Relations Low Management
School Variety
1940
Operational
Research
School
1960
Operations
Computers/ Management
Advanced The Mass and
1980 Manufacturing Service High
Technology Revolution Variety
Contemporary Developments:
- Japanization/Lean Production
- Operations Strategy Paradigm
C21st
Figure 1.1: The History of Manufacturing, Production and Operations Management
The substitution of machine- for human power
The inventors of machine power are now collectively known as the "Process School" and their activities gave rise to the various engineering professions. Foremost amongst the early process developers were James Watt with the invention of the steam engine in 1764, Hargreaves and the "spinning jenny", Cartwright's "power loom" and Maudsley's "screw cutting lathe". It was these inventions that gave the Industrial Revolution its initial impetus.
Figure 1.2: Adam Smith (1723-1790)
The establishment of the "Factory System".
Adam Smith's "The Wealth of Nations" (Smith, 1776) proclaimed the benefits of the division and specialisation of labour. Thus production activities came to be broken into small specialised tasks assigned to workers through the manufacturing process, as opposed to the craftsman's "make-complete" approach. Increased capital intensity through mechanisation and new ways of planning and controlling production workers using the principles of specialisation led to a move away from the cottage system to that of factory working.
The Industrial Revolution into the Nineteenth Century
Two notable developments occurred into the nineteenth century:
Interchangeable Parts
The concept of interchangeable parts was initially developed by Eli Whitney, a manufacturer of rifles for the US government, in 1790. Whitney designed and built on an assembly line such that parts were produced to tight tolerances enabling every part to fit right first time into a rifle assembly. Previously parts were hand crafted, or else they were merely sorted from large batches to find those components that fitted together neatly or only required minor modifications. The concept of interchangeable parts was not easily grasped at first, but is today taken for granted. Consider where we would be without interchangeable light bulbs to holders and interchangeable tapes for video recorders!
Although the invention of the cotton gin changed history, its inventor, Eli Whitney, made little profit from it. The gin made cotton cleaning so efficient that growing the crop became a major industry for the American South. However, patent disputes and supply problems kept Whitney from producing the cotton gin profitably. His later venture into arms manufacturing was more fruitful, and Whitney successfully applied mass-production techniques based on the use of interchangeable parts.
Culver Pictures, Inc.
Figure 1.3: Eli Whitney (1765-1825)
Further Development of the Factory System
By 1850 the cottage system was almost completely replaced by factory working. Industrial empires were being constructed by a new class of entrepreneurs and businessmen. By 1900 the high level of capital and production capacity, the expanded urban workforce, new Western markets and increasingly effective transportation and communication set the stage for the great production output explosion of the twentieth century.
As the Industrial Revolution spread to the United States, plants such as this textile factory appeared. Soon the production of exports outpaced import of goods, and by the late 1800s America emerged as the world’s largest industrial power.
Hulton-Deutsch Collection
Figure 1.4: An Early Textile Factory
The Scientific Management School
Around 1900 the Scientific Management approach was being developed. This was initially based upon the pioneering work of Frederick Winslow Taylor (1856-1915), outlined in his "Principles of Scientific Management" (Taylor 1911). At the time, scientific management represented a concerted attack on the prevailing techniques used in the management of production. The work of Taylor, Lilian and Frank Gilbreth and Henry Gantt, amongst others, was analytical and stressed the need for the development of standards for work and improved efficiency. There was little consideration, however, of human feelings and most practitioners of scientific management viewed operators as mere extensions of their machines working within a wider, controlled system.
A number of ideas and techniques were developed at this time including piecework payment systems, time and motion study, the principles of efficiency, standards and management by exception. Criticised as scientific management is today, and in many respects rightly so, its development constituted the first truly rigorous and structured theory of production management to replace the more general and less analytical methods of factory management used before.
Division of labour is a basic tenet of industrialisation. In division of labour, each worker is assigned to a different task, or step, in the manufacturing process, and as a result, total production increases. As the illustration above shows, one person performing all five steps in the manufacture of a product can make one unit in a day. Five workers, each specialising in one of the five steps, can make 10 units in the same amount of time.
Microsoft Illustration
Figure 1.5: Division of Labour in the Factory
-
Scientific management principles culminated with the opening of the Ford Motor Company's Rouge plant in Detroit for the production of the Model-T (see Womack et al, 1991 for an interesting discussion of the rationale behind early Ford systems). The Rouge plant featured:
- standardised product designs using interchangeable parts;
- mass production;
- low manufacturing costs;
- mechanised assembly lines; and
- a high specialisation of labour.
Ford was an adapter rather than an inventor of scientific management and the Rouge plant formed the model for factory design and work organization well into the twentieth century (the approach now commonly known as "Fordism"). So, around the 1920s, was born the era of mass manufacture and standardised, low variety products.
The Human Relations School
In the 1930's an opposing view to scientific management began to emerge in which behavioural issues were identified as being important to productivity. Knowledge of psychological and sociological features started to influence job design, strategies for worker motivation and management control policies. The organizational forms of production and service companies have been influenced by a number of "behaviouralist" theories and practical approaches:
The Hawthorne Studies and "Behavioural Science School"
A series of experiments conducted by researchers from the Harvard Business School at Western Electric Company which illustrated the importance of human aspects in determining output and productivity (Roethlisberger and Dickson, 1939).
The Motivation Theorists
A number of theories have been forwarded on the motivation of people at work, including Maslow's "Hierarchy of Needs" (Maslow, 1943), McGregor's "Theory X and Theory Y" (McGregor, 1960), Likert's Theory (Likert, 1961), and Herzberg's "Satisfiers and Dissatisfiers" (Herzberg, 1966).
Wilfred Brown, Glacier Metal Company of London and "Daywork"
Drew into question the effectiveness of direct piecework incentives and presented hourly pay in the form of daywork as a less problematic alternative means of remuneration (Brown, 1962).
Socio-Technical Systems and "Group Working"
On the evidence of development of work design in the British Coal Mining industry, the teamwork approach to flowline assembly at Philips, Eindhoven, and the experiences of Volvo in Sweden with autonomous group working, theorists (most predominantly from the Tavistock Institute) stressed the need for the parallel development of social and technical systems for the success of manufacturing operations (see, for example, Gyllenhammar, 1977).
Flexible Labour
Recently the need for flexible labour to cope with changes in the market and environment has been identified. Atkinson's model of the "Flexible Firm" was developed as an explanation of flexible organization (Atkinson, 1984). "Post-Fordism" has developed whose supporters argue that the era of mass production is now over with more flexible and less rigid work structures now developing (Murray, 1989). The argument for "Flexible Specialisation" has been forwarded which sees a revival of craft-forms of production and the need for multi-skilling in the workforce (Piore and Sabel, 1984).
The Operational/Operations Research School
Operational Research (OR) originated in the military and defence organizations of Britain around 1940 with the advent of World War Two. OR was initially used for solving problems of civilian defence, bombing strategies, radar systems, transportation and military logistics.
Following the war OR people began to turn to business and industry to apply their techniques. The spin-offs for operations management included new quantitative techniques for stock control, scheduling, forecasting, project management, quality control, simulation and linear programming, to name a just a few. In the 1950s OR was responsible for the introduction of computers in the management of operations. OR seeks to replace intuitive decision making for large complex problems with approaches that identify "optimal" or "best" solutions through analysis. It is in its logical and methodological approach that OR has contributed to the developing theory of operations management. (For more detail on the history and the techniques of OR see Duckworth et al, 1977).
Computers and Advanced Manufacturing Technology
Computers are now a highly cost effective and efficient means of managing and distributing the information required to plan and operate production and service systems. New computer technologies have also had a profound effect in the last twenty years or so on the design of new processes with the development of flexible and programmable systems. Most significantly, the control afforded by computer technology has made possible the manufacture of products in mass volumes, but in a wide variety and, in some instances, configured to suit individual customer requirements. Figure 1.6 illustrates the evolving use of computers in operations management.
Decade Emergent Applications Examples
1950s Clerical activities Payroll, invoicing, stock movement,
cost reporting.
1960s Operational Research Linear programming, scheduling,
(OR) project planning and control.
1970s Operations planning Forecasting, inventory management,
and control materials requirements planning (MRP),
factory control.
1980s Computer integrated Computer aided design and manufacture
manufacturing (CIM) (CAD and CAM), robotics, barcodes,
flexible manufacturing systems (FMS),
automated storage and retrieval systems (ASRS).
1990s Decision support and Systems for the analysis and solution of problems,
artificial intelligence (AI) expert systems, imitation of human decision making
or expertise.
Figure 1.6: The History of Computers in Operations Management
The Service Revolution
There has been a vast expansion in the service and public sector industries since 1960. During this time manufacturers and service operators have come to realise that they have a considerable amount to learn from one another and that there are innumerable areas of similarity in the management of their operations. Note also that all products will have an element of tangible good and service associated with them. Conversely many services also have a tangible product content (e.g. a MacDonald’s burger).
The need to manage service operations efficiently and effectively is just as necessary as the productive management of manufacturing. Many of the principles and concepts are, indeed, transferable. For example, all service operators will have inventories to manage, quality to control, work to schedule, output to deliver, facilities to layout, employees to remunerate, and so on. However the lessons are not one-way. Manufacturing organizations are learning much in terms of customer care and service reliability from the service industries.
Contemporary Developments in Operations Management
Invention was the catalyst of the Industrial Revolution in the eighteenth and nineteenth centuries. Invention is once again the catalyst for a new manufacturing revolution that began in Asia and the countries of the Pacific Rim in the 1970s and 80s. However, the inventions this time are not of a technological type. Rather it has involved the development of alternative operations theory and practice. New concepts such as "just-in-time" management and new approached towards quality and design management (such as Total Quality and Kaizen) were introduced and evolved, in Japan particularly. This served warning of a new challenge to the traditional Western manufacturers (Hayes and Wheelwright, 1984; Schonberger, 1986; Womack et al,1990).
Another recent development has been the shift in emphasis from techniques and systems at the operating level to a broader and more balanced strategic perspective of operations. The works of Wickham Skinner and Terry Hill in the area of strategic management and its interface with operations are germane here (Skinner, 1985; Hill, 1985).
Summarising the Historical Perspective
Referring back to Figure 1.1, it has been illustrated how the development of Production and, more generally, Operations Management has been closely tied with the major industrial events and emergence of a number of schools of thought over the last 200 to 300 years. In the 1800s the prime focus was the management of the factory, but as scientific management practices became more widespread in the early twentieth century the discipline changed from general Factory Management to Production Management. The wider operational perspective brought in by OR to encompass transportation, logistics and supply plus the growing need to incorporate and learn from service operations has broadened the discipline further. Now, subject to the influence of computer developments and Japanese approaches, the theory and practice of operations and quality management continues to develop under the influence of a number of different, and often conflicting, schools and paradigms.
1.3 The Role of the Operations Manager
The task of the operations manager can be summarised at a basic level as converting a range of resource inputs, through the operations process, into a range of outputs in the form of products. However, the various elements that together make up this management function are diverse and complex in nature. The operations manager must have competencies in human resource management, strategic awareness, product knowledge, systems and organizational design and, at the operating level, of planning and control. Moreover, the task of the operations manager is often misunderstood and is often relegated to a reactive rather than a positive and proactive role within the organization.
1.4 The Scope of Operations Management
Operations management relates to that function of an organization concerned with the design, planning and control of resources for the production of goods or provision of services. As a discipline it is not merely confined to a collection of techniques and quantitative methods. It makes appropriate use of the tools of OR and statistics where relevant, but is primarily concerned with the broader issues involved in the design, planning and control of products and processes.
There are a number of ways of conceptualising the scope of operations management, some of which are suggested below:
By considering the components of a operations system:
Utterbeck and Abernathy's model of innovation suggests that any productive unit should be considered as comprising three main elements: product, process and work organization (Utterbeck and Abernathy 1975). It is useful to consider the operations manager as having responsibilities in all three of these areas.
Figure 1.7: Stages in a Product's Life
By considering the life cycle for products:
Operations management is concerned with, and should have an input to, all stages in a product's life cycle. The responsibilities of the operations manager, therefore, should not be merely confined to the production stage. Figure 1.7 shows the stages in a product's life where the operations manager should be involved in the decision making process.
By considering the organizational scope of operations management:
"Operations Management" should not be confused with the term "operational management". The management of operations permeates all levels of organizational decision making and is not merely confined to less important, low level and short term decisions. The operations manager should, in turn, enter more widespread strategic debates in addition to maintaining contact with day-to-day operations. Thus the scope for operations management in decision making covers operational management right through to strategic management.
For the purposes of this module a distinction has been drawn between "design" and "operations planning and control". Design, covered in Chapters 3 and 4 of this package, involves the organization and arrangement of physical facilities and labour resources to enable the conversion of inputs (materials, orders, labour, etc.) into outputs (goods and services). Chapters 5 and 6 then explore the design and management of service operations and issues pertaining to project management respectively. Planning and control, contained within Chapters 7 to 9, concerns the organizing and monitoring of systems once in operation, together with the feedback of variances from plan for process adjustment where necessary. The principles of quality management and process improvement, which encompasses strategy, design and operational management, is covered extensively in Chapters 10 and 11.
1.5 Summary
Operations Management is, essentially, a multidisciplinary subject which draws upon a wide range of perspectives and schools of management thought, as described above. The remainder of this package will explore the subject in depth.
Now read Slack et al, Chapter 1.
-----------------------------------------------------------------------------------------------------------------------------
MBA Operations Management Page
"Adam Smith," Microsoft® Encarta® 96 Encyclopedia. © 1993-1995 Microsoft Corporation. All rights reserved.
"Eli Whitney," Microsoft® Encarta® 96 Encyclopedia. © 1993-1995 Microsoft Corporation. All rights reserved.
"Early Industrial Plant," Microsoft® Encarta® 96 Encyclopedia. © 1993-1995 Microsoft Corporation. All rights reserved.
"Division of Labour in Industry," Microsoft® Encarta® 96 Encyclopedia. © 1993-1995 Microsoft Corporation. All rights reserved.
