Hi everybody, we are Group 1 consisting of Ibai, Xabier, Ivan, Luis and myself Ibai.

In this presentation we will try to summarize for you briefly the historical trajectory of Operations management and its likely transformation in future days. The eras of operations management can be divided clearly in 3 : The reductions of Costs era, the era focused on bettering the quality of the products, and the era where the customization of the products took the lead. The Cost Focus took place between 1776 (when Watt invented the steam engine)and 1980 (more or less when Sargent Tejero tried to take the congress in Madrid). So this was a pretty wide time frame. The first step to reduce the costs was to make workers more efficient in their job. Since most of the employees were manufacturing goods, their tasks had to be clearly defined, in order, not to waste the salary that was invested in them on useless actions or movements. Indeed, there is nothing more efficient than a machine, so in essence they tried to do that. This didnt only led to be more efficient, but also to increase the speed in which the goods were produced. The increasing speed of production and reducing gain margin, led the industry towards Mass production. The Mass production become a perfect way to make money: the market niches where the goods were addressed broaden, because they became more inexpensive. But what about the quality? Mass production makes cheap products available for everyone, who cares. If it breaks you just buy another one. And what if I could make one that does not break? As the USA was experiencing the happy years of its economy it was difficult to implement new ideas there. Everything was going OK, they wanted no unnecessary risks. Japan in contrast was devastated by WWII. This gave a new opportunity to establish a quality focus. This gave a competitive advantage that launch organizations to the top. A good example of this was the Toyotas approach to quality based in two principles: quality is built, at every stage and quality is continually improved. So better quality is translated into a great customer satisfaction. At twentieth century cost and quality were analysed and improved according to the state of the art. Customers from all around the world started to demand products according to their needs. Every person is different so getting customers satisfaction implies offering a wide range of options. To put yourself in customers shoes, so well put an example: This picture shows a real 3D printer. Its quite expensive but if the price falls it could become as common as a tv or a computer. Imagine printing yourself unique products at home. This takes customization into a next level, so precise, that fully personal products are manufactured. Lets learn something about five of the people who adopted the ideas mentioned before Eli Whitney, Frederick Taylor, F & L Gilbreth, Henry Ford and Deming. They have in common that they are all from the US, this is due to the fact that US has always been at the vanguard of OM. Eli Whitney is known for having invented a kind of assembly line to manufacture 10000 muskets for the just founded government of USA. To accomplish this, He designed the machine tools to market muskets in a standardized

way. On the other hand Frederick Taylor, was known as the father of scientific Management. but during a long time, he was considered as the devil, because he treated workers as nothing but machines He was the author of the principles of scientific management which were some principles to manage the organization efficiently. Some of this principles were: the division of labor, to match employees to the right job, provide them with proper Tools, and training. Taylor collaborated with the other precursors in this field,such as, Henry Ford with his assembly line. And..... another one...Do you remember it? (sealar) yes, Frank & Lillian Gilbreth. They established a new breakthrough in the path of evolution of operations management. This marriage of engineers, developed methods for workers movements needed to fulfill a certain task. Their 12 children were often used as guinea pigs to test and improve these methods. As they were applied, the efficiency increased due to the reduction of motions involved. For example, Frank Gilbreth was the first using the term caddy, indicating that a nurse would have to pass surgical instruments to the surgeon as he asked for them, similar to what a golfer does with the clubs. Some years later, the mass production era started when Henry Ford founded the car company. He implemented the assembly line which allowed producing thousands of units due to the simplicity of the cars design: very few and inexpensive components were used so that any worker could learn fast to produce a certain part. Your turn Xabi The fact that goods were manufactured by thousands was another key to success.;. ;, Reducing the costs in each unit had a great impact on the incomes of the organization. Also, as it was told in the video we saw the other day, this kind of job turned out to be very stressful, so Ford paid high wages to keep people satisfied. Some years on, it was Edwards Deming who took the lead in the application of the Quality approach, in a devastated Japan. As a consequence, and to give an example, Japanese cars run more smoothly and customers experienced fewer problems, just because they were made with better tolerances than in the US . Engineers at Ford did not know how this was done until they met Deming. Well, I find these theories very interesting, but do you think that any of the characters mentioned would understand operations management such as it works today? -I suppose they wouldn't Yes, as you think, due to globalization, uncertainty and other factors, operations management has suffered many changes. I ll show you the most important ones: 1. - Firstly, nowadays OM goes beyond national or local goals. This is globalization. 2. - Also, we won t see big piles of stock as something positive anymore, now it s used the Just-in time method, a system developed by Toyota that tries to reduce in inventory and carrying costs. 3. - Supply chain partnerships take a very important role reinforcing all the involved parties, as we can see in the one maintained between McDonald s and Coca-Cola. 4. There re lot of alliances between companies to increase the speed of the product development or TIME TO THE MARKET (TTM). For example, Mercedes, Ford, Nissan and Renault had joined efforts to bring a zero emission technology, reducing TTM. 5. Mass customization is the most important trend for adding value to the product, and

has replaced standard products. As a curiosity, if you enter in the Nikeid website, you can design your own Nike trainers and buy them. Maybe the price doesn t appeal to you as much as the idea. 6. And finally, it s important to emphasize that all the employees must take part in the process, being able to take different decisions. - ***We re speaking a lot about products. But what does this mean exactly? Ok, a product is the result of a process to satisfy customers, that can be classified between goods and services. As a good, we understand tangible products, those whose definition can be clearly specified, regardless of the company that has produced it. (FOTOS). And when talking about services, we refer to intangible products, which are produced and consumed at the same time, often unique and knowledge intensive. (cada concepto FOTOS). *We will try to explain the relation between the 2 concepts. ****, where do you usually go to have dinner friday nights? /I'm only looking for food, so I just go through the McAuto for french fries *Are you kidding me? Really? /Yes, but on Valentine's day I'm planning to invite my girlfriend to Arzak's restaurant.....................don't worry, she's paying. As we see here, food can be understood in both ways, like a good (McDonald's) or a service (Arzak's). Having given an introduction to Operations Management, Lets present some ideas about productivity now. By definition, productivity is an objective and specific way of measuring a process efficiency. Its practical because it gives a figure that can be used to compare a companys evolution, as well as different countries performances. This is something that cannot be done directly with efficiency and effectiveness concepts. Productivity is the amount of outputs produced divided by the amount of inputs used. Although, Theres a major drawback on measuring outputs, some of them can be intangible. In contrast, inputs are understood in a wide way, and three basics are typically considered: labour, capital and management. Its worth mentioning that management is the one that has the greatest influence in productivity results. But in the end, organisations still need workers. That's true. For this reason is interesting to improve labour productivity. A worker needs the appropriate education for the labour and also a diet of the labour force. I mean, a worker should be both able and willing . In addition to this, technology and knowledge change faster than ever and a cualified worker has to be up to date. A company also has to invest on social overhead. In coclusion, a trained worked is needed but also is important to keep that person motivated. These points are seen as costs by Companies who will usually try to reduce them while workers will try to earn more. Firing people is an easy way for an oraganisation to reduce cost inmediately. However that doesn't seem to be the best option for future. (diapositiva 2) If we look at productivity spain is not the best example. It's usual to compare a nation with neighbours. Spain is usually compared with germany. Spain did

just the opposite! Productivity is also related to the wealth of a country. As usual,spain is not in the top. As for social responsibility is concern, when the ethical attitude of the company gets better productivity often goes worse. Not to have suppliers that own sweatshops, being environmentally friendly, etcetera. Automatically rises the cost of manufacturing the goods. The lack of regulations turns the market into a jungle were the law of the strongest is applied. So we need to keep in mind that playing ethically means, from the perspective of the employee: being productive for the salary you are payed, and from the employer, being socially responsible. If increasing the productivity of your company by all means is your main goal in life: you have a problem. So, we hope that this presentation has been entertaining and useful. And thank you all for attention. Have a nice afternoon.