Wednesday, September 18, 2013

Six Cardinal Areas for Industrial Engineering - Going Industrial Engineering

If, ignoring the conventional
mode of analyzing industrial organization, we look at it
from the point of view taken in the alliterative divisions of
the field listed in the opening chapter, the applications of
system in which we are most interested in industrial en-
gineering will relate generally to six cardinal points.
First, the general institutions and form of management;
second, the provision and custody of material; third, the
handling and payment of labor or u men "; fourth, the care
and maintenance of tools and machinery; fifth, the determi-
nation and direction of operations, or manufacturing meth-
ods; sixth, the recording of expenditures and costs that
is, of money. Our seventh " M " markets belong to
the commercial or sales organization, and though equally
susceptible to scientific treatment are not included in the
scope of this study.

System is an ideal that is more or less perfectly embodied
in innumerable concrete " systems " for handling each and all
of these things. There is no universally correct and spe-
cific way of doing any one of them. Always beware of
the man with the panacea. Ideals and principles are funda-
mental and fixed; methods and systems must vary with con-
ditions. The systems that will succeed in any given case
depend on the organization adopted in, and the circum-
stances surrounding, that case. Many misfits and troubles
have resulted from attempts to force cut-and-dried systems
that had succeeded under one set of conditions and in one
environment, upon a plant differently organized and en-
vironed to which these systems were not adapted at all.
There are, nevertheless, fixed principles that can be formu-
lated and should be observed in any system we may adopt in
any individual case.

Management, in its broad sense, includes everything in
the entire range of this discussion. In its limited sense of
the governing and directing body it is ordinarily (as al-
ready said) dominated too exclusively by ideals of " line "
subdivision with insufficient " staff " co-ordination. Very
generally, however, a broad staff or functional segregation
appears in the adoption of what is called the " three-column
form" of organization; that is, the management is carried
on by three co-ordinated departments financial, manu-
facturing, and commercial. The division is elementary and
logical. First get your money, next turn it into manu-
factured wares, then sell the product. Below this step,
however, ordinary management is unstandardized. All ef-
fective work in the improvement of efficiency must begin
here, either by replacing the existing arrangement by a
" functional force " or by " co-ordinating with it in an ex-
pert staff."

Materials are generally supplied through a purchasing
department, whose duty it is to provide all materials and
supplies in the quantity and quality required by the produc-
tion department, at the most advantageous price possible;
and to verify its purchases to the auditing department for
payment. Materials when received pass into the custody of
the stores department, at the head of which is an official
known as the storeskeeper or storekeeper. In a large
plant there will probably be a general storeskeeper and
a sufficient number of division or assistant storeskeepers and
clerks to handle the work. The duty of the stores depart-
ment is to keep materials in safe custody and orderly ar-
rangement, to supply them to the departments of the fac-
tory on requisitions from proper authority, to account for
their issue, to receive them again, in partly finished or fin-
ished condition, if the routine of the factory operation so
requires, and to maintain an inventory of all material on
hand. Sometimes finished product is delivered from
stores on order of the sales department; sometimes the ship-
ping department is distinct. Obviously both purchasing de-
partment and stores department must be in close touch with
the needs of the production department, but the discretion
given either of them to query or to anticipate production-
department requisitions or wants varies greatly in different
cases, and may be determined by the policy of the concern
or the personality of the officials chiefly concerned. It is
not uncommon, however, for the stores department to be
charged with responsibility for maintaining at all times a
sufficient stock not only of raw materials but of finished
product. The manufacturing department then works al-

ways and only upon orders issued by the stores depart-

The records of materials are usually kept by requisitions
made out in multiple, separate copies going to the manu-
facturing and accounting officials immediately concerned,
and by entering each addition or withdrawal in books or on
cards accompanying each lot or kind of material carried in
stock. The movement of material through the factory is
usually directed and recorded by tags, accompanying each
piece or lot, and distinguished by serial numbers connecting
them with the order or job to which they apply. Multiple
copies of these memoranda, sent ahead, serve to notify re-
sponsible officials further down the line what to look for,
and act as detectors for any delay or discrepancy in arrival.
This system is commonly called stock tracing.

Material in process of manufacture is commonly called
either stock or stores. The terms are rather loosely used,
but the best authority prescribes the use of the term
" stores " for raw material and " stock " for finished product.
This usage, however, is not universal, and very often
" rough stores " or " raw stores " is used to designate un-
manufactured material, and " finished stores," manufactured

Labor, which was listed as the third cardinal subject of
systematic handling, is very diversely managed. Some large
concerns have a regular labor department or employment
agency where applications are filed and examined, and by
which men are engaged in such numbers and at such times
as, the managing officials direct. In other cases the heads
of departments make their own engagements and dis-
charges. Usually the discipline and work assignments of
each employee depend upon his immediate superior, who
may be a very minor official, such as a gang boss or sub-
foreman. Many disciplinarians consider that the power of
promotion or discharge is necessary to the man in imme-

diate command. There are, however, great dangers of in-
justice, and of the exercise of favoritism or spite disastrous
to efficiency of the working force as a whole, if too much
power is entrusted to petty officers. I think this is on the
whole the safer view to adopt. The assignment of work,
even, when not determined by general routine, is now
sometimes advantageously directed from a central works
office, where a work dispatcher has every machine in the
shop displayed before him on a board, with its jobs in hand
or accumulated systematically tabulated on slips, and he di-
rects the next movement for each man and machine on the
floor, as a train dispatcher moves the trains on a railroad.

The individual jobs are usually designated by numbers
connecting them with the work to which they apply. The
time each man works is usually recorded by a representative
of the accounting or auditing or cost department, called a
time clerk or a timekeeper. Very generally each workman
registers his entrance and departure by punching a time
clock or some similar automatic recording device, so that
the total time for which he is paid is indisputable. The
division of his time among various jobs (if his work is of
such character that it is divided among several jobs) is
noted either by himself, by his foreman, or by the time
clerk, who then makes frequent rounds of the shop and
visits every man often enough to keep close track. These
time records, like the material records, are usually kept on
individual cards, which can be assembled afterwards for
such tabulations and cost determinations as are desired and
may be kept as long as deemed advisable for further ref-
erence. The system of payment is determined by the man-
agement in the light of such appreciation as the managers
may have of the virtue and benefits of the several advanced
wage systems, and under such limitations as the prejudices
of the men or the effective restriction of the union may re-

The fourth cardinal point listed for systematic direction
was the care and maintenance of tools and machinery. The
larger mechanical equipment, power transmission, etc., is too
often left more or less vaguely to the engineering or me-
chanical department, from whom it devolves upon the fore-
men. There is, however, a generally recognized and almost
universally established institution called the tool room,
which has two separate functions; one is the custody and
issue of small tools, which are provided, ground, kept in
order, and given out to the men as needed, account being
kept by hanging a brass check representing the tool on a
hook bearing the workman's number. The other and
larger function 'of the tool room is the making of standard
and special tools, jigs, fixtures, etc., and the repair of ma-
chines and machinery. The province of the tool room,
however, is seldom extended widely enough and the tool-
maker's knowledge of the most efficient operation of ma-
chines and of the principal causes of waste and loss of time
is seldom deep enough, or his authority to institute re-
forms and is seldom great enough, to make the tool room
adequate to drive the plant at its highest capacity. Here
is an opportunity for most profitable use of the staff spe-

The direction of methods, our fifth cardinal point, is in a
still more unsatisfactory condition. It is left sometimes to
the men running the machines, sometimes to their foreman
or to a special functional foreman, sometimes to the tool
room, sometimes to the drafting room, and sometimes to
the engineering department or mechanical department at
large. Here is another broad field for the staff specialist.

Systematic supervision of money matters, our sixth car-
dinal point in manufacturing organization, exists in two di-
rections. Both are based, in part at least, on the same data,
but their scope and purpose are quite diverse. The first of
these functions is exercised by the auditor's department. Its

purpose is simply to connect every expenditure with an ac-
tual bona fide transaction material bought and vouched
for, wages paid for services proved, royalties paid on a veri-
fied contract, machines purchased, buildings erected, etc.
Time and material tickets coming from the shop are merely
vouchers to the auditor, to warrant his O. K. of requisitions
on the treasurer for the payment of bills or the drawing of
payroll checks. Beyond this, he is not in the least concerned
officially. If John Smith is certified on the payroll for 60
hours, as proved by the time clock, and at 25 cents an hour
as certified by his general foreman, the auditor approves
his payroll check for $15 without further question.

But the second department concerned in money matters
has a different function; this is the cost department. The
time and material cards, having served as auditor's vouch-
ers if necessary, are taken in hand by the cost department
and sorted by numbers so that all cards belonging to any
particular job, machine, or desired item of product fall to-
gether. From these the complete material and labor cost
of any piece or product (or by proper prearrangement, of
any part of a unit of product or of any operation upon any
part) can be figured up and recorded. It is part of the
function of the cost department not merely to connect ex-
penditures with certain manufacturing accounts as the audi-
tor does, but to determine by comparison whether the ex-
penditure and the thing secured by it are in fair proportion.
The auditor went no farther than to find that John Smith
put in 60 hours by the clock. The cost department divides
up this 60 hours, job by job, and it can or should compare
John Smith's time on each job with recorded times made by
other men on the same jobs. If he has been soldiering and
has done altogether in 60 hours only what the records show
that other men have previously done in 25 hours, the facts
are made clear and proper action can be taken.

The cost department, properly conducted, may thus be-

come a mine of valuable information, first for the shop
superintendent in helping him to prove the comparative
worth of his men, and next for the commercial or sales or-
ganization, because it shows not only what margin of profit
exists and affords a guide to possibilities of meeting compe-
tition, but it also permits close estimates to be made on new
work, by a comparison with similar jobs in the past and by
compiling unit prices from which the costs of new models
may be built up. 

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