IEM Prof. Z. A. Shaikh's Lecture on Industrial Engineering and Management

Industrial
Engineering
and
Management
Prof. Z. A. Shaikh
1Prof. Z. A. Shaikh

Brief introduction of
IEM
• In any industry, inputs are human efforts, materials,
energy, invested capital.
• Co-ordination or management of these inputs are
very much necessary for getting desired output or
profit.
• So, AIIE (American Institute of industrial engineers)
has defined industrial engineering as,
• “Concerned with the design, improvement and
installation of integrated systems of people,
materials, equipment and energy. ”
2Prof. Z. A. Shaikh

• Industrial engineers are concerned with reducing
production costs, increasing efficiency, improving the
quality of products and services, ensuring worker
health and safety, protecting the environment and
complying with government regulations.
• They "work to eliminate waste of time, money,
materials, energy and other commodities."
• Productivity Improvement (sole purpose of IE)
• It implies: a) A more efficient use of resources
b) less waste per unit of input supplied
c) less time and efforts 3Prof. Z. A. Shaikh

• Management means “the way of getting things done”
• Father of scientific management: Fredrick W. Taylor,
defined management as, “The art of knowing what
you want to do in best and cheapest way”
• Taylor introduced the concept of scientific
management when he started at Midvale steel
company in Philadelphia around 1880
• Management is the process of designing and
maintaining an environment in which individuals,
working together in groups, efficiently accomplish
selected goals.
5Prof. Z. A. Shaikh

• By expanding this definition….
• As managers, people carry out the managerial
functions of planning, organizing, staffing, leading and
controlling.
• Management applies to any kind of organization.
• It applies to all managers at all levels.
• The aim of all managers is the same to create a
surplus(profit).
• Managing is concerned with productivity.
6Prof. Z. A. Shaikh

Levels of Managers
• TOP LEVEL MANAGERS: They are responsible for
making organization-wide decisions and establishing
the goals that effect the entire organization.
• MIDDLE LEVEL MANAGERS: They manage the work of
first line managers / supervisors.
• FIRST LINE MANAGER: They manage the work of non
managerial employees.
8Prof. Z. A. Shaikh

Managerial skills
• These skills can be categorize into….
• Technical skills: Are of greatest importance at
supervisory level.
• Human skills: Are helpful in frequent interactions with
others.
• Conceptual skills: the ability to think and create new
things new ideas etc.
9Prof. Z. A. Shaikh

Goal of all Managers
and organization
• Productivity: Productivity is the output – input ratio
within the time period with due consideration for
quality. It can be expressed as follows………
Productivity = output / input
(within a time period, quality considered)
• Efficiency: Is the achievement of the ends with the
least amount of resources. (using minimum
resources, getting max.. Output)
• Effectiveness: Is the achievement of objectives within
a specified time period.
10Prof. Z. A. Shaikh

Functions of
Management

Evolution of
Management
• Management has been existed since the human
civilization
• With the onset of industrial revolution (Around 1750),
the structure of industry became complex and new
problems generated. At this stage theory of scientific
management became necessary.
• Robert Owen (1771-1858): He believed workers
performance was influenced by working
environment, working hours, housing, training,
canteen, rest places, kind treatment. He was also the
promoter of trade unions

• Charles Babbage (1792-1871): he advocated use science
and mathematics, investigation and accurate data to run
the factories, also suggested precise cost of every
process, paying of bonus, profit sharing etc.
• James watt jr. (1796-1848) and Robinson Boulten (1770-
1842) Forecasting, Market research, planned machine
layout, production planning, standardization of parts, etc
The real beginning of scientific management occur
in the last decade of 19th century. A group of persons
such as F.W. Taylor, Henri Fayol, H.L. Gantt, Emerson,
Gilberth, Carl Barth and others contributed to make the
scientific management into reality.

Contribution of
F.W. Taylor
• Laid the foundation of scientific management
between 1880-1890.
• During his carrier as a machinist and foreman, Taylor
observed much disorder in human resource, workers
do not work for even 1/3 rd of a day’s work, the
worker did not want the management to know how
much they work, moreover management does not
have idea what workers are doing.
• Taylor tried to work out some systems whereby the
interest of management and workers is same.

• Breaking of task into small elements and timing them
• Explored the inefficiency and labour difficulties in industry
through time study
• Selecting best worker for task and training them further to
aquire desired skills, equal division of work between workers
and management, which led to the scientific management.
• Concept named A fair day’s task: fatigue incurred by worker
and time necessary to complete a task.
• The work of each worker is planned atleast one day in advance
• Developed various work standards
• Costing system
• Wage incentive scheme.

Henry Fayol
(1841-1925)
• He found that all activities of the industrial
enterprise could be divided into six groups:
(i) Technical (relating to production);
(ii) Commercial (buying, selling and exchange);
(iii) Financial (search for capital and its optimum use) ;
(iv) Security (protection of property and persons);
(v) Accounting (Preparation of various statements,
accounts, returns etc.) and
(vi) Managerial (planning, organisation, command, co-
ordination and control)

principles of
management
Following are the widely talked and discussed fourteen
principles of management developed by Henri Fayol:
1. Division of Work:
Specialization of labour increases output by making
employees more efficient.
2. Authority: Managers must be given authority which, in
turn, gives them right to give orders. However, along with
authority must go responsibility too?
3. Discipline:
Employees must obey and respect the rules that govern the
organization. This helps an organization run smoothly.

4. Unity of Command:
Every employee should receive orders from only one superior.
5. Unity of Direction:
The efforts of each employee in the organization having the same
objective should be directed by one manager in the same direction.
6. Subordination of Individual Interests to General Interests:
The interests of the organization as a whole should be above the
interests of the individual employees.
7. Remuneration:
Employees should be paid fair remuneration for the services rendered
by them.
8. Centralization:
A proper proportion should be evolved between involving the
employees in decision-making activity (decentralization) and decision
made by the management (centralization). 18Prof. Z. A. Shaikh

9. Scalar Chain:
Communication should follow from the top management to
the lowest ranks of the employees.
10. Order:
Both people and materials should be in the right place at the
right time.
11. Equity:
Managers should be fair and kind to their subordinates.
12. Stability of Tenure of Personnel:
Management should make proper personnel planning to
ensure that replacements are available to fill vacancies. 19Prof. Z. A. Shaikh

13. Initiative:
Employees should be allowed and encouraged to
initiate the preparation of plans.
14. Esprit de Corps:
Promoting team spirit will build harmony and unity
within the organization. The team spirit is the key to
organizational success.

Qualities of an
Effective Manager:
(i) Physical (health, vigour, and address);
(ii) Mental (ability to understand and learn, judgement,
mental vigour, and adaptability) ;
(iii) Moral (energy, firmness, willingness to accept
responsibility, initiative, loyalty, tact and dignity);
(iv) Educational (acquaintance with matters related to
general functioning) ;
(v) Technical (peculiar to the functions being
performed); and
(vi) Experience (arising from the work).

Planning
• Definition: Planning is the fundamental management
function, which involves deciding beforehand, what is to
be done, when is it to be done, how it is to be done and
who is going to do it. It is an intellectual
process which lays down an organisation’s objectives
and develops various courses of action, by which the
organisation can achieve those objectives. It chalks out
exactly, how to attain a specific goal.
• Planning is nothing but thinking before the action takes
place. It helps us to take a peep into the future and
decide in advance the way to deal with the situations,
which we are going to encounter in future. It involves
logical thinking and rational decision making.

Characteristics of
Planning

• Managerial function: Planning is a first and foremost
managerial function provides the base for other functions
of the management, i.e. organising, staffing, directing and
controlling, as they are performed within the periphery of
the plans made.
• Goal oriented: It focuses on defining the goals of the
organisation, identifying alternative courses of action and
deciding the appropriate action plan, which is to be
undertaken for reaching the goals.
• Pervasive: It is pervasive in the sense that it is present in
all the segments and is required at all the levels of the
organisation. Although the scope of planning varies at
different levels and departments.

• Continuous Process: Plans are made for a specific term,
say for a month, quarter, year and so on. Once that period
is over, new plans are drawn, considering the
organisation’s present and future requirements and
conditions. Therefore, it is an ongoing process, as the
plans are framed, executed and followed by another plan.
• Intellectual Process: It is a mental exercise at it involves
the application of mind, to think, forecast, imagine
intelligently and innovate etc.
• Futuristic: In the process of planning we take a sneak
peek of the future. It encompasses looking into the
future, to analyse and predict it so that the organisation
can face future challenges effectively.

• Decision making: Decisions are made regarding the
choice of alternative courses of action that can be
undertaken to reach the goal. The alternative chosen
should be best among all, with the least number of
the negative and highest number of positive
outcomes.

Importance of Planning
• It helps managers to improve future performance, by
establishing objectives and selecting a course of action, for the
benefit of the organization.
• It minimizes risk and uncertainty, by looking ahead into the
future.
• It facilitates the coordination of activities. Thus, reduces
overlapping among activities and eliminates unproductive
work.
• It states in advance, what should be done in future, so it
provides direction for action.
• It uncovers and identifies future opportunities and threats.
• It sets out standards for controlling. It compares actual
performance with the standard performance and efforts are
made to correct the same.

Organizing
• It is the process of establishing orderly uses for all
resources within the management system of the
organization. It is a function in which the synchronization
and combination of human, physical, financial, and
information resources takes place for the achievement of
the results.
• Hence, organizing refers to the following process.
• Identifying and grouping of the work to be performed.
• Defining and determining responsibility and authority for
each job position.
• Establishing relationship among various job positions.
• Determining detailed rules and regulations of working for
individuals and groups in organization.

Importance of
organizing
• Organizing is essential because it facilitates administration
as well as operation of in the organization.
• By the proper grouping of the work and the employees,
production increases, overload of work is checked,
wastage is reduced, duplication of work is restricted and
effective delegation becomes possible.
• Organizing also facilitates growth and diversification of
activities through clear division of work.
• it becomes possible through organizing to provide for the
optimum use of technical and human resources. Besides
organizing also encourages creativity and enhances
interaction among different levels of management which
leads to unification of efforts of all.

Departmentation
• ‘Departmentation’ or ‘Departmentalisation’ is the process
of grouping the activities of an enterprise into several
units for the purpose of administration at all levels.
• The administrative units so created may be designated as
departments, divisions, units, branches, sections, etc.
• Departmentation can provide a necessary degree of
specialisation of executive activity for efficient
performance. It can simplify the tasks of management
within a workable span. It also provides a basis on which
the top managers can co-ordinate and control the
activities of the departmental units.

Departmentation by
Functions:
• The enterprise may be divided into departments on
the basis of functions like production, purchasing,
sales, financing, personnel etc. This is the most
popular basis of departmentation. If necessary, a
major function may be divided into sub-functions. For
example, the activities in the production department
may be classified into quality control, processing of
materials, and repairs and maintenance.

• What is the difference between Line Authority and Staff Authority?
• Line Authority vs Staff Authority
• Line authority is the type of authority that reflects superior-
subordinate relationships characterized by the power of decision
making. Staff authority refers to the right to advice on improving the
effectiveness for line employees in performing their duties.
• Main Responsibility Line managers are responsible for directing,
motivating and supervising employees towards achieving
organizational goals. Main responsibility of line staff is to provide
expert advice and support to line staff to allow smooth flow of
operations.
• Specialization Level of specialization is low in line authority. High
specialization is seen in staff authority.
• Adaptation to Environment Line authority is mostly suitable for
small and medium scale organizations. Staff authority can bring
wider benefits for large-scale organizations.

• The difference between line authority and staff
authority depends on the personnel the authority is
granted to. Decision-making power in routine
activities is associated with line authority while staff
authority deals with specialized work that provides
assistance for line employees. While line authority
can be seen in all types of organizations, staff
authority is found in selected organizations, notably
in large scale ones.

Effective organizing

• Identification of activities – Each organization exists for fulfilling a specific
purpose. This purpose identifies the activities which are performed by the
organization. For example, in a manufacturing organization, production of
the goods and their selling are the major activities in addition to the
routine activities. And these activities are in variance with the activities of a
service organization or an organization involved in the trading activities.
Hence the identification of the various activities of the organization is an
important step in the organizing function.
• Grouping of activities – Once the activities have been identified, then there
is a necessity that they are grouped. The activities are grouped in various
ways. The activities which are similar in nature can be grouped as one and
a separate department can be created. For example, activities related to
the purchasing, production, marketing, and accounting and finance can be
grouped respectively under purchase, production, marketing, and finance
departments etc. Further in each department the activities can be further
subdivided into various specific jobs.

• Assignment of responsibilities – Having completed the exercise of
identifying, grouping and classifying of all activities into specific jobs, the
individual employees comes into picture since the employees are to be
assign with the responsibilities to take care of activities related to the
specific jobs.
• Granting authority – On the basis of specific responsibilities given to
individual employees, they are to be provided with the necessary authority
for the discharge of the assigned responsibilities in order to ensure their
effective performance and in turn the performance of the organization.
• Establishing relationship – This is a very important part of the organizing
function since each employee in the organisation is to know as to whom to
report and which are the employee who are to work with him. This
establishes a structure of relationships in the organization which helps to
ensure that the organization has clear relationships. This structure of
relationships also facilitates the delegation.

Centralization vs.
Decentralization
• Companies with centralized structure concentrate their
authority in upper levels of management. For example,
the military has a centralized organization structure. This
is because the higher ups order those below them and
everybody must follow those orders.
• Decentralized companies have less concentrated
authority. In a decentralized organization, lower levels in
the organizational hierarchy can make decisions.
• An example of a decentralized organization is a fast-food
franchise chain. Each franchised restaurant in the chain is
responsible for its own operation. Broadly
speaking, companies start out as centralized organizations
and then progress towards decentralization as they
mature.

1. Relieves top management of some burden
of decision-making and forces upper-level
managers to let go.
2. Encourages decision-making and
assumption of authority and
responsibility.
3. Gives managers more freedom and
independence in decision-making.
4. Promotes establishment and use of broad
controls that may increase motivation.
5. Makes comparison of performance of
different organizational units possible.
6. Facilitates setting up of profit centers.
7. Facilitates product diversification.
8. Promotes development of general
managers.
9. Aids in adaptation to fast-changing
environment.
1. Makes it more difficult to have a uniform
policy.
2. Increases complexity of coordination of
decentralized organizational units.
3. May result in loss of some control by upper-
level managers.
4. May be limited by inadequate control
techniques.
5. May be constrained by inadequate planning
and control systems.
6. Can be limited by the lack of qualified
managers.
7. Involves considerable expenses for training
managers.
8. May be limited by external forces (national
labor unions, governmental controls, tax
policies).
9. May not be favored by economies of scale
of some operations.
Advantages
Decentralization
Limitations

Public Goal Setting by
Carlos Ghosn
Setting goals and making them public can be risky. Yet, leaders have to set the
direction for its followers. Carlos Ghosn who turned Nissan around set a very
ambitious goal of selling 3.6 million cars in 2005. This verifiable goal was widely
publicized. Doing so could have been risky for Ghosn because it can be measured
and a non-achievement could have resulted in a loss of his leadership abilities. On
the other hand, employees identified with this clear goal and were motivated to its
achievement. Indeed, the goal was achieved, partly be introducing new models,
the Murano and Fuga. Because of this leadership at Nissan, Ghosn has been
considered heading an alliance between Japanese Nissan, French Renault, and
American General Motors.

Is China losing its
Competitive Advantage?
Opportunities for India
• For many years, China enjoyed a steady GDP growth of around
9 percent. Chinese manufacturers benefitted from low-cost
labor, a cheap currency, and minimal regulations.
• However, things are beginning to change with higher labor and
energy costs
• In an environment of globalization, firms are now considering
leaving China and looking for opportunities in India and
Vietnam. A German sportswear company is looking for
opportunities in India where the costs are lower. However,
productivity would probably lag in India.
• Due to covid 19 pandemic also, most of the foreign companies
wants to shift their companies from china.
• Best locations for them are vietnam, taiwan, bangladesh, India

Tylenol’s 1982 scandal
• In 1982, seven people in chicago died after taking tylenol
due to an unknown suspect lacing the capsules with
cyanide.
• Its 37% market share dropped to 7%
• Despite tylenol was not responsible for this incident, they
pulled back their product from all stores.
• Loss of $100 million dollars.
• Tylenol was successfully reintroduced with tamper
resistant packaging, discounts, and sales presentation to
medical community.
• The brand survived due to swift action and effective
public relations and made huge profits afterwards.

Planning Hurdles for
the $2,500 Nano Car
• When the $2,500 TATA’s Nano car was introduced at the
Delhi auto show in 2008, it caused headlines around the
world. It also caught the attention of competitors such as
Hyundai Motor and Nissan-Renault who plan to introduce
low-priced cars
• since the planning of the Nano, costs have risen. Raw
materials, which constitute a substantial part of the cost,
have risen in price. Also, the factory is behind schedule.
Moreover, people around the plant near Kolkata have
protested about the way government has seized their
land without adequate compensation in order to build the
factory.

The car’s introduction comes at a time TATA Motors’ earnings fell in mid
2008s. The company’s stock price was also hurt, partly because of the
acquisition of Jaguar and Land Rover from Ford Motor Company. Still,
Ratan TATA is committed to the low-cost car project, although some
compromises may have to be made to keep the price low.
Perhaps the greatest obstacle is the land disputes. Some 40,000
protesters descended on Singur, a city some 25 miles outside
Kolkata, complaining that the state authorities together with the
industrialists took some 1,000 acres from the farmers to build the
Nano factory.7 Tata, in return, threatened to move the factory out
of the state. Indeed, in 2008 the company decided to relocate to
the business friendly state of Gujarat.8 The relocation could be very
costly for Tata and also could delay the introduction of the Nano
car. 44Prof. Z. A. Shaikh

IEM Prof. Z. A. Shaikh's Lecture on Industrial Engineering and Management

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