Operations management is concerned with designing and controlling the production of goods and services,OperationsAcademia.org: The state-of-the-art of PhD research in Operations Research/Management Science and related disciplines Retrieved on October 22, 2016 ensuring that businesses are efficient in using resources to meet customer requirements.
It is concerned with managing an entire production system that converts inputs (in the forms of raw materials, labor, consumables, and energy) into outputs (in the form of goods and services for consumers).Great Operations: What is Operations Management Retrieved on July 3, 2013 Operations management covers sectors like banking systems, hospitals, companies, working with suppliers, customers, and using technology. Operations is one of the major functions in an organization along with supply chains, marketing, finance and human resources. The operations function requires management of both the strategic and day-to-day production of goods and services.
In managing manufacturing or service operations, several types of decisions are made including operations strategy, product design, process design, quality management, capacity, facilities planning, production planning and inventory control. Each of these requires an ability to analyze the current situation and find better solutions to improve the effectiveness and efficiency of manufacturing or service operations.
History
The history of production and operation systems begins around 5000 B.C. when Sumerian priests developed the ancient system of recording inventories, loans, taxes, and business transactions. The next major historical application of operation systems occurred in 4000 B.C., when the Egyptians started using planning, organization, and control in large projects such as the construction of the pyramids. By 1100 B.C., labor was being specialized in China; by about 370 B.C., Xenophon described the advantages of dividing the various operations necessary for the production of shoes among different individuals in ancient Greece:Friedrick Klemm, A history of Western Technology, Charles Scribner's Sons 1959 in D. A. Wren and A. G. Bedeian, The Evolution of Management Thought, Wiley 2009Xenophon, Cyropedia, Book VIII, Delphi Classics
In the Middle Ages, kings and queens ruled over large areas of land. Loyal noblemen maintained large sections of the monarch's territory. This hierarchical organization in which people were divided into classes based on social position and wealth became known as the feudal system. In the feudal system, vassals and serfs produced for themselves and people of higher classes by using the ruler's land and resources. Although a large part of labor was employed in agriculture, artisans contributed to economic output and formed guilds. The guild system, operating mainly between 1100 and 1500, consisted of two types: merchant guilds, who bought and sold goods, and craft guilds, which made goods. Although guilds were regulated as to the quality of work performed, the resulting system was rather rigid, shoemakers, for example, were prohibited from tanning hides.D. A. Wren and A. G. Bedeian, The Evolution of Management Thought, Wiley 2009
Services were also performed in the Middle Ages by servants. They provided service to the nobility in the form of cooking, cleaning, and providing entertainment. Court jesters were considered service providers. The medieval army could also be considered a service since they defended the nobility.
The Industrial Revolution was facilitated by two elements: interchangeability of parts and division of labor. Division of labor has been a feature from the beginning of civilization, the extent to which the division is carried out varied considerably depending on period and location. Compared to the Middle Ages, the Renaissance and the Age of Discovery were characterized by a greater specialization in labor, which was a characteristic of the growing cities and trade networks of Europe. An important leap in manufacturing efficiency came in the late eighteenth century as Eli Whitney popularized the concept of interchangeability of parts While manufacturing 10,000 muskets. Up to this point in the history of manufacturing, each product (e.g. each musket) was considered a special order, meaning that parts of a given musket were fitted only for that particular musket and could not be used in other muskets. Interchangeability of parts allowed the mass production of parts independent of the final products in which they would be used. An entire new market to meet the need for the sale and manufacturing of muskets began at this time.
In 1883, Frederick Winslow Taylor introduced the stopwatch method for accurately measuring the time to perform each single task of a complicated job. He developed the scientific study of productivity and identifying how to coordinate different tasks to eliminate wasting of time and increase the quality of work. The next generation of scientific study occurred with the development of work sampling and predetermined motion time systems (PMTS). Work sampling is used to measure the random variable associated with the time of each task. PMTS allows the use of standard predetermined tables of the smallest body movements (e.g. turning the left wrist by 90°), and integrating them to predict the time needed to perform a simple task. PMTS has gained substantial importance due to the fact that it can predict work measurements without observing the actual work. The foundation of PMTS was laid out by the research and development of Frank B. and Lillian M. Gilbreth around 1912. The Gilbreths took advantage of taking motion pictures at known time intervals while operators were performing the given task.
At the turn of the twentieth century, the services industries were already developed, but largely fragmented. In 1900 the U.S. service industry consisted of banks, professional services, schools, general stores, railroads and telegraph. Services were largely local in nature (except for railroads and telegraph) and owned by entrepreneurs and families. The U.S. in 1900 had 31% employment in services, 31% in manufacturing and 38% in agriculture.
The idea of the production line has been used multiple times in history prior to Henry Ford: the Venetian Arsenal (1104); Smith's pin manufacturing, in the Wealth of Nations (1776) or Brunel's Portsmouth Block Mills (1802). Ransom Olds was the first to manufacture cars using the assembly line system, but Henry Ford developed the first auto assembly system where a car chassis was moved through the assembly line by a conveyor belt while workers added components to it until the car was completed. During World War II, the growth of computing power led to further development of efficient manufacturing methods and the use of advanced mathematical and statistical tools. This was supported by the development of academic programs in industrial and systems engineering disciplines, as well as fields of operations research and management science (as multi-disciplinary fields of problem solving). While systems engineering concentrated on the broad characteristics of the relationships between inputs and outputs of generic systems, operations researchers concentrated on solving specific and focused problems. The synergy of operations research and systems engineering allowed for the realization of solving large scale and complex problems in the modern era. Recently, the development of faster and smaller computers, intelligent systems, and the World Wide Web has opened new opportunities for operations, manufacturing, production, and service systems.
Industrial Revolution
Before the First Industrial Revolution, work was mainly done through two systems: domestic system and craft guilds. In the domestic system merchants took materials to homes where artisans performed the necessary work, craft guilds on the other hand were associations of artisans which passed work from one shop to another, for example: leather was tanned by a tanner, passed to curriers, and finally arrived at shoemakers and saddlers.
The beginning of the industrial revolution is usually associated with the eighteenth-century English textile industry, with the invention of the flying shuttle by John Kay in 1733, the spinning jenny by James Hargreaves in 1765, the water frame by Richard Arkwright in 1769 and the steam engine by James Watt in 1765. In 1851 at the Crystal Palace Exhibition the term American system of manufacturing was used to describe the new approach that was evolving in the United States of America which was based on two central features: interchangeable parts and extensive use of mechanization to produce them.
Second Industrial Revolution and post-industrial society
Henry Ford was 39 years old when he founded the Ford Motor Company in 1903, with $28,000 capital from twelve investors. The model T car was introduced in 1908, however it was not until Ford implemented the assembly line concept, that his vision of making a popular car affordable by every middle-class American citizen would be realized. The first factory in which Henry Ford used the concept of the assembly line was Highland Park (1913), he characterized the system as follows:
This became one of the central ideas that led to mass production, one of the main elements of the Second Industrial Revolution, along with emergence of the electrical industry and petroleum industry.
The post-industrial economy was noted in 1973 by Daniel Bell. He stated that the future economy would provide more GDP and employment from services than from manufacturing and have a great effect on society. Since all sectors are highly interconnected, this did not reflect less importance for manufacturing, agriculture, and mining but just a shift in the type of economic activity.
Operations management Although productivity benefited considerably from technological inventions and division of labor, the problem of systematic measurement of performances and the calculation of these by the use of formulas remained somewhat unexplored until Frederick Taylor, whose early work focused on developing what he called a "differential piece-rate system"Taylor, Frederick Winslow (1896), A Piece Rate System, read before the American Society of Mechanical Engineers http://wps.prenhall.com/wps/media/objects/107/109902/ch17_a3_d2.pdf and a series of experiments, measurements and formulas dealing with cutting metalsTaylor, F. W., On the Art of Cutting Metals, American Society of Mechanical Engineers (1906) and manual labor.Taylor, F. W., Shop Management (1903), a handbook read before the American Society of mechanical engineers, New York (this has been republished in 1911 https://archive.org/details/shopmanagement00taylgoog) The differential piece-rate system consisted in offering two different pay rates for doing a job: a higher rate for workers with high productivity (efficiency) and who produced high quality goods (effectiveness) and a lower rate for those who fail to achieve the standard. One of the problems Taylor believed could be solved with this system was the problem of soldiering: faster workers reducing their production rate to that of the slowest worker.
In 1911 Taylor published his "The Principles of Scientific Management",Taylor, Frederick Winslow (1911), The Principles of Scientific Management. New York, NY, US and London, UK: Harper & Brothers. LCCN 11010339. OCLC 233134. Also available from Project Gutenberg. in which he characterized scientific management (also known as Taylorism) as: The development of a true science; The scientific selection of the worker; The scientific education and development of the worker; Intimate friendly cooperation between the management and the workers.