Integrated Systems Management

CT068-3-M-ISM

Productivity, Competitiveness and

Leanness
MSc in Information Technology Management
MSc in Technology Management
 Topic and Structure of Lesson

Productivity, Competitiveness and Leanness

• Eras in Manufacturing
– Craft Production
– Mass Production
– Lean Production
• Spread of Lean Production
• Principles of Lean Production

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 The Machine that Changed the World

• In 1985, the International Motor Vehicle

Program (IMPV) was established at M.I.T.
• IMPV undertook an extensive 5 year study of
the worldwide auto industry.
• This was one of the most comprehensive
industry studies ever undertaken.
• The findings were published in over 116
research papers, and summarized in the book
“The Machine that Changed the World”.

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 The Scope of the Study

• The IMVP study looked at all the aspects of

the auto industry including:
• market assessment
• product design
• detailed engineering
• co-ordination of supply chain
• operation of individual factories
• sales and service of finished product

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 The Findings…

• A new manufacturing paradigm dubbed “lean

production” emerged after World War II.
• Lean production replaced the mass production
approach pioneered in North America by Henry
Ford.
• Lean production requires fundamental
restructuring of traditional industries.

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 The Spread of Lean Production

• The dominance of Japanese industry was

founded on the principles of lean production.

• Most North American and European

manufacturers were still rooted in mass
production thinking.

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 The Principles of Lean Production

• Teamwork

• Communication

• Efficient use of resources and elimination of

waste

• Continuous improvement

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 Eras in Manufacturing

• Craft production
– has existed for centuries
• Mass production
– developed after World War I by Henry Ford
and General Motors’ Alfred Sloan
• Lean Production
– developed in Japan after World War II
– pioneered by Eiji Toyoda and Tailchi Ohno of
Toyota

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 Craft Production

• Despite the extensive hand craftsmanship, early

cars were unreliable and trouble-prone

• The problem stemmed from lack of part

standardization
– no standard gauging
– no tools for cutting hardened steel

• As a result, parts were not interchangeable

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 Mass Production

• The mass production techniques developed by

Henry Ford before World War I put almost all the
craft producers out of business.
• The key to mass production: interchangeable
parts. This was necessary to make the assembly
line possible.
• Production of interchangeable parts required two
major advances:
– standardized gauging
– capability to machine hardened steel
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 Mass Production

• Productivity was increased by a fine division

of labour
– unskilled workers perform simple
repetitive jobs

• Assembly workers must be supported by

narrowly skilled indirect workers
– maintenance workers
– quality inspectors
– rework specialists
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 Mass Production

• Division of labour within engineering has lead to

narrow specialization
– Design Engineers
• design of products to meet functional requirements
– Manufacturing Engineers
• design of production equipment and machine tools
to manufacture these products
– Industrial Engineers
• design and allocations of assemble procedures
• design and analysis of manufacturing systems
• work study and ergonomics

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 Lean Production

• After the Second World War, Japanese

industry underwent complete rebuilding.
• Manufacturers did not have the volume to
justify Detroit-type mass production
assembly lines, and needed a better way.
• Lean production principles were developed
by Japanese engineers based on practical
considerations, and are largely a matter of
common sense.

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 Lean Production

• A critical contribution was made by W.Edwards

Deming, an American statistician, who
convinced the Japanese of the importance of
quality, and gave them the tools to achieve it.
• Ironically Dr. Deming was not discovered by
Western manufacturers until the early 1980’s
when he was in his eighties.
• His teachings are widely credited as being
responsible for the major improvements in
Western competitiveness.
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 Lean Production

• There are many popular manufacturing buzz

words these days, including:
– Just in time
– Continuous improvement
– Concurrent engineering
– Flexible manufacturing
– Total quality management
– Statistical Process Control
• These are all integral parts of lean production

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 Lean Production

• teams of multiskilled workers

• highly flexible, automated machines
• high productivity and low cost
• large product variety

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 Lean Production vs Mass Production

• half the human effort in the factory

• half the manufacturing space
• half the investment in tools
• half the engineering hours
• half the time to develop new products
• a fraction of the inventory
• few defects

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 The Objectives of Mass Producers

• Quality must be ‘good enough’, defined as

an acceptable defect rate.
• Maximum acceptable inventory levels.
• A narrow range of standardized products.

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 Weakness of Lean Production

• Requires stable relationships between

producers, suppliers and customers.
• Not responsive to rapid, unpredictable
change.
• Best suited to manufacturing of commodity
products.

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 Industries where Western Industry is
Strong

• Software
• Computers
• Entertainment
• Communications
• Services

as opposed to Japan

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 Western Competitive Advantages

• Computer Integrated Manufacturing

– Western industries have a large lead in
information technology
• Re-engineering
– quantum improvements in business processes,
using information technology
• Innovation and entrepreneurship
• Agile Manufacturing
– responsive to continuous, unpredictable change
as opposed to Japan
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 Quick Review Question

Identify some organisation which would

ideally be suitable for the following types
of production:
– Craft production
– Mass production
– Lean production

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 Follow-up Assignment

Refer to the Case Study given with your

assignment, identify which production
type best suits the organisation in the
case study.

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 Summary of Main Teaching Points

Productivity, Competitiveness and Leanness

• Spread of Lean Production
• Principles of Lean Production
• Eras in Manufacturing
– Craft Production
– Mass Production
– Lean Production

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 Summary of Main Teaching Points

Productivity, Competitiveness and Leanness

• Lean Production vs Mass Production
• Objectives of Mass Production
• Objectives of Lean Production
• Weaknesses of Lean Production
• Western Competitive Advantages

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 Next Lesson

Plant Layout
• Types of Layout
– Product Layout
– Process (Functional) Layout
– Group (Cell) Layout
– Fixed Position Layout

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 Question and Answer Session

Q&A

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