Industrial Management and Economics / B.Tech. CSE/SE/ 2015-16/ VII semester

Reference Material

INDUSTRIAL MANAGEMENT:Industrial Management deals with the development, improvement, implementation and evaluation of integrated systems of people, money, knowledge, information, equipment, energy, materials and/or processes. It also deals with designing new product prototypes more efficiently. It incorporates the principle and methods of engineering analysis and synthesis with the mathematical, physical and social sciences together to specify, predict, and evaluate the results of systems or processes. The principles of industrial management are not only universally applicable across industries, but across all operations in government, commerce, services, or industry. The theoretical basis of industrial engineering is a science of operations, and to use this science in most applications one must simultaneously consider at least three criteria: (1) quality, (2) timeliness, and (3) cost.

The goal of industrial engineering is to ensure that goods and services are being produced or provided at the right quality at the right time at the right cost. From a business perspective the practice of industrial engineering must culminate in successful ul application. This requirement typically dictates that a practicing industrial engineer effectively use soft as well as hard science. In the final analysis, the industrial engineers job is to make both new and existing operations perform well. The preponderance of traditional industrial management techniques deal with physical entities (e.g., equipment, buildings, and tools) as well as informational entities (e.g., time, space) for an operation, employing what can be thought of as hard science. However, management related factors in the workplace that determine the motivation level of an employee to perform his or her assigned duties well, or actively participate in operational improvement over time, represent the soft science of industrial management Concept of Industrial Management: Industrial management term applied to highly organize modern methods of carrying on industrial, especially manufacturing and operations. Industrial management is a process of planning, organizing, directing, controlling and managing the activities of any industry. It combines and transforms various resources used in the system and subsystem of the organization into value added product in a controlled manner. Industrial management includes following for the effective management. Japan introduced the JIT (just in time) concept for the inventory management. Now a days all industries uses automation, CAD/CAM, CIM, MRP, SCM & TQM. These are the industrial management techniques used in managing all phases of industry

Applications of industrial management are summarized in the following departments of industry:

1. Managing and arranging the location of facilities

2. Design of Plant layouts

3. Management t of material handling systems

4. Supply chain management.

5. Production and Planning control

6. Quality control & Total quality management

7. Inventory & Materials management

8. Maintenance management

9. Operations management

10. Labour management

Scope of Industrial Management As far as the scope of industrial management is concerned it is applicable in all segments of industry as well as in daily life. As in daily life, we plan our activities; we coordinate available resources and control our activities to achieve certain goals in the most economic way. In the same way any organization must follow the Principles of Management for its survival and growth and to be economically viable. These management principles are applicable to all activities in industry also. Reading and learning Industrial Management will enable one to be capable of solving the problems of the organization, may be in a Production Shop, Hospital, Departmental shop, an Educational Institution or even a coffee shop. The problems a manager faces in various organizations are more or less similar to that of Production department but smaller in magnitude. Hence the knowledge of Industrial Management will help anybody managing business activities, tackle the problems encountered in business . Scope of Industrial Management encompasses all industrial and human activities.

Benefits derived from efficient industrial management The efficient Industrial Management will give benefits to the various

sections of the society. They are:

CONSUMER: benefits from improved industrial Productivity, increased use value in the product. Products are available to him at right place, at right price, at right time, in desired quantity and of desired quality.

INVESTORS:They get increased security for their investments, adequate market returns, and creditability and good image in the society.

EMPLOYEE: gets adequate Wages, Job security, improved working conditions and increased Personal and Job satisfaction.

SUPPLIERS:Will get confidence in management and their bills can be realized without any delay.

COMMUNITY:community enjoys Benefits from economic and social stability.

THE NATION: will achieve prospects and security because of increased Productivity and healthy industrial atmosphere.

Management: Management in businesses and organizations is the function that coordinates the efforts of people to accomplish goals and objectives by using available resources efficiently and effectively. Management includes planning, organizing, staffing, leading or directing, and controlling an organization to accomplish the goal. Resourcing encompasses the deployment and manipulation of human resources, financial resources, technological resources, and natural resources.

Management has been described as a social process involving responsibility for economical and effective planning & regulation of operation of an enterprise in the fulfilment of given purposes. It is a dynamic process consisting of various elements and activities. These activities are different from operative functions like marketing, finance, purchase etc. Rather these activities are common to each and every manger irrespective of his level or status.The functions of management uniquely describe managers' jobs. The most commonly cited functions of management are planning, organizing, leading, and controlling, although some identify additional functions. The functions of management define the process of management as distinct from accounting, finance, marketing, and other business functions. These functions provide a useful way of classifying information about management, and most basic management texts since the 1950s have been organized around a functional framework.Different experts have classified functions of management. According to George & Jerry, There are four fundamental functions of management i.e. planning, organizing, actuating and controlling. According to Henry Fayol, To manage is to forecast and plan, to organize, to command, & to control. Whereas Luther Gullick has given a keyword POSDCORB where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. But the most widely accepted are functions of management given by KOONTZ and ODONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.

PlanningIt is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of pre-determined goals. According to KOONTZ, Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from where we are & where we want to be. A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.Fayol defined planning in terms of forecasting future conditions, setting objectives, and developing means to attain objectives. Fayol recognized that effective planning must also take into account unexpected contingencies that might arise and did not advocate rigid and inflexible plans. Fayol defined organizing as making provision for the structuring of activities and relationships within the firm and also the recruiting, evaluation, and training of personnel.

According to Fayol, commanding as a managerial function concerned the personal supervision of subordinates and involved inspiring them to put forth unified effort to achieve objectives. Fayol emphasized the importance of managers understanding the people who worked for them, setting a good example, treating subordinates in a manner consistent with firm policy, delegating, and communicating through meetings and conferences.

Planning is the function of management that involves setting objectives and determining a course of action for achieving these objectives. Planning requires that managers be aware of environmental conditions facing their organization and forecast future conditions. It also requires that managers be good decision-makers.

Planning is a process consisting of several steps. The process begins with environmental scanning, which simply means that planners must be aware of the critical contingencies facing their organization in terms of economic conditions, their competitors, and their customers. Planners must then attempt to forecast future conditions. These forecasts form the basis for planning.

Planners must establish objectives, which are statements of what needs to be achieved and when. Planners must then identify alternative courses of action for achieving objectives. After evaluating the various alternatives, planners must make decisions about the best courses of action for achieving objectives. They must then formulate necessary steps and ensure effective implementation of plans. Finally, planners must constantly evaluate the success of their plans and take corrective action when necessary.

There are many different types of plans and planning.

1. STRATEGIC PLANNING.

Strategic planning involves analyzing competitive opportunities and threats, as well as the strengths and weaknesses of the organization, and then determining how to position the organization to compete effectively in their environment. Strategic planning has a long time frame, often three years or more. Strategic planning generally includes the entire organization and includes formulation of objectives. Strategic planning is often based on the organization's mission, which is its fundamental reason for existence. An organization's top management most often conducts strategic planning.

2. TACTICAL PLANNING.

Tactical planning is intermediate-range planning that is designed to develop relatively concrete and specific means to implement the strategic plan. Middle-level managers often engage in tactical planning. Tactical planning often has a one- to three-year time horizon.

3. OPERATIONAL PLANNING.

Operational planning generally assumes the existence of objectives and specifies ways to achieve them. Operational planning is short-range planning that is designed to develop specific action steps that support the strategic and tactical plans. Operational planning usually has a very short time horizon, from one week to one year.

OrganizingOrganizing is the function of management that involves developing an organizational structure and allocating human resources to ensure the accomplishment of objectives. The structure of the organization is the framework within which effort is coordinated. The structure is usually represented by an organization chart, which provides a graphic representation of the chain of command within an organization. Decisions made about the structure of an organization are generally referred to as "organizational design" decisions.

Organizing also involves the design of individual jobs within the organization. Decisions must be made about the duties and responsibilities of individual jobs as well as the manner in which the duties should be carried out. Decisions made about the nature of jobs within the organization are generally called "job design" decisions.

Organizing at the level of the organization involves deciding how best to departmentalize, or cluster jobs into departments to effectively coordinate effort. There are many different ways to departmentalize, including organizing by function, product, geography, or customer. Many larger organizations utilize multiple methods of departmentalization. Organizing at the level of job involves how best to design individual jobs to most effectively use human resources.

Traditionally, job design was based on principles of division of labor and specialization, which assumed that the more narrow the job content, the more proficient the individual performing the job could become. However, experience has shown that it is possible for jobs to become too narrow and specialized. When this happens, negative outcomes result, including decreased job satisfaction and organizational commitment and increased absenteeism and turnover.

Recently many organizations have attempted to strike a balance between the need for worker specialization and the need for workers to have jobs that entail variety and autonomy. Many jobs are now designed based on such principles as job enrichment and teamwork.

It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnels. To organize a business involves determining & providing human and non-human resources to the organizational structure. Organizing as a process involves: Identification of activities.

Classification of grouping of activities.

Assignment of duties.

Delegation of authority and creation of responsibility.

Coordinating authority and responsibility relationships. StaffingIt is the function of manning the organization structure and keeping it manned. Staffing has assumed greater importance in the recent years due to advancement of technology, increase in size of business, complexity of human behavior etc. The main purpose o staffing is to put right man on right job i.e. square pegs in square holes and round pegs in round holes. According to Kootz & ODonell, Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed un the structure. Staffing involves: Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place).

Recruitment, Selection & Placement.

Training & Development.

Remuneration.

Performance Appraisal.

Promotions & Transfer.

Directing or Leading Leading involves influencing others toward the attainment of organizational objectives. Effective leading requires the manager to motivate subordinates, communicate effectively, and effectively use power. If managers are effective leaders, their subordinates will be enthusiastic about exerting effort toward the attainment of organizational objectives.

To become effective at leading, managers must first understand their subordinates' personalities, values, attitudes, and emotions. Therefore, the behavioral sciences have made many contributions to the understanding of this function of management. Personality research and studies of job attitudes provide important information as to how managers can most effectively lead subordinates.

Studies of motivation and motivation theory provide important information about the ways in which workers can be energized to put forth productive effort. Studies of communication provide direction as to how managers can effectively and persuasively communicate. It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following elements:

Supervision

Motivation

Leadership

Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding.

ControllingControlling involves ensuring that performance does not deviate from standards. Controlling consists of three steps, which include establishing performance standards, comparing actual performance against standards, and taking corrective action when necessary. Performance standards are often stated in monetary terms such as revenue, costs, or profits, but may also be stated in other terms, such as units produced, number of defective products, or levels of customer service.

The measurement of performance can be done in several ways, depending on the performance standards, including financial statements, sales reports, production results, customer satisfaction, and formal performance appraisals. Managers at all levels engage in the managerial function of controlling to some degree.

The managerial function of controlling should not be confused with control in the behavioral or manipulative sense. This function does not imply that managers should attempt to control or manipulate the personalities, values, attitudes, or emotions of their subordinates. Instead, this function of management concerns the manager's role in taking necessary actions to ensure that the work-related activities of subordinates are consistent with and contributing toward the accomplishment of organizational and departmental objectives.

Effective controlling requires the existence of plans, since planning provides the necessary performance standards or objectives. Controlling also requires a clear understanding of where responsibility for deviations from standards lies. Two traditional control techniques are the budget and the performance audit. Although controlling is often thought of in terms of financial criteria, managers must also control production/operations processes, procedures for delivery of services, compliance with company policies, and many other activities within the organization.

The management functions of planning, organizing, leading, and controlling are widely considered to be the best means of describing the manager's job as well as the best way to classify accumulated knowledge about the study of management. Although there have been tremendous changes in the environment faced by managers and the tools used by managers to perform their roles, managers still perform these essential functions.

It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur. According to Theo Haimann, Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation. According to Koontz & ODonell Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished. Therefore controlling has following steps: Establishment of standard performance.

Measurement of actual performance.

Comparison of actual performance with the standards and finding out deviation if any.

Corrective action.