OPERATIONS MANAGEMENT: HISTORY
The first step in understanding and identifying the key issues in Operation Management(OM) situations is to review the historical perspectives that dominated management thought since the 19th century. Many aspects of earlier viewpoints, philosophies and schools of thought remain relevant today and can provide the careful observer with valuable insight into present day OM situations. An understanding of the foregoing would help one appreciate the many insights, ideas and scientific underpinning which preceded the upsurge of OM during recent years. Familiarity with the history of management thought may also help to avoid rediscovering previously known ideas. Historical development in essence gives a picture of, where we have come from, are and are going.
Since 1900, the major schools of thought, have fallen within one of historical perspectives, of management thought: The structural perspective, generally held at the turn of the 19th century, evolved from that time to encompass the theory of scientific management, classical theory, bureaucracy, decision theory and systems theory. The human perspective, which first appeared in the 1920s, eventually included schools of thought focused on human relations, group dynamics, and leadership research.
The development of management theory dates back to the days of ancient civilizations of Egypt, Greece, Rome and the Biblical time, when people first attempted to accomplish goals by working together in groups. The Bible for example explains organizational problems faced by Moses in leading his people. He is credited with having employed the first management consultant, his father-in-law, to help design the organization through which he governed the Hebrews. The Greek and Roman Empires developed much thought to the organizational problems. The basic organizational models were the Military and the Roman Catholic Church.
Management
Traditionally management has been defined as Forecast and Plan, Organize, Command, Coordinate and Control.
Management is the process of designing & maintaining an environment in which individuals working together, in-groups, efficiently to accomplish selected aims:
· As managers, people carry out the function of planning, organizing, staffing, leading and controlling
· Management applies to any kind of organization & managers at all levels
· The aim of all managers is the same: to create a surplus
· Managing is concerned with productivity; effectiveness & efficiency
Management has also been defined as a form of work that involves coordinating an organization’s resources – land, labor, capital and information – towards accomplishing organization objectives. An entrepreneur conceives the idea of what product or service to produce, starts the organization and builds it to a point where additional people are required. At this time, the entrepreneur can either make the transformation to a professional manager or can hire one.
OM may be defined as the design, operation & improvement of the production systems that create the firm’s primary products/services. “It is a functional field of business with clear line management responsibilities’ Operations Management; Schonberger and Edward (1997).
“Operations Strategy specifies how the firm will employ its production capabilities to support its corporate strategy”. Production and Operations Management, Chase Aquilano and Jacobs (1998).
INDUSTRIAL REVOLUTION
Historically, the field of Operations Management has evolved in a very shot span of time. Its roots go back to the Industrial Revolution, which started in the 1770s with the following important developments:
· The division of labour concept, espoused by Adam Smith
· The steam engine invented by James Watt
· The interchangeable parts’, concept developed by Eli Whitney
Despite a lack of formal theory, economists such as Adam Smith sowed the seeds of labour theory. In his book An Inquiry into the Nature and Cause of wealth of Nations 1776, Smith included a chapter on the division of labor that laid the groundwork for the later introduction of assembly line processes. Smith spoke approvingly of a pin manufacturer who divided the work into a number of branches’, causing the separation of pin manufacturing into 18 different operations. This separation of activities permitted workers to concentrate on only one task & thus radically increased the quality of pins that could be manufactured in a day. Smith also emphasized the importance of proper machinery to facilitate labor. However, management prior to 1900 can be best described as using the rule of thumb.
Adam smith is given much of the credit for the theoretical development of the economics of modern production. In his book, The Wealth of Nations, he pointed out that where workers are organized to produce large quantities of an item, the labor required should be divided into discrete tasks. He believed that this division of labor would produce several benefits such as.
· Workers who continually performed the same task would acquire skill at it.
· Time normally lost in switching from one task to another, would be saved
· A worker’s increased concentration on a task would lead to the development of special tools & techniques for its easier/faster accomplishment.
Division of labor characteristic described by Adam Smith has continued its evolution and refinement all the way to the factories, hospitals, schools, government agencies, stores, libraries, restaurants and other organizations.
In 1832 a mathematician, Charles Babbage, extended Smith’s work by recommending the use of scientific methods to analyse problems. In particular he suggested the use of time study, unit costing, research & development, economic location analysis, bonus payments & pay on the basis of skill requirements.
Babbage is also known for his ‘difference engine’, and his ‘analytical engine’ the forerunners of today’s computer. Both were never completed because, difference engine was faced by lack of tooling technology & financial backing was withdrawn for the analytical engine by the Chancellor of the Exchequer since it was believed to be indefinitely expensive.
SCIENTIFIC MANAGEMENT
Frederick Winslow Taylor
Almost half a century passed after Babbage before anyone addressed the problem of managing factories. In 1898, a US National Tennis Champion, Frederick Winslow Taylor, turned his attention to the factories and began a movement that eventually earned him the title, ‘father of scientific management’. He gave up going to college and started as an apprentice pattern maker and machinist in 1875. In 1878, he began working for the Midvale Steel Company whose president, William Sellers, was an advocate of experimentation in factory methods. Taylor adopted some of Sellers’ ideas among many other of common knowledge, and organized them to form a unique philosophy of management.
He worked as a machinist (apprentice/common laborer), foreman, master mechanic and finally as Chief Engineer after earning a degree through evening study. He invented high-speed steel – cutting tools. These gave him ample experience and opportunity to know first-hand the problems and attitudes of workers & saw the great opportunities for improving management quality.
Always looking for the best way to do things, he developed techniques to systemize & improve economies of work motion. He established a complete management philosophy that included time analysis, wage incentives, infrastructure to separate the responsibilities of management (planning) and workers (doing), an accounts system & principles for running business on a scientific basis.
Taylor was an imaginative engineer and insightful observer of organizational activities. Briefly, his philosophy was that successful management was not a result of applying individual management ‘techniques’ to the job but rather of a comprehensive approach to business operations. Its essence was that improved efficiency in a business could be obtained by:
· Using managers as work planners by gathering traditional knowledge about the work and reducing it to standardized procedures for the workers.
· Methodically selecting, training & developing each worker on an individual basis
· Striving for co-operation between management & workers to simultaneously obtain both maximum production and high worker wages
· Dividing work between management workers ensured each is working on what they are most proficient in doing.
Although Taylor added his own contributions to the field, his most significant accomplishment was the massive amount of attention he focused on the field of management through determination & zeal. He described his new management philosophy in the book, “The Principles of Scientific Management’, Published in 1911. In this classical book, Taylor offered the following definition of the Scientific Management “The kind of management, which conducts business or affairs by standards established by facts or truths gained through systematic observation, experiment or reasoning”. Scientific management was mainly concerned with improved methods of production. It was a rebellion against the old managerial problem solving through trial & error, the rule of thumb. The advent of scientific management around the turn of the 20th century is probably the major historical landmark for the field. Therefore, this event more than any other can be considered as the beginning of the field of Operations Management.
Taylor was convinced that, the scientific method, which provides a logical framework for the analysis of problems, could be applied to the management process. The method consists of defining the problem, gathering data, analyzing data, developing alternatives & selecting the best alternative. He believed that use of scientific method would direct the manager to the most efficient way work could be performed. Taylor sincerely believed that scientific management practices would benefit employer through increased output and workers, who would receive more income. But he stressed that scientific management would require both manager & employees to undergo a revolution in thinking.
The greater part of Taylor’s work was oriented towards improving management of production operations. The classic case of the pig iron experiment at Bethlehem Steel Company where laborers would pick up 92 pounds pigs in the car. In a group of 75 laborers, Taylor determined the average output was about 12.5 tons per man per day. By applying the scientific method, he developed;
o An improved method of work
o A prescribed amount of rest on the job
o A specific standard of output and
o Payment by the unit of output
After Taylor’s recommendations were implemented, the average output per worker rose from 12.5 to 48 tons per day, and the daily pay rose form $1,15 to $1,85 under the incentive system. He concluded that the problem of productivity arose from ignorance of both management and workers. Part of this ignorance was due to the fact that both the managers and the workers did not know what constituted a ‘fair day’s work’ and a ‘fair day’s wage’. Also both the managers and workers were concerned with how they would divide the profit, rather than increasing the profit so that both owners & workers could get more. Taylor’s patterns for high-speed steel-cutting tools & other inventions as well as his early engineering consulting works made him very well off. As such he reretired from paid work in 1901at the age of 45 & spent the remaining 14 years of his life as an unpaid consultant & lecturer to promote his ideas on scientific management.
Taylor’s dedication to systematic planning and study of processes of all kinds pervaded his life. With a specially designed tennis racket, he played on a national doubles, tennis championship team. When playing golf, he used clubs designed individually to achieve a predictable lie; his friends reportedly refused to play with him when he used a particular putter because of its accuracy. Legend has it that Taylor died of Pneumonia in a hospital with his stopwatch in his hands.
Taylor’s philosophy was not greeted with approval by all of his contemporaries. Some unions resented or feared scientific management, with some justification. In too many instances, managers of the day were quick to embrace the mechanisms of Taylor’s Philosophy, time study, incentive plans and so forth, but ignored their responsibility to organize and standardize the work to be done. Hence there were numerous cases of rate cutting, labor overwork & poorly designed work methods. Taylor’s ideas were however widely accepted in contemporary Japan where his books, the Principles of Scientific Management, The Secrete of Saving Lost Motion, translated into Japanese, sold more than two million copies. To date there is a strong legacy of Taylorism in Japanese approaches to manufacturing management (Chase Aqilano & Jacobs).
Taylor inspired legions of contemporaries, colleagues and followers who were many and included the following; Frank & Lillian Gilbreth, Henry Ford, Henry Gantt whose works are well known to management scholars.
Morris Cooke
Pioneered application of scientific management to educational and municipal organizations.
Frank and Lillian Gilbreth
Among the earliest proponents of eliminating waste were husband and wife team of Frank (1868 – 1924) and Lillian (1878 – 1972) Gilbreth. They extended Taylor’s time study to detailed analysis of motion. Their philosophy of work smarter and not harder meant that every task had to be carefully studied and all wasted motion should be eliminated to arrive at the one best way to do the job. During their lifetimes, they applied this philosophy to almost every conceivable kind of work. Frank owned a construction company that specialized in speed building. Applying one-best way philosophy to the task of bricklaying, he reduced the number of basic motions for laying a brick from 8 to 6. At a time when bricklayers were laying about 500 bricks a day his bricklayers averaged 2600.
Frank, is considered by most people, as the father of motion study. He stressed the application of principles of motion economy to the most, minute details of tasks in an attempt to identify the ‘one best way’ of performing a given task. He also developed the well-known motion study technique involving the use of ‘therbligs’ and chronocyclegraphs. He introduced new detailed techniques of analyzing job from the point of view of time, motion and fatigue.
Lillian is known for human relation work in the field. Her book, “The Psychology of Management”, is one of the earliest works concerning the human factor in business organizations. From her studies dealing with worker fatigue and psychology, she gained the title of the ‘first lady of management’.
Though important contributors to management thought, they could hardly be called the parents of TQM or JIT since these go far beyond their thinking & in some instances stand counter to it.
§ They were specifically interested in the waste of motion while there are many types of waste;
§ In any process, there is no such a thing as one-best-way, if there ever was, it would only be temporary & superseded by still better way CI;