Introduction to Operations Management
Adding Value by Improving Operations Management
Better management of a company’s operations can add substantial value to the company by improving its competitiveness and long-term profitability. Poor operations decisions can hurt a company’s competitive position and increase its costs on the other hand; good operations decisions can improve the value of the company by increasing profitability and growth. Operations management is an important discipline in the struggle to remain competitive in an ever-changing global marketplace. There are three primary functions in business: operations, marketing, and finance/accounting. Production is the creation of goods and services, while operation management is the set of activities that creates value in the form of goods and services by transforming inputs into outputs. This conversion process is the heart of what is called operations or production and is the predominant activity of a production system. Managers in POM is operations managers who manage the production system, their primary concern is with the activities of the conversion process or production.
Historical Milestone in POM
There are several developments that have impacted the evolution of POM. 1. The Industrial Revolution
2. The post-Civil War period
3. Scientific management
4. Human Relations and behaviorism
5. Operations research
6. The service resolution
7. The computer revolution.
The Industrial Revolution
Production system prior to the 1700s are often referred to as cottage system, because the production of products took place in homes or cottages where craftsmen directed apprentices in performing handwork on products. In England in the 1700s, a development occurred that we refer to as the Industrial Revolution. This advancement involved two principal elements: the widespread substitution of machine power for human and waterpower and the establishment of the factory system. The publication of Adam Smith’s The Wealth of Nations in 1776 touted the economic benefits of the division of labor, also referred to as the specialization of labor (division of labor), which broke the production of products into small, specialized tasks that were assigned to workers along production lines. In 1790 Eli Whitney, an American inventor, developed the concept of interchangeable parts. She designed rifles to be manufactured for the U.S. Government on an assembly line such that parts were produced to tolerances allowing every part to fit right the first time.
Post-Civil War Period
The post-Civil war period set the stage for the great expansion of production capacity in the new century. The abolition of slave labor, the exodus of farm laborers to the cities, and the massive influx of immigrants in the 1865-1900 period provided a large workforce for the rapidly developing urban industrial centers. The post-Civil War period produced large railroads, the second great U.S. Industry. Rail lines were extended; new territories were developed; and with the coming of the twentieth century, an effective and economical transportation system, national in scope, was in operation. By 1900 all of these developments-increased capital and production capacity, the expanded urban workforce, new Western markets, and an effective national transportation system-set the stage for the great production explosion of the early twentieth century.
Scientific management consists of a nucleus of engineers, business executives, consultants, educators, and researchers, which developed the methods and philosophy. Frederick Winslow Taylor is known as the father of scientific management and father of industrial engineering, who studied the factory problems of his day scientifically and popularized the notion of efficiency-getting the desired result with the least waster of time, effort, and materials.
Taylor’s shop system is a systematic approach to improve worker...