturer and the assembly line
method becoming a dominant production
approach
 MASS PRODUCTION

MODEL “T” – the Machine that Changed the World

• 1914: Ford produced 308,162 cars, more than all
299 other auto manufacturers combined
• 1927: an automobile was Produced every 24
seconds
• Higher volumes → Lower cost → Lower Prices
→Increased Sales → Higher Volumes
• In the early 1940’s, GM’s strategy was to provide
options i.e. many models, many options
• GM outperformed Ford
• Ford abandoned flow and setup functional
departments
• After WWII, Japan needed re-building
• Deming visited Toyota (William Edwards Deming, statistician from USA )
• Toyota was in shambles with no cash
• Toyota studied Ford, GM, and American Supermarkets
• Developed a liking for Ford’s 1913 concept of flow and
developed a production system that supported flow with
many models and options
• This became known as the Toyota Production System which
minimised cash required to run the business
https://www.youtube.com/watch?v=YgZ5xxRNS9s&feature=youtu.be
• During the late 1980’s – Early 1990’s, USA
wanted to survey the world and
benchmark why the USA could not
compete
• Womack surveyed the Automobile
Industry, supported by James and Roos
• The conclusion being Toyota was far ahead
of the rest of industry
– They wrote the book “The Machine that
changed the World” in 1992
• Womack visited Toyota and studied their
production system
– He wrote the book “Lean Thinking” in
1996
• Formed the Lean Enterprise Institute, a
non-profit organisation
The Power Loom
• In 1894, Sakichi Toyoda (outside of
Nagoya) built a wooden spinning
machine and started to make manual
looms
• Toyoda was pleased with his looms,
but disturbed that his mother, grand
mother, and their friends still had to
work so hard spinning and weaving
• He wanted to find a way to relieve
them of this punishing labor
• He then developed power driven
wooden looms
How Toyota became the
World’s best Manufacturer

•In 1926, Sakichi Toyoda started the Toyoda Automated

Loom works
•There were machine interruption due to thread
breakages
•He invented a special mechanism to automatically stop
the machine whenever a thread broke. Later this become
the concept – Jidoka
•Sakichi Toyoda was later referred to as Japan’s “King of
Inventors”
•Sakichi was highly influenced by the works of James Watt
How Toyota become the World’s best
Manufacturer
• In 1930, Toyoda sold the patent right of power loom to
Platt Brothers, England for the value of 100,000 British
Sterling Pounds
• Kichiro Toyoda (son of Sakichi) started the Toyota Motor
Company by investing the money earned by selling the
power loom patent
“Everyone should tackle some great project at
least once in their life. I devoted most of my life
to inventing new kind of loom’s. Now it is your
turn. You should make an effort to complete
something that will benefit the society”
SAKICHI TOYODA – 1930
FOUNDER OF TOYOTA MOTOR COMPANY - JAPAN