Download Introduction to Operation Management PDF

TitleIntroduction to Operation Management
TagsSupply Chain Management Operations Management Inventory Supply Chain Business Process
File Size550.4 KB
Total Pages25
Document Text Contents
Page 1




What Is Operations Management? 2
Links to Practice: The E-tailers 4
Differences between Manufacturing and Service

Organizations 5
Links to Practice: US Postal Service 6
Operations Management Decisions 7
Links to Practice: Texas Instruments

Incorporated 9

Plan of This Book 10
Historical Development 11
Today’s OM Environment 17
Operations Management in Practice 18
OM Across the Organization 19
Inside OM 21
Case: Hightone Electronics, Inc. 22
Case: Creature Care Animal Clinic (A) 23


Page 12


in their shops or homes. Each product was unique, painstakingly made by one per-
son. The Industrial Revolution changed all that. It started in the 1770s with the
development of a number of inventions that relied on machine power instead of
human power. The most important of these was the steam engine, which was in-
vented by James Watt in 1764. The steam engine provided a new source of power
that was used to replace human labor in textile mills, machine-making plants, and
other facilities. The concept of the factory was emerging. In addition, the steam
engine led to advances in transportation, such as railroads, that allowed for a wider
distribution of goods.

About the same time, the concept of division of labor was introduced. First de-
scribed by Adam Smith in 1776 in The Wealth of Nations, this important concept
would become one of the building blocks of the assembly line. Division of labor

Industrial Revolution Late 1700s Brought in innovations that changed production by
using machine power instead of human power.

Scientific management Early 1900s Brought the concepts of analysis and measurement of
the technical aspects of work design, and development
of moving assembly lines and mass production.

Human relations movement 1930s to 1960s Focused on understanding human elements of job
design, such as worker motivation and job

Management science 1940s to 1960s Focused on the development of quantitative
techniques to solve operations problems.

Computer age 1960s Enabled processing of large amounts of data and
allowed widespread use of quantitative procedures.

Just-in-time systems (JIT) 1980s Designed to achieve high-volume production with
minimal inventories.

Total quality management (TQM) 1980s Sought to eliminate causes of production defects.

Reengineering 1980s Required redesigning a company’s processes in order
to provide greater efficiency and cost reduction.

Environmental issues 1980s Considered waste reduction, the need for recycling,
and product reuse.

Flexibility 1990s Offered customization on a mass scale.

Time-based competition 1990s Based on time, such as speed of delivery.

Supply chain management 1990s Focused on reducing the overall cost of the system
that manages the flow of materials and information
from suppliers to final customers.

Global competition 1990s Designed operations to compete in the global market.

Electronic commerce Late 1990s; early Used the Internet for conducting business activity.
twenty-first century

Concept Time Explanation


Historical Development of Operations Management

Page 13


means that the production of a good is broken down into a series of small, elemental
tasks, each of which is performed by a different worker. The repetition of the task al-
lows the worker to become highly specialized in that task. Division of labor allowed
higher volumes to be produced. This, coupled with advances in transportation, en-
abled distant markets to be reached by steam-powered boats and railroads.

A few years later, in 1790, Eli Whitney introduced the concept of interchangeable
parts. Prior to that time, every part used in a production process was unique. With in-
terchangeable parts, parts are standardized so that every item in a batch of items fits
equally. This concept meant that we could move from one-at-a-time production to
volume production, for example, in the manufacture of watches, clocks, and similar

Scientific Management
Scientific management was an approach to management promoted by Frederick W.
Taylor at the turn of the twentieth century. Taylor was an engineer with an eye for ef-
ficiency. Through scientific management he sought to increase worker productivity
and organizational output. This concept has two key features. First, it is assumed that
workers are motivated only by money and are limited only by their physical ability.
Taylor believed that worker productivity is governed by scientific laws, and that it is
up to management to discover these laws through measurement, analysis, and obser-
vation. Workers are to be paid in direct proportion to how much they produce. The
second feature of this approach is the separation of the planning and doing functions
in a company, which means the separation of management and labor. Management is
responsible for designing productive systems and determining acceptable worker out-
put. Workers have no input into this process — they are permitted only to work.

Many people did not like the scientific management approach. This was especially
true of workers, who thought that management used these methods to unfairly in-
crease output without paying them accordingly. Still, many companies adopted the
scientific management approach. Today many see scientific management as a major
milestone in the field of operations management, and it has had many influences on
operations management. For example, piece rate incentives, in which workers are paid
in direct proportion to their output, came out of this movement. Also, a widely used
method of work measurement, stopwatch time studies, was introduced by Frederick
Taylor. In stopwatch time studies, observations are made and recorded of a worker

Steamboat and railroad
forging during the Industrial

Today’s modern work

� Scientific management
An approach to management
that focused on improving
output by redesigning jobs
and determining acceptable
levels of worker output.

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