Tag: OM history

OM in the News: The History of Supply Chains

In 1970, there was no FedEx, no internet, no PCs, no cellphones, no Amazon, no TSA, no 3D printers, no Google, and  no Uber, writes IndustryWeek (April 17, 2020). Nixon hadn’t gone to China yet, so offshoring wasn’t a major issue. There were no supply chain planning systems, no warehouse management systems, no UPC barcodes, no online marketplaces. It was a much slower-paced economy than the frenetic pace the supply chain moves at now.

In 1970 we didn’t even have anything called the “supply chain.” Although the basic concept of SCM dates back to the 1950s, the actual term “supply chain” wasn’t coined until 1982. How different running a manufacturing operation was in 1970. The EPA wasn’t introduced until late that year, OSHA didn’t launch until 1971, and the trucking and rail industries weren’t deregulated until 1980.

When we wrote the first edition of our textbook, Production and Operations Management, in 1988, we didn’t mention the following: (as they either hadn’t been invented yet or nobody had associated them with SCM): drones, the Internet of Things, same-day delivery, omni-channel distribution, machine learning, Uber-style freight transportation apps, blockchain, cobots, RFID, and virtual reality,

We also didn’t mention the impact the coronavirus would have on supply chains, or any of the other major disruptions we’ve seen in recent years, such as the swine flu of 2009, the Icelandic volcanic eruption of 2010, the Japanese earthquake and tsunami of 2011, or the three deadly hurricanes of 2017.  But we’ve learned that supply chains—and the people managing them—are incredibly resilient. In 25 years people will likely look back at how slow-paced supply chains moved in 2020. Will the convergence of GPS, RFID, wearable and supply chain visibility technologies lead to the point that everybody will carry some sort of ID chip that will make obsolete the idea of cash and credit cards?

Classroom discussion questions:

  1. What technologies have the potential to seriously impact current supply chains?
  2. Will the global move toward sustainability be impacted by the virus pandemic?

Video Tip: Starting Your Semester with the History of OM and the Ford Model T

Many instructors like to start the semester with a bit of OM history (see Figure 1.4). Your students will enjoy this 5 minute video featuring the Ford Model T, which changed the way Americans live, work and travel.  Ford’s revolutionary advancements in assembly line automobile manufacturing made the Model T the first car to be affordable for a majority of Americans. More than 15 million Model Ts were built in Michigan, and the automobile was also assembled at a Ford plant in Manchester, England, and at plants in continental Europe.

The Model T was built from 1908 until 1927. It quickly became prized for its low-cost, durability, versatility, and ease of maintenance. Assembly line production allowed the price of the car to be lowered from $850 in 1908 to less than $300 in 1925.

The Model T was offered in several body styles. All bodies were mounted on a uniform 100-inch-wheelbase chassis. The car was mass-produced in only one color—black. The engine was simple and efficient, with all four cylinders cast in a single block and the cylinder head detachable for easy access and repair. The engine generated 20 horsepower and propelled the car to top speeds of 40–45 miles per hour. The engine was started by a hand crank. The transmission, consisting of two forward gears and one reverse, was controlled by foot pedals. Throttle was controlled by a hand lever on the steering column. The 10-gallon fuel tank was located under the front seat. Because gasoline was fed to the engine only by gravity, and also because the reverse gear offered more power than the forward gears, the Model T frequently had to be driven up a steep hill backward.

Good OM Reading: The History and Future of Operations

hbrProf. Marco Iansiti’s new article in Harvard Business Review (July, 2015), declares: “It’s time to rethink what we mean when talk about operations.  Operations is and has always been what gives an organization the power to act: to create value for its customers; to capture value for its shareholders; and to share value with its ecosystem. In the era of ubiquitous digital technologies, operations empowers an increasing variety of organizations.”

Growing out of the industrial revolution of the late 1800s, OM field took off as the modern economy emerged from the new phenomenon of volume manufacturing. Popular notions of “interchangeable parts” were first applied to the design of muskets and enabled a new breed of industrialists to invent a modular system of production, in which individual components could be manufactured independently and at scale. This gradually led to the concepts of logistics, supply chains, and assembly lines, and formed the foundations of the “American System of Manufacturing,” which grew during the first half of the 20th century and peaked during the 1950s. (In fact, at one time Harvard Business School offered practical classroom demonstrations on the use of lathes and milling machines). The 1960s saw the development of a broad variety of analytical methods to analyze and optimize the flow of goods and information not only in manufacturing systems, but in a wide variety of service contexts.

What is different now? Digital technology and its exploding range of applications in web services, mobile, and now the internet of things means that the development and delivery of software services is transforming the fabric of operating environments. If the essence of OM is providing economic agents with “the power to act,” digital technology is transforming the nature by which that power is defined and delivered, with new operating models that are increasingly open, distributed, and shared across thousands of organizations and contributors. These new models have enabled close to 9 million independent developers to contribute apps to mobile platforms. And they’ve enabled WhatsApp to grow to over 450,000 users with fewer than 30 employees. As such, the design of development tools, operating system APIs, and the user onboarding process for apps have become as crucial to OM excellence as production planning or inventory theory.

 

OM Reading: A 40 Year View of Operations Management

Jay, our colleague Jeff Heyl (at Lincoln U. in New Zealand), and I just wrote a short article for OR/MS Today (Feb., 2011) that appears on-line today. The title is “A Four Decade View of Changes in OM”. We look back on 12 topics that have had a major impact on texts and the teaching of OM over our careers.

The changes include: (1) viewing OM through a strategy lens; (2) how quality and TQM have permeated the course; (3) Goldratt’s influence with the Theory of Constraints; (4) the movement from manufacturing to services; (5) the globalization of OM; (6) integration of marketing/finance into OM topics; (7) JIT’s role ; (8) how process analysis and re-engineering have played a role; (9) the surging impact of Supply Chain management; (10) the spread of Ethics in our courses; (11) Lean’s impact; and (12) how green manufacturing and Sustainability have entered our course and books.

The teaching OM has definitely seen an evolution over the decades and we hope you enjoy our look back.