OPERATIONS MANAGEMENT
• The management of processes or systems that
create goods and/or provide services.
• Why study OM?
--U.S. Experience of the 70’s and 80’s
--Lessons from the Japanese about the mgmt. of
operations
--Core business function; interrelationships with
functional areas
--50% or more of all jobs in OM related areas
DIFFERENTIATING FEATURES
OF PRODUCTIVE SYSTEMS
• Degree of Standardization
highly standardized vs. highly customized
• Type of Operation
project, job shop, batch, repetitive, continuous
• Manufacturing vs. Service
OM: An Evolutionary
Perspective
• Managers in OM use some methods that
were developed by other managers who
preceded them decades and centuries ago.
• Today’s managers in OM also face new
problems that affect the ways that they
manage. Therefore, old ways must be
modified.
HISTORICAL PERSPECTIVE
• PRE-INDUSTRIAL REVOLUTION
• INDUSTRIAL REVOLUTION
New power sources--Watt, steam engine
Division of labor---Adam Smith
Interchangeable parts--Eli Whitney
HISTORICAL PERSPECTIVE
MODERN MOVEMENT
• I. Post-Civil War (1865-1900)
Mass exodus of farm laborers-labor pool
Modern capital formation-joint stock co.
Entrepreneurial ideas-Morgan,etc.
Rapid expansion of West-railroad
----Great Productive Explosion----
HISTORICAL PERSPECTIVE
MODERN MOVEMENT
• II. Scientific Management (1875-1925)
F.W. Taylor--efficiency and productivity
F. Gilbreth--motion studies
L. Gilbreth--fatigue studies
H. Gantt--scheduling charts
H. Ford--auto assembly
HISTORICAL PERSPECTIVE
MODERN MOVEMENT
• II. Scientific Management (1875-1925)
“Systematic Planning”--management
responsibility that precludes production
“Control Systems”--sensing mechanism
to maintain standards
“Scientific or Analytical Investigation”
“Standards as Benchmarks”
-Thrust aimed at lower level of org.-
HISTORICAL PERSPECTIVE
MODERN MOVEMENT
• III. Operations Research (1940--)
“Total System” perspective
“Interdisciplinary”
“Model-building”
“Mathematical manipulation”
--Thrust at top-of-the-organization--
HISTORICAL PERSPECTIVE
MODERN MOVEMENT
• IV. Advent of Computers (1955--)
-clerical duties
-analysis and optimization studies
-massive data storage, retrieval, and
manipulation
Today, the OM manager is a computersystem user who uses this tool to better
manage the organization.
INFLUENCE OF JAPANESE
MANUFACTURERS
• Quality revolution of 80’s and 90’s
• Emphasis on quality, continual improvement,
worker teams and empowerment, and achieving
customer satisfaction
• Just-in-Time manufacturing
• Taiichi Ohno--Toyota JIT plant
• Genichi Taguchi--parameter design
RECENT TRENDS
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•
•
•
•
Internet and e-business
Supply chain management
Global Competition
Operations Strategy
Total Quality Management
New forms of Competition
Flexibility
Time Reduction
• Technology
RECENT TRENDS
• Worker Involvement
• Environmental Issues
• Corporate downsizing
• Reengineering
• Lean Production
craft--mass--lean progression
PRODUCTIVITY
• OUTPUT per unit of INPUT
output / input
• Numerous measures--labor, multifactor,etc.
• U.S. % increases have lagged in 70s and
80s but did improve in late 90s
• Key measure of the effectiveness of mgmt.
• Closely associated with standard of living,
and inflation
PRODUCTIVITY
• Numerous factors determine it
Methods
Capital
Quality
Technology
Management
STRATEGY
• Mission
• Goals
• Strategies
Organizational
Operations
• Tactics
• Distinctive competencies, Environmental
Scanning
CONTRAST--TOP EXECS
AND OM MANAGERS
TOP
OM
A. Goals & Object. “Global” “Well-defined”
satisficing optimization
B. Planning Horizon long term short term
C. Daily Routine
varied
predictable
D. View of Ext.
Environment
open
closed
CONTRAST--TOP EXECS
AND OM MANAGERS
TOP
E. Decision Making unique
long-run
complex
OM
recurring
short-run
easier
Judgment Computat.
SYSTEMS AGE
Discovery
Micro
“parts analysis”
Macro
“synthesis &
integration”
system--an organized complex of
interdependent components or subsystems
designed to achieve objectives.
SYSTEMS AGE
closed system--a system that does not interact
with its external environment.
open system--a system that has a continuous
action and reaction with its external
environment.
suboptimality--the condition that exists when
the extreme optimization of one component
or subsystem results in less than optimal
performance of the larger system and viceversa.
PRODUCTIVE SYSTEM
MODEL
INPUTS
Environmental
Market
Primary Res.
TRANSFORM
OUTPUTS
Physical
Locational
Exchange
Storage
General
CONTROL
Goods
Services