Question: Introduce and define the terms - Production management and Operations Management. Also summarise the historical development of Production and Operations Management.
Introduction to Production/Operations Management
Operations are useful actions or activities which are done methodically as part of plan of work by a process that is designed to achieve the pre decided objectives.
Production/Operations Management is the management of the processes that transform inputs into goods and services that add value for the customer.
Production/operations management is the process, which combines and transforms various resources used in the production/operations subsystem of the organization into value added product/services in a controlled manner as per the policies of the organization. Therefore, it is that part of an organization, which is concerned with the transformation of a range of inputs into the required products or services having the requisite quality level.
The set of interrelated management activities involved in manufacturing of certain goods is called as Production Management. Similarly, the set of management activities involved in providing certain services is called as Operations Management.
Definition of Production Management
E.S. Buffa defines Production Management as, “Production management deals with decision making related to production processes so that the resulting goods or services are produced according to specifications, in the amount and by the schedule demanded and out of minimum cost.”
Definition of Operations Management
According to Plenert (2002), "Operations Management (OM) can be defined as the management of activities that enable an organisation to transfer a range of basic inputs (raw materials, energy, customer requirements, information, skills, finance, etc.) into outputs that deliver the organisation’s primary products and services to the end customer."
Operations management researches efficiencies in planning, organizing, and supervising in production and manufacturing. It is delivery-focused, ensuring that an organization successfully turns inputs to outputs in an effective manner. The inputs themselves could represent anything from materials, equipment, and technology to human resources such as staff or workers.
Operation Management is a way or means through which the listed objectives of an operating system is achieved. There is always a confusion between the word OM & PM (Production Management). It is accepted norm that OM includes techniques which are enabling the achievement of operational objectives in an operation system.
The operation system includes both manufacturing sector as well as service sector, but when you use the word PM, you should be careful to note that it refers to the manufacturing sector but not the service sector. Suppose, you are designing a layout for the hospital you should say that you are applying Operations Management Technique not the Production Management Technique.
When you design a layout for a manufacturing sector you can say that you are applying Production Technique or Operation Technique or vice versa.
From, the above discussion we can come to a conclusion that production management is a subset of Operations Management.
Historical Evolution of Production and Operations Management
The Industrial Revolution
The Industrial Revolution was a period of major industrialisation and innovation that took place during the late 1700s and early 1800s. The Industrial Revolution began in Great Britain and quickly spread to other European countries and to the United States.
The human power got largely replaced by the steam engine invented by James Watt in 1764.
The traditional view of manufacturing management began in eighteenth century when Adam Smith's The Wealth of Nations in 1776 recognised the economic benefits of specialisation of labour. He recommended breaking of jobs down into subtasks and recognises workers to specialised tasks in which they would become highly skilled and efficient. Thus, the late 18th century's factories had not only machine power but also ways of planning and controlling the tasks of workers.
In 1798, an American, Eli Whitney, develop the concept of Interchangeable Parts. Interchangeable parts are parts (components) that are identical. They are made to specifications that ensure that they are so nearly identical that they will fit into any assembly of the same type. One such part can freely replace another, without any custom fitting, such as filling. This interchangeability allows easy assembly of new devices, and easier repair of existing devices, while minimising both the time and skill required of the person doing the assembly or repair.
The American Industrial Revolution commonly referred to as the second Industrial Revolution, started sometime between 1820 and 1870. This period saw the mechanization of agriculture and textile manufacturing as well as a revolution in power, including steamships and railroads, that affected social, cultural, and economic conditions.
The development of gasoline engine and electricity further advanced the revolution. By the mid 1800, the old cottage system of production got replaced by the factory system.
Post Civil War Period
After the civil war, American industry changed dramatically. Machines replaced hand labour as the main means of manufacturing, increased the production capacity of industry tremendously. It increased capital and production capacity, expanded the urban workforce, developed new western US markets, and an effective national transportation system.
In 1909, Frederich Winslow Taylor known as father of Scientific Management published The Principles of Scientific Management. In this book, he suggested that productivity would increase if jobs were optimised and simplified. He also proposed matching a worker to a particular job that suited the person’s skill level and then training the worker to do that job in a specific way. Taylor first developed the idea of breaking down each job into component parts and timing each part to determine the most efficient method of working.
Scientific management was best known from 1910 to 1920, but in the 1920s, competing management theories and methods emerged, rendering scientific management largely obsolete by the 1930s. However, many of the themes of scientific management are still seen in industrial engineering and management today.
While Taylor was conducting his time studies, Frank and Lillian Gilbreth were completing their own work in Motion Studies to further scientific management.
The Gilbreths made use of scientific insights to develop a study method based on the analysis of work motions, consisting in part of filming the details of a worker’s activities while recording the time it took to complete those activities. The films helped to create a visual record of how work was completed, and emphasized areas for improvement. Secondly, the films also served the purpose of training workers about the best way to perform their work.
Time and Motion studies are used together to achieve rational and reasonable results and find the best practice for implementing new work methods.
Human Relations Movement
The Hawthorne studies were conducted from 1927 until 1932 by Professor Elton Mayo at the Western Electric Hawthorne Works in Chicago. Professor Mayo examined work conditions and productivity. The conclusion of the research led to the discovery that relationships largely influenced productivity. Being part of a group or team affected the performance of each employee.
In other words, relationships between workers and management affect employee efficiency. If workers are being analyzed by their boss, they will be more motivated to do well – a phenomenon known as the Hawthorne effect.
In the 1960s, social psychologist Douglas McGregor developed two contrasting theories that explained how managers' beliefs about what motivates their people can affect their management style. He labelled these Theory X and Theory Y.
If you believe that your team members dislike their work and have little motivation, then, according to McGregor, you'll likely use an authoritarian style of management. McGregor called this Theory X
On the other hand, if you believe that your people take pride in their work and see it as a challenge,, then you'll more likely adopt a participative management style. Managers who use this approach trust their people to take ownership of their work and do it effectively by themselves. McGregor called this Theory Y.
The two theories were important additions to management studies, and the human relations movement progressed by aligning individual needs with organizational needs.
The term Operations Research originated during Second World War when U.S.A. and Great Britain’s Armed Forces sought the assistance of Scientists to solve complex and very difficult strategical and tactical problems of warfare, like making mines harmless or increasing the efficiency of antisubmarine aerial warfare, etc.
After the end of World War II, the tools of operations research were more widely applied to problems in business, industry, and society. Since that time, operational research has expanded into a field widely used in industries ranging from petrochemicals to airlines, finance, logistics, and government, moving to a focus on the development of mathematical models that can be used to analyse and optimize complex systems, and has become an area of active academic and industrial research.
After World War II, the creation of service organisations accelerated sharply. As service sector became more prominent, the change from ‘production’ to ‘operations’ emphasised the broadening of our field to service organisations.
In the early year of 1940 applications of computers were mainly in the areas of government research. They were mainly applied to the solution of scientific problems relating to science and engineering. Due to advancement of computers and reduced costs computers were later applied to the solutions of business problems also.
Since the computers are the most effective and easy way for people to work it is getting used everywhere - homes, organizations, hospitals, businesses, etc. Day by day the computer technology is increasing and getting improved on how to make it more easy and convenient for the people to work on it and get the most out its advantage.