Operations management is an area of management concerned with overseeing, designing, and controlling the process of production and redesigning business operations in the production of goods or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as few resources as needed, and effective in terms of meeting customer requirements. It is concerned with managing the process that converts inputs (in the forms of materials, labor, and energy) into outputs (in the form of goods and/or services). The relationship of operations management to senior management in commercial contexts can be compared to the relationship of line officers to highest-level senior officers in military science. The highest-level officers shape the strategy and revise it over time, while the line officers make tactical decisions in support of carrying out the strategy. In business as in military affairs, the boundaries between levels are not always distinct; tactical information dynamically informs strategy, and individual people often move between roles over time.

According to the U.S. Department of Education, operations management is the field concerned with managing and directing the physical and/or technical functions of a firm or organization, particularly those relating to development, production, and manufacturing. Operations management programs typically include instruction in principles of general management, manufacturing and production systems, factory management, equipment maintenance management, production control, industrial labor relations and skilled trades supervision, strategic manufacturing policy, systems analysis, productivity analysis and cost control, and materials planning. Management, including operations management, is like engineering in that it blends art with applied science. People skills, creativity, rational analysis, and knowledge of technology are all required for success.

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 centered 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.    Their scientific education and development

4.    Intimate friendly cooperation between 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 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 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 Kanban-American style" in which he described JIT goals in terms of seven zeros: zero defects, zero (excess) lot size, zero setups, zero breakdowns, zero handling, zero lead time and zero surging. This periods 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-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.

Recent trends in the field revolve around concepts such as Business Process Re-engineering (launched by Michael Hammer in 1993), 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. Six Sigma refers to a control limits placed at 3 standard deviations of 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 developed in DMAIC (for improving processes) and DFSS (for designing new products and new processes).