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INTRODUCTION

• OM history begins with industrial revolution (late 1700s)

• OM shares roots with other fields:– Organizational Behavior, Industrial

Engineering, Management Science

• Trends influencing OM development:– dominance of service sector– internationalization of business– environmental concerns

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THE CHRONOLOGICAL DEVELOPMENT OF OM

• The Industrial Revolution– Adam Smith– The Evolution of Management Thought– birth of mass production

• Scientific Management– a technical understanding of work– Frederick W. Taylor

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THE CHRONOLOGICAL DEVELOPMENT OF OM

• Industrial psychology and industrial sociology– developing a human understanding of work– Hugo Munsterberg– Hawthorne Studies

• Statistical control of quality– Walter Shewhart

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THE CHRONOLOGICAL DEVELOPMENT OF OM

• Management Science– optimizing the use of limited resources– WWII Operations Research

• Functionalization of OM– bringing it all together in one function– 1950s production managers– 1970s POM

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THE CHRONOLOGICAL DEVELOPMENT OF OM

• The MRP crusades– computerizing operational decision making– Materials Requirements Planning

• JIT, the Quality Revolution and Operations strategy– Toyota production system– Total Quality Management – operations strategies

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CURRENT TRENDS INFLUENCING THE FIELD OF OPERATIONS MANAGEMENT

• Growth and dominance of services– 74% U.S. employment in service sector jobs

• Internationalization– business competition is global

• Environmental quality– environmental impact of operational decisions is a

growing concern for businesses

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CURRENT TRENDS INFLUENCING THE FIELD OF OPERATIONS MANAGEMENT

• Cross-functional management– Business Process Reengineering (BPR)

• Supply chain management– business is concerned with competitiveness of

entire chain of value-adding activities

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CURRENT TRENDS INFLUENCING THE FIELD OF OPERATIONS MANAGEMENT

• The explosion of E-commerce– operational decisions must be more responsive

to other functional areas– the Internet

• Careers in Operations Management– APICS– entry level opportunities

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Process, Volume, and Variety

Process Focusprojects, job shops

(machine, print, carpentry)

Standard Register

Repetitive(autos, motorcycles)

Harley Davidson

Product Focus(commercial

baked goods, steel, glass)Nucor Steel

High VarietyHigh Varietyone or few one or few units per run, units per run, high varietyhigh variety(allows (allows customization)customization)

Changes in Changes in ModulesModulesmodest runs, modest runs, standardized standardized modulesmodules

Changes in Changes in Attributes Attributes (such as grade, (such as grade, quality, size, quality, size, thickness, etc.) thickness, etc.) long runs onlylong runs only

Mass Customization(difficult to achieve, but huge rewards)Dell Computer Co.

Poor Strategy Poor Strategy (Both fixed and (Both fixed and variable costs variable costs

are high)are high)

Low Low VolumeVolume

Repetitive Repetitive ProcessProcess

High High VolumeVolume

VolumeVolumeFigure 7.1Figure 7.1