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 ManagementDefinition 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 Recenttrends 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.



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 Delhi7.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 SiilasmaaNokia

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 Performancee.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 Actionse.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.02/18/15 Dept. of E & TC,SCOE,Pune

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 subordinators02/18/15 Dept. of E & TC,SCOE,Pune

Applications of Line Organization

Textile Industry Paper Industry

Sugar Industry02/18/15 Dept. of E & TC,SCOE,Pune

Functional Organization

Superintendent

Shop Office

Route clerk

Instruction Clerk

Time & Cost Clerk

Disciplinarian Gang Boss

Speed Boss

InspectorRepair 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 i\Joint-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 Society1. 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 Management1. 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 i\14 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 productivityunit i\Episode 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


GlobalizationThe 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.02/18/15 Dept. of E & TC,SCOE,Pune

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,Function 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


http://en.wikipedia.org/wiki/Bruce_D._Henderson

http://en.wikipedia.org/wiki/Boston_Consulting_Group

the 4 segmeNtso 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

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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


• Consider the strategies: Build selectively on strength, Define the implications of challenging for market leadership


• Cell 3: High industry attractiveness and medium business strength


• 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

• The strategy advice for this cell is to invest for earnings

• Consider the strategies: defend strengths , shift resources to attractive zone


• Cell 5: medium industry attractiveness and medium business strength

• The strategy advice for this cell is to invest for 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 medium business strength

• The strategy advice for this cell is to 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

• The strategy advice for this cell is to restructure, harvest or divest

• Should exit the market or prune the product line


Porter’s Five Forces oF model

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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 ManagementDefinition 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 Tools1. 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. TQM02/18/15 Dept. of E & TC,SCOE,Pune

What does TQM mean?

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 the Therefore, 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 leader2. Person working at lower level, say worker

can also become leader3. 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 ZENTo modify, make good,

to change make better

KAIZENMake 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


?02/18/15 Dept. of E & TC,SCOE,Pune

• 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 Encounter At Your Workplace?

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

REDTAG


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 monthOnce 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 5SAfter 5S - Cleaned, organized and drawers labeled (less time and frustration hunting)


Five words , their English equivalent and how are they 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 BiographyAmerican 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.


6σWhat 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

QualityImprovment


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 control02/18/15 Dept. of E & TC,SCOE,Pune

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)02/18/15 Dept. of E & TC,SCOE,Pune

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 createthe 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……….


Why Implement This?

• It helps to determine the root causes of a problem using a structured approach

• It encourages group participation and utilize group knowledge of the process

• It uses an orderly, easy to read format to diagram cause and effect relationship

• It indicates possible causes of variation in a process• It increases knowledge of the process by helping everyone to

learn more about the factors at work and how they relate• It identifies areas where data should be collected for further

study


C&E Fishbone diagrams can be constructed two ways

• Paper and pen – Usually more effective when working in a team– May take multiple sheets of flip chart paper– Many teams find it helpful to do the flip chart

method first because it lends itself to group dynamics. Everyone can see and participate easier.

• Minitab software– Very helpful when sharing diagram with an

audience outside of your team


Example of Ishikawa Diagram


History of Pareto Analysis

• The Pareto effect is named after Vilfredo Pareto, an economist and sociologist who lived from 1848 to 1923

• In 1906, Italian economist Vilfredo Pareto created a mathematical formula


A Pareto chart is a graphical representation that displays data in order of priority


• This technique helps to

identify the top 20% of causes that needs to be addressed to resolve the 80% of the problems.


Pareto Analysis• Pareto Analysis is used to record and

analyse data relating to a problem in such a way as to highlight the most significant areas, inputs or issues

• This pattern is also called the ‘80/20 rule’

• As a basic Quality Improvement tool, Pareto Analysis can:

• define categories of defects which cause a particular output (product, service, unit) to be defective;

• count the frequency of occurrence of each defect;

• display graphically as a bar chart, sorted in descending order, by frequency of defect


• Pareto charts help you identify which of your problems are most significant, so you can focus your improvement efforts on areas where the largest gains can be made.

• Pareto charts are a special type of bar chart in which the horizontal axis represents categories of interest (e.g., material types, sizes, scrap codes, process centers), rather than a continuous scale (e.g., 0-100). The categories are often “defects”, sources of defects, or inputs into a process. The vertical axis represents some type of count or frequency (e.g., occurrences, incidents, parts, time).– By ordering the bars from left-to-right, largest to smallest, a

Pareto chart can help you visually determine which of the defects comprise the “vital few,” and which represent the “trivial many.”

Pareto Chart


To Create a Pareto Chart:

Step 1: Select the items (problems, issues, actions, defects, etc.) to be compared.

Step 2 : Select a standard for measurement. Step 3: Gather necessary data

Step 4: Arrange the items on the horizontal axis in a descending order according to the measurements you selected.

Step 5 : Draw a bar graph where the height is the

measurement you selected. 02/18/15 Dept. of E & TC,SCOE,Pune

This is a simple example of a Pareto diagram using sample data showing the relative frequency of causes for errors on websites. It enables you to see what 20% of cases are causing 80% of the problems and where efforts should be focused to achieve the greatest improvement.


Poka-yoke

• The use of process or design features to prevent errors or their negative impact.

• Also known as Poka-yoke, Japanese slang for “avoiding inadvertent errors” which was formalized by Shigeo Shingo.

• Inexpensive. Mistake-Proofing• Very effective for manufacturers that

are aware of it.• Based on simplicity and ingenuity.• Something you already have in your

organization.


• This is known as ‘MISTAKE-PROOFING’

• From Japanese:• Yokeru (avoid)• Poka (inadvertent errors)

What is Poka-Yoke?


What Does Poka-Yoke Do?• Eliminates the cause of an error at the

source;

• Detects an error as it is being made;

• Detects an error soon after it has been made but before it reaches the next operation.

Key Principles of Poka-Yoke

• Errors are inevitable but can be eliminated:

People make mistakes. These mistakes can be reduced or even eliminated. Poka Yoke is a technique that can help to analyze the kinds of mistakes employees make


ISO Standards

• What is a standard?

A standard is a document that provides requirements, specifications, guidelines or characteristics that can be used consistently to ensure that materials, products, processes and services are fit for their purpose


Who created the standards?

• International Organization for Standardization - Geneva

• ISO tech committee - TC 176 started in 1979• Standards created in 1987

– To eliminate country to country differences– To eliminate terminology confusion– To increase quality awareness


The ISO 9000 family

• ISO 9001 Is the standard That gives the requirements for a quality management system

• ISO 9001:2008 is the latest, improved version• It is the only standard in the ISO 9000 family that

can be used for certification• There are 16 other standards in the family that

can help an organization on specific aspects such as performance improvement, auditing, training…


Who uses this approach as a way to improve quality?

The Boeing CompanyDr. Pepper Snapple Group

Wal-Mart

ISO 9001 Management Principles1. Customer Focus

2. Leadership

3. People Involvement

4. Process Approach

5. System Approach

6. Continual improvement

7. Factual Approach to Decision Making

8. Mutually Beneficial Supplier Relationships


• Customer focused organization

Organizations depend on their customersand therefore should understand currentand future customer needs, meetcustomer requirements and strive toexceed customer expectations

• Leadership Leaders establish unity of purpose and direction of the

organization. They should create and maintain the internal environment in which people can become fully involved in achieving the organization’s benefit


• Involvment of People

People at all levels are the essence of an organization and their full involvment enables their abilities to be used for the organization’s benefit

• Process Approach

A desired result is achieved more efficiently when related resources and activities are managed as a process


• System Approach to Management

Identifying, understanding and managing a system of interrrelated processes for a given objective improves the organization’s effectiveness and efficiency

• Continual Improvement

Continual improvement should be a permanent objective of the organization


• Factual Approach to Decision Making

Effective decisions are based on the analysis ofdata and information

• Mutually Beneficial Supplier Relationships

An organization and its suppliers are interdependent, & a mutually beneficial relationship enhances the ability of both to create value


Quality Management System Documentation

Quality Manual

Quality Manual Quality

System Procedures

Quality System

Procedures Work Instructions

Work Instructions

FormsForms


Quality Management SystemStandardISO 9000

Quality Manual

Quality System Procedures

Work Instructions

Forms

LEVEL 1

LEVEL 2

LEVEL 3

LEVEL 4

Policy Statement, Commitment, Organisation, Responsibilities

Company Practices, Interfaces

Written Instructions to Control Tasks

Quality Records


The ISO 14000 family

• ISO 14001 is the standard that gives the requirements for an environmental management system

• ISO 14001:2004 is the latest, improved version

• It is the only standard in the ISO 14000 family that can be used for certification

• The ISO 14000 family includes 21 other standards that can help an organization specific aspects such as auditing, environmental labelling, life cycle analysis…


What is ISO 14001?

• It is an Environmental Management System (EMS) that uses a continual improvement approach in achieving and demonstrating sound environmental performance

• The goal is for organizations to control the impacts that their activities, products and services have on the environment

• ISO 14000 is the standard, and ISO 14001 is the document containing the requirements


Follow a Plan-Do-Check-Act approach-Plan - Establish the objectives and

processes needed to deliver the results (in line with the EMS).

– Do - Implement the needed processes of the EMS.

– Check - Check the processes against the policy, objectives, targets, regulations, and report on the results. (Auditing)

– Act - Take actions that will continually improve the EMS.


Requirements (Plan): Management• Top Management must be committed to and involved

in the design and implementation of the EMS

• They will write the Environmental Policy and be responsible for making sure it is communicated and implemented

• The EMS must clarify what resources, human and physical are required to create safe products and operations

• After implementation Management will conduct management review to ensure continued effectiveness of the system


Tools to help your implementation 0f EMS

• The ISO 14001 Workbook – This is a series of 30 detailed checklists, exercises and

instructions that take you through 30 systematic tasks for your organization to consider and complete.

• EMS Manual, Procedures and Forms– Move your project along with our professionally

designed documentation. – This package provides Microsoft Word templates to

use as a foundation for your EMS. – Customize this Environmental Manual including

procedures, forms, and tables to save time and ensure an efficient, effective system.


http://www.14000store.com/iso-14001-checklist.html

http://www.14000store.com/iso-14001-management-system.html

http://www.14000store.com/iso-14001-management-system.html

improved profitability,

improved revenues,

improved budgetary performance,reduced costs, improved cash flow, improved return on investment,

Benefits ISO 9000 & 14000


Certification not a requirement

• Certification is not a requirement of ISO 9001 or ISO 14001

• The organization can implement and benefit from an ISO 9001 or ISO 14001 system without having it certified

• The organization can implement them for the internal benefits without spending money on a certification programme


Processes, not products

• Both ISO 9001 and ISO 14001 concern the way an organization goes about its work.

• They are not product standards• They are not service standards• They are process standards• They can be used by product manufacturers

and service providers


Unit 4: 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.


Important terms In FInance management

• Capital Structure• Working Capital• Fixed Capital• Money Market • Capital Market


Working capital

• Working capital typically means the firm’s holding of current or short-term assets such as cash, receivables, inventory and marketable securities.

• These items are also referred to as circulating capital


FACTORS DETERMINING WORKING CAPITAL

• Demand of Industry • Cash requirements• Manufacturing time• Inventory Turnover• Business Turnover• Current Assets requirements


Continue……….

• Gross Working Capital: It refers to the investment made in all current assets

• Net Working Capital : It means the excess of current assets over current liabilities


Continue……….

• Permanent Working Capital: It is the minimum level of investment in the current assets that is done by a business to carry out business activities

• Temporary Working Capital: Required over and above the permanent working capital. It keep on changing


Fixed Capital• The stock of tangible , durable

fixed assets owned or used by resident enterprises for more than one year

• This includes plant, machinery, vehicles & equipments, land, buildings


securItIes and exchange Board oF IndIa


Continue……….


Debentures


Break Even Analysis


You can make a profit……..

• Reducing the fixed costs

• Reducing the variable costs

• Increase the selling price of their

products


Project Management


WHAT IS PROJECT?

“A temporary endeavor undertaken to create a unique product, service, or result.”

If it has: • A specific and desired outcome • A deadline or target date • A budget that limits resources

Thenit is a project...


Phases of the Project Life Cycle 1

• Definition stage

• The first phase involves the identification of a need, problem, or opportunity.

– The need and requirements are usually written by the customer into a document called a request for proposal (RFP)

– The needed target and expected performance are set according to the customers demand



• Planning stage:• The second phase is the development of a proposed

solution to the need or problem– This phase results in the submission of a proposal– The customer and the winning contractor

negotiate and sign a contract (agreement) – Forecasting of risk factors from the external

environment and have some provision and alternative solutions

– Allocation of defined jobs to the specialist for the job means staffing



• Execution stage

• The third phase is performing the project

– Different types of resources are utilized

– Results in the accomplishment of the project objective



• Delivery stage:

• The final phase is terminating the project

– Perform close-out activities

– Project will be Surrender to customer

– Training of customer

– Transfer of ownership

– Evaluate performance

– Invite customer feedback02/18/15 Dept. of E & TC,SCOE,Pune

What is Project management?


The Project Management Process

• The project management process means planning the work and then working for plan

1. Clearly define the project objective 2. Divide and subdivide the project scope into major “pieces”3. Define the specific activities for each piece (work package)4. Graphically portray the activities that need to be performed fro each

work package in order to accomplish the project objective – in the form of network diagram.

5. Make a time estimate for how long it will take to complete each activity – resources needed.

6. Make a cost estimate for each activity.7. Calculate a project schedule and budget to determine whether the

project can be completed within the required time, with the allotted founds, and with the available resources.


Network analysis

• Network analysis is the general name given to certain specific techniques which can be used for the planning, management and control of projects

• Project is broken down to individual tasks or activities, which are arranged in logical sequence or also decides which tasks does simultaneously

• This present visually the relationship between all activities involved


Network Analysis Techniques

• PERT: Program Evaluation and Review technique• CPM: Critical path method• RAMS: Resource allocation and multiproject

scheduling• PEM : program evaluation procedure• COAPAC: critical operating production allocation

control• MAP: Manpower allocation procedure• GERT : Graphical Evaluation and Review

technique


Terms related to network analysis method

• Event: Is a specific instant of time which marks the start and the end of an activity (Event and node are synonyms)

• Activity: Every project consists of a number of job operations or tasks which are called activities


Activities are classified as:

• Critical activity: if it consumes more than estimated time, project

get delayed• Non critical activity if it consumes more than estimated time, project

get will not get delayedDummy activityWhen two activities start at the same instant of

time


Situations in network diagram

AB

C

A must finish before either B or C can start

A

B

C both A and B must finish before C can start

A

C

B

D

Dummy

A must finish before B can start

both A and C must finish before D can start


Types of Network Design

• Activity – on – Arrow:

Arrow= activity (write on arrow)

Node = event• Activity – on – Node:

Node = activity

Arrow = event


• Illustration of network analysis of a minor redesign of a product and its associated packaging

• The key question is: How long will it take to complete this project ?


Questions to prepare activity network

• Is this a Start Activity? • Is this a Finish Activity? • What Activity Precedes this? • What Activity Follows this? • What Activity is Concurrent with this?


• For clarity, this list is kept to a minimum by specifying only immediate relationships, that is relationships involving activities that "occur near to each other in time"


Network diagram


Critical path method

• Critical activity:• It is that sequence of activities which decides the total

project duration• It is the longest path and consumes maximum time• The expected completion date cannot be met, if even

one critical activity is delayed

• Total project time:• Is the time which will be taken to complete a project

and is found out from the sequence of critical activities


CRITICAL PATH TAKES 24 WEEKS FOR THE COMPLETION OF THE PROJECT


CPM• Employed first in 1958 by USA company to

schedule and control the project and experienced good amount of savings.

• CPM is a technique used for planning and controlling the most logical and economical sequence of operation for accomplishing project.

• This method is used for small as well as large projects.

02/18/15 03:47

steps For accomplIshIng a cpm

• Construct the network diagram• Calculate the earlier start time, earlier finish

time , latest start time , latest finish time• Calculate total float for each activity• Identify the critical activities and mark the

critical path• Calculate the total project duration


• Earliest start time (EST) : Is the earliest possible time at which an activity can start and is calculated by moving from first to last event

• EARLIEST FINISH TIME• It is the earliest possible time at which activity

can finish• EFT= EST + Duration of that activity

02/18/15 03:47

• Latest finish time (LFT): It is calculated by moving backward . It is the last event time of the head event

latest time an activity can be completed without delaying critical path time

• Latest start time (LST)• it is the latest possible time by which an activity

can start • LST = LFT – Duration of that activity

02/18/15 03:47

FLOAT

• This means a spare time, a marginal time over and above its duration which a non critical activities can consume without delaying project..

• Float is the difference between the time available for completing activity and time necessary to complete the same.

• Total float= LST-EST/ LFT- EFT

02/18/15 03:47

Ex: A Small engineering project consists of 6 activities namely A,B,C,D,E,F with duration of 4,6,5,4,3 and 3 days respectively. Draw the network diagram and calculate EST,LST,EFT,LFT and floats. Mark the critical path and find total project duration

ACTIVITY DURATION (DAYS)

A 4

B 6

C 5

D 4

E 3

F 3

02/18/15 03:47

ACTIVITY DURATION (DAYS)

EST EFT LFT LST TOTAL FLOAT

A 4 0 4 4 0 0

B 6 4 10 10 4 0

C 5 10 15 15 10 0

D 4 4 8 12 8 4

E 3 8 11 15 12 4

F 3 15 18 18 15 0

02/18/15 03:47

PERT• Program (Project) Evaluation and Review

Technique (PERT) is a project management tool used to schedule, organize, and coordinate tasks within a project.

• It is basically a method to analyze the tasks involved in completing a given project, especially the time needed to complete each task, and to identify the minimum time needed to complete the total project.

Estimation of activity timea) Optimistic time (to) = it is the shortest

possible time in which an activity can be completed if everything goes exceptionally well

b) Most likely time(tm ) = it is the time in which the activity is normally expected to complete under normal contingencies

c) Pessimistic time (tp) = it is the time which an activity will take to complete in case of difficulty i.e if mostly things go wrong. It is the longest of all the three time estimates.

steps For accomplIshIng a pert

• Construct the network diagram• Calculate the estimated time , standard

deviation, variance• Calculate EST & LST and total slack for each

activity• Identify the critical activities and mark the

critical path• Calculate the Probability that the project will

meet the due date


Ex: A small engineering project consists of 9 activities. Three time estimates for each activity are given in following table

Activity t0 (in days) tm tp

1-2 2 5 14

1-6 2 5 8

2-3 5 11 29

2-4 1 4 7

3-5 5 11 17

4-5 2 5 14

6-7 3 9 27

5-8 2 2 8

7-8 7 13 31


Activity t0 (in days) tm tp te

1-2 2 5 14 6

1-6 2 5 8 5

2-3 5 11 29 13

2-4 1 4 7 4

3-5 5 11 17 11

4-5 2 5 14 6

6-7 3 9 27 11

5-8 2 2 8 3

7-8 7 13 31 15

Activity EST LST Total slack

1-2 0 0 0

1-6 0 2 2

2-3 6 6 0

2-4 6 20 14

3-5 19 19 0

4-5 10 24 14

6-7 5 7 2

5-8 30 30 0

7-8 16 18 2

Critical path

• Critical path is 1-2-3-5-8• The length of the critical path or the total

project duration (te) is sum of the duration of each critical activity 6+13+11+3= 33 days

• Variance of critical path is 4+16+4+1=25

probability

• Probability that project will meet scheduled date is calculated from given relation:

z= (D-Te)/StTe= total project duration= 33 daysSt = standard deviation= square_root(variance of

project)= 5D= due date= lets take as 38 daysZ= (38-33)/5= 1Corresponding value of probability is 0.841

PERT CPM

• Suitable in defence project and R&D projects where activity time cannot be reliably predicted.

• Suitable in industrial setting, plant maintenance, civil constructions etc.

Unit 5 : Inventory, Logistic and Supply chain Management

Need of Inventory - Costs associated with Inventory ,types of Inventory- Basic EOQ Model - EOQ with discounts , Classification of materials - ABC Analysis, VED, HML, FSN, GOLF, SOS (Numerical expected on Basic EOQ, EOQ with discounts and ABC), Concept of Logistics-3PL, 4PL, Supply Chain Management, Just In Time(JIT), Kanban.


costs assocIated wIth Inventory

• Basic material cost: The cost which is paid to the supplier as price of product

• Packaging & packing Cost: Cost of the packaging of the products


Economic Order Quantity

“ EOQ is the order quantity that minimizes total inventory cost and ordering costs ”


logIstIc management

• The process of planning , implementing and controlling the efficient, cost effective flow and storage of products and related information from point of origin to point of consumption for the purpose of conforming to customer


Modern Trend In Logistic Management

• 3PL : Transportation, warehousing, inventory management, packaging , currier

• 4PL : Assembles, manage the resources, capabilities and technology


Supply Chain Management

• The management of the flow of material and information so that highest degree of customer satisfaction is provided at the lowest possible cost


Kanban



One typical Kanaban Board


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.



Components of Management Information System

Advantages of Kanban

• Reduce Wastage of Inventory• Improve Flow• Prevents Overproduction


ERP• A Enterprise Resource Planning is a packaged

business software system that allows a company to:- Automate and integrate the majority of its

business processes- Share common data and practices across the

entire enterprise- Produce and access information in a real time

environment


Industrial management

Engineering

Transcript of Industrial management