Course: Industrial Engineering and ManagementCode : MEE308

Winter Semester 2010-11

Unit-II Industrial Engineering and Productivity

Siva Prasad Darla / SMBS

Frederick Winslow Taylor Master of Scientific Management

IEM / SMBS / VIT 2

Contents Introduction to Industrial EngineeringIndustrial Engineer Skills and QualitiesHistory and Development of Industrial EngineeringActivities of Industrial EngineeringConcepts of Industrial EngineeringIntroduction to ProductivityBasic definitions of productivity measureAdvantages and limitations of productivity measuresProductivity benefit modelFactors affecting ProductivityProductivity improvement techniques

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Introduction to Industrial Engineering Industrial Engineering is concerned with the design, improvementand installation of integrated system of men, materials and equipment. It draws upon specialized knowledge and skills in themathematical, physical sciences together with the principles andmethods of engineering analysis and design to specify, predict and evaluate the results to be obtained from such systems- AIIE

Ex. Management Engineers/Health System EngineersSystem OptimizerIndustrial ManagerQuality EngineerReliability EngineerErgonomistOperations analyst

Similar fields- Operations Research, Management Science, Production and Material Handling Supply Chain, Engineering Management, Systems Engineering, Human Factors Engineering/Ergonomics, Process Engineering, Value Engineering, Quality Engineering, Statistics, Stochastic Systems,

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Industrial Engineering integrates knowledge and skills from several fields of science: Technical Sciences, Economic Sciences as well as Human Science - all these can also be supported with skills in Information Sciences.

Introduction cont..

Source: kwaliteg

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Good mathematical skillsStrong time management skillsGood common senseStrong desire for organization and efficiencyExcellent communication / salesmanshipCreative problem solvingQuantitative – aptitude skillsTechnical competencyContinuous drive for improvementResourcefulness Listening, negotiation, diplomacy and patienceAbility to adopt to many environmentContinuous desire to learnLeadership skillsEngineering Ethics

Skills and Qualities needed

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Micro motion study, fatigue studies, human factor in work, employee selection and training

Lillian M Gilbreth(1878-1973)

Motion study, method study, therbligs, relationship b/n output and effort of worker.

Frank B Gilbreth(1868-1934)

Scientific management principles, theory of management principles and methodologies. Constitution of day’s work, wage payment system, elimination of waste, training of workers, understanding b/n managers and workers.

Frederick W Taylor (1856-1915)

On the economy of machinery and manufactures and build ‘analytical calculating machine’

Charles Babbage (1832)

“The Wealth of Nations”- concept of division of work (speciali-zation of labour) include skill development, time savings and use of special machines to influence the factory system.

Adam Smith (1776)

Steam engine, provided machine power for factories to increase productivity.

James Watt (1764)ContributionsContributor

History and Development of IE

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Concept of work samplingLHC Tippet (1937)

Gantt charts, incentive pay systems, training of workers by management, recognition of social responsibility of business and industry.

Henry L Gantt (1861-1919)

Halsey premium plan of wage paymentFrederick A HalseyPh.D. in Motion study Ralph M Barnes

Economic aspects and responsible of the engineer’s jobHenry R Towne

Scientific management application to education and government

Morris L Cooke (1872-1960)

Principles of efficiency- Emerson’s efficiency bonus plan, million-dollars-a-day savings in railroads, methods of control

Harrington Emerson (1885-1931)

Mathematical analysis, slide rule, feeds and speeds studies, consulting to automobile industry

Carl G Barth (1860-1939)

ContributionsContributorHistory and Development of IE cont…

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• Robotics and Numerical Control (CNC Machines)• Computer assisted design like CAD/CAM/CIM/CAE, CAPP, CAQC• Statistical control for quality like SPC, SQC and TQM, Six Sigma• DOE, ANOVA• Reliability Engineering• TPM• Lean (just-in-time) manufacturing, Kaizen system, Kanban Production Control System• GT, CMS, Automation and FMS• Benchmarking• ISO Standards• CE –DFMA, Design for X• Process Re-engineering• Outsourcing• ERP• SCM• “Virtual” Organization• Customer Relationship Management• PDM, PLM• Advances in information technology and computer packages

History and Development of IE cont..Advances in computer technologies and software application packages

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Selection of processes and assembling methodsSelection and design of tools and equipmentDesign of facilityDesign planning and control systemsDeveloping a cost control systemDevelopment of time standards, costing and performance standardsDevelopment and installation of job evaluation systemEstablishment and installation of wage and incentive schemesDevelopment of standard training programmesDesign and implementation of value engineering and analysis systemOptimization of systems using Operations Research TechniquesPerformance evaluationOrganization StructureProject feasibility studiesSupplier selection and evaluationImplementation of various systems like MRP, ERP, Bar-code, RFID, ISO, TQM, Six Sigma

Activities of IE

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Role of industrial engineer

Industrial Engineer

Expert TrainerAdvisor and Consultant

Analyst of System

Decision Maker

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• Method study, Motion study, Work measurement• Facilities design• OR• SQC / SPC• Reliability• Capacity planning• Inventory management• Project scheduling CPM / PERT• Forecasting• PPC• VE / VA• Material handling system• Wage – Incentive schemes• Job evaluation• Ergonomics• System analysis• Quality Assurance and TQM

Concepts of IE

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JOURNALS AND MAGAZINES• International Journal of Industrial Engineering• IIE Transactions• INFORMS – OR/MS• Journal of Scheduling• Knowledge and Information Systems: An International Journal• Engineering Magazine• Institutions of Engineering (India)• Applied Ergonomics • Ergonomics • Human Factors in Ergonomics and Manufacturing • IEEE Industry Applications Magazine • IEEE Transactions on Robotics and Automation • International Journal of Flexible Manufacturing Systems • International Journal of Production Research• Journal of Engineering and Technology Management • Journal of Intelligent Manufacturing • Quality and Reliability Engineering International • Robotics and Computer-Integrated Manufacturing• Expert Systems with Applications• Knowledge Based Systems

Productivity

Industrial Engineering and Productivity(Unit – II)

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INTRODUCTION TO PRODUCTIVITY• Quesnay (1766) – word “productivity”• Littre (1883) – productivity defined as the “faculty to produce”• Early 1900s – Relationship between output and the means employed to

produce this output • OEEC (1950) – “Productivity is the quotient obtained by dividing output by one

of the factors of production”• Kendrick and – Functional definitions for partial, total factor and

Creamer (1979) total productivity• Sumanth(1979) – Total productivity- the ratio of tangible output to tangible input

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COMMON MISUSE OF THE TERM

Production is concerned with the activity of producing goods and/or services.

Productivity is concerned with the efficient utilization of resources (inputs) in producing goods and/or services (output).

XYZ electronic company produced 10000 calculators by employing 50 people at 8 hours/day for 25 days.

Production = 10000 calculatorsProductivity (of labour) = output / labour input

= 1 calculator per man-hoursThis company increased its production to 12000 calculators by hiring

10 additional workers at 8 hours/day for 25 days.Production = 12000 calculatorsProductivity (of labour) = 1 calculator per man-hours

An increased production does not necessarily mean increased productivity

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COMMON MISUSE OF THE TERMEfficiency is the ratio of actual output attained to standard output

expected.

consumed resourceachieved eperformanc

=

Effectiveness is the degree of accomplishment of objectives.

Productivity is a combination of both effectiveness and efficiency.

According to Mali [1978]

Productivity index

efficiencyesseffectiven

=

expendedinput obtainedutput o

=

y)(efficienc Fness)(effective findex ty Productivi =

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Basic Definitions of Productivity Measure

Partial Productivity is the ratio of output to one class of input. Labour productivity = output / labour input

Total-factor Productivity is the ratio of net output to sum of associated labour and captial (factor) inputs.

Total-factor productivity = net output / (labour and capital input)

Total Productivity is the ratio of total output to the sum of all input factors. Total productivity = total output / total input

Partial Productivity Measure

Total-factor Productivity Measure

Total Productivity Measure

Both the output and input(s) are expressed in real or physical terms by being reduced to constant rupees of a reference period (base period).

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Advantages and limitations of partial productivity measure

1. If used alone, can be very misleading and may lead to costly mistakes

2. Do not have the ability to explain overall cost increases

3. Tend to shift the blame to the wrong areas of management control

4. Profit control through partial productivity measures can be a hit-and miss approach

1. Easy to understand2. Easy to obtain the data3. Easy to compute the productivity

indices4. Easy to sell to management 5. Some partial productivity

indicator data is available industry wide

6. Good diagnostic tool

LimitationsAdvantages

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Advantages and limitations of total-factor productivity measure

1. Does not capture the impact of materials and energy inputs

2. The value-added approach to defining the output is not very appropriate in a company setting

3. Not appropriate when material costs form a sizable portion of total product costs

4. Only labour and capital inputs are considered in the total factor input

5. Data for comparison purposes are relatively difficult to obtain

1. The data from company records are relatively easy to obtain

2. Usually appealing from a corporate economist’s viewpoint

LimitationsAdvantages

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Advantages and limitations of total productivity measure

1. Data for computations are relatively difficult to obtain at product and customer levels

2. Does not consider intangible factors of output and input in a direct sense

1. More accurate representation of the real economic picture of a company.

2. Profit control through the use of total productivity indices is a tremendous benefit to top management.

3. If used in conjunction with partial measures, can direct management attention in an effective manner

4. Sensitivity analysis is easier to perform

5. Easily related to total costs

LimitationsAdvantages

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Productivity Benefits ModelImprovement in productivity

Increase in wages

Increase in demandfor goods and services

Lowering of prices Greater employment

Higher investmentsMore savingsMore profits

Reduction in product cost

More output Better machines

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Factors affecting Productivity

Capital / Labour Ratio

Capital Investment

Research and development- R & D expenditures are necessarily impacting productivity improvement, particularly when the data are considered at the industrial level.

Capacity UtilizationGovernment Regulations – Regulations to provide a balance between

industrial progress and desirable social goals.Age of Plant and Equipment

Energy Costs

Workforce Mix

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Factors affecting Productivity

Unions’ influenceManagement – Barry study showed that, on the average, only 4.4 hrs

per day are used productively; 1.2 hrs are lost because of personal and other unavoidable delays; and 2.4 hrs are simply wasted because of management’s ability to effectively plan and control the workers’ tasks.

Work EthicWorkers’ Fear About Loss of Jobs

Product

Materials Technology

Human factorsWork methods

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• Technology-based techniques– CAD, CAM, CIM– Robotics– Laser beam technology– Energy technology– Group technology– Computer graphics– Maintenance management– Rebuilding old machinery– Energy conservation

• Employee-based techniques– Financial incentives (individual and group)– Fringe benefits– Employee promotion, Job enrichment, Job enlargement, Job rotation– Worker participation– Skill enhancement

Productivity Improvement Techniques

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Productivity Improvement Techniques• Employee-based techniques

– Management by objectives– Learning curve, communication, working condition improvement– Training and education– Quality of supervision, recognition, punishment– Quality circles, PQ teams– Zero defects– Time management, Flextime

• Material-based techniques– Inventory control– MRP– Materials management– Quality control– Material handling systems improvement– Material reuse and recycling

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Productivity Improvement Techniques• Product-based techniques

– Value analysis / value engineering– Product diversification– Product simplification, product standardization– Research and development– Emulation– Advertising and promotion

• Task-based techniques– Methods Engineering / work simplification– Work measurement– Job design– Job evaluation– Job safety design– Human factors engineering– Production scheduling

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Reference:

Industrial Engineering – B Kumar

Productivity Engineering and Management – David Sumanth

Industrial Engineering and Management – O P Kanna