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ASSIGNMENT OFOPERATIONS MANAGEMENT
Student Name: NAEEM ULLAH KHAN
Student Id: M1003126
Student Status: MBA 2nd
semester LSBF Manchester Campus
University Of Wales
Module Title: OPERATIONS MANAGEMENT
London School of Business & Finance
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TABLE OF CONTENT
S.NO TOPICS Pg. No
1 Introduction to Porters Value Chain 3
2 Lean Production
y Def inition
4
3 Seven Principles of Toyota Production System 5
4 Corporate Culture 6
5 The Five Ss 7
6 The Focus Of Toyota production System 8
7 Toyota And Waste Elimination 9
8 Recommendation
Kaizen Concept
11-12
9 References 13
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Porter¶ Value Chain:
The Porter¶s value chain or value chain
analysis, is a principle from business
management that was first time put forward
by Michael Porter in 1985 in his book,
Competitive Advantage: Creating and
Sustaining Superior Performance.
A value chain includes a chain of
activities. In operation process Productspass through all these activities of the
chain in order and at each activity the
product gains some value. The chain of
activities gives the products more added
value than the sum of added values of all
activities.
The concept of the value chain should not
be mixed with the costs occurring
throughout the activities. As an example of
the difference, a diamond cutter can be
used. The cutting activity may have a low
cost, but the activities adds too much ofthe value to the end product, since a rough
diamond is significantly less valuable than
a cut diamond.
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The value chain arrange the generic value-
adding activities of an organization in an
ordre. The ³primary activities´ include:
inbound logistics, operations (production),
outbound logistics, marketing and sales
(demand), and services (maintenance). The
³support activities´ include:
administrative infrastructure management,
human resource management, information
technology, and procurement. The costs andvalue drivers are identified for each value
activity.
The value-chain concept is not for an
individual organization, it exceed and
cross the limits of an individual
organization. It can apply to whole supply
chains and distribution networks. The
delivery of products and services mix to
the end customer will mobilize different
economic factors, each managing its own
value chain. Porter terms this larger
interconnected system of value chains the³value system.´ A value system includes the
value chains of a firm¶s supplier (and
their suppliers all the way back), the firm
itself, the firm distribution channels, and
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the firm¶s buyers (and presumably extended
to the buyers of their products, and so
on).
Lean production:
Engineer Taiichi Ohno developed a concept
originally for manufacturing of
automobiles in Toyota Company after World
War II. It is also known as the Toyota
Production System or just-in-timeproduction. His concept was mainly based
on eliminating waste and empowering
workers, reduced inventory and improved
productivity.
Definition:
Lean production is an assembly-line
methodology which is about doing more with
less: less time, inventory, space, labour,
and money. "Lean manufacturing", shorthand
for a commitment to eliminating waste,
simplifying procedures and speeding up
production.
Lean Manufacturing (also known
as the Toyota Production System)
is the systematic elimination of waste ±
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overproduction, waiting, transportation,
inventory, motion, and over-processing,
defective units ± and the implementation of
the concepts of continuous flow and
customer pull.
Instead of maintaining resources in
anticipation for future manufacturing, the
management of Toyota built a good
relationship with suppliers. By use of
multi-skilled employees, Toyota was able toflatten their management structure and
focus resources in a flexible manner.
Because the company was able make changes
quickly, they were often able to respond
faster to market demands than their
competitors could.
Seven Principles of ToyotaProduction System:
1. R educed Setup Times:All practices held in Toyota are
wasteful because they add no value and
they tie up labour and equipment. By
organizing procedures, Toyota managed
to slash setup times from months to
hours and sometimes even minutes.
2. Small-Lot Production:
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Producing things in large amount
results in huge setup costs, larger
inventories, extended lead times,
and larger defect costs. Because Toyota
has make setups short and inexpensive,
it became possible for them to
economically produce a variety of
things in small quantities.
3. E mployee involvement and empowerment:Toyota organized their workers by
forming teams and gave them theresponsibility and training to do many
specialized tasks. Teams are also given
responsibility for housekeeping and
minor equipment repair. Each team has a
leader who also works as one of them on
the line.
4. Quality at the source:
To eliminate product defects, they must
be discovered and corrected as soon as
possible. Since workers are at the best
position to discover a defect and to
immediately fix it, they are assigned
this responsibility. If a defect cannotbe readily fixed, any worker can halt
the entire line by pulling a cord
(called Jidoka).
5. Eq uipment maintenance:
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Toyota operators are assigned primary
responsibility for basic maintenance
since they are in the best position to
defect signs of bad operation.
Maintenance specialists diagnose and fix
only complex problems, improve the
performance of equipment, and train
workers in maintenance.
6. Pull Production:
To reduce inventory holding costs and
lead times, Toyota developed the pull
production method wherein the quantity
of work performed at each stage of the
process is dictated solely by demand formaterials from the immediate next stage.
This is where the term Just-in-Time
(JIT) originated.
7. Supplier Involvement:
Toyota treats its
suppliers as partners, as integral
elements of Toyota Production System
(TPS). Suppliers are trained in ways to
reduce setup times, inventories;
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defects, machine breakdowns etc., and
take responsibility to deliver their
best possible parts.
Corporate Culture:
The fundamental reason for Toyota's
success in the global marketplace lies in
its corporate philosophy ± the set of
rules and attitudes that govern the use of
its resources. Toyota have successfullypenetrated global markets and established
a world-wide presence by increase its
productivity. The company's rule to both
product development and distribution is
very consumer-friendly and market-driven.
Toyota's philosophy of empowering itsworkers is the centerpiece of a human
resources management system that fosters
creativity, continuous improvement, and
innovation by encouraging employee
participation and that likewise engenders
high levels of employee loyalty. Knowing
that a workplace with high morale and job
satisfaction is more likely to produce
reliable, high-quality products at
affordable prices, Toyota have
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institutionalized many successful
workforce practices. Toyota has done so
not only in its own plants but also in
supplier plants that was experiencing
problems.1
Although many car manufacturers have
earned a reputation for building high-
quality cars, they have been unable to
overcome Toyota's advantages in human
resource management, supplier networks anddistribution systems in the highly
competitive car market. Much of Toyota's
success in the world markets is attributed
directly to the synergistic performance of
its policies in human resources management
and supply-chain networks.
The Five Ss:
The Five Ss includes the five dimensions
of workplace optimization: Seiri (Sort),
Seiton (Set in order), Seiso (Shine),
Seiketsu (Standardize), and Shitsuke
(Sustain).Like many concepts of keizen and lean
manufacturing, the 5S can be interpreted
narrowly or broadly, depending on
circumstances of their use.
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The 5S Program defines the steps that are
used to make all work spaces efficient and
productive, help people share work
stations, reduce time looking for needed
tools and improve the work environment.
Phases of Ss:
There are 5 primary phases of 5S: sorting,
straightening, systematic cleaning,
standardizing, and sustaining.
Additionally, there is an additional
phase, safety, which is sometimes
included.
Sorting (Seiri): Eliminate all unnecessary
tools, parts, instructions. Go through all
tools, materials, etc., in the plant and
work area. Keep only essential items.
Everything else is stored or discarded.
Straightening or Setting in Order(Seiton): There should be a place for
everything and everything should be in its
place. The place for each item should be
clearly labelled or demarcated. Items
should be arranged in a manner that
promotes efficient work flow. Workers
should not have to repetitively bend to
access materials. Seiton is one of thefeatures that distinguish 5S from
"standardized cleanup".
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Shining or Sweeping or Cleanliness /Systematic Cleaning (Seiso): Keep the
workplace tidy and organized. At the end
of each shift, clean the work area and be
sure everything is restored to its place.
A key point is that maintaining
cleanliness should be part of the daily
work ± not an occasional activity
initiated when things get too messy.
Standardizing (Seiketsu): Work practices
should be consistent and standardized.
Everyone should know exactly what his or
her responsibilities are for related to
the first 3 S's.
Sustaining the discipline (Shitsuke): Maintain and review standards. Once the
previous 4 S's have been established, theybecome the new way to operate. Maintain
focus on this new way and do not allow a
gradual decline back to the old ways. When
an issue arises such as a suggested
improvement,, a new way of working, a new
tool or a new output requirement, review
the first 4 S's and make changes asappropriate.
The Focus of Toyota Production System:
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Real TPS is not just about ³flow´ or
³pull production. TPS in Toyota is
primarily concerned with making a profit,
and satisfying the customer with the
highest possible quality at the lowest
cost in the shortest lead-time, while
developing the talents and skills of its
workforce through improvement routines and
problem solving disciplines. This stated
aim is mixed in with the twin productionprinciples of Just in Time (make and
deliver the right part, in the right
amount, at the right time), and Jidoka
(build in quality at the process), as well
as the notion of continuous improvement by
standardization and elimination of waste
in all operations to improve quality,
cost, productivity, lead-time, safety,
morale and other metrics as needed.
2. Discuss and recommend how wasteis/can be managed along your chosen
organisations Value chain?
Toyota and Waste Elimination:
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Wastes (muda) are the activities and
results to be eliminated.
While the elimination of waste may seem
like a clear subject in such environmentalconcepts as cleaner production, it is
noticeable that waste is often very
conservatively identified.
In Lean Manufacturing, waste is any
activity that consumes time, resources, or
space but does not add any value to the
product or service. Lean manufacturing is,
in its most basic form, the systematic
elimination of 7 wastes ± overproduction,
waiting, transportation, inventory,
motion, over-processing, defective units ±
and the implementation of the concepts of
continuous flow and customer pull.
The waste is key to establishingdistinctions between value-adding
activity, waste and non-value-adding work.
Non-value adding work is waste that must
be done under the present work conditions.
One key is to measure, or estimate, the
size of these wastes, to demonstrate the
effect of the changes achieved andtherefore the movement toward the goal.
The "flow" (or smoothness) based approach
aims to achieve Just-In-Time (JIT), by
removing the variation caused by work
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scheduling and thereby provide a driver,
rationale or target and priorities for
implementation, using a variety of
techniques.
The three broad types of waste:
The elimination of waste is the goal of
Lean. Toyota defined three broad types of
waste: mur i, mura and muda.
Mur i is all the unreasonable work that
management imposes on workers and machines
because of poor organization, such as
carrying heavy weights, moving things
around, dangerous tasks, even working
significantly faster than usual. It is
pushing a person or a machine beyond itsnatural limits. This may simply be asking
a greater level of performance from a
process than it can handle without taking
shortcuts and informally modifying
decision criteria. Muri also includes bad
working conditions, and it will often push
a resource to work harder than its natural
limits. Unreasonable work is almost
always a cause of multiple variations.
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Mura is the variation and inconsistency in
quality and volume in both products and
human conditions.
Muda is the Japanese word for waste. It
specifies it specifies any human activity,
which absorbs resources, but does not
directly add customer value. These non-
value-adding activities and results ±
overproduction, waiting, transportation,
inventory, motion, over-processing,
defective units ± are to be eliminated.
3. Evaluate the impact that yourrecommendation will have on yourorganisation¶s resources,
And justify how your recommendation will ensure increased competitiveness,long term Sustainability and corporate social
responsibility?
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Ans: R ecommendation and Toyota
Production System
1. Begin action in the technical
system and then follow quickly with
cultural change.
2. Learn by doing first and training
second.
3. Start with value to demonstrate
lean as a system and provide a "go see
model".4. Use value stream mapping to develop
future state visions and help "learn to
see".
5. Use Kaizen workshops to teach and
make rapid changes.
6. Organize over value streams.
7. Make it mandatory.
8. A crisis may prompt a lean
movement, but may not be necessary to
turn the company around.
9. Be opportunistic in identifying
opportunities for big financial
impacts.
10. Realign metrics with value streams
perspective.
11. Build on your company's roots to
develop your own way.
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12. Hire or develop lean leaders and
develop a succession system.
13. Use experts for teaching and
getting quick results.
Kaizen Concept:
y Everything can and should be improved.y Not a single day should go by withoutsome kind of improvement being made
somewhere in the company.
y Don't just criticize, suggest animprovement.
y Think beyond common sense. Challengeassumptions. Even if something is
working, try to find the ways to make
it work even better. Ask searchingquestions.
y Customer-driven strategy forimprovement ± any management activity
should eventually lead to increased
customer satisfaction.
y Imagine the ideal customer experienceand strive to provide it.
y Quality first, not profit first ± anenterprise can prosper only if
customers who purchase its products or
services are satisfied.
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y Recognize that any corporation hasproblems and establish a corporate
culture where everyone can freely admit
these problems and suggest improvement.
y Think of how to improve it instead ofwhy it can't be improved.
y See problem solving as cross-functionalcollaborative and systemic approach.
y Emphasis on process ± establish a wayof thinking oriented at improving
processes, and a management system thatsupports and acknowledges people's
process-oriented efforts for
improvement.
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R eferences
y Barnett H, Operations management,
Macmillan,London, 1996
y Constable C. and New C., OperationsManagement - a Systems Approach, Wiley,
1976
y Currie, Work Study,y Naylor J, Operations Management,Pitman, 1996
y Rose M, Industrial Behaviour, Penguin,1978
y Hill T, Production/OperationsManagement, Prentice Hall, 1991
y Shingo S, Non-stock Production - theShingo System for Continous
Improvement, Productivity Press, 1988
y Slack, Chambers, Harland, Harrison,
Johnson, Operations Management, Pitman,1995.
y Ohno, Taiichi (February 1988). Toyota
Production System: Beyond Large-Scale
Production .
y Waldner, Jean-Baptiste (September1992). P r inciples of Com puter-
I nteg r ated Manufactur ing . John Wiley &Sons.
y Louis, Raymond (2006) Custom Kanban:
Designing the System to meet the Needs
of Your Environment.