UNIT-1 Industrial Management EHU-601
UNIT-1 Industrial Management EHU-601
UNIT-1 Industrial Management EHU-601
IMPORTANCE OF MANAGEMENT
Sound Organization.
Industrial management is now a branch of engineering which facilitates creation of management system
and integrates same with people and their activities to utilize the resources.
Industrial management is structured approach to manage the operational activities of the organization.
Industry Planning
Industry Organization
Factory Management
Materials Management
Labor Administration
Industry Control
2. Organizing Function
3. Controlling Function
Quality
Quantity
Time
Inventory
Cost
Maintenance
i)
ii)
iii)
iv)
12. Stability
13. Initiative
14. Esprit de corps. (In union there is strength)
Criticism
. It is true that a manager must direct, command and order to get things done. But he also encourages,
communicates, develops, and stimulates.
He was of the opinion that the cause of increase in productivity of the workers is not a single factor like
changing working hours or rest pauses, but a combination of these and several other factors such as less
restrictive methods of supervision giving autonomy to the workers allowing the formation of small
cohesive groups of workers, cooperation between workers and management, opportunity to be heard,
participation in decision making etc.,
Main aspects
It draws concept from psychology, sociology, human relations, inter-personnel relationships, satisfaction
of workers needs etc
Since management is getting things done through people the managers must have a basic understanding
of human behaviour and human relations in all its aspects, particularly in the context of work groups and
organizations
Management must study inter-personnel relations among people
Greater production and higher motivation can be achieved only through good human relations
Motivation, leadership, communication, participative management and group dynamics are the core of
this school of thought,
It indicates to further refinement extension and synthesis of all classical and neoclassical approach to
management.
Decision trees.
Network models
Game theory
Inventory Model
Simulation Models(Artificial Intelligence, management games etc )
It aims at achieving high degree of precision , perfection and objectivity by encouraging the use of mathematical
and statistical tools for solving complex problems.
2. SYSTEM APPROACH
It tries to solve problems by diagnosing them within a framework of inputs, transformation processes outputs and
feedback.
Features :
3. CONTINGENCY APPROACH
It argues that appropriate managerial action depends on particular parameters of the situation.
The founders of this approach says that Effectiveness if a given management is contingent upon many
factors and their interrelationship in a particular situation.
It is situation oriented urging upon management to study analyze and diagnose the situation
PRODUCTION
Production is transformation of inputs into the output of commodity in a specific period of time with the given
technology.
Production implies the creation of form, place and time utilities of different usable commodities and service.
Production System
The production system can be viewed as a framework or skeleton of activities within which the creation of
value can occur.
The difference between the value of input and the value of output represent the value created through
production activities.
At the one end of the production system are the input and at the other end are output.
Connecting the input and output are a series of operations or processes, storage and inspections represent
the simplified production system.
Input
Receiving Reports
Row material
Inventory Reports
Operation - 1
Schedules
Production Manager
Operation 2
Production
Route Sheets
Production Reports
Operation 3
Final inspection
Inspection Reports
Inventory Reports
Output
Shipping Orders
Manager
MATERIAL
PLANT
MEN
&
GOODS &
SERVICES
FACILITIES
INPUT
ENERGY
PRODUTION
PROCESS
OUTPUT
PRODUCTIVITY
Productivity is an overall measure of the ability to produce a good or service. More specifically,
productivity is the measure of how specified resources are managed to accomplish timely objectives as
stated in terms of quantity and quality. Productivity may also be defined as an index that measures
output (goods and services) relative to the input (labor, materials, energy, etc., used to produce the
output).
Hence, there are two major ways to increase productivity: increase the numerator (output) or decrease
the denominator (input). Of course, a similar effect would be seen if both input and output increased,
but output increased faster than input; or if input and output decreased, but input decreased faster than
output.
Productivity is an objective concept. As an objective concept it can be measured, ideally against a
universal standard. As such, organizations can monitor productivity for strategic reasons such as
corporate planning, organization improvement, or comparison to competitors. It can also be used for
tactical reasons such as project control or controlling performance to budget. Productivity is also a
scientific concept, and hence can be logically defined and empirically observed. It can also be measured
in quantitative terms, which qualifies it as a variable. Therefore, it can be defined and measured in
absolute or relative terms. However, an absolute definition of productivity is not very useful; it is much
more useful as a concept dealing with relative productivity or as a productivity factor.
Productivity is useful as a relative measure of actual output of production compared to the actual input
of resources, measured across time or against common entities. As output increases for a level of input,
or as the amount of input decreases for a constant level of output, an increase in productivity occurs.
Therefore, a "productivity measure" describes how well the resources of an organization are being used
to produce input.
In simple terms productivity is the quantitative relationship between what we produce (output) and the resources
(inputs) which we used.
Term Productivity symbolizes
It relates the output to input in any system. Where some value addition is performed on the input resource.
Efficiency (resource utilization): is the ratio of actual output to the expected output.
Therefore indicates a measure of how well the resources are utilized to accomplish a target or result.
Effectiveness (performance) : is the degree of accomplishing the objectives. Therefore effectiveness indicates a
measure of how well a set of targets or results are accomplished.
Production is related to the activity of producing goods and services. It is a rocess of converting input into
some useful , value added output.
Productivity is related to the efficient utilization of input resources into produced output in the form of value
added goods and services
Thus, if the input increases the output will normally increase in the same proportion. The productivity
remains unchanged. If. however, the output increases with the same input of resources or we get the same
output with lesser input of the resources, the productivity increases.
Production means the output in terms of money (or the number of units produced) without any regard to the
input of resources, while productivity is an attitude to produce more and more with less and less inputs of
resources so that the benefits of improved productivity will be distributed to a large number of people.
Productivity Index = (Aggregated output in the measured period/Resource input in the measured
period) (Aggregated output in the base period/Resource input in the base period)
1. Partial productivity- It is defined on the basis of class of input being considered. Ex: If labor is
increased by 18% during last financial year, its effect on the increased output is represented by
labor productivity.
Labor productivity or human productivity = Output/Human Input
Material productivity = Output/ Material Input
Capital productivity= Output/Capital Input
Energy productivity = Output/Energy Input
Advertising and Media planning productivity = Output/Advertising and Media planning input
Other Expenses productivity = Output/Other expenses input
Advantages:
It is easy to compare with other industries. Ex: The labor productivity of a public limited
steel producing company(SAIL) may be compared with the labor productivity of a private
sector steel providing company(TISCO).
Disadvantages:
2. Total Factor Productivity- Total factor productivity = Net output/Labor + Capital Input
Disadvantage:
Many important inputs, such as material, energy, energy etc. are ignored.
3. Total Productivity- The ratio of total output to the sum of all input factors. Total output must
be expressed in the same unit of measure and total input must be expressed in the same unit of
measure. However, total output and total input need not be expressed in the same unit of
measure. Resources are often converted to rupees or standard hours so that a single figure can
be used as an aggregate measure of total input or output. For example, total output could be
expressed as the number of units produced, and total input could be expressed in rupees, such as
tons of steel produced per dollar input. Other varieties of the measure may appear as dollar
value of good or service produced per rupee of input, or standard hours of output per actual
hours of input. Total productivity ratios reflect simultaneous changes in outputs and inputs. As
such, total productivity ratios provide the most inclusive type of index for measuring
productivity and may be preferred in making comparisons of productivity. However, they do not
show the interaction between each input and output separately and are thus too broad to be used
as a tool for improving specific areas.
Total productivity = Total output/ Total input
Advantages:
Disadvantage:
Develop productivity measures for all operations; measurement is the first step in managing and
controlling an organization.
Look at the system as a whole in deciding which operations are most critical, it is over-all
productivity that is important.
Develop methods for achieving productivity improvement, such as soliciting ideas from
workers (perhaps organizing teams of workers, engineers, and managers), studying how other
firms have increased productivity, and reexamining the way work is done.
Make it clear that management supports and encourages productivity improvement. Consider
incentives to reward workers for contributions.
Don't confuse productivity with efficiency. Efficiency is a narrower concept that pertains to
getting the most out of a given set of resources; productivity is a broader concept that pertains to
use of overall resources. For example, an efficiency perspective on mowing the lawn given a
hand mower would focus on the best way to use the hand mower; a productivity perspective
would include the possibility of using a power mower.
Higher Productivity
Enhanced
Wages
Better utilization of
resources
Employee
training
Increased national
wealth
Better career
prospects
More industries
Better living
standards
More
employment
Increased
purchased power
Prosperity
. .
1. Technology based
(a) CAD/CAM/C1MS are computer techniques and have profound influence on human productivity
(b) Robotics
(c) Laser technology
(d) Modern maintenance techniques
(e) Energy technology
(f)Flexible manufacturing system (FMS).
2. Employee based
(a) Incentives (financial/non-financial) at individual and group level
(b) Promotion
(c) Job design, job enlargement, job enrichment
(d) Worker participation
(e) Quality circles, small group activities
(f) Personal development.
3. Material based
(a) Material planning and control
{b) Purchasing logistics
(c) Material storage and retrieval
(d) Source selection for quality
(e) Waste limination
(f) Recycling and reuse of waste material
4. Process based
(a) Methods Engineering and work simplification
(b) Process design
(c) Human factors engineering
5. Product based
(a) Valueanalysis/valueengineering
Productivity can be measured at international, national and industry (sector) levels. It can also be measured on
company level and on individual resource level.
P = Total productivity
(b) Gross National Product includes capital consumption allowances (reserves for depreciation, accidental damage to
fixed capita
(c) Net National Product. It excludes above such allowances. Bureau of Labour Statistics (BLS) use (a) Labour
productivity index, (b) Capital productivity index and (c) Labour and capital utility productivity index for this
purpose.
PLANT LAYOUT
It is floor plan indicating distances between different work stations and departments in a plant.
Continuous flow
Maximum visibility
Maximum accessibility
Flexibility
Safety requirements
TYPES OF LAYOUT
There are mainly four types of plant layout:
(a) Product or line layout
(b) Process or functional layout
(c) Combined or group layout
(d) Fixed position layout
(e) Cellular layout
Low cost of material handling, due to straight and short route and absence of backtracking
PROCESS LAYOUT:
Process layouts are found primarily in job shops, or firms that produce customized, low-volume products
that may require different processing requirements and sequences of operations. Process layouts are
facility configurations in which operations of a similar nature or function are grouped together. As such,
they occasionally are referred to as functional layouts. Their purpose is to process goods or provide
services that involve a variety of processing requirements. A manufacturing example would be a machine
shop. A machine shop generally has separate departments where general-purpose machines are grouped
together by function (e.g., milling, grinding, drilling, hydraulic presses, and lathes). Therefore, facilities
that are configured according to individual functions or processes have a process layout. This type of
layout gives the firm the flexibility needed to handle a variety of routes and process requirements.
Services that utilize process layouts include hospitals, banks, auto repair, libraries, and universities.
Example of process layout of an automobile service station:
There is high degree of machine utilization, as a machine is not blocked for a single product
COMBINED LAYOUT:
A combination of process & product layout is known as combined layout.Many situations call for a
mixture of the three main layout types. These mixtures are commonly called combination or hybrid
layouts. For example, one firm may utilize a process layout for the majority of its process along with an
assembly in one area. Alternatively, a firm may utilize a fixed-position layout for the assembly of its final
product, but use assembly lines to produce the components and subassemblies that make up the final
product (e.g., aircraft).
The layout is flexible as change in job design and operation sequence can be easily
incorporated.
Adjustments can be made to meet shortage of materials or absence of workers by changing the
sequence of operations.
As the production period being very long so the capital investment is very high.
Very large space is required for storage of material and equipment near the product.
As several operations are often carried out simultaneously so there is possibility of confusion
and conflicts among different workgroups.
INDUSTRIAL OWNERSHIP
It is classified into three categories
Private sector
Public sector
Joint sector
Sole Proprietorship
Sole Proprietorship is that form of Industrial ownership in which Individual Exercise & enjoy all rights
related to business in his own interest. The sole owner arranges the capital, takes the risk of business and
managers it. This type of ownership is easy to form and there is little legal formalities. This type of
ownership is very suitable for service systems. The business can be easily taken care by one person. This
requires small capital to start the business and run it.
Merits
Easy Formation
Easy to Operate
Secrecy
Simplicity
Flexibility
Demerits
Limited Resources
Lack of Continuity
Unlimited Liability
Limited Managerial Ability
Partnership
Partnership may be defined as the relation between person who has agreed to share the profits of a
business carried on by all or any of them acting for all.
Merits
Legal Entity
Risk Sharing
More Funds
Continuity
Mutual Agency
Demerits
Unlimited Liability
Limited Resources
Possibility Of Conflict
Merits
Limited Liability
Transfer of Interest
Perpetual Existence
Professional Management
Demerits
Complexity in Formation
Lack of Secrecy
Numerous Regulation
Co Operative Undertaking
The Co Operative society is voluntary association of person, who join together with the motive of
welfare of the members and society.
Main Characteristics
1. It is a voluntary organization.
2. It is formed by relatively economically weaker sections of. society.
3. There is open membership.
4. The main objectives of the society is service motive, mutual help and for common interest of the
members.
5. It works on the principle of one person-one vote and has democratic organization.
Merits
Limited liability
Economy in Operation
Stable Existence
Ease of Formation
Demerits
Limited Resources
Inefficiency in Management
Lack Of Secrecy
Government Control
Difference Of Opinion