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A Brief History of Operations Management

OM - Early Developments 1. Pre-Industrial Revolution o One of the first people to address the issues of operations management was the Scottish philosopher -- and father of modern economics -- Adam Smith. In 1776 Smith wrote "The Wealth of Nations," in which he described the division of labor. According to Smith, if workers divided their tasks, then they could produce their products more efficiently than if the same number of workers each built products from start to finish. This concept would later be used by Henry Ford with the introduction of the assembly line. Textile Industry in England replaced people with machines water and mule power instead of human power nature of production changed from cottage to factory James Watt steam engine - in use by 1785

Eli Whitney 1794 - Built first cotton gin to separate cotton seeds from cotton fibers. 1799 - Began mass production of muskets Introduced concept of standard interchangeable parts to allow the use of less skilled labor to produce muskets. Development of the machine tool industry - metal tools and machines now possible (late 1700's).

M.ASJAD KHAN FA10-MBA-011

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Developments this Century Frederick Winslow Taylor Principles of scientific management - 1911 1. Scientific laws govern work so scientific methods can be used to analyze work 2. Workers are different so match workers to their job and then train them thoroughly 3. Use employee self-interest to motivate 4. 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 Henry Ford Early 1900s - introduced assembly line manufacturing to produce Model T cars durable, inexpensive automobile extensive vertical integration coordinated supply and production was really the first Just In Time production

Ford Model T Alfred P. Sloan., Jr. CEO of General Motors - 1923-1946 Competed with Ford through innovation Developed strategy of marketing different cars with different features and prices Installment selling (GMAC), used car trade-ins, automotive styling, annual design changes
M.ASJAD KHAN FA10-MBA-011

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Human Resources Movement - Examined psychological factors in manufacturing Hawthorne Studies - 1927 to examine the effect of light on work Considered the role of treatment of employees in production OM: 1940-1960 Use of multidisciplinary team approaches for complex system problems by usin simplex method of linear programming.siginificant participants were Operation Research group (ENGLAND), George B.Dantzing Extensive development of operation research tools like Simulation, waiting-line theory, Decision theory,Mathametical programming, techniques like PERT and CPM in 1950 to 1960.

OM: 1970-1980 Wide spread use of computer in business and use of tools like shop scheduling, inventory control,forcasting,project management,MRP in 1970s led by computer manufacturer like IBM and people like Joseph orlicky and Oliver Wight major innovators of MRP. Service quality and productivity and mass production in service sector was observed and originator was MacDonalds. Manufacturing strategy paradigm which saw manufacturing as competitive weapon developed by Harvard Business school faculty in 1980. JIT,TQC and Factory automation concepts were developed in 80s which used tools like Kanban,Poka-yokes, CAD/CAM, robotics etc. Concept of synchronous manufacturing based upon bottleneck analysis, OPT, theory of constraints was developed.
M.ASJAD KHAN FA10-MBA-011

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OM: 1990-presenet A major development was the focus on TQM in the late 1980s an 90s.various organizations contributed in different ways. Baldrige quality awards, ISO 9000, quality function development, value and concurrent engineering and continuous improvement paradigm were developed.

BPR was developed in 1990s to remain competitive in that time of economic recession and idea was mainly developed by Michael Hammer and some major consulting firms in US. Supply chain management was another idea to remain competitive in business which now being used and incorporated idea of recent trend like mass customization. Electronic and software tools such as SAP/R3 and oracle DBMS helped in this development. New technologies like internet and WWW has also put influence upon field of OM by 1990s to present day.developement of internet and communication softwares from Microsoft, Netscape played a key role in that. Recent trends of E-commerce and E-business had impact upon operation management as well. Using internet and World Wide Web has changed the business dynamics of today. Companies like eBay.com, Amazon.com, Yahoo.com are the originator of this new environment

M.ASJAD KHAN FA10-MBA-011