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ASSIGNMENT HISTORY OF OPERATION MANAGEMENT

From pre industrial age to the present
A view of the evolutionary thoughts through the looking glass of history that have mad
made up current course of OM.

Submitted to: Muhammad Imran Qureshi

Submitted by: Noor Alam Khan

Registration #: SP10-MBA-065

Submitted on: 25th Feb. 2011

1 Page

COMSATS Institute of Information Technology, Abbottabad

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Table of Contents
Introduction ........................................................................................................................................................... 3
Historical Review of OM .................................................................................................................................. 3
The Pre and Post industrial age ............................................................................................................................. 3

Post Industrial Era .................................................................................................................................................. 3

Developments in 20th century (Early 20th Century)
Inventions in 18th century ............................................................................................................................. 4
Adam smiths division of labor ...................................................................................................................... 4
Development in 20th Century

Taylors Scientific Management .................................................................................................................... 4

Henry Fords Assembly Line (1913) ............................................................................................................... 5

Human Relations Movements ....................................................................................................................... 5

Application of Quantitative models and statistical tools .............................................................................. 5

During and Post WWII developments

Operational Research .................................................................................................................................... 6

Production management .............................................................................................................................. 6

The internet and computers ............................................................................................................................. 6

Quality Revolution Era ....................................................................................................................................... 7

Late 20th Century

Globalization .................................................................................................................................................. 8

Supply chain Management ........................................................................................................................... 9

Business process reengineering .................................................................................................................... 9

E-Commerce ................................................................................................................................................. 9

Summary............................................................................................................................................................. 10

References .......................................................................................................................................................... 11
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Introduction

Operation Management can be described as "The process of continuous improving the system and
processes undertaken to deliver and manufacture firms primary products and services."

This assignment explores changes and shifts in the field of Operations Management thoughts from
the evolution era to present age. The assignment involved of the description of the key periods and
improvements in this field.

Historical Review of Operations Management

When we study of Operation Managements history we identify many stages that show many
development and shifts in thinking that have conspired to bring about the evolution of the
Operations Management.

The Pre industrial age

Prior to industrial revolution there was cottage-based guild system. Production of goods took place
in homes or cottages, where craftsman directed apprentices in performing hand work on products.

Post Industrial Revolution era

Industrial Revolution emerged in United Kingdom in 18th century and its impacts then spread to
other European countries and to the United States. Industrial Revolution resulted in two major
developments:

1. Widespread substitution of machine power for human power and establishment of the
factory system. The events that took place from 1770 to the 1800s are characterized by
Great Inventions. The great inventions were eight in number, with six of them having been
conceived in England, one in France and one in the United States .The eight inventions are

Hargreaves Spinning Jenny, Arkwrights Water Frame, Cromptons Mule, Cartwrights Power
Loom, Watts steam engine, (in use by 1785) Berthollets Chlorine Bleaching Discovery.
Mandslays Screw-Cutting Lathe and Eli Whitneys Interchangeable Manufacture.

Most of inventions were concerned with the spinning of yarn and weaving of cloth because
of short supply and dominating demand in the expanding British colonial empire and trade.
The availability of machine power greatly facilitated the gathering of workers in factories
that housed the machines.

The large number of workers congregated in the factories, created the need for organizing
them in logical ways to produce goods.
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2. The Industrial Revolution advanced further with the development of the gasoline engine and
electricity in the 1800s. Other industries emerged and along with them new factories came
into being. By the middle of 1800s the old cottage system of production had been replaced
by the factory system. Here the mass production starts and along with need of managing the
operation of these factories also arises.

Adam Smiths Division of Labor

The publication of Adam Smiths The Wealth of Nations in 1776 advocated the benefits of
the Division of Labor or specialization of labor, which broke production of goods into small
specialized tasks that were assigned to workers on production lines. Thus, the factories of
late 1700s not only had developed production machinery, but also ways of planning and
controlling the output of workers.

Developments in Early 20th Century

As days went by, production capacities expanded, demand for capital grew and labor became highly
dependant on jobs and urbanized. At the commencement of the 20th century, the one element that
was missing was a management (the ability to develop and use the facilities to produce on a
maximum capacity to meet massive markets of today.)

1. Frederick Winslow Taylors Scientific Management (1911)

Frederick W. Taylors scientific management theory involved time studies in an attempt to

establish the most productive way to undertake a process.

Scientific laws govern work so scientific methods can be used to analyze work
Workers are different so match workers to their job and then train them thoroughly
Separate the responsibilities of workers and managers.

Taylor - Systems approach to manufacturing

All equipment, workers and tasks are part of a manufacturing system whose performance
should be maximized

Around the same time, Frank Gilberth and his leaned wife Lillian Gilberth examined the
motions of the limbs of the workers (such as the hands, legs, eyes etc) in performing the jobs
and tried to standardize these motions into certain categories and utilize the classification to
arrive at standards for time required to perform a given job. This was the precursor to the
present day motion study. Although to this day Gilberths classification of movements is used
extensively, there have been various modifications and newer classifications.
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2. Henry Fords Application of Division of Labor and Scientific Management

"What was worked out at Ford was the practice of moving the work from one worker to
another until it became a complete unit, then arranging the flow of these units at the right
time and the right place to a moving final assembly line from which came a finished product.
Regardless of earlier uses of some of these principles, the direct line of succession of mass
production and its intensification into automation stems directly from what we worked out
at Ford Motor Company between 1908 and 1913. [3]

3. Human Relations Movement

Until 1920s operations management emphasized on organizational structure, specialization,

planning and control but not on human dimension. Harvard Research Team (led by Elton
Mayo) Conducted studies and established relationship between behaviour of workers &
their job environments.

Hawthorne Studies - 1930 to examine the effect of light on work

Considered the role of treatment of employees in production

The results showed that psychological factors were as important as scientific job design.

Motivation theories

From 1940 to 1960 the following research supported motivational theories brought by the
researchers by considering human element in efficiency and effectiveness.

Abraham Maslow Hierarchy of needs theory 1940

Frederick Herzberg. The Hygiene-Motivation Theory (1950)
Douglas McGregors theory X and Y 1960

Application of Quantitative models and statistical tools for managing operations

1. Statistical Quality Control

Uses statistics in the control of product quality by controlling the processes by which
products are made. In 1931, Walter Shewart came up with theory regarding Control
Charts for quality or what is known as process control. These charts suggested a simple
graphical methodology to monitor the quality characteristics of the output and how to
control it. In 1935, H F Dodge and HG Romig came up with application of statistical
principles to the acceptance and/or rejection of the consignments supplied by the
suppliers to exercise control over the quality. This field, which has developed over the
years is now known as; acceptance sampling.[5]

2. Economic Order Quantity

Used for finding the least cost inventory ordering.
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3. Gantt Charts
Gantt charts for sequencing operations and Critical Path Method for finding optimum
completion time of operations.

During and Post WWII developments

1. Advent of Operations Research Techniques and Production Management

The birth of Operations Research (OR) during the World War II period saw a big boost in the
application of scientific techniques in management. To solve the complex problems of
logistics control due to massive deployment of soldiers, supplies, planes, ships and efficient
utilization of resources, Allies formed O.R. teams in military branches.

In the late 1950s and early 1960s scholars shift their focus on writing about production
management. Production management had itself become a professional field as well as an
academic discipline. This field was further investigated and developed by academic
institutions. Various techniques such as Linear programming game theory, queuing theory
and the like developed by people such as George Dantzig A Charnes and W.W Cooper have
become indispensable tools for management decision making today.

2. Linear programming by George Dantzig (1947)

A management tool for optimum resource allocation given some restrictions or limitations
of the resources such as materials, budgets, labor, machine time etc. linear programming
consists of sequence of steps that will lead to optimal solution to problems, in cases where
an optimum exists.

3. Computers & Advanced Operations Technology

Digital computer (Remington Rand)

In March 1951, The Eckert and Mauchly Computer Co. of Philadelphia delivered the UNIVAC
1 (Universal Automatic Computer) to the U.S. Census Bureau. The machine was put into
service on June 14, 1951. It was retired on October 3, 1963 after 73,000 hours of operation.
In the meantime, Remington Rand (now Unisys Corp.) sold 45 UNIVAC 1 machines to U.S.
government agencies and private-industry.

MRP (Materials Resource Planning)

In the 1960s, Joseph Orlicky studied the TOYOTA Manufacturing Program and developed
Material Requirements Planning (MRP), and Oliver Wight and George Plossl then developed
MRP into manufacturing resource planning
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Quality Revolution

1. JIT (just-in-time) 1970s

In 1970s Japanese firm Toyota introduced a management philosophy, developed by by

Taiichi Ohno as a means of meeting consumer demands with minimum delays. It originally
referred to the production of goods to meet customer demand exactly, in time, quality and
quantity, whether the `customer' is the final purchaser of the product or another process
further along the production line.

Toyota was able to meet the increasing challenges for survival through an approach that
focused on people, plants and systems. Toyota realized that JIT would only be successful if
every individual within the organization was involved and committed to it, if the plant and
processes were arranged for maximum output and efficiency, and if quality and production
programs were scheduled to meet demands exactly.

2. TQM (W. Edwards Deming) 1980s

In the 1980s to the 1990s, a new phase of quality control and management began. This
became known as Total Quality Management (TQM). Having observed Japans success of
employing quality issues, western companies started to introduce their own quality
initiatives. TQM, developed as a catchall phrase for the broad spectrum of quality-focused
strategies, programmes and techniques during this period, became the centre of focus for
the western quality movement.

TQM includes phrases like Customer focus, the involvement of all employees, continuous
improvement and the integration of quality management into the total organization.

The Internet and computers

ARPA NET 1969 provided the base to data communication.

WWW by Tim Berners-Lee in 1989

i2 Technologies, a supply chain management software and services company,

founded in 1988

CAD/CAM

CAD/CAM stands for Computer-aided design and Computer-aided manufacturing. It is used

in product development to enable manufacturers to design and build their products using
computers.
The technology that has been developing since the first interactive graphics was developed
at MIT in early 1970s. CAD uses computer graphics and software to enable engineers to do
most of design activities needed to complete engineering design that include creating parts
in 3D, assembling them, and producing engineering drawings.
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CIM- Computer Integrated Manufacturing

Known as CIM, is the phrase used to describe the complete automation of a manufacturing
plant, with all processes functioning under computer control and digital information tying
them together.

Late 20th century developments

Market Focus

Trends changed with awareness that market controls production not the product. Therefore
product should be differentiate and targeted at distinct niches to capture maximum value from
products.

Globalization

In 1990s reduction in trade barriers and advancement in communication and transportation

technology bring about globalization of markets and production. Many companies stated to
expand and compete globally. This brought a new dimension in operations management in form
of Global sourcing (outsourcing of products and services globally) to take the benefits of specific
locations and coverage of new market. Organizations designed their operations to compete in the
global market.

Quality Management Systems

The 1970s were an era of quality engineering and the 1990s saw quality systems as an emerging
field. Like medicine, accounting, and engineering, quality has achieved status as a recognized
profession and the Importance of quality management has finally been recognized.

Internal versus external quality systems

Total Quality Management

ISO 9000/QS 9000
HACCP (Chinese)
Government regulations

Business process reengineering (1990)

Business process reengineering (BPR) was developed in the early 1990s and refers to a
management technique that companies can use to become more efficient. BPR was most
famously espoused by management consultants Michael Hammer and James A. Champy in a
best-selling book, Reengineering the Corporation. The authors argued that companies
should reinvent the way in which their work was to be accomplished.

Supply Chain Management 1990s

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Supply chain management (SCM) involves managing the ow of materials and information
from suppliers and buyers of raw materials all the way to the nal customer. The objective is
to have everyone in the chain work together to reduce overall cost and improve quality and
service delivery. Numerous companies, including Dell Computer, Wal-Mart, and Baxter
Healthcare, have achieved world-class status by effectively managing their supply chains.
Closer relationships with suppliers Coordination and decision making spread through the
chain

Electronic Data Exchange - EDI

Efficient Consumer Response ECR
The use of SAP ERP to coordinate operations.

E-Commerce

After World Wide Web revolution new electronic enterprises emerged in form of Yahoo,
Amazon etc. These enterprises used the Internet for conducting business activity. This felt
the need of new ways of managing the operations.

Environmental Issues 1990s

There is increasing emphasis on the need to reduce waste, recycle, and reuse products and
parts. Society has placed great pressure on business to focus on air and water quality, waste
disposal, global warming, and other environmental issues. Operations management plays a
key role in redesigning processes and products in order to meet and exceed environmental
quality standards. The importance of this issue is demonstrated by a set of standards termed
ISO 14000. Developed by the International Organization for Standardization (ISO), these
standards provide guidelines and a certication program documenting a companys
environmentally responsible actions

New Technologies

In the field of operations management currently the following technologies are under focus to aid
operations.

Robotics
Computer controlled manufacturing
Biotechnology
Global positioning systems
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Summary

When we look into the history through the window of Operations Management we identify many
evolutionary terms and shifts that led the need of Operations Management. Until the end of the
18th century, agriculture was the predominant industry in every country. The invention of James
Watts e steam engine and Eli Whitney's concept of standardized parts paved the way for the
Industrial Revolution UK which later spread to other Europe, USA and later in the world. These
countries evolved from an agricultural economy to an industrial economy. But for a time,
manufacturing was more of an art than a science and element of management was missing. This
philosophy changed and management gape filled with the introduction of Taylor's method of
scientific management and Henry Ford's moving assembly line brought the world into an age where
management was predominantly centered around the production of goods.

During 1930s human relations movement started which focused on understanding human elements
of job design, such as worker motivation and job satisfaction. In 1931, Walter Shewart came up with
theory regarding Control Charts for quality or what is known as process control. This age was
application of statistical tools to control quality in operations.

During WWII Operations Research conducted in Allied forces military branches for efficiency in
resource utilization and logistics, which later changed the face towards industrial engineering and
production management. After 1950s digital computer introduced and used for managing
operations which later coupled with network technologies. CAD and CIM also introduced to design
and build their products using computers. During 1970s another paradigm came in the field of
operation in form of JIT and later TQM in west as quality revolution in operations. In 1990s with the
evolution of World Wide Web electronic enterprises took place and brought new dimension in
operations. In the same age global expansion of firms led the new facets of operations management
for these firms. New environmental issues also came in front that put also a new challenge for
operations. In 1990s business process reengineering, quality systems and supply chain management
dimensions of operations management also introduced. Enterprise Resource Planning introduced by
SAP to facilitate every facet of business operations.

In these days new technologies like Robotics, Computer controlled manufacturing, Biotechnology
are in focus to facilitate operations.

Furthermore I can say that onward industrial revolution there have been different challenging events
came in managing processes and solution have also been developed with the passage of time. These
developments in the processes later on take the form operations management and this field is still
under focus and improvements are in continuum.
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References
1. http://en.wikipedia.org/wiki/Industrial_Revolution
2. K.ASWATHAPPA AND K.SHRIDHARA BHAT (http://www.shvoong.com/business-
management/entrepreneurship/59120-production-operations-management/)
3. Henry ford changes the world: http://www.eyewitnesstohistory.com/ford.htm
4. University of Guelph OM (http://www.uoguelph.ca/~dsparlin/intro.htm)
5. http://www.citeman.com/4795-brief-history-of-the-production-and-operations-
management-function/
6. http://www.ehow.com/info_7811298_history-operations-management.html
7. http://www.ifm.eng.cam.ac.uk/dstools/process/jit.html
8. http://www.ehow.com/info_7811298_history-operations-management.html