Cost Leadership Strategy and Industrial Engineering

Industrial engineering with its focus on efficiency, productivity and cost reduction has an important role to play  in companies which have decided to compete on cost leadership. In these companies there is special emphasis on examining product as well as processes to identify inefficiencies and wastes and minimize resources.

Industrial Engineering curriculums must include an elective subject on developing strategy perspective in IEs especially in relation to the cost leadership strategy.



Bibliography

http://www.costleadershipstrategy.com/



Investigating the tradeoff between cost leadership and differentiation
M.Sc these of Stockholm School of Economics
2007
http://arc.hhs.se/download.aspx?MediumId=315

Term Paper on Cost Leadership - Tata Steel and Reliance Industries are covered in the paper - 2008
http://www.scribd.com/doc/13637922/Cost-leadership-term-paper


Cases Studies on Total Productive Management and Competitive Advantages

Li Chang-Chung, (Department of Industrial Engineering and Engineering Management, National Tsing Hua University, Hsinchu, Taiwan, ROC), Tsai Ping-Chen, (Department of Industrial Engineering and Engineering Management, National Tsing Hua University, Hsinchu, Taiwan, ROC)
Asian Journal on Quality, Vol. 2 Iss: 1, pp.106 - 116

Abstract: The purpose of business strategy is to achieve competitive advantages which includes higher efficiency, better quality, more innovation and faster customer response. In other words, the business strategy is to build unique capability of lower cost and/or differentiation. In production aspect, unique capability means better production power with better performance at 3M(Man, Machine, Material) of input and PQCDSM (Product, Quality, Cost, Delivery, Safety, Moral) from output. The Total Productive Management (TPM), a series of improvement activities focused on reduction of equipment loss, is a tool to establish business competitive advantages.

In this paper, several domestic companies who won the Japan TPM Award have been studied. It is found that there is a strong cause-effect relationship between TPM and competitive advantages because: (1) TPM can change employees mindset effectively; (2) TPM can upgrade employees capabilities; (3) TPM can lead to excellent productivity.

Achieving Cost Leadership - A Sustainable and Pragmatic Approach
Booz Paper
http://www.booz.com/media/uploads/AchievingCostLeadership.pdf

Cost Leadership Strategies
http://ocw.u-tokyo.ac.jp/wp-content/uploads/lecture-notes_eng/Eco_07/e-shintaku-05-2.pdf

Leadership in Operational Excellence - Spencer Stuart
http://content.spencerstuart.com/sswebsite/pdf/lib/opX_0107.pdf

Business Level Strategies and Performance - Ph d thesis 1998
http://repositories.tdl.org/ttu-ir/bitstream/handle/2346/12825/31295012468293.pdf?sequence=1

Cost Leadership - Leadership - Deloitte
http://www.deloitte.com/view/en_CH/ch/insights/privatebankingcentreofexcellence/costleadershipinbusinessoperations/index.htm

Cost Leadership Strategy and Product Specification and Design Choices

In a cost leadership strategy, the focus is not on traditional design problems of form or function, but rather to deliver the lowest retail price at the highest margin with acceptable product quality. Surprisingly, the design thought process has a lot to say about what customers find acceptable within this framework.
http://triginnovation.com/tangents/2011/3/25/design-thinking-for-cost-leadership.html

Design and Design thinking in strategy concepts
http://www.dmi.org/dmi/html/conference/academic08/papers/Stevens%20et%20al/Design%20thinking%20in%20strategy%20concepts%20DMI%2008.pdf



Understanding Customers Important for Cost Leaders

Cost leaders have to dissect the customer value proposition.  A company that examines the value proposition required by its target market may uncover new insights. Such a study may reveal some factors on which the company may be incurring substantial expenditure and yet the customers do not care about the particular feature or facility. Cutting on such frills may help in improving the bottom line. Such cuts on frills can be accompanied by thrust on factors where company’s offering is below the customers’ expectations.

Most popular no frills strategy is pursued by Southwest Airlines which based its strategy on clear understanding of the segment of customers it was going to serve by operating the flight services at lowest fares and prompt schedules. The clear understanding of expectations of the segment it was going to serve and competitive value proposition that this segment was being offered by the aviation industry opened up the real opportunity of lowering its costs and yet maximizing the value of low fares and adherence to schedules for its customers by keeping clear of facilities like baggage transfers, meals, seat arrangement etc., which any way the customers were not bothered about. It is an important point to note that Southwest Airlines has done its marketing well and found a target market and its requirement. It is also important to have a large target market that provides strategic advantage over a long period of time.

http://www.alagse.com/strategy/s10.php

Cost Leader Companies in Various Industries - Strategic Programs

Cement Industry
Cost leadership is the only possible strategy
http://tejas-iimb.org/articles/32.php
IIMB Faculty - Student collaboration
Business strategies for Indian Cement Industry
http://www.ipedr.com/vol2/1-P00003.pdf
Heidelberg Cement
In our industry cost leadership is a crucial factor for success.
http://www.heidelbergcement.com/NR/rdonlyres/0639C65D-9BE2-4DC6-9D01-EF6398E1141D/0/GB_2011_E_WebLinks.pdf   2011 annual report.


Retail Sales
Masters Dissertation on Strategies of Walmart and Carrefour in China
http://edissertations.nottingham.ac.uk/1369/1/07MAlixyl25.pdf.pdf


Telecom Networks
Ericsson is technology leader.
Huawei is the cost leader.
http://www.economist.com/node/21541043
Dec 2011

CFD Software - Being Promoted as Cost Effective for Number of Design Problems

CFD software is being promoted as cost effective software for design problems in various industries.

Benefits of CFD

CFD is routinely used today in a wide variety of disciplines and industries, including aerospace, automotive, power generation, chemical manufacturing, polymer processing, petroleum exploration, medical research, meteorology, and astrophysics.

The use of CFD in the process industries has led to reductions in the cost of product and process development and optimization activities (by reducing down time), reduced the need for physical experimentation, shortened time to market, improved design reliability, increased conversions and yields, and facilitated the resolution of environmental, health, and right-to-operate issues.

It follows that the economic benefit of using CFD has been substantial, although detailed economic analyses are rarely reported. A case study of the economic benefit of the application of CFD in one chemical and engineered-material company over a six-year period conservatively estimated that the application of CFD generated approximately a six-fold return on the total investment in CFD (Davidson, 2001a).

http://www.nae.edu/Publications/Bridge/ExpandingFrontiersofEngineering7308/TheRoleofComputationalFluidDynamicsinProcessIndustries.aspx

Davidson, D.L. 2001a. The Enterprise-Wide Application of Computational Fluid Dynamics in the Chemicals Industry. Proceedings of the 6th World Congress of Chemical Engineering. Available on Conference Media CD, Melbourne, Australia.

Comparison between CFD and Wind Tunnel
http://www.cd-adapco.com/pdfs/presentations/adm10/Todd_Leighton.pdf  2010


Usage of CFD


Aircraft Design


Automobile industry

Cement Industry
http://www.turnellcorp.com/Publications/WorldCement2012-CFD-Duct%20Optimization.pdf - 2012 article

HVAC
http://usa.autodesk.com/manufacturing/building-products-equipment-fabrication/#tab1


Courses and Consultants for CFD

http://www.energo.rs/CFD%20-%20COMPUTATIONAL%20FLUID%20DYNAMIC.htm



CFD Books

Industrial Engineering Concepts Question Paper - September 2011

PGDIE 41 – First Quarter End Examination
OP-03 Industrial Engineering Concepts

Date 16.9.2011                                                                                        Max. Marks: 60

Answer any FIVE  questions
All questions carry equal marks

1. Industrial  engineering is an engineering-based management staff-service discipline that deals with the design of human effort and system efficiency in all occupations.

Explain the statement by briefly explaining
a) the contribution of Taylor and Gilbreth.
b) Going’s explanation
c) Lehrer conceptualization of the discipline
d) AIIE’s definition
e) Definitions of recent days – Sawada, Narayana Rao, and Yamashina

2  a). Explain the principles used in making a motion analysis of an operator.

b) What are local fatigue and whole body fatigue? What human effort design criteria will prevent them? How do you measure those criteria?

3 a). Production methods are designed by functional production engineers and industrial engineers analyze them for waste reduction opportunities in methods efficiency engineering. In Single Minute Exchange of Dies, or set up time reduction, the focus is on reducing the time for set up. How the Eliminate, Combine, Rearrange and Simplify steps were used in developing SMED method?

b) Value Engineering examines product designs and component production methods to reduce cost and provide the intended function. What are the six important analysis techniques of value engineering? What is your engineering discipline and discuss relevance of value engineering to a product of your discipline.

4 a) Explain an application area for mathematical method in the design of a component or a subsystem in your discipline of engineering.

b) In the Maynard Book chapter on Operations Research, the following case studies were given.

i) Production planning at Harris Corporation ii) Gasoline Blending at Texaco iii) FMS Scheduling at Caterpillar iv) Fleet assignment at Delta Airlines v)Keycorp Service Excellence Management System.

Explain any one case study.



5 a). What is management and what is the process of total productivity management?

b). Engineering economic analysis is to be done by all engineers in various engineering departments and industrial engineering department has to do engineering economic appraisal. Differentiate between engineering economic analysis and engineering economic appraisal.


6 a) . Dramatic productivity improvements were demonstrated by Taylor and Gilbreth. Give examples.

b). Employee involvement in methods improvement project is to be encouraged at every stage by industrial engineers. Explain.

c). What therbligs or  basic work elements are used in MTM to determine standard times?

7 a). In every system design, there is a role for industrial engineering department. Describe that role briefly.

b). What are the wastes in software development similar to the wastes identified in manufacturing systems under Toyota Production System (TPS).

c). Describe some steps for increasing the efficiency of energy use in factories and offices.
   

---------

Ergonomics - A Collection of Recent Articles

http://www.intechopen.com/books/ergonomics-a-systems-approach



Work-Related Musculoskeletal Disorders Assessment and Prevention
by Isabel L. Nunes and Pamela McCauley Bush


Work-Related Musculoskeletal Discomfort in the Shoulder due to Computer Use
By Orhan Korhan

More articles in the collection by InTech

Industrial Engineering and Sustainability

25.8.2012

Manufacturing and the Science of Sustainability
Keynote Address byTimothy G. Gutowski
Massachusetts Institute of Technology, Cambrige, MA 02139
2011
http://web.mit.edu/ebm/www/Publications/Gutowski_CIRP_Keynote_2011.pdf  - Important Paper


There are many opportunities for Industrial Engineering to work on sustainability issues.
http://ime.calpoly.edu/profiles/industrial-engineering-and-sustainability/

University of Central Florida - IE Department incorporate sustainability into curriculum
http://iems.ucf.edu/Sustainability_Education/index.html

Interesting statement by a student
"As an industrial engineer, I think we have a lot to provide society, because we are getting the skills on how to do things more effectively and more efficiently, so we are not reinventing the wheel, we are just making the wheel a little better. If we can do this with the concept of how can we do this and protect the environment at the same time... Because any environmental movement that is not profitable, is not going to be picked up in the commercial world. If the company cannot do it and be profitable, the company is not going to exist."


Industrial Engineering for Sustainability
http://www.livegreen.iastate.edu/involved/projects/project.php?a=view&id=207


Improve the performance of closed-loop supply chains with remanufacturing to reduce waste and conserve material and energy.
Design and analyze governmental incentives and fees related to reduce, reuse, and recycle.
Improve manufacturing systems for wind energy systems to increase reliability and decrease cost of energy production.



Can Efficiency Improvements Reduce Resource Consumption?
A Historical Analysis of Ten Activities
http://stuff.mit.edu/afs/athena.mit.edu/course/2/2.813/OldFiles/www/readings/DahmusGutowskiEfficiency.pdf



Important Paper 1999 with number of issues and more than 300 references

Issues in environmentally conscious manufacturing and
product recovery: a survey
Computers & Industrial Engineering 36 (1999) 811±853
http://eco-design.gr/docs/ecodesign/SCIENCE_3.pdf

Presentation by Dr. Anna Bella Siriban-Manalang
Industrial Engineering Department, DLSU, Philippines
International Panel Member for Sustainable Resource
Management, UNEP-DTIE
(link to be given)


Environmentally Benign Manufacturing
Large number of articles - Collection by MIT
http://web.mit.edu/ebm/www/publications.htm

Resource Efficiency View of Industrial Engineering

Human Resource Efficiency

   Human Effort Engineering

Equipment Efficiency

Material Efficiency

   Inventory Reduction


Energy Efficiency

Energy Use Efficiency - IE for Energy Resource
http://nraoiekc.blogspot.com/2012/04/energy-use-efficiency-ie-for-energy.html

Revolutionizing Data Center Energy Efficiency  2008 McKinsey Company Report
http://www.ecobaun.com/images/Revolutionizing_Data_Center_Efficiency.pdf

Information System Efficiency




IE Techniques and Their Contribution to Resource Efficiency

Standardization

Variety Reduction

Industrial Engineering Technicians- Occupational Outlook for 2010-20

http://www.bls.gov/ooh/architecture-and-engineering/industrial-engineering-technicians.htm

Number of jobs in 2010: 62,500

Is Industrial Engineering a Strategic Function?

The answer is yes. Industrial Engineering is a strategic function. Its focus is efficiency, waste elimination, planning of optimal cost for the enterprise and hence profit maximization subject to the revenue constraints or maximum sales achieved by the organization. Is profit a strategic measure for the organization? Yes, it is. Then is not the function that has a focus on optimizing the profit using technical as well as managerial alternatives available a strategic function? The answer is yes. It is.

What is industrial engineering?
It is human effort engineering and system efficiency engineering.


Annual profit planning and long-tern profit planning are board level issues and board has to take decisions regarding IE targets and programs. Total productivity management is a good management method to plan enterprise level improvement activities and  then involve local units to achieve enterprise improve and thereby targeted profit. Total cost management is enterprise level cost management with active participation of all.


Board and Its Responsibilities

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1276331/

Board look for Efficiency with IT
http://www.directorship.com/boards-look-for-efficiency-with-it/

NHS Commissioning Board Plans new improvement body to promote efficiency
JIM Easton, Director of  Improvement and Efficiency
July 2012
http://www.hsj.co.uk/news/policy/commissioning-board-plans-new-improvement-body-to-drive-efficiency/5047152.article

Functional Engineering and Management Certifications for Industrial Engineers

List created by iseek.com

http://www.iseek.org/industry/manufacturing/education/certificationApplays?id=172112

Safety Engineering and Management for Industrial Engineers

Industrial engineers integrate men, materials and machines through work station designs that improve productivity and comfort of workers. In doing such a design, they have to take care of safety engineering and management aspects also. Also when they are doing value engineering of engineering equipment say in equipment producing companies, they have to make sure that all the safety benefits provided in the design being examined are kept intact and any feature change does not reduce the safety of the item. It is better to say that Industrial engineers have the objective of taking care of safety of operators.

Hence industrial engineers have to learn the safety theories and methods developed so far various safety scholars and professionals and enrich them with their insights.

In Maynard's handbook 5th edition there is a chapter on Safety Engineering and Management.

It identified three areas;

Behavioral safety
Safety Engineering
Systems safety

As a part of safety management, it discussed recording accidents, reporting them and analyzing them.


_____________________________________

Safety Engineering and Management - Bibliography

New model of Safety - STAMP - 2002 - Nancy G. Levenson - MIT Professor
Book System Safety Engineering Back to the Future , 2002,
Donwload from Author's site
http://sunnyday.mit.edu/book2.pdf

Home Page of Prof Levenson
http://sunnyday.mit.edu/
There are many pages on safety from sunnyday page that appear in Google search results on safety.

LayOPT - Facilities Layout Analysis and Optimization Software

Strategic Layout Planning for Lean Manufacturing - A LayOPT Tutorial
http://www.ie.metu.edu.tr/~ie425/LayOPT_Tutorial_Narayanaswamy.pdf 

Engineering Research Paper Summary Project - Section B 2012

Assignment Part of Introduction to Industrial Engineering - Industrial Engineering Concepts Course

Course Page and Course Handouts



Section B


Computer Science

R.No. 68
Agile software development method
http://pratikd-nitie-ie.blogspot.in/2012/08/summary-of-research-paper-on-agile.html

R.No. 83
RISK MANAGEMENT USING SPIRAL MODEL FOR INFORMATION TECHNOLOGY
http://sagarbhore.blogspot.in/2012/08/risk-management-using-spiral-model-for.html

Engineering Research Paper Summary Project - Section A 2012

Section A Paper Summaries

Assignment Part of Introduction to Industrial Engineering - Industrial Engineering Concepts Course

Course Page and Course Handouts


Electronics Engineering


R.No.34


MOBILE REMOTE MONITORING SYSTEM

http://harshbudholiya.blogspot.in/2012/08/mobile-remote-monitoring-system.html

R.No.46
BIPOLAR JUNCTION TRANSISTOR
http://meenakshi-ie.blogspot.in/2012/08/engineering-research-paper.html


Mechanical Engineering


R.No. 25
High Performance Gear Hobbing with powder-metallurgical High- Speed-Steel
http://debashish-ie.blogspot.in/2012/08/high-performance-gear-hobbing-with.html

Design and Production Process Project - Section A - 2012

Assignment Part of Introduction to Industrial Engineering - Industrial Engineering Concepts Course

Course Page and Course Handouts


Mechanical Engineering

R.No.

25         Spur Gear  http://debashish-ie.blogspot.in/2012/08/spur-gear-manufacturing.html

Productivity in Construction - 1993 Report

National Research Council of Canada Report
http://www.nrc-cnrc.gc.ca/obj/irc/doc/pubs/nrcc37001.pdf

Solar Lamp - Engineering Economic Analysis

Kerosene lamps typically require 5 ml to 42 ml of kerosene per hour for light output varying from 8 lumens to 67 lumens.

If we assume that higher capacity lamp is used for 4 hours in the night and the lower capacity lamp for 8 hours in the night, 208 ml of kerosene is required in a day and for a month 6 litres will be required. In India, Kerosene is sold at subsidized rate of Rs. 12.50 and at this rate it come to Rs.75 per month for the consumer.  If a solar lamp is sold at Rs. 600, it can mean a saving of Rs.300 per month in the first year itself for the consumer. The payback period comes to 8 months.

The country will save on subsidy which is around Rs.20 per litre now.

Ref:

http://saurorja.org/2011/07/18/kerosene-vs-klean-lighting-up-rural-india-cost-and-emission-analysis/

http://www.rpc.com.au/information/developing-countries/fuel-based-lighting.html

http://www.repoa.or.tz/documents/RR_11_2.pdf

Danish artist Olafur Eliasson wants to offer solar lamp for $10 to consumers in India.
http://economictimes.indiatimes.com/news/news-by-industry/et-cetera/danish-artist-olafur-eliasson-designs-10-solar-lamp-to-sell-in-india/articleshow/15333637.cms

It will be sold to retailers at $5.
News in Economic Times 3 august 2012.