operations management


  • An individual production system is usually analyzed in the literature referring to a single business; therefore it is usually improper to include in a given production system
    the operations necessary to process goods that are obtained by purchasing or the operations carried by the customer on the sold products, the reason being simply that since businesses need to design their own production systems this then becomes
    the focus of analysis, modeling and decision making (also called “configuring” a production system).

  • More recently, Six Sigma has included DMAIC (for improving processes) and DFSS (for designing new products and new processes) • Reconfigurable manufacturing system: a production
    system designed at the outset for rapid change in its structure, as well as its hardware and software components, in order to quickly adjust its production capacity and functionality within a part family in response to sudden market changes
    or intrinsic system change.

  • One important example of how system throughput is tied to system design are bottlenecks: in job shops bottlenecks are typically dynamic and dependent on scheduling while on
    transfer lines it makes sense to speak of “the bottleneck” since it can be univocally associated with a specific station on the line.

  • The concept of production systems can be expanded to the service sector world keeping in mind that services have some fundamental differences in respect to material goods:
    intangibility, client always present during transformation processes, no stocks for “finished goods”.

  • According to this classification different kinds of systems will have different customer order decoupling points, meaning that work in progress cycle stock levels are practically
    nonexistent regarding operations located after the (except for WIP due to queues).

  • Operations management[edit] Although productivity benefited considerably from technological inventions and division of labor, the problem of systematic measurement of performances
    and the calculation of these by the use of formulas remained somewhat unexplored until Frederick Taylor, whose early work focused on developing what he called a “differential piece-rate system”[13] and a series of experiments, measurements
    and formulas dealing with cutting metals[14] and manual labor.

  • Cycle times can be modeled through manufacturing engineering if the individual operations are heavily automated, if the manual component is the prevalent one, methods used
    include: time and motion study, predetermined motion time systems and work sampling.

  • In 1851 at the Crystal Palace Exhibition the term American system of manufacturing was used to describe the new approach that was evolving in the United States of America
    which was based on two central features: interchangeable parts and extensive use of mechanization to produce them.

  • See also: Industrial Revolution and Productivity improving technologies (historical) Before the First Industrial Revolution, work was mainly done through two systems: domestic
    system and craft guilds.

  • Topics Production systems[edit] In a job shop machines are grouped by technological similarities regarding transformation processes, therefore a single shop can work very
    different products (in this picture four colors).

  • [3] In managing manufacturing or service operations, several types of decisions are made including operations strategy, product design, process design, quality management,
    capacity, facilities planning, production planning and inventory control.

  • From this point on, a curious development took place: while in the United States the possibility of applying the computer to business operations led to the development of
    management software architecture such as MRP and successive modifications, and ever more sophisticated optimization techniques and manufacturing simulation software, in post-war Japan a series of events at Toyota Motor led to the development
    of the Toyota Production System (TPS) and lean manufacturing.

  • • Six Sigma (an approach to quality developed at Motorola between 1985 and 1987): Six Sigma refers to control limits placed at six standard deviations from the mean of a normal
    distribution, this became very famous after Jack Welch of General Electric launched a company-wide initiative in 1995 to adopt this set of methods to all manufacturing, service and administrative processes.

  • Although estimating throughput for a single process maybe fairly simple, doing so for an entire production system involves an additional difficulty due to the presence of
    queues which can come from: machine breakdowns, processing time variability, scraps, setups, maintenance time, lack of orders, lack of materials, strikes, bad coordination between resources, mix variability, plus all these inefficiencies tend
    to compound depending on the nature of the production system.

  • [40] The beginning can be seen as process production, the middle as part production and the end again as process production: it is unlikely that a single company will keep
    all the stages of production under a single roof, therefore the problem of vertical integration and outsourcing arises.

  • That is the real principle of our production, and conveyors are only one of many means to an end”[11] This became one of the central ideas that led to mass production, one
    of the main elements of the Second Industrial Revolution, along with emergence of the electrical industry and petroleum industry.

  • Usually in the back there is a similar system for managing the set of tools required for different machining operations.

  • With this innovative system customers were able to search for products they might like to buy, enter the order for the product, pay online, and track delivery of the product
    to their location, all in two days.

  • The next generation of scientific study occurred with the development of work sampling and predetermined motion time systems (PMTS).

  • The next major historical application of operation systems occurred in 4000 B.C., when the Egyptians started using planning, organization, and control in large projects such
    as the construction of the pyramids.

  • One of the key insights of this management system was the distinction between dependent demand and independent demand.

  • A first possible distinction in production systems (technological classification) is between continuous process production and discrete part production (manufacturing).

  • Toyota evolved a unique manufacturing system centered on two complementary notions: just in time (produce only what is needed) and autonomation (automation with a human touch).

  • During World War II however, the development of mathematical optimization went through a major boost with the development of the Colossus computer, the first electronic digital
    computer that was all programmable, and the possibility to computationally solve large linear programming problems, first by Kantorovich[22] in 1939 working for the Soviet government and later in 1947 with the simplex method of Dantzig.

  • • Project production management: the application of the analytical tools and techniques developed for operations management, as described in Factory Physics to the activities
    within major capital projects such as encountered in oil and gas and civil infrastructure delivery.

  • The operations system included careful selection of merchandise, low cost sourcing, ownership of transportation, cross-docking, efficient location of stores and friendly home-town
    service to the customer.

  • By 1100 B.C., labor was being specialized in China; by about 370 B.C., Xenophon described the advantages of dividing the various operations necessary for the production of
    shoes among different individuals in ancient Greece:[7][8] “…In large cities, on the other hand, inasmuch as many people have demands to make upon each branch of industry, one trade alone, and very often even less than a whole trade, is
    enough to support a man: one man, for instance, makes shoes for men, and another for women; and there are places even where one man earns a living by only stitching shoes, another by cutting them out, another by sewing the uppers together,
    while there is another who performs none of these operations but only assembles the parts.

  • ABC analysis is a method for analyzing inventory based on Pareto distribution, it posits that since revenue from items on inventory will be power law distributed then it makes
    sense to manage items differently based on their position on a revenue-inventory level matrix, 3 classes are constructed (A, B and C) from cumulative item revenues, so in a matrix each item will have a letter (A, B or C) assigned for revenue
    and inventory.

  • [31] Walmart provided the first example of very low cost retailing through design of their stores and efficient management of their entire supply chain.

  • [26] Meanwhile, in the sixties, a different approach was developed by George W. Plossl and Oliver W. Wight,[27] this approach was continued by Joseph Orlicky as a response
    to the TOYOTA Manufacturing Program which led to material requirements planning (MRP) at IBM, latter gaining momentum in 1972 when the American Production and Inventory Control Society launched the “MRP Crusade”.

  • Independent demand is demand which originates outside of the production system, therefore not directly controllable, and dependent demand is demand for components of final
    products, therefore subject to being directly controllable by management through the bill of materials, via product design.

  • [29] This requires a standard and limited menu, an assembly-line type of production process in the back-room, high customer service in the front-room with cleanliness, courtesy
    and fast service.

  • He defined control: “For our present purpose a phenomenon will be said to be controlled when, through the use of past experience, we can predict, at least within limits, how
    the phenomenon may be expected to vary in the future.

  • Thus it may be seen that methods-time measurement is basically a tool of method analysis that gives answers in terms of time without the necessity of making stop-watch time

  • During World War II, the growth of computing power led to further development of efficient manufacturing methods and the use of advanced mathematical and statistical tools.

  • McDonald’s also pioneered the idea of franchising this operation system to rapidly spread the business around the country and later the world.

  • [18] His paper inspired a large body of mathematical literature focusing on the problem of production planning and inventory control.

  • [citation needed] In 1924 Walter Shewhart introduced the control chart through a technical memorandum while working at Bell Labs, central to his method was the distinction
    between common cause and special cause of variation.

  • It was the McDonald’s operations system of both production and service that made the difference.

  • This concept of a fast package delivery system created a whole new industry, and eventually allowed fast delivery of online orders by Amazon and other retailers.

  • It follows, therefore, as a matter of course, that he who devotes himself to a very highly specialized line of work is bound to do it in the best possible manner.”

  • [12] He stated that the future economy would provide more GDP and employment from services than from manufacturing and have a great effect on society.

  • Interchangeability of parts allowed the mass production of parts independent of the final products in which they would be used.

  • This period also marks the spread of total quality management (TQM) in Japan, ideas initially developed by American authors such as Deming, Juran and Armand V.

  • Since all sectors are highly interconnected, this did not reflect less importance for manufacturing, agriculture, and mining but just a shift in the type of economic activity.

  • • Process production means that the product undergoes physical-chemical transformations and lacks assembly operations, and therefore the original raw materials cannot easily
    be obtained from the final product.

  • Operations is one of the major functions in an organization along with supply chains, marketing, finance and human resources.

  • In the first category are job shops, manufacturing cells, flexible manufacturing systems and transfer lines.

  • It is also useful to break up productivity in use U (productive percentage of total time) and yield η (ratio between produced volume and productive time) to better evaluate
    production systems performances.

  • In 1931 Shewhart published his Economic Control of Quality of Manufactured Product,[19] the first systematic treatment[20] of the subject of statistical process control (SPC).

  • [2] Operations management covers sectors like banking systems, hospitals, companies, working with suppliers, customers, and using technology.

  • The synergy of operations research and systems engineering allowed for the realization of solving large scale and complex problems in the modern era.

  • He developed the scientific study of productivity and identifying how to coordinate different tasks to eliminate wasting of time and increase the quality of work.

  • He described the problem as follows: “Interest on capital tied up in wages, material and overhead sets a maximum limit to the quantity of parts which can be profitably manufactured
    at one time; “setup costs” on the job fix the minimum.

  • The first factory in which Henry Ford used the concept of the assembly line was Highland Park (1913), he characterized the system as follows: “The thing is to keep everything
    in motion and take the work to the man and not the man to the work.

  • Recently, the development of faster and smaller computers, intelligent systems, and the World Wide Web has opened new opportunities for operations, manufacturing, production,
    and service systems.

  • Metrics: efficiency and effectiveness[edit] Operations strategy concerns policies and plans of use of the firm productive resources with the aim of supporting long term competitive

  • In 1913 Ford Whitman Harris published a paper on “How many parts to make at once”, in which he presented the idea of the economic order quantity model.

  • It is concerned with managing an entire production system that converts inputs (in the forms of raw materials, labor, consumers, and energy) into outputs (in the form of goods
    and services for consumers).

  • Experience has shown one manager a way to determine the economical size of lots.

  • Recent trends in the field revolve around concepts such as: • Business process re-engineering (launched by Michael Hammer in 1993[34]): a business management strategy focusing
    on the analysis and design of workflows and business processes within an organization.

  • An entire new market to fill the need for the sale and manufacturing of muskets began at this time.

  • Beginning in 1955 McDonald’s provided one of the first innovations in service operations.

  • Each of these requires an ability to analyze the current situation and find better solutions to improve the effectiveness and efficiency of manufacturing or service operations.

  • This method posits that items away from the diagonal should be managed differently: items in the upper part are subject to risk of obsolescence, items in the lower part are
    subject to risk of stockout.

  • Operations management is concerned with designing and controlling the production of goods and services,[1] ensuring that businesses are efficient in using resources to meet
    customer requirements.

  • A production system comprises both the technological elements (machines and tools) and organizational behavior (division of labor and information flow).


Works Cited

[‘o OperationsAcademia.org: The state-of-the-art of PhD research in Operations Research/Management Science and related disciplines Retrieved on October 22, 2016
o ^ Great Operations: What is Operations Management Archived 2016-10-07 at the Wayback
Machine Retrieved on July 3, 2013
o ^ Jump up to:a b R. B. Chase, F.R. Jacobs, N. Aquilano, Operations Management: For Competitive Advantage, McGraw-Hill 2007
o ^ Krajewski, L.J.; Ritzman, L. P.; Malhorta, M.J. (2013). Operations Management: Processes
and Supply Chains (10th ed.). Pearson. ISBN 978-0-13-280739-5.
o ^ Reid, R. Dan; Nada R. Sanders (2019). Operations management: an integrated approach (Seventh ed.). Hoboken, NJ: Wiley. ISBN 978-1-119-49733-2. OCLC 1119125081.
o ^ Hanna, Mark;
W. Rocky Newman (2007). Integrated operations management: a supply chain perspective (2nd ed.). Ohio, OH: Thomson/South-Western. ISBN 978-0-324-37787-3. OCLC 73996956.
o ^ Friedrick Klemm, A history of Western Technology, Charles Scribner’s Sons
1959 in D. A. Wren and A. G. Bedeian, The Evolution of Management Thought, Wiley 2009
o ^ Xenophon, Cyropedia, Book VIII, Delphi Classics
o ^ D. A. Wren and A. G. Bedeian, The Evolution of Management Thought, Wiley 2009
o ^ Fisk, Donald M. (2003-01-30).
“American Labor in the 20th Century” (PDF).
o ^ Henry Ford, Today and Tomorrow, New York, 1926
o ^ Bell, Daniel (1973). The coming of the post-industrial society: a venture in social forecasting. New York: Basic Books. ISBN 978-0465012817.
o ^
Taylor, Frederick Winslow (1896), A Piece Rate System, read before the American Society of Mechanical Engineers http://wps.prenhall.com/wps/media/objects/107/109902/ch17_a3_d2.pdf
o ^ Taylor, F. W., On the Art of Cutting Metals, American Society
of Mechanical Engineers (1906)
o ^ Taylor, F. W., Shop Management (1903), a handbook read before the American Society of mechanical engineers, New York (this has been republished in 1911 https://archive.org/details/shopmanagement00taylgoog)
o ^
Taylor, Frederick Winslow (1911), The Principles of Scientific Management. New York, NY, US and London, UK: Harper & Brothers. LCCN 11010339. OCLC 233134. Also available from Project Gutenberg.
o ^ Frank Bunker Gilbreth, Lillian Moller Gilbreth
(1921) Process Charts. American Society of Mechanical Engineers.
o ^ Jump up to:a b c Harris, Ford W. (1990) [Reprint from 1913]. “How Many Parts to Make at Once” (PDF). Operations Research. 38 (6). INFORMS: 947–950. doi:10.1287/opre.38.6.947. JSTOR
170962. Retrieved Nov 21, 2012.
o ^ Jump up to:a b Shewhart, Walter Andrew, Economic control of quality of manufactured product, 1931, New York: D. Van Nostrand Company. pp. 501 ISBN 0-87389-076-0 (edition 1st). LCCN 132090. OCLC 1045408. LCC TS155
o ^ Jump up to:a b D.C. Montgomery, Statistical Quality Control: A Modern Introduction, 7th edition 2012
o ^ H.B. Maynard, J.L. Schwab, G.J. Stegemerten, Methods Time Measurement, McGraw-Hill 1948 http://www.library.wisc.edu/selectedtocs/ca1794.pdf
o ^
L. V. Kantorovich, Mathematical Methods of Organizing and Planning Production, Management Science 1960 [English translation from 1939]
o ^ Taiichi Ohno, Toyota Production System, Productivity Pres 1988
o ^ J. N. Edwards, MRP and Kanban-American
style, APICS 26th Conference Proceedings, pp. 586–603 1983
o ^ Feigenbaum, Armand Vallin (1961). Total Quality Control. McGraw-Hill. OCLC 250573852.
o ^ R. J. Schnonberger, Japanese Manufacturing Techniques: Nine Hidden Lessons in Simplicity,
New York 1982
o ^ Jump up to:a b R.B. Grubbström, Modelling production opportunities – an historical overview, Int. J. Production Economics 1995
o ^ Orlickly, Materials Requirement Planning, McGraw-Hill 1975
o ^ Levitt, Theodore (1972). “The
Production-Line Approach to Services”. Harvard Business Review. 50 (4): 41–52.
o ^ Love, John F. (1986). McDonald’s: Behind the Arches. New York: Bantam. ISBN 0-553-34759-4.
o ^ Birla, Madan (2007). FedEx Delivers. New York: Wiley.
o ^ Fishman,
Charles (2006). Wal-Mart Effect. New York: Penguin Books.
o ^ “14 Quirky Things You Didn’t Know About Amazon”. Business Insider.
o ^ M.Hammer, J.Champy, Reengineering the Corporation: A Manifesto for Business Revolution, Harper Business 1993
o ^
Womack, Jones, Roos, The Machine that Changed the World, Free Press, 1990
o ^ Jump up to:a b A. Portioli, A.Pozzetti, Progettazione dei sistemi produttivi, Hoepli 2003
o ^ Note: this classification is very old but it has been subject to update
as production systems have evolved over the 20th century, for a complete picture consult recent texts
o ^ J.C. Wortmann, Chapter: “A classification scheme for master production schedule”, in Efficiency of Manufacturing Systems, C. Berg, D. French
and B. Wilson (eds) New York, Plenum Press 1983
o ^ Roger W. Schmenner, How Can Service Businesses Survive and Prosper?, Sloan Management Review, vol. 27, no. 3, Spring 1986 http://umairbali.ekalaam.com/Business%20Process%20Workflow%20Analysis/Week6/SMR-ServiceBusiness.pdf
Archived 2013-11-13 at the Wayback Machine
o ^ “How blue jeans is made – material, manufacture, making, history, used, procedure, steps, product, machine”. madehow.com.
o ^ T. Hill, Manufacturing Strategy-Text and Cases, 3rd ed. Mc-Graw Hill 2000
o ^
Grando A., Organizzazione e Gestione della Produzione Industriale, Egea 1993
o ^ Taft, E. W. “The most economical production lot.” Iron Age 101.18 (1918): 1410–1412.
o ^ W. Hopp, M. Spearman, Factory Physics, 3rd ed. Waveland Press, 2011
o ^
“Factory Physics for Managers”, E. S. Pound, J. H. Bell, and M. L. Spearman, McGraw-Hill, 2014, p 47
o ^ “New Era of Project Delivery – Project as Production System”, R. G. Shenoy and T. R. Zabelle, Journal of Project Production Management, Vol
1, pp Nov 2016, pp 13–24 https://www.researchgate.net/publication/312602707_New_Era_of_Project_Delivery_-_Project_as_Production_System
o ^ “The Services Sector: How Best to Measure it?”. Archived from the original on 2010-12-03.
o ^ Fitzsimmons,
J.; Fitzsimmons, M.; Bordoloi, S. (2014). Service Management: Operations, Strategy and Technology. New York: McGraw-Hill. ISBN 978-0-07-802407-8.
o ^ Heizer, Jay; Render, Barry (2011). Operations Management (10th ed.). Upper Saddle River, N.J.:
Prentice-Hall. ISBN 978-0-13-611941-8.
o ^ Johnston, Robert; Clark, Graham; Shulver, Michael (2012). Service Operations:Management: Improving Service Service Delivery (Fourth ed.). London, England: Pearson. ISBN 978-0-273-74048-3.
o ^ Burnetas
A.N. and M. N.Katehakis (1993).. “On Sequencing Two Types of Tasks on a Single Processor under Incomplete Information”, Probability in the Engineering and Informational Sciences, 7 (1), 85–0119.
o ^ Zipkin Paul H., Foundations of Inventory Management,
Boston: McGraw Hill, 2000, ISBN 0-256-11379-3
o ^ Katehakis M.N. and C. Derman (1989). “On the maintenance of systems composed of highly reliable components”, Management Science, 6 (5): 16–28.
o ^ “Rankings” (PDF). Archived from the original (PDF)
on 2013-05-27. Retrieved 2012-07-17.
Photo credit: https://www.flickr.com/photos/seven_of9/4797595918/’]