Sunday, February 5, 2012

A New Charter for Industrial Engineers

This article is primarily based on the chapter with the same title in the book 'Strategic Planning for the Industrial Engineering Function' authored by Jack Byrd, Jr. and L.Ted Moore and published by Van Nostrand Reinhold Company, New York in 1986.

The major thesis of the book is that industrial engineers can contribute to strategic planning of the function of the company. Some industrial engineers can move into strategic planning function from IE Department and the strategic planning department can give some projects to IE Department. Chapter 23 of the book is titled "A New Charter For Industrial Engineers" and this chapter focuses in IE completely.

The chapter starts with the statement that Frederick Taylor believed that management of labor resources could be put on a scientific basis supported by experimental studies and measurement and such an approach would increase productivity, drive down costs of production and would benefit both the capitalist and worker alike. The organizations of cost of production of items will come down and workers would get more wages.

According to Byrd & Moore, many industrial engineers are involved in maintaining direct labor standards and doing other low-productivity clerical work. Industrial engineering is falling into systems maintenance trap. After a burst of creative productivity enhancement of systems, IE department is rewarded with maintaining the systems and thus a highly productive resource is directed toward a much less productive work.

IEs have to take initiative to take control of costs and improvement of productivity. They must propose projects for their department that will make solid contribution to profitability. They have to take responsibility for the projects they propose. To identify and propose strategic projects, industrial engineers have to become familiar with some of the common approaches to corporate strategy and apply them to the development of IE department strategy.

Byrd & Moore suggested the use of product portfolio model to allocate IE resources to products. They advocate  allocating bulk of IE resources to "Star Category" products to reduce their costs aggressively.

Industrial engineers have to speak the language of strategy, the competitive advantage of the company and demonstrate how their productivity improvement efforts are in tune with the overall direction of the business.

Measures of Productivity for Industrial Engineering

Byrd & Moore observed that IE profession has done little to measure its own productivity. Even though one hears statements like, "an industrial engineer should save the company x times his salary in any given year", one does not come across evidence that the IE professionals are serious about and measure their contribution in a formal manner. They suggest that IE departments have to develop documentation for their studies and projects showing the cost reduction achieved in relation to the resources invested and he gives the opinion that such a documentation will help the IE departments in expanding the charter.

Industrial engineering department has to show commitment to the realization of productivity improvement and cost reduction goals. Industrial engineering department has to set productivity, efficiency and cost reduction goals and accept the responsibility for implementation of the goals. Industrial engineering department has to think in terms of activities and projects and they have to be taken up based on potential payoffs rather than on the basis of tradition.  Industrial engineers have to become more aggressive in seeking out new projects. Managements are willing to grant more projects provided IEs present their case appropriately.

Byrd & Moore expressed concern that there is stiff resistance to the project orientation of IE department. Existing personnel are comfortable with clerical orientation. But a transformation to project oriented, cost reduction and efficiency improvement is required from the IE Departments to raise high in the contribution record of the organization.

My proposal is that IE department is organized into three sections
1. Human Effort Engineering
2. Systems Efficiency Engineering
3. Systems Design Management, Installation, and Improvement Management.

All three sections can be allotted projects and measured on the results of projects. Two sections have major focus on engineering aspect. The third section has focus on management design, installation and improvement. Industrial engineers from human effort engineering section and system efficiency engineering section take part in the activities being managed by the management section as per the tasks allotted to them in relation to the studies and projects conducted and completed by them.

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