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Productions and operations management MODULE 1 Industrial Revolution Before the First industrial revolution work was mainly

done through two systems: domestic system and craft guilds. In the domestic system merchants took materials to homes where artisans performed the necessary work, craft guilds on the other hand were associations of artisans which passed work from one shop to another, for example: leather was tanned by a tanner, passed to curriers, and finally arrived at shoemakers and saddlers. The beginning of the industrial revolution is usually associated with 18th century English textile industry, with the invention of flying shuttle by John Kay in 1733, the spinning jenny by James Hargreaves in 1765, the water frame by Richard Arkwright in 1769 and the steam engine by James Watt in 1765. 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. In 1913 Henry Ford first used the concept of the assembly line in Highland Park, he characterized it as follows: "The thing is to keep everything in motion and take the work to the man and not the man to the work. That is the real principle of our production, and conveyors are only one of many means to an end

This became one 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. Operations management In 1911 Frederick Taylor published his "The Principles of Scientific Management", in which he characterized scientific management as: 1. The development of a true science; 2. The scientific selection of the worker; 3. The scientific education and development of the worker; 4. Intimate friendly cooperation between the management and the workers. Taylor is also credited for developing stopwatch time study, this combined with Frank and Lillian Gilbreth motion study gave way to time and motion study which is centered on the concepts of standard method and standard time. Other contemporaries of Taylor worth remembering are Morris Cooke (rural electrification in 1920s and implementer of Taylor's principles of scientific management in the Philadelphia's Department of Public Works), Carl Barth (speed-and-feed-calculating slide rules ) and Henry Gantt (Gantt chart). Also in 1910 Hugo Diemer published the first industrial engineering book: Factory Organization and Administration. In 1913 Ford W. Harris published his "How Many parts to make at once" in which he presented the idea of the economic order quantity model. 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; "set-up" costs on the job fix the minimum. Experience has shown one manager a way to determine the economical size of lots" In 1931 Walter Shewhart published his Economic Control of Quality of Manufactured Product, the first systematic treatment of the subject of Statistical Process Control. In the 1940s Methods-time measurement (MTM) was developed by H.B. Maynard, JL Schwab and GJ Stegemerten. MTM was the first of a series of predetermined motion time systems, predetermined in the sense that estimates of time are not determined in loco but are derived from an industry standard. This was explained by its originators in a book they published in 1948 called "Method-Time Measurement" In 1943, in Japan, Taiichi Ohno arrived at Toyota Motor company. 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). Regarding JIT, Ohno was inspired by American supermarkets: workstations functioned like a supermarket shelf where the customer can get products they need, at the time they need and in the amount needed, the workstation (shelf) is then restocked. Autonomation was developed by Toyoda Sakichi in Toyoda Spinning and Weaving: an automatically activated loom that was also foolproof, that is automatically detected problems. In 1983 J.N Edwards published his "MRP and KanbanAmerican style" in which he described JIT goals in terms of seven zeros:[8] zero defects, zero (excess) lot size, zero setups,

zero breakdowns, zero handling, zero lead time and zero surging. This period also marks the spread of Total Quality Management in Japan, ideas initially developed by American authors such as Deming, Juran and Armand V. Feigenbaum. Schnonberger identified seven fundamentals principles essential to the Japanese approach: 1. Process control: SPC and worker responsibility over quality 2. Easy able -to-see quality: boards, gauges, meters, etc. and poka-yoke 3. Insistence on compliance: "quality first" 4. Line stop: stop the line to correct quality problems 5. Correcting one's own errors: worker fixed a defective part if he produced it 6. The 100% check: automated inspection techniques and foolproof machines 7. Continual improvement: ideally zero defects In 1987 the International Organization for Standardization (ISO), recognizing the growing importance of quality, issued the ISO 9000, a family of standards related to quality management systems. There has been some controversy thought regarding the proper procedures to follow and the amount of paperwork involved. Meanwhile in 1964, a different approach was developed by Joseph Orlicky as a response to the TOYOTA Manufacturing Program: Material Requirements Planning (MRP) at IBM, latter gaining momentum in 1972 when the American Production and Inventory Control Society launched the "MRP Crusade". One of the key insights of this management system was the distinction between dependent demand and independent demand.

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. Recent trends in the field revolve around concepts such as Business Process Re-engineering (launched by Michael Hammer in 1993[10]), Lean Manufacturing, Six Sigma (an approach to quality developed at Motorola between 1985-1987) and Reconfigurable Manufacturing Systems. The term lean manufacturing was coined in the book The Machine that Changed the World.[11] Six Sigma refers to control limits placed at six (6) 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. More recently, Six Sigma has included DMAIC (for improving processes) and DFSS (for designing new products and new processes) Operations management is often used along with production management in literature on the subject. It is therefore, useful to understand the nature of operations management .Operations management is understood as the process whereby resources or inputs are converted into more useful products .A second reading of the sentence reveals that, there is hardly any difference between the terms produ7ction management and operations management .But, there are a least two points of distinction between production management and operations management .First, the term production management is more used for a system where tangible goods are produced .Whereas

,operations management is more frequently used where various inputs are transformed into tangible services .Viewed from this perspective, operations management will cover such services organization as banks ,airlines ,utilities ,pollution control agencies super bazaars, educational institutions ,libraries ,consultancy firm and police departments, in addition ,of course ,to manufacturing enterprises. The second distinction relates to the evolution of the subject. Operation management is the term that is used now a days .Production management precedes operations management in the historical growth of the subject The two distinctions not withstanding, the terms production management and operations management are used interchargeably . Scope of Production and Operation Management The scope of production and operations management is indeed vast .Commencing with the selection of location production management covers such activities as acquisition of land, constructing building ,procuring and installing machinery ,purchasing and storing raw material and converting them into saleable products. Added to the above are other related topics such as quality management ,maintenance management ,production planning and control, methods improvement and work simplification and other related areas

he above functions of production management are briefly discussed below.

1. Selection of Product and Design

Production management first selects the right product for production. Then it selects the right design for the product. Care must be taken while selecting the product and design because the survival and success of the company depend on it. The product must be selected only after detailed evaluation of all the other alternative products. After selecting the right product, the right design must be selected. The design must be according to the customers' requirements. It must give the customers maximum value at the lowest cost. So, production management must use techniques such as value engineering and value analysis.

2. Selection of Production Process

Production management must select the right production process. They must decide about the type of technology, machines, material handling system, etc.

3. Selecting Right Production Capacity Production management must select the right production capacity to match the demand for the product. This is because more or less capacity will create problems. The production manager must plan the capacity for both short and long term's production. He must use break-even analysis for capacity planning.

4. Production Planning

Production management includes production planning. Here, the production manager decides about the routing and scheduling. Routing means deciding the path of work and the sequence of operations. The main objective of routing is to find out the best and most economical sequence of operations to be followed in the manufacturing process. Routing ensures a smooth flow of work. Scheduling means to decide when to start and when to complete a particular production activity.

5. Production Control

Production management also includes production control. The manager has to monitor and control the production. He has to find out whether the actual production is done as per plans or not. He has to compare actual production with the plans and finds out the deviations. He then takes necessary steps to correct these deviations.

6. Quality and Cost Control Production management also includes quality and cost control. Quality and Cost Control are given a lot of importance in today's competitive world. Customers all over the world want goodquality products at cheapest prices. To satisfy this demand of consumers, the production manager must continuously improve the quality of his products. Along with this, he must also take essential steps to reduce the cost of his products.

7. Inventory Control

Production management also includes inventory control. The production manager must monitor the level of inventories. There must be neither over stocking nor under stocking of inventories. If there is an overstocking, then the working capital will be blocked, and the materials may be spoiled, wasted or misused.

If there is an understocking, then production will not take place as per schedule, and deliveries will be affected.

8. Maintenance and Replacement of Machines

Production management ensures proper maintenance and replacement of machines and equipments. The production manager must have an efficient system for continuous inspection (routine checks), cleaning, oiling, maintenance and replacement of machines, equipments, spare parts, etc. This prevents breakdown of machines and avoids production halts. OPERATIONS STRATEGY The foregoing discussion has highlighted the strategic importance of operations to organizational performance. An appropriate operations strategy is essential to an organization not only as this will determine the extent to which its business strategy can be implemented, but also as its operations can be a source of competitive advantage. But what exactly is meant by the term operations strategy Mintzbergs view of strategy as being a pattern in a stream of actions (Mintzberg and Waters, 1985). Mintzberg sees strategy as being realized through a combination of de-

liberate and emergent actions (see Figure 2.2). An organization can have an intended strategy, perhaps as a set of strategic plans. However, only some of this intended strategy may be realized through deliberate strategy. Some of the intentions may be unrealized. Strategies which take no regard of operational feasibility are likely to become unrealized, remaining merely as a set of intentions. Strategy may also emerge from actions taken within the organization, which over time form a consistent pattern. Actions of this kind will, almost inevitably, arise from within the operations of the organization. So, whether planned or otherwise, the organizations operations are bound to have a major impact on the formation of organizational strategy. It is often believed that strategy is an issue that is somehow separate from day-today organizational activities. Taken to extremes this can result in strategy being regarded as some kind of cerebral activity performed by superior beings who need to be removed from day-to-day operational pressures. Mintzberg is amongst those who point to the dangers of managers becoming detached from the basics of the enterprise. Mintzberg and Quinn (1991) call this the dont bore me with the operating

details; Im here to tackle the big issues syndrome. They caution that, the big issues are rooted in little details. The remainder of this chapter will address two related issues concerning operations strategy, namely its process and content: a Operations strategy process: How an organization sets about developing an appropriate operations strategy b Operations strategy content: What the key decision areas that need to be addressed in developing an operations strategy are

Operational Strategies Corporate Strategy Corporate strategies involve seeing a company as a system of interconnected parts. Just as the muscles of the heart depend on brain functions in a human body, each department in a company depends on the others to stay healthy and achieve desired outcomes. The additional core strategies that a company uses should support the corporate strategy and use cross-functional interactions.

Customer-driven Strategies Operational strategies should include customer-driven approaches to meet the needs and desires of a target market. To do so, a company must develop strategies that evaluate and adapt to changing environments, continuously enhance core competencies and develop new strengths on an ongoing basis. When evaluating environments, a company should monitor market trends to take advantage of new opportunities and avoid possible threats. Developing Core Competencies Core competencies are the strengths and resources within a company. While core competencies can vary by industry and business, they can include having well-trained staff, optimal business locations and marketing and financial expertise. By identifying core competencies, a company can develop processes such as customer satisfaction, product development and building professional relationships with stakeholders. Competitive Priorities The development of competitive priorities comes from the creation of a corporate strategy, market analysis, defining core processes and conducting a needs analysis. To create competitive priorities, an organization evaluates operational costs, the quality of a product or service, the time it takes to develop and deliver a good or service and the flexibility of a good or service with regard to variety, volume and customization. Competitive priorities should include being able

to provide a quality product or service at a fair cost that consistently meets the needs of a customer. Product and Service Development Strategies behind the development of products and services should consider design, innovation and added values. When developing new customer products, a company can decide to be a leader in introducing a new product or service, wait for the introduction of innovations on the market to improve upon them or wait to see if a company's innovation is successful before moving forward. When developing a service, companies should consider packaging it with immediately observable and psychological benefits and support services. When developing a good or service, a company should consider the wants of its customers, how its stands against the competition and how its