HISTORICAL DEVELOPMENT

Why OM?

Business did not always recognize the importance of operations management. In fact, following World War II the marketing and finance functions were predominant in American corporations. The United States had just emerged from the war as the undisputed global manufacturing leader due in large part to efficient operations. At the same time, Japan and Europe were in ruins, their businesses and factories destroyed. U.S. companies had these markets to themselves, and so the post-World War II period of the 1950s and 1960s represented the golden era for U.S. business. The primary opportunities were in the areas of marketing, to develop the large potential markets for new products, and in finance, to support the growth. Since there were no significant competitors, the operations function became of secondary importance, because companies could sell what they produced. Even the distinguished economist John Kenneth Galbraith observed, “The production problem has been solved.”

Then in the 1970s and 1980s, things changed. American companies experienced large declines in productivity growth, and international competition began to be a challenge in many markets. In some markets such as the auto industry, American corporations were being pushed out. It appeared that U.S. firms had become lax due to the lack of competition in the 1950s and 1960s. They had forgotten about improving their methods and processes. In the meantime, foreign firms were rebuilding their facilities ...

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