industrial_management__2003_1__

INDUSTRIAL MANAGEMENT

INDUSTRIAL

• A firm engaged in industry• An organized action of making goods and

services for sale .• Any thing having to do business .

MANAGEMENT

• An art of getting things done through others.

ENGINEERING

• The practical application of science to industry.

• The discipline dealing with the art or science of applying scientific knowledge to practical problems.

• Industrial management is the branch of engineering that deals with the creation and management of systems that integrate people, materials and energy in productive ways.

• it also involves studying the performances of machines as well as people.

• A training program in industrial management is aimed at putting emphasis on the use of computers, mathematics and statistics in management, training professionals for the position of manager/management responsibility in industrially oriented industries such as textiles,steel,power,chemicals,aviation etc.

CONCEPT OF MANAGEMENT

• For Satisfy wants, a person has to perform numerous activities but an individual not able to perform alone .He needs a group,family,society,organization etc.

• A central organ or agency is required to coordinate the activities & efforts of various individual working together in an organization so that they can work collectively as a team. Such an organ is called management.

• “Management is the process of getting things done through others.”

Marry parker

• “Management is the coordination of all resource through the process of planning,organizing,dircting and controlling in order to attain stated objectives”

Henry .L.Sisk

NATURE OF MANAGEMENT

• Multidisciplinary process• Dynamic • Science /art• Universality• Goal oriented• Group activity• Ongoing process

FUNCTIONS OF MANAGEMENT

• Planning• Organizing• Staffing• Directing• Controlling• coordinating

PLANNING

• It is the process of deciding in advance what to do,when to do,where to do ,how to do and who is to do

ORGANIZING

• It involves identification and grouping the activities to be performed for the attainment of common objective.

STAFFING

• Right man for right job.• It is the function by which manager builds an

organization through recruitment, selection and development of individuals an a capable employees.

DIRECTING

• Process of instructing,guiding,counselling,motivating and leading the human resources to achieve organizational objectives.

CONTROLLING

• Purpose is to ensure that every thing in the organization occurs in accordance with the predetermined goals.

COORDINATING

• Achievement of orderly group efforts and unity of action in the pursuit of a common goal.

MANAGEMENT AS A SCIENCE

• Systematic body of knowledge.• Universality of principles.• Experiments occurred.• Cause and effect relationships.

MANAGEMENT AS AN ART

• Art is personalized process and every artist has its own style.

• Practical knowledge based on practice• Personal skills• Positive motivation• Creativity• Improvement through practiceExample:-music,painting,dance etc.

MANAGEMENT AS A PROFESSION

• Profession means occupation which requires specialized knowledge ,training and skills.

Example:-Engineering , Medicine , MBA ,BBA

Both:science and art

• It is like a preparation of tea which contains both an art of presenting it to guest and a science of making it.

• Absence of any one will result inefficiency.

• But management is partially a science,an art and a profession.

THEORIES OF MANAGEMENT

1.Classical theory2.Neo -classical theory3.Modern Theory

CLASSICAL THEORY1.Bureaucracy theory (Max Weber)1864-1920

2.Scientific theory (F.W.Taylor)1856-1915

3.Administrative theory (Henry Fayol )1841-1925

NEO CLASSICAL THEORY

1.Hawthrone Experiments (George Elton Mayo) 1880-19492.Human Relation Movements3.Behavioural Approach

MORDERN THEORY

1.System Theory

2.Contingency Theory

INDUSTRIAL ENGINEERING

• The American Institute of Industrial Engineering (AIIE) has defined

“concerned with the design ,improvement and installation of integrated systems of people, materials, equipments and energy”.

• It is the branch of engineering that deals with the creation and management of systems that integrate people , materials and energy in productive ways.

• It is concerned not merely with the system of material ,equipment and processes but also with the people who interact with this system.

ROLE OF INDUSTRIAL ENGINEER

APPLICATION OF INDUSTRIAL ENGINEERING

• Before 1940,industrial engineering was mainly applied to manufacturing industries for improving methods of production to develop works standards or to formulate production control and wage policies

• Later on, its use also spread to non manufacturing activities such as construction ,transport ,airline ,maintenance ,public utilities, government and military operations

• Still today, industrial engineering finds major applications in manufacturing plants and industries.

• It is widely used in manufacturing & service sector.

• Some manufacturing applications are: formulation of production plans control of processes and plant inventory control design & scheduling of machines

• Some service applications : construction project planning Airlines operationsHospital managementTransportation problemsOptimal use of natural resources etc

SCOPE OF INDUSTRIAL ENGINEERING

HISTORICAL DEVELOPMENT OF INDUSTRIAL ENGINEERING

• Industrial Engineering has developed during past 250 years.

Pre industrial revolution (up to 1800) Industrial revolution(1800 -1890) Scientific management(1890-1940) Operation research & quantitative phase(1940-1980) Automation & computer integrated manufacturing

phase(1980-present)

• Development of industry has been gradual and has gone through various stages before coming to present state of hi-tech industrialization.

• but the people of ancient & medieval times had no such facilities .They had to depend on the power of their own hands & of their animals to produce ,even the small quantity of food.

• Today ,there is the use of machines.• The industrial development has gone through

various stages. The entire development of the industry is divided into two parts:

(1) the early stage which prevailed before the industrial revolution.

(2) modern stage ,which prevailed after the pre industrial revolution stage.

EARLY STAGE OF DEVELOPMENT

• The early stage prevailed before the industrial revolution .It is divided into three parts:-

(1)primitive/hunting/gathering society stage.(2)Agrarian economy stage(3)Handicrafts stage

Primitive/hunting/gathering society stage

• The first stage in the early part of industrialization is known as primitive stage. In this stage, the societies were self sufficient and fulfilled their requirements by exchange of goods among themselves. They spent most of their time in fishing, hunting and making weapons. These people had no division of labour concept. They used BARTER SYSYTEM (i.e.. exchange of one commodity for another)

Agrarian economy stage• Agrarian societies were primarily based on

agriculture or craft production rather than industrial production.

• Agricultural societies also provided bases for the establishment of economic institutions. Trade became more elaborate & money became the medium of exchange. It demanded the maintenance of rewards of transactions ,crop harvest taxation, government rules &regulations

Handicrafts stage

• The agrarian stage replaced by handicrafts stage.

• Artists lived in their villages and produced their products for local people.

• The craftsmen had to use simple hand tools and manual skills in manufacturing their products as there was no machinery available to them

INDUSTRIAL REVOLUTION

• Industrial revolution began in the mid eighteenth century when factories were first built and laborers were employed to work in them.

• Machine power began to substitute for human power.

• Lead to mass production of economical goods.• Improved &less costly transportation system

became available

• Created larger market for goods, larger organization developed to serve larger market.

• Created the need for formalized management practices.

• JAMES WALT CONTRIBUTION in 1774,James Walt developed steam engine.• ADAM SMITH’s CONTRIBUTION he was an economist. wrote the wealth of nation(1776). came out with the concept of division of labour, skill , development and specialization. Increased productivity by increasing each workers skill .Creation of labour-saving inventions & machinery.

• FRANK GILBRETH &LILLIAN MOLLER GILGRETH’S CONTRIBUTION

They came out with the concept of motion study(1991)-finding the best method to perform.

TAYLORS CONTRIBUTIONHe was an American and began his career as a

mechanist in U.S.A In the beginning of 20th century ,Taylor introduced

the concept of scientific management

• GEORGE ELTON MAYO’S CONTRIBUTION He was an American He was the leader of the team Introduced Hawthorne Experiment related to

human relations for finding out the productivity of workers.

• HENRY FAYOL’S CONTRIBUTIONHe was a French industrialist, began his career

as a mining engineer.Introduced fourteen principles of management

• MAX WEBERA German social scientistIntroduced bureaucratic model (ideal type of organization characterized by

division of labour,hierarchy,rules & regulations).

• CHARLES BABBAGESHe was a British mathematician at Cambridge

University.Father of modern computer.Was a very curious childScience, math were favourite subjects.Come out with time study concept (establish

work standard for job).

PRODUCTIVITY

• Productivity is one of the most commonly used buzz words in industrial engineering. It is a measure of how well resources are utilized to produce output.

• The term productivity, symbolizes the following:

* It relates output to input in any system, where some value addition is performed on the input resources.

*It is a quantitative measure of performance.

• According to Organization of Europe Economic Co-operation (OEEC)

“productivity is the quotient (ratio) obtained by

dividing output by one of the factors of production .Thus, it is possible to speak about productivity of capital ,investment or raw materials according to whether output is being considered in relation to capital, investment or raw material etc.”

Productivity = output input

Output = quantity of production Input = quantity of resources

Example: A company is manufacturing 24000 components per

month by employing 100 workers in 8 hours shift. so what will be the productivity level?

Productivity = output input = 24000 100x8 hrx30 days of a month = 24000 24000 = 1 component /man hour

PRODUCTION & PRODUCTIVITY

• Production is related to the activity of producing goods & services .It is a process (or system) of converting input into some useful value added output.

• Productivity is related to the efficient utilization of input resources into produced output in the form of value added goods or services .It puts emphasis on the ratio of output produced to the input used .Its focus is on how well the input resources is used for conversion into output.

PRODUCTIVITY INDEX

• The combined effect of efficiency and effectiveness is used in defining a term called productivity index.

• It is an integration of both efficiency and effectiveness. It indicates a combined effect of utilization (i.e.. efficiency)& performance (ie.effectiveness)

• Effectiveness: it indicates a measure of how well a set of targets or results are accomplished.

• Efficiency: it indicates a measure of how well the resources are utilized to accomplish a target or results.

• Productivity index = performance achieved input resources consumed or = effectiveness efficiency

TYPES OF PRODUCTIVITY INDEX

1.Labour productivity2.Direct labour cost productivity3.Capital productivity4.Direct cost productivity5.Energy productivity6.Raw material productivity

Labour productivity

• The resource inputs are aggregated in terms of labour hours. Hence this index is relatively free of changes caused by wages rates and labour mix.

Direct labour cost productivity

• The resource inputs are aggregated in terms of direct labour cost .This index will reflect the effect of both wages rates and changes in the labour mix.

Capital productivity

• Several formulations are possible .The resource inputs may be the charges during the period to depreciation ,in another ,the inputs may be the book value of capital investment.

Direct cost productivity

• In this formulation ,all items of direct cost associated with resources used are aggregated on a monetary value basis.

Energy productivity

• In this formulation the only resources considered is the amount of energy consumed.

Raw material productivity

• In this formulation, the numerators are usually weight of products, the denominators are the weight of raw material consumed

APPROACHES TO MEASURE PRODUCTIVITY

• It is important to measure it quantitatively. These are some important approaches to measure it:

1.partial productivity approach. 2.total factor productivity. 3.total productivity.

1.Partial productivity

It is defined on the basis of the class of the input being considered.

Advantages of partial productivity measure

• It is a good diagnostic measure to identify areas where improvements may be done

• Easy to calculate as an independent of other inputs.

• Easy to understand• Easy to compare with other industries.• Data may be easily generated from this.

Limitations of partial productivity measure

• It does not contain the overall effect of the system of performance.

• Focused areas of improvement are difficult to identify.

Total factor productivity

• It is the ratio of output to the sum of labour & capital inputs. Thus,

• Total factor productivity = net output labour + capital input = total labour - intermediate goods/services purchased

labour + capital input

Advantages of total factor productivity

• It is relatively easy to compile data from company records.

• Simple and easy technique.

Disadvantages of total factor productivity

• Many important inputs, such as material energy etc. are ignored.

• The net output does not reflect the efficiency of production system in a proper way.

Total productivity

• It is the ratio of total output to the sum of all input factors.

Advantages of total productivity

• It considers all the output & input factors. therefore, it is more accurate representation of real economic performance of the organization.

• It is easy for the top management to understand the company performance.

• Easy for cost accountants to compare.

Limitations of total productivity

• Difficult to generate company wise and sector wise data.

• Many indirect measures of input/outputs are ignored.

Ways to improve productivity

1. Machine manual labour be replaced by machines. reliable machines. automation.2. Management motivated work force better planning & co-ordination effective control of process

3. Processes computerization of system use of management information system(MIS) improvement in scheduling better material flow.4. Work design improve job design better work method on job training

5. work environment better lighting & illumination. proper ventilation safe work place Total quality management (TQM)6. Program suggestion scheme incentive schemes revise pay/policy

7. Technology acquire new technology8.Manufacturing strategy adopt stock less production strategy. Keep work place clean & environment friendly. Go for total change in the process

/product/strategy if the system is not working properly.

9. External environment better political stability purchasing capacity of buyersGlobalization & open market economy.

Factors affecting productivity

(a)Factors affecting national productivity

human factors technology & capital investments. Government regulation

(b)Factors affecting productivity in manufacturing & services

Product or service designMachinery & equipmentThe skill & effectiveness of the workers.

Production system• It is a part of larger system and it can be

viewed as a framework of activities within which the creation of value can occur. but in production system ,production of components and production of services included.

• It is the framework with in which the conversion of input into output occurs.

Types of production system

1. Continuous production (a) mass production/line production (b) flow production/process production2. Intermittent production/batch production.3. Job order production/project type

production.

Continuous production

• Continuous production is the specialized manufacture of idential articles.The machinery & equipments are fully engaged. The products which are in high demand are produced in large quantities. The continuous production can be classified into two types:-

(a) Mass Production

• In mass production, identical particles are produced in very large quantities, using automatic machines & equipments,

• e.g. – manufacture of bolts, nuts, automobile parts, gears, households articles like pressure cookers, electrical appliances like bulbs etc.

(b) Flow Production

• In flow production, the plant, equipment , machinery & layouts are designed to produce for the required product. The arrangement is not flexible. Industries using flow production are known as process industries.

( eg:- Paper mills, chemical industry, fertilizer factory, cement factory etc .)

2. Batch Production/ Intermittent Production

• In this type of production ,identical products are produced in batches of small quantity. After one batch of a particular products is produced, another batch of similar product is produced. The same machine and equipment are used.

• eg: machines tools , furniture ,clothes , shoes etc.

3. Job Order Production/ Project Type Production

• Job order production is the manufacture of products to meet specific customer requirements of special orders. This type of production is mainly concerned with special projects , models , special machinery or equipment to perform specialized tasks .

• In this type of production , the products are made when orders are received from the customers

• Example: large engines , material handling system , ship-building etc.

INDUSTRIAL OWNERSHIP

• A firm is an ownership organization which combines the factors of production(men , material & machines)in a plant for the purpose of producing goods or services & selling them at profit

• The ownership of an industry may be individual or collective .

Types of ownership

• The different types of ownership are:1.Single ownership .2.partnership.3.Joint stock companies.4.co-operative organization.5.State & central government owned.

1.SINGLE OWNERSHIP

• A business owned by one man is called single ownership. single ownership works well for those enterprises which require little capital & lend themselves readily to control by one person.

• Example : agriculture ,small scale industries , cottage industries , retail trade , handicrafts etc.

Suitability/applications

• It is suitable :1.For retail traders, service concern and small

engineering firms which require relatively small capital to start with & to turn.

2.For those businesses which don't involve high risks of failure.

3.When the business can be take care by one person.

Advantages of single ownership

• easy to establish as it does not require to complete any legal formality.

• Owner is free to make all decisions• This type of ownership is simple, easy to

operate & extremely flexible.• owner enjoys all the profits.• Owner can keep secrecy as regards the raw

materials used, method of manufacturing etc.

Disadvantages of single ownership

• The owner is liable for all obligations and debt of the business.

• The business may not be successful if the owner has limited money, lacks ability & not necessary experience to run the business.

• Generally, single ownership firm has limited life.

STATE & CENTRAL GOVERNMENT

• State government or central government owned enterprises are created in order to overcome some of the disadvantages of joint-stock companies.

• State or central government owned concerns have the advantages that raw materials , power , fuel ,transport are easily made & available to them.

The aim of such enterprises are:

1.Increase employment opportunities2.Look after well-being & welfare of public3.Minimize exploitation of workers & consumers4.Improve economic balance of the country.5.Have national progress & development. etc.

• Examples of some government owned enterprises:

(i)Fertilizer corporation(ii)Ship building concerns(iii)Steel making concerns(iv)Post & telegraph

• Government owned enterprises may not meet much success if:

(i)Public does not realize its duties & responsibilities

(ii)Incompetent persons occupy high levels(iii)High level management is dishonest & shows

favoritism etc.

PARTNERSHIP

• Section 4 of the Indian Partnership Act,1932,defines partnership as follows:

“ partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all.”

The persons who have entered into a partnership with one another are individually called “partners” & “collectively a firm ”.

The name under which business is carried on is called “firm name”.

Features of partnership

• Association of two or more persons.• Agreement• Carrying on a business• Lawful business• Profit sharing.

Rights of partner

1.Every partner has a right to take part in management of the business.

2.Every partner has a right to be consulted about the affairs of the partnership

3.Every partner has a right to inspect the books of account & have a copy of the same.

4.Every partner has a right to share the profit or loss with others in the agreed ratio.

5.In case of an emergency, a partner has the right to act according to his best judgment & be indemnified for the expenses incurred by him.

6.A person has the right not to allow the admission of a new partner.

7. On giving a proper notice, a partner has the right to retire from the firm.

Types of partner

1. Actual partner a person who becomes a partner by an

agreement and is actively engaged in the conduct of the business of partnership is known as an actual partner.

2.Sleeping /dominant partner A sleeping partner is one who does not take

an active part in the conduct of the business of the firm .He, like other partners , invests capital & shares in the profit of the business But a sleeping partner need not give a public notice of his retirement from the firm. He is not liable for any act of the firm done after his retirement .He is, however liable for the debts of the firm.

3.Nominal partner A nominal partner is known to the world as a

partner in the firm, but he does not share in the profits of the firm .

4.Partner in profit only

Sometimes partners may agree that a partner shall get a share of the profits only & that he shall not be liable to contribute towards the losses. Such a partner is known as a partner in profit only.

5. Partner by estoppels /holding out

Some times a person who is not a partner in a firm may, under certain circumstances ,liable for its debts as if he were a partner .such a partner is called a partner is called a partner by estoppels or holding out.

6.Minor partner With the consent of all partners for the time

being , a minor may be admitted to the benefits of partnership .A minor partner has a right to such share of the property and of the profits of the firms as may have been agreed upon.

JOINT STOCK COMPANY

• A joint stock company is an association of individuals called shareholders , who join together for profit and agree to supply capital divided into shares that are transferable for carrying on a specific business

• Death , insolvency,disablement of the shareholders does not affect the joint stock company.

• A joint stock company consists of more than twenty persons for carrying any business other than the banking business.

• These persons give a name to the company ,mention the purpose for which it is formed & state the nature & the amount of capital (shares) to be issued etc.& submit the proposal to the registrar issues a certificate in this connection ,the company starts operating.

• The managing body of a joint stock company is the board of directors elected by the share holders . The board of directors :

1) makes policies 2) takes decision 3) run the company efficiently.

• There are two types of joint stock company : (a) private limited company /sector (b) public limited company / sector

(a) Private company

• A private company is normally what the Americans call a close corporation .it means a company restricts the right to transfer shares and the number of members limit is between 2 to 50.

(b)Public Company

A public company means a company which by its articles:

i) Does not restrict the right to transfer its shares.

ii)No limit of members.iii)Does not prohibit any invitation to the public

to subscribe for any share / debenture of the company.

Differences between public & private company

1. Minimum number of members (a) the minimum number of members

/persons required to form a public company is 7.

(b) It is 2 in case of private company.

2. Maximum number of members (a) there is no restriction of maximum number

of members in a public company (b) where as the maximum number cannot

exceed 50 in a private company.

3.Number of directors (a) a public company must have at least 3

directors.(b) Where as in a private company, at least 2

directors.

4.Prospectus

(a)There is a need to issue a prospectus in a public company

(b)No need to issue a prospectus in a private company

5.Transferability of shares

(a) in a public company shares are freely transferable.

(b)There is a restriction of share transferability.

CO-OPERATIVE UNDERTAKINGS/ORGANIZATION

• Co-operative is a form of business organization formed by individuals to improve their economic conditions through collective efforts .such an association is registered under co-operative societies .

• These organization has been instituted in various fields such as production ,distribution , banking ,marketing etc.

• It is a voluntary association of economically weak persons who work for achievement of their common economic objectives on the basis of equality & mutual services.

Features of co-operative undertakings

• Individual having common interest and willingness to work together to improve their

financial positions from a voluntary association as co-operative.

• The members can leave the co-operative with due notice . There is no compulsion to continue.

• All the members of a co-operative society enjoys equal status.

• Each member is entitled to one vote only irrespective of the number of shares held by him

Forms of co-operative enterprise/organization/society

1.Consumers cooperatives ,in retail trade & services.

2. Producers cooperatives , for group buying & selling such items as dairy products , grains , fruits etc.

3.Cooperative farming for more & good quality yield from the farms

4.cooperative housing for constructing & providing houses to the members of the association at relatively lesser rates.

5.cooperative credit society , to provide loans to the needy individuals.