I NEED AN ECONOMICS PAPER ...ASAP
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Economics Term Paper
A Comparative view on Karl Marx and Adam Smith
Ms. Kular
CIE3M-AP
CJ Graham-Nutter
November 21st, 2005
Two of the most famous economists of the modern era, are Karl Marx and Adam Smith. Karl Marx is one of the main theorists behind the concept of modern day communism whilst Adam Smith is one of the main theorists behind the concept of modern day capitalism. Communism and Capitalism are on opposite sides of the economic spectrum. Communism simply stated is total power to the government and that the government should handle all aspects of people’s lives from education to work. Capitalism simply stated is power to the people, with people having the ultimate power of what they wish to do for a living as well as purchase, as long as they have the propensity to buy. Both Karl Marx and Adam Smith had very interesting lives; it is likely that the paths their lives followed played a vital role in helping them form their respective economic theories and ideology.
Karl Marx was born in Trier, Germany in the year 1818. While Karl Marx’s mother was pregnant with him, Karl Marx’s father died. This forced Karl Marx to be raised single-handedly by his mother. Whilst Karl Marx attended university he joined a group referred to as the “Hegelian Left”. The Hegelian Left is an extremely left wing political group. After university, he moved to Paris, France with is wife and began to more heavily associate with socialists and communists. He met a man by the name of Freidrich Engels and after meeting Engels he began to adopt the communist ideology as he felt very strongly that this was the best ideology. He grew up in a capitalist society that was very strongly modeled after the circular flow diagram. Karl Marx believed that the upper class of a capitalist society did not appreciate the work done by the working class. He felt that the working class was being paid far too poorly for work that was necessary for the survival of the upper class. Karl Marx was alive during the height of the Industrial revolution and this was a major factor in this formulation of his economic beliefs. He saw that the improved technology was in turn eliminating jobs from the working class whilst allowing the upper class to just make more money than ever before. While he was a part of the schooling system he wrote a paper entitled “Religion: the glue that binds society together.” For his work on this paper he won a literary prize. Karl Marx received a Ph.D in philosophy from the University of Jena in 1841, the ideas and beliefs that Karl Marx was introduced during his time at university helped him to formulate his own personal ideas about the economy. Karl Marx was deported from a number of countries for his revolutionary activities, the countries he was forced to leave include both France and Germany. In London, Karl Marx founded the International Workingmen’s Association. This organization was a revolutionary socialist organization that aspired to represent the working class across the world. Karl Marx wanted this organization to help fight for and protect the rights of the working class across the world. Karl Marx eventually died on March fourteenth, 1883 in London, England at the relatively young age of sixty-five. He is arguably one of the most influential people in history; he was ranked number twenty seven on Michael H. Harts ranking of the most influential people in history.
Adam Smith’s actual birth date is unknown but the closest known date the date of his baptismal is June 5th, 1723 in Kirkcaldy, Scotland. He was the son of Adam Smith Sr. and Margaret Douglas. Adam Smith was kidnapped at the age of four by a band of gypsies; he was rapidly recovered by his uncle and returned to his mother unscathed. In 1737 he entered Glasgow University in the pursuit of studying moral philosophy, his professor was Francis Hutcheson. In 1740 he entered Balliol College in Oxford as a Snell Exhibitioner. Adam Smith spent much of his life traveling between Universities’s and lecturing at them as well. In 1748 he began to lecture on belle-letters and jurisprudence in Edinburgh, Scotland. At this time he was lecturing under the strong-willed Lord Kames. In 1759 Adam Smith published his first novel; he was thirty-nine at the time. By this point in his life he was becoming rather well respected and soon after the publishing of his first novel he was elected a Fellow of the Royal society. He was elected to this esteemed position in 1766. In the same year as he was elected to the position of Fellow of the Royal society, he began writing his final, largest and most influential work, The Wealth of Nations. He was appointed commissioner of customs for Scotland in 1778. This new position as commissioner came at a very convenient time for Adam Smith as it allowed him to move to Edinburgh to aid his rather sickly mother. Adam Smith was not alive during the heart of the industrial revolution although he was able to see it begin. He was able to see the issues Britain was having with its North American colonies particularly the modern day United States of America. He believed that America could be taxed by the British; however there was no reason for it as they would never repay the massive debt Britain incurred in the settling of the modern day United States of America.
Adam Smith created some very strong economic theories that are still in use today. Adam Smith developed the concept of Laws of the Market. The laws of the market refer to the fact that; individual self-interest within a group of other people driven by self interest will result in fair competition. That competition leads to the production of only the goods and services demanded by the public. This same competition is also responsible for keeping prices at a low sustainable level. His theories state that due to competition, producers will be forced to attempt to outsell each other and would therefore do all in their power to make their product more wanted than other similar goods. This would be accomplished through marketing and having a lower price as well as better quality or innovation. Adam Smith stated that every individual is guided by the “invisible hand”, the “invisible hand” referring to the concept that every individual does what they believe is best for their own personal wants and needs, “enlightened self-interest”. He felt that each individual’s propensity to buy would direct the market in the proper direction. If society as a whole did not have the propensity to buy a certain good or service, the good or service would simply stop being manufactured or produced.
The economic theories of Karl Marx are on the opposite side of the economic spectrum than Adam Smith’s theories. Karl Marx was a revolutionist who desperately wanted to overthrow capitalism as well as the individuals who created it and those who controlled that capitalism was the economic theory used; the bourgeoisie . He sought to do this because he felt that this was the only way for the proletariat to be free. He believed that as the number of the proletariat workers increased it was only a matter of time until the capitalist leaders were overthrown. Karl Marx stated that capital is a collective product, and that only through the joint action of all members of a society should it ever be used. Simply stated, he believed that capital is social and that no individual should ever have more than any other person; there should be totally equality. Karl Marx believed that one of capitalism’s biggest flaws was that people had the power to appropriate others’ work. Marx believed one should have the power to appropriate the products of society but never have the power to control others’ work.
Karl Marx and Adam Smith shared some similar life experiences however their views on life and the economy developed oppositely. They both grew up fatherless and they were both intellectuals that spent almost their entire lives studying the economy and how people interacted with the economy. Even though both Karl Marx’s communist theories and Adam Smith’s capitalist theories are on opposite ends of the economic spectrum, they still have large numbers of followers and remain extremely influential economic theories. They are the basis for almost every country's economic system in some way even though it has been at least 100 years since either Marx or Smith were alive.
CJ Graham-Nutter
Bibliography
Foust, Brady and Anthony R. deSouza. The Economic Landscape A theoretical Introduction.Ohio: Merill, 1978
Stagerm David. Economic Analysis And Canadian Policy 2nd Edition. Ontario: Butterworths, 1976
“Adam Smith (economists)” Msn Encarta, 2005
Kreis, Steven. “Karl Marx.” March 26th 2005. October 25, 2005. The History Guide. http://www.historyguide.org/intellect/marx.html
A Comparative view on Karl Marx and Adam Smith
Ms. Kular
CIE3M-AP
CJ Graham-Nutter
November 21st, 2005
Two of the most famous economists of the modern era, are Karl Marx and Adam Smith. Karl Marx is one of the main theorists behind the concept of modern day communism whilst Adam Smith is one of the main theorists behind the concept of modern day capitalism. Communism and Capitalism are on opposite sides of the economic spectrum. Communism simply stated is total power to the government and that the government should handle all aspects of people’s lives from education to work. Capitalism simply stated is power to the people, with people having the ultimate power of what they wish to do for a living as well as purchase, as long as they have the propensity to buy. Both Karl Marx and Adam Smith had very interesting lives; it is likely that the paths their lives followed played a vital role in helping them form their respective economic theories and ideology.
Karl Marx was born in Trier, Germany in the year 1818. While Karl Marx’s mother was pregnant with him, Karl Marx’s father died. This forced Karl Marx to be raised single-handedly by his mother. Whilst Karl Marx attended university he joined a group referred to as the “Hegelian Left”. The Hegelian Left is an extremely left wing political group. After university, he moved to Paris, France with is wife and began to more heavily associate with socialists and communists. He met a man by the name of Freidrich Engels and after meeting Engels he began to adopt the communist ideology as he felt very strongly that this was the best ideology. He grew up in a capitalist society that was very strongly modeled after the circular flow diagram. Karl Marx believed that the upper class of a capitalist society did not appreciate the work done by the working class. He felt that the working class was being paid far too poorly for work that was necessary for the survival of the upper class. Karl Marx was alive during the height of the Industrial revolution and this was a major factor in this formulation of his economic beliefs. He saw that the improved technology was in turn eliminating jobs from the working class whilst allowing the upper class to just make more money than ever before. While he was a part of the schooling system he wrote a paper entitled “Religion: the glue that binds society together.” For his work on this paper he won a literary prize. Karl Marx received a Ph.D in philosophy from the University of Jena in 1841, the ideas and beliefs that Karl Marx was introduced during his time at university helped him to formulate his own personal ideas about the economy. Karl Marx was deported from a number of countries for his revolutionary activities, the countries he was forced to leave include both France and Germany. In London, Karl Marx founded the International Workingmen’s Association. This organization was a revolutionary socialist organization that aspired to represent the working class across the world. Karl Marx wanted this organization to help fight for and protect the rights of the working class across the world. Karl Marx eventually died on March fourteenth, 1883 in London, England at the relatively young age of sixty-five. He is arguably one of the most influential people in history; he was ranked number twenty seven on Michael H. Harts ranking of the most influential people in history.
Adam Smith’s actual birth date is unknown but the closest known date the date of his baptismal is June 5th, 1723 in Kirkcaldy, Scotland. He was the son of Adam Smith Sr. and Margaret Douglas. Adam Smith was kidnapped at the age of four by a band of gypsies; he was rapidly recovered by his uncle and returned to his mother unscathed. In 1737 he entered Glasgow University in the pursuit of studying moral philosophy, his professor was Francis Hutcheson. In 1740 he entered Balliol College in Oxford as a Snell Exhibitioner. Adam Smith spent much of his life traveling between Universities’s and lecturing at them as well. In 1748 he began to lecture on belle-letters and jurisprudence in Edinburgh, Scotland. At this time he was lecturing under the strong-willed Lord Kames. In 1759 Adam Smith published his first novel; he was thirty-nine at the time. By this point in his life he was becoming rather well respected and soon after the publishing of his first novel he was elected a Fellow of the Royal society. He was elected to this esteemed position in 1766. In the same year as he was elected to the position of Fellow of the Royal society, he began writing his final, largest and most influential work, The Wealth of Nations. He was appointed commissioner of customs for Scotland in 1778. This new position as commissioner came at a very convenient time for Adam Smith as it allowed him to move to Edinburgh to aid his rather sickly mother. Adam Smith was not alive during the heart of the industrial revolution although he was able to see it begin. He was able to see the issues Britain was having with its North American colonies particularly the modern day United States of America. He believed that America could be taxed by the British; however there was no reason for it as they would never repay the massive debt Britain incurred in the settling of the modern day United States of America.
Adam Smith created some very strong economic theories that are still in use today. Adam Smith developed the concept of Laws of the Market. The laws of the market refer to the fact that; individual self-interest within a group of other people driven by self interest will result in fair competition. That competition leads to the production of only the goods and services demanded by the public. This same competition is also responsible for keeping prices at a low sustainable level. His theories state that due to competition, producers will be forced to attempt to outsell each other and would therefore do all in their power to make their product more wanted than other similar goods. This would be accomplished through marketing and having a lower price as well as better quality or innovation. Adam Smith stated that every individual is guided by the “invisible hand”, the “invisible hand” referring to the concept that every individual does what they believe is best for their own personal wants and needs, “enlightened self-interest”. He felt that each individual’s propensity to buy would direct the market in the proper direction. If society as a whole did not have the propensity to buy a certain good or service, the good or service would simply stop being manufactured or produced.
The economic theories of Karl Marx are on the opposite side of the economic spectrum than Adam Smith’s theories. Karl Marx was a revolutionist who desperately wanted to overthrow capitalism as well as the individuals who created it and those who controlled that capitalism was the economic theory used; the bourgeoisie . He sought to do this because he felt that this was the only way for the proletariat to be free. He believed that as the number of the proletariat workers increased it was only a matter of time until the capitalist leaders were overthrown. Karl Marx stated that capital is a collective product, and that only through the joint action of all members of a society should it ever be used. Simply stated, he believed that capital is social and that no individual should ever have more than any other person; there should be totally equality. Karl Marx believed that one of capitalism’s biggest flaws was that people had the power to appropriate others’ work. Marx believed one should have the power to appropriate the products of society but never have the power to control others’ work.
Karl Marx and Adam Smith shared some similar life experiences however their views on life and the economy developed oppositely. They both grew up fatherless and they were both intellectuals that spent almost their entire lives studying the economy and how people interacted with the economy. Even though both Karl Marx’s communist theories and Adam Smith’s capitalist theories are on opposite ends of the economic spectrum, they still have large numbers of followers and remain extremely influential economic theories. They are the basis for almost every country's economic system in some way even though it has been at least 100 years since either Marx or Smith were alive.
CJ Graham-Nutter
Bibliography
Foust, Brady and Anthony R. deSouza. The Economic Landscape A theoretical Introduction.Ohio: Merill, 1978
Stagerm David. Economic Analysis And Canadian Policy 2nd Edition. Ontario: Butterworths, 1976
“Adam Smith (economists)” Msn Encarta, 2005
Kreis, Steven. “Karl Marx.” March 26th 2005. October 25, 2005. The History Guide. http://www.historyguide.org/intellect/marx.html
duhamelski
Active member
my dad got $5000 when he graduated from stanford for being at the top of his economics class. you should ask him to do it for you
Nihiriju
Active member
mines prety shisty
bbut here:
Xbox 360 is a new gaming console produced by Microsoft, this gaming console is under lots of scrutiny for its sales tactics. The sales tactics used for this product are affecting the supply and demand for the product, which is resulting in a higher price than should be paid; however, since this is not a necessity (like food) the company has every ethical right to charge as much as it wants to. These units are retailing for $400 Canadian, which is fairly high compared to the costs of producing the product. Microsoft likes charging these prices, so to keep the prices high they are not offering as many Xbox 360 units as their production would allow. Since the video game system industry is an oligopoly, only having 3 major firms, Microsoft has some power over price control, it has even more power over price control because the other industry leaders have not yet released their new line of product. This gives the Xbox 360 a huge lead on market competition, this early release of their product gives them a monopoly for a short period of time, until the other new platforms are released. Large barriers of entry stop outside firms from intruding on this oligopoly, and production time as a barrier of entry stops the competing firms from entering the short time monopoly immediately. This situation allows Microsoft to use their choice of sales tactics. ? The Xbox 360 has been advertised for months, quotes saying it is a revolutionary system and that the system brings a whole new level to gaming. However in this technological industry there must be a sacrifice of bringing out your gaming system before your competitors. When the new system is looked at closely it is found to be not much better than the old Xbox, and compared to the not yet released Nintendo, and Playstation gaming systems probably falls fairly short on the technological end of things. Microsoft took the risk of releasing their new system earlier than their competitors and having a worse product because they believe that they will be able to hook more consumers onto their product if they sell it earlier than their competitors. With eager gamers around the world, this early release sale tactic will likely work. Microsoft has also come under accusations that they are “engineering a scarcity to drive consumer demand”(CBC). The scarcity of a product like this would drive consumer demand because for many video game gurus this is a normal good, that they in fact must have, so they are willing and able to pay these high prices. These high prices should encourage Microsoft to supply more product, but it is possible they do not have the time to produce the product. The fact that there is a shortage of the product suggests that Microsoft is not making high enough profits on the good, and as a result are not willing to sell as many units, but since Microsoft has had the soul choice in price setting for this new generation of goods would also suggest that this was just a production error, and that Microsoft did not expect to sell so many units so fast. “Many retailers sold out quickly. Even customers who had pre-ordered in the spring went away empty-handed”(CBC). This extremely large shortage of the system shows how many consumers must consider this product to be a normal good, for they are obviously in high need of it. The fact is that the Xbox 360 is in such high demand at the moment that “there have been some reports of shoppers being robbed at gunpoint for their Xboxes, and in Maryland, some 300 shoppers where involved in a stampede.”(CBC). Luxury goods do not have this amount of demand, especially when consumers are willing to pay more than twice the retail value. Ebay “reported that Xbox 360s were being sold for an average of $922.” These high prices are due to the large shortage of units being sold, which could drive the retail price higher; however Microsoft has probably researched the market demand and decided that the average consumer of the product is more likely to pay retail price of $400. ? For many other consumers the Xbox 360 is not a normal good, but a luxury good, resulting in a highly elastic demand curve. Luckily for Microsoft there are enough consumers that consider their product more of a normal good and are willing to pay the initial high prices. As time goes on Microsoft will have to market their product to the consumers who consider their product a luxury item, generally this only means dropping the price of the unit. This method of for sales has been used in the past for almost all video game systems. The price also drops on the vide game systems because the supply curve changes when new technologies result in the production process becoming cheaper. This change in elasticity could be considered a kinked elasticity curve, where there is an area of low elastics above a higher elasticity portion. This low elasticity portion results in the early high prices and the normal good characteristics of the product. As the hardcore gamer gurus have picked up their Xbox 360s the elasticity of the product changes and becomes highly elastic as more competition enters the market and the technology of the gaming system becomes outdated. This high elasticity and greater amount of competition results in lower prices for the consumer, which I am sure we will see in time. Eventually the company will only be making normal profits if not loses, and will have to invest in a new more advanced game console to get more consumers again. ? There are barriers to entry in this video game market, these include things like; capital, time, and associates. To be a player in the game console industry you need a large amount of capital for production and distribution. One would also need the time to produce the product, which takes large amounts of time for testing, and the proper technological developments. As a game console firm you will also have to produce your own games, or find someone to produce games for you. These barriers to entry stop new firms from entering this oligopoly market.? The oligopolistic video game console market is fairly competitive and has strong barriers to entry, profits also go up and down dramatically, resulting in new more advanced products having to be released every few years. The Xbox 360 was released ahead of its competitors so that it could enjoy a momentary monopoly in the market place. Microsoft hopes that this monopoly will help to pull the products profits up, and keep them higher year round with better market planning strategies. The current shortage of Xbox 360s will soon die out as the hardcore fans receive their product, this will result in a higher rate of elasticity driving prices down. Revenues for the company will slowly drop and they will have to start investing in a new game console system to re-gain the attention of the hardcore gamers that will consider the next generation console a normal good again. This cycle will continue until technology stops advancing or overall console demand levels fall.
bbut here:
Xbox 360 is a new gaming console produced by Microsoft, this gaming console is under lots of scrutiny for its sales tactics. The sales tactics used for this product are affecting the supply and demand for the product, which is resulting in a higher price than should be paid; however, since this is not a necessity (like food) the company has every ethical right to charge as much as it wants to. These units are retailing for $400 Canadian, which is fairly high compared to the costs of producing the product. Microsoft likes charging these prices, so to keep the prices high they are not offering as many Xbox 360 units as their production would allow. Since the video game system industry is an oligopoly, only having 3 major firms, Microsoft has some power over price control, it has even more power over price control because the other industry leaders have not yet released their new line of product. This gives the Xbox 360 a huge lead on market competition, this early release of their product gives them a monopoly for a short period of time, until the other new platforms are released. Large barriers of entry stop outside firms from intruding on this oligopoly, and production time as a barrier of entry stops the competing firms from entering the short time monopoly immediately. This situation allows Microsoft to use their choice of sales tactics. ? The Xbox 360 has been advertised for months, quotes saying it is a revolutionary system and that the system brings a whole new level to gaming. However in this technological industry there must be a sacrifice of bringing out your gaming system before your competitors. When the new system is looked at closely it is found to be not much better than the old Xbox, and compared to the not yet released Nintendo, and Playstation gaming systems probably falls fairly short on the technological end of things. Microsoft took the risk of releasing their new system earlier than their competitors and having a worse product because they believe that they will be able to hook more consumers onto their product if they sell it earlier than their competitors. With eager gamers around the world, this early release sale tactic will likely work. Microsoft has also come under accusations that they are “engineering a scarcity to drive consumer demand”(CBC). The scarcity of a product like this would drive consumer demand because for many video game gurus this is a normal good, that they in fact must have, so they are willing and able to pay these high prices. These high prices should encourage Microsoft to supply more product, but it is possible they do not have the time to produce the product. The fact that there is a shortage of the product suggests that Microsoft is not making high enough profits on the good, and as a result are not willing to sell as many units, but since Microsoft has had the soul choice in price setting for this new generation of goods would also suggest that this was just a production error, and that Microsoft did not expect to sell so many units so fast. “Many retailers sold out quickly. Even customers who had pre-ordered in the spring went away empty-handed”(CBC). This extremely large shortage of the system shows how many consumers must consider this product to be a normal good, for they are obviously in high need of it. The fact is that the Xbox 360 is in such high demand at the moment that “there have been some reports of shoppers being robbed at gunpoint for their Xboxes, and in Maryland, some 300 shoppers where involved in a stampede.”(CBC). Luxury goods do not have this amount of demand, especially when consumers are willing to pay more than twice the retail value. Ebay “reported that Xbox 360s were being sold for an average of $922.” These high prices are due to the large shortage of units being sold, which could drive the retail price higher; however Microsoft has probably researched the market demand and decided that the average consumer of the product is more likely to pay retail price of $400. ? For many other consumers the Xbox 360 is not a normal good, but a luxury good, resulting in a highly elastic demand curve. Luckily for Microsoft there are enough consumers that consider their product more of a normal good and are willing to pay the initial high prices. As time goes on Microsoft will have to market their product to the consumers who consider their product a luxury item, generally this only means dropping the price of the unit. This method of for sales has been used in the past for almost all video game systems. The price also drops on the vide game systems because the supply curve changes when new technologies result in the production process becoming cheaper. This change in elasticity could be considered a kinked elasticity curve, where there is an area of low elastics above a higher elasticity portion. This low elasticity portion results in the early high prices and the normal good characteristics of the product. As the hardcore gamer gurus have picked up their Xbox 360s the elasticity of the product changes and becomes highly elastic as more competition enters the market and the technology of the gaming system becomes outdated. This high elasticity and greater amount of competition results in lower prices for the consumer, which I am sure we will see in time. Eventually the company will only be making normal profits if not loses, and will have to invest in a new more advanced game console to get more consumers again. ? There are barriers to entry in this video game market, these include things like; capital, time, and associates. To be a player in the game console industry you need a large amount of capital for production and distribution. One would also need the time to produce the product, which takes large amounts of time for testing, and the proper technological developments. As a game console firm you will also have to produce your own games, or find someone to produce games for you. These barriers to entry stop new firms from entering this oligopoly market.? The oligopolistic video game console market is fairly competitive and has strong barriers to entry, profits also go up and down dramatically, resulting in new more advanced products having to be released every few years. The Xbox 360 was released ahead of its competitors so that it could enjoy a momentary monopoly in the market place. Microsoft hopes that this monopoly will help to pull the products profits up, and keep them higher year round with better market planning strategies. The current shortage of Xbox 360s will soon die out as the hardcore fans receive their product, this will result in a higher rate of elasticity driving prices down. Revenues for the company will slowly drop and they will have to start investing in a new game console system to re-gain the attention of the hardcore gamers that will consider the next generation console a normal good again. This cycle will continue until technology stops advancing or overall console demand levels fall.
Nihiriju
Active member
WORKS CITED
CBC. “Xbox 360 From all Angles.” Indepth: Tech 24th Nov. 2004, 27th Nov. 2004, ? < http://www.cbc.ca/news/background/tech/xbox.html>
umm yeha wow my essay sucks., and its fomr when xbox 360 first came out.
CBC. “Xbox 360 From all Angles.” Indepth: Tech 24th Nov. 2004, 27th Nov. 2004, ? < http://www.cbc.ca/news/background/tech/xbox.html>
umm yeha wow my essay sucks., and its fomr when xbox 360 first came out.
Logchucker
Active member
The Toyota Production Method
Brian McNeillie
SCM 298
May 9, 2006
Toyota is currently on its way to become the biggest car company in the world. This is the culmination of goals set back in the 1970s, where Toyota’s management decided that it would like to attempt to catch up with the American car companies in terms of efficiency and production but add there own twist. To get this Twist Toyota developed the Toyota Production System or TPS that is the main topic of this paper.
The fundamental crux that faced Toyota was this: Since its inception the car building assembly line, developed originally by Henry Ford, was developed to produce one similar item, very quickly and efficiently. As Henry Ford once said of his car selection “You can have any color as long as it is black”. Toyota wanted to offer more model selection to customers, thus producing less batches of each. This does not bode well for supply chain efficiency based off of the Ford Model. Therefore they needed to re-think the process that was used to build cars. They had to figure out how to make an incredibly flexible supply chain
Toyota first decided to look at the fundamental theory of car production, and began to implement a series of changes on the production floor. These ideas were implemented by Taiichi Ohno, who took ideas he learned from trips to America, and from initial experiences. Later he would document it and give it the name that itsis known as the Toyota Production System TPS. The fundamental 2 ideas of the system are Just-in-Time manufacturing and the visualization of problems on as supply chain known as Jikoda.
On a tour of the United States touring GM and Ford, a team of specialist for Toyota overlooked the operations. Interstingly there main idea though came not from the lines producing Mustangs and Malibu’s, rather they learned from something Americans all over walk into, supermarkets.
Taiichi Ohno looked to the supermarket as a model for the Just in Time theory. When one looks at it truly is quite different in the way it is operated and maintained. They have a huge product variation, movement of many goods very quickly (though fairly constant demand for many things), they have to maintain short lead times, as food is perishable. How does a supermarket cope? Retailers such as Wal-Mart and King Soopers uses point of sales information. The instant an item is purchased it is acknowledged by a computer thus re-evaluating the on hand inventory. This computer takes the information and then instantly places a replenishment order for more when a preset numbers are gone. Then they would have many shipments at a time in order to meet the customer expectations. This system is very demand driven, and is actually quite effective as one can see, as very rarely does one walk into a supermarket and find that what they want is not there, but everything is usually fresh and ready to take home when demanded.
So Toyota took this and decided that they would take this idea to there own automobile line. They would not begin production unless demand was actually there (most of the time, some sales forecasting does take place), then by shortening lead times. They also did this in each part, only producing parts when needed and replenishing only when needed, as opposed to stock piling on the production floor. This system is very different then the mass producers such as Ford. It allows flexibility as you can switch over parts more efficiently. Another advantage you don’t have to push one product batch through before another one can be brought to the table. With this flexibility, Toyota had an easier time easier time meeting demand as you can respond quickly to customer demand without wasting resources on the switchover or running into overage or underage costs.
Also with this Toyota drastically reduced the warehousing process on either end of the chain. They no longer had cars sitting around waiting for pickup, nor did they require the storage of parts in places, rather the just in time relieved them of the burden of cost associated with these. This meant they cut prices allowing them to gain price advantages. They then further tweaked there supply line innovating ideas to help create a more efficient system to compete with the Big 3 from the United States, who at the start of the process controlled most of the automotive market
Now originally this system seemed tough to run, and employee intensive. The problem was that for quality control to occur, the traditional model required an employee at every station, a “specialist” like working every single machine was the case. Tradition from years meant the lathes would be in one place operated by the lathe operators, then these men would transfer the lathed piece to the drillers, for drilling, who would then transport the drilled piece to the bolt setter. This process had much human inspection, but lots of time was spent with the product in transition and was employee strenuous, as sometimes all operators had to do was watch to ensure quality. In America the above cycle would be tough to break, as each of the above jobs had a union, as unions were based on a discipline. Japanese Unions were general, so Toyota decided that they would put more automatic checks, and also line up machines for processing, so a single operator could operate all 3. This decreased labor and decreased time in transporting cost, increasing manufacturing speed and response.
With this new system though, transfer of information and problems became vital to the success or failure of the line, because with just in time manufacturing anything that is produced must be perfect, because you have no backup stock for mis-production. This is where the Jikoda comes in. In order to effectively communicate information up and down the supply chain Toyota developed a whole new way of communicating line information to every worker in the production cycle and quickly respond to errors that occur up and down the supply chain.
The first major development in this essence from Toyota was the Kanban card, which was essential to implement the above system of having on hand products. The Kanban is a parts-movement system using cards and containers used to move from one work station during the manufacturing process. Kanban stands for Kan-card, Ban-signal. The Kanban concept is that a supplier or the warehouse should only deliver parts the factory floor when need only, so that there is little to no storage on the Production Floor. Within this system, workstations located along production lines only produce/ deliver desired components when they receive a card and an empty container, indicating that more parts will be needed in production. Should line interruption occure, only empty containers are filled, everything else stops so no funneling occurs as funneling decreases the efficiency of labor. In addition, Kanban limits the amount of inventory in the process by acting as an authorization to produce more inventory. Since Kanban is a chain process in which orders flow from one process to another, the production or delivery of components are pulled to the production line. These cards allowed Toyota to keep very tight knit controls on demand and production.
The other innovation on the floor Toyota Developed was the Andon. The Andon in ancient Japan were paper lanterns used in front of little shops at night to indicate if they were open or closed. Well the TPS gave the Andon gave this word a whole new definition in the Supply Chain. It was a simple idea at first, and idea that now seems quite simple. In order to communicate a shutdown, if any machine detected a problem in the supply chain, it would trigger a signal to the signboard over the factory floor. This made the entire process stop, and the problem addressed with a succession of asking why 5 times to get to the bottom of the problem. This means that every problem is addressed and recorded. This means the whole line knows the problem, knows the fix and every aspect up to the problem can be looked at and fixed, which means it shouldn’t occur again or another question series will be produced. This means that the supply chain is always becoming more refined.
These ideas were implemented by Toyota in order to become the leaders in there field. Now Toyota, 30 years later is the second biggest manufacturer of automobiles in the world, and has the shortest lead times and least production costs of any auto manufacturer. The most profitable company is also a perennial member of the best supply chains. The Toyota production system is applied in thousands of manufacturing processes, driving leading companies like Dell and Gateway. These companies show the true power of the TPS. But another question stems. Why was the Big player in the automaker, GM unable to keep pace, as it is now in debt, while Toyota in continually turning in profits?
GM is still the leading manufacturer of automobiles in the world. Its company arms include Buick, Cadillac, Chevrolet, GMC, Holden, Hummer, Opel, Pontiac, Saturn, Saab and Vauxhall. This represents almost 15% of all world car sales, and employ 340,000 people. And yet they are facing massive financial woes, struggling to match the previous glories.
In the new right now much is discussed about the GM pension and health benefits. Cureently they are paying almost 1,500 dollars per car to people who no longer work for GM. They have had major finance issues, as there bond are now classified as junk bonds and now no longer are looked upon as stable. Solutions to these problems involve renogtion of debt and contract and will probably be resolved. But another problem less discussed by the media is GMs failure to match Toyotas intricate production system.
As mentioned above the TPS would be difficult to implement because of the structure of the existing Union setup for specialization, and that hinder the evolution. But fundamentally GM never really innovated there supply chain. Yes all the trucks could be produced on a line, then the passenger cars of certain sizes in on plant, and could be distributed in this way. This was fine when demand remained constant. But they never developed the real depth of production possibilities of a Toyota line, producing the Camry, and at the same time could produce the Tundra with a weekends work at changing. Therefore when Toyota had a mass change, it simply changed its plants. GM faced a very different issue. If the overall demand for trucks went down, suddenly the production line lay empty, while possibly the car division was over worked. They then were no longer using full capacity, which cost money. The other plant would be short, and therefore more money is lost. This system is slowly changing as GM realizes there mistake, and now working on joint ventures for Toyota, should help GM stream line, though it is believed that only bankruptcy will help GM renegotiate its Union contracts in order to help try and change the impending slide.
Another problem GM ran into was it was the biggest, it was no longer pushing innovation. It would have multiple brands producing almost identical products in the same market, Such as the GMC Jimmy, Chevy Tahoe. The cars were indistinguishable from one another, but were competing against one another. This meant that the companies would have to focus on deals between the 2 companies pushing the cars, and thus allowed other competitors to enter the market rather easily and able to distinguish themselves quite easily, as GM was really not offering different standard.
GM has shown though that it can push new prducts and be successful. The revitalization of Cadilac has shown the can grab market if they offer the right products to the right place. They will still continue to innovate and won’t let Toyota pass them without a fight. So Toyota does face some challenges in the coming years.
With th change in computers, the whole world is changing with it. Toyota is no exception. Toyota is currently trying to integrate the new changes in. Currently Toyota has set a goal to cut its inventory holding in half of its current 3 months, which will be quite a feat. The just in time will be pushed to its limits, but they will be working hard to try and provide even more accurate demand info and push there production system eve further
The key components will start by redesigning of the existing operational systems, creating a data warehouse to interface with the system, and designing the interfaces between demand-estimating, supply-chain modules, and the supply-chain strategy. Basically they are refining the techniques in which information is acquired by companies, and thus producing even closer to instanteously. By converting info into IT they can also spread information instantly across the world, making production even for streamlined, as problems form across the lines can be solved and shared with little or no time between in every plant. This though increases the base knowledge of the basic employee on the plant floor, which takes time and can actually be problematic. Some managers in certain Toyota plants feel that too much information may be counterproductive. They say it may also decrease built in flexibility if too much weight is put on this info. Most industry experts say the IT revolution will come, whether Toyota wants it no or later, and Toyota would do best to embrace it early.
Also an new challenge facing Toyota is the alternative fuel systems becoming more and more demanded. These cars have even more unique parts, requiring new ways of production, making them more difficult to produce on the same line as normal car. With more developing alternative fuel sources suddenly the option that must be changed is going to to increase greatly. Toyota is already on the forefront, but in a burgeoning industry much can change very quickly and therefore Toyota will have to watch for rapid changes, and be able to tweak plants in order to catch any new development as quickly as possible, trying to make the chain even more flexible and also requiring again, more worker knowledge and training.
Toyota’s innovations have made it the envy of the automotive industry and continues to push the market it terms of how to handle production. Its models are studied in courses all over the world Its continuing innovation and dedication to its renewal guarantee its place in industry will be one of power for years to come
Brian McNeillie
SCM 298
May 9, 2006
Toyota is currently on its way to become the biggest car company in the world. This is the culmination of goals set back in the 1970s, where Toyota’s management decided that it would like to attempt to catch up with the American car companies in terms of efficiency and production but add there own twist. To get this Twist Toyota developed the Toyota Production System or TPS that is the main topic of this paper.
The fundamental crux that faced Toyota was this: Since its inception the car building assembly line, developed originally by Henry Ford, was developed to produce one similar item, very quickly and efficiently. As Henry Ford once said of his car selection “You can have any color as long as it is black”. Toyota wanted to offer more model selection to customers, thus producing less batches of each. This does not bode well for supply chain efficiency based off of the Ford Model. Therefore they needed to re-think the process that was used to build cars. They had to figure out how to make an incredibly flexible supply chain
Toyota first decided to look at the fundamental theory of car production, and began to implement a series of changes on the production floor. These ideas were implemented by Taiichi Ohno, who took ideas he learned from trips to America, and from initial experiences. Later he would document it and give it the name that itsis known as the Toyota Production System TPS. The fundamental 2 ideas of the system are Just-in-Time manufacturing and the visualization of problems on as supply chain known as Jikoda.
On a tour of the United States touring GM and Ford, a team of specialist for Toyota overlooked the operations. Interstingly there main idea though came not from the lines producing Mustangs and Malibu’s, rather they learned from something Americans all over walk into, supermarkets.
Taiichi Ohno looked to the supermarket as a model for the Just in Time theory. When one looks at it truly is quite different in the way it is operated and maintained. They have a huge product variation, movement of many goods very quickly (though fairly constant demand for many things), they have to maintain short lead times, as food is perishable. How does a supermarket cope? Retailers such as Wal-Mart and King Soopers uses point of sales information. The instant an item is purchased it is acknowledged by a computer thus re-evaluating the on hand inventory. This computer takes the information and then instantly places a replenishment order for more when a preset numbers are gone. Then they would have many shipments at a time in order to meet the customer expectations. This system is very demand driven, and is actually quite effective as one can see, as very rarely does one walk into a supermarket and find that what they want is not there, but everything is usually fresh and ready to take home when demanded.
So Toyota took this and decided that they would take this idea to there own automobile line. They would not begin production unless demand was actually there (most of the time, some sales forecasting does take place), then by shortening lead times. They also did this in each part, only producing parts when needed and replenishing only when needed, as opposed to stock piling on the production floor. This system is very different then the mass producers such as Ford. It allows flexibility as you can switch over parts more efficiently. Another advantage you don’t have to push one product batch through before another one can be brought to the table. With this flexibility, Toyota had an easier time easier time meeting demand as you can respond quickly to customer demand without wasting resources on the switchover or running into overage or underage costs.
Also with this Toyota drastically reduced the warehousing process on either end of the chain. They no longer had cars sitting around waiting for pickup, nor did they require the storage of parts in places, rather the just in time relieved them of the burden of cost associated with these. This meant they cut prices allowing them to gain price advantages. They then further tweaked there supply line innovating ideas to help create a more efficient system to compete with the Big 3 from the United States, who at the start of the process controlled most of the automotive market
Now originally this system seemed tough to run, and employee intensive. The problem was that for quality control to occur, the traditional model required an employee at every station, a “specialist” like working every single machine was the case. Tradition from years meant the lathes would be in one place operated by the lathe operators, then these men would transfer the lathed piece to the drillers, for drilling, who would then transport the drilled piece to the bolt setter. This process had much human inspection, but lots of time was spent with the product in transition and was employee strenuous, as sometimes all operators had to do was watch to ensure quality. In America the above cycle would be tough to break, as each of the above jobs had a union, as unions were based on a discipline. Japanese Unions were general, so Toyota decided that they would put more automatic checks, and also line up machines for processing, so a single operator could operate all 3. This decreased labor and decreased time in transporting cost, increasing manufacturing speed and response.
With this new system though, transfer of information and problems became vital to the success or failure of the line, because with just in time manufacturing anything that is produced must be perfect, because you have no backup stock for mis-production. This is where the Jikoda comes in. In order to effectively communicate information up and down the supply chain Toyota developed a whole new way of communicating line information to every worker in the production cycle and quickly respond to errors that occur up and down the supply chain.
The first major development in this essence from Toyota was the Kanban card, which was essential to implement the above system of having on hand products. The Kanban is a parts-movement system using cards and containers used to move from one work station during the manufacturing process. Kanban stands for Kan-card, Ban-signal. The Kanban concept is that a supplier or the warehouse should only deliver parts the factory floor when need only, so that there is little to no storage on the Production Floor. Within this system, workstations located along production lines only produce/ deliver desired components when they receive a card and an empty container, indicating that more parts will be needed in production. Should line interruption occure, only empty containers are filled, everything else stops so no funneling occurs as funneling decreases the efficiency of labor. In addition, Kanban limits the amount of inventory in the process by acting as an authorization to produce more inventory. Since Kanban is a chain process in which orders flow from one process to another, the production or delivery of components are pulled to the production line. These cards allowed Toyota to keep very tight knit controls on demand and production.
The other innovation on the floor Toyota Developed was the Andon. The Andon in ancient Japan were paper lanterns used in front of little shops at night to indicate if they were open or closed. Well the TPS gave the Andon gave this word a whole new definition in the Supply Chain. It was a simple idea at first, and idea that now seems quite simple. In order to communicate a shutdown, if any machine detected a problem in the supply chain, it would trigger a signal to the signboard over the factory floor. This made the entire process stop, and the problem addressed with a succession of asking why 5 times to get to the bottom of the problem. This means that every problem is addressed and recorded. This means the whole line knows the problem, knows the fix and every aspect up to the problem can be looked at and fixed, which means it shouldn’t occur again or another question series will be produced. This means that the supply chain is always becoming more refined.
These ideas were implemented by Toyota in order to become the leaders in there field. Now Toyota, 30 years later is the second biggest manufacturer of automobiles in the world, and has the shortest lead times and least production costs of any auto manufacturer. The most profitable company is also a perennial member of the best supply chains. The Toyota production system is applied in thousands of manufacturing processes, driving leading companies like Dell and Gateway. These companies show the true power of the TPS. But another question stems. Why was the Big player in the automaker, GM unable to keep pace, as it is now in debt, while Toyota in continually turning in profits?
GM is still the leading manufacturer of automobiles in the world. Its company arms include Buick, Cadillac, Chevrolet, GMC, Holden, Hummer, Opel, Pontiac, Saturn, Saab and Vauxhall. This represents almost 15% of all world car sales, and employ 340,000 people. And yet they are facing massive financial woes, struggling to match the previous glories.
In the new right now much is discussed about the GM pension and health benefits. Cureently they are paying almost 1,500 dollars per car to people who no longer work for GM. They have had major finance issues, as there bond are now classified as junk bonds and now no longer are looked upon as stable. Solutions to these problems involve renogtion of debt and contract and will probably be resolved. But another problem less discussed by the media is GMs failure to match Toyotas intricate production system.
As mentioned above the TPS would be difficult to implement because of the structure of the existing Union setup for specialization, and that hinder the evolution. But fundamentally GM never really innovated there supply chain. Yes all the trucks could be produced on a line, then the passenger cars of certain sizes in on plant, and could be distributed in this way. This was fine when demand remained constant. But they never developed the real depth of production possibilities of a Toyota line, producing the Camry, and at the same time could produce the Tundra with a weekends work at changing. Therefore when Toyota had a mass change, it simply changed its plants. GM faced a very different issue. If the overall demand for trucks went down, suddenly the production line lay empty, while possibly the car division was over worked. They then were no longer using full capacity, which cost money. The other plant would be short, and therefore more money is lost. This system is slowly changing as GM realizes there mistake, and now working on joint ventures for Toyota, should help GM stream line, though it is believed that only bankruptcy will help GM renegotiate its Union contracts in order to help try and change the impending slide.
Another problem GM ran into was it was the biggest, it was no longer pushing innovation. It would have multiple brands producing almost identical products in the same market, Such as the GMC Jimmy, Chevy Tahoe. The cars were indistinguishable from one another, but were competing against one another. This meant that the companies would have to focus on deals between the 2 companies pushing the cars, and thus allowed other competitors to enter the market rather easily and able to distinguish themselves quite easily, as GM was really not offering different standard.
GM has shown though that it can push new prducts and be successful. The revitalization of Cadilac has shown the can grab market if they offer the right products to the right place. They will still continue to innovate and won’t let Toyota pass them without a fight. So Toyota does face some challenges in the coming years.
With th change in computers, the whole world is changing with it. Toyota is no exception. Toyota is currently trying to integrate the new changes in. Currently Toyota has set a goal to cut its inventory holding in half of its current 3 months, which will be quite a feat. The just in time will be pushed to its limits, but they will be working hard to try and provide even more accurate demand info and push there production system eve further
The key components will start by redesigning of the existing operational systems, creating a data warehouse to interface with the system, and designing the interfaces between demand-estimating, supply-chain modules, and the supply-chain strategy. Basically they are refining the techniques in which information is acquired by companies, and thus producing even closer to instanteously. By converting info into IT they can also spread information instantly across the world, making production even for streamlined, as problems form across the lines can be solved and shared with little or no time between in every plant. This though increases the base knowledge of the basic employee on the plant floor, which takes time and can actually be problematic. Some managers in certain Toyota plants feel that too much information may be counterproductive. They say it may also decrease built in flexibility if too much weight is put on this info. Most industry experts say the IT revolution will come, whether Toyota wants it no or later, and Toyota would do best to embrace it early.
Also an new challenge facing Toyota is the alternative fuel systems becoming more and more demanded. These cars have even more unique parts, requiring new ways of production, making them more difficult to produce on the same line as normal car. With more developing alternative fuel sources suddenly the option that must be changed is going to to increase greatly. Toyota is already on the forefront, but in a burgeoning industry much can change very quickly and therefore Toyota will have to watch for rapid changes, and be able to tweak plants in order to catch any new development as quickly as possible, trying to make the chain even more flexible and also requiring again, more worker knowledge and training.
Toyota’s innovations have made it the envy of the automotive industry and continues to push the market it terms of how to handle production. Its models are studied in courses all over the world Its continuing innovation and dedication to its renewal guarantee its place in industry will be one of power for years to come
