Operations Management

UNITS

Introduction
Operations performance operations strategy
Product and service design
Process Design
Managing Process
Demand Forecasting
Capacity Planning
Managing Inventory
UNITS

Managing capacity, operations planning

Quality Management
Project Management
JIT
Group presentation
 Operations Management

Specific Assessment Method Weightage

Group project submission, presentation 20%
Case presentation 10%
Class participation/assignment 15%
Quiz 15%
End-term Exam 40%
UNIT 1
Contents
What, exactly, is operations management?
What Do Operations Managers Do?
OM in the Manufacturing industry
OM in the service sector
Importance of Operations Management in Business – it’s a heart of every business
A Brief History of OM
How Operations Contributes to ROA
Efficiency and effectiveness
Key decision making and planning horizon in operations
 9 ASPECTS OF ATG TO MODERN OPERATIONS MANAGEMENT
 Alexander the Great & modern business
management…. ..Cont.

1. Clear Vision and Strategic Direction

Just as modern operations managers

set clear goals and directions for their
teams, Alexander had a clear vision of
creating one of the largest empires in
history.

He was focused and determined,

qualities admired in the current
operations environment.
 Alexander the Great & modern business management…. ..Cont.

2. Decentralized Decision-Making

Alexander empowered his generals to make decisions on the battlefield,

allowing for quick adjustments to changing situations.

In modern operations management, this is akin to delegating responsibilities

and empowering team members to make decisions based on real-time data.
 Alexander the Great & modern business management…. ..Cont.

3. Continuous Improvement

Throughout his campaigns, Alexander constantly learned from

his experiences and adapted his strategies.

This is reminiscent of modern continuous improvement

philosophies like Lean or Six Sigma, where operations are

consistently analyzed and optimized.

Alexander the Great & modern business
management…. ..Cont.

4. Adaptability

Alexander was known for his ability to adapt

to various cultures and circumstances. After
conquering lands, he would often incorporate
aspects of the local culture into his army and
governance.

This adaptability is similar to the modern

business world's need for globalization,
understanding different market needs, and
adapting operations accordingly.
Alexander the Great & modern business
management…. ..Cont.

5. Resource Optimization

Despite having a large army,

Alexander ensured that resources,
whether manpower or supplies,
were effectively utilized.

 This mirrors the modern

operations principle of
efficient resource allocation
and waste minimization.
Alexander the Great & modern business management…. ..Cont.

6. Team Morale and Motivation

Alexander knew the importance of

keeping his troops motivated. He would
often lead from the front and engage in
direct combat, showing his commitment
and boosting morale.

Modern operations managers

recognize the importance of team
morale and motivation and employ
various strategies to keep teams
engaged.
Alexander the Great & modern business
management…. ..Cont.

7. Feedback Loops

Alexander would hold meetings

(councils) with his generals and
advisors to discuss strategies and
receive feedback.

 Similarly, modern operations

management emphasizes the
importance of feedback loops to
continuously refine processes.
 Alexander the Great & modern business
management…. ..Cont.

8. Risk Management

Alexander assessed risks and took

calculated steps despite being aggressive
in his strategies.

Modern operations managers constantly

evaluate risks associated with their
decisions, using tools and
methodologies to predict and mitigate
potential issues.
Alexander the Great & modern
business management…. ..Cont.

9. Talent Management

Alexander surrounded himself with

skilled generals, advisors, and scholars.

He recognized and nurtured talent, a

principle fundamental in modern

operations where human resource

development and talent management

are critical.
 Alexander the Great & modern business management…. ..Cont.

While these comparisons illustrate parallels between

Alexander the Great's strategies and modern operations
management, it's essential to recognize the vast differences
between leading an ancient military campaign and managing
contemporary business operations.

 Nonetheless, the principles of leadership, adaptability,

and strategy are timeless and can be seen across eras.
 WHAT, EXACTLY, IS
OPERATIONS
MANAGEMENT?
In simple terms, the operations function in an organization

creates and delivers its products or services.

It collects materials and resources, then turns them into

final products or services by adding value.

In simple terms, Operations Management (OM) is about

designing, managing, and improving the processes that

create and deliver products or services.

 Operations Management

• What is Operations Management?

• design, operation, and improvement of productive
systems
• What is Operations?
• a function or system that transforms inputs into
outputs of greater value
• What is a Value Chain?
• a series of activities from supplier to customer that add
value to a product or service
 Transformation Process

• A series of activities along a value chain extending from

supplier to customer
• Activities that do not add value are superfluous and
should be eliminated

© TAYLOR & FRANCIS 2016

 Transformation Process

• Physical: as in manufacturing operations

• Locational: as in transportation or warehouse
operations
• Exchange: as in retail operations
• Physiological: as in health care
• Psychological: as in entertainment
• Informational: as in communication
OPERATIONS MANAGEMENT AND YOU
What, exactly, is operations management?

Transformation
Output:
Inputs: of inputs
Finished goods
Humans, raw Resources:
and delivered
materials Labour.
services
technology

A simple model of operation

• Universities
• Hospitals
• Automobile company
 Operations as a
Transformation Process

INPUT
•Material
TRANSFORMATION OUTPUT
•Machines
PROCESS •Goods
•Labor
•Services
•Management
•Capital

Feedback & Requirements

Operations is often defined as a transformation process. As given in
figure on the previous slide, inputs (such as material, machine, labour,
management and capital) are transferred into outputs (goods and
services). Requirements and feed back from customers are used to
adjust factors in the transformation process, which may in turn, inputs.
In operations, we try to ensure that the transformation process is
performed efficiently and that the output is of greater value than the
sum of the inputs. Thus, the role of operations is to create value. The
transformation process can be viewed as a series of activities along a
value chain extending from supplier to customer.

© TAYLOR & FRANCIS 2016

 • Operations really is the heart of

most companies, because the

OPERATIONS
MANAGEMENT IS THE
HEART OF THE operations department actually
ORGANISATION
gets the job that the company

needs to get done.

EXAMPLE 1
Case: Let's use the example of a major

e-commerce company, such as Amazon, to

illustrate how operations can be seen as the

heart of most companies.

E-COMMERCE
COMPANY CONTEXT
This company's main function is to:

a) Allow users to shop online;

b) Purchase products, and;

c) Then deliver those products to the user's

doorstep in a

d) Timely and accurate manner.

VARIOUS DEPARTMENTS AND
THEIR CORE FUNCTIONS
MARKETING: PROMOTES THE PLATFORM, ATTRACTS NEW CUSTOMERS,
AND RETAINS EXISTING ONES.

IT: MANAGES THE WEBSITE, ENSURES IT'S FUNCTIONAL, USER-FRIENDLY,

AND SECURE.

CUSTOMER SERVICE: ADDRESSES COMPLAINTS, PROVIDES SUPPORT, AND

HANDLES RETURNS.

FINANCE: MANAGES COMPANY FINANCES, ENSURES PROFITABILITY, AND

HANDLES INVESTMENTS.

OPERATIONS: MANAGES INVENTORY, OVERSEES WAREHOUSES, ENSURES

PRODUCTS ARE IN STOCK, HANDLES ORDER FULFILLMENT, OVERSEES
SHIPPING, AND ENSURES DELIVERIES ARE TIMELY.
 Fulfilling the Company's Promise:
While marketing might attract users
to the site with promises of quick
delivery and a vast selection, it's
operations that has to ensure that
HOW products are in stock, picked from the
OPERATIONS IS warehouse, packed, and shipped in
THE HEART? time. Without smooth operations, the
company's primary promise would be
unfulfilled.
DIRECT IMPACT ON
CUSTOMER SATISFACTION

A user's experience is heavily

impacted by the operational
efficiency.

If a product is late, damaged, or the

wrong item is sent, it's typically due
to a lapse in operations.

Thus, the operations department plays

a pivotal role in ensuring customer
satisfaction.
 VOLUME AND
SCALABILITY

As the e-commerce platform

grows, the sheer volume of orders

will increase.

The operations department is

responsible for scaling up and

ensuring that even with a surge in

orders, efficiency and accuracy are

maintained.
COST EFFICIENCY
While the finance department
manages the money, operations
can have a huge impact on costs.

Efficient operations can reduce

shipping costs, minimize
returns, decrease warehouse
expenses, and optimize inventory
– all contributing to the company's
bottom line.
So, in the context of this e-commerce
company, even though every department
has a significant role to play, it's the
operations department that "actually gets
the job that the company needs to get
done.

If operations fail, it doesn't matter how

good the website is, how well the
company is marketed, or how efficient
customer service is – the core promise of
delivering purchased products efficiently
and accurately to the customer falls
apart.
 A business has to answer that
fundamental question posed by all
customers: “Why should I choose
you?”

WHAT DO
OPERATIONS A business says: “Choose us because
we promise you….”
MANAGERS
DO?
Who delivers on these promises?

Operations managers deliver on

promises that are made by the
business to the customer.
MANY FACTORS CAN AFFECTS
CUSTOMERS’ CHOICE
Product or Service Quality; Price; Customer Service;
Reputation; Location and Convenience; Ethical Practices;
Variety of Offerings; Branding and Presentation;
Technological Innovations; Payment Options; Return and
Warranty Policies; Customization; Company Stability and
History; Community Involvement; Security and Privacy;
Recommendations; Loyalty Programs; Environmentally-
Friendly; Transparency; Flexibility
 WHAT DO OPERATIONS
MANAGERS DO?
Design and run work systems that create the
product;

 Forecast demand;

 Determine the nature and;

 Locations of the manufacturing unit

 Delivery process
 WHAT DO OPERATIONS
MANAGERS DO?
Organize suppliers and transporters to make

and move the product.

Manage suppliers, labour, distribution, and

logistics for speed and/or affordability.

Face variability
Manage inventory to achieve desired

customer service levels at an acceptable

cost.

Define and manage product and service

quality

Study work processes for analysis and

improvement.
SAMPLE OM JOB TITLES
Operations analyst

Six Sigma black belt

Purchasing manager

Transportation manager

Warehousing manager

Production planner and scheduler

Project manager

Business analyst
 IMPORTANCE OF OPERATIONS
MANAGEMENT IN BUSINESS

The scope of OM range across the organization.

o OM people are involved in product and service design,
o Process selection,
o Selection and management of technology,
o Design of work systems,
o Location planning,
o Facilities planning and
o Quality improvement of the organization's product or
services.
The operation functions includes many interrelated activities, such as:
a) Forecasting,
b) Capacity planning,
c) Scheduling,
d) Managing inventories,
e) Assuring quality,
f) Motivating employees
g) Deciding where to locate facilities and more.
The operations function in a business is concerned with
the management of the processes that convert inputs (like
raw materials and labor) into outputs (finished goods and
services).

 It's a multi-faceted area that requires coordination of

various activities to ensure that the business runs
efficiently.

 From forecasting demand to ensure production keeps

pace with sales, to managing inventory levels to prevent
overstocking or stockouts, to assuring the quality of
products or services, each activity plays a critical role.
Furthermore, decisions such as where to locate a new
manufacturing plant can have long-term implications on
costs and revenues.

Thus, effectively managing these operations activities is

crucial to achieving business objectives and satisfying
customer needs.
EXAMPLE: OPERATIONS ACTIVATES IN
MANUFACTURING INDUSTRY - A COMPANY
LIKE FORD MOTOR COMPANY

1. Forecasting:

Example: Ford analyzes market trends, economic

indicators, and potential shifts in consumer preferences to
estimate future demand for its cars, trucks, and SUVs.

They also keep an eye on global political and

environmental events that might impact demand.
© TAYLOR & FRANCIS 2016
© TAYLOR & FRANCIS 2016
EXAMPLE: OPERATIONS ACTIVATES IN
MANUFACTURING INDUSTRY - A COMPANY
LIKE FORD MOTOR COMPANY

2. Capacity Planning:

Example: Based on forecasted demand, Ford decides how

many cars of each model it needs to produce annually.

This decision impacts how many factories should be

operational, how many shifts they should run, and what
level of raw materials they need to procure.
3. Design:

Product Design: Ford employs teams of designers

and engineers to create the designs for new car
models. They focus on aesthetics, aerodynamics,
fuel efficiency, interior comfort, and more. This
design process uses software simulations, clay
modeling, and prototype testing.

Process Design: Ford designs its manufacturing

processes to be efficient and lean. They determine
the sequence of tasks, the layout of the factory floor,
and the integration of robotics and human labor.
4. Analysis:

 Ford collects data on every aspect of its manufacturing

process. This might involve analyzing the efficiency of
an assembly line, studying the wear and tear on
machinery, or looking at defect rates for parts. The
company then uses this analysis to refine and improve
its operations.
5. Scheduling:

 Example: Ford schedules shifts in its factories,

allocates machinery usage, and sets timelines for the
production of each car part to ensure that assembly
lines run smoothly and efficiently.
6. Managing Inventories:

Example: Ford maintains inventory of raw materials (like steel,

rubber, electronics) as well as semi-finished goods (like car
doors, engines, or tires). They use Just-In-Time (JIT) inventory
systems to minimize stock holding costs and ensure a smooth
flow in production.

7. Assuring Quality:

Example: Ford has stringent quality control measures in place.

Each car goes through rigorous quality checks, from raw
material quality inspections to testing the finished vehicle for
safety, performance, and comfort standards.
8. Motivating Employees:

Example: Ford offers various employee incentives, such as

performance bonuses, employee-of-the-month recognitions, and
training programs, to motivate its workforce. They also invest in
ergonomic workstations and safety to ensure a healthy work
environment.
9. Deciding Where to Locate Facilities:

Example: Ford strategically locates its

manufacturing plants. Factors influencing
these decisions might include proximity to
suppliers, closeness to key markets, labor
costs, and logistical considerations. For
instance, their decision to set up plants in
Michigan is historically tied to the
abundance of raw materials and the legacy
of the auto industry in the region.
To sum up, Ford Motor Company, like other automobile
manufacturers, has a complex operations management
structure that must coordinate myriad activities to
produce high-quality vehicles and meet global demand.
The success of their operations is tied to how well they
can integrate and manage these various aspects of
operations.
EXAMPLE – 1. Forecasting:

OPERATIONS Example: Marriott analyzes historical booking data, seasonal

trends, and other factors (like major events in a city) to estimate
MANAGEMENT IN the future demand for rooms in each of its hotels.

SERVICE INDUSTRY 2. Capacity Planning:

Example: Capacity in the hotel context refers to the number of

rooms and facilities available. Based on forecasted demand,
Marriott might decide to expand by building more rooms or
even entire new hotels in certain strategic locations.
 3. Design:

EXAMPLE –
OPERATIONS Service Design: Marriott's service design is centered around the guest
experience. This involves designing the layout and decor of rooms, the
amenities offered, the range of services provided (like spa, gym, or
MANAGEMENT IN concierge services), and the flow of services from check-in to check-out.

SERVICE INDUSTRY
Process Design: Marriott designs processes for every service aspect. For
instance, the process a guest goes through from the moment they enter the
hotel, the check-in procedure, the way housekeeping services a room, or
the method for handling complaints.
 4. Analysis:
EXAMPLE –
OPERATIONS
MANAGEMENT IN Marriott consistently collects feedback from guests in the
form of reviews, surveys, and direct feedback during
stays. They analyze this feedback to gauge guest
SERVICE INDUSTRY satisfaction, identify areas of improvement, and ascertain
the efficacy of new initiatives (e.g., a new check-in system
or loyalty program). They also analyze operational data,
like room occupancy rates, the efficiency of
housekeeping, or the profitability of in-house restaurants.
5.Scheduling:
Example: Marriott schedules staff shifts to
ensure adequate coverage during peak check-
in/check-out times, nighttime, and for events. This
includes front desk staff, housekeeping, catering,
security, and more.
6. Managing Inventories:
Example: For a hotel, inventory includes items
like toiletries, linens, food and beverage supplies
for their restaurants, and more. Marriott ensures
a consistent stock of these essentials so guests
always have what they need.
7. Assuring Quality:
Example: Marriott has a reputation to maintain.
They have quality checks for room cleanliness,
food quality in their restaurants, and overall
guest experience. Feedback forms and online
reviews also provide insights into areas for
improvement.
8. Motivating Employees:
Example: Marriott offers employee growth
opportunities, training programs, and incentive
structures, such as bonuses or recognition
programs, to ensure their staff delivers the best
service possible.
9. Deciding Where to Locate

Facilities:

Example: The decision to open a new

Marriott hotel in a particular city or

location is strategic. Factors might

include tourist popularity of the

destination, business traveler flow,

competition, and proximity to key

attractions or business hubs.

 OM IN MANUFACTURING
INDUSTRY

Operations management (OM) is central to the

manufacturing sector, as it concerns itself with

the design and management of production

systems.

The primary aim of OM in manufacturing is to

ensure that production processes are

efficient, effective, and continuously

improving.
MAIN APPLICATIONS OF
OPERATIONS MANAGEMENT IN
THE MANUFACTURING SECTOR

Process Design Quality Capacity Inventory

and Analysis Management Planning Management

Production Supply Chain

Scheduling Management
MAIN APPLICATIONS OF
OPERATIONS MANAGEMENT IN
THE MANUFACTURING SECTOR

Facility Maintenance Cost Control Workforce

Location and and Reliability and Budgeting Management
Layout

Continuous Health and Technology Sustainability

Improvement Safety Integration and
Environmental
Responsibility
 MAIN APPLICATIONS OF
OPERATIONS MANAGEMENT
IN THE SERVICE SECTOR

Operations Management (OM) is equally essential in

the service sector as it is in manufacturing, albeit with
some differences in applications due to the intangible
nature of services.

In the service sector, OM focuses on

managing the processes that produce and
deliver services. Here are the main
applications of operations management
in the service sector.
Main applications of operations management in the
service sector

1. Service Design

2. Capacity Planning

3. Queue Management

4. Quality Management

5. Location and Layout

6. Scheduling

7. Workforce Management

8. Technology Integration

9. Inventory Management

10. Supply Chain Management

11. Continuous Improvement

12. Risk Management

13. Sustainability and Social Responsibility

14. Customization
A BRIEF HISTORY
OF OM
Operations management, in a broad

sense, began with the early 1900s

scientific management work theories

of Frederick W. Taylor (1856–1915).

IMPORTANT
INCIDENTS IN HIS
LIFE

 The Incident of
"Soldiering": while
working at the Midvale
Steel Company.

 The Pig Iron Handling

Experiment: at the
Bethlehem Steel Works
To combat "soldiering," Taylor introduced the "Differential Piece-Rate

System." This system paid more to workers who exceeded the production

standard and less to those who didn't meet it. This was a radical

departure from the prevailing day-wage system, where workers got a

fixed daily wage regardless of their output.

• This observation of "soldiering" profoundly affected Taylor. It made him
realize that the inefficiencies in the workplace were not merely the result of
worker laziness or ineptitude but stemmed from systematic problems.

• He began to believe that management should play a more proactive role

in determining the most efficient work methods, instead of leaving it to
the discretion of the individual worker.

• The incident also underscored the significance of proper incentives in the

workplace. Taylor became convinced that aligning worker incentives with
productivity was key to maximizing efficiency.

© TAYLOR & FRANCIS 2016

 The Operations Function

• Organizing work
• Selecting processes
• Arranging layouts
• Locating facilities
• Designing jobs
• Measuring performance
• Controlling quality
• Scheduling work
• Managing inventory
• Planning production

© TAYLOR & FRANCIS 2016

Operations managers design, operates and improves productive
system- systems for getting work done. The food you eat, the movies
you watch the stores in which you shop and the books you read are
provided to you by the people in operations. Operations managers
are found in banks, hospitals, factories and government. They design
system, ensure quality, produce products and deliver service. They
work with customers and suppliers the latest technology and global
partners. They solve problems, reengineer processes, innovate and
integrate. Operation is more than planning and controlling; its doing.
Whether it is a superior quality, speed-to-market, customisation or low
cost, excellence in operations is critical to a firm’s success.

© TAYLOR & FRANCIS 2016

 Operations Function

• Operations
• Marketing
• Finance and
Accounting
• Human
Resources
• Suppliers
Activities in OM include organizing work, selecting processes,

arranging layouts, locating facilities, designing jobs, measuring

performance, controlling quality, scheduling work, managing inventory

and planning production. Operations managers deal with people,

technology and deadlines. These managers need good technical.,

conceptual and behavioural skills. Their activities are closely

intertwined with other functional areas of a firm. The four primary

functional areas of a firm are – Marketing, Finance, Operations and

Human Resources. The Operation is closely linked to all other areas as

shown in figure on the previous slide.

© TAYLOR & FRANCIS 2016

 Sample Organizational Structure
CEO
Chief Executive Officer

CFO COO CIO

Chief Financial Officer Chief Operating Officer Chief Information Officer

VP Human Resources

VP Operations

VP Supply Chain
Management

VP Marketing

C3-10
 A Brief History of OM

•Standardised Tasks

•Training

•Differential Piece-Rate System

•Efficiency

•Management Responsibility
FREDERICK
W. TAYLOR’S
CONTRIBUTIO •Functional Foremanship
N TO OM
 A BRIEF HISTORY OF OM

Henry Ford was also a Professor Elton Mayo (1880–1949) ran the famous
practitioner of scientific ‘Hawthorne’ experiments at a Western Electric plant
management principles. (1924–1927).
 A BRIEF HISTORY OF OM

Henry Ford was also a

practitioner of Standardization of
Assembly Line (1993)
scientific management Parts
principles.

Time and Motion Wage Innovations Worker

Studies (1914) Specialization
 With revenue growth

WHY IS disappearing, companies are

OM
IMPORTA chasing profits through efficiency
NT?
and differentiation goals. OM is

integral to both objectives.

WHY IS OM
IMPORTANT?

From a business perspective, OM is a

strategic capability; that is, it can directly
impact business performance and profits.
 LEVERAGING POWER OF OM
Suppose, Selling Price = $10/unit
Sales = 1 unit
and COGS = $9/unit (no other costs involved).

Therefore, Total earnings = (Sales revenue – COGS)

= $10*1 unit - $9
= $1.00

Now suppose, operations succeeds in reducing COGS by $1.00 (price and sales remain unchanged).
Therefore, Total earnings = $10*1 unit - $8
= $2.00

A 100% boost in earnings from an 11% reduction in cost (from $9 to $8)!

Whereas, consider if cost ($9) and price ($10) remain the same, but marketing efforts boost sales. How much would
sales have to increase to improve earnings to the same $2.00?
Total earnings = (Sales revenue – COGS)
Total earnings = $2.00
So,
$2.00 = ($10*sales - $9/unit*sales)
= $1*Sales

Thus, Required Sales = 2 units (would be higher in reality, since we have not included the costs of
marketing efforts).

Marketing would have to increase sales by 100% (from 1 unit to 2 units), in order to obtain the same financial
impact that we can get from just an 11% reduction in operational costs.
HOW IS OPERATIONS RELEVANT
TO MY MAJOR?
Accounting “As an auditor you must understand the
fundamentals of operations management.”
“IT is a tool, and there’s no better place to apply
Information it than in operations.”
Technology

“We use so many things you learn in an

Management operations class—scheduling, lean production,
theory of constraints, and tons of quality tools.”

© 2014 JOHN WILEY & SONS, INC. - RUSSELL AND TAYLOR 8E 1-82
HOW IS OPERATIONS RELEVANT
TO MY MAJOR?
Economics “It’s all about processes. I live by flowcharts and
Pareto analysis.”
Marketing “How can you do a good job marketing a
product if you’re unsure of its quality or
delivery status?”
Finance “Most of our capital budgeting requests are
from operations, and most of our cost savings,
too.”

© 2014 JOHN WILEY & SONS, INC. - RUSSELL AND TAYLOR 8E 1-83
EVOLUTION OF OPERATIONS AND SUPPLY
CHAIN MANAGEMENT
Craft production
 process of handcrafting products or services for
individual customers
Division of labor
 dividing a job into a series of small tasks each
performed by a different worker
Interchangeable parts
 standardization of parts that enabled mass production
Scientific management
 systematic analysis of work methods
1-84
 EVOLUTION OF OPERATIONS AND
SUPPLY CHAIN MANAGEMENT
Mass production
 high-volume production of a standardized product for a mass
market
Quality revolution
 an emphasis on quality and the strategic role of operations
Lean production
 adaptation of mass production that prizes quality and flexibility

1-85
 HISTORICAL EVENTS IN
OPERATIONS MANAGEMENT
Era Events/Concepts Dates Originator
Steam engine 1769 James Watt
Industrial
Division of labor 1776 Adam Smith
Revolution
Interchangeable parts 1790 Eli Whitney
Principles of scientific
1911 Frederick W. Taylor
management
Frank and Lillian
Scientific Time and motion studies 1911 Gilbreth
Management Activity scheduling chart 1912 Henry Gantt
Moving assembly line 1913 Henry Ford

1-86
 HISTORICAL EVENTS IN
OPERATIONS MANAGEMENT
Era Events/Concepts Dates Originator
Hawthorne studies 1930 Elton Mayo
Human 1940s Abraham Maslow
Relations Motivation theories 1950s Frederick Herzberg
1960s Douglas McGregor
Linear programming 1947 George Dantzig
Digital computer 1951 Remington Rand
Simulation, waiting
Operations Operations research
line theory, decision 1950s
Research groups
theory, PERT/CPM
1960s, Joseph Orlicky, IBM
MRP, EDI, EFT, CIM
1970s and others

1-87
 HISTORICAL EVENTS IN
OPERATIONS MANAGEMENT
Era Events/Concepts Dates Originator
JIT (just-in-time) 1970s Taiichi Ohno (Toyota)
TQM (total quality W. Edwards Deming,
1980s
management) Joseph Juran
Quality Strategy and Wickham Skinner,
1980s
Revolution operations Robert Hayes
Michael Hammer,
Reengineering 1990s
James Champy
Six Sigma 1990s GE, Motorola

1-88
 HISTORICAL EVENTS IN
OPERATIONS MANAGEMENT
Era Events/Concepts Dates Originator
Internet Internet, WWW, ERP, 1990s ARPANET, Tim
Revolution supply chain management Berners-Lee SAP,
i2 Technologies,
ORACLE, Dell
E-commerce 2000s Amazon, Yahoo,
eBay, Google, and
others
Globalization WTO, European Union, 1990s China, India,
Global supply chains, 2000s Emerging
Outsourcing, Service economies
Science

1-89
 HISTORICAL EVENTS IN
OPERATIONS MANAGEMENT
Era Events/Concepts Dates Originator
Sustainability Global warming Today Numerous
Carbon footprint companies,
Green products statesmen,
governments,
Corporate social
responsibility (CSR) United Nations,
World Economic
UN Global Compact Forum

© 2014 JOHN WILEY & SONS, INC. - RUSSELL AND TAYLOR 8E

1-90
 HOW OPERATIONS CONTRIBUTES TO ROA

Return on Assets

Revenue Cost Assets

Revenue = Price * Volume Cost= Cost of goods sold + Marketing Assets = Inventory + Cash + Accounts
and Administrative costs receivable + Fixed and other assets

Operations impacts both price Operations impacts both COGS and Operations impacts inventory, cash, and
and volume M&A expenses fixed assets