Exhibit 1.6 gives a timeline of OSM's history. Our purpose in this section is not to go through all the details of OSM; that would require us to recount the entire Industrial Revolution. Rather, the focus is on major operations-related concepts that have been popular since the 1980s. Where appropriate, how a supposedly new idea relates to an older idea is discussed. (We seem to keep rediscovering the past.)

In the late 1950s and early 1960s, scholars began to deal specifically with operations management as opposed to industrial engineering or operations research. Writers such as Edward Bowman and Robert Fetter (Analysis for Production and Operations Management, 1957) and Elwood S. Buffa (Modern Production Management, 1961) noted the commonality of problems faced by all production systems and emphasized the importance of viewing production operations as a system. They also stressed the useful application of waiting-line theory, simulation, and linear programming, which are now standard topics in the field. In 1973, Chase and Aquilano's first edition of this book stressed the need “to put the management back in operations management.” Bob Jacobs joined the book team in 1997.

LEAN MANUFACTURING, JIT, AND TQC

The 1980s saw a revolution in the management philosophies and technologies by which production is carried out. Just-in-time (JIT) production was the major breakthrough in manufacturing philosophy. Pioneered by the Japanese, JIT is an integrated set of activities designed to achieve high-volume production using minimal inventories of parts that arrive at the workstation exactly when they are needed. The philosophy—coupled with total quality control (TQC), which aggressively seeks to eliminate causes of production defects—is now a cornerstone in many manufacturers' production practices, and the term “lean manufacturing” is used to refer to the set of concepts. Chapter 12 covers this topic.

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Of course, the Japanese were not the first to develop a highly integrated, efficient production system. In 1913, Henry Ford developed an assembly line to make the Model-T automobile. Ford developed a system for making the Model-T that was constrained only by the capabilities of the workforce and existing technology. Quality was a critical prerequisite for Ford: The line could not run steadily at speed without consistently good components. On-time delivery was also critical for Ford; the desire to keep workers and machines busy with materials flowing constantly made scheduling critical. Product, processes, material, logistics, and people were well integrated and balanced in the design and operation of the plant.¹

MANUFACTURING STRATEGY PARADIGM

The late 1970s and early 1980s saw the development of the manufacturing strategy paradigm by researchers at the Harvard Business School. This work by professors William Abernathy, Kim Clark, Robert Hayes, and Steven Wheelwright (built on earlier efforts by Wickham Skinner) emphasized how manufacturing executives could use their factories' capabilities as strategic competitive weapons. Central to their thinking was the notion of factory focus and manufacturing trade-offs. They argued that because a factory cannot excel on all performance measures, its management must devise a focused strategy, creating a focused factory that performs a limited set of tasks extremely well. This required trade-offs among such performance measures as low cost, high quality, and high flexibility in designing and managing factories. Ford seems to have realized this about 60 years before the Harvard professors.

SERVICE QUALITY AND PRODUCTIVITY

TOTAL QUALITY MANAGEMENT AND QUALITY CERTIFICATION

The ISO 9000 certification standards, created by the International Organization for Standardization, now plays a major role in setting quality standards for global manufacturers. Many European companies require that their vendors meet these standards as a condition for obtaining contracts.

BUSINESS PROCESS REENGINEERING

The need to become lean to remain competitive in the global economic recession in the 1990s pushed companies to seek innovations in the processes by which they run their operations. The flavor of business process reengineering (BPR) is conveyed in the title of Michael Hammer's influential article in Harvard Business Review: “Reengineering Work: Don't Automate, Obliterate.” The approach seeks to make revolutionary changes as opposed to evolutionary changes (which are commonly advocated in TQM). It does this by taking a fresh look at what the organization is trying to do in all its business processes, and then eliminating non–value-added steps and computerizing the remaining ones to achieve the desired outcome.

Hammer actually was not the first consultant to advocate eliminating non–value-added steps and reengineering processes. In the early 1900s, Frederick W. Taylor developed principles of scientific management that applied scientific analysis to eliminating wasted effort from manual labor. Around the same time, Frank and Lillian Gilbreth used the new technology of the time, motion pictures, to analyze such diverse operations as bricklaying and medical surgery procedures. Many of the innovations this husband-and-wife team developed, such as time and motion study, are widely used today.

SIX-SIGMA QUALITY

Originally developed in the 1980s as part of total quality management, six-sigma quality in the 1990s saw a dramatic expansion as an extensive set of diagnostic tools was developed. These tools have been taught to managers as part of “Green and Black Belt Programs” at many corporations. The tools are now applied to not only the well-known manufacturing applications, but also to nonmanufacturing processes such as accounts receivable, sales, and research and development. Six-sigma has been applied to environmental, health, and safety services at companies and is now being applied to research and development, finance, information systems, legal, marketing, public affairs, and human resources processes.

SUPPLY CHAIN MANAGEMENT

The central idea of supply chain management is to apply a total system approach to managing the flow of information, materials, and services from raw material suppliers through factories and warehouses to the end customer. Recent trends such as outsourcing and mass customizationProducing products to order in lot sizes of one. are forcing companies to find flexible ways to meet customer demand. The focus is on optimizing core activities to maximize the speed of response to changes in customer expectations.

ELECTRONIC COMMERCE

The quick adoption of the Internet and the World Wide Web during the late 1990s was remarkable. The term electronic commerce refers to the use of the Internet as an essential element of business activity. The Internet is an outgrowth of a government network called ARPANET, which was created in 1969 by the Defense Department of the U.S. government. The use of Web pages, forms, and interactive search engines has changed the way people collect information, shop, and communicate. It has changed the way operations managers coordinate and execute production and distribution functions.

²Jim Spohrer, “Service Science, Management, and Engineering (SSME): A Next Frontier in Education, Employment, Innovation, and Economic Growth,” IBM India, teleconference to India from Santa Clara, CA, December 2006.