Learnings in Operations Management from Henry Ford, Sloan and Toyota Essay

The achievement of atomic number 1 crossway till 1925s total heat crossroad did not cast the automobile. He didnt even invent the gather frontier. But more(prenominal) than any other single individual, he was responsible for trans seduceing the automobile from an art of unk forthwithn utility into an innovation that profoundly shaped the 20th hundred and continues to affect our delays today. copy T (A auto for everyman)In simple terms, the Model T changed the world. It was a powerful car with a possible put forwardnonb totally along of 45 mph. It could run 25 miles on a gallon of gaso telegraph line. It carried a 20-horsepower, side-valve four-cylinder locomotive and two-speed planetary transmission on a 100-inch wheelbase.It was Henry Fords foresight which maxim the potential market of automobiles. In his panorama f aration was a basic need of gay and if affordable anyone would be willing to buy it. It was with this vision of delivering automobiles to everyman tha t Ford started to experiment with divergent outturn ruleologies to lower the cost of turnout.Influence of Frederick Taylor on Henry FordFrederick Taylor was a contemporary of Henry Ford. His theory of scientific management had a monstrous impact on Henry Ford.According to Henry Ford, the meeting line was base on three simple principles the planned, rangely, and continuous progression of the commodity by the computer storage the delivery of race instead of leaving it to the operatives initiative to find it an analysis of operations into their constituent parts. A scientific approach to these principles, the next logical step in the judicature of work, had already been enunciated by Frederick Taylor in what is now called as scientific management. Henry Ford utilise the proficiencys specified by Frederick Taylor in increasing the aptitude of his wait on. Taylors scientific management consisted of four principles1. Replace rule-of-thumb work methods with methods establi sh on a scientific study of the tasks.2. Scientifically select, train, and develop sepa valuely employee rather than passively leaving them to train themselves.3. Provide Detailed steering and supervision of each(prenominal) proletarian in the performance of that proles discrete task.4. Divide work nearly equally between managers and workers, so that the managers apply scientific management principles to planning the work and the workers truly perform the tasks.Learnings from Henry Ford and Model TAssembly draw off/Mass yieldIn 1913 Henry Ford started takings of Ford Model T in a sliding assemblage line. though assembly line was used previously used in different industry but it was mostly for products which had small number of parts. Model T on the other hand had many a(prenominal) more brokers.Sliding assembly line of Henry Ford was inspired by overhead trolleys used to dress up beef. Henry Ford imagination that the same technique can be used for automobile too. A break through came in April 1913. A labor engineer in the flywheel magneto assembly range tried a new way to put this components parts together. The operation was divided into 29 disunite steps. Workers placed wholly one part in the assembly before pushing the flywheel raft the line to the next employee.Previously, it had taken one employee about 20 transactions to assemble a flywheel magneto. Divided among 29 men, the job took 13 minutes. It was ultimately trimmed to five minutes. This approach was applied gradually to the construction of the engine and other parts.According to Henry FordThe principles of assembly ar these(1) organise the tools and the men in the sequence of the operation so that each component part shall travel the least possible distance while in the member of finishing.(2) Use work slides or some other form of carrier so that when a workman completes his operation, he drops the part forever in the same placewhich place must eer be the most convenient place to his handand if possiblehave gravitation carry the part to the next workman for his own.(3) Use sliding pee lines by which the parts to be assembled are delivered at convenient distances.Advantages of assembly Line In his autobiography Henry Ford (1922) mentions several benefits of the assembly line includingWorkers do no heavy lifting.No stooping or bending over.No special training required.There are jobs that close to anyone can do.Provided employment to immigrants.The gains in productiveness allowed Ford to increase worker pay from $1.50 per day to $5.00 per day once employees reached three years of do on the assembly line. Ford continued on to reduce the hourly work week while continuously lowering the Model T price.Interchangeable/Standard PartsCentre to the concept of assembly line was the concept of interchangeable parts. Interchangeable parts meant that all the cars had same components at same place. This saved time which could have been wasted in categorisation and identification of different parts.Henry Ford made sure that all components were standardised in the production of Model T.But it was not moreover parts which were standardised, Henry Ford overly standardised all the plowes. following Frederick Taylors One mightily wayto do the task, Henry Ford devised the best possible way for a process. These were usually devised by detailed study of every task, time measurements and dividing tasks into small, controllable and reproducible steps. drudge policiesFord astonished the world in 1914 by offering a $5 per day wage ($120 today), which more than doubled the rate of most of his workers. The incite proved extremely profitable instead of invariant turnover of employees, the best mechanics in Detroit flocked to Ford, bringing their human big(p) and expertise, raising productivity, and lowering training costs. Ford announced his $5-per-day program on January 5, 1914, raising the minimum daily pay from $2.34 to $5 for qualifying workers. It also set a new, reduced workweek.Fords policy proved, however, that pay raft more would enable Ford workers to afford the cars they were producing and be unassailable for the economy. Ford explained the policy as profit-sharing rather than wages.FranchisingFord pioneered the franchise constitution that would be applied to other industries, such as MacDonalds and many other franchise giants. He put a Ford go under in every country that was on good terms with the U.S. and started the bypassen to struggled world(a) flocks. Ford mapped out the whole system, from standardizing the car to franchising dealerships to creating a global network, and he did it all with no precedents to learn from. Just in clip (Henry Fords Contribution)Ernest Kanzler worked with Henry Ford in reducing the stock list costs at Fordson tractor whole caboodle. Kanzler noticed that during the Great contend, excessive supplies were brought into the Fordson Tractor Plant introductory to production. He found that these excess supplies tied up valuable plant space and millions of dollars.To remedy this, Kanzler reorganized inventory schedules so that raw materials and pans were bought lonesome(prenominal) when ask and that the freight cars used fordelivery of these pans were used promptly to transport finished Fordson tractors to dealers.The success of world-wide Motors post1927 (Sloan)Mr. Sloan was elected President of world-wide Motors in 1923, succeeding Pierre S. du Pont, who said of him on that occasion The greater part of the successful development of the Corporations operations and the grammatical construction of a strong manufacturing and sales organization is due to Mr. Sloan. His election to the government activity is a natural and well-merited recognition of his untiring and able efforts and successful achievement. Mr. Sloan had real by hence his system of disciplined, professional management that provided for decentralized operations with coordinated centraliz ed policy control. Applying it to everyday Motors, he set the corporation on its course of industrial leadership. The next 23 years, with Mr. Sloan as important Executive Officer, were years of enormous expansion for General Motors and of a smasher increase in its share of the automobile market.Changing with timesdarn Henry Fords success with Model T was base on providing a mean of transport to everyone, Sloan realized that by 1925s retributory getting a mean of transport was not important. People were now more conscious about the looks and features of car too.He changed the organisation and production system at General Motors to keep up with these changes and provide an benefit over Ford who were still producing only one model at a time.Learnings from Alfred Sloan and General MotorsAnnual Model Change/Planned obsolescenceTo cite unit sales, General Motors head Alfred P. Sloan Jr. suggested annual model-year design changes to change car owners that they needed to buy a new r eplacement each year, an idea borrowed from the bicycle industry.In his autobiography, My Years with General Motors, he penned this thoughtThe changes in the new model should be so novel and fascinating as to create solicit . . . and a certain amount of dissatisfaction with former(prenominal) models as compared with the new one.Decentralisation in Organisational structureAlfred Sloan split General Motors into divisions, and each division was run as a connection inwardly a company. Sloan said the company wascoordinated in policy and modify in administration. He supervised the decentralisation of the organisation into divisional operating units, placing in charge of each an executive with total place for his own activity.In order to give coherence to the decentralised organisation, Sloan on purpose maintained a degree of central control. Decentralisation he saw as analogous to free enterprise, and centralisation to regimentation. He believed that elements of both were require d to successful business. At the same time as dividing the company into separate units, he developed a system which enabled the units to support each other, therefrom establishing a much stronger organisation as a whole.Price partitionSloan realized that he cant compete with Ford in price wars. Instead what he did was to have a model in every price segment. This way they can take some musket ball of Fords low price range with Chevrolet cars while with child(p) multiple options to users at higher ends.His theory was to provide A car for every purse and purpose. This proved very successful in the long run and have become a must do thing for big businesses in all kind of industries.FinancingA company was founded in 1919 by General Motors Corporation as the General Motors Acceptance Corporation (GMAC) to be a provider of financing to automotive customers.This proved very beneficial in the long run as Ford had no such system and it negated the effect of low prices provided by Ford t o some extent.Inventorycontrol and production controlSloan devised a system where inputs from retailers and individual organisation was used to decide the production plans for future. He asked every office to give three estimates- pessimistic, realistic and optimistic. These reviews were used to promise and plan the future production. Also, it was used to decide how much inventory needed to be kept.Fact melodic themed planning and Decision PlanningSloan always put an emphasis on fact based decision making. flush when working under his predecessors Durant and du Pont, he always went to them with changes in system based on data. Something which du Pont readily accepted and was important in selection of Sloan as next President of General Motors.The success of Toyota in the 70s and 80sThe history of Toyota started in 1933 with the company being a division of Toyoda Automatic Loom plant devoted to the production ofautomobiles under the direction of the founders son, Kiichiro Toyoda. Kiichiro Toyoda had traveled to Europe and the United States in 1929 to investigate automobile production and had begun researching gasoline-powered engines in 1930. Toyoda Automatic Loom Works was encouraged to develop automobile production by the Japanesegovernment, which needed domestic vehicle production, due to the war with China.Need for innovationAfter WWII, Levels of demand in the Post War economy of Japan were low and the focus of mass production on lowest cost per item via economies of scale therefore had little application. Kiichiro Toyoda once more visited many automobile companies in US and Europe. He found that production strategies havent changed much in last 20 years. He asked Taiichi Ohno to devise a system as cost efficient as Ford for the Japanese economy. Taiichi Ohno took his own tour of different facilities in US.Having visited and seen supermarkets in the USA, Taiichi Ohno recognised the scheduling of work should not be driven by sales or production targets b ut by actual sales. granted the financial authority during this period, over-production had to beavoided and thus the notion of Pull (build to order rather than target driven Push) came to underpin production scheduling.The working of Toyota production system has been very well documented in Jeffrey Likers account book The Toyota expressive style.Some tools from Toyota production SystemJidokaIt may be exposit as intelligent automation or automation with a human touch. This type of automation fulfils some supervisory functions rather than production functions. At Toyota this usually means that if an abnormal situation arises the machine tallys and the worker will stop the production line. It is a quality control process that applies the following four principles1. Detect the abnormality.2. Stop.3. Fix or correct the immediate condition.4. Investigate the root cause and install a countermeasure.Kanban (Just In Time)Kanban cards are a key component of kanban and signal the need to impinge on materials within a manufacturing or production facility or move materials from an outside supplier in to the production facility. The kanban card is, in effect, a message that signals that there is a depletion of product, parts, or inventory that, when received, the kanban will foundation the replenishment of that product, part, or inventory. Consumption therefore drives demand for more production, and demand for more product is signaled by the kanban card. Kanban cards therefore help create a demand-driven system.KaizenKaizen is a daily process, the purpose of which goes beyond simple productivity improvement. It is also a process that, when done correctly, humanizes the workplace, eliminates overly hard work (muri), and teachespeople how to perform experiments on their work using the scientific method and how to learn to spot and eliminate waste in business processes. In all, the process suggests a humanized approach to workers and to increasing productivity The idea is to suffer the companys human resources as much as it is to compliment and encourage participation in kaizen activities. Successful implementation requires the participation of workers in the improvement. People at all levels of an organization participate in kaizen, from the chief operating officer down to janitorial staff, as well as external stakeholders when applicable. The format for kaizen can be individual, suggestion system, small group, or large group.5 WhysThe 5 Whys is an iterative question-asking technique used to explore the cause-and-effect relationships underlying a special(prenominal) problem.The primary goal of the technique is to determine the root cause of a defect or problem. (The 5 in the name derives from an empirical comment on the number of iterations typically required to resolve the problem.)5SThere are five primary 5S phases They can be translated from the Japanese as Sort, Systematize, Shine, standardize and Self-Discipline.Sort Remove unnecess ary items and dispose of them properlySystematize fix up all necessary items in order so they can be easily picked for useShine Prevent machinery and equipment deteriorationStandardize take note everything in order and according to its standardSelf-Discipline To keep in working orderOhno CircleTaiichi Ohno was well known for walking onto the shop floor and drawing a circle on the ground. He would then go and stand in the circle and observe, think and analyse. Learn what was rattling going on. From this study he would then have enough noesis to improve the process.Three types of wasteMuda any activity in your process that does not add value. MUDA is not creating value for the customer.Mura Any variation guide to unbalanced situations. Inshort UNEVENNESS, inconsistent, irregular.Muri Any activity asking paradoxical stress or effort from personnel, material or equipment. In short OVERBURDENAndonAndon is a manufacturing term referring to a system to notify management, maintenance, and other workers of a quality or process problem. The alert can be activated manually by a worker using a pullcord or button, or may be activated automatically by the production equipment itself. The system may include a means to stop production so the issue can be corrected.Learning from Toyota output signal SystemThe Toyota WayA brief summary of points given in Toyota WaySection I Long-Term Philosophy rationale 1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.Section II The Right Process ordain Produce the Right Results Principle 2. Create a continuous process flow to bring problems to the surface.Principle 3. Use pull systems to avoid overproduction. Principle 4. Level out the workload (heijunka). (Work like the tortoise, not the hare.)Principle 5. take a leak a culture of stopping to fix problems, to get quality right the first time.Principle 6. Standardized tasks and processes are the foundation for continuous i mprovement and employee empowerment.Principle 7. Use visual control so no problems are hidden.Principle 8. Use only reliable, thoroughly tested technology that serves your people and processes.Section III Add Value to the Organization by ontogenesis Your PeoplePrinciple 9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.Principle 10. Develop exceptional people and teams who follow your companys philosophy.Principle 11. Respect your extended network of partners and suppliers by repugn them and helping them improve.Section IV Continuously Solving Root Problems Drivesorganisational LearningPrinciple 12. Go and see for yourself to thoroughly understand the situation (genchi genbutsu).Principle 13. Make decisions slowly by consensus, thoroughly considering all options implement decisions rapidly (nemawashi).Principle 14. Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen).Referenceshttp//c orporate.ford.com/our-company/heritage/heritage-newsdetail/672-model-t http//en.wikipedia.org/wiki/Assembly_linehttp//www.sloan.org/about-the-foundation/who-was-alfred-psloan-jr/ http//corporate.ford.com/our-company/heritage/historic-sitesnews-detail/663-highland-park http//www.thehenryford.org/EXHIBITS/HF/http//www.investopedia.com/articles/financial-theory/08/henryford.asp http//www.vectorstudy.com/management-gurus/frederick-taylor http//www.shmula.com/fords-contribution-to-just-in-time/371/ http//www.willamette.edu/fthompso/MgmtCon/Scientific_Manage ment.htmlhttp//en.wikipedia.org/wiki/Planned_obsolescencehttp//inspiredeconomist.com/2012/09/20/the-greatest-inventionplanned-obsolescence/ http//www.mbsportal.bl.uk/taster/subjareas/busmanhist/mgmtthin kers/sloan.aspxhttp//www.economist.com/node/14298890http//faculty.chicagobooth.edu/anil.kashyap/research/papers/gene ralmotors.pdfhttp//en.wikipedia.org/wiki/Henry_Fordhttp//en.wikipedia.org/wiki/Alfred_P._SloanThe Toyota Way Jeffrey LikerMy Years with General Motors Alfred Sloan