Category: Chapter 16

Posts related to Chapter 16

OM in the News: Increased Efficiency From JIT Comes at a Price

Just as the recovery in US auto sales begins to accelerate, a fire last week at Magna International, a major auto parts manufacturer near Detroit, put a huge scare into  five automakers. Two of them, GM and Mazda, had to close plants and stop making some models. Three others, Ford, Chrysler, and Nissan,  faced the prospect of having to do without critical parts from their only supplier of ceilings, consoles, and other parts.

Yesterday’s Portland Press Herald (March 7,2011) writes: “The impact of the blaze shows how years of work to make auto plants more efficient can fall apart when something interrupts the flow of parts in an intricate supply chain”.  As we discuss in Chapter 16, JIT has proven a wonderful system for 3 decades in the auto industry. Auto companies have cut costs and become more efficient by going to a JIT parts delivery system to avoid paying for huge stockpiles of parts.

But to avoid buying costly machinery, parts firms often make a particular part at only one site. As a result, plants have few parts in storage and are so dependent on every link in the supply chain that the whole system falls apart, as it did in this case, if production is interrupted at a single factory. These days most auto parts are “single-sourced”.

The story for Magna and its customers fortunately (and luckily) had a happy ending today. The company was able to work with its customers to get enough of the equipment up and running to allow auto plants to receive  at least a portion of their needed parts. Our Ch.16 case study, “JIT After a Catastrophe” deals with how Caterpillar faced a very similar disaster when a tornado destroyed its Mississippi couplings plant in 2008.

Discussion questions:

1. How should the auto makers react at this point?

2. What should Magna do in planning for the future?

OM in the News: Starbucks’ Lean Teams Slowing Down

I always like to use Starbucks examples in class. Its the kind of “hip” company that students can relate to. Over the past few years , Starbucks has been applying lean manufacturing techniques to study every move its baristas make in order to shave seconds off each order. Chapter 1 in our text has an OM in Action box describing these productivity improvements.

But The Wall Street Journal (Oct.13, 2010)  just reported that Starbucks now wants to reign in its baristas, an act that will result in longer lines and waits.   Baristas are being told to stop making multiple drinks at one time, to steam milk one drink at a time instead of a pitcher at a time, to rinse pitchers after each use, and to use 1 espresso machine instead of 2.

Why would the company do this?  The new methods have “doubled the amount of time it  takes to make some drinks” says one employee. But the company  is concerned  about quality, with customers indicating that Starbucks espresso drinks are just “average”.

It is definitely an interesting class topic to see the lean techniques being reversed and I am sure many students will have a comment about such changes.

Discussion questions:

1. Why would baristas be opposed to slowing down the process?

2. What are some of the lean techniques the company has introduced over the years?

3. What other changes has Starbucks made recently in product and process?

OM in the News(and Video): Ford’s Lean Auto Plant in Brazil

Ford’s most progressive plant in the world may well be in northeast Brazil, where it uses lean manufacturing, sophisticated supply chains, and a vast array of robotics to produce the EcoSport SUV and Fiesta. A  colleague in that country, who is using the Portuguese edition of our text,  just emailed me the link to a video about which he is justifiably proud.  This 3.5 minute video illustrates all 3 concepts: lean, SCM, and automation and makes a nice presentation in Ch11 or Ch.16. (I do need to warn you that the last few seconds are a bit anti-union).

In 2009, the Ford plant produced over 207,000 vehicles. This South American operation brings so much profit to the parent company in Dearborn,Michigan,that the firm was able to turn down federal loans in 2009 that both GM and Chrysler accepted.

Brazil is becoming a leader in lean auto making, with another plant churning out VWs with a similar layout in which suppliers produce, on-site, with their own employees, the parts that are installed in the final vehicle. If you look at the Global Company Profile that opens Ch.16 in our text, you will see a  layout at the Toyota Tundra plant in San Antonio, Texas that also resembles what we see in the video.

Discussion Questions:

1. Why is it doubtful that this Ford plant will be replicated in the US?

2. How does the supply chain differ from most US plants?

3. Why is this an example of lean manufaturing?

Good OM Reading:Lean Hospitals

If there was ever a field in need of our knowledge, consulting, and experience as teachers in OM, it is our hospitals. If you have had the unfortunate experience of spending time in an ER, an OR, or an overnight stay, you will really appreciate this book.

Or if you are just  looking for great examples of OM and TQM in the health care field, I highly recommend it. Lean Hospitals, by Mark Graban (Productivity Press, 2009, 252 pages) is simply excellent. Each chapter is full of stories and data you can use in class. Graban describes, in real hospitals, how lean improves patient outcomes, increases employee and physician satisfaction, all while saving money.

Lean is not new in hospitals, as Graban traces auto production methods back to a Michigan hospital in 1922.

Chapters 1 and 2 are introductory, Chapter 3 deals with Value and Waste, Chapter 4 with Value Streams , Chapter 5 with Standardized Work, Chapter 6 with Visual Management, 5S and Kanban, Chapter 7 with Root Causes, Chapter 8 with Error Proofing, Chapter 9 with Improving Flows, and Chapter 10 with Engaging Employees.

I found myself taking notes in every chapter. Graban’s writing style makes this a very readable book. Mark also keeps a  useful web site  that is worth visiting.