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Curriculum Center Browse Bibliography Build EPacket Pricing Structure Distribution Process Management Control in Nonprofit Organizations
Note on Lean Operations
Heineke, Janelle
Functional Area(s):
   Operations Management
   For Profit
Difficulty Level: Beginner
Pages: 12
Teaching Note: Not Available. 
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First Page and the Assignment Questions:
Since the start of the industrial revolution, the role of the manager has been to harness the energy of the organization to produce goods and services to serve the organization's customers and to achieve its goals. Managers have always been concerned with efficiency, too. There is a natural tension between effectiveness (satisfying customers) and efficiency (using resources well). Over time, management styles and the production systems managers have used to achieve both efficiency and effectiveness have evolved, reflecting changes in society and incorporating new management theories and insights.

Production systems all incorporate both a strategy/philosophy and a set of tools. The strategy or philosophy of a production system provides the “broad brush” perspective that helps managers and workers to focus on what matters to the organization. Production systems also incorporate tools that support the production philosophy and channel all activities to meet organizational objectives.


One of the skills that differentiates humans from other creatures is the widespread use of tools to do work. Throughout history, inventive people have developed new tools to produce goods and services faster and better. In the 1700s and 1800s, the pace of invention accelerated with introduction of power-driven machinery that made large-scale goods production possible. During that period, manufacturers focused on using each new technology well, without much emphasis on how the processes in different stages of production were linked together or how workers did their work.

The first attempts to reduce wasted effort in production processes began in the 1890s, when Frederick Taylor and the early industrial engineers began to study work methods. Taylor called his ideas Scientific Management and he created planning departments, staffed with engineers whose responsibility it was to: (a) develop scientific methods for doing work, (b) establish goals for productivity, (c) establish systems of rewards for meeting the goals, and (d) train workers in how to meet the goals by using the methods.9  Frank Gilbreth developed motion studies and invented process flow-charting and his wife, Lillian Gilbreth studied worker motivation and the effect of attitudes on process outcomes.

In the early 1900s, Henry Ford used many of the principles of Scientific Management to arrange the first assembly line for automobiles. His production system was very efficient, but not very flexible, and he is often quoted as saying you could have Ford cars in “any color you want - so long as it's black.” Alfred P. Sloane at General Motors introduced an assembly line that could produce more variety while maintaining high efficiency levels. Still, the expensive set-up of the production line encouraged managers to plan long production runs to spread the fixed set-up costs over larger numbers of units of output. The cost of downtime similarly encouraged managers to hold inventories of raw materials to buffer against changes in the supply of materials, work-in-process inventories as a buffer against process problems and machine failures and finished goods inventories as a buffer against changes in the demand for goods. Some inventories were also held to buffer against quality problems: if some of the materials or work-in-process were defective, there were additional units on hand to substitute and reduce the risk of stopping production. The assembly line was configured based on time and motion studies that focused on keeping workers busy in order to get the most out of every labor dollar.

World War II brought about the next major change in production systems. After the war, statisticians W. Edwards Deming and Joseph Juran went to Japan to teach statistical methods to managers. Their ideas, along with the tools developed by Kaoru Ishikawa, helped to lay the foundation for a new system of production At Toyota Motor Company,