Monday, May 30, 2016

June First Week - IE Knowledge Revision








Industrial Engineering - Introduction to  Basic Principles and Techniques


Industrial engineering converts technical products and processes created by pure engineers and managers into commercially viable products and thereby creates industries - manufacturing/engineering service concerns that satisfy the needs of the people and make profit for the organizations. On an ongoing basis industrial engineering improves the profits of the organization by eliminating wastes and reducing cost through minimizing resource use.

Industrial engineering is system efficiency engineering and human effort engineering.

IE helps in creating new industries and prosperous industries.
IE makes enterprises rich. IE makes employees rich. IE makes societies rich.


June First Week, 1 to 5 - 2016

1  June

Industrial Engineering Introduction
Component Areas of IE: Human Effort engineering and System Efficiency Engineering

2 June

Pioneering Efforts of Taylor, Gilbreth and Emerson
Principles of Motion Economy

3 June
Motion Study - Human Effort Engineering
Ergonomics - Introduction

4 June

Work Measurement
Predetermined Motion Time Systems (PMTS)

5 June

Methods Efficiency Engineering
Product Design Efficiency Engineering

Sunday, May 29, 2016

Industrial Engineering Economics - Important Component of Industrial Engineering



The objectives of industrial engineering are productivity, efficiency, cost reduction and resource minimization.

Industrial engineers are responsible for decreasing the use of all resources used in production of products and services. To achieve this objective, industrial engineers have to redesign products and processes. This redesign activity is closer to management functions of planning and organizing. Thus industrial engineers develop more productive products and processes. To develop more productive products and processes industrial engineers identify and use freshly available technologies. As industrial engineer is modifying newly designed systems and systems in current use with the objective of reducing cost and eliminating waste, each decision of industrial engineer is to be subjected to economic analysis that assures that costs are decreasing and profits are increasing due to the industrial engineering improvements.

While in the initial iterations, the design engineers are more concerned with fulfilling the technical requirements, in the later iterations of design industrial engineers are more concerned with finding alternate ways of satisfying the technical requirements with lower cost alternatives. The specialty of industrial engineering knowledge accumulated in the handbooks of the profession regarding low cost alternatives that satisfy various technical requirements and also the experience of the professionals in using those alternatives in practical situations and realizing cost economies. Each year the profession accumulates more and more knowledge that furthers the objective or productivity (producing more output from the same output).


Engineering economics is the subject that attempts to convert engineering alternatives into economic terms. The basic model of engineering economics is one time investment or cash outflow followed by cash inflow as savings in costs (cost minimization models). A summary measure of return is calculated from this model and it is compared with the cost of capital (that is used in cash outflow).

The importance of industrial engineering economics is that whenever a new technology like cloud computing, Internet of things etc. emerge industrial engineers have to do engineering economic analysis and decide the appropriate time to adopt the technology in their organization to realize productivity improvement. New technology sellers have to contact industrial engineers and explain to the cost reduction potential of their technologies so that they can jointly do the engineering economic analysis for the organization and decide on implementing the technology.

Industrial engineering professional societies and academic institutions also have to arrange similar interaction between new technology sellers and the institution so that they can come out with more general analysis justifying adoption of the technology.

Engineering economic analysis is thus a very important component of industrial engineering to accelerate the productivity in the organization through adoption of new technologies as they emerge from any R&D organization in the world.

No doubt every industrial engineering proposal must the accompanies by economic analysis that shows that there will be cost reduction and increase in profit for the company.


Engineering Economic Analysis - Case Studies

June - Industrial Engineering Knowledge Revision Plan

June - Industrial Engineering Knowledge Revision Plan











Industrial Engineering - Introduction to  Basic Principles and Techniques


June First Week, 1 to 5 - 2016

Industrial Engineering Introduction
Component Areas of IE: Human Effort engineering and System Efficiency Engineering



Pioneering Efforts of Taylor, Gilbreth and Emerson
Principles of Motion Economy


Motion Study - Human Effort Engineering
Ergonomics - Introduction



Work Measurement
Predetermined Motion Time Systems (PMTS)


Methods Efficiency Engineering
Product Design Efficiency Engineering

June 2 Week, 8 to 12

Plant Layout - Efficiency
Value Engineering - Introduction



Statistical Quality Control – Industrial Engineering
Inspection Methods Efficiency Engineering


Operations Research - An Efficiency Improvement Tool for Industrial Engineers
Engineering Economics is an Efficiency Improvement Tool for Industrial Engineers



Industrial Engineering and Scientific Management in Japan
Shigeo Shingo - The Japanese Industrial Engineer


System Engineering Process and Its Management
Systems Improvement Process


June 3 week, 15 to 19

Systems Installation - Installing Proposed Methods
Productivity, Safety, Comfort, and Operator Health Management



Organizing for Industrial Engineering: Historical Evolution of Thinking
Current Research in IE



Managing Change in Improvement Projects - Comfort Zone to Comfort Zone
Supply Chain Cost Reduction


Total Improvement Management
Total Industrial Engineering - H. Yamashina



Industrial Engineering Economics - Important Component of Industrial Engineering
Time Value of Money - Time Value of Money Calculations

June 22 to 26



Cash Flow Estimation for Expenditure Proposals - Depreciation and Other Related Issues
Required Rate of Return - Cost of Capital  - Required Rate of Return for Investment or Expenditure Proposal..



NPV - IRR and Other Summary Project Assessment Measures
Income Expansion Projects - Cost Reduction Projects - Replacement Decisons


Present-Worth Comparisons
Rate-of-Return Calculations


Equivalent Annual-Worth Comparisons
Expected Values and Risk of Project Revenues and Costs


Structural Analysis of Alternatives
Engineering Economic Analysis - Subject Update - Recent Case Studies


June Month Birthdays - Management Scholars and Professors



IE Techniques to be Revised

Principles of Industrial Engineering/Scientific Management by Taylor
Twelve Principles of Efficiency - Harrington Emerson
Product Design Efficiency Engineering (Value Engineering) - Application of Engineering Technology
Methods Efficiency Engineering - Operation Analysis (Maynard) - Application of Engineering Technology
    Plant Layout - Material and Man Movement Analysis and Optimization
    Innovations in Industrial Engineering by Shigeo Shingo - SMED and Poka Yoke
Operations Research - Application of Mathematical Modelling and Optimization in Technology Processes (Product and Process), Business Processes and Managerial Processes.
Application of Statistics in Industrial Engineering - Six Sigma, SPC, SPC, Forecasting
Engineering Economics - Economic Analysis of Engineering Projects - Income Enhancing Projects as well as Cost Reduction Projects - It evaluates and improves capital productivity both long term as well as short term
Human Effort Engineering - Motion study - Principles of Motion Economy, Motion Study
Ergonomics - Application of knowledge of anatomy, physiology, and bio mechanics and findings of experiments on actual working situations

Work Measurement - Productivity Measurement - Cost Measurement

Productivity Management 

High Efficiency/Productivity Systems  Industrial Engineering- Lean Systems Industrial Engineering - Toyota Production System










One Year Industrial Engineering Knowledge Revision Plan

January - February - March - April - May - June

July - August - September - October - November - December

In months after June the articles prescribed have to be modified as a new scheme is started in 2015.


Industrial Engineering - Introduction to  Basic Principles and Techniques - June (28 article are included so far)

Scientific Management of Taylor  (July 17 articles)

12 Principles of Efficiency by Harrington Emerson

Motion Study

Operation Analysis - Method Study - Methods Efficiency Engineering (August 25 articles)

Work Measurement 

Value Engineering

Ergonomics

Mathematics and Optimization

Application of Statistics for Cost Reduction and Productivity Improvement

Engineering Economics

Business Process Improvement

Management Process Improvement

Productivity Management and Improvement (20 articles)

Lean Systems (December 20 articles)



Updated 29 May 2016, 26 May 2016, 16 Feb 2016






Saturday, May 28, 2016

June Fourth Week - IE Knowledge Revision





Industrial engineering converts technical products and processes created by pure engineers and managers into commercially viable products and thereby creates industries - manufacturing/engineering service concerns that satisfy the needs of the people and make profit for the organizations. On an ongoing basis industrial engineering improves the profits of the organization by eliminating wastes and reducing cost through minimizing resource use.

Industrial engineering is system efficiency engineering and human effort engineering.

IE helps in creating new industries and prosperous industries.
IE makes enterprises rich. IE makes employees rich. IE makes societies rich.


June 22 to 26



Cash Flow Estimation for Expenditure Proposals - Depreciation and Other Related Issues
Required Rate of Return - Cost of Capital  - Required Rate of Return for Investment or Expenditure Proposal..



NPV - IRR and Other Summary Project Assessment Measures
Income Expansion Projects - Cost Reduction Projects - Replacement Decisons


Present-Worth Comparisons
Rate-of-Return Calculations


Equivalent Annual-Worth Comparisons
Expected Values and Risk of Project Revenues and Costs


Structural Analysis of Alternatives
Engineering Economic Analysis - Subject Update - Recent Case Studies


June Third Week - IE Knowledge Revision
http://nraoiekc.blogspot.com/2016/05/june-third-week-ie-knowledge-revision.html

June - Industrial Engineering Knowledge Revision Plan

June Second Week - IE Knowledge Revision






Industrial engineering converts technical products and processes created by pure engineers and managers into commercially viable products and thereby creates industries - manufacturing/engineering service concerns that satisfy the needs of the people and make profit for the organizations. On an ongoing basis industrial engineering improves the profits of the organization by eliminating wastes and reducing cost through minimizing resource use.

Industrial engineering is system efficiency engineering and human effort engineering.

IE helps in creating new industries and prosperous industries.
IE makes enterprises rich. IE makes employees rich. IE makes societies rich.


June 2 Week, 8 to 12

Plant Layout - Efficiency
Value Engineering - Introduction



Statistical Quality Control – Industrial Engineering
Inspection Methods Efficiency Engineering


Operations Research - An Efficiency Improvement Tool for Industrial Engineers
Engineering Economics is an Efficiency Improvement Tool for Industrial Engineers



Industrial Engineering and Scientific Management in Japan
Shigeo Shingo - The Japanese Industrial Engineer


System Engineering Process and Its Management
Systems Improvement Process


June Third Week - IE Knowledge Revision
http://nraoiekc.blogspot.com/2016/05/june-third-week-ie-knowledge-revision.html

June First Week - IE Knowledge Revision
http://nraoiekc.blogspot.com/2016/05/june-first-week-ie-knowledge-revision.html


June - Industrial Engineering Knowledge Revision Plan

Sunday, May 15, 2016

May Third Week - IE Knowledge Revision









Introduction to Organizational Behavior

Third Week   15 May to 19 May

Environmental context: Information Technology and Globalization
Environmental context: Diversity and Ethics

Organizational Context: Design and Culture
Organizational Context:: Reward Systems

Perception and Attribution
Personality and Attitudes

Motivational Needs and Processes
Positive Psychology Approach to OB

Communication
Decision Making



Industrial engineering is concerned with  People, Processes, Technology and Management Policies and Activities. Productivity, Cost reduction and optimization, Efficiency Improvement and Waste Elimination are its objectives as system level. At people level, IE is concerned with comfort, safety, health, satisfaction and training.

Industrial engineers study anatomy, physiology, psychology, sociology and their applied subjects Ergonomics and Organizational Behavior (include consumer behavior).

Industrial engineers have to understand the principles and prescriptions of Organizational Behavior to develop their ways of interacting with people to study processes and to train them in improved processes.

Saturday, May 14, 2016

My Comments on Industrial Engineering Issues in Social Media Forums



14 May 2016

People, processes and technology - I explain it as human effort engineering and system efficiency engineering. Industrial  engineering have to improve technology/engineering processes using both technology and managerial knowledge. I feel two engineering subjects "product productivity engineering and "Engineering processes productivity engineering" have to be made important subjects in IE curriculums to bring out clearly the engineering foundation of IE. Similarly a subject discussing waste being created by managerial processes/actions in technical processes has to be studied to bring out the role of managerial actions in reducing or improving productivity.

In FaceBook discussion
https://www.facebook.com/groups/IIEnet/permalink/10156787029820562/


January 2016
Narayana Rao Kvss: Engineering knowledge is the primary requirement. Industrial engineers have to keep updating their engineering knowledge to improve the products and processes. Lean thinking is industrial engineering only with new emphasis on reduction of inventory.
http://www.iienet2.org/IndustrialEngineer/printerfriendly.aspx?id=41092



27 Feb 2015
IE in Supply Chain Activities
IE is applied to technical processes, business processes, and managerial processes.

Supply or purchasing as well as distribution are more of a business processes. IE can be applied to improve them. But under the philosophy or line of thinking that assumes that suppliers are your partners and you should do every thing to improve their processes to improve the whole supply chain IE applied to mfg processes within a company can be applied in Supplier's company also. So IE of mfg also is applicable in SC activity.

I'll like to know how does Industrial Engineering integrate /connect/relate to supply chain and logistics, I understand it better from the quality and operations/production point of view

Linkedin - Industrial Engineering Network Group
Beatrice Khoete
Industrial Engineering Intern

https://www.linkedin.com/groupItem?view=&gid=49280&type=member&item=5970981505470603264&commentID=5976802885567078400&report%2Esuccess=8ULbKyXO6NDvmoK7o030UNOYGZKrvdhBhypZ_w8EpQrrQI-BBjkmxwkEOwBjLE28YyDIxcyEO7_TA_giuRN#commentID_5976802885567078400

 I strongly advocate that industrial engineering's main focus is productivity improvement of technical processes. The successful improvement of productivity in technical processes can be extended to the business processes and managerial processes. Industrial engineering itself is a managerial process. Industrial engineering went into a decline all over the world and lost its reputation as it lost its focus on technology and has not made any productivity improvements to any technology in the last so many years. It is only in Japan, that some companies led by Toyota at the top implemented IE in technology and became world class. But still IE profession refused to see the success of productivity improvement of tech processes and we have many other discipline people trying to push their discipline ahead under various names citing Japanese success.

Linkedin - Industrial Engineering Network
Towards the Configuration of an Industrial Engineering Education Field in Colombia from the Critical Didactics Pedagogy

Lexie Scirp
Editor at Scientific Research Publishing
https://www.linkedin.com/groupItem?view=&gid=49280&type=member&item=5972531657633185794&commentID=5976798831579328512&report%2Esuccess=8ULbKyXO6NDvmoK7o030UNOYGZKrvdhBhypZ_w8EpQrrQI-BBjkmxwkEOwBjLE28YyDIxcyEO7_TA_giuRN#commentID_5976798831579328512

What Makes Industrial Engineers More Useful in Engineering/Manufacturing Organizations?



Industrial Engineers are versatile.


Industrial engineers have the consistent consideration of all situations from a systems standpoint. Their focus is on study of processes right from the inception of the discipline.

Their purpose is to enable people, processes and technology to work together synergistically to create value for the world.


IEs have long been considered the bridge between business and engineering – able to speak both languages and to bring disparate and diverse groups together to develop a common solution. In many ways, IEs appear to be balanced from a left brain and right brain aspect, with almost equal comfort employing the appropriate combination of technical skills and soft skills.


From the article
The chameleons of engineering
IE skills are perfect for a world that is changing – and their talents also can change the world
Industrial and Systems Engineering at Work
May 2016    |    Volume: 48    |    Number: 5
The member magazine of the Institute of Industrial and Systems Engineers
http://www.iienet2.org/ISEMagazine/details.aspx?id=41465


My comment in FaceBook Discussion on the article
People, processes and technology - I explain it as human effort engineering and system efficiency engineering. Industrial engineering have to improve technology/engineering processes using both technology and managerial knowledge. I feel two engineering subjects "product productivity engineering and "Engineering processes productivity engineering" have to be made important subjects in IE curriculums to bring out clearly the engineering foundation of IE. Similarly a subject discussing waste being created by managerial processes/actions in technical processes has to be studied to bring out the role of managerial actions in reducing or improving productivity.


In FaceBook discussion
https://www.facebook.com/groups/IIEnet/permalink/10156787029820562/


Wednesday, May 11, 2016

Productivity Improvement Trends - 2016 Compilation


Productivity Improvement Trends - 2016 Compilation - Themes

Human Effort Engineering


Motion Study

Work Measurement

Ergonomics

Job Evaluation

Incentives

Wearable Devices Use to improve productivity.

Mobile Technology allowing people to work more and also productively

Australia’s economy is $42.9 billion (2.6% of GDP) larger in 2015 than it would otherwise be, because of the long-term productivity ($34 billion/2.0% of GDP) and workforce participation ($8.9 billion/0.6% of GDP) benefits generated by mobile technology take-up.
https://www2.deloitte.com/au/en/pages/media-releases/articles/australias-mobile-revolution-continues-170316.html



System Efficiency Engineering


Product Efficiency Improvement

Production Process Efficiency Improvement

Inspection Process Efficiency Improvement

Maintenance Process Efficiency Improvement



Information - Data Collection, Processing and Dissemination Efficiency Improvement

Optimization

Industrial Engineering Statistics

Industrial Engineering Economics

Work Measurement, Cost Measurement, and Productivity Measurement

System Level Industrial Engineering

Management of Technical Processes

Supply Chain Improvement

Business Process Improvement

Management of Business Processes

Supply Chain Improvement

Energy Efficiency Improvement



Resource Efficiency Improvement



Productivity Improvement Trends - 2016 Compilation - Detailed Information

Manufacturing output per person in India

India is ranked    9 in the world.    $203 billion is the output for 2013 in 2005 prices and exchange rates.   $200 per man is the output per year lowest in the top 20 ranked countries.             13% of the national output is in manufacturing. Becomes       2% of global output.
Indonesia has $500 per man and Brazil has $800 per person.

Human Effort Engineering


Motion Study

Now it became part of 5S
Combination tools

Work Measurement

MOST Technique

Ergonomics

Job Evaluation

Incentives

Wearable Devices Use to improve productivity.


System Efficiency Engineering


Product Efficiency Improvement

Productivity Improvement of Technical Processes

      Production Process Efficiency Improvement

      Inspection Process Efficiency Improvement

Internet of Test? The Internet of Things for Test and Measurement
http://www.deskeng.com/de/internet-of-test-the-internet-of-things-for-test-and-measurement/

What IoT brings in Test and Measurement
http://electronicsmaker.com/what-iot-brings-in-test-and-measurement

Will National Instruments Lead In The Next Generation Of IoT Tools?
http://www.forbes.com/sites/patrickmoorhead/2014/11/06/national-instruments-to-enable-next-generation-design-and-test-tools-for-the-internet-of-things/#3d82c5153717

http://www.moorinsightsstrategy.com/wp-content/uploads/2014/11/MIS-Software-Designed-Measurement-and-Control-vFINAL.pdf

      Maintenance Process Efficiency Improvement

Lean thinking for a maintenance process
Sherif Mostafaa*, Sang-Heon Leeb, Jantanee Dumrakc, Nicholas Chileshea & Hassan Soltand
pages 236-272
Production & Manufacturing Research: An Open Access Journal

Volume 3, Issue 1, 2015
The maintenance process shares significant operating costs in an organisation. Lean thinking can be incorporated into maintenance activities through applying its principles and practices/tools. Lean maintenance (LM) is a prerequisite for lean manufacturing systems. This research proposes a new structure for LM process based on a systematic literature review of a significant number of related articles that were published on LM. The process structure is designed based on the five lean principles to guide and support organisations to pursue maintenance excellence. This study establishes a scheme for LM tools that are structured into 2 level 4 bundles and 26 lean practices/tools and develops a House of Waste (HoW) to demonstrate the association between maintenance wastes and the LM tools. With a successful accomplishment of the proposed scheme, the performance of a maintenance department can create more improvement opportunities over time to reach the maintenance excellence status.
http://www.tandfonline.com/doi/full/10.1080/21693277.2015.1074124

http://www.skf.com/group/services/services-and-solutions/benchmarking/6-steps-to-best-in-class-maintenance-benchmarking.html

http://www.prnewswire.com/news-releases/achieving-excellence--source-to-tap-program-realizes-43-improvement-in-field-maintenance-productivity-for-washington-aqueduct-300230632.html

     Information - Data Collection, Processing and Dissemination Efficiency Improvement

Optimization


Integrating preventive maintenance and production scheduling

Industrial Engineering Statistics


Six Sigma

Industrial Engineering Economics

ROI caculation for all investments
New capital equipment
Replacement equipment
Capital expenditure proposals
Revenue expenditure proposals

Consultants in capital productivity - McKinsey Company


Our Capital Productivity group is part of our Operations Practice. Our clients include leading companies worldwide from a wide range of industries. We support and advise their management on strategic and operational questions relating to large construction projects. Capital productivity consultants are thought leaders and expert practitioners with deep experience in delivering very large construction projects.

To strengthen our Capital Productivity group in our office locations in Germany, the UK, Denmark, Sweden, Belgium, and the Netherlands, we are looking for

Consultants in capital productivity/construction projects

At McKinsey, you will have unique opportunities to use your knowledge creatively to influence others. You will apply managerial expertise gained from large construction projects and deep experience in bottom-up design, design optimization, risk management, contracting and procurement, construction management, and the ramp-up of production processes in capital-intensive industries. You will carry out lean construction project implementations and capability building. You will develop short- and long-term capability-building plans for all relevant levels of client leadership and McKinsey client service teams, with anticipated deliverables, outcomes, and required resources. You will introduce new frameworks, tools, or ways of using existing material, identify clients for beta testing, and codify new knowledge in articles. You will provide expertise on project/program management tools such as portfolio management, lifecycle planning, and project tracking. You will perform structured, fact-based diagnoses of systems, processes, and organizations across a broad range of industries.



Desired Skills

You have a proven track record and expertise in delivering large construction projects (larger than USD 100 million) across the entire project lifecycle (design engineering, risk management, procurement and contracting, construction management, commissioning, ramp-up, etc.)
You have professional operations or consulting experience in at least one of the following industry sectors: oil and gas, metals and mining, energy and power generation, chemicals or other process industry, infrastructure, construction and real estate, or manufacturing
You have a progressive career trajectory, including outstanding professional achievement and impact
You hold an excellent university degree, preferably with an engineering focus
You have outstanding analytical and conceptual skills
You show great initiative and creativity, working well both on your own and in a team
You are mobile and excited to take on longer international assignments
You are able to convince others through your written and spoken communication

https://mckinsey.secure.force.com/EP/job_details?jid=a0xA0000005XhND

Work Measurement, Cost Measurement, and Productivity Measurement

Productivity Measurement


OECD analysis shows that the productivity of the most productive firms – those on the “global productivity frontier” in economic terms—grew steadily at an average 3.5% per year in the manufacturing sector, or double the speed of the average manufacturing firm over the same period. This gap was even more extreme in services. Private, non-financial service sector firms on the productivity frontier saw productivity growth of 5%, eclipsing the 0.3% average growth rate. Perhaps more importantly, the gap between the globally most productive firms and the rest has been increasing over time, especially in the services sector. Some firms clearly “get it” and others don’t, and the divide between the two groups is growing over time.

https://hbr.org/2015/08/productivity-is-soaring-at-top-firms-and-sluggish-everywhere-else


http://www.oecd.org/economy/the-future-of-productivity.htm


A global textile, chemical and floor-covering maker, Milliken self-identifies as operationally excellent. In the 10 years since 2006 (when McNulty became finance chief), the company has improved manufacturing productivity by at least 5 percent each year according to McNulty.
http://ww2.cfo.com/benchmarking/2014/04/operations-nirvana-profits-soar-far-beyond-sales-growth/

System Level Industrial Engineering


IIE changed its name to IISE

Total productivity management
Total cost industrial engineering
        Understand total cost - Costing Profit and Loss Account

Management of Technical Processes

Lean Manufacturing
Lean Maintenance
Lean Design and Development

Benchmarking


In many areas, productivity of China is only 65% of the productivity elsewhere.
Simply adopting and spreading global best practices in the way companies and government departments in China conduct their operations would capture three-quarters of China’s productivity gap.

http://www.mckinsey.com/mgi/overview/in-the-news/why-china-should-invest-in-productivity-not-in-reproductivity


Increasing R & D Productivity


http://www.mckinsey.com/business-functions/operations/our-insights/brightening-the-black-box-of-r-and-d

Supply Chain Technical Processes Improvement

Extending Lean Thinking

http://www.atkearney.dk/automotive/news-media/news-release/-/asset_publisher/78jRxPc9hKWt/content/future-of-manufacturing-new-productivity-levers-body/10192?_101_INSTANCE_78jRxPc9hKWt_redirect=%2Fautomotive%2Fnews-media%2Fnews-release%3Fp_p_id%3D2_WAR_kaleodesignerportlet%26p_p_lifecycle%3D0

Business Process Improvement


Marketing Analytics
Supply chain management software - Barrier to implementation

Management of Business Processes


Supply chain improvement - Supply Chain Training Programmes - Supply chain partner conferences



Energy Efficiency Improvement


Bringing lean thinking to energy

McKinsey 2014

The energy and raw materials are important cost drivers. For one LCD-television manufacturer, Mckinsey studied, energy represented 45 percent of total production costs. For many “upstream” manufacturers (such as steel and chemical makers) energy typically accounts for up to 15 percent or more of overall production costs—the largest share after raw materials, which often account for at least 50 percent of the cost base. The experience of  Mckinsey suggests that many of these manufacturers could reduce the amount of energy they use in production by as much as 30 percent by applying lean principles and by shifting mind-sets to focus the organization on eliminating anything that doesn’t add value for customers.




The analysis of energy using theoretical energy consumption (ideal value) helped a  company to optimize its plants’ production rates to use energy more efficiently. Indeed, the company identified a narrow set of conditions in which the plants’ energy consumption was destroying value—a situation it could now predict and avoid.

A chemical manufacturer used a similar approach to optimize its variable costs associated with both energy use and materials yields. Theoretical-limit analyses identified a series of process-control improvements, as well as opportunities to lower thermodynamic-energy losses and to optimize mechanical equipment. Taken together, these moves helped the company to reduce its energy consumption by 15 percent. Meanwhile, on the raw-material side, the company combined theoretical-limit analysis with advanced statistical techniques using big data to map the profit per hour of a set of activities. This approach helped the company to optimize the use of an important catalyst in production, to discover additional process parameters for fine tuning, and to improve the allocation of its production activities across the company’s different lines. All this, together with a few selected capital investments, ultimately helped to increase yields by 20 percent (or, in lean terms, to cut yield losses by 20 percent—a savings equivalent to a plant’s entire fixed cost for labor).


While all of these examples are impressive on their own, perhaps more impressive is the enduring power of lean principles to generate unexpected savings when companies gain greater levels of insight into their operations—for example, through the use of advanced analytics or profit-per-hour analyses. In the years ahead, as emerging-market growth continues to boost demand for resources and to spur commodity-price volatility, more and more companies should have incentives to experience this power for themselves.

About the Authors

Markus Hammer is a senior expert in McKinsey’s Lisbon office, Paul Rutten is a principal in the Amsterdam office, and Ken Somers is a master expert in the Antwerp office.
http://www.mckinsey.com/business-functions/operations/our-insights/bringing-lean-thinking-to-energy

http://articles.extension.org/pages/70308/reducing-energy-consumption-through-lean-thinking:-presentations

https://www.ncsu.edu/bioresources/BioRes_09/BioRes_09_1_1373_Lyon_Q-PC_Reducing_Elec_Consum_Forest_Prod_Ind_Lean_4479.pdf

https://www.epa.gov/sites/production/files/2013-10/documents/lean-energy-climate-toolkit.pdf

Resource Efficiency Improvement


More from less: Making resources more productive

By Markus Hammer and Ken Somers

A change in perspective can lead to real breakthroughs in resource productivity or  reduction in  resource consumption.

 Their full range of options includes maximizing the use of raw materials, minimizing harmful emissions, cutting water loss, and reducing or avoiding waste streams through recycling and energy recovery.

The vivid examples in action provided in  this article will stir the imaginations of senior leaders about the possibilities for using resources more productively.



The lean idea of "recognize and root out waste" can be applied to energy and materials. This can dramatically improve resource productivity.

In practice, these methods often involve following a product through a factory or service operation. That’s known as value-stream mapping, which can be illustrated by a Sankey diagram that highlights streams of resource waste.

The article gives the example of baking cakes for a school fund-raiser. There are various inputs, such as ingredients and electricity for running the oven, as well as losses, such as heat leakage from the oven. Currently only one loss is recovered, and that too only partially: apple cores are used to feed chickens.   Can some more losses be also recovered? Could the oven lose less heat in baking? Could eggshells be added to garden compost? What if the oven ran on gas instead of electricity or the electricity came from a solar panel whose cost has already been paid?



1. Thinking Base 


The starting point for most operational-improvement efforts is the existing process  and improvements are suggested as involved people know as possible from that point. An aggressive approach to resource productivity takes a different route. It identifies  the current theoretical limit for resource use to produce a product or service. The difference between the theoretical limit and actual consumption is labeled as what it truly is: a loss. Most people, and most organizations, are far more motivated to avoid losses than to reduce consumption. Reframing the problem in this way is therefore more likely to produce major improvement opportunities. An iron and steel manufacturer in China, for instance, followed this exercise and increased the power it generated from waste heat by 25 percent.

2. Think profits per hour


Determine profits per hour of processing of products.

That sort of comparison can help companies make crucial resource-productivity choices. For example, in the chemical industry, increasing a product’s yield usually reduces environmental waste but requires longer reaction times and leaves less capacity for other products. If, however, the product’s profit per hour increases by running the reaction longer and improving the yield, the decision to do so and reduce production of other products is an easy one.

3. Embrace state-of-the-art analytics


Advanced analytic techniques can multiply the power of profit per hour, helping companies sort through millions of possible interdependencies among variables such as the quality of raw materials, the configuration of equipment, or process changes.



To understand what was at play, the mining company turned to neural networks to isolate specific days and events when the yield should have been higher. The analysis showed that increasing the concentration of oxygen in the process offsets the yield loss resulting from a decline of ore grades over the previous year. Thanks to the changed process parameter, the company increased yields (and therefore production) by 8 percent in three months.

4. Change the thinking


Resource productivity also requires a comprehensive change-management effort.  Success stories, however, change people’s underlying mind-sets so that they “think holistically” . Equally important, exceptional organizations support the new mind-sets with revised metrics and more frequent performance dialogues as part of a new management infrastructure. At these companies, resource productivity informs almost every aspect of operations, ensuring that people keep finding new opportunities to create more value from less.



People have to embrace more sustainable logic:  “think circular,” creating new value for companies and society by looping products, components, and materials back into the production process after they have fulfilled their initial use.

Consider, for example, the pharmaceutical company that applied lean manufacturing to a series of processes in its biological reactors, where it grew cell cultures. The combination of loss-mapping techniques along the production chain, deep statistical analysis, and rigorous brainstorming and problem-solving sessions with engineers and operators helped to identify improvements in the productivity of the biological resources. The company expects these improvements to boost yields by over 50 percent—without additional costs. This finding was noteworthy because even though the company was well versed in lean thinking and methods, its production team had initially taken variability in biological materials for granted (a common attitude).

About the Authors

Markus Hammer is an expert in McKinsey’s Vienna office, and Ken Somers is a master expert in the Antwerp office.
http://www.mckinsey.com/business-functions/operations/our-insights/more-from-less-making-resources-more-productive

Report on Resource Efficiency using Lean Principles in UK Food and Drink Supply Chain - 266 pages
http://www.oakdenehollins.co.uk/media/270/11668_20131114RevisedLeanresearchreport-DEFR01270FO0425_from_defra_website.pdf


Technologies Improving Productivity

Mobile Technology


Australia’s economy is $42.9 billion (2.6% of GDP) larger in 2015 than it would otherwise be, because of the long-term productivity ($34 billion/2.0% of GDP) and workforce participation ($8.9 billion/0.6% of GDP) benefits generated by mobile technology take-up.
https://www2.deloitte.com/au/en/pages/media-releases/articles/australias-mobile-revolution-continues-170316.html

Cloud Computing


Cloud Computing technology investments raising to expectation of increase in productivity
http://mobile.deloitte.wsj.com/cio/2015/09/17/midmarket-invests-in-it-for-productivity-growth/


Service robots: The next big productivity platform
http://www.pwc.com/us/en/technology-forecast/2015/robotics/features/service-robots-big-productivity-platform.html

Management Theories, Methods and Techniques Improving Productivity


Data Analytics and Productivity
https://www.pwc.com/ca/en/power-utilities/publications/pwc-the-productivity-imperative-data-analytics.pdf

The Perform approach - PWC
http://www.pwc.com.au/productivity/perform.html


Organisation effectiveness
Revolutionising how businesses think about organisation design, partnering with clients to design and implement the organisational models, and developing structures that will deliver maximum agility, flexibility and responsiveness
https://www.pwc.in/assets/pdfs/services/people-and-change/organisation-effectiveness.pdf


Analytics Advantage - AT Kearney

http://www.atkearney.tw/paper/-/asset_publisher/dVxv4Hz2h8bS/content/id/5849311

https://hbr.org/2016/01/how-to-boost-your-teams-productivity



Explanation for the Words "Industrial" and "Engineering" in Industrial Engineering

Pure Engineering - Industrial Engineering

Pure Engineering: Technical Product

Industrial Engineering - Product at the price paid by the customer and maximum profit to the firm through resource use minimization.

That is why Taiichi Ohno termed it Profit engineering
Target costing developed in Japan best explains the role of industrial engineering.


IE techniques are primarily used for improving technical processes and managerial processes of technical processes (planning, organizing, resourcing, executing and controlling of technical tasks and processes) for increasing productivity. All IE pioneers worked in engineering concerns. They improved technical processes as well as managerial methods and processes used to manage technical processes.

F.W. Taylor improved metal cutting, machines, and management of machine shop through his functional management scheme.

Gilbreth improved bricklaying process by making changes in techniques. Then he proceeded to make fatigue studies to decide the speed at which workers can function and also time.

As an augmented activity, IE is applied to business processes and managerial activities related to business processes.

The emphasis on engineering tasks is the engineering component of industrial engineering. Emphasis on making products profitable is the explanation for the term "industrial". Technical products are made commercial products or industrial products by IEs by reducing their costs below the prices quoted by potential consumers.

The basis for reduction of costs is better explained by value engineering. A potential customer quotes a price for a new product by the services it provides to him and by comparison to the prices that he is paying for current equipment that he is using. So for reducing the costs of a proposed product to bring it in line with customer's quote, industrial engineers have to study the architecture of the current products being used by potential customers. They need to get ideas for redesigning the proposed product by understanding how the required functions are being provided by the existing products being currently used at a lower cost. In investigating the product, the processes being used for producing them also come into investigation.


1908 – The industrial engineering department at Penn State is founded by Hugo Diemer, a pioneer in the field. Diemer coined the term “industrial engineering” in 1900 to describe the fusion of engineering and business disciplines. Diemer is named the first head of the department.
http://www.ime.psu.edu/department/history.aspx


Updated  11 May 2016
Published on 9 May 2016

Monday, May 9, 2016

May Second Week - IE Knowledge Revision





Second Week 8 May to 12 May 2016


Managerial Accounting or Management Accounting - Review Notes
Relevant Information and Decision Making - Marketing Decisions

Relevant Information and Decision Making - Production
Relevant Information and Decision Making - HR

The Master Budget - Accounting Information
Flexible Budgets and Variance Analysis - Review Notes

Responsibility Accounting for Management Control
Accounting Information for Management Control in Divisionalized Companies

Capital Budgeting - Accounting and Cost Information

Introduction to Organizational Behavior


Relation between Industrial Engineering and Management Accounting


This week's subject of revision is management accounting. Management accounting provides accounting based data/information to managers for use in decision making models. One example is determining economic order quantities. Estimates of ordering cost, set up cost, and inventory carrying are provided by management accountants. Industrial engineers may also use number of accounting measures in optimization studies. They have to get data for these models from management accountants. Management accountants may not know details of these accounting measures initially and industrial engineers have to explain the composition of these measures to accountants. They have to get the data for measures,use them in the models and subsequently validate them, so that in future accountant provide these measures on a routine basis to decision makers.

Budgets are important for industrial engineers. They have to make sure that results of productivity projects carried by them in the last year are captured in the coming year budgets. Then only deviations from the budgeted results can be analyzed for deviations from standard practices prescribed by industrial engineering departments for improved efficiency or productivity.

Friday, May 6, 2016

Accounting Analysis of Productivity Projects and Programmes - Bibliography




Costing for Strategic Profitability Analysis
http://nraomtr.blogspot.com/2011/12/ -for-strategic-profitability.html



How to Measure Company Productivity using Value-added:
A Focus on Pohang Steel (POSCO)
Marvin B. Lieberman
UCLA Anderson School of Management
Los Angeles, CA 90095-1481
USA
Email: marvin.lieberman@anderson.ucla.edu
Jina Kang
Technology Management Economics and Policy Program (TEMEP)
Seoul National University
Seoul 151-742, South Korea
Email: profkang@snu.ac.kr
http://www.anderson.ucla.edu/faculty/marvin.lieberman/docs/Lieberman_POSCO.pdf


Profits and Productivity
by
E. Grifell-Tatjé
C.A.K. Lovell
97-18
Wharton
http://fic.wharton.upenn.edu/fic/papers/97/lovell.pdf



The Productivity Paradox
Wickham Skinner
HBR THE JULY 1986 ISSUE
https://hbr.org/1986/07/the-productivity-paradox

Productivity Accounting - 2015 - Emili Grifell-Tatjé, C. A. Knox Lovell - Book Information




Productivity Accounting



Emili Grifell-Tatjé, C. A. Knox Lovell


Cambridge University Press, 26-Jan-2015 - Business & Economics - 408 pages


The productivity of a business exerts an important influence on its financial performance. A similar influence exists for industries and economies: those with superior productivity performance thrive at the expense of others. Productivity performance helps explain the growth and demise of businesses and the relative prosperity of nations.

Productivity Accounting: The Economics of Business Performance offers an in-depth analysis of variation in business performance, providing the reader with an analytical framework within which to account for this variation and its causes and consequences.

The primary focus is the individual business, and the principal consequence of business productivity performance is business financial performance. Alternative measures of financial performance are considered, including profit, profitability, cost, unit cost, and return on assets. Combining analytical rigor with empirical illustrations, the analysis draws on wide-ranging literatures, both historical and current, from business and economics, and explains how businesses create value and distribute it.

https://books.google.co.in/books?id=Xz3WBQAAQBAJ


Productivity Drivers  


(Pages 22 to 32)

Productivity Drivers Internal


1. Quality of Management: General
2. Quality of Management: Human Effort Engineering and Human Resource Management.
3. Quality of Management: Allocation of Resources
4. Quality of Management: Adoption of New Technology
5. Quality of Management: Product Range and Diversification
6. Quality of Management: Cost Reduction and Waste Elimination
7. Quality of Labor
8. Quality of Capital ( and Intermediate Goods in a Gross Output Context)
9. Quality of Outputs of Services

Productivity Drivers External


1. Institutions
2. Ownership
3.The competitive environment
4. Regulation, Deregulation and Regulatory Structure
5. Structural Reform and Liberalization
6. Demographics
7. Geography
8. Public Infrastructure and Research & Development


The authors say the list is only indicative and not comprehensive. They are intended to emphasize that productivity is controllable either by firm management, or by the aggregate economy's helmsmen.