An Assignment on

Summary of “The machine that change the world”

Course: Operations management

Course Code: IB-305

Prepared For

Md. Rashedur Rahman

Assistant Professor,

Department of International Business

University of Dhaka Prepared by

MD: Monir Hosen

Roll -16 (6th Batch)

Dept. International Business

Date of Submission: 13 May 2015

Table of content

Chapter no. Chapter name Page no

Chapter-01 The industry of industries in transition 01

The origins of lean production 02

Chapter-02 The rise and fall of mass production 02

Chapter-03 The rise of lean production 03

The elements of lean production 03

Chapter-04 Running the factory 04

Chapter-05 Design the car 05

Chapter-06 Coordinating the supply chain 06

Chapter-07 Dealing with customers 07

Chapter-08 Managing the lean production 08

Diffusing lean production 09

Chapter-09 Confusion about diffusion 10

Chapter-10 Completing the transition 10

1

Chapter 01: The industry of industries in transition

1. Entirely the chapter is all about the different production process in automobile sector like

as craft production, mass production and lean production.

2. Today’s automobile industry is the world largest manufacturing activities in

manufacturing process.

3. After World War I craft production moves to mass production and after World War II

mass production moves to lean production.

4. After the World War II a dramatic change occurred in Japans economy because Toyota

motor company introduced lean production process. It changed the economic condition

because Toyota motors had a large influence in Japan’s economy.

5. There is a good reason for what Toyota introduced lean production. After the World War

II there is large demand but the availability of resource is limited. Today many of the

developed countries adopt lean production process because of scarcity of resource.

6. In crafts production highly skilled worker are needed with more flexible tool. Craft

production takes more time and the expenses are also high. But if look at the mass

production moderately skilled worker are needed as well as technological competency is

also required to produce standardized goods.

7. After analyzing the lean production process we can say lean production is a bridge

between this two because lean production requires multi-skilled workers, flexible tools

and automated process for production. Lean production is more efficient because it

reduce wastage of inventories and worker time.

8. The main difference between mass and lean production are in their ultimate objectives

because mass production goal is limited by their activities but lean production set their

goal by their slight explicitly perfection.

2

Origins of lean production

New ideas emerge from a set of condition in which old ideas no longer seem to work. This was

certainly true of lean production. In this part we look at craft origins of the industry in the 1880s

and the transition to mass production around 1915. Then we are ready to examine the genesis of

lean production in1950s.

Chapter-02: The rise and fall of mass production

1. In last decades 18th

century there were little amount of automobile production and all was

done in crafts production process. In craft production workers were highly skilled in

design, machine operation and fitting.

2. In craft production process resources were collected from various sources and integrated

in one place and all part were assembled by hand. Production volumes were low but

exclusively designed and high cost.

3. Beginning the 19th

century the automobile demand increased. As the demand increased,

automobile production need to be increased. For this reason the mass production process

were introduced.

4. Moreover producers were more interested in environment friendly product that’s why

producers are continuously used consistent interchangeable parts and simplicity of

attaching them to each other. In mass production assemblers only perform a task once

which reduces time of production.

5. Mass production requires less skilled labor, less inventories but it require standardized

machinery.

6. Mass production also follows the division of labor. Different labors are specialized in

different job.

7. In mass production vertical organizational structure is followed.

8. In near 1950s mass production has become commonplace in countries across the world

and founder of mass production were losing their competitive advantage.

3

Chapter-03: The rise of lean production

1. In the springs of 1950s lean production is introduced by Toyota Company in japan. They

are the pioneer of this process. It is the birth place of lean production.

2. Ohno used highly skilled worker to reduce the defect in produced goods and to eliminate

repair cost in lean process workers are worked in group and guide by the team leaders.

Workers perform only one or two task so that they can be efficient in that task. Different

task also be coordinated by the leader. Work is inspected by inspector.

3. Toyota introduced MUDA, the waste that encompasses wasted effort material and time.

4. KAIZAN is a popular concept in every organization means continuous improvement is

also introduced by Toyota.

5. Kanban is another process to coordinate the floe parts within the supply system on day to

day basis. This process dramatically eliminates the need of inventories overnight.

6. The principles of lean production are also introduced by Toyota at mid-19th

century.

7. Toyota put much emphasis on interpersonal communication among worker because they

believe it increase quality output.

The element of lean production

People has a simple and vivid mental image in automobile production- the assembly plant where

all the parts come together to create the finished car. We must look at every step in the process,

beginning with product design and engineering then end with customer who relies on the

automobile for daily living.

Under these steps we proceed to product development and engineer then into the supply system

where the manufacturing occurs. Next we look at the system of selling cars.

4

Chapter-04: Running the factory

1. Assembly plan is best suited to find out the difference between the lean and mass

production function because a wide range of parts are used here and the task of assembly

is almost same in every production.

2. Assembly plant of General Motors is an appropriate example of mass production. In this

plant it is seen that there is no order of work and workers are working aimlessly and there

is little coordination among workers. Which results a large number of defective outputs

that need to be repaired which increase time horizon and cost.

3. Toyota can be a good example of lean production. . Here in the plant workers worker

according to a fixed chain. There is hardly any indirect worker in the alais line. Every

worker adding some extent of value to the assembly line. Toyota plant is comparatively

small in size than GM because small place provide much opportunity to face to face

communication with each other to smooth the task.

4. There is no inventory room in Toyota because inventories are directly supplied to the

worker at regular interval which reduces inventory cost as well as time and stock out.

Moreover worker has the ability to stop the function if anything occurs which gives the

plant more flexibility. As a result there is finished goods without a defect and directly

supplied to the customer because there is no repairing area.

5. After surveying the world it is found that most of the Japanese firm operates in lean

function and Americans and Europeans firm trails lean production function to be

successful. And most of the American firms are under pressure to follow lean production

function because of the TOYOTAs transplant in north America because Toyota is the

pioneer of lean production and become more efficient than mass production by following

lean production

6. But between this two there somewhere exist the need of crafts production function. When

it is a luxury car the situation is different because luxury car produced at a small volume

with large specialization craft production is needed in some degree because product must

be up to the mark and should meet the standard. So there is a group of craftsmen in every

assembly line to finish the product.

7. One surprising aspect is that there is hardly any relationship between productivity and

quality.

8. The most important factor of setting up lean production is automation and

manufacturability. Another important element for lean production is efficient workgroup

which is mainly the responsibility of manager.

9. Sometimes criticism may arise about the efficiency of lean production. There are two

most popular criticism about lean production is it is worse for worker than mass

production and absent of neo-craftsmanship. But this is not true because lean production

remove all slack.

5

Chapter-05: Designing the car

1. Almost all car manufacturing company face the same problem either following lean

or mass production process that is how to design a new product. And the main

problem they face I how to integrate different functional area in a new product design

process.

2. If we look at the mass production function General Motor undertake the process of

developing new product is known as GM-10. This process first surveys the market

and then develops a product design.

3. But when the GM-10 slipped its five years’ timetable workers become powerless and

the program become a fail project. But after that Gm-10 was redesigned. After that

GM-10 became successful. Though it thought to be competitive it face strong

competition in market.

4. On the other hand Hondas planning is quite different from GM-10. Honda appointed

large project leader and give them the power to take necessary initiative to set up the

accord plant. Honda also subdivided its development work in different plant. each

plant is responsible for performing different task. Each of the worker related to this

project work relentlessly and finally launce the product then shift to develop another

product.

5. Around the world it is seen that producer put more emphasis on lean production

because it reduce time and increase efficiency on the other hand mass production

increase time and effort.

6. Leadership in mass production is centralized on the other hand in lean production

everyone has the authority to improve the task.

7. In mass production more emphasis in put on individual performance but in lean

production function more emphasis is given in teamwork.

8. In mass production there is less intra-organizational communication but in lean

production communication among worker is encouraged.

9. In mass production little emphasis is given in step by step development but in lean

production function more emphasis is given in step by step development

10. If we look at the market offering we can see that lean production function offer

variety of product to the customers and replace them more frequently than mass

production. Because lean production function takes less time to process a plan and

6

execute the plan. It is seen than by using lean production function Japan, America

North American production increase in large amount.

11. Some critics said lean production will not sustain in the long run because of the short

time cycle but the case is different. Lean production fundamentally changes the logic

of competition in the industry. Lean production variety of product at the same budget

to attract the customer.

12. All the people related to the new product development area do the same routine job

but what happen if everything changes. General motor undertake division of labor

method on the other hand I lean production function recruit fresh employee and rotate

them in different work around the plant.

13. If we look at the success of two different kind of companies it is seen that the

Japanese lean producers are consistently outpaced the American even European

company.

Chapter-06: Coordinating the supply chain

1. Supply chain is an important factor for all production activity. There is no significant

difference between weather the supplies comes from inside or outside the company.

Successfully coordinated supply chain can be a good competitive source for fussiness.

2. In mature mass production source of suppliers maybe in house or outside suppliers.

Whichever the source the companies that follow mass production like GM followed the

traditional bidding process to select suppliers. Whichever bidder bid the lowest price could

be selected as suppliers. Which often results in poor quality and higher price because bidder

has only the layout of the suppliers?

3. Moreover GM selects multiple suppliers to complete single parts which also caused to

defected parts from some suppliers and also increase time period.

4. Getting the right supplies in time is also become difficult because of the large number of

suppliers and there is little communication between them as a result pore quality product.

5. On the other hand in lean production following companies like Toyota select supplier based

on relationship. They also select single suppliers for a single part which reduce time and fault

in the final product. And there is always a cooperative relationship between suppliers and

assemblers.

6. In lean production producer at first set the cost target and then design different parts and their

cost. According to that estimation producer order to the suppliers.

7

7. It is also important to mention that lean production supply cost reduces as the life time

increases of the product.

8. Relationship between suppliers and producer in lean production is strictly maintained. The

entire suppliers are members of suppliers association and are engaged in decision making

about new component. Supplier are always notify about their performance if any negative

performance occurred they could be faired.

9. The long domination mass production procedure is now changing to a newer degree. They

are no more stand at the point of mass production. They regenerate the procedure combined

with the lean production.

10. Supplier’s performance also changes to a greater degree. Now suppliers are getting more

serious about quality.

11. At the end it is found the mass production now trying to create a post mass production

supply system. Which gives them more cost and time efficiency.

Chapter-07: Dealing with customers

1. The link between customers and production is much curtailed to start understanding any

market driven understanding process. Any success of mass production is totally depended on

careful identification and planning for the manufacturing process.

2. A good example of mass production is Ford basically deal with their customers through

dealers rather managing customers directly. They manage the dealers.

3. Another strategy that fords follow is that the order supplies and raw materials in consignment

but take full payment from the dealer.

4. As we know dealership was popular in fords day, every assembly line has its own marketing

division for each of its sales division which control the steady production to achieve the

organizational goal.

5. Most of the time exporters deny accepting special order from distance because there is low

profit and high transportation cost rather they follow standardized process.

6. It is found that only cheap items are sold through dealers because it entitles only minimum of

assistance to customers. By visiting different showrooms it is found that only few

salespersons know about their product. Dealers in japan need to manage different model

manes for their car but the main differentiating thing is the salespersons appeal and behavior

to different customers.

7. Toyota follows a team approach to sell their product and the total team may sit once or twice

a day to systematically solve any problem.

8. In lean system the maximum stock is 21 day and seals team work on percentage to sell all the

stock within 21 days.

8

9. The key objective of every Japanese distribution channel is to build lifetime channel loyalty.

10. When any lag in the sales is faced work team put more work hours to solve the problem.

Sometimes production personnel may transfer into the sales system.

11. In lean system buyers are an integral parts of the production process. Lean producer have

only a limited number of suppliers and they work with only a limited number of dealers who

all form their integral part of lean production system.

Chapter-08: Managing the lean enterprise

1. In order to manage an enterprise as a lean enterprise lean manager must differentiate the

financial technical marketing global coordination from mass production.

2. At the beginning of the Japanese industrialization Large firms are mainly financed through

zaibatsu had holding company at the top. Each Zaibatsu has owned a bank and deposit in

bank is used as the financial source of new firm

3. After that Zaibatsu was replaced by a new form of twenty major company of each sector.

4. There prevailed a cross equity structure between companies and each group has a bank, an

insurance company and treading company.

5. Each of the group has substantial fund for helping the members group. Their main purpose is

to help each other in the group.

6. The japans group system is pertinent and extremely long term in orientation, although the

Japanese group make mistake.

7. The new system has shown superior performance compared with both Anglo Saxon and

continental European firms because western capital is largely impatient and uniformed about

companies problem.

8. Any successful lean production company believes that value cannot be added only by the

managerial activity rather it is the responsibility of every employee.

9. Higher payment in lean company based on seniority as well as performance. Lean company

try to make employee understand whatever they do worth some value.

9

10. Superior skills in lean production are dispersing among the different section so that employee

can be expert in every aspect.

11. In lean enterprise there is reduced number of top to bottom communication. It is everyone

responsibility to make any decision or solve any problem. Position is rotated around the

company even to the linked companies.

12. This practice creates a go interpersonal communication with everyone involved in the

production process.

13. To make the enterprise successful it is necessary to complete all task in one place. For that

most of time suppliers firm may locate near to the manufacturing plant.

14. The basic thing of lean production in doing all activities near the point of sale.

15. Managers of lean enterprise sometimes face challenge to take decision how to coordinate,

how to make the organizational structure, what would be the appropriate structure.

Diffusing lean production

Lean production is a superior way for humans to make things. It provides better products in

wider variety at lower cost. It also provides more challenging and fulfilling work for employees

at every level, from the factory to headquarters. Now we will shift from analysis-what lean

production is and where it comes from – to prescription. We will present a vision of how the

world can make the transition to a new and better way of making things with a minimum amount

of pain and tension.

10

Chapter-09: confusion about diffusion

1. Reason for lack of resistance with mass production done in the same city as craft

production it was replacing, so all skilled workers could find jobs.

2. Lean production also provides more challenge for both worker and top managers to

fulfill a task.

3. The most common challenge for lean producer is to find it hard to cope with the

environment outside the home country because other may follow oldest production

procedure.

4. As before we notice that mass production encounter crafts production similarly lean

production encounter mass production because in lean production requires low cost ,low

time horizon reduce waste and defective parts.

5. Lean production is a system of reciprocal obligation because worker share their fate with

managers, suppliers share their fate with producers. In lean production employees pay is

always tied to their performance and company’s profitability. If profit downs payment

also reduced.

6. It needs to understand that lean production is based on doing as much as manufacturing

as possible at the final assembly including product development.

Chapter-10: Completing the transition

1. Mass producers need lean competitors located across the road, as they tend to change

only when they see a concrete nearby example to strip away all other explanations why

the other manufacturer is succeeding. Western producers need a better system of

industrial finance, one which demands they do better while supplying large funds that

will be needed to turn these large companies around the world.

2. Obstacle in the path of lean production:-western much production, outdated thinking

about world economy and Inward focus on Japanese lean producers.

3. Lean production dramatically raises the threshold of acceptable quality to a level that

mass production, particularly in low wage countries, cannot easily match. Lean

dramatically lowers the amount of high wage effort needed to produce a given

description, and it keeps reducing it through continuous incremental improvement.

Lean can fully utilize automation in ways mass production cannot, further reducing the

advantage of low wages.

11

4. Introduction of lean production can dramatically reduce production costs to spur the

stagnant domestic market, where only the upper middle class can now afford the output

of the inefficient mass produced products.

5. Beware the risk of extra-regional export strategies in a world of fluctuating currencies.

6. The plants moving to Lean which perform best are those with a strong lean management

presence in the early years of operations, and those that have moved slowly and

methodically to build up their domestic supply base.