Industrial Management

and
Engineering Economy

1
 What is Management?

2
 The verb manage comes from the Italian
maneggiare (to handle — especially a horse)
 Which in turn derives from the Latin manus (hand)
 The French word mesnagement (later ménagement)
influenced the development in meaning of the
English word management in the 15th and 16th
centuries

3
 Definition of management

 Management is the art of getting things done through people

 Management is the process of getting activities completed
efficiently and effectively with and through other people
 Management is both an art and a science.
 It has scientific basis because management techniques are
susceptible to measurement and factual determination.
 It is an art because management means coordinating and getting
work done through others.

4
 What is this little lad doing?
Do you know where he is going?
Can you see where he is going?
Do you know what could happen if he
falls in the water?
Can you really see what the
consequences are going to be?
Have you got the big picture in mind?
With anything that one does in life you
start with the end in mind. You decide
what you want to achieve and then you
decide how you will work towards
achieving it. This is what management
is.

5
 So That You and Your
Followers Can Reach Our
Vision

Put Stepping Stones in

Place

Chart the Path

6
 In general "management" identifies a special group
of people whose job is to direct the effort and
activities of other people toward common
objectives.
 Simply, management gets things done through other
people by planning, coordinating and directing the
activities of an organization
 The decisions and judgments made are normally
oriented to the needs of the organization
 Management is a servant of administration

7
 Why Management?

 The Industrial Revolution brought about the

emergence of large-scale business and its need for
professional managers
 Management became more important as the
developments and complexities of technology and
human relationships get more challenging to those
who perform managerial functions

8
Shorter
Shorter life-cycles
life-cycles for
for innovative
innovative technologies
technologies
•Water power •Steam •Electricity •Petrochemicals •Digital networks
•Textiles •Rail •Chemicals •Electronics •Software
•Iron •Steel •Internal-combustion •Aviation •New media
engine

1st Wave 2nd Wave 3rd Wave 4th Wave 5th Wave

1785 1845 1900 1950 1990 1999 2020

60
60 yrs
yrs 55
55 yrs
yrs 50
50 yrs
yrs 40
40 yrs
yrs 30
30 yrs
yrs

Source: The Economist, February 20, 1999

9
What managements strives for?
 'Management strives involving a group of people
work together in the most effective and efficient
manner to achieve stated goals in the best and most
economical way'.

10
 Functions of management
 The subject of management can be considered a
process involving certain functions that a manager
performs
1. Planning
2. Organizing
3. Staffing
4. Directing
5. Controlling

11
1. Decision making

 Decision can be defined as an act involving mental

process at a conscious level in choosing a course of
action from available alternatives for the purpose of
attaining a desired result

12
Five steps of Decision making
1. Fact gathering process to lay a solid foundation for
understanding the situation
2. Recognition of the right problem
3. Generate as many alternatives as possible
4. Select the best alternative
5. Communicate the decision to others

13
2. Planning

Planning involves the predetermining of the course

of action to be taken in relation to the known event.
It also includes anticipating the possibilities of
future problems that might appear
Failing to plan means planning to fail.

14
Cont’d…
 It is a systematic activity which determines
when, how and who is going to perform a
specific job. It is rightly said “Well plan is half
done”.

15
 Cont’d…
 The increased importance of planning in a business
enterprise results from various changes in the
environment like

 changes in technology,

 government policy,

 overall economic activity,

 in the nature of competition and

 in social norms and attitudes.

16
 Cont’d…

 There are different planning executed in different

level of an organization
 Strategic planning: is formulated by top level managements for a long
period of time of five years or more

 Tactic planning: Concerned with the integration of various

organization units and ensures implementation of strategic plan

 Operational planning: are the plans which are formulated by the lower
level management for short term period of up to one year. It is concerned with
the day to day operation of the organization. It is detail and specific

17
 Cont’d…

 In general, the planning process may

systematically be composed of five elements:
I. Setting Primary & Intermediate Goals
II. Search for Opportunities
III. Formulation of Plans
IV. Target Setting
V. Follow-up of Plans

18
Organizing
 Organizing may be defined as the structure and
process by which a group allocates its tasks among
its members, identifies relationships and integrates
its activities toward common objectives

19
 Cont’d…
The organizing function of management brings together
human and physical resources in an orderly manner and
arranges them in coordinated pattern to accomplish
planned objectives.
Each organizational resource (human, material, finance
etc.) represent an investment from which the
management system must get the return. Therefore,
these resources should be organized properly for
efficient and effective use of the same goal.

20
 Cont’d…
A sound organization is necessary because it brings many benefits to the
management of an enterprise. Some of the benefits are:
 Good communication between the management and employees,
 Sound basis to evaluate the performance of individuals and groups,
 Well defined areas of works for each employee,
 Coordination of activities of various individual, groups, etc.,
 Effective delegation and decentralization,
 Adequate and effective control,
 Difficulty in empire building in any segment of the enterprise, and
 Stimulation of independent, creative thinking and initiative on the part of
the employees.

21
 Cont’d…

There are some principles of organization which are

guide lines for thought to operating managers and
researchers in an organization
1. Principle of objective : The organization must have a common goal, which must
be followed by each and every department and as well as by the people working
in it.
2. Principle of specialization : the organization should be set up in such a way that
every individual should be assigned according to his skills and qualifications.
3. Principle of coordination: There should be a proper system to co-ordinate the
activities of various department.

22
Cont…

4. Principle of Authority and responsibility: Every individual is given authority to

get the work done. Though authority can be delegated but responsibility lies with
the man who has been given the work. The responsibility cannot be delegated
under any circumstances.
5. Principle of balance: assignment of work should be such that every person should
be given only that much of work which he can perform well.
6. Principle of continuity :The organization should be amendable according to the
changing situations. The organization should be dynamic and not static. There
should always be a possibility of making necessary adjustments
7. Principle of Definition: The scope of authority and responsibility should be
clearly defined. Every person should know his work with definiteness.

23
8. Span of Control: Span of control means how many
subordinates can be supervised by a supervisor. The
number of subordinates should be such that the
supervisor should be able to control their work
effectively. Moreover, the work to be supervised
should be of the same nature.
9. Principle of Unity of Command: There should be a
unity of command in the organization. A person
should be answerable to one boss only.

24
12) Principle of Simplicity: The organizational structure
should be simple so that it is easily understood by each
and every person. The authority, responsibility and
position of every person should be made clear so that
there is no confusion about these things.
13) Principle of Efficiency:The organization should be able
to achieve enterprise objectives at a minimum cost.

25
 Cont’d…
 the
steps that are important when
organizing an enterprise
 Reflection on plans and objectives,
 Establishing major tasks,
 Dividing major tasks into subtasks,
 Allocating resources and directives for subtasks,
and
 Evaluating the result of implemented organizing
strategy.

26
 Cont’d…
Reflecting on
plans and
objectives

Evaluating
results for Establishing
organizing major tasks
strategy

Allocating
Dividing major
resources and
tasks into
directives for
subtasks
subtasks

27
 Staffing
Staffing deals with the workers and is worker-oriented
This function includes the process of placing the right
person in the right organiza­tional position
The process of matching the people and the jobs is done
by careful preparation of specifications necessary for
positions and raising the performance of personnel by
training and retraining of people to fit the needs of the
organizational position

28
 Controlling
 Control is the process that measures current
activities, quantitatively if possible, and guides it
toward some predetermined goal, plan, policy,
standard, norm, decision rule and criterion or
yardstick.
 The essence of control lies in checking and
correcting actions against desired results in the
planning process

29
 Cont’d…
 Controlling includes ensuring that employees perform
the work allocated to them in the ways laid down, and
with no wastage or duplication of time, effort or
materials.
 That involves much more than simply instructing a
given number of employees to perform work; they
must be supervised and managed so that their efforts
achieve the desired results.
 This requires that they are motivated, checked,
guided, taught and encouraged.

30
 Communication
 It serves as a linkage by which the other functions
explained are tied together
 There are three types of communications in an
organization
1. Organization charts show the flow of authority and the channels
through which the vertical and downward communication flows
2. Horizontal type whereby, managers on the same level of an
organization coordinate their activities without referring all matters to
their superior
3. The informal type

31
 Directing
 For the same idea, different organizations use different
terms such as
 Leading
 Executing
 Supervising
 Ordering and
 Guiding
 What ever terms are assigned to it, the idea of directing is
to put into effect the decisions, plans and programs that
have been worked out.

32
There are four types of leadership styles
 The dictatorial leader maintains a highly critical and negative
attitude in his relation with subordinates and advocates the
accomplishment of tasks through fear of penalties
 The benevolent - autocratic leader assumes a paternalistic role
which forces the workers to rely on him for satisfaction. This
type of leader must be exceptionally strong and wise individual,
so that his personality generates respect and allegiance. The
subordinates develop dependence on the leader to the extent that
they have very little chance of developing leadership qualities.
33
 The democratic leader suggests better methods and tries to
improve the worker's attitude. Unlike the others, not only he
depends on his capabilities but encourages consultation with
subordinates in planning, decision making and organizing.
With this type of leadership satisfaction is gained through a
feeling of group accomplish­ments.
 The fourth type of leadership style is a laissez - faire type
where the leader assumes the role of just another member of
the group and depends completely on subordinates to
establish their own goals and make their own decision
34
 Characteristics of a Good Manager
The Dual Aspects of any Manager's Job
 The modern 'world of industry' is very complex, and this very
complexity has led to what is called “specialization” and to the
"division of labor” by which different people specialize in
performing − and become specialists in − different types of work.
 It follows, therefore, that the “technical” or "functional”, i.e. the
specific work of different managers can and does vary
enormously.

35
Cont’d…
 Nevertheless, all those different types of managers, and all
others, should have considerable knowledge of the
technical aspects of their jobs in addition to being
proficient ‘managers of people’.
 It is, in any case, not easy to train, supervise and control
the work of others without knowing what they are or
should be doing.

36
Cont’d…
 So the duties of any manager or supervisor comprise two
quite different aspects:

1) The technical or functional aspect which is concerned

with the work to be performed by his enterprise or
department or section; and

2) The managerial aspect which is concerned with the

people who are to perform that work in his enterprise or
department or section.
37
Cont’d…
 Some estimates show that a managing director may spend
between 80% and 90% of his working hours on managerial
matters and only 10% to 20% of his time on the technical
activities. whilst senior managers may spend approximately 50%
of their work time on managerial activities and 50% on technical
activities; and supervisors and foremen may spend some 70% to
75% of their time on technical activities and only 25% to 30% of
their time at work on the supervision of their subordinates

38
Cont’d…

39
Personal Qualities Needed for Managerial Success
 Some of the more important personality traits of a successful
manager are the following:

Ability to Think Clearly and Logically: A manager needs to

be able, as the result of training, to approach each situation
and problem positively and objectively, without prejudgment
or being distracted by irrelevancies. This requires him to think
in a clear, orderly fashion and to marshal and arrange logically
in his mind all the facts and information available to him.

40
Cont’d…
The Abilities to Make Decisions and to Act Decisively:
These follow on from the foregoing, and also require a
measure of self-confidence; a belief in one's own ability
to succeed in solving problems in the right way, and in
one's own ability to deal effectively with different
situations and sets of circumstances.

41
 Cont’d…
1. Defining as accurately as possible the problem which needs to be
solved.
2. Obtaining all relevant information about the problem
3. Breaking down the problem into parts − very often the solution
to one part is obvious and leads, logically, to the solving of other
parts or the whole problem.
4. Comparing and judging the probability of success of any possible
different solutions to the same problem, and their possible
consequences on other areas.
5. Selecting the most attractive solution − making the decision

42
 Cont’d…
 The Ability to Use Initiative: from time to time a manager is
bound to come across problems or situations which are outside his
range of experience or outside the normal scope of his responsibly;
the latter can, perhaps, arise when a senior is away or is
unavailable for some reason. In such circumstances, particularly if
action is urgently needed, the manager must not simply leave the
matter until his senior is available or wait to be told what to do, but
must initiate - that is, lead the action without waiting to be
prompted.

43
 Cont’d…
 Ability to Handle Conflict: A good manager is calm, able to
listen, is positively responsive to criticism and is able to handle
conflicts and differences in a constructive manner. In order to
handle conflicts well, a manager must be confident, self-assertive,
fair and dominant. He should be highly tolerant of stress, as
conflicts generally lead to stress and tension. This would require a
sound mind in a sound body.

44
 Cont’d…
 Ability to Adapt Change and be Flexible: Any manager must be
able to adapt to changes and, if necessary, to cope with changed
circumstances, and ensure that his subordinates also do so.
 Adaptability to different situations and flexibility of mind are also
necessary in the routine, day-to-day running of a section,
department or an entire enterprise.

45
 Cont’d…
 Ability to Be Emotionally Stable: In dealing with different
problems and situations, some of which might be irritating,
annoying, worrying or heated − or include emotional displays (e.g.
tearful women, angry voices, etc.) by others − a manager must be
sufficiently mature to keep calm and collected. He must be able to
keep control over his own emotions and his temper whatever may
the provocation be, and be able to concentrate his attention on the
matter in hand, thinking clearly, logically, and avoiding hasty
reactions.

46
 Cont’d…
 Stamina and Concentration: mental fitness to work long and
hard without undue stress or strain.
 Besides mental alertness, a manager needs to be able to concentrate
his mind on the matter in hand even under the most tiring
circumstances and/or when he is under pressure; to focus or keep
one's mind intently fixed over a long period can be tiring,
particularly as there will be many different matters requiring
attention and concentration during a manager's working day.

47
 Cont’d…

 Drive and Determination: A manager needs the urge and

enthusiasm to stimulate action, not only by himself, but by other
people as well. He also needs the determination to keep going
whatever the difficulties, adapting his actions and decisions to
overcome problems encountered, and pressing on to a successful
conclusion.

48
 Cont’d…
 Leadership: Leadership is the ability of a person to exert a
positive influence over the thoughts, behavior and actions of
others, and then to direct their thoughts, behavior and actions
towards a common goal or objective.

49
Organization Structure
 planned organizational structure must not be overlooked
in the establishment of a new business. The stages in the
setting up of an effective organizational structure are 
 The activities which will be necessary to achieve the objectives
of the business must be established. 
 The various related activities should be grouped together into
departments; the most logical grouping is by 'function', that is,
by type of activity: production, marketing, finance, etc. 
 The activities of a particular department will be further divided,
and grouped together into sections;

50
Cont’d…
 An organization chart should be produced to depict the
proposed organization
 Based on estimates of the volume of work, which will be
performed by each section, the number of staff required
must be determined. Depending on the type of work to be
performed and on other factors, the numbers of
supervisors, junior and middle managers per section and
department must be given thought

51
Cont’d…
 The special knowledge or talents required by departmental
and sectional managers must be laid down. Coupled with this
is the necessity to lay down the extent and the limits of
authority and tile duties of all those who will hold managerial
positions and the authority to delegate must be provided. 
 The equipment necessary for the proper functioning of each
section and department must be decided upon, and provision
made for its positioning when considering the layout of the
accommodation for each unit. 
 To ensure effective coordination of all parts of the enterprise,
effective procedures and systems of communication must be
devised and installed.

52
Types of Organizational Structure
 There are four different types of organizations, namely

I. line,

II. functional,

III. line and staff, and

IV. matrix organization.

53
I. Line Organization
 sometimes called 'military organization', because it is how
the armed forces are organized. 
 there is a clear 'line' of responsibility and authority right
through the management structure from the board to the
lowest level of supervision, and below.

54
Cont’d…
 Line organization is simple and direct and is easy to
understand. The 'chain of command‘ is direct and so decisions
can usually be made quickly and implemented rapidly, because
of the directness of the control, the coordination of the
activities of all those employed in a department is simplified.
 The position (and status) of all the different people working in
a department can be easily seen, and so the extent of their
responsibilities, authority and duties can, be clearly defined
and understood, making disputes less likely.

55
Cont’d…

56
II. Functional Manager
 it is the function (the type of activity), which determines
the areas of authority and responsibility.
 An expert or specialist is placed in charge of each
function, and will have direct control of that function
wherever it is undertaken within the enterprise.

57
Cont’d…
 As the functional specialists are not involved in the day-to-
day running of the enterprise (which is the domain of the line
managers) they are free to the concentrate on their particular
functions that produce many benefits for the enterprise.
 However, this form of organization makes control difficult as
there are no clear lines of authority and it is similarly difficult
to establish responsibility when things do not go right.
 Furthermore, staff as well as supervisors and junior managers
become confused at being subject to the authority of more
than one superior.

58
Cont’d…

59
III. Line and Staff Organization
 In such a structure, the line managers control the primary
functions, such as marketing and production, which are
directly concerned with achieving the objectives of the
business; whilst the staff managers are generally involved
with secondary functions which assist the smooth and
efficient running of the primary functions.

60
 Cont’d…
MANAGING DIRECTOR
DIRECTOR

L WORKS L SALES L ACCOUNTS S PERSONNEL

MANAGER MANAGER MANAGER MANAGER

L L
L SECTION SECTION MANAGERS SECTION
MANAGERS SUPERVISORS & MANAGERS
SUPERVISORS & SALESMEN SUPERVISORS &
OPERATORS CLERKS

S EMPLOYMENT S TRAINING
OFFICER OFFICER
L – Line relationship: S – staff relationship
Responsibility and authority shown by
. SUPERVISORS SUPERVISOR
Staff. Advisory relationship shown by & CLERKS S
--------------- & CLERKS
61
IV. Matrix Organization (Project Organization)
 These are temporary organizational structures formed for
specific projects for a specific period of time and are
dismantled, once the required goal is achieved.
 A typical example for this kind of organizational structure
can be the goal to design
 The specialists are selected primarily on the basis of task-
related skills and expertise rather than decision making
experience or planning ability.

62
Cont’d…
 These structures are very useful when:
 The project is clearly defined in terms of objectives to be
achieved and the target date for completion of the project.
 The project must be separate and unique and not be a part of
daily work routine of the organization.
 There must be different types of activities which require skills
and specialization and must be coordinated to achieve the
desired goal.
 The project must be temporary in nature and not extended into
other related projects.

63
Cont’d…
 This kind of organization occurs frequently in:
 Construction ( e.g. building a bridge)
 Aerospace engineering ( i.e. designing and launching
weather satellite)
 Marketing( e.g. advertising company for new product)
 Installation of an electronic data processing system, etc.

64
Cont’d…
General
Manager

Labor Research Finance Personnel Technical

Services

Project A Manager

Project B Manager

Project C Manager

65
Cont’d…
 In matrix organization, it is possible for the individual
employee to have two managers. However, proponents of
matrix organization believe that it provides an agency
with the flexibility to work on critical projects.
 Matrix organization also brings together the specialized
talent that is often necessary to complete a project

66
Cont’d…
 Other advantages of matrix organization:
 Decision making is decentralized to a level where information
is processed properly and relevant knowledge is applied.
 Extensive communications networks help to process large
amount of information.
 With decisions delegated to appropriate levels, higher
management levels are not over loaded with operational
decisions.

67
Cont’d…
 Resource utilization is efficient, because key resources are
shared across several important programs or products at
the same time.
 Employee learns the collaborative skills needed to
function in an environment characterized by frequent
meeting and more informal interactions.

68
Cont’d…
 disadvantages include:
 Reporting for two supervisors which creates confusion
 The design encourages managers who share subordinate to
jockey for power.
 The mistaken belief can arise that matrix management is the
same thing as group decision making − in other words every
one must be consulted for every decision.
 Too much democracy can lead to not enough action.

69
 Productivity

© 2006 Prentice Hall, Inc. 12 – 70

 The Basics of Productivity
 In most businesses, competition for the available market,
forces the management of each enterprise to seek
competitive advantage through the use of:
 product improvements
 lower costs
 lower selling prices for the same or better quality and
 better service to customers

 Productivity is defined as the ratio of value of output to the

value of input

© 2006 Prentice Hall, Inc. 12 – 71

 Cont’d…
value of output
Productivity =
value of input

© 2006 Prentice Hall, Inc. 12 – 72

 Cont’d…

 An increase in production does not

necessarily by itself indicate an increase in
productivity.
 If the input of resources goes up in direct
proportion to the increase in output the
productivity remains the same

© 2006 Prentice Hall, Inc. 12 – 73

 Cont’d…

 If input increases by a greater percentage

than output, higher products will be achieved
at the expense of reduction in productivity

© 2006 Prentice Hall, Inc. 12 – 74

 Cont’d…

 In short higher productivity means to

produce more with the same expenditure, or
with a minimum increase in expense, or the
same amount is produced at less cost in
terms of resources

© 2006 Prentice Hall, Inc. 12 – 75

 Cont’d…

 The outputs may be products or services

and the inputs or resources may be land,
materials, plant machineries, tools and a
series of man

© 2006 Prentice Hall, Inc. 12 – 76

 Cont’d…

 Land Productivity: Better seed, fertilizer

and better method of cultivation may
increase the yield from two quintals to
three quintals. Hence land productivity
has increased by 50 percent.

© 2006 Prentice Hall, Inc. 12 – 77

 Cont’d…
• Material Productivity: If a skillful worker is able
to produce 300 formworks from 400 pieces of 2m
 1m sheet metal, while an unskillful worker can
only produce 250 out of the same material, then
with the skillful worker the material was used
with 20 percent greater productivity

© 2006 Prentice Hall, Inc. 12 – 78

 Cont’d…

 Machine Productivity: If a machine tool has

been producing 100 pieces per a working day,
and through the use of improved cutting tool
and/or proper maintenance procedure its
output in the same period is increased to 120
pieces, the productivity of that machine has
been increased by 20 percent.

© 2006 Prentice Hall, Inc. 12 – 79

 Cont’d…
 Productivity of Man: If a shoe maker has been
producing 30 pieces of leather parts per hour, and if
improved methods of work enable him to produce 40
pieces per hour the productivity of that man has
increased by 33.3 percent

© 2006 Prentice Hall, Inc. 12 – 80

 Cont’d…
 To sum up, a low level of productivity implies a
low growth of economy. A low growth of
economy meant, low income leading to low
standard of living and a low level of savings,
resulting in low level of investment and low
productivity

© 2006 Prentice Hall, Inc. 12 – 81

 Global

Higher Higher Higher International

Quality productivity competitiveness
multinational

Export

© 2006 Prentice Hall, Inc. 12 – 82

 Productivity Improvement
 Productivity is affected by many external and
internal factors. Some of the external factors,
influencing productivity to mention are:
 the national and international policies
 infrastructure supports
 cultural practices
 the availability of technology and natural resources
 organizational policies
 climate
 incentives and information

© 2006 Prentice Hall, Inc. 12 – 83

 Cont’d…

Examples of internal factors that are

identified to as hindering the rise of
productivity are:
 unsuitable personnel policies leading to a low level of
satisfaction and involvement;
 poor maintenance system and low level of
maintenance awareness;
 improper selection and training of personnel;

© 2006 Prentice Hall, Inc. 12 – 84

 Cont’d…
 inappropriate choice of design,
 tools, material and equipment;
 undefined standardization and quality policies;
 inadequate plant layout and materials handling
systems;
 poor planning, controlling and communication
systems;
 unsafe and unhealthy working environment

© 2006 Prentice Hall, Inc. 12 – 85

 Productivity Improvement
Strategy
A. Short term Strategy

• The first strategy is improving organizational

planning and control, to implement planned
maintenance of machinery and effective
production system in plants would show an
increase in machine productivity and
reduction in maintenance cost.

© 2006 Prentice Hall, Inc. 12 – 86

 Cont’d…

– The second action is increasing

manpower efficiency and effectiveness

at all levels. Effectiveness and efficiency
are the main tools of productivity.

© 2006 Prentice Hall, Inc. 12 – 87

 Cont’d…

• To be able to increase manpower

efficiency and effectiveness at all
levels of an organization what is
required is motivation, training and
education. This method has proved
itself successful in Japan.
© 2006 Prentice Hall, Inc. 12 – 88
 Cont’d…
• The third short term line of attack is
improving operation methods. The
techniques of method study involve
breaking a process into detailed
components.
• The study may result in elimination
of an activity, combination of several
activities, change of sequence of
activities, shortening duration of
activities etc.
© 2006 Prentice Hall, Inc. 12 – 89
 Cont’d…
• As Frederik Taylor said "Most of us
can do three or four times as much as
we ordinarily do without lengthening
working hours or even driving
ourselves to exhaustion by the day's
end".
• In fact, to achieve this, effective
implementation of method
engineering is required.
© 2006 Prentice Hall, Inc. 12 – 90
 Cont’d…
B. Medium Term Strategy
• At this stage the firm may require capital
to simplify and improve the products,
and reduce variety. The analysis consists
of common sense questions to come up
with effective solutions like substitution
of alternative materials, elimination of
parts where special designs have been
specified, redesign, etc.
© 2006 Prentice Hall, Inc. 12 – 91
 Cont’d…
C. Long Term Strategy
• Properly selected new machineries,
well organized departments and
proper layout will undoubtedly
contribute to an increase in
productivity.
• Furthermore, research and
development is the backbone for
productivity increment.
© 2006 Prentice Hall, Inc. 12 – 92
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© 2006 Prentice Hall, Inc. 12 – 93
 Functions of an Industrial
Enterprise
 Manufacturing functions
 Engineering Functions
 Control Functions
 Support Functions

© 2006 Prentice Hall, Inc. 12 – 94

 Manufacturing Function
 Receiving: has the responsibility for
accepting raw material from the carrier,
presenting for inspection, and getting it to
the plant
 Warehousing (or storing): has the
responsibility for storing raw material until
needed for production, and storing finished
goods until ready to be shipped to the
customers.
© 2006 Prentice Hall, Inc. 12 – 95
 Cont’d…
 Transportation: has the responsibility for
moving all types of materials within the plant
area and from the suppliers.
 Production: has the responsibility for
transforming the raw material into an
acceptable and economical finished product.
 Shipping: has the responsibility for packing and
delivering the finished goods to customers.

© 2006 Prentice Hall, Inc. 12 – 96

 Engineering Function
 Product Design: has the responsibility for the
development of new and salable products and
preparation of product description, product
drawings and product specifications.
 Process Design: has the responsibility for the
development of efficient processes for the
manufacture of the products developed by the
product design unit.

© 2006 Prentice Hall, Inc. 12 – 97

 Cont’d…
 Plant Engineering: has the responsibility for the
design and installation of new facilities and
ensuring that proper working conditions are
maintained.
 Cost Estimation: has the responsibility for
determining costs involved on product
manufacture. This includes design and
development cost of the product prior to
manufacture.
© 2006 Prentice Hall, Inc. 12 – 98
 Control Function
 Production Control: has the responsibility for
establishing forecasts, production plans, inventory
levels and product distribution.

© 2006 Prentice Hall, Inc. 12 – 99

 Control Function
 Quality control: has the responsibility for
establishing and maintaining the necessary
control of quality for raw materials, intermediate
products, and finished goods. It is also responsible
for the inspection of raw materials and finished
products for conformity to quality specifications.

© 2006 Prentice Hall, Inc. 12 – 100

 Control Function
 Cost Control: has the responsibility for
determining and reporting the design cost, the
manufacturing cost and comparing these costs
with the amounts allocated in the budgets.

© 2006 Prentice Hall, Inc. 12 – 101

 Support Function
 Purchasing: has the responsibility of buying the
necessary materials of the proper quality and
quantity at the most favorable price and securing
deliveries on time according to schedules
established.
 Sales: has the responsibility for selling the
company's product and for liaison after material
has been delivered

© 2006 Prentice Hall, Inc. 12 – 102

 Cont’d…
 Maintenance: has the responsibility for the
execution of preventive maintenance, repair of
old equipment, installation of new equipment
and provision of facilities.
 Personnel: has the responsibility for hiring,
administering and training workers; and for the
termination of employments.

© 2006 Prentice Hall, Inc. 12 – 103

 Project
• Think any industry, visit (service/manufacturing) it and
evaluate in all perspectives the plannings, organizational
structure, forcasting, facility layout, inventory
management , measure their productivity, develop
detailed production improvement implementation plan to
apply the six production improvement techniques

© 2006 Prentice Hall, Inc. 12 – 104