Industrial management

Objective of Industrial Management
1. Basics of Management &
multidisciplinary teams.
2. Professional & ethical
responsibility
3. Communication Skills
4. Financial Management &
environmental management
5. Manage jobs & business
6. Knowledge of management of
different industries
02/18/15 Dept. of E & TC, SCOE,Pune

Role of Industrial Engineer
1. Advocate/Activist:
2. Analyst:
3. Boundary Spanner:
4. Motivator:
5. Decision Maker:
6. Designer/Planner:
7. Expert:
8. Coordinator& Integrator:
9. Innovator/Inventor:
10.Measure:
11.Project Manager:
12.Trainer/Educator:
13.Data Gatherer:
14.Negotiator:

Unit 1: Basics of Management
Unit 2 : Quality Management
Unit 3 : Financial & Project Management
Unit 4 : Human Resource Development
Unit 5 : Entrepreneurship Management
Unit 6 : Management Information Systems
02/18/15 Dept. of E& TC, SCOE,Pune

Unit 1 : Basics of Management
Introduction, Definition of
management, Characteristics of
management, function of
management: Planning,
Organization, Staffing, Directing,
Co-ordination Controlling,
Motivating, Communication,
Decision making,
Principal of management- F. W.
Taylor, Henry Fayol, Elton
Mayo, Administration and
management, Nature of
management
02/18/15 Dept. of E & TC,SCOE,Pune

Unit 2: Quality Management
Definition of quality, goalpost view of
quality, continuous improvement
definition of quality, types of quality –
quality of design, conformance and
performance, phases of quality
management, Juran’s and Demings view
of quality, Quality Management
Assistance Tools: Ishikawa diagram –
Pareto Analysis – Pokka Yoke (Mistake
Proofing). quality circles, TQM, Kaizen,
Five S (5S), Six Sigma Quality
Management Standards (Introductory
aspects only)- The ISO 9001:2000
Quality Management System Standard-
The ISO14001:2004Environmental
Management System Standard- ISO
27001:2005 Information Security
Management System

Unit 3: Financial & Project
Management
Capital Structure, Fixed & working
capital, Role of Securities and Exchange
Board of India (SEBI), function of
money market and capital Market,
sources of finance, Introduction to
capital budgeting, Techniques of capital
budgeting ,Break even analysis -
assumptions, importance, Cost-Benefit
analysis, CVP graph, Project
Management, Project network analysis,
CPM, PERT and Project crashing and
resource Leveling.

Unit 4 : Human Resource
Development
Strategic importance HRM; objectives of
HRM; challenges to HR professionals;
role, Responsibilities and competencies of
HR professionals; HR department
operations; Human Resource Planning -
objectives and process; human resource
information system. Talent acquisition;
recruitment and selection strategies,
career planning and management,
training and development, investment in
training programme; executive
development, Case study on Recent
trends in Human Resource Development.

Unit 5 : Entrepreneurship
Management
Concept of entrepreneurship, Identification
of business opportunities, Generation of
business idea, Business plan, Preparation of
business proposal, Sources of finance –
government and nongovernment agencies,
Types of businesses / ownerships –
Partnership, Proprietorship, Private
limited company, Public limited company,
Joint stock, Co-operative society, Govt.
Sector etc, Policies and incentives for small
business development, Government policies
and incentives, Woman entrepreneurship,
Industrial relations, Case study on Small
scale industries in India.

Unit 6 : Management Information
Systems
Concept of data and information,
characteristics of information, 35.types
of information, Definition of MIS,
Need, Purpose and Objectives,
Contemporary Approaches to MIS,
Components of an information system,
Need to study information systems,
Classification of information systems,
Functional Business systems – sales &
marketing, Human resources,
accounting, manufacturing etc.
Decision-making models, Types of
decisions, Decision Support Systems,
Introduction to e-commerce, types –
B2B, B2C, C2B, C2C etc. Overview of
ERP, Business Process Re-
engineering.

References
Text books:
1.O. P. Khanna, “Industrial Engineering and Management”, Dhanpatrai publications,Delhi.
2 L.C.Jhamb , Savitri Jhamb , Industrial Management –I , Everest Publishing House .
Reference Books :
1.Dinesh Seth and Subhash C. Rastogi, “Global Management Solutions”, Cengage
Learning, Second Edition, USA.
2.B. Davis and Margrethe H. Olson, "Management Information Systems", Mc-Graw-Hill
International Editions.
3.Azar Kazmi , “Strategic Management & Business Policy “, Tata McGraw Hill, New Delhi
4.Kenneth C. Laudon and Jane P. Laudon, “"Management Information Systems", Eighth
Edition, Pearson Education
5.K.Shridhara Bhat, “Materials and Logistics Management”, Himalaya Publishing House,
Mumbai
6.M.Y. Khan and P. K. Jain, “Financial Management”, Tata McGraw Hill, New Delhi
7.Ravi M. Kishore, “Project Management”, Tata McGraw Hill, New Delhi

Unit 1 : Basics of Management
 Introduction of Management
 Definition of Management
 Characteristics of Management

Introduction of Management
• Management is one of the most imperative and
interesting disciplines of business.
• Coordinating work activities so that they are
completed efficiently and effectively with and
through other people
• Every product we use, every service we receive
and every action we take is provided or affected
by organizations. These organizations require
managers.

Definition of Management
• Management refers to all those
persons who are concerned with
management of the organization.
Such persons are given
responsibilities with authority to
execute policies of business.
• Management is art of getting
things done through and with
people in formally organized
groups.

Continue…….
• It defines aims and objectives of a business
• It set down plans, policies,procedures,programms,objectives of business
• It brings together various factors like: men, money, machine, methods,
market
• It makes the best possible use of all resources and factors of production
• It provides conditions in which persons who are associated with the
organization derive maximum benefit and satisfaction.

Characteristics of Management
• Management Is Goal Oriented
• Management Integrates Human, Physical& Financial Recourses
• Management Is Continuous
• Management Is Time Oriented
• Management Is all Pervasive
• Management Is a Group Activity
• Management Is Linked With other Fields of Study

Management Is Goal Oriented
• Management is highly goal
oriented activity.
• Success is measured in terms
of the achievements of
predetermined goals or
objectives.
• Example: If an organization
decides to provide better quality
products to their consumers,
then management directs the
required manpower and
resources in the proper direction
to get the expected results.

Management Integrates Human,
Physical & Financial Resources
• In any organization the different resources used are humans,
machines, materials, financial assets ,buildings etc.
• Humans have to work with non human resources to perform
their jobs.
• Management Integrates human efforts to those non human
resources. It brings harmony among available resources.

Management Is Continuous
• Management involves continuous
handling of problems and issues.
• It is an ongoing process.
• It includes the problem identification and
finding out the solution by taking
appropriate steps.
• Management is not only concerned with a
particular department like production or
human resources, it even involves
marketing, advertisement and so on

Management Is Time Oriented
• Management has to always ensure that the
production schedules are met and the targets are
achieved.
• All targets are always set in accordance with the
time and the results are also measured in terms of
time.
• The management has to ensure that it manages
particular features properly and is always relates it
to the other features of management.

Management Is all Pervasive
• Management is required in all types of organizations including
political, social, cultural or business as it assist and directs
various efforts towards a definite goal.
• Thus colleges, hospitals, business firms, clubs, government
organizations require management.
• Irrespective of the size or type of organization where more
than one person is involved needs management.

Management Is a Group Activity
Management is concerned with the group
activity rather than an individual’s
performance.
The efforts are measured in terms of groups
to achieve predetermined goal or
objectives.
To accomplish the objectives of an
organization every individual from the
organization needs to work in the team

Management Is Linked With Other
Fields of Study
1. Anthropology
2. Economics
3. Philosophy
4. Political Science
5. Psychology
6. Sociology

Continue…….
1. Anthropology:
- Anthropology is the study of societies. It helps
to learn about humans and their activities.
- It also elucidates the differences in fundamental
values, attitudes and behavior among people
in different countries as well as even within
different organizations

2. Economics:
- This is a study of the allocation, distribution of
scarce resources.
- It helps us to understand the changing
economy and the role of competition and free
markets across the globe.

3. Philosophy:
- It describes the nature of things, specially
values and ethics
4. Sociology:
- Sociology deals with the study of people in
relation to their fellow human beings

5. Political Science:
- Political science is the study of behavior of
individuals and groups within a political
environment.
- It also involves structuring of conflict,
allocating power in an economic system , and
manipulating power for individual self-interest

6. Psychology :
- This is thee study of human behavior. It seeks
to measure, explain, and sometimes change
the behavior of humans and other animals.

Nature of Management
Whether
it is an
art or
science?

Levels of Management

Top Level Managers
Risto Siilasmaa
Nokia
Indra K. Nooyi
PepsiCo, Inc

Role of Top Level Managers
• Sets the goals, objectives, policies etc
• Approving annual budgets
• Setting the salaries
• Responsible for shareholders for the
performance of business

Middle Level Management : The
Role
• Top level managers set goals & plans and according to that
middle level managers make plan
• Middle level managers executive plan
• They give training to the lower level managers
• Middle level managers interpret and explain policies from top
level to lower level
• Take a care about departmental activity
• They take a feedback from low level managers and present
towards the top level managers which help in decision making
process
• They motivate and inspires the lower level managers

Lower Level Management : The
Role
• Guide and instruct workers for day to day activities
• They are responsible for quality and quantity of
production
• Take a feedback from employees and present the
employees problems, suggestions in front of middle
level managers
• They motivates and inspire the workers
• They provides practical skills and training to workers
• Making a list and arrangement of machine, tools, raw
materials

Functions of Management
 Planning
 Organizing
 Staffing
 Directing or Leading
 Controlling

Planning
- Planning means what has to be done to achieve a particular
goal. In other words we can say that it is set of exact steps to
be taken to accomplish organization’s goal.
- A good plan always gives good results.
Example: If company decides to boost the sale. The necessary
steps could be inventory management, advertisement or
increase in sales staff etc. Once the proper plan gets ready
manager has to execute it step by step.

• Goals
• Objectives
• Strategy
• Policy
• Procedure
• Rules
• Program
• Method
• Budget

Continue…
• Planning is highly goal oriented
• Planning is a continuous processes
• Planning is pervasive
“ Planning is the preparation of tomorrow and it
an activity which allows managers to
determine what they want and how they will
achieve it ”

Organizing
• It is distributing or allocating
the activities of business among
different personnel
• The manager has to divide the
work in activities and assign
tasks to various groups of people

Purpose Of Organizing
• Match The Employees To The Task
• Communicate Properly
• Transfer Authority
• Prevents Corruption

Staffing
• Staffing is another important
function which manager needs
to perform.
• Determining the human
resource requirement from the
plan, manager has to speed up
the process of staffing by
selecting, recruiting, training
and developing the employees.
• Manager has to work with the
human resource department to
execute this function

Directing
• Directing includes the work
guiding and supervising
subordinates.
• Each and every manager is
responsible for his / her
department and he/ she should
provide necessary guidelines
to his/ her subordinates.

Importance Of Directing
• It Initiates Actions
• It Integrates Efforts
• Efficient Utilization Of Resources
• Coping With The Changes

Controlling
• Controlling means to check
the functioning of all the
works.
• It is following up what is
being done.
• Controlling consist of basic
steps viz. setting standards of
performance.
• Comparing actual with
these standards and taking
corrective steps whenever
deviations are there.

Steps In Controlling Functions
1. Set Standards To Measure Performance
2. Measure Real Performance
e.g. Sales growth is target of organization. The organization
should have a means of gathering and reporting sales data
3. Contrast Performance With The Standards
4. Take Corrective Actions
e.g. In a productivity or quality department workers and
managers often empowered to evaluate their own work

Summary……….
………. Planning includes the predetermined course of action
………Organizing concerned with the allocation of task
responsibilities within employees
….staffing include selection of proper personnel for proper
job in an organization. Staffing includes manpower
planning, recruitment, training, promotion etc.
…… Directing guidelines to subordinates to provide them
suggestion and instruction wherever needed
…….. Controlling include setting standards and comparing the
actual performance with standards performance.

Communication
• Communication is the process of
passing information and
understanding from one person
• Communication is a the process
of meaning full interaction among
human beings
• it involves a systematic process
of telling, listening and
understanding

Decision Making
• Generally all managers take
decision. They take decision
based upon some data and
their analysis.
• Decision are the choice of
management from of several
alternatives for that they use
several technical methods.
• Example: sales manager
takes decision for sale,
marketing manger for
marketing.

Managerial Skills
• Managers ,to effectively run an organization, must
possess certain skills that will enable them to perform
their tasks successfully
• Poor managerial skills can defect the most successful
activities and in many cases can lead to the downfall
of the organization
• Managerial Skills divided into 3 category:
-- Technical Skills
-- Human Skills
-- Conceptual Skills

Managerial Skills

Managerial Role
• Managerial roles divided into 3 groups:
A)Interpersonal : 1. Figurehead
2. Leader
3. Liaison
B)Informational : 1. Monitor
2. Disseminator
3. Spokesperson
C) Decisional : 1. Entrepreneur
2. Disturbance Handler
3. Resource Allocator
4. Negotiator

Interpersonal Role

Informational Role

Decision Role

Organization
• A social unit of people that is structured and managed
to meet a need or to pursue collective goals
• All organizations have a management structure that
determines relationships between the
different activities and the members and subdivides
and assigns roles, responsibilities, and authority to
carry out different tasks

Line Organization

Advantages of Line Organization
• Structure of line organization is easy to understand is simple
as well as easy to execute
• It is flexible and easy to expand and contract. Easily we can
add or remove member from this type of organization
• Due to simple structure the division of authority becomes clear
and simple
• Even communication among superiors as well as subordinates
is easy as there is no confusion among members
• This structure allows fast or speedy work as there is no
conflicts
• Due to perfect fixation of responsibilities the degree of
discipline is very high and thus very useful for an organization

Disadvantages of Line Organization
• It is very simple and small so it does not cover the complicated
relationship between people
• Line of organization is not able to focus on the work
specialization. People may have to do the job though they are
not specialized in that area
• Because of lack of specialization there is more wastage of
materials and man hours
• In this type of organization working is monotonous that only
superiors dictate the work to the subordinates
• In line organizations provisions are not frequently made to
train, develop and replace top executives as well as the
subordinates
• It may overload the subordinators

Applications of Line Organization
Textile Industry Paper Industry
Sugar Industry

Functional Organization
Superintendent
ShopOffice
Route clerk
Instruction Clerk
Time & Cost Clerk
Disciplinarian Gang Boss
Speed Boss
Inspector
Repair Boss

Advantages of Functional
Organization
• In this type of organization considered the work specialization.
Since a foreman is responsible for one function, he can
perform his duties in a better manner and produces the better
results
• Due experts advice there is reduction in the number of
accidents and wastage of materials, men and machine hours.
• Expert person like a foreman can give work related advice to
the workers so the workers so that they again perform better
and thus their productivity is also better
• Quality of work gets improved because of concentration in
only one specialized area of the concern person

Disadvantages of Functional
Organization
• In this type of organization the exposure given to the worker is
very less. There is no opportunity to the worker to show their
ingenuity, initiative or drive
• Due to number of foremen, workers may get confuse about the
activities and authorities of these numbers of foremen
• As there are various foremen working on the same level who
handles different activity, the coordination among these
foremen becomes a difficult task

Line and Staff Organization

Advantages of Line- Staff
Organization
• Required expert advice can be taken from the specialist staff
executive
• To concentrate on the production the line executives are made
free from the load by allocating work to the staff
• Due to proper work division there is less wastage of material,
men power ,machine
• Due to specialization the quality of product is improved
• The chance of confusion among the people are very less
because duties are clear to each and every person
• Line-Staff organization have all the advantages of functional
and line organization

Disadvantages of Line –Staff
Organization
• Due to increase in staff members and due their high salaries
and other official expenses the cost of the product gets
increased
• If functions are not properly cleared by line and staff,
organization may get confused
• If line executives are fully dependant on the staff member or
staff executive then they may lose their initiative, drive and
ingenuity
• If jealousies are developed between line and staff executive it
may cause harm to the enterprise

Business Organization
• Business organization refers to all those steps that need to be
undertaken for establishing relationship between men, material
and machine to carry on business efficiently with the intension
of earning profits.
• In short, it is what all is required to get a business rolling with
the underlying intension of making profits.

Characteristics of Business Organization
 Ownership: Refers to the
right of an individuals or a
group of individuals to acquire
legal title to assets or
properties for the purpose of
running the business
A business firms firm may be
owned by one individual or a
group of individuals jointly

Lawful Business
• The business activity that is
undertaken by the business
enterprise must be lawful.
• This implies that illegal
activities should not be
undertaken and the enterprise
should comply with the law of
the land

Separate Entity and Management
• Every enterprise is an
independent entity and has its
own assets and liabilities and a
separate way of functioning
•Separate entity is that the
profit or losses of one entity
cannot be passed to another
entity

Continuity
• The business
operations undertaken
by the entity should be
on a continuous basis
and cannot have one
single operation or
transaction

Risk
• Business is directly
associated with risk and
uncertainty
• The greater the risk the
greater has to be the profit

Types of Business Organization
• Sole Proprietorship
• Joint Stock Company
• Partnership
• Co-operative Society
• Joint Hindu Family Business
• Government Company

Sole Proprietorship

Characteristics of Sole Proprietorship
• Legal Status: There is no difference between the business
assets and the private assets of the sole proprietorship
• Liability: The liability of the sole proprietor is unlimited.
• Stability: The stability and continuity of the firm depend upon
the capacity, competence and the life span of the proprietor
• Legal formalities : A few legal restrictions may be there is
setting up a particular type of business.
Example: 1. To open a restaurant the sole proprietor needs a
license from the local municipality
2. To open a chemist shop, the individual must have a license
from the government.

Advantages of Sole Proprietorship
• Direct Motivation: The owner is directly motivated to put his best
efforts as he alone is the beneficiary of the profits earned
• Prompt Decision Making: As the sole trader takes all the decisions
himself the decision making becomes quick, which enables the
owner to take care of available opportunities immediately and
provide immediate solutions to problems
• Creation of Employment : A sole trader ship business facilitates
self employment and also employment for many others.

Disadvantages of Sole Proprietorship
• Unlimited Liability: In sole proprietorship, the
liability of business is recovered from the personal
assets of the owner. It restricts the sole trader to take
more risk and increases the volume of his business
• Uncertainty of Duration: The existence of a sole
trader ship business is linked with the life of the
proprietor . Illness or death of the owner brings an
end to the business. The continuity of business
operation is, therefore, uncertain.

Joint Stock Company
unit iJoint-Stock Company[1].mp4

Characteristics of Joint Stock Company
• Formation: A company comes into existence only when it has
been registered after completing the formalities prescribed
under the Indian Companies Act 1956
• Common Seal: Every company has a common seal by which
it is represented while dealing with outsiders. Any document
with the common seal and duly signed by an officer of the
company is binding on the company
• Transfer Ability of Shares: The members of a company are
free to transfer the shares held by them to anyone else.

Co-operative Society
• Rendering service rather than
earning profit
• Mutual help instead of
competition
• Self help in place of dependence

IFFCO :
IFFCO's mission is "to enable
Indian farmers to prosper through
timely supply of reliable, high
quality agricultural inputs and
services in an environmentally
sustainable manner and to
undertake other activities to
improve their welfare"
• Kaira Co-operative Processing Milk under the brand name AMUL

Types of Co-operative
• Consumer Co-operative:
e.g. Kendriya Bhandar in Delhi, Alaka in
Bhuhawaneshwar
• Producers Co-operative:
e.g. The Handloom Owner Co-operative
• Marketing Co-operative:
e.g. Kashmir Arts Emporium, J&K Handicrafts
• Housing Co-operative:
• Credit Co-operative:
e.g. Urban co-operative bank
• Forming Co-operative

Characteristics Of Co-operative Society
• Service Motive: The primary objective of any co-
operative organization is to render services to its
members in particular and to the society in general
• Voluntary Association: Individuals having common
interest can come together to form a co-operative
society. Any person can become a member of such an
organization and leave the same

Advantages of Co-operative Society
1. Easy formation: formation of cooperative society is easy as
compared to a company. Any 10 persons can voluntarily form
an association and get themselves registered with the registrar
of cooperative societies.
2. Limited liability: The liability of the members is limited to the
extend of capital contributed by them.
3. State assistance: cooperatives get a lot of patronage in the
form of exemptions and concessions in taxes and financial
assistance from the state governments which no other
organization gets.
4. Middleman’s profit: Through the cooperative the consumers
control their own supplies and by this means the middleman’s
profit is eliminated.

Disadvantages of Co-operative
Society
• Lack of Co-operation: Co-operatives are formed with the
very idea of co-operation. But ,it is often seen that there is lot
of friction among the members due to personality differences,
ego clash etc
• Lack of Secrecy: Maintenance of business secrecy is one of
the important factors for the success of enterprise which the
co-operatives always lack
• Dependence on Government: The inadequacy of capital and
various other limitations make co-operative dependant on the
government for support and patronage in terms of grants, loans

Partnership
• Persons from different walks
of life having ability,
managerial talent and skill join
together to carry on a business
• This increase the
administrative strength of the
organization, the financial
resources, the skill and
expertise and reduce risk

Types of Partnership
• Active Partner: Works activity in firm
• Sleeping Partner: Does not work, but invests
capital
• Nominal Partner: Firm uses his/ her name for
reputation

Characteristics of Partnership
• Sharing of Profit & Loss: The partner can share
profit in any ratio as agreed. In the absence of an
agreement ,they share in the profit
• Transfer of Interest: No partner can sell or
transfer his interest in the firm to anyone without
the consent of other partners
• Legal Status: The firm means partner and the
partner means firm. Law does not recognize the
firm as a separate entity

Advantage & Disadvantage of
Partnership Business
• Easy Formation
• Flexibility in operation
• Better Public Relation
• Instability: The death, lunacy of partner may bring
about an unexpected end to partnership
• Lack of Harmony: Every partner has equal right,
there are greater possibility of friction among the
partners. Disharmony which may ultimately result in
disruption and closure of the firm

Joint Hindu Family Business
• The success of Joint Hindu
Family Business is mostly
dependent upon the efficiency of
the KARTA and the mutual
understanding between the family
members
• Nevertheless , this type of
business is losing its ground with
the gradual decline in the joint
Hindu family system

Can a Female member be the KARTA?
---The answer is no. An unmarried
daughter, in the unfortunate event of
her father passing away, will become
the karta of the organization if she
has no brother

Advantage & Disadvantage of Joint
Hindu Family Business
• Sharing of Knowledge and experience: A Joint
Hindu family business provides opportunity for the
young members of the family to get the benefits of
knowledge and experience of the elder members
• Scope for misuse of power by the Karta: Karta has
absolute freedom to manage the business, there is
scope for him to misuse it for his personal gains.

Government Company

Characteristics of Government Companies
• Formation: Government company is formed
and registered under Indian Companies Act
1956 either as a Private Company or Public
Company
• Ownership: State Government or Central
Government or both may own the Government
Company

Advantages of Government
Company
• It provides healthy competition to private
sectors
• The profit of the companies are utilized for the
further expansion activities
• Government company facilitates all round
industrial development by taking up projects in
the neglected areas where private sectors
hesitate to invest

Disadvantages of Government
Company
• As most of the government companies take the
assistance of civil servants, they are not
technical persons
• Most of the government companies experience
slackness in management under the grab of
public services. These are not treated as
efficient as private units because of this state
of affairs found

Principles of Management
- A fundamental truth or proposition that serves
as the foundation for a system of belief or
behavior or for a chain of reasoning
- Result of cause and effect relationship
- Henry Fayol, F.W.Taylor, Elton Mayo

Classical Theory : Henry Fayol
Henry Fayol famous
industrials of France, also
known as a father of
management has described
14 principals of
management

14 Principle’s of Management
1. Division of work
2. Discipline
3. Unity of command
4. Unity of Direction
5. Fair Remuneration
6. Principal of order
7. Principal of Equity
8. Principal of Stability tenure
9. Principals of Initiative
10. Subordination of individual
11. Centralization and Decentralization
12. Scalar Chain
13. Authority
14. Esprit-de-Crops
unit i14 Principles of Management - Henri Fayol.mp4

Scientific Management : F.W.Taylor
The core ideas of scientific
management were develop by
Frederick Taylor in 1880
Its main objectives was improving
economic efficiency, especially labor
productivity
unit iEpisode 143_ Taylor's Scientific Management.mp4

Behavioral Theory : Elton Mayo

• Trade – goods and services.
– You can buy a TV from China, car from Japan, clothes from Indonesia or
Italy.
– You can hire someone from India to write software or answer your
telephone
• Capital – money, investment
– You can put your savings into a bank in Zurich.
– You can buy stock in SONY, a Japanese company
• People – immigrants, refugees, tourists
– Immigrants come to Calgary from Asia, Africa, S. America, Europe
– You can easily travel to Europe, Asia, S. America
• Communication
– You can easily call or email people around the world
• Culture (art, music, cuisine)
– You can hear music from Brazil, South Africa, India
– Nearby restaurants: Chinese, Thai, Ethiopian, Indian
• Ideas

What is Globalization?

MC Donald’s…
Israel
India
Russia
Japan

Globalization
The process by which businesses or
other organizations develop
international influence or start
operating on an international scale
Globalization means integration of
economies and societies through cross
country flows of information ,ideas,
technologies, goods, services, capital,
finance and people.

What is Globalization Process?
• Domestic company export to foreign countries directly on its own
• Domestic company export to foreign countries through the dealers
• Domestic company becomes an international company by
establishing production and marketing operations in foreign
countries
• Company becomes a true foreign company by serving the needs of
foreign customers

Reasons for Globalization of Markets
• The companies found that the
size of domestic market is very
small to suffice the production
output and hence opted for
foreign markets.
• companies globalize markets in
order to increase their profits
and achieve company goals.
• To cater to the demand for
their products in the foreign
markets.

Reasons for Globalization of Production
• Availability of high quality raw materials and
components in other countries.
• Availability of inputs at low cost in foreign
countries.
• Availability of skilled labour resources at low
cost.
• To reduce the cost of transportation and easy
logistics management.
• To design and produce the products as per the
varying tastes of customers in foreign countries.
• Ex: Jet Airlines has 132, 500 major components.
These components are produced in 545 different
locations of the globe.

Reasons for Globalization of Investment
• Significant amount of FDI directed to the developing
countries in Asia and Eastern Europe.
• Small and medium sized companies have started
investing in various countries.
• Global companies in order to have control over
manufacturing and marketing activities, invest in the
foreign countries.

Advantages of Globalization
- Impact of industrial areas: The production of the world in entirely effected. As
there is no physical barrier the exchange of goods and services becomes easier
reason being the world is treated as global village.
- Change in financial aspects: The economy is affected by globalization to a great
extend as it makes a lot of profit, reason being a common ground of exchange of
goods and services is provided to them
- Increases economic prosperity and opportunity
- Higher degrees of political and economic freedom in the form of democracy
- Improved standard of living – reduction in poverty
- Increased life-span

Disadvantages of Globalization
 Increased environmental damage
 Increased poverty, inequality, injustice
 Erosion of traditional culture
 Corporations are motivated by profit and have
little concern for people
 Economic globalization developments feed into
ethnic, religious, and factional tensions that lead
to wars and help breed terrorism

Unit 2: Strategic Management
Characteristics of Strategy management,
Minzberg5p’s,Carporation,Bussiness,Functi
on levels of Strategy. Strategic management
process, Preparing an Environmental Threat
and Opportunity profile (ETOP), Industry
analysis, Porter's five force model of
competition, BCG Matrix, GE 9Cell model,
Balanced scored card, Generic competitive
Strategies-Low cost ,Differentiations, Focus.

What Has Napster
Wrought?
Example of Strategic Management : Napster

What is strategy?
• Strategic management can be used to
determine mission, vision, values, goals,
objectives, roles and responsibilities, timelines,
etc.
•“Anything that a firm does especially well
compared to rival firms”

What is strategy?
• The process by which objectives are
formulated and achieved is known as strategy
• Without a strategy ,the organization is like a
ship without a rudder.
• Without an appropriate strategy effectively
implemented, the future is always dark and
hence more are the chances of business failure

What is strategy?
• Strategy means bridge the gap
between policies and tactics
• an action or strategy carefully
planned to achieve a specific end

What is strategiC management?
•Strategy is all these—it is perspective,
position, plan, and pattern
• Strategy is the bridge between policy
or high-order goals on the one hand and
tactics or concrete actions on the other
• Strategy and tactics together straddle
the gap between ends and means
• In short, strategy is a term that refers
to a complex web of thoughts, ideas,
insights, experiences, goals, expertise,
memories, perceptions, and
expectations that provides general
guidance for specific actions

strategiC maNagemeNt proCess
Situation Analysis, in the form of information gained by
the internal environment and scanning the external
environment, is used to develop the company's
strategic vision and strategic mission.
Strategy Formulation is guided by the company's
strategic vision and strategic mission, and is
represented by strategies that are formulated or
developed and subsequently implemented or put into
action.
Strategy Implementation strategic competitiveness
and above-average returns result when a company is
able to successfully formulate and implement value-
creating strategies that others are unable to duplicate.
Strategy Evaluation & Control links the elements of the
strategic management process together and helps
companies continuously adjust or revise strategic
inputs and strategic actions in order to achieve desired
strategic outcomes

Characteristics of Strategic
Management
• Nature
• Uncertain
• Complex
• Long Term Implication

Characteristics of Strategic
Management
•Organization Wide : Strategic management
has organization wide implication. It is not
operation specific. It is a system approach. It
involves strategic choice
• Fundamental: Strategic management is
fundamental for improving the long-term
performance of the organization
• Implementation: Strategic management
ensures that the strategy is put into action,
implementation is done through action plans.
• Implications on Relationship : Strategy
involves important decisions and these
decisions have implications for external
relations of the company with suppliers,
customers and the society

Strategic Management Process

LeveLs of strategy

Corporate LeveL strategy
• Corporate level strategy occupies the highest
level of strategic decision-making . Top
management of the organization makes such
decisions.
• Covers actions dealing with the objective of
the firm, acquisition and allocation of
resources and coordination

BusiNess LeveL strategy
• Business-level strategy is – applicable in those
organizations, which have different
businesses-and each business is treated as
strategic business unit (SBU)
• Business-level strategy concerned with
developing distinctive capabilities, resources
and competitive advantage in each unit

fuNCtioNaL LeveL strategy
• Functional strategy, as is suggested by the
title, relates to a single functional operation and
the activities involved
• Concerned with efficiently deploying
specialists within the functional area
• Below the functional-level strategy, there may
be operations level strategies as each function
may be dividend into several sub functions

eCoNomiC faCtors
• Economic factors affect the purchasing power of
potential customers and the firm’s cost of capital
• These factors include: business cycle, inflationary
trends, consumption, employment, investment,
monetary, and fiscal policies
• Ex: The most recent fiscal policy event that has
happened, that delays Medicare price restraints on a
class of drugs including Sensipar. This provision leads
to AMGen having two more years to sell Sensipar
without governmental controls. The delay of Medicare
price restraints has a positive effect on AMGen

poLitiCaL faCtors
• Political factors are how and to what degree
government intervenes in the economy
• Political factors include: political power,
ideologies, interest groups, social stability,
legislation, and regulation.
• Ex: One of the most recent and controversial
legislations passed. AMGen expects a drastic
increase of competition in future years due to
this legislation. The legislation allows the
approval of bio similars, generic biotech drugs, to
take significantly shorter time

soCiaL faCtors
• Social factors impact an organization due to
the social, cultural, demographic, and
environmental profiles in the industry.
• Social factors include: age distribution,
geographic distribution, income distribution,
mobility, education, family values, and
business attitudes.

teChNoLogiCaL faCtors
• Technological factors impact how an
organization or company operates in relation
to equipment used in the company’s
environment.
• Technological Factors include: rate of
technological change, future raw material
availability, raw material cost, technological
developments, and product life cycle.

geographiCaL faCtors
• Geographical Factors are important to the overall
analysis of a company
• Geographical factors include: plant/warehouse
location, relocation of facilities, headquarters,
and foreign markets
• Although the United States markets contribute to
more than 75% of AMGen's Annual income.
AMGen has been working to increase its reach in
international and foreign markets. The company
has extended its products to high-growth regions
such as Japan, China, Russia, and Africa

eNviroNmeNtaL threat aNd
opportuNity profiLe (etop)
• ETOP is a process of dividing the
environment into different sector and
then analyzing the impact of each sector
on the organization
• ETOP provides a clear picture to the
strategists about which sector and
different factors have favorable impact
on the organization

steps iN aN etop
1. Identify major Environmental factors such as:
economic, political, social, technological,
competitive, geographical, etc.
2. Environmental factors are then sub-divided into
subsectors of each factor.
3. These factors are then analyzed to determine
major weaknesses and strengths in each of the
subsectors.
4. The impact of each factor is then accessed as
being either favorable, unfavorable, or neutral.

iNdustry aNaLysis
• Industry analysis involves reviewing the
economic, political and market factors that
influence the way the industry develops
• Industry analysis explains why one industry is
very profitable and all the competitors make
good money while another industry has much
lower profit and many business operate on a
marginal basis

Aspects of Industry Analysis
• BasiC iNdustry CoNditioNs:
Basic conditions of the industry include factors
such as size of the industry, product
categories, volumes of each category ,
product substitutes, current and past
performance of the industry

iNdustry eNviroNmeNt
• Industry environment can be defined as the
relationship of firms with three sets of
players: customers, suppliers and competitors
• Industries can be classified based on their
environment as fragmented, emerging,
matured, declining and global industries

iNdustry struCture
• Industry structure means the fundamental
economic and technical forces operating in an
industry.
• Each firm has its own set of features such as
number of workers , market size, shares of the
members, nature of competition, cost
structure

iNdustry attraCtiveNess
• Industry attractiveness includes : potential of
the industry , growth opportunities within the
industry, profitability , and the barriers to
entry and exit from the industry

iNdustry performaNCe
• Industry performance means studying the
patterns of production , sales , profitability
and technological development

iNdustry praCtiCes
• Every industry has particular patterns with
respect to distribution, pricing, promotion ,
methods of selling, service field support, R&D
and legal tactics

emergiNg treNds
• These trends can emerge by analyzing issues
such as the product life cycle stage of the
industry , rate of growth , innovation in
product , entry and exit of firms and emerging
changes in the regulatory environment

BCg matrix
• The growth–share matrix is a chart that was created by
Bruce D. Henderson for the Boston Consulting Group in 1970
to help corporations to analyze their business units
• The Boston Consulting group’s product portfolio matrix (BCG)
is designed to help with long-term strategic planning, to help
a business consider growth opportunities by reviewing its
portfolio of products to decide where to invest, to
discontinue or develop products

the 4 segmeNts
o Stars: High Market
Growth Rate , High
Market Share
o Cash Cows: Low Market
Growth Rate, High
Market Share
o Question Marks: Low
Market Share , High
Market Growth Rate
o Dogs: Low Market
Growth Rate, Low
Market Share

LimitatioNs of BCg matrix
• BCG Matrix classifies business as low and high,
but generally business can be medium also
• High market share does not always leads to
high profits
• Market growth rate and market share are not
the only indicators of profitability
..DocumentsBCG.mp4

ge 9 CeLL matrix

Segments of GE 9 CELL Matrix
• Each SBU can be portrayed as a circle plotted
on the matrix, with the information conveyed
as follows:
• Market size is represented by the size of the
circle
• Market share is shown by using the circle as a
pie chart
• The expected future position of the circles is
indicated by an arrow

• Industry attractiveness and SBU strength are calculated by first identifying the criteria for each unit
• Determining the value of each parameter in the cell
• Then each parameter is multiplying by a weighting factor. Each factor is assigned a weighting that
is appropriate for the industry
• The industry attractiveness then is calculated as follows:
Industry-attractiveness:=
Parameter value 1 x factor weighting 1
+
Parameter value 2 x factor weighting 2
+
Parameter value N x factor weighting N
• The INDUSTRY ATTRACTIVENESS INDEX : is made up of such factors as market size, market growth,
industry profit margin, amount of competition, the degree of seasonal and cyclical fluctuations in
demand, and industry cost structure
• The STRATEGIC BUSINESS UNIT STRENGTH consists of factors like relative market share, price,
competitiveness, product quality, customer and market knowledge, sales effectiveness, and
geographic advantages

The BLACK ZONE
• In this zone business is strong and the market
is attractive
• Company should allocate resources in this
business and focus on growing the business
and increase market share
• This zone is divided into 3 cells, each one
indicating the position of the business unit or
product offering & each cell will have different
strategic advice

• CELL 1: High industry attractiveness and high
business strength
• The strategy advice for this cell is to invest for
growth
• Consider the strategies: Provide maximum
investment , Diversify

• Cell 2: High industry attractiveness and
medium business strength
growth
• Consider the strategies: Build selectively on
strength, Define the implications of
challenging for market leadership

• Cell 3: High industry attractiveness and
growth
• Consider the strategies: Build selectively on
strength, Define the implications of
challenging for market leadership

The GRAY ZONE
• In this zone business is strong but the market
is not attractive or the market is strong but
business is not strong
• The suggested strategy is to seek to maintain
share rather than growing or reducing share

• Cell 4: low industry attractiveness and high
business strength
earnings
• Consider the strategies: defend strengths ,
shift resources to attractive zone

• Cell 5: medium industry attractiveness and
earnings
• Consider the strategies: Segment the market
to find a more attractive position , make a
plan to protect the position

• Cell 6: high industry attractiveness and low
business strength
• The strategy advice for this cell is to
opportunistically market invest for earnings. If
not strengthen business then should exit the
market.
• Consider the strategies: ride with the market
growth, seek on opportunity to increase
strength through acquisition

The RED ZONE
• This is the worst segment
• Business are weak and their market is not
attractive
• Decision makers should consider either
repositioning these business unit into a
different market segment, develop better cost
effective offering, invest the resources into
more promising and strategic business unit

• Cell 7: Low industry attractiveness and
restructure, harvest or divest
• Consider the strategies : prepare for divest,
shift resources to more attractive segment

• Cell 8: medium industry attractiveness and
low business strength
• The strategy advice for this cell is to preserve
for harvest
• Consider the strategies : seek an opportunistic
sale, seek a way to increase strengths

• Cell 9: Low industry attractiveness and low
business strength
restructure, harvest or divest
• Should exit the market or prune the product
line

Porter’s Five Forces oF model
..DocumentsPorter's Five Forces Model.mp4

Balanced scorecard
• It was originated by Robert Kaplan
and David Norton
• The Balanced Scorecard is a strategic
performance management framework
that allows organizations to manage and
measure the delivery of their strategy

What is Balanced Scorecard?
• Balanced Scorecard enables organizations to bridge
the gap between strategy and actions
• Balanced scorecard methodology is an analysis
technique designed to translate an organization's
mission statement and overall business strategy into
specific, quantifiable goals and to monitor the
organization's performance in terms of achieving these
goals
• It provides feedback around both the internal business
processes and external outcomes in order to
continuously improve strategic performance and
results

Perspectives of Balanced
Scorecard

• The Financial Perspective covers the financial objectives of an
organization and allows managers to track financial success and
shareholder value
• The Customer Perspective covers the customer objectives such as
customer satisfaction, market share goals as well as product and
service attributes
• The Internal Process Perspective covers internal operational goals
and outlines the key processes necessary to deliver the customer
objectives
• The Learning and Growth Perspective covers the intangible drivers
of future success such as human capital, organizational capital and
information capital including skills, training, organizational culture,
leadership, systems and databases

Benefits of Balanced Scorecard
• Better Strategic Planning
• Improved Strategy Communication and
Execution
• Better Management Information
• Improved Performance Reporting
• Better Strategic Alignment
• Better Organizational Alignment

Unit 3: Quality Management
Definition of quality, goalpost view of
quality, continuous improvement
definition of quality, types of quality –
quality of design, conformance and
performance, phases of quality
management, Juran’s and Demings view
of quality, Quality Management
Assistance Tools: Ishikawa diagram –
Pareto Analysis – Pokka Yoke (Mistake
Proofing). quality circles, TQM, Kaizen,
Five S (5S), Six Sigma Quality
Management Standards (Introductory
aspects only)- The ISO 9001:2000
Quality Management System Standard-
The ISO14001:2004Environmental
Management System Standard- ISO
27001:2005 Information Security
Management System

What is Quality?
“ Quality is never an accident, it is always the
result of high intention , sincere effort,
intelligent direction & skillful execution ”

Quality
“Conformance to
specification, where
the specification has
been developed
from the expressed
needs of the
customer”

Quality
• Quality is a pragmatic system of continual improvement a
way to successfully organize men and machines
• The meaning of excellence is called as quality
• Quality is the unyielding and continuing effort by everyone in
an organization to understand , meet and exceed the needs
of its customers
• Quality means the best product that you can produce with
the materials that you have to work with
• Quality means continuous good product which a customer
can trust
• Quality means producing a product or service that meets the
needs or expectations of the customer
• Quality means not only satisfying customers , but delighting
them, innovating and creating

Goal Post View of Quality

Goal Post View of
Quality• Companies measure quality by the
number of defects in product or
services
•In this system, defects are identified
through inspections of the materials
and products
• Upper and lower quality limits are
established
• If product or service is falling within
the this LSL & USL ,such product or
service is called good quality product
or service
• If product or service is falling outside
the LSL & USL limit such product or
service cause for customer
dissatisfaction

Quality Management Tools
1. Check sheet: consist of collecting and analyzing data of product
2. Stratification analysis: A technique that separates data gathered from a variety
of source
3. Histogram: It is a graph for showing frequency distribution
4. Pareto chart: similar to bar graph
5. Cause-and-effect diagram: Identify many possible causes for an effect or
problem
6. Scatter diagram: Graphs pairs of numerical data, one variable on each axis
7. Poka-Yoke: Poka means inadvertent errors and Yoke means to avoid
8. Kaizen
9. Six sigma
10. Five s
11. DMAIC Methodology
12. Quality Circle
13. TQM

What does TQMmean?
Definition:
“Management approach of an organization
centered on quality, based on the participation
of all its members and aiming at long term
success through customer satisfaction, and
benefits to all members of the organization
and to society ”

• Total : Encompasses all functions, all activities,
all employees, all subcontractors, vendors,
suppliers, all the time
• Quality : Customer satisfaction and delight
with product and service
• Management : Leadership, organization
structure, working system
TQM = Total + Quality +
Management

Total Quality Management
• Total - made up of the whole
• Quality - degree of excellence a product or
service provides
• Management - act, art or manner of planning,
controlling, directing,….
Therefore, TQM is the art of managing theTherefore, TQM is the art of managing the
whole to achieve excellencewhole to achieve excellence

What’s the goal of TQM?
“Do the right things, right the first time,
every time.”

Structure of TQM
Levels of Management
TQM Training
Focus on Improvement
All department Involvement
Final Decisions

Structure of TQM
1. Every company member, from the CEO to the lowest level employee is
focused on product or service quality. If management is not behind
TQM, then it will fail
2. Everyone must have the required training and be familiar with the
necessary TQM techniques
3. Anyone can suggest areas for improvement
4. All departments are expected to focus on quality and productivity
improvement and implement changes for their area
5. In addition all departments interact with each other to fix common
problems in the product or process
6. Decision made are based on the best solution

Benefits of TQM
• Improve the customer satisfaction
• Increase Production
• Reduce company expenditure
• Elimination of repetitive work

Quality Circle
• Quality circle is a term for a group of people who
meet together on a regular basis to identify,
analyze and solve quality, productivity, cost
reduction, safety and other problems in their
work areas leading to improvement in their total
performance and enrichment of their work life.
• The Circle makes its recommendations and gives
status report on its activities to its departmental
heads

Structure of Quality Circle

Steering Committee
1.It generally consist of various functional heads
as well as Head of the manufacturing plant
2. Prepare a list of problems with priorities
3. Committee is also responsible for accepting or
rejecting the recommendation made by the
Quality Circle leader during their group
presentations

Facilitators
1. Facilitators is responsible for handling three
to four quality circles at a time
2. Many managers working at a middle level
having facilitation skills are generally selected
as facilitators
3. The main role of facilitators is to guide the
quality circle leaders and providing them
support

Leader
1. For every quality circle there is a leader
2. Person working at lower level, say worker
can also become leader
3. Leader is responsible for ensuring meeting at
regular intervals with active involvement of
all participants
4. Each Quality Circle gives two presentation i.e.
interim & final. Responsibility for these
presentations is of leader

Members
1. Generally there are 7 to 15 members in each
circle who are participating voluntarily
2. Members on an average spend one hour per
week for regular meeting
3. It provides excellent opportunity for the
members to show their talent

Benefits of Quality Circle
• It helps the management to nurture & bring out the human
potential
• It improves the morale & motivation level of workers
• It provides opportunities especially to the workers to show
their innovativeness & creativity
• Workers get more job satisfaction due to recognition given to
their performance by the management
• Develop harmonious supervisor employees relationship
• Create positive work attitude in employees
• Develop safety awareness
• Reduce job errors

Kaizen

Kaizen – Just Do It!
• Kaizen means continuous improvement
• Moreover, Kaizen means continuing
improvement in personal life, home life, social
life, and working life
• When applied to the workplace Kaizen means
continuing improvement involving everyone –
managers and workers

Three functions should happen simultaneously
within any organizations
• Maintenance
• Innovation
–Major improvements in
technology/equipment
–Requires substantial investment
–Best suited to a good economy
• Kaizen

• Japanese word meaning
–Kai - gradual and orderly change, Zen - for
the better
• involves everyone in the organization in
small improvements using conventional
knowledge and tools
• without large capital investments

What Does Kaizen Mean?
• KAI ZEN
To modify, make good,
to change make better
KAIZEN
Make it easier by studying it, and making the
improvement through elimination of waste

The Types of Waste
• Muda of inventory
• Muda of processing
• Muda of overproduction
• Muda of defects
• Muda of motion
• Muda of Time
• Muda of transportation

The Types of Waste
• 1. Muda of inventory: Semi-finished or final products,
even part supplies kept as inventory do not add any value
2. Muda of processing: In manufacturing, more workers
and a longer time means high operating cost, it also
means higher possibility of mistakes and quality problems
3. Muda of overproduction: Overproduction is a waste
because it needs extra raw materials, manpower,
machineries, administrative cost and additional space for
storing

The Types of Waste
• 4. Muda of defects: Rework is waste of resources, money, time and
effort
5. Muda of motion: Workers should not lift or carry heavy objects which
are physically strenuous and risky. Unnecessary movement should be
eliminated by rearranging the workplace
6. Muda of waiting: This waste happens when workflow stops because
of machine downtime, line imbalance or a lack of part
7. Muda of transportation: Use of forklifts, conveyors, trucks, etc. are
essential in operation. It does not add any value but damage might incur
during transportation. To prevent this muda , physically distant
processes from the main production line should be brought closer

Muda of Overproduction
• To produce more than is required *
• To produce before required *
• *Required by external and internal customers

Delivery lead time
• Case 1
• Case 2
Muda of Time
Manufacturing lead time
Delivery lead time

• Solution…
What is the solution?
Delivery lead time

• Identify and eliminate all wastes in our manufacturing
processes
• Example: manufacture a
• Total operations: 6 hours
• Mfg. lead-time: 40 days = 320 hours
• Difference: 314 hours
Delivery lead time
?

• Example: manufacture a
• Total operations: 6 hours
• Mfg. lead-time: 40 days = 320 hours
• Difference: 314 hours
Delivery lead time
Storage,
Transport,
Waiting time98%

The principle of Kaizen
• Eliminate Muda :“Muda” in Japanese means “waste” or “non value adding
activity”. Waste reduction is an effective way of increasing profitability
• When in doubt, Go to “Gemba” : “Gemba” in Japanese means workplace. This
means that whenever there is a problem or the possibility of a potential problem,
make your hands dirty and get in touch with the ground realities
• Involve the people : Kaizen cannot succeed if people all across the organization
are not involved. It has been observed that on an average, a Japanese company
which believes in Kaizen receives 24 hours improvement suggestions per
employee per year!!
• Take immediate action and then based on data find the root cause : Taking
immediate action on the suggestions, collection of data and analysis of the data to
find out the root cause of the Muda
• Standardize: Once the process / suggestion for elimination of the waste is
confirmed and proved with data, the process is standardized across the
organization so that there is no recurrence

Continuous Improvement Steps
(Kaizen)

Benefits of Kaizen
• A good kaizen is simple, effective & revolutionary
• A good kaizen provides permanent solution to the
problem by identifying their root cause
• A good kaizen corresponds to departmental &
company's goal and policies
• A good kaizen makes effective use of available
resources
• A good kaizen required little or no investment to
implement
• A good kaizen produces no negative side effect(i.e.
does not give rise to new problem in the same or other
areas

5S BASIC TRAINING
What is 5s and
Why do We Want
to do it?

What Problems Do U Commonly
EncounterAt YourWorkplace?
 High Absenteeism
 High Turnover
 Demotivated Employees
 Disordered/Cluttered Environment
 Mistakes/Errors

THE SOLUTION TO ALL THESE
PROBLEMS IS
5s
HOUSEKEEPING TECHNIQUE
PRODUCTIVITY AND SAFETY
ENHANCEMENT TECHNIQUE

THE Five-S (5S) PRINCIPLES
• SEIRI – Structurise
• SEITON – Systematic
• SEISO – Sanitise
• SEIKETSU – Standardise
• SHITSUKE – Self-discipline

Five S (5S)
5 S is an abbreviation for the Japanese words: Seiri,
Seiton, Seiso, Seiketsu, Shitsuke
• 5S represents 5 disciplines for maintaining a
visual workplace (visual controls and information
systems)
• These are foundational to Kaizen (continuous
improvement) and a manufacturing strategy
based "Lean Manufacturing" (waste removing)
concepts
• 5S is one of the activities that will help ensure
our company’s survival

1. Organisation (seiri)
• Decide what you need
• Remove unnecessary items
• All tools, gauges, materials, classified and then
stored
• Remove items which are broken, unusable or
only occasionally used

• Give staff red labels
• Ask staff to go through every item in the work
place
• Ask if needed & those that are needed , in
what quantity if Not needed red tag it
• Store in the red tag area
RED
TAGRED TAG TECHNIQUE

For Wavering Items
• Place the suspected items in the red
tag area for one week
• Allow the staff to reevaluate the
needed items
• At the end of week those who need
items should be returned
RED
TAG

Benefits Expected From Seiri
• It reduces number of lockers/ cabinets for
storage
• Seiri saves productive space
• It prevents incident of unnecessary buying of
items

2. ORDERLINESS(SEITON)
• Once you have eliminated all the unneeded
items
• Now turn to the left over items
• Plan items based on frequency of use
• Apply first in first out rule and keep all items
in identified locations

Organisation Based On Usage Frequency
PRIORITY FREQUENCY OF USE HOW TO USE
High Once Per Day Keep handy
Avg Once per month
Once per week
Locate at the
workplace
Low Less than once per
year
Store away
from the
workplace

Benefits Expected From Seiton
• Easy retrieval of materials
• Time taken to search is minimized
• Unnecessary purchase of items is avoided
(this is because when items can not be found
due to poor Seiton , they are purchased)
• Determine quantity of each item and plan
storage according to usage frequancy

SEISO (CLEAN/SHINE)
• Divide areas into zones
• Define responsibilities for cleaning
• Tools and equipment must be owned by an
individual
• Focus on removing the need to clean
• Create a spotless workplace
• Identify and eliminate causes of dirt and grime –
remove the need to clean

Benefits Expected From Seiso
• Neat & clean workplace
• Smooth working
• No obstruction
• Safety increases
• Productivity improves

4. SEIKETSU (STANDARDISE)
• Generate a maintenance system for the first
three (i.e. Seiri, Seiton, Seiso)
• Develop procedures, schedules, practices
• Continue to assess the use and disposal of
items
• Regularly audit using checklists and measures
of housekeeping
• Real challenge is to keep it clean

5. SHITSUKE (SUSTAIN / DISCIPLINE)
• Means inoculate courtesy & good habits
• Driving force behind all 5S
• Make it a way of life
• Part of health and safety
• Involve the whole workforce
• Develop and keep good habits

Some 5S Examples
Before 5S
After 5S - Cleaned, organized and
drawers labeled (less time and
frustration hunting)

Fivewords, their English equivalent and how arethey applied to
work place
Sr.
No
Japanese English Meaning How to apply to it the work place?
1 Seiri Structurise Sorting Classify items into necessary and
unnecessary, retain only those which are
required and dispose off others( i.e. those
not needed)
2 Seiton Systematize Reorganize Store things systematically to ensure
3 Seiso Sanitise Cleanup Maintain work place free of dirt/dust and
sweeping garbage by fixed individuals
cleaning responsibility
4 Seiketsu Standardise Standardization Maintain cleanliness through, seiri, seiton and
seiso by ensuring transparency and uniformity of
everything that is done in the organization.
5 Shitsuke Self –
discipline
Proper
attitudes
Make a habit of doing things the way they
habit/formation are supposed to be done (i.e.
developing habit of following
rules/practices/procedures) including daily 5-S
practices.

Benefits of 5S
• QUALITY IMPROVES
• WASTAGE DECREASE
• MACHINE MAINTENANCE
• VISUAL CONTROL SYSTEM
• EMPLOYEES MOTIVATED
• WORKSTATIONS BECOME SPACIOUS

Summary of 5S
• 1. Sort - All unneeded tools, parts and supplies are removed from
the area
• 2. Set in Order - A place for everything and everything is in its place
• 3. Shine - The area is cleaned as the work is performed
• 4. Standardize - Cleaning and identification methods are consistently
applied
• 5. Sustain - 5S is a habit and is continually improved
• Clean-up and organize your work area every day so that each new day is
easier and safer than the day before
• Take a good look around...Imagine zero waste/zero confusion!

Dr. Deming Biography
American Statistician, Professor, Author, Lecturer, and
Consultant
• BE in electrical engineering
& MS & PhD in Mathematics
& Mathematical Physics
• He has been referred as the
father of Industrial revolution

• In the 1970s, Dr. Deming's philosophy was summarized by some of his
Japanese proponents with the following 'a'-versus-'b' comparison:
(a) When people and organizations focus primarily on quality, defined by
the following ratio:
QUALITY= Results of Work Efforts
Total Costs
quality tends to increase and costs fall over time
(b) However, when people and organizations focus primarily on costs,
costs tend to rise and quality declines over time

Deming’s Philosophy
• Quality is about people, not products
• Suggested quality concept for designing product
• Management need to understand nature of
variation and how to interpret statistical data
• Promoted importance of leadership
• 85% of production faults responsibility of
management, not workers
• Enumerated a 14-point management philosophy

Create constancy of purpose for
improvement of product & service

New Philosophy

Cease dependence on mass inspection

End the practice of awarding business
on the basis of price alone
• Stop the practice of awarding business on the
basis of product price
• Check other points such as quality and timely
delivery, provision of complete paperwork
without sending reminders
• Check work to minimize the total cost of
quality, not just the initial cost

Constantly & forever improve the
systems of production & services

Institute training on the job
• New skills are required to keep up with
changes in materials, methods , product
design, machinery, technology and service etc
• Then gives training during the job for better
use of employees potential

Institute Leadership

Drive out Fear

Break down obstacle between
departments

Eliminate slogans, exhortations and
production targets for the work

Eliminate work standards in an
organization

Remove barriers that hinder

Institute a vigorous programme of
education & self improvement

Structure the top management to empower
them to achieve the above 13 point

Lead time means
• Each seconds and minutes is counted in the
lead time which begins right with the
payment for raw materials and supplies; it
ends with receiving money from the products
sold

Some New Words
• Red Tag-Process for tagging, removing and disposing of
items not needed in the work area.
Lean Manufacturing-concepts that seek continuous
improvement by removing waste in
processes
• Some Japanese words you need to know:
Kaizen-(pronounced “ki zen”) - improvement
• Kaizen Event and 5S Event-Planned improvements to a
• specific area or process (usually take 3 to 5 days).
• 5S Events focus on making 5S improvements.
• Muda-(pronounced “moo da”) - waste
• Gemba-(pronounced “gim ba”) - workplace

New Words - Continued
• Kanban-(pronounced “kon bon”) - Pull type inventory
control system. Items are only produced to meet customer
needs. The request to produce more is signaled from an
upstream operation and/or customer orders.
• Value Stream Map - A diagram of all processes needed to
make and deliver the product to the customer.
• OTHER PROBLEM SOLVING TOOLS
• TOC-Short for Theory of Constraints. Problem solving and
constraint management methods. Use the 5 Step form of
TOC to solve problems that you will encounter in your
continuous improvement efforts.

6σ
What is Six Sigma?

What is Six Sigma?
• Six sigma is a business statistical strategy
• It is to identify the defects and removing from
the process and improve quality. Defect means an
any process output that does not meet customer
specification
• For the business or manufacturing process, the
sigma value is a metric that indicates how well
that processes is performing
• Six sigma is a management philosophy used to
 Eliminate waste , rework, mistakes
 Increase customer satisfaction
 Increase profitability and competitiveness

Continue…….
• With six sigma the common measurement index is
Defects Per Unit. Where a unit can be virtually
anything….. A component, piece of material, Line of
code, administrative form , distance
• The sigma value indicates how often defects are
likely to occur
• Higher the sigma value, less likely a process will
produce defects
• As sigma increases , costs go down and customer
satisfaction goes up

DMAIC Method

Define Phase
• Define the problems
• Identify the goals
• Specify the customer need
• Outline the target process

Measure Phase
• Measure the performance of process
• Find out the parameters
• Make a flow chart of process

Analyze Phase
• Analyze the performance of process
• Check the potential of main cause by
using quality tools like quality circle,
Ishikawa diagram

Improve Phase
• Improve the performance of process
• Take correct action used different
tools like kaizen, 5S, Poka Yoke

Control Phase
• Once we find out the problem, we need to
improve and finally control the process
• We need to observe the performance of
process for 2 to 3 months period. If process
performance is stable or under the control
then six sigma project can be closed

DMADV Method
• This method is also called as DFSS (Design for
six sigma)
• Design: This phase is used to design a new
processes or design a correct step to meet the
targets
• Verify: Verify with the help of quality
improvement tools

Structure of Six Sigma

Role of Strategic Level
• Create a vision for the six sigma
• Define the strategic goals and measure of the
organization
• Establish the business targets
• Establish the rewards and recognition system
• Make resources available - team members and
budget

Role of Tactical Level
• Project Owner
• Selects and mentor Black Belts
• Leads in project identification, prioritization
and defining the project scope
• Removes barriers for Black Belts and aligns
resources
• Communicates progress of six sigma projects
with the Master Black Belts

Role of Master Black Belt
• Is a Technical Leader
• Trains Black Belts and ensures they are
properly applying the method and tools
• Coaches and mentors Black Belt and Green
Belts
• Maintains the training material and updates it
if necessary

Role of Black Belts
• Use Six sigma method and advanced tools ( to
execute business improvement project)
• Are dedicated full-time (100%) to six sigma
• Undergo 5 weeks of training over 5-10 months

Role of Green Belts
• Use six sigma DMAIC Method and basic tools
to executive improvements within their
existing job function
• May lead smaller improvements projects
within Business Unit
• Bring Knowledge of six sigma concepts & tools
to their respective job function
• Undergo 8-11 days of training over 3-6
months

Six Sigma Companies

Six Sigma Financial Services

Advantages of Six Sigma
• Six sigma impacts bottom line i.e. Profits
• Six sigma drives strategy execution
• Six sigma generates robust, flexible business
process
• Six sigma improve human performance across
entire organization
• Six sigma is a low risk investment

Juran’s Two Definitions of
Quality
 Conformance to customer:
• "Quality" means features of products which meet customer needs and
thereby provide customer satisfaction. In this sense, the meaning of
quality is oriented to income.
The purpose of such higher quality is to provide greater customer
satisfaction and, one hopes, to increase income. However, providing more
and/or better quality features usually requires an investment and hence
usually involves increases in costs. Higher quality in this sense usually
"cost more ’’
 Freedom from deficiencies:
• "Quality" means freedom from deficiencies(freedom from errors) that
require doing work over again (rework) or that results in field failures,
customer dissatisfaction, customer claims and so on. In this sense, the
meaning of quality is oriented to costs, and higher quality usually "cost
less ’’

Difference between Juran’s 2
definition of Quality
Definition of Quality 1 Definition of Quality 2
Conformance to the customer Freedom from deficiencies
- Increase the customer satisfaction - Reduce error rates
-Meet competition - Reduces wastage
- Increase the market share - Reduces the customer dissatisfaction
- Increase sales income - Increases the delivery performance
-Major effect is on sale
-Higher Quality Cost More
-Major effect is on cost
- Higher Quality Cost Less

Juran’s Trilogy
Quality
Planning
Quality
Control
Quality
Improvment

Quality Planning
• Establish the quality goal
• Identify who the customer are
• Determine the needs of the customer
• Develop the product features that
respond to the customer need
• Develop the process able to produce the
product features
• Establish the process control

Quality Control
• Evaluate actual performance
• Compare actual performance with
quality goal
• Act on the difference
• Choose unit of measurement
• Choose control subject( what to control)
• Interpret the difference (actual Vs
standard)

Quality Improvement
• Identify the improvement projects
• Establish the project team
• Provide the team with resources,
training and motivation
• Establish the control to hold the gains

10 steps of Quality Improvement

Tools for Root Cause Analysis

Quality Management Assistance tools
Ishikawa Diagram
Pareto Analysis Pokka Yoke

Dr Kaoru Ishikawa
• Quality control statistician
• Professor in University of Tokyo
• One of the pioneers of Japan’s quality
revolution in the 1940s
• Played major role in growth of QC circles
• Best known for formalizing use of Cause-
and-Effect Diagram
• Won the Deming Prize and Shewhart
Medal

What is Cause and Effect Analysis
• Cause and Effect Analysis is a technique for identifying all the possible
causes (inputs) associated with a particular problem / effect (output)
before narrowing down to the small number of main, root causes which
need to be addressed
• Not a quantitative tool
Problem/
Desired
Improvement
Main Category
Cause
Root Cause

Components
- Head of a Fish : Problem or Effect
- Horizontal Branches : Causes
- Sub – branches : Reason
- Non- service Categories : Machine, Material, Method etc.
- Service categories : People, Process, Policies, Procedures etc.

Causes are usually grouped into major categories to identify these
sources of variation. The categories typically include:
• People: Anyone involved with the process
• Methods: How the process is performed and the specific
requirements for doing it, such as policies, procedures, rules,
regulations and laws
• Machines: Any equipment, computers, tools, etc. required to
accomplish the job
• Materials: Raw materials, parts, pens, paper, etc. used to produce
the final product
• Measurements: Data generated from the process that are used to
evaluate its quality
• Environment: The conditions, such as location, time, temperature,
and culture in which the process operates

Step 1:Identify and clearly define the
outcome or effect
• Establish or define the problem
• By brainstorming or free exchange of ideas
and recording them , attempt to identify
major causes

Step 2: Draw the SPINE and create
the EFFECT box
• Draw a horizontal arrow pointing to the
right. This is the spine
• To the right of the arrow, write a brief
description of the effect or outcome
which results from the process
• Draw a box around the description of
the effect

Continue………
Head of Fish or Effect Box
Spine

Step 3 : Identify the main CAUSES
contributing to the effect
• Write the main categories your team has selected
to the left of the effect box. Draw some above and
below the spine
• Apply 5M methods or 4P’s + M methods (5Ms man,
Methods, Materials, Machinery, and measurement.
4Ps + m – Policies, Procedures, People, Plant and
measurement)
• Draw a box around each category label and use a
diagonal line to form a branch from the box to the
spine

Continue………

STEP 4: For each major branch, identify other specific
factors which may be the CAUSES of the EFFECT
• Identify as many factors or causes
possible and attach them as sub-
branches of the major branches
• Fill in detail for each cause

STEP 5:Analyze the diagram
• Look for causes that appear repeatedly.
These may represent root causes.
• Look for what you can measure in each
cause so you can quantify the effects of
any changes you make.
• Most importantly, identify and circle
the causes that you can take action on

Continue……….

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