REVIEWER SA ENGINEERING MANAGEMENT.docx

**INTRODUCTION TO ENGINEERING MANAGEMENT** **ENGINEERING MANAGEMENT** The course is about management and using the skills of Engineering to boost the organization's objectives. Managers are the one thing that all organizations---no matter the size, kind, or location---need. And there's no doubt th...

**INTRODUCTION TO ENGINEERING MANAGEMENT** **ENGINEERING MANAGEMENT** The course is about management and using the skills of Engineering to boost the organization's objectives. Managers are the one thing that all organizations---no matter the size, kind, or location---need. And there's no doubt that the world managers face has changed, is changing, and will continue to change. The dynamic nature of today's organizations means both rewards and challenges for the individuals who will be managing those organizations. **IMPORTANCE OF MANAGERS** - Organizations need managerial skills and abilities in uncertain and chaotic times. - Managerial skills and abilities are critical in getting things done. - The quality of the employee/supervisor relationship is the most important variable in productivity and loyalty. **WHO'S THE MANAGER ?** - Someone who coordinates and oversees the work of other people so that organizational goals can be accomplished. - Directing the actions of a group achieve a goal in most efficient manner. - Getting things done through people - Process of achieving organizational goals by working with and through people and organizational resources. **FUNCTIONS, ROLES AND SKILLS OF MANAGERS** **MANAGEMENT LEVELS** - First-line Managers -- individuals who manage the work of non-managerial employees. - Middle Managers -- Individuals who manage the work of first-line managers. - Top managers -- individual who are responsible for making organization-wide decisions and establishing plans and goals that affect the entire organization. **THE ORGANIZATION** A deliberate arrangement of people assembled to accomplish some specific purpose (that individuals independently could accomplish alone) **CHARACTERISTICS OF ORGANIZATIONS** - Have a purpose (Goal) - Composed of people - Have a structure **THE MANAGEMENT** - Management -- involves coordinating and overseeing the work activities of other so that their activities are completed efficiently and effectively. - Efficiency -- Doing things right, getting the most output for the least inputs. - Effectiveness -- Doing the right things, attaining organizational goals. **MANAGEMENT FUNCTIONS** - Planning -- Selecting missions and objectives, defining goals, requires decision making - Organizing -- Establishing structure for the objective, arranging and structuring work to accomplish goals. - Leading -- Working with and through people to accomplish goals, influencing people to achieve the objective. - Controlling -- Measuring and correcting activities, monitoring comparing and correcting work. **Management Roles** -- Roles are specific actions or behaviors expected of a manager. Mintzberg identified 10 roles grouped as interpersonal relationships, the transfer of information and decision making. **Interpersonal Roles** -- figurehead role (Outward relationship), leader role (Downward relation), liason role (Horizontal relation). **Informational Roles** -- Monitor role (Collects information about internal operations and external events), Disseminator role (Transforms information internally to everybody in organization), Spokesman role (Public relations) **Decisional Roles** -- Entrepreneurial roles (Initiates changes, assumes risks, transforms ideas into useful products), Disturbance Handler role (Deals with unforeseen problems and crisis), Resource allocator role (Distributing resources), Negotiator role (bargains with suppliers, customers etc. in favor of the enterprise). **MANAGERIAL SKILLS** - Technical skills -- knowledge and proficiency in a specific field, specific skills such as engineering, accounting, etc. - Human Skills -- the ability to work well with others, dealing with others, leading, motivating or controlling them. - Conceptual skills -- the ability to think and conceptualize about abstract and complex situations concerning the organization. Ability to discern the critical factors that will determine the organization's success or failure. **IMPORTANT MANAGERIAL SKILLS** - Managing human capital - Inspiring commitment - Managing change - Structuring work and getting things done - Facilitating the psychological and social contexts of work - Using purposeful networking - Managing decision-making process - Managing strategy and innovation - Managing logistics and technology **FACTORS AFFECTING A MANAGER'S JOB AND IMPORTANCE OF MANAGEMENT** **IMPORTANCE OF CUSTOMERS** - Customer -- the reason that organizations exist. - Managing customer relationships is the responsibility of all Managers and employees. - Consistent high quality customer service is essential for survival. **IMPORTANCE OF INNOVATION** - Doing things differently, exploring new territory, and taking risks. - Managers should encourage employees to be aware of and act on opportunities for innovation. **IMPORTANCE OF SUSTAINABILITY** - Sustainability -- a company's ability to achieve business goals and increase long-term shareholder value, by integrating economic, environmental and special opportunities into its business strategies. **STUDY OF MANAGEMENT** Management is needed: - In all types and sizes of organizations - At all organizational levels - In all organizational areas - In all organization, regardless of location **PROS AND CONS IN BEING A MANAGER** **ADVANTAGES** - create a work environment in which employees can reach their full-potential - opportunity to think creatively and use ones imagination - help others find fulfillment in work - support, coach and nurture others - work with variety of people - receive recognition and status in the organization or in the community - play a role in influencing organizational outcomes - receive appropriate compensation in the form of salaries, bonuses and stock options - good managers are needed by organizations. **DISADVANTAGES** - do hard work - duties are more clerical than managerial - have to deal with a variety of personalities - often make do with limited resources - motivate employees in chaotic and uncertain situations - blend knowledge, skills, ambitions and experiences of a diverse work group - success depends on others' work performance **HISTORICAL BACKGROUND OF MANAGEMENT** Management has been practiced a long time. Organized endeavors directed by people responsible for planning, organizing, leading, and controlling activities have existed for thousands of years. Here are some of those Management practices and theories. **EARLY EXAMPLES OF MANAGEMENT** **EGYPTIAN PYRAMIDS & GREAT WALL OF CHINA** The Egyptian pyramids and the Great Wall of China are proof that projects of tremendous scope, employing tens of thousands of people, were completed in ancient times. It took more than 100,000 workers some 20 years to construct a single pyramid. Who told each worker what to do? Who ensured that there would be enough stones at the site to keep workers busy? The answer is managers. Someone had to plan what was to be done, organize people and materials to do it, make sure those workers got the work done, and impose some controls to ensure that everything was done as planned. **VENICE, ITALY** Another example of early management can be found in the city of Venice, which was a major economic and trade center in the 1400s. The Venetians developed an early form of business enterprise and engaged in many activities common to today's organizations. For instance, at the arsenal of Venice, warships were floated along the canals, and at each stop, materials and riggings were added to the ship. Sounds a lot like a car "floating" along an assembly line, doesn't it? In addition, the Venetians used warehouse and inventory systems to keep track of materials, human resource management functions to manage the labor force (including wine breaks), and an accounting system to keep track of revenues and costs. **ADAM SMITH** In 1776, Adam Smith published The Wealth of Nations, in which he argued the economic advantages that organizations and society would gain from the division of labor (or job specialization)---that is, breaking down jobs into narrow and repetitive tasks. Using the pin industry as an example, Smith claimed that 10 individuals, each doing a specialized task, could produce about 48,000 pins a day among them. However, if each person worked alone performing each task separately, it would be quite an accomplishment to produce even 10 pins a day! Smith concluded that division of labor increased productivity by increasing each worker's skill and dexterity, saving time lost in changing tasks, and creating labor saving inventions and machinery. Job specialization continues to be popular. For example, think of the specialized tasks performed by members of a hospital surgery team, meal preparation tasks done by workers in restaurant kitchens, or positions played by players on a football team. **INDUSTRIAL REVOLUTION** Starting in the late eighteenth century when machine power was substituted for human power, a point in history known as the industrial revolution, it became more economical to manufacture goods in factories rather than at home. These large efficient factories needed someone to forecast demand, ensure that enough material was on hand to make products, assign tasks to people, direct daily activities, and so forth. That "someone" was a manager: These managers would need formal theories to guide them in running these large organizations. It wasn't until the early 1900s, however, that the first steps toward developing such theories were taken. **MAJOR APPROACHES TO MANAGEMENT** **CLASSICAL APPROACH** - Scientific Management \- Frederick W. Taylor \- Frank and Lillian Gilbreth - General Administrative Theory \- Henri Fayol \- Max Weber Although we've seen how management has been used in organized efforts since early history, the formal study of management didn't begin until early in the twentieth century. These first studies of management, often called the classical approach, emphasized rationality and making organizations and workers as efficient as possible. Two major theories comprise the classical approach: scientific management and general administrative theory. The two most important contributors to scientific management theory were Frederick W. Taylor and the husband-wife team of Frank and Lillian Gilbreth. The two most important contributors to general administrative theory were Henri Fayol and Max Weber. **PRINCIPLES OF SCIENTIFIC MANAGEMENT (FREDERICK WINSLOW TAYLOR)** Modern management theory was born, 1911. That was when Frederick Winslow Taylor's Principles of Scientific Management was published. Its contents were widely embraced by managers around the world. Taylor's book described the theory of scientific management: the use of scientific methods to define the "one best way" for a job to be done. Taylor worked at the Midvale and Bethlehem Steel Companies in Pennsylvania. As a mechanical engineer with a Quaker and Puritan background, he was continually appalled by workers' inefficiencies. Employees used vastly different techniques to do the same job. They often "took it easy" on the job, and Taylor believed that worker output was only about one-third of what was possible. Virtually no work standards existed and workers were placed in jobs with little or no concern for matching their abilities and aptitudes with the tasks they were required to do. Taylor set out to remedy that by applying the scientific method to shop-floor jobs. He spent more than two decades passionately pursuing the "one best way" for such jobs to be done. 1. Develop a science for each element of an individual\'s work to replace the old rule-of- thumb method. 2. Scientifically select and then train, teach, and develop the worker. 3. Heartily cooperate with the workers so as to ensure that all work is done in accordance with the principles of the science that has been developed. 4. Divide work and responsibility almost equally between management and workers. Management does all work for which it is better suited than the workers. Taylor's experiences at Midvale led him to define clear guidelines for improving production efficiency. He argued that these four principles of management would result in prosperity for both workers and managers. Probably the best known example of Taylor's scientific management efforts was the pig iron experiment. Workers loaded "pigs" of iron (each weighing 92 lbs.) onto rail cars. Their daily average output was 12.5 tons. However, Taylor believed that by scientifically analyzing the job to determine the "one best way" to load pig iron, output could be increased to 47 or 48 tons per day. After scientifically applying different combinations of procedures, techniques, and tools, Taylor succeeded in getting that level of productivity. By putting the right person on the job with the correct tools and equipment, having the worker follow his instructions exactly, and motivating the worker with an economic incentive of a significantly higher daily wage. Using similar approaches for other jobs, Taylor was able to define the "one best way" for doing each job. Overall, Taylor achieved consistent productivity improvements in the range of 200 percent or more. Based on his ground breaking studies of manual work using scientific principles, Taylor became known as the "father" of scientific management. His ideas spread in the United States and to other countries and inspired others to study and develop methods of scientific management. His most prominent followers were Frank and Lillian Gilbreth. **TIME AND MOTION STUDY (FRANK AND LILLIAN GILBRETH)** A construction contractor by trade, Frank Gilbreth gave up that career to study scientific management after hearing Taylor speak at a professional meeting. Frank and his wife Lillian, a psychologist, studied work to eliminate inefficient hand-and body motions. The Gilbreths also experimented with the design and use of the proper tools and equipment for optimizing work performance. Also, as parents of 12 children, the Gilbreths ran their household using scientific management principles and techniques. In fact, two of their children wrote a book, Cheaper by the Dozen, which described life with the two masters of efficiency. Frank is probably best known for his bricklaying experiments. By carefully analyzing the bricklayer's job, he reduced the number of motions in laying exterior brick from 18 to about 5, and in laying interior brick from 18 to 2. Using Gilbreth's techniques, a bricklayer was more productive and less fatigued at the end of the day. The Gilbreths invented a device called a microchronometer that recorded a worker's hand and-body motions and the amount of time spent doing each motion. Wasted motions missed by the naked eye could be identified and eliminated. The Gilbreths also devised a classification scheme to label 17 basic hand motions (such as search, grasp, hold), which they called therbligs (Gilbreth spelled backward with the th transposed). This scheme gave the Gilbreths a more precise way of analysing a worker's exact hand movements. **14 PRINCIPLES OF MANAGEMENT (HENRI FAYOL)** General administrative theory focused more on what managers do and what constituted good management practice. He first identified five functions that managers perform: 1. 2. 3. 4. 5. Fayol wrote during the same time period as Taylor. While Taylor was concerned with first-line managers and the scientific method, Fayol's attention was directed at the activities of all managers. He wrote from his personal experience as the managing director of a large French coal-mining firm. Fayol described the practice of management as something distinct from accounting, finance, production, distribution, and other typical business functions. His belief that management was an activity common to all business endeavors, government, and even the home led him to develop 14 principles of management---fundamental rules of management that could be applied to all organizational situations and taught in schools. 1. Division of Work - Specialization increases output by making employees more efficient 2. Authority - Managers must be able to give orders, and authority gives them this right 3. Discipline - Employees must obey and respect the rules that govern the organization 4. Unity of command - Every employee should receive orders from only one superior 5. Unity of direction - The organization should have a single plan of action to guide managers and workers 6. Subordination of individual interests to the general interest - The interests of any one employee or group of employees should not take precedence over the interests of the organization as a whole 7. Remuneration - Workers must be paid a fair wage for their services 8. Centralization - This term refers to the degree to which subordinates are involved in decision making 9. Scalar chain - The line of authority from top management to the lowest ranks is the scalar chain 10. Order - People and materials should be in the right place at the right time 11. Equity - Managers should be kind and fair to their subordinates 12. Stability of tenure of personnel - Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies 13. Initiative - Employees who are allowed to originate and carry out plans will exert high levels of effort 14. Esprit de corps - Promoting team spirit will build harmony and unity within the organization **BUREAUCRACY (MAX WEBER)** Weber was a German sociologist who studied organizations. Writing in the early 1900s, he developed a theory of authority structures and relations based on an ideal type of organization he called a bureaucracy---a form of organization characterized by division of labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships. Weber recognized that this "ideal bureaucracy" didn't exist in reality. Instead he intended it as a basis for theorizing about how work could be done in large groups. His theory became the structural design for many of today's large organizations. Bureaucracy, as described by Weber, is a lot like scientific management in its ideology. Both emphasized rationality, predictability, impersonality, technical, competence, and authoritarianism. Although Weber's ideas were less practical than Taylor's, the fact that his "ideal type" still describes many contemporary organizations attests to their importance. **CHARACTERISTICS OF WEBER'S BUREAUCRACY**  Several of our current management ideas and practices can be directly traced to the contributions of general administrative theory. For instance, the functional view of the manager's job can be attributed to Fayol. In addition, his 14 principles serve as a frame of reference from which many current management concepts---such as managerial authority, centralized decision making, reporting to only one boss, and so forth---have evolved. Weber's bureaucracy was an attempt to formulate an ideal prototype for organizations. Although many characteristics of Weber's bureaucracy are still evident in large organizations, his model isn't as popular today as it was in the twentieth century. Many managers feel that a bureaucratic structure hinders individual employees' creativity and limits an organization's ability to respond quickly to an increasingly dynamic environment. However, even in flexible organizations of creative professionals---such as Microsoft, Samsung, General Electric, or Cisco Systems---some bureaucratic mechanisms are necessary to ensure that resources are used efficiently and effectively. **ORGANIZATIONAL BEHAVIOUR** Just a review, Managers get things done by working with people. This explains why some articles and documents look at management by focusing on the organization's people. The field of study that researches the actions (behaviour) of people at work is called organizational behaviour (OB). Much of what managers do today when managing people---motivating, leading, building trust, working with a team, managing conflict, and so forth---has come out of OB research. Although a number of individuals in the early twentieth century recognized the importance of people to an organization's success, four stand out as early advocates of the OB approach: 1. Robert Owen (Late 1700s) - Concerned about deplorable working conditions - Proposed idealistic workplace - Argued that money spent Improving labor was smart investment 2. Hugo Munsterberg (Early 1900s) - Pioneer in field of industrial psychology - scientific study of people at work - Suggested using psychological tests for employee selection, learning theory concepts for employee training, and study of human behavior for employee motivation 3. Mary Parker Follett (Early 1900s) - One of the first to recognize that organizations could be views from perspective of individual and group behavior - Proposed more people-oriented ideas than scientific management followers - Thought organizations should be used on group ethic 4. Chester Barnard (1930s) - Actual manager who thought organizations were social systems that required cooperation - Believed manager's job was to communicate and stimulate employees; high levels of effort - First to argue that organizations were open systems Their contributions were varied and distinct, yet all believed that people were the most important asset of the organization and should be managed accordingly. Their ideas provided the foundation for such management practices as employee selection procedures, motivation programs, and work teams. **HAWTHORNE STUDIES (ELTON MAYO)** Without question, the most important contribution to the OB field came out of the Hawthorne Studies, a series of studies conducted at the Western Electric Company Works in Cicero, Illinois. These studies, which started in 1924, were initially designed by Western Electric industrial engineers as a scientific management experiment. They wanted to examine the effect of various lighting levels on worker productivity. Like any good scientific experiment, control and experimental groups were set up with the experimental group being exposed to various lighting intensities, and the control group working under a constant intensity. It's logical to think that individual output in the experimental group would be directly related to the intensity of the light. However, they found that as the level of light was increased in the experimental group, output for both groups increased. Then, much to the surprise of the engineers, as the light level was decreased in the experimental group, productivity continued to increase in both groups. In fact, a productivity decrease was observed in the experimental group only when the level of light was reduced to that of a moonlit night. What would explain these unexpected results? The engineers weren't sure, but concluded that lighting intensity was not directly related to group productivity, and that something else must have contributed to the results. They weren't able to pinpoint what that "something else" was, though. In 1927, the Western Electric engineers asked Harvard professor Elton Mayo and his associates to join the study as consultants. Thus began a relationship that would last through 1932 and encompass numerous experiments in the redesign of jobs, changes in workday and workweek length, introduction of rest periods, and individual versus group wage plans. For example, one experiment was designed to evaluate the effect of a group piecework incentive pay system on group productivity. The results indicated that the incentive plan had less effect on a worker's output than did group pressure, acceptance, and security. The researchers concluded that social norms or group standards were the key determinants of individual work behavior. Scholars generally agree that the Hawthorne Studies had a game-changing impact on management beliefs about the role of people in organizations. Mayo concluded that people's behaviour and attitudes are closely related, that group factors significantly affect individual behaviour, that group standards establish individual worker output, and that money is less a factor in determining output than are group standards, group attitudes, and security. These conclusions led to a new emphasis on the human behaviour factor in the management of organizations. Although critics attacked the research procedures, analyses of findings, and conclusions, it's of little importance from a historical perspective whether the Hawthorne Studies were academically sound or their conclusions justified. What is important is that they stimulated an interest in human behaviour in organizations. The behavioral approach has largely shaped how today's organizations are managed. From the way that managers design jobs to the way that they work with employee teams to the way that they communicate, we see elements of the behavioural approach. Much of what the early OB advocates proposed and the conclusions from the Hawthorne studies have provided the foundation for our current theories of motivation, leadership, group behavior and development, and numerous other behavioral approaches. **QUANTITATIVE APPROACH** Although passengers bumping into each other when trying to find their seats on an airplane can be a mild annoyance for them, it's a bigger problem for airlines because lines get backed up, slowing down how quickly the plane can get back in the air. Based on research in spacetime geometry, one airline innovated a unique boarding process called "reverse pyramid" that has saved at least 2 minutes in boarding time. This is an example of the quantitative approach, which is the use of quantitative techniques to improve decision making. This approach also is known as management science. The quantitative approach evolved from mathematical and statistical solutions developed for military problems during World War II. After the war was over, many of these techniques used for military problems were applied to businesses. For example, one group of military officers, nicknamed the Whiz Kids, joined Ford Motor Company in the mid-1940s and immediately began using statistical methods and quantitative models to improve decision making. What exactly does the quantitative approach do? It involves applying statistics, optimization models, information models, computer simulations, and other quantitative techniques to management activities. Linear programming, for instance, is a technique that managers use to improve resource allocation decisions. Work scheduling can be more efficient as a result of critical path scheduling analysis. The economic order quantity model helps managers determine optimum inventory levels. Each of these is an example of quantitative techniques being applied to improve managerial decision making. Another area where quantitative techniques are used frequently is in total quality management. **QUALITY MANAGEMENT** A quality revolution swept through both the business and public sectors in the 1980s and 1990s. It was inspired by a small group of quality experts, the most famous being W. Edwards Deming and Joseph M. Juran. The ideas and techniques they advocated in the 1950s had few supporters in the United States but were enthusiastically embraced by Japanese organizations. As Japanese manufacturers began beating U.S. competitors in quality comparisons, however, Western managers soon took a more serious look at Deming's and Juran's ideas that became the basis for today's quality management programs. **What is Quality Management?** 1\. Intense focus on the customer - The customer includes outsiders who buy the organization\'s products or services and internal customers who interact with and serve others in the organization. 2\. Concern for continual improvement - Quality management is a commitment to never being satisfied. \"Very good\" is not good enough. Quality can always be improved. 3\. Process focused - Quality management focuses on work processes as the quality of goods and services is continually improved. 4\. Improvement in the quality of everything the organization does - This relates to the final product, how the organization handles deliveries, how rapidly it responds to complaints, how politely the phones are answered, and the like. 5\. Accurate measurement - Quality management uses statistical techniques to measure every critical variable in the organization\'s operations. These are compared against standards to identify problems, trace them to their roots, and eliminate their causes. 6\. Empowerment of employees - Quality management involves the people on the line in the improvement process. Teams are widely used in quality management programs as empowerment vehicles for finding and solving problems. **TOTAL QUALITY MANAGEMENT (TQM)** Total quality management, or TQM, is a management philosophy devoted to continual improvement and responding to customer needs and expectations. The term customer includes anyone who interacts with the organization's product or services internally or externally. It encompasses employees and suppliers as well as the people who purchase the organization's goods or services. Continual improvement isn't possible without accurate measurements, which require statistical techniques that measure every critical variable in the organization's work processes. These measurements are compared against standards to identify and correct problems. No one likes long lines, especially residents of New York City. If they see a long checkout line, they often go somewhere else. However, at Whole Foods' first gourmet supermarkets in Manhattan, customers found something different---that is, the longer the line, the shorter the wait. When ready to check out, customers are guided into serpentine single lines that feed into numerous checkout lanes. Whole Foods, widely known for its organic food selections, can charge premium prices, which allow it the luxury of staffing all those checkout lanes. And customers are finding that their wait times are shorter than expected. The science of keeping lines moving is known as queue management. And for Whole Foods, this quantitative technique has translated into strong sales at its Manhattan stores. The quantitative approach contributes directly to management decision making in the areas of planning and control. For instance, when managers make budgeting, queuing, scheduling, quality control, and similar decisions, they typically rely on quantitative techniques. Specialized software has made the use of these. **CONTEMPORARY APPROACH** Many elements of the earlier approaches to management theory continue to influence how managers manage. Most of these earlier approaches focused on managers' concerns inside the organization. Starting in the 1960s, management researchers began to look at what was happening in the external environment outside the boundaries of the organization. Two contemporary management perspectives---systems and contingency---are part of this approach. **SYSTEMS THEORY** Systems theory is a basic theory in the physical sciences, but had never been applied to organized human efforts. In 1938, Chester Barnard, a telephone company executive, first wrote in his book, The Functions of an Executive, that an organization functioned as a cooperative system. However, it wasn't until the 1960s that management researchers began to look more carefully at systems theory and how it related to organizations. A system is a set of interrelated and interdependent parts arranged in a manner that produces a unified whole. The two basic types of systems are closed and open. - Closed systems are not influenced by and do not interact with their environment. - In contrast, open systems are influenced by and do interact with their environment. Today, when we describe organizations as systems, we mean open systems. Above is a diagram of an organization from an open systems perspective. As you can see, an organization takes in inputs (resources) from the environment and transforms or processes these resources into outputs that are distributed into the environment. The organization is "open" to and interacts with its environment. How does the systems approach contribute to our understanding of management? Researchers envisioned an organization as being made up of "interdependent factors, including individuals, groups, attitudes, motives, formal structure, interactions, goals, status, and authority." What this means is that as managers coordinate work activities in the various parts of the organization, they ensure that all these parts are working together so the organization's goals can be achieved. For example, the systems approach recognizes that, no matter how efficient the production department might be, the marketing department must anticipate changes in customer tastes and work with the product development department in creating products customers want or the organization's overall performance will suffer. In addition, the systems approach implies that decisions and actions in one organizational area will affect other areas. For example, if the purchasing department doesn't acquire the right quantity and quality of inputs, the production department won't be able to do its job. Finally, the systems approach recognizes that organizations are not self-contained. They rely on their environment for essential inputs and as outlets to absorb their outputs. No organization can survive for long if it ignores government regulations, supplier relations, or the varied external constituencies upon which it depends. How relevant is the systems approach to management? Quite relevant. Consider, for example, a shift manager at a Starbucks restaurant who must coordinate the work of employees filling customer orders at the front counter and the drive-through windows, direct the delivery and unloading of food supplies, and address any customer concerns that come up. This manager "manages" all parts of the "system" so that the restaurant meets its daily sales goals. **CONTINGENCY THEORY** The early management theorists came up with management principles that they generally assumed to be universally applicable. Later research found exceptions to many of these principles. For example, division of labor is valuable and widely used, but jobs can become too specialized. Bureaucracy is desirable in many situations, but in other circumstances, other structural designs are more effective. Management is not (and cannot be) based on simplistic principles to be applied in all situations. Different and changing situations require managers to use different approaches and techniques. The contingency approach (sometimes called the situational approach) says that organizations are different, face different situations (contingencies), and require different ways of managing. A good way to describe contingency is "if, then." If this is the way my situation is, then this is the best way for me to manage in this situation. It's intuitively logical because organizations and even units within the same organization differ---in size, goals, work activities, and the like. It would be surprising to find universally applicable management rules that would work in all situations. But, of course, it's one thing to say that the way to manage "depends on the situation" and another to say what the situation is. Management researchers continue working to identify these situational variables. Listed below are four popular contingency variables: 1. Organization Size - As size increases, so do the problems of coordination. For instance, the type of organization structure appropriate for an organization of 50,000 employees is likely to be inefficient for an organization of 50 employees. 2. Routineness of Task Technology - To achieve its purpose, an organization uses technology. Routine technologies require organizational structures, leadership styles, and control systems that differ from those required by customized or non routine technologies. 3. Environmental Uncertainty - The degree of uncertainty caused by environmental changes influences the management process. What works best in a stable and predictable environment may be totally inappropriate in a rapidly changing and unpredictable environment. 4. Individual Differences - Individuals differ in terms of their desire for growth, autonomy, tolerance of ambiguity, and expectations. These and other individual differences are particularly important when managers select motivation techniques, leadership styles, and job designs. Although the list is by no means comprehensive---more than 100 different variables have been identified---it represents those most widely used and gives you an idea of what we mean by the term contingency variable. The primary value of the contingency approach is that it stresses there are no simplistic or universal rules for managers to follow. **CONSTRAINTS AND CHALLENGES OF MANAGEMENT** **Omnipotent View** - The view that managers are directly responsible for an organization's success or failure. **Symbolic View** - The view that much of an organization's success or failure is due to external forces outside the manager's control. **External Environment** - Those factors and forces outside the organization that affect its performance. Someone who coordinates and oversees the work of other people so that organizational goals can be accomplished. **COMPONENTS OF EXTERNAL ENVIRONMENT** Specific Environment -- external forces that have a direct and immediate impact on the organization. General Environment -- Broad economic, socio-cultural, political/Legal, demographic,technological, and global conditions that may affect the organization. **UNCERTAINTY AND COMPLEXITY** Environmental Uncertainty -- degree of change and complexity in an organization's environment. Environmental Complexity -- the number of components in an organization's knowledge about those components. Stakeholders -- any constituencies in the organization's decisions and actions. **ORIGIN OF ORGANIZATIONAL CULTURE** - Organization founder - Vision and Mission - Past practices - Top management behavior - Socialization -- the process that helps employees adapt to the organization's culture. **ORGANIZATIONAL CULTURE** - Amplified by the behaviors of leaders - Embedded in a network of organizational practices - Shared beliefs, values, and assumptions held by members of an organization - Visible in the 'way that work gets done' on a day to day basis - Evident in the behaviors of individuals and groups **LEARNING CULTURE IN THE ORGANIZATION** - Stories -- Narratives of significant events or people, e.g. organization founders, rule breaking, reaction to past mistakes etc. - Rituals -- Sequence of activities that express and reinforce the important values and goals of the organization. - Material Artifacts and Symbols -- convey the kinds of behavior that are expected, e.g. risk taking, participation, authority, etc. - Language - Acts as a common denominator that bonds members. **STRONG VS. WEAK CULTURES** ----------------------------------------------------------------- -------------------------------------------------------------- **Weak Cultures** **Strong Cultures** Values widely shared Values limited to a few people usually top management Culture conveys consistent messages about what\'s important Culture sends contradictory messages about what\'s important Most employees can tell stories about company history or heroes Employees have little knowledge of company history or heroes Employees strongly identify with culture Employees have little identification with culture Strong connection between shared values and behaviors Little connection between shared values and behaviors ----------------------------------------------------------------- -------------------------------------------------------------- **BENEFITS OF A STRONG CULTURE** - Creates a stronger employee commitment to the organization - Aids in the recruitment and socialization of new employees - Fosters higher organizational performance by instilling and promoting employee initiative **CULTURAL CONSTRAINTS ON MANAGERS** - Whatever managerial actions the organization recognizes as proper or improper on its behalf - Whatever organizational activities the organization values and encourages - The overall strength or weakness of the organizational culture **MANAGERIAL DECISIONS AFFECTED BY CULTURE** Planning - The degree of risk that plans should contain - Whether plans should be developed by individuals or teams - The degree of environmental scanning in which management will engage Organizing - How much autonomy should be designed into employees\' jobs - Whether tasks should be done by individuals or in teams - The degree to which department managers interact with each other Leading - The degree to which managers are concerned with increasing employee job satisfaction - What leadership styles are appropriate - Whether all disagreements-even constructive ones-should be eliminated Controlling - Whether to impose external controls or to allow employees to control their own actions - What criteria should be emphasized in employee performance evaluations - What repercussions will occur from exceeding one\'s budget **CURRENT TRENDS IN ORGANIZATIONAL CULTURE** - Creating a Customer Responsive Culture - Hire the right type of employees (employees with strong drive in serving customer) - Have few rigid rules, procedures, and regulations. - Use widespread empowerment of employees - Have good listening skills in relating to customers messages - Provide role clarity to employees in order to reduce ambiguity and conflict and to increase job satisfaction - Have conscientious, caring employees willing to take initiative  **SPIRITUALITY AND CULTURE** - Workplace spirituality -- a culture where organizational values promote a sense of purpose through meaningful work that takes place in the context of community. **CHARACTERISTICS OF A SPIRITUAL ORGANIZATION** - Strong sense of purpose - Focus on individual development - Trust and openness - Employee empowerment - Toleration of employee's expression **DECISION MAKING PROCESS** - Decision - Making a choice from two or more alternatives. **EIGHT-STEP DECISION-MAKING MODEL** 1. Identify need for a decision to be made 2. Gather relevant info from variety of perspectives 3. Decide goals, painting clear vision of desired outcome 4. Develop clear decision-making criteria to evaluate options 5. Generate viable options that can achieve goals 6. Weigh the options, picking best of the bunch 7. Implement the option that you chose 8. Evaluate implementation process & revise as needed Step 1: Identifying the Problem - Problem - A discrepancy between an existing and desired state of affairs. Characteristics of Problems - A problem becomes a problem when a manager becomes aware of it. - There is pressure to solve the problem. - The manager must have the authority, information, or resources needed to solve the problem. Step 2: Identifying Decision Criteria - Decision criteria - are factors that are important (relevant) to resolving the problem. - Costs that will be incurred (investments required) - Risks likely to be encountered (chance of failure) - Outcomes that are desired (growth of the firm) Step 3: Allocating Weights to the Criteria - Decision criteria are not of equal importance - Assigning a weight to each item places the items in the correct priority order of their importance in the decision making process. Step 4: Developing Alternatives - Identifying viable alternatives - Alternatives - are listed (without evaluation) that can resolve the problem. Step 5: Analyzing Alternatives - Appraising each alternative's strengths and weaknesses - An alternative's appraisal is based on its ability to resolve the issues identified in steps 2 and 3. Step 6: Selecting an Alternative - Choosing the best alternative - The alternative with the highest total weight is chosen. Step 7: Implementing the Decision - Putting the chosen alternative into action - Conveying the decision to and gaining commitment from those who will carry out the decision. Step 8: Evaluating the Decision's Effectiveness - The soundness of the decision is judged by its outcomes. - How effectively was the problem resolved by outcomes resulting from the chosen alternatives? - If the problem was not resolved, what went wrong? **FOUR WAYS OF MAKING DECISIONS** Decision making is particularly important to managers. It's part of all four managerial functions. In fact, that's why we say that decision making is the essence of management. And that's why managers---when they plan, organize, lead, and control---are called decision makers. 1. **Rationality** - Managers make consistent, value-maximizing choices with specified constraints. - Assumptions are that decision makers: - - - - 2. **Bounded Rationality** - Managers make decisions rationally, but are limited (bounded) by their ability to process information. - Assumptions are that decision makers: - - 3. **The Role of Intuition** - Intuitive decision making - Making decisions on the basis of experience, feelings, and accumulated judgement. Experience-based decisions - Managers make decisions based on their past experiences Affect-initiated decisions - Managers make decisions based on feelings or emotions Cognitive-based decisions - Mangers make decisions based on skills, knowledge, and training Values or ethics-based decisions - Mangers make decisions based on ethical values or culture Subconscious mental processing - Managers use data from subconscious mind to help them make decisions 4. **The Role of Evidence-Based Management** - Systematic use of the best available evidence to improve management practice. - The four essential elements of EBMgt are the (1) decision maker's expertise and judgment; (2) external evidence that's been evaluated by the decision maker; (3) opinions, preferences, and values of those who have a stake in the decision; and (4) relevant organizational (internal) factors such as context, circumstances, and organizational members. **DIMENSIONS OF DECISION-MAKING STYLES** 1. **Ways of thinking** - - 2. **Tolerance for ambiguity** - - **TYPES OF DECISION MAKERS** 1. **Directive** - Use minimal information and consider few alternatives. 2. **Analytic** - Make careful decisions in unique situations. 3. **Conceptual** - Maintain a broad outlook and consider many alternatives in making long-term decisions. 4. **Behavioral** - Avoid conflict by working well with others and being receptive to suggestions. **EFFECTIVE DECISION MAKING** Today's business world revolves around making decisions, often risky ones, usually with incomplete or inadequate information, and under intense time pressure. Here are some guidelines in making decisions. 1. **Understand cultural differences** Managers everywhere want to make good decisions. However, is there only one "best" way worldwide to make decisions? Or does the "best way depend on the values, beliefs, attitudes, and behavioral patterns of the people involved?" 2. **Know when it's time to call it quits** When it's evident that a decision isn't working, don't be afraid to pull the plug. However, as we said earlier, many decision makers block or distort negative information because they don't want to believe that their decision was bad. They become so attached to a decision that they refuse to recognize when it's time to move on. 3. **Use an effective decision-making process** Experts say an effective decision-making process has these six characteristics: \(1) It focuses on what's important; \(2) It's logical and consistent; \(3) It acknowledges both subjective and objective thinking and blends analytical with intuitive thinking; \(4) It requires only as much information and analysis as is necessary to resolve a particular dilemma; \(5) It encourages and guides the gathering of relevant information and informed opinion; and \(6) It's straightforward, reliable, easy to use, and flexible." 4\. **Build an organization that can spot the unexpected and quickly adapt to the changed environment** This suggestion comes from Karl Weick, an organizational psychologist, who has made a career of studying organizations and how people work. He calls such organizations highly reliable organizations (HROs) and says they share five habits. 1. They're not tricked by their success - HROs are preoccupied with their failures. They're alert to the smallest deviations and react quickly to anything that doesn't fit with their expectations. \(2) They defer to the experts on the front line - Frontline workers---those who interact day in and day out with customers, products, suppliers, and so forth---have first hand knowledge of what can and cannot be done, what will and will not work. 3. They let unexpected circumstances provide the solution. \(4) They embrace complexity - Because business is complex, these organizations recognize that it "takes complexity to sense complexity." Rather than simplifying data, which we instinctively try to do when faced with complexity, these organizations aim for deeper understanding of the situation. They ask "why" and keep asking why as they probe more deeply into the causes of the problem and possible solutions. \(5) Finally, they anticipate, but also recognize their limits -These organizations do try to anticipate as much as possible, but they recognize that they can't anticipate everything. As Weick says, they don't "think, then act. They think by acting. By actually doing things, you'll find out what works and what doesn't." Making decisions in today's fast-moving world isn't easy. Successful managers need good decision-making skills to plan, organize, lead, and control. **MANAGEMENT FUNCTIONS** **PLANNING** IMG\_256 **A primary functional managerial activity that involves:** - Defining the organization's goals - Establishing an overall strategy for achieving those goals - Developing a comprehensive set of plans to integrate and coordinate organizational work. **Types of planning** - Informal: not written down, short-term focus; specific to an organizational unit. - Formal: written, specific, and long-term focus, involves shared goals for the organization. **Purposes of Planning** - Provides direction - Reduces uncertainty - Minimizes waste and redundancy - Sets the standards for controlling **The Relationship between Planning and Performance** - Formal planning is associated with: - - - The quality of planning and implementation affects performance more than the extent of planning. - The external environment can reduce the impact of planning on performance - Formal planning must be used for several years before planning begins to affect performance. **ELEMENTS OF PLANNING** 1. **Goals (also Objectives)** - Desired outcomes for individuals, groups, or entire organizations - Provide direction and evaluation performance criteria 2. **Plans** - Documents that outline how goals are to be accomplished - Describe how resources are to be allocated and establish activity schedules. **TYPES OF GOALS** 1. **Financial Goals -** Are related to the expected internal financial performance of the organization. 2. **Strategic Goals** - Are related to the performance of the firm relative to factors in its external environment (e.g., competitors). 3. **Stated Goals versus Real Goals** - Broadly-worded official statements of the organization (intended for public consumption) that may be irrelevant to its real goals (what actually goes on in the organization). **CHARACTERISTICS OF WELL-DESIGNED GOALS** - Written in terms of outcomes, not actions - Focuses on the ends, not the means. Measurable and quantifiable - Specifically defines how the outcome is to be measured and how much is expected. Clear as to time frame - How long before measuring accomplishment. Challenging but attainable - Low goals do not motivate - High goals motivate if they can be achieved. Written down - Focuses, defines, and makes goal visible. Communicated to all - Puts everybody "on the same page." **Steps in Goal Setting** 1\. Review the organization's mission statement. Do goals reflect the mission? 2\. Evaluate available resources. Are resources sufficient to accomplish the mission? 3\. Determine goals individually or with others. Are goals specific, measurable, and timely? 4\. Write down the goals and communicate them. Is everybody on the same page? 5\. Review results and whether goals are being met. What changes are needed in mission, resources, or goals? **STRATEGIC MANAGEMENT** The set of managerial decisions and actions that determines the long-run performance of an organization. **Importance of Strategic Management** 1\. It results in higher organizational performance. 2\. It requires that managers examine and adapt to business environment changes. 3\. It coordinates diverse organizational units, helping them focus on organizational goals. 4\. It is very much involved in the managerial decision-making process. **STRATEGIC MANAGEMENT PROCESS** **Step 1: Identifying the organization's current mission, objectives, and strategies** - Mission: the firm's reason for being - - Goals: the foundation for further planning - **Step 2: Conducting an external analysis** - The environmental scanning of specific and general environments - Focuses on identifying opportunities and threats **Step 3: Conducting an internal analysis** - Assessing organizational resources, capabilities, activities, and culture: - - - **Step 4: Formulating strategies** - Develop and evaluate strategic alternatives - Select appropriate strategies for all levels in the organization that provide relative advantage over competitors - Match organizational strengths to environmental opportunities - Correct weaknesses and guard against threats **Step 5: Implementing strategies** - Implementation - effectively fitting organizational structure and activities to the environment - The environment dictates the chosen strategy; effective strategy implementation requires an organizational structure matched to its requirements. **Step 6: Evaluating Results** - How effective have strategies been? - What adjustments, if any, are necessary? **Organization** Few topics in management have undergone as much change in the past few years as that of organizing and organizational structure. Managers are re-evaluating traditional approaches to find new structural designs that best support and facilitate employees' doing the organization's work---designs that can achieve efficiency but are also flexible. **Organizational Structure** The formal arrangement of jobs within an organization. **ORGANIZATIONAL DESIGN** A process involving decisions about six key elements: 1. 2. 3. 4. 5. 6. 1. **Work Specialization** - The degree to which tasks in the organization are divided into separate jobs with each step completed by a different person. - Overspecialization can result in human diseconomies from boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover. 2. **Departmentalization by Type** - Functional - Grouping jobs by functions performed - Product - Grouping jobs by product line - Geographic -Grouping jobs on the basis of territory or geography - Process - Grouping jobs on the basis of product or customer flow - Customer - Grouping jobs by type of customer and needs **ORGANIZATION STRUCTURE** 3. **Chain of Command** - The continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization and clarifies who reports to who. **Authority** - The rights inherent in a managerial position to tell people what to do and to expect them to do it. **Responsibility** - The obligation or expectation to perform. **Unity of Command** - The concept that a person should have one boss and should report only to that person. 4. **Span of Control** - The number of employees who can be effectively and efficiently supervised by a manager. **Width of span affected by:** - Skills and abilities of the manager - Employee characteristics - Characteristics of the work being done - Similarity of tasks - Complexity of tasks - Physical proximity of subordinates - Standardization of tasks 5.1 **Centralization** - The degree to which decision-making is concentrated at a single point in the organizations. - Organizations in which top managers make all the decisions and lower-level employees simply carry out those orders. 5.2 **Decentralization** - Organizations in which decision-making is pushed down to the managers who are closest to the action. Employee Empowerment - Increasing the decision-making, 6\. **Formalization** - The degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures. - - **LEADING** A leader is someone who can influence others and who has managerial authority. Leadership is a process of leading a group and influencing that group to achieve its goals. Managers should be leaders because leading is one of the four management functions. **MANAGER VS. LEADER** **Managers** - Are appointed to their position - Can influence people only to the extent of the formal authority of their position - Do not necessarily have the skills and capabilities to be leaders **Leaders** - Are appointed or emerge from within a work group - Can influence other people and have managerial authority - Do not necessarily have the skills and capabilities to be managers **CURRENT APPROACHES TO LEADERSHIP** 1. **Transactional Leadership** - Leaders who guide or motivate their followers in the direction of established goals by clarifying role and task requirements. 2. **Transformational Leadership** - Leaders who inspire followers to transcend their own self-interests for the good of the organization by clarifying role and task requirements. - Leaders who also are capable of having a profound and extraordinary effect on their followers. **4 elements of Transformational leaders:** 1. 2. 3. 4. 3. **Charismatic Leadership** An enthusiastic, self-confident leader whose personality and actions influence people to behave in certain ways. **Characteristics of charismatic leaders:** - Have a vision - Are able to articulate the vision - Are willing to take risks to achieve the vision - Are sensitive to the environment and follower needs - Exhibit behaviors that are out of the ordinary 4. **Visionary Leadership** A leader who creates and articulates a realistic, credible, and attractive vision of the future that improves upon the present situation. **Visionary leaders have the ability to:** - Explain the vision to others - Express the vision not just verbally but through behavior - Extend or apply the vision to different leadership contexts **TEAM LEADERSHIP CHARACTERISTICS** - Having patience to share information - Being able to trust others and to give up authority - Understanding when to intervene **TEAM LEADER'S JOB** - Managing the team's external boundary - Facilitating the team process - Coaching, facilitating, handling disciplinary problems, reviewing team and individual performance, training, and communication **TEAM LEADERSHIP ROLES** - Liaison with external constituencies - Troubleshooter - Conflict manager - Coach **MANAGING POWER** 1. **Legitimate power** - The power a leader has as a result of his or her position. 2. **Coercive power** - The power a leader has to punish or control. 3. **Reward power** - The power to give positive benefits or rewards. 4. **Expert power** - The influence a leader can exert as a result of his or her expertise, skills, or knowledge. 5. **Referent powe**r - The power of a leader that arise because of a person's desirable resources or admired personal traits. **CONTROL** The process of monitoring activities to ensure that they are being accomplished as planned and of correcting any significant deviations. **Purpose of Control** - To ensure that activities are completed in ways that lead to accomplishment of organizational goals. **Market Control** - Emphasizes the use of external market mechanisms to establish the standards used in the control system. - External measures: price competition and relative market share **Bureaucratic Control** - Emphasizes organizational authority and relies on rules, regulations, procedures, and policies. **Clan Control** - Regulates behavior by shared values, norms, traditions, rituals, and beliefs of the firm's culture. **IMPORTANCE OF CONTROL** As the final link in management functions: Planning - Controls let managers know whether their goals and plans are on target and what future actions to take. Empowering employees - Control systems provide managers with information and feedback on employee performance. Protecting the workplace - Controls enhance physical security and help minimize workplace disruptions. **The Process of Control** - Measuring actual performance. - Comparing actual performance against a standard. - Taking action to correct deviations or inadequate standards. **Taking Managerial Action** Courses of Action: - "Doing nothing" - Only if deviation is judged to be insignificant. - Correcting actual (current) performance - Immediate corrective action to correct the problem at once. Basic corrective action to locate and to correct the source of the deviation. - Corrective Actions - Change strategy, structure, compensation scheme, or training programs; redesign jobs; or fire employees - Revising the standard - Examining the standard to ascertain whether or not the standard is realistic, fair, and achievable. - - **CONTROLLING FOR ORGANIZATIONAL PERFORMANCE** **What Is Performance?** \- The end result of an activity **What Is Organizational Performance?** \- The accumulated end results of all of the organization's work processes and activities. \- Designing strategies, work processes, and work activities. \- Coordinating the work of employees **ORGANIZATIONAL PERFORMANCE MEASURES** **Organizational Productivity** - Productivity: the overall output of goods and/or services divided by the inputs needed to generate that output. - Output: sales revenues - Inputs: costs of resources (materials, labor expense, and facilities) - Ultimately, a measure of how efficiently employees do their work. **Organizational Effectiveness** Measuring how appropriate organizational goals are and how well the organization is achieving its goals. - Systems resource model - The ability of the organization to exploit its environment in acquiring scarce and valued resources - The process model - The efficiency of an organization's transformation process in converting inputs to outputs - The multiple constituencies model - The effectiveness of the organization in meeting each constituencies' needs. **TOOLS FOR CONTROLLING ORGANIZATIONAL PERFORMANCE** - Feed-forward Control - A control that prevents anticipated problems before actual occurrences of the problem. - - - Concurrent Control - A control that takes place while the monitored activity is in progress. Direct supervision: management by walking around. - Feedback Control - A control that takes place after an activity is done. - **Advantages of feedback controls:** - Feedback provides managers with information on the effectiveness of their planning efforts. - Feedback enhances employee motivation by providing them with information on how well they are doing. **PRODUCTION AND OPERATIONS MANAGEMENT** **Production and Operation** - Producing and marketing desired goods and services is the key role of businesses. - Production converts raw materials and other inputs into finished products. People often use the terms production and manufacturing interchangeably. **THE PRODUCTION PROCESS** INPUTS - Resources - Raw Materials CONVERSION PROCESS - Add value OUTPUTS - Goods - Services **STRATEGIC IMPORTANCE OF PRODUCTION FUNCTION** The production process is at the center of any firm. Effective production processes increase quality, meet customer demands, provide new products, and lower the cost of production. A vital function is necessary for generating money to pay employees, lenders, and stockholders. **Effective production and operations management can:** -- lower a firm's costs of production. -- boost the quality of its goods and services. -- allow it to respond dependably to customer demands. -- enable it to renew itself by providing new products. **Mass production** makes outputs available in large quantities. Much of the foundation of economic growth in the US has been driven from mass production. The assembly line is a key byproduct of mass production. A very good example of flexible production is the auto industry. Changing from mass production to flexible production enabled companies to produce different kinds of cars at the same plant. Customer-driven production is used to drive short-term forecasting and design production schedules. In some cases, products are not produced until orders are received. Retail scanner data and information from sales drive production. The **production process** to make different products range. Production processes use either an analytic or synthetic system. And time requirements of either continuous or intermittent processes. An analytic production system reduces raw materials to its component parts. A synthetic production system is the reverse, it combines a number of raw materials. A continuous production process generates finished products over a lengthy period of time. An intermittent production process generates products in short production runs. **TECHNOLOGY AND THE PRODUCTION PROCESS** Technology has dramatically changed production. Technology boosts efficiency and enhances flexibility. Robots were most common in automotive and electronics manufacturing but robots are now being used in a variety of processes. Police use robots to dispose of bombs. Computer-Aided Design and Manufacturing allows engineers to design and test before building prototypes. Flexible Manufacturing has been enhanced by powerful new software and can be a valuable feature to a production process. Computer-Integrated Manufacturing provides a centralized computer system that can control the production process. **Robots** -- reprogrammable machines capable of performing routine jobs and manipulating material **Computer-Aided Design and Manufacturing** -- enables engineers to design parts and buildings on computer screens faster and with fewer mistakes. **Flexible Manufacturing Systems** -- a production facility that workers can quickly modify to manufacture different products. **Computer-Integrated Manufacturing** -- integrates robots, computers and other technologies to help workers design products, control machines, handle materials, and control the production function. **THE LOCATION DESIGN** The decision of where to locate a production facility impacts transportation, human resources, and physical factors. Location is a very important production decision. The ability to hire enough qualified employees and managers in a specific area drives location decisions. Each business has different variables to balance and consider. A firm often must prepare an environmental impact study that analyzes how a proposed plant would affect quality of life in the proposed community. **PRODUCTION LAYOUT** Oversee the work of people and machinery to convert inputs (materials and resources) into finished goods and services. **PRODUCTION MANGEMENT TASKS** - Planning the production process - Selecting the most appropriate layout - Implementing the production plan - Controlling the production process There are four major tasks of production managers. Part of the control process involves continuous evaluation of results. If problems occur, managers return to the first step and make adjustments. Planning the production process - what goods and services will we offer? Determining the facility layout -- managers must decide the best layout for the facility. A good layout can reduce material handling, decrease costs, and improve product flow. Implementing the production plan involves making a decision to make, buy, or lease; selecting the best suppliers and controlling inventory. **Planning the Production Process** The planning process is the first step in designing the production process. Managers must think about the products and services that will be produced and convert these ideas into final specifications. - Choose what goods or services to offer customers. - Convert original product ideas into final specifications. - Design the most efficient facilities to produce those products. **Process Layout** - In the process layout, the work in process moves around the plant to reach different workstations. - Process layout groups machinery and equipment according to their functions. - Facilitates production of a variety of nonstandard items in relatively small batches. **BASIC FACILITY LAYOUT** a. b. c. d. 1. **Product Layout** - The product layout is also called the assembly line. Production equipment is set up along a product-flow line, and the work in process moves along this line past workstations. - Product layout sets up production equipment along a product-flow line, and the work in process moves along this line past workstations. - Efficiently produces large numbers of similar items. 2. **Fixed Position Layout** - Fixed-position layouts are most common when building homes, bridges, or highways. - A fixed position layout places the product in one spot, and workers, materials, and equipment come to it. 3. **Customer Oriented Layout** - Service organizations must decide appropriate layouts for their production processes. Banks, libraries and universities use a form of process layouts but high-interaction processes in the service industry are commonly called customer-oriented layouts. - Customer-oriented layout arranges facilities to enhance the interactions between customers and a service. 4. **Production Process** - When implementing the production plan, managers must think about whether to make, buy or lease the product or components. Managers must think about cost and availability. The selection of suppliers is important to think about quality, prices, and delivery. **Make, Buy, or Lease Decision** - Choosing whether to manufacture a needed product or component in-house, purchase it from an outside supplier, or lease it. - Factors in the decision include cost, availability of reliable outside suppliers, and the need for confidentiality. **Selection of Suppliers** - Based on comparison of quality, prices, dependability of delivery, and services offered by competing companies. **Inventory Control** - Inventory control is an important part of a production process. There can be 100s or more than 1,000s of parts and supplies required to produce one product. These materials can be costly to order, warehouse and manage. Inventory must be effectively managed. **Two important types of inventory:** - Perpetual inventory : Systems continuously monitor the amounts and locations of stocks. - Vendor-managed inventory : Inventory control functions handed over to suppliers. **Just-in-time systems** allow managers to reduce the amount of inventory on hand. These systems can save money for an operation but they require effective communication and management to work well. Improving profits and return on investment by minimizing costs and eliminating waste through cutting inventory on hand. **Materials Requirement Planning** aids in managing the purchase and planning of materials required for production. These systems can be key in keeping the cost of inventory down. Computer-based production planning system by which a firm can ensure that it has the correct materials for production. **Controlling the Production Process** Production planning determines the amount of resources an organization needs to produce a certain output. Routing determines the sequence of work. Managers develop timetables that specify how long each operation in the production process takes for workers. This scheduling includes using PERT and GANT diagrams. Dispatching is the phase of production control process where the manager dictates who will do what and the time allotted. Follow-up is the point where managers spot problems in the production process and determine needed changes. Production control creates a well-defined set of procedures for coordinating people, materials, and machinery. 1. 2. 3. 4. 5. **GANTT CHART** - Production managers use a variety of tools to schedule work. - Gantt Charts track projected and actual work. - Gantt Charts are more effective for scheduling relatively simple projects **PERT DIAGRAM** - PERT is a Program Evaluation and Review Technique. - These diagrams seek to minimize delays by coordinating all aspects of the production process. - They outline a critical path to identify to managers the sequence of operations with the longest time for completion. **DISPATCHING AND FOLLOW-UP** - Dispatching and follow-up are steps in the process that complete the production planning. - Follow-up is important as it is the step that enforces quality. **Importance of Quality** - Quality is the goal of a good production process. The lack of quality can cost a company revenue. - All companies must measure and control quality. Six Sigma is a concept to reduce the number of defective products. - A good or service free of deficiencies. - Poor quality can account for 20% loss in revenue. - Benchmarking is the process of analyzing other firms' best practices. - Quality control is measuring goods and services against established quality standards. - Many companies evaluate quality using the Six Sigma concept. - A company tries to make error-free products 99.9997% of the time, a tiny 3.4 errors per million opportunities. **ISO Standards** - ISO is a set of global quality standards. - Many organizations have received significant benefits from ISO 9000. - Many note that ISO 9000 increases the competitiveness of a firm. - International Organization for Standardization (ISO) - mission is to promote the development of standardized products to facilitate trade and cooperation across - National borders. - Representatives from more than 146 nations. - ISO 9000 series of standards sets requirements for quality processes. - Nearly half a million ISO 9000 certificates have been awarded to companies around the world. - ISO 14000 series also sets standards for operations that minimize harm to the environment.