Manufacturing has progressed from individual or cottage or craft based activity into industrial organisation and now into the post-industrial economy. There are many key thinkers and turning points in the development of modern operations management that plans, organizes, resources, directs and controls a net work of manufacturing, storing and transport facilities connected by information and financial flows and supplies goods and services at prices market is willing to buy and at costs that give adequate profits to all the participants in the supply chain.
Production and Operations Management - The Beginning
1886 - ASME - Henry Towne - Shop Management and Works Management
American Society of Mechanical Engineers (ASME) made the beginning in the field of works management and shop management.
Henry Towne, in a paper presented to the society (ASME) in 1886 observed that the work of all engineers, especially that of the mechanical engineers, includes the executive duties of organizing and superintending the operations of industrial establishments, and of directing the labor of the artisans whose organized efforts yield the fruition of his work.
To insure the best results, the organization of productive labor must be directed and controlled by persons having not only good executive ability, and possessing the practical familiarity of a mechanic or engineer with the goods produced and the processes employed, but having also, and equally, a practical knowledge of how to observe, record, analyze and compare essential facts in relation to wages, supplies, expense accounts, and all else that enters into or affects the economy of production and the cost of the product.
It will probably not be disputed that the matter of shop management is of equal importance with that of engineering, as affecting the successful conduct of most, if not all, of our great industrial establishments, and that the management of works has become a matter of such great and far-reaching importance as perhaps to justify its classification also as one of the modern arts. A vast amount of accumulated experience in the art of workshop management already exists, but there is no record of it available to the world in general. Surely this condition of things is wrong and should be remedied. The remedy should originate from engineers, and, for the reasons above indicated, particularly from mechanical engineers. So, Towne put forward the question, "why should it not originate from, and be promoted by The American Society of Mechanical Engineers?"
The discussion and the dissemination of useful knowledge in this specialty, group themselves under two principal heads, namely: Shop Management, and Shop Accounting. A third head may be named which is sub-ordinate to, and partly included in each of these, namely: Shop Forms and Blanks. Under the head of Shop Management fall the questions of organization, responsibility, reports, systems of contract and piece work, and all that relates to the executive management of works, mills and factories. Under the head of Shop Accounting fall the questions of time and wages systems, determination of costs, whether by piece or day-work, the distribution of the various expense accounts, the ascertainment of profits, methods of book-keeping, and all that enters into the system of accounts which relates to the manufacturing departments of a business, and to the determination and record of its results.
This work, if undertaken by the society, may be kept separate and distinct from the present work of the society (engineering work) by organizing a new "section" (which might be designated the " Economic Section'').
In the case of shop information of a manufacturing establishment, there is now in use, in connection with the manufacturing accounts and exclusive of the ordinary commercial accounts, some twenty various forms of special record and account books, and more than one hundred printed forms and blanks. .The primary object to which all of these contribute is the systematic recording of the operations of the different departments of the works, and the computation therefrom of such statistical information as is essential to the efficient management of the business, and especially to increased economy of production. All of these special books and forms have been the outgrowth of experience extending over many years, and represent a large amount of thoughtful planning and intelligent effort at constant development and improvement. The methods in use presently, would undoubtedly be of great value to others engaged in similar operations, and particularly to persons engaged in organizing and starting new enterprises. The society can provide a platform for explaining the present practices and many would come forward to engage in such a dialogue to benefit from the idea generated in the discussions.
Costs of products were reduced by many companies without encroaching upon the earnings of the men engaged and the results we know are quite striking.
A portion of the cost reductions indicated resulted from improved appliances, larger product, and increased experience, but after making due allowance for all of these, there remains a large portion of the reduction which, to the writer's knowledge, is fairly attributable to the operations of the peculiar piece-work system adopted. Henry Towne, promised to present the details and operations of this system followed in his company in the proceedings of the new section of the society, in due time. He expressed the hope that other, and probably much more valuable, information and experience relating to systems of contract and piece-work would doubtless be contributed by other members.
One can clearly see in the paper by Towne, the acceptance of the idea of "Xenogamy (Cross Fertilization)" to develop the subjects of shop management and works management.
For the full paper of Towne
The Engineer as an Economist- Henry Towne
Henry Towne presented his ideas on involving labor in cost reduction work of the production organization in the paper "Gain Sharing" presented in 1889. This paper advocated bonus to all the employees based on the reduction achieved in the cost of production relative to a base year. Halsey in 1891 presented a paper and argued for production time as the basis for paying bonus to the individual workers. F.W. Taylor presented a more comprehensive system in 1895. It is very important to note that Taylor, proposed that organization of "Elementary Rate Fixing Department" as the fundamental step to achieve cost reductions. To implement the changes proposed by the rate fixing departments, differential piece rate system has to be introduced.
This work, if undertaken by the society, may be kept separate and distinct from the present work of the society (engineering work) by organizing a new "section" (which might be designated the " Economic Section'').
In the case of shop information of a manufacturing establishment, there is now in use, in connection with the manufacturing accounts and exclusive of the ordinary commercial accounts, some twenty various forms of special record and account books, and more than one hundred printed forms and blanks. .The primary object to which all of these contribute is the systematic recording of the operations of the different departments of the works, and the computation therefrom of such statistical information as is essential to the efficient management of the business, and especially to increased economy of production. All of these special books and forms have been the outgrowth of experience extending over many years, and represent a large amount of thoughtful planning and intelligent effort at constant development and improvement. The methods in use presently, would undoubtedly be of great value to others engaged in similar operations, and particularly to persons engaged in organizing and starting new enterprises. The society can provide a platform for explaining the present practices and many would come forward to engage in such a dialogue to benefit from the idea generated in the discussions.
Costs of products were reduced by many companies without encroaching upon the earnings of the men engaged and the results we know are quite striking.
A portion of the cost reductions indicated resulted from improved appliances, larger product, and increased experience, but after making due allowance for all of these, there remains a large portion of the reduction which, to the writer's knowledge, is fairly attributable to the operations of the peculiar piece-work system adopted. Henry Towne, promised to present the details and operations of this system followed in his company in the proceedings of the new section of the society, in due time. He expressed the hope that other, and probably much more valuable, information and experience relating to systems of contract and piece-work would doubtless be contributed by other members.
One can clearly see in the paper by Towne, the acceptance of the idea of "Xenogamy (Cross Fertilization)" to develop the subjects of shop management and works management.
For the full paper of Towne
The Engineer as an Economist- Henry Towne
Gain Sharing, Piecework and Day Work Systems
Henry Towne presented his ideas on involving labor in cost reduction work of the production organization in the paper "Gain Sharing" presented in 1889. This paper advocated bonus to all the employees based on the reduction achieved in the cost of production relative to a base year. Halsey in 1891 presented a paper and argued for production time as the basis for paying bonus to the individual workers. F.W. Taylor presented a more comprehensive system in 1895. It is very important to note that Taylor, proposed that organization of "Elementary Rate Fixing Department" as the fundamental step to achieve cost reductions. To implement the changes proposed by the rate fixing departments, differential piece rate system has to be introduced.
Elementary Rate Fixing Department (1895 - Taylor)
Taylor started this department of section in his company and its successful record was presented to the ASME in 1895. This department has to study the productive capabilities machines and men in a scientific manner and establish the speeds at which machines can work and men can work and based on the speed information has to decide the time required for completing various jobs or tasks. Such scientific information has to be used to set piece rates. This department must have status equal to the engineering department of the organization. So Taylor organized the first industrial engineering department that is parallel to the engineering department of the company and is focused on the study of machines and men and in actual working on specific jobs and in designing best methods of working that reduce cost of production.
Taylor started this department of section in his company and its successful record was presented to the ASME in 1895. This department has to study the productive capabilities machines and men in a scientific manner and establish the speeds at which machines can work and men can work and based on the speed information has to decide the time required for completing various jobs or tasks. Such scientific information has to be used to set piece rates. This department must have status equal to the engineering department of the organization. So Taylor organized the first industrial engineering department that is parallel to the engineering department of the company and is focused on the study of machines and men and in actual working on specific jobs and in designing best methods of working that reduce cost of production.
Shop Management (1905 - Taylor)
Taylor responded to the call by Towne to described innovations in the field of management done by engineers who had done managerial work as part of engineer's functions. He contributed a paper on redesign of belts based on cost data (1893) and another paper on increasing productivity and reducing costs by organizing elementary rate fixing department and installing differential piece rate system.
In 1895, he presented a book length paper on shop management. He described many practices that will contribute to productivity improvement and effectiveness improvement. He also indicated the innovations of many others in the field of shop management. Taylor also contributed to discussions on shop accounting and its contribution to improving productivity.
In the paper "Shop Management", Taylor wrote, "The art of management has been defined, "as knowing exactly what you want men to do, and then seeing that they do it in the best and cheapest way."" No concise definition can fully describe an art, but the relations between employers and men form without question the most important part of this art. In considering the subject, therefore, until this part of the problem has been fully discussed, the other phases of the art may be left in the background. Once again, we have to carefully note this sentence. Taylor said, the many other items are left in the background and issues related to managing men are highlighted.
For more details of shop management
F.W. Taylor - Shop Management - With Appropriate Sections and Themes
In 1895, he presented a book length paper on shop management. He described many practices that will contribute to productivity improvement and effectiveness improvement. He also indicated the innovations of many others in the field of shop management. Taylor also contributed to discussions on shop accounting and its contribution to improving productivity.
In the paper "Shop Management", Taylor wrote, "The art of management has been defined, "as knowing exactly what you want men to do, and then seeing that they do it in the best and cheapest way."" No concise definition can fully describe an art, but the relations between employers and men form without question the most important part of this art. In considering the subject, therefore, until this part of the problem has been fully discussed, the other phases of the art may be left in the background. Once again, we have to carefully note this sentence. Taylor said, the many other items are left in the background and issues related to managing men are highlighted.
For more details of shop management
F.W. Taylor - Shop Management - With Appropriate Sections and Themes
Works Management - Harvard Business School and New York University
Works management was taught at Harvard Business School (HBS). James Gunn who first mentioned the word industrial engineering in 1901 worked in HBS. C.B. Thompson who wrote many papers and book on Scientific Management worked in HBS.
A New York University Engineering College, Walter Rautentrauch, organized a course on works management during 1908 to 1911. C.B. Going taught Industrial Engineering as a part of that course.
Industrial Engineering Course - Penn State College
Hans Diemer is the first full time industrial engineering faculty. He started the four year industrial engineering course in Penn State College. He published his proposed 4 year program in an article. Walter Rautentrauch criticized the course for lack sufficient attention to manufacturing, the key focus of industrial engineering.
In the modern era, Elwood Buffa is given the credit for developing Production Management subject.
A detailed writeup on Operations Management
A detailed writeup on Operations Management
Operations Management by Martin Spring in Oxford Handbook of Management
https://books.google.co.in/books?id=1dk-DgAAQBAJ&pg=PA57#v=onepage&q&f=false
Books on Shop Management, Works Management, Production Management and Operations Management
The Commercial Management of Engineering Works
by Francis G. Burton
Publication date 1899
Publisher The Scientific publishing co.
https://archive.org/details/commercialmanag00burtgoog/page/n4
Production factors in cost accounting and works management
by Church, A. Hamilton (Alexander Hamilton), 1866-1936
Publication date 1910
Topics Cost accounting, Factory management
Publisher New York, The Engineering magazine
https://archive.org/details/productionfacto00churgoog/page/n7
The human factor in works management
by Hartness, James, 1861-1934
Publication date 1912
https://archive.org/details/humanfactorinwo01hartgoog/page/n7
The Science Of Works Management
by Batey, John
Publication date 1914
https://archive.org/details/dli.bengal.10689.10563/page/n5
Theory development remains the most fertile research area in the field of operations management (Westbrook, 1995; Pannirselvam et al., 1999).
A number of attempts have been made to develop and propose theories and theory-like principles of
operations management.
These attempts include: trade-off theory (Skinner, 1969), the process-product matrix (Hayes and Wheelwright, 1979), the customer-contact model (Chase and Tansik, 1983), the TOC (Goldratt and Cox, 1984; Boyd and Gupta, 2004), the cumulative theory (Ferdows and DeMeyer, 1990), the theory of production competence (Cleveland et al., 1989; Vickery, 1991), priority management theory (Westbrook, 1994), the theory of TQM (Flynn et al., 1994; Handfield and Melnyk, 1998), the theory of swift and even flow, and the theory of performance frontiers (Schmenner and Swink, 1998).
This list is not exhaustive but rather an attempt to highlight major initiatives undertaken in the academic OM literature. Schmenner and Swink (1998) further suggested that these theories in operations management should be carefully examined, refined and, if warranted, abandoned.
Cox et al. (2003) goes beyond other OM textbooks in developing a “business systems model” incorporating organization structure, business processes and management direction as a framework for discussing the use and impact of TOC concepts on the whole organization.
Ud. 5.9.2024.
Pub. 27.4.2019
This is a very useful post. I could write some good posts on operations management due to participation in the A to Z Blogging Challenge in April 2019.
ReplyDeleteVery informative post, way too technic for me, but great ;))
ReplyDeleteInteresting post and especially that Taylor /Towne were writing so long ago. I've no background in the above since I was a primary teacher but I recall 'piece work' being introduced in many 'machinery shop floors in Scotland (Glasgow) in the 1960s and it was not popular. This was my parents' generation and those involved thought that quality was being eroded.
ReplyDeleteNice comment. Interesting observation. Taylor specifically stated that productivity improvement should not lead to quality deterioration. He wanted special mechanism to be in place to ensure quality.
Delete