Wednesday, October 30, 2013

Stream of Variation Modeling and Analysis for Multistage Manufacturing Processes - Book Information

Stream of Variation is being called VSm II

Jianjun Shi

CRC Press, 12-Dec-2010 - Technology & Engineering - 496 pages

Variability arises in multistage manufacturing processes (MMPs) from a variety of sources. Variation reduction demands data fusion from product/process design, manufacturing process data, and quality measurement. Statistical process control (SPC), with a focus on quality data alone, only tells half of the story and is a passive method, taking corrective action only after variations occur. Learn how the Stream of Variation (SoV) methodology helps reduce or even eliminate variations throughout the entire MMP in Jianjun Shi's Stream of Variation Modeling and Analysis for Multistage Manufacturing Processes.

The unified methodology outlined in this book addresses all aspects of variation reduction in a MMP, which consists of state space modeling, design analysis and synthesis, engineering-driven statistical methods for process monitoring and root-cause diagnosis, and quick failure recovery and defect prevention. Coverage falls into five sections, beginning with a review of matrix theory and multivariate statistics followed by variation propagation modeling with applications in assembly and machining processes. The third section focuses on diagnosing the sources of variation while the fourth section explains design methods to reduce variability. The final section assembles advanced SoV-related topics and the integration of quality and reliability.

Introducing a powerful and industry-proven method, this book fuses statistical knowledge with the engineering knowledge of product quality and unifies the design of processes and products to achieve more predictable and reliable manufacturing processes.

Google Book Link to be added

Presentation by Jianjun Shi

Book is available in NITIE library

Value Stream Mapping - Origins

Learning to See: Value Stream Mapping to Add Value and Eliminate Muda
Mike Rother, John Shook
Lean Enterprise Institute, 01-Jan-2003 - Business & Economics - 102 pages

In 1998 John teamed with Mike Rother of the University of Michigan to write down Toyota's mapping methodology for the first time in Learning to See. This simple tool makes it possible for you to see through the clutter of a complex plant. You'll soon be able to identify all of the processing steps along the path from raw materials to finished goods for each product and all of the information flows going back from the customer through the plant and upstream to suppliers. With this knowledge in hand it is much easier to envision a "future state" for each product family in which wasteful actions are eliminated and production can be pulled smoothly ahead by the customer.

Much more important, these simple maps - often drawn on scrap paper - showed where steps could be eliminated, flows smoothed, and pull systems introduced in order to create a truly lean value stream for each product family.

In plain language and with detailed drawings, this workbook explains everything you will need to know to create accurate current-state and future- state maps for each of your product families and then to turn the current state into the future state rapidly and sustainably.

In Learning to See 2003 edition you will find:

A foreword by Jim Womack and Dan Jones explaining the need for this tool.
An introduction by Mike Rother and John Shook describing how they discovered the mapping tool in their study of Toyota.
Guidance on identifying your product families.
A detailed explanation of how to draw a current-state map.
A practice case permitting you to draw a current-state map on your own, with feedback from Mike and John in the appendix on how you did.
A detailed explanation of how to draw a future-state map.
A second practice case permitting you to draw a future-state map, with "the answer" provided in the appendix.
Guidance on how to designate a manager for each value stream.
Advice on breaking implementation into easy steps.
An explanation of how to use the yearly value stream plan to guide each product family through successive future states.
More than 50,000 copies of Learning to See have been sold in the past two years. Readers from across the world report that value stream mapping has been an invaluable tool to start their lean transformation and to make the best use of kaizen events.

What are the origin's of Value Steam Mapping?

Baudin' Explanation  -

Origin in Toyota’s Operations Management Consulting Division (OMCD)

Materials and Information Flow diagram was developed at Toyota’s Operations Management Consulting Division (OMCD), for selective use with suppliers — that is, wherever the main issue is with flows of materials and information related to these flows.

The OMCD, whose Japanese name actually means “Production Investigation Division” (生産調査部). is a group of 55 to 65 high-level TPS experts.

The technique was brought to the US by the Toyota Supplier Support Center (TSSC).

According to John Shook, Materials and Information flow diagrams were created by Toyota’s OMCD group. They were introduced to the U.S. by TSSC,

Jim Womack and Dan Jones introduced the concept of “value stream” and in Lean Thinking told readers to map them. While the book had an example and descriptions, the process wasn’t laid out. At that time, Mike Rother had just become very interested in Toyota’s M&I flow mapping so John introduced him to Jim  Womack and Dan Jones.

Mike was the lead author (John Shook is co-author) of the workbook Learning to See and developed the mapping workshop. Dan Jones came up with the title Learning to See. Jim Womack and Dan Jones coined the term “value stream” and “value-stream mapping.”

John Shook said it was and still is used by the select group of TPS experts, mostly in the OMCD organization. (I think it is now Operations Management and Development Division.) So, the tool came to LEI in a roundabout way from TSSC.

 ”John (Shook), has known about the “tool” for over ten years, but never thought of it as important in its own right.  It is used by Toyota Production System practitioners to depict current and future, or “ideal” states in the process of developing implementation plans to install lean systems. At Toyota, while the phrase ‘value stream’ is rarely heard, infinite attention is given to establishing flow, eliminating waste, and adding value.”

Materials and Information Flow Analysis at TSSC
TSSC still teaches Materiasl and Information Flow analysis.

“Material & Information Flow: day in classroom designed to develop the skill to document the current condition and locate the process bottleneck. 1 day shop floor focused on grasping the current condition and finding the bottleneck in an actual shop floor setting.Length: 1.5 days”

Microlevel versus Macro Level

Ohba says that one should start at the micro level — machines, cells, workstations, tooling, fixtures, operator job design, etc. — not at the macro level — lines, departments, suppliers, customers, etc. His reasoning is that you need to develop skills before you can address macro level issues. And he is saying that you should not start with VSM because it is a macro level tool. What Ohba does not say in his presentation is how you find out where in the plant you should start at the micro level. To me, an appropriate pilot project must meet the following conditions:

It must provide an opportunity for tangible, short-term performance improvements.
Both management and the work force in charge of the target process must be willing and able.
The target process must have at least one more year of economic life.
To identify such opportunities, you need to observe operations directly, interact with operators, managers and engineers, and analyze data. VSM is one of the tools that are useful in doing this, but it is not the only one, and it is not always needed.

one week of process kaizen and one week of system kaizen. During that week we used MIFD. Later on they started using it more and more in the plants only when needed.”

 The “Value Stream Mapping” Label

“Materials and Information Flow” accurately describes what the technique is about, and is almost self-explanatory.

According to  Gary Stewart, a 23-years Toyota veteran:

“The VSM process was known internally simply as “process mapping” – (or occasionally later as MIFD – but that was more specific to OMCD ) – it is only one of a suite of tools that should be used together to understand the process from high level to great detail. I think today the term VSM and the use by consultants of the term VSM is  more of creating a branding difference in both Marketing and Consulting. In Marketing “process mapping” does not sound very sexy – But with Value Stream Mapping – you have a major brand differentiator.

Unquestionably, Jim Womack is an outstanding marketer. “Process Mapping,” “Materials and Information Flow Analysis,” are all terms that, at best, appeal to engineers. Any phrase with “value” in it, on the other hand, resonates with executives and MBAs.

Art Smalley’s perspective on VSM

“Value stream mapping, for instance, is perhaps the most widely used tool in lean programs today.

A third dimension, human motion, is often added to the mix for consideration as well at Toyota. As TPS evolved internally and was rolled out to supplier companies externally a consistent problem was insufficient investigation into the details of material flow, information flow, and human motion in the process. It became a requirement for engineers and others in charge of manufacturing processes and line conversion work at suppliers to make maps.

The emphasis was to draw both detailed standardized work charts depicting operator motion, and flow charts depicting material storage locations, scheduling points, and operator work sequence before the start of production. In other cases, this tool was used externally to find ways to convert lines to more efficient ones.

The key point is that the tool was created to analyze and solve a specific category of problems Toyota faced in new production lines and in helping suppliers implement lean. From this fairly specific local origin in Toyota, the tool was slightly modified (the human motion emphasis was reduced) and popularized in the U.S. by my good friend and former Toyota colleague John Shook, and his co-author Mike Rother, in their insightful, best selling workbook “Learning to See”.

The book is about learning to see what is primarily a material and information flow problem, or essentially elements of the JIT pillar of Toyota’s production system (flow, takt time, level, and pull production).

By design it doesn’t even attempt to address the topic of Jidoka for example which Toyota considers an equally if not more important support pillar than JIT or equipment stability. The technique used in the workbook simply measures the overall manufacturing lead-time versus production value add time. Everything non-value adding (i.e. the waste) is to be eliminated and answering seven specific questions outlined in the workbook will help you accomplish some of this goal.

Overall, however, when the 4M’s of manufacturing (man, machine, material, and method) are considered you’ll realize that this tool mainly considers the material (and information) flow component. The other 3M’s are much less emphasized and one other important M – metrics – is expressed chiefly in terms of lead-time and value-add time.

This is fine for Toyota. Internally they well know the limits of the tool and understood that the it was never intended as the best way to see and analyze every waste or every problem related to quality, downtime, personnel development, cross training related issues, capacity bottlenecks, or anything to do with profits, safety, metrics or morale, etc.

No one tool can do all of that. For surfacing these issues other tools are much more widely and effectively used. Unfortunately, the average user of the workbook tends to copy the pattern expressed in value stream mapping regardless of the nature of their manufacturing problems.

The unintended consequence of the success of the method has been to convince many people that it is a universal tool for identifying all problems in manufacturing operations.

This guidance however biases companies with major quality, downtime, or factor productivity problems to deemphasize them since those items are not surfaced well using the method and questions outlined in value stream mapping. The tool just does not frame these problems well by design. Couple this effect with the fact that most lean efforts already have a disproportionate bias towards the concept of “flow”, and there is a recipe for inherent danger.

For example instead of learning to see what is truly broken in their processes companies wind up typically focusing on a particular subset of operational problems chiefly that of flow and lead-time related issues.”

John Shook in VSM Misunderstandings -

Sunday, October 20, 2013

Industrial Engineering in Electronics Engineering


Optimization of Components and Products

Chip design optimization 
Optimization of Systems

Multiple criterion optimization of electronic circuits
M Lightner
Carnegie Mellon University
Stephen W. Director

The two input MOSFET NAND gate used as an example.  The first step in designing the NAND gate is to choose a model for the transistors. We chose a four terminal model that includes the effect of substrate
bias. This model and its defining equations are presented. There are many possible sets of designable parameters that could be used in designing the NAND gate, for example, the lengths and widths
of all the devices as well as the flat band voltages of the devices. We choose the flat band voltage, V _ , the
Ftf width of the bottom two transistors, W2~, (constrained to be the same) and the width of transistor T^ V^, as the designable parameters.

Digital Circuit Optimization via Geometric Programming

2006 paper
NXP Semiconductors, Research, DMS - Physical Design Methods,
Hich Tech Campus 48, 5656 AE Eindhoven, The Netherlands

Magma Design Automation,
TUE Campus, Den Dolech 2, Dommel Building Z-Wing 8, 5612 AZ Eindhoven, The Netherlands

Chip production
Productivity of Human Factor
Safety and Health of Employees

Assembly of electronic products

McKinsey  Cananda - 2006

Cost Management in Electronics

Manufacturing Cost Modeling - Electronics Assembly Example
(In Information-Based Manufacturing: Technology, Strategy and Industrial Applications

New Technology

A Printed Circuit Board Inspection System With Defect Classification Capability

August 15, 2013
I. Ibrahim, S. Bakar, M. Mokji, J. Mukred, Z. Yusof, Z. Ibrahim, K. Khalil, M. Mohamad

Electronics Manufacturing Technical Article Library Online

Saturday, October 19, 2013

Industrial Engineering Techniques - Articles, Books, Courses

Work Study Course for Shipyard Personnel - Course Material

Introduction to Industrial Engineering -  Course Page

France in the Age of Organization: Factory, Home and Nation from the 1920s to Vichy


Berghahn Books, 15-Jun-2011 - History - 228 pages
In interwar France, there was a growing sense that ‘organization’ was the solution to the nation’s perceived social, economic and political ills. This book examines the roots of this idea in the industrial rationalization movement and its manifestations in areas as diverse as domestic organization and economic planning. In doing so, it shows how experts in fields ranging from engineering to the biological sciences shaped visions of a rational socio-economic order from the 1920s to Vichy and beyond.

 Google Book Link

The Human Motor: Energy, Fatigue, and the Origins of Modernity
Anson Rabinbach

University of California Press, 1992 - Philosophy - 402 pages
"Masterfully integrating Europe-wide debates in science, philosophy, technology, economics, and social policy, Rabinbach has provided us with a profoundly original understanding of the productivist obsessions from which we are still painfully freeing ourselves. . . . A splendid example of the mutual enrichment of intellectual and social history. It goes well beyond its central concern with the 'science of work' to illuminate everything it discusses, from Marxism to the social uses of photography, from cultural decadence to the impact of the First World War."--Martin Jay, University of California, Berkeley

Google Book Link

Course Outline - Industrial Engineering - 40 hours program by Protech

Industrial Engineering Techniques is an on-site 40-hour program, normally presented in five consecutive days, which provides new engineers, supervisors, non-IEs, and other technical and non-technical personnel a grounding in classical Industrial Engineering methods and procedures.

The program relies heavily on interactive demonstrations, teamwork, video, and class exercises. This program has been presented many times for automobile manufacturers and OEM suppliers, and uses numerous video examples of real plant scenes in fabrication and assembly operations. The overall program consists of several "modules" that may added or deleted to produce a custom program of 24 to 40 hour duration if desired.

1.0  Introduction to Industrial Engineering and Methods Analysis
     1.1  Definition of Industrial Engineering
     1.2  Relationship of Method to Time
     1.3  IE History; Taylor and Gilbreth

2.0  Methods Analysis and Work Measurement
     2.1  Manufacturing Systems and Concepts
     2.2  Methods Analysis and the Methods Engineering Approach
     2.3  Work Measurement

3.0  Manufacturing Systems Analysis
     3.1  Methods of Organizing Information
     3.2  Symbol systems
     3.3  The Fabrication Chart
     3.4  The Precedence Chart
     3.5  The Flow Chart
     3.6  The Process Chart
     3.7  The Flow-Process Chart

4.0  The Analysis of Manual Methods
     4.1  Components of job study; task, element, act, motion,
     4.2  Purposes of  job analyses
     4.3  Effects on method
     4.4  Variation in Output within Fixed Limits
     4.5  The Acts
     4.6  Review of analysis form and sample Act Breakdown
     4.7  Progressive improvement

5.0  Methods Summary Charting
     5.1  Definition and purpose of methods summary charting
     5.2  Types of charts; man/man, man/machine
     5.3  Review of methods summary chart
     5.4  Video exercises

6.0  Ineffective Worker Movement Analysis
     6.1  Definition
     6.2  Causes of Ineffective Worker Movements
     6.3  Video examples
     6.4  Six steps of analysis
     6.5  Analysis form--Ineffective Worker Movement
     6.6  Team exercises

7.0  Motion Economy and Workplace Layout
     7.1  Improving the motion path; barriers
     7.2  Workplace layout principles
     7.3  Motion Economy Check List; discussion of 20 Principles

8.0  Ergonomics (Human Factors)
     8.1  Definition
     8.2  Scope and history
     8.3  Anthropometry
     8.4  Discussion of body dimensions
     8.5  Workplace design dimensions
     8.6  NIOSH guidelines for manual lifting
     8.7  Hand tool design

9.0  Work Measurement
     9.1  Overview of work measurement concepts
     9.2  The Standard Hour Concept
     9.3  Time study
          9.3.1  Stopwatches
          9.3.2  Procedure
          9.3.3  Work description
          9.3.4  Elemental breakdown
          9.3.5  Types of method description
          9.3.6  Keywords, breakpoints
          9.3.7  Irregular elements, foreign elements
          9.3.8  Number of cycles to study
     9.4  Evaluating operator performance
          9.4.1  Definition
          9.4.2  Characteristics of normal performance
          9.4.3  Performance descriptors; skill, effort, pace, etc.
          9.4.4  Benchmarks
          9.4.5  Performance rating systems
          9.4.6  Selection of an average operator
     9.5  Recording the data
           9.5.1  Snapback vs. continuous study
     9.6  Time study exercises

10.0 Work Sampling
     10.1 Introductory Video
     10.2 Work Sampling Procedure
          10.2.1 Statistical principles, randomness
          10.2.2 Demonstration
          10.2.3 Determination of sample size; alignment chart
          10.2.4 Design of study elements
          10.2.5 Taking the study; instantaneous observation
          10.2.6 Tracking progress of the study
     10.3 Work Measurement Sampling
     10.4 Use of an electronic random reminder; time management

11.0 Line Balancing
     11.1 Discussion--Use of powered lines
     11.2 Factors influencing product assembly; design, equipment, precedence
     11.3 Build methods; process or product orientation, fixed position
     11.4 Line types; straight, circular, indexing or continuous
     11.5 Requirements for the line balancing process
     11.6 Line balancing procedure
     11.7 Line balance-powered line operations
     11.8 Line balance class problem (team exercise)

12.0 Summary and Critique
Industrial Engineering Techniques for Improving Operations
McGraw Hill Book Co, June 1986

Operation Analysis by Maynard, 1939

Industrial Engineering Skills

This course module provides an introduction to Industrial Engineering techniques as used to measure and improve productivity, and defines the role of I.E. data in a company's planning and costing systems.
On completion, participants will be capable of:
Understanding the role of Industrial Engineering in productivity improvement.
Using I.E. techniques in simple applications for manpower and capacity planning.
Understanding the social context of industrial engineering.
Directing the industrial engineering activity to achieve business objectives.
  1. Industrial Engineering and Productivity Measurement
  2. Problem solving in Industrial Engineering
  3. Method Study
  4. Work Measurement
  5. Layout Planning
  6. Control of staff and production indirects
  7. Ergonomics
  8. Job Design
  9. Human Relations
  10. Manpower and capacity planning
DURATION: 40 hours
IE 5191. ADVANCED STUDIES IN INDUSTRIAL ENGINEERING Individually approved research projects and reading courses in industrial engineering. Such individual studies will be graded A, B, C, D, F or X. Subject to the approval of the Graduate Advisor, IE 5191, 5291 and 5391 may be repeated as the topics change. In addition, work on a thesis substitute will be performed under IE 5391. In this case, IE 5391 is graded P/F/R.
Prerequisite: written approval of both the supervising faculty member and Graduate Advisor.
IE 5291. ADVANCED STUDIES IN INDUSTRIAL ENGINEERING Individually approved research projects and reading courses in industrial engineering. Such individual studies will be graded A, B, C, D, F or X. Subject to the approval of the Graduate Advisor, IE 5191, 5291 and 5391 may be repeated as the topics change. In addition, work on a thesis substitute will be performed under IE 5391. In this case, IE 5391 is graded P/F/R.
Prerequisite: written approval of both the supervising faculty member and Graduate Advisor.
A study of selected topics in industrial engineering. May be repeated when topics vary.
Prerequisite: consent of instructor and Graduate Advisor.

Human structural, physiological, psychological, and cognitive capacities and limitations in the workplace, and their effects on the design of work systems to enhance productivity, and maintain health and safety.
Prerequisite: IE 3301 or equivalent, or consent of instructor.

Practicum in Industrial Engineering techniques consisting of professional level experience in a relevant company, agency, or institution. This technical experience is directed by a supervising professor and requires the writing of a professional report.
Prerequisite: 24 hours of graduate work in Industrial Engineering.



Management of Engineering Design Office Operations through Utilisation of Computer Systems and Application of Industrial Engineering Techniques

Mitchell, RM; Hing, CR; Bashford, KH
Abstract: The paper describes a project undertaken with the aim of improving management of an Engineering Design Office. Dealt with are the application of industrial engineering techniques to develop performance standards and procedures for their use, development of a supporting computer system, and education of engineering managers to facilitate implementation and maintenance of new systems.
Conference on Engineering Management 1981


Monday, October 14, 2013

Lean Supply Chain Management: A Handbook for Strategic Procurement By Jeffrey P. Wincel -Book Information

Table of Contents:
The purchasing/SCM executive as CEO
The disciplines of planning
Force versus skill
Defining the crisis environment
Crisis plan background and phase I : acquisition team formation
Phase II : price benchmarking
Phase III : short-term process improvement
Phase IV : value analysis/value engineering
Phase V : lean manufacturing
Defining the standard environment
Supply base management
Supplier quality and development
Cost management and control
Materials management
The supply chain organization
Developing & implementing lean fundamentals
Manufacturing implementation
Ongoing improvements.

Thursday, October 10, 2013

JIT Implementation Manual - Hiroyuki Hirano - 2011 Book Information

Known as the JIT bible in Japan, JIT Implementation Manual — The Complete Guide to Just-in-Time Manufacturing presents the genius of Hiroyuki Hirano, a top international consultant with vast experience throughout Asia and the West. Encyclopedic in scope, this six-volume practical reference provides unparalleled information on every aspect of JIT— the waste-eliminating, market-oriented production system. This historic, yet timeless classic is just as crucial in today’s fast-changing global marketplace as when it was first published in Japan 20 years ago.

Providing details on how to implement standardized operations in manufacturing, including essential information on how to establish, improve, and preserve standard operations,

Providing a comprehensive introduction to the just-in-time production system, Volume 1: The Just-in-Time Production System dispels outdated myths and ideas about manufacturing that are still prevalent. Supplying essential background information on the JIT approach to production management, this user-friendly resource builds a strong foundation for implementation.

Volume 2: Waste and the 5S’s provides a comprehensive overview of the concepts of waste in manufacturing and methods of discovering, removing, and preventing the creation of waste. It also teaches the 5S system, a method for organizing the workplace to eliminate waste, demonstrating how to use red tags for visual control and signboards for visual orderliness. The book also illustrates how to organize jigs and tools.

Volume 5: Standardized Operations — Jidoka and Maintenance/Safety covers the key topic of Jidoka, or human autonomation — essentially how to separate human activity from machine work without producing defects. It also addresses the essential aspects of maintenance in a JIT environment and how to prevent breakdowns. The book includes time-saving information on how to quickly recognize why injuries occur and create a strategy for zero injuries and zero accidents.

Saturday, October 5, 2013

Basic Concepts, Principles and Methods of Industrial Engineering

Taylor's Principles of Scientific Management

First. The development of a true science (of work or operation or task).
Second. The scientific selection of the workman.
Third. His scientific education and development.
Fourth. Intimate friendly cooperation between the management and the men.

Harrington Emerson's Principles of Efficiency

1. Clearly defined ideals.
2. Common sense
3. Competent counsel
4. Discipline
5. The fair deal
6. Reliable, immediate and adequate records
7. Despatching
8. Standards and schedules
9. Standardized conditions
10. Standardized operations
11. Written standard-practice instructions
12. Efficiency-reward

Gilbreth's Principles of Motion Economy

        Principles of Motion Economy - Some More Details
        Principles of Motion Economy - YouTube Videos

ECRS Method

        Eliminate, Combine, Rearrange, Simplify - ECRS Method - Barnes

Miles' Principles of Value Engineering

Avoid generalities
Get all available costs
Use information from the best source
Blast create and refine
Use real creativity
Identify and overcome roadblocks
Use industry experts to extend specialized knowledge
Get a dollar sign on key tolerances
Utilize vendors’ available functional products
Utilize and pay for vendors’ skills and knowledge
Utilize specialty processes
Utilize applicable standards
Use the criterion, “would I spend my money this way?”

Principles of Ergonomics

1. Work in neutral postures
2. Reduce excessive forces
3. Keep everything in easy reach
4. Work at proper heights
5. Reduce excessive motions
6. Minimize fatigue and static load
7. Minimize pressure points
8. Provide clearance
9. Move exercise and stretch
10. Maintain a comfortable environment

     Good explanation with illustrations is available in

Principle of Difference in Productivity

Principles relating Wage differentials (incentives - efficiency reward)  and Motivation

Principles of Engineering Economics

Principles of System Optimization

Principles Statistics

Principles of Mathematical Modeling

Related Articles

Industrial engineering Principles, Methods Tools and Techniques

Principles of Human Effort Engineering

Principles of System Efficiency Engineering

Friday, October 4, 2013

Industrial Engineering - 21st Century Progress - Opporunities and Challenges

Industrial engineering profession has to define its primary role and its augmented product.

Industrial engineering has its primary focus on efficiency of the systems in the engineering area and it contributes to the organization as external or internal consultant.

The broadening is into nonengineering areas and effiectiveness domain.

As new engineering areas emerge, it has to support them in the efficiency domain as its primary role.

Challenges for IE - July 2013

Industrial Engineering caught between two revolutions

Industrial Engineering in Germany

History of American Institute of Industrial Engineering

AIIE was founded in 1948

Within a year of its inception, membership consisted of 1,279 members, including 938 students, 2 senior chapters and 10 university chapters. The first convention was held in June 1950 and has continued annually since that time. By 1958, membership had escalated to 6,500 members with 80 chapters and climbed to 12,000 by 1960.
The Journal of Industrial Engineering became a monthly publication in 1966, and two years later branched into AIIE Transactions and Industrial Engineering. In 1972 the headquarters moved from New York to Atlanta, Georgia where it remains today.

Society of Industrial Engineers - History and Publications

Founding of the Society

The Society of Industrial Engineers, a national organization, the membership of  which is to comprise men and women who are industrial engineers, professional technical engineers, .accountants, managing executives
of commercial and industrial activity, writers, educators and students, was planned in Chicago on May 26. The Society will be permanently organized in Washington, on June 15, on which date the directors have been called to meet.

Charles Buxton Going, for twenty years editor of the Engineering Magazine, New York, was chosen provisional President and pro tern, chairman of the board of directors which was chosen at the session. This board, comprising 15 prominent men from various sections of the United States, the majority of whom have accepted, includes:

Charles Buxton Going, New York;
C. E. Knoeppel, industrial engineer and organiza- tion counsel, New York;
Frank B. Gilbreth, industrial engineer, Providence, B. I.;
E. 0. Shaw, vice-president The B. E. Goodrich Co., Akron, Ohio;
Harrington Emerson, industrial engineer, New York;
Charles Piez, president The Link Belt Co., Chicago;
Irving A. Berndt, manager betterment department,
Joseph T. Eyerson & Son, Chicago;
G. DeA. Babcock, production manager The H. H. Franklin Manufacturing Co., Syracuse, N. T.;
Willard E. Hotchkiss, dean Northwestern University School of Commerce, Chicago;
Harry Franklin Porter, Detroit Executives' Club, Detroit, Mich.;
H. Thorpe Kessler, President Western Efficiency Society, Chicago;
Dexter Kimball, Cornell University, Ithaca, N. T.;
Morris L. Cooke, industrial engineer, Philadelphia;
C. Day, industrial engineer, Philadelphia;
Herman Schneider, school of engineering, University of Cincinnati, Ohio.

Temporary committees are now at work. Upon completion of the organization its serv-
ices will at once be tendered to the government, through Howard E. Coffin, chairman of the advisory committee, Council of National Defense, and such other committees as can utilize the services of The Society of Industrial Engineers.

The temporary executive committee consists of

Irving A. Berndt, chairman ;
F. M. Simons, Jr.;
H. Thorpe Kessler;
H. A. Bose,
G. C.Dent,
Harry Franklin Porter,
C. A. Knoeppel,
Willard E. Hotchkiss,
S. T. A. Loftis and
Charles Buxton Going.

G. C. Dent is temporary secretary and H. Thorpe Kessler, treasurer.

Announcement by I. A. Berndt, Chairman, Executive Committee, SIE

The plan of organization adopted provides for a service or promotion bureau under the direction of a vice-president, and divided into two sections: (1) Advisory, and (2) Performing.

. The function of this bureau is to list as soon as possible all the industrial specialists in the country who may be qualified to serve either as advisers or as actual directors of efficiency work. From these two groups of advisers and performers the society will draw those necessary to carry on whatever work may be dele-
gated to it in connection, with perfecting preparation for war.

All men who possess qualifications that would enable them to serve in either or both of these sections are urged to get in touch with the acting secretary of the organization, G. C. Dent, 327 South La Salle Street, Chicago, as soon as possible.

Publications of Society of Industrial Engineers

1918 - Proceedings -  "Labor problems under war conditions; complete report of the proceedings of the National Conference held under the auspices of the Western Efficiency Society and the Society of Industrial Engineers, March 27, 28 and 29, 1918, Chicago"
1920 - Proceedings - Practical Application of Industrial Engineering Principles

Thursday, October 3, 2013



WHEN a child touches the red-hot end of a poker, the information, advice, notice, record is reliable and lasting, also immediate and adequate. The scar is a perennial reminder of the mistake. Many of
Nature's warnings are reliable, immediate, and permanent; they reach us and other animals
through the senses — we hear, we see, we smell, we taste, above all principally, we feel. There
are two nerves from the brain to the eyes, two to the ears, two to the nose, two to the palate ;
there are several hundred between body surface and brain. Very few people allow themselves
to be burned, because the penalty is reliable, immediate, and adequate; but they are not as
shy about more deadly disease germs (probably a thousand people die of tuberculosis for one
who is burned to death) because the result is not reliable nor immediate.

The object of records is to increase the scope and number of warnings, to give us more information than is usually received immedi-ately through our senses. A steam boiler with water in it, a fire under it, and all outlets closed, is more dangerous than a hot poker. There is very little to indicate the imminence
of disaster. It is too hot to touch with the hand, although it is conceivable that a spot in it
might be so insulated as to permit the engineer to tell by feeling whether it was becoming too
warm. A thermometer would give a better record; but usually there are three recording instruments, each reliable and immediate, one of them in addition adequate. The engineer watches his pressure gauge, he watches his water-level glass, and the safety valve will pop even if he has fallen asleep. It is because of
these three devices, one of which is independent of the man, that there are so few boiler explo-
sions. All around us are many natural forms of advice, of records — the word is throughout
used in its largest sense.

The object of records is to annihilate time. ^ to bring back the past, to look into the f uture, to annihilate space, to condense a whole rail-road system into a single line, to magnify the thousandth part of an inch to foot-rule meas-urement, to gauge the velocity of a distant star by the shifting of the lines in the spectroscope,
to annihilate temperature by enabling us to read the millionth of degree or the 10,000-degree difference between moon and sun heat.

Animals make and use records, reach out to each other through time and space; and the naive surprise of the doe when the stag appears does as much credit to her modesty as the trail of musk left in her footsteps along many miles and for many days does credit to her involun-tary common sense. Man alone reaches out to
man through millenniums; and the pictures carved in stone, the hieroglyphics pressed in brick or cut in granite, tell us more about the intimate lives and philosophies of the Hittites, of the Egyptians, than we know of our own im-mediate ancestors, the Germans or the Gauls —than we know of our immediate neighbors, the
Indians. Pictures and writing were a great in-vention ; the reducing of music to written form so it could be reproduced was even more mar-velous, since through the eye we recreate for the ears, thus bridging the gap between the senses. The perpetuation of sound through ages in the phonograph disk, the perpetuation
of movement on a long film, these are part of man's triumph through records. The phono-graph disk is, next to the brain, the most mar-velous, if not the most useful, record man pos-sesses, since all the throbs, moans, triumphs, all the nuances of a hundred instruments and of a hundred voices, pulsations of the air, are
recorded by the needle point in a microscopic line; and that line, that perfect record, gives us again the same air pulsations, the same great instrumental and vocal chorus.

Records are anything that give information. Men have always felt the need of records, but they have not always known what they wanted nor how to secure them. In the great industrial plants one knows not whether to marvel most at the absence of reliable, immediate, and ac-curate records, or at the superabundance of permanent records, collected with painstaking and at great expense, but neither reliable, im-mediate, nor adequate. Even if the latter have all these qualities, there is often great duplica-
tion, and as a consequence we find an immense amount of accumulation of very little value,
which has cost far more than it need. An ex-ample of duplication may be found in the coal
records for locomotives. Expenses of operating locomotives are generally recorded per mile,
but suddenly a parallel set will crop up showing miles run per ton of coal. It has not been un-
usual in a great corporation's records to find a great variety of monthly tabulations, and
when inquiry is made it is finally unravelled that twenty years before some president wanted a certain set of records, that his suc-cessor wanted a different set, which were started in parallel, that a third and fourth in-
cumbent added their requests, but the old tabu-lations continue to be made and painstaking
clerks work their monotonous lives away in neat compilation that no one has looked at, much less used, for a decade.

When the tramp piled and repiled the same cord of wood first on one side of the yard, then on the other, he was working efficiently but to no purpose ; and having the soul of an artist he finally rebelled.

A clerical force may be hard at work, but it may accomplish very little and in the larger acceptance of the word it is inefficient, even as a hard-working steam engine using 50 pounds of steam per horse-power hour is inefficient in spite of its diligent consumption of coal.

There are records of all kinds, many of them essential to our continued existence. There are
in a much more limited way records of cost; and between the two extremes of universal
records (as the swing of the earth in its sea-sons or the slow aging of every living and in-
animate thing) on the one side, and cost rec-ords on the other, come records of efficiency,
and these are what we particularly need in the present phase of industrial life. We have not
yet learned to use to any great extent the con-ception of efficiency. We are interested in what
eggs cost per dozen, not in the weight of each egg; we ask the price of coal per ton, but
rarely know whether it contains 10,000 or 15,000 heat units per pound; we violently re-
sist a demand for a 10 per cent increase in wages, but we tolerate a 50 per cent inefficiency
in the worker. Not one in ten thousand knows even approximately the cost of food. Its price
is known, but not its value, and if a curve of food values per pound should be drawn, and
above each item its price, the line would look like the record of the seismograph during an
earthquake, or the record of a magnetic needle during an eruption on the sun.

The whole United States was frantic in 1896 over the money question, and not one in a
thousand of the gold advocates knew that owing to violent fluctuations in supply and use
gold had varied in value more than any other staple, not from hour to hour, as gold bonds
and gold stocks fluctuate in value on the stock exchange, but from decade to decade. One of
the tasks of modern scientific management, of efficiency and standard-practice engineering —
two names for the same ideals — is to convert efficiency records into cost records, since the
language of costs is understood by all, the lan-guage of efficiency only by the few. It is, of
course, generally true that costs will decline as efficiency increases, but this is not always so.

A jeweller may work with the same efficiency setting on one day a $2,500 diamond in a gold
stickpin and the next day setting a $0.25 bit of glass in a brass pin. Costs have varied, but not
efficiency. A Japanese miner may work for $0.20 a day and an Alaskan miner for $15.00 a day.
Each may work with equal efficiency, but the cost is very different. On the other hand, a
farmer, from the same field, planted to the same crop, plowed by the same man, team, and plow,
raises increasing crops of the same grain ; but wages, land values, and the price of horse feed
might also increase so that decreased cost will not always directly flow from increased efficiency.

In the refinement essential for the control of modern operations, it becomes increasingly
necessary to state efficiencies even if we talk costs.

Efficiency of Labor and Oost of Locomotive Bepaftn.
1905 1906 1907 1908 1909

_______ __________ . •

As a contribution to the solution of this prob-lem a universal formula of cost and efficiency
has been evolved which has the further advan-tage of showing what records are really essen-
tial and necessary, what form they ought to take and what records are useless, confusing,
and to be omitted. All the necessary reliable, immediate, adequate, and permanent records
can be obtained and maintained for less ex-pense than is usually incurred for misleading,
delayed, inefficient, and ephemeral records.

The costs of modern operations consist of three elements. For instance, in a recent year
it may have cost to operate all the railroads of the United States approximately:

For materials $ 524,000,000

For personal services 1,021,000,000

For interest, depreciation, and other cap-
ital charges 1,210,000,000


Omitting millions, we can set up the formula :

Total cost = Material + Per. service + Invest, charges

2,755 = 524 + 1,021 + 1,210
C (actual) =M (actual) + S (actual) + I (actual)

Let us assume that extended investigations show very inefficient use of materials, very in-
efficient use of personal services and also over-equipment, and that from a practical point of
view it might be possible to accomplish the same general result with $370 of materials,
$780 of personal service, and $600 of invest-ment charges. 41 The formula of standard cost
then becomes:

* These figures are used only for illustration, not as the expres-sion of a conviction.

(standard) = (standard) + (standard) 4- (standard)
$1,750 = $370 + $780 + $600

The efficiency of the whole operation is :

C stan dard $1,750 - r . _ x _ „ .

C actual 2755 =e>3,5 P er cent.=Total efficiency=E

The relation of standard cost to actual cost gives the efficiency. This can be applied to each
sub-part >:

Material cost standard $370 Material

Material cost actual $524 =70 - 6 %= efficiency

Labor cost standar d ___ $780 -$ 4 <* _ Service

Labor cost actual $l,02i " efficiency

Investment cost standard _ $600 =49 6r = Investment
Investment cost actual $1,210 ' efficiency.

Actual costs can next be stated in terms of standard cost and of efficiency: —

Total actual cost^ ^ 1 s £ ndard cost = gML° =$2 7

Total efficiency 63.5 * z >'°&

Total Standard cost Standard cost Standard cost

actual s of material . of service . of investment

cost Material efficy."'" Service efficy 'Invest, efficy.

Total actual cos^+^+g =f 2>766

If we know in advance the standard or theo-retical costs, if we know the current efficiencies,
we can predetermine actual costs. What we all desire is to make the industrial machine as
efficient as possible, to bring efficiencies up to 100 per cent, and when we do this actual costs
will be the same as theoretical costs. We must first attack the problem theoretically. We must
have standards and we must have efficiencies. When a pump or steam engine is tested, by
every means we ascertain ideals ; we then com-pare actualities with the ideals and we ascer-
tain efficiencies. Similarly, in the great indus-trial problem we set up ideals, we measure
against them actual performance, and we as-certain efficiencies, and as for pumps, and for
steam engines, so also do we use these efficien-cies to prophesy future costs.

When actual and ideal performances are both recorded the relation in one month will gener-
ally serve to predetermine efficiencies in the next month, the relation of one year to prede-
termine efficiencies in the next year.

The elementary formula is, however, wholly inadequate for a real determination of efficien-cies and has in fact led to most serious miscon-ceptions and consequent mistakes.

Reference has already been made to the folly of the man who buys coal by the ton without
knowing whether it contains 10,000 or 15,000 heat units per pound, who scrutinizes the cost
of personal service without knowing its qual-ity, invests in new machinery without counting
its hourly cost, or without being able to keep it busy.

The cost of materials depends on two factors, the quality and the price.

Material cost=Quantity of units at price per unit.

M c =Qm Pm

What is wanted is that QP shall be a mini-mum cost.

The usual impulse and plan is to attack the price, P. This does not work. It is almost im-possible to lower price, yet maintain quality. There is a constant demand for better quality and the tendency of prices is upwards. In the last ten years railroad presidents would have had great difficulty in buying steel rails at
less than $28 a ton. Q, quality, is the impor-tant factor. There is almost no limit to the re-
ductions that can be made in quantity. Let us take coal as an example. The ordinary indus-
trial-plant furnace, boiler and engine, use five to seven pounds of coal per horse-power hour.

By buying better coal, better furnace, better boiler, better engine and better service, coal
consumption can be reduced to two pounds, in some instances to one.

Efficiency of production of power as to mate-rial is raised from 14 to 40 per cent up to 100
per cent. The distribution of power may, how-ever, be very inefficient. Air, water, and steam
pipes may leak, there may be seven voltage drops in electric transmission. For 100 horse
power produced in power house only 80 may
reach the places of use. There is usually great
waste in the use of power ; lights burn, pumped
water is wasted, steam blows through steam
hammers, compressed air is used to ventilate
rooms or blow the dust out of clothes. The ef-
ficiency of use is rarely above 70 per cent. As-
suming the efficiency of production to be as
high as 70 per cent, that of transmission as
high as 80 per cent, that of use as high as 70
per cent, we have an end maximum efficiency
of 39.2 per cent. If, as often happens, produc-
tive efficiency is as low as 14 per cent (the air-
brake pump uses about 200 pounds of steam
per horse-power hour), if the efficiency of
transmission is as low as 60 per cent (I have
known power steam pipes to be laid unlagged
through running brooks), if the efficiency of
use is 30 per cent (cities where water is me-
tered use only one-third as much as those where
it is furnished without check as to quantity),
then the end efficiency of 14 per cent produc-
tion, 60 per cent transmission and 30 per cent
use is only 2.52 per cent. It is not because of
price, but because of the dependent sequence
of inefficiencies in quantity that QP usually
admits of such very great reduction.

Materials actua^-r^gjf — ^= —

JtSJv C/ tnq XVmp

If EE'E" is only 2.5, P st could be increased
40 times without adding to cost, but a compara-
tively small increase in P st doubling it for in-
stance, may be the easiest, quickest and most
economical way of increasing EE'E" mq to 10.
per cent, 40 per cent, or even 90 or 100 per
cent, as the case may be.

Therefore, in the last generation railroad
executives were willing to pay more for steel
rails than for iron rails, fuel consumers are
willing to pay more per ton for oil than for
coal, bridge builders prefer expensive wire
rope to cheap cast-iron, for in each case as
quality goes up, quantity goes down much more
rapidly. What is true of materials is equally
true of personal service. Labor, like material,
consists of both quantity and quality. The
quantity of labor is measured by time, its qual-
ity by what it accomplishes. The formula for
personal service becomes.

S=time in hours multiplied by wages per hour

When TW seems too high there is generally
an insane desire on the part of those in control
to reduce W. This is naturally resisted most
strenuously by the wage earner. As in mate-
rials, it is not the price of the unit per hour
that counts, but the quantity used. Also as in
materials, there are inefficiencies of initial
quantity, inefficiencies of distribution, and in-
efficiencies of use. Let us assume schedules of
different rates of pay for different classes of
workers. I have known industrial plants to en-
gage 600 men when 300 would have been suffi-
cient ; I have known 12 men to be assigned to a
job that 2 men could have done. There is in-
efficiency of initial quantity of 50 per cent to
17 per cent.

I have known men that ought to have been
earning $6 a day, in reality earning only $3
because they were in the wrong place, paid $3
for work that a $1 a day boy could have per-
formed better; I have known a $75 a day ex-
pert to be kept busy on clerical work that could
have been done better by an $18 a week clerk.
These are examples of inefficiency of distribu-
tion, varying from 17 per cent down to 4 per

The inefficiencies of use are so tremendous
that their cause has to be explained. Up to
about a hundred years ago, with the exception
of a few windmills, a few sailing ships, and a
few cumbersome water wheels, all the work
of the world was done by the muscular energy
of man and animal. It was used fairly efficiently,
often strenuously. I have been fortunate in
seeing and experiencing personally much of
what was formerly the rule, as the porterage
of freight and supplies over the Chilcoot pass
on men's backs, 100 pounds to the man, and
the killing, by overwork, of 3,750 horses out
of 3,780 in the awful strenuousness, but la-
mentable inefficiency, of the White Pass pack
trail in 1898.

The discovery that we could use coal, oil, gas,
mountain water-powers as sources of energy
has changed all civilization. In the United
States alone we have per inhabitant twenty
times as much energy available as when I was
born. The man whose manual labor it would
take for over 500 years to spade up a section
of unbroken prairie land, is quite inclined to
think that he is using his time very efficiently
if with team and plow he breaks up 640 acres
in four years, when in reality with suitable
equipment, mechanical tractors and gang
plows, it could be done in 36 hours.

The man who would take a week carving by
hand a small frame, might pride himself on
turning out one frame a day with foot power,
when in reality with moulds and automatic ma-
chinery he could turn out one frame a minute.

If, as I have seen, a man using a shaper over-
runs the necessary stroke three-fold, if the
machine's speed is only 30 per cent of what it
ought to be with modern steels, if his feed is a
1/64 inch instead of a 1/16, if he takes four
cuts instead of two, then his end efficiency is
only 1.25 per cent. Men have not yet realized
that the ages of muscular effort are passed,
that work can no longer be measured in man-
power or foot-power, that we no longer want
the man who can spade twice as much, the man
of burden who can carry twice as much, the
man who can break a horseshoe with his bare
hands ; but we want the man on the bridge of
an oil-fired steamer, we want the crew of an
oil-fired locomotive, engineer on one side with
hand on power-moved lever, fireman on other
side with finger on oil valve ; we want the crew
of mechanical tractors and gang plows, each
man directing and superintending the evolution
of as much uncarnate energy as 2,000 mien could
have evolved using man-incarnated energy.

Assuming as a possibility in inefficiency of
labor a quantity of 50 per cent, of labor dis-
tribution of 17 per cent, of labor use of 1.25
per cent, we have an end efficiency of 1/5 of 1
per cent. I have seen worse happen than this,
for sometimes the worker did nothing at all,
at other times was busy on wholly unnecessary
work. As a general average, efficiency of sup-
ply of work is not over 90 per cent; efficiency
of distribution, if fitness for the work is in-
cluded, not over 60 per cent, and efficiency of
use not over 70 per cent, giving an end effi-
ciency of 37.8 per cent, shading off from this
maximum to nothing.

As to service, therefore, as in materials, it
is quality that ought to be improved by paying
a much higher price per unit. It is not more
strenuousness that is wanted; it is more effi-
ciency with less effort. As T goes down, W
must go up both relatively and directly. The
locomotive engineer is paid higher wages than
the Chinese coolie, and as part of his daily life
he enjoys luxuries unknown to kings a genera-
tion ago, still unknown to Chinamen. The
coolie carries 150 pounds 20 miles in a day ; the
American locomotive engineer and the fire-
man haul 6,000 tons 60 miles a day. Piece
rates are physiologically and equitably vicious
and wrong. They put a premium on harmful
strenuousness, instead of standardizing condi-
tions and operations so that greater output will
follow less effort, but higher efficiency per unit
of time ; they are based on the assumption that
output is dependent on muscular energy as it
was in former ages, instead of being dependent
on a steadily increasing quantity of uncarnate
energy, combined with a steadly increasing
quantity of incarnate energy, both directed by
a steadily increasing intelligence.

T cannot indefinitely decrease, neither can
W indefinitely increase, and experimentally we
must determine what combination of TW re-
sults in minimum cost.

In the diagram on page 224, the vertical lines
A, B, C, D, E are records of different men work-
ing on similar jobs but at different rates of
speed. A, the slowest worker, takes 10 hours
to accomplish a task. His speed is that of a
lame man only able or willing to walk a mile
and a half an hour. Nevertheless, although
he may be wholly unfitted for the work and the
work not suited to him, he has to live, has prob-
ably a family to support, and he is unwilling to
work for less than $0.30 an hour, and if he is
wise, joins a union which will enforce this mini-
mum rate. A's standard expenses probably eat
up 90 per cent of his earnings, or $0.27 per
hour, his profit above expenses being $0.03 per
hour. B is a faster worker, able to walk 2.2
miles an hour. He is also given $0.30 an hour,
but in view of his greater speed an extra pay-
ment of 6.6 per cent is added, making his hourly
rate $0.32. His living expenses, as for the
other man, being $0.27, his net earnings or
profits become $0.05 per hour as compared to
$0.03. He has increased his profits 66.6 per
cent. The man C is one who can and does walk
at the rate of 3.3 miles an hour, a mile in 18
minutes. This man earns $0.32 in wages and
a bonus of 20 per cent, making his hourly earn-
ings $0.38. His net profit above minimum liv-
ing cost of $0.27 is $0.11 an hour, or an in-
crease above A in net profits of 267 per cent.
D is a man who can walk 4.5 miles an hour, or
a mile in 13.3 minutes. This is fast walking,
but not as fast as is regularly kept up hour
after hour and day after day on the Yukon if
the trail is good.

D earns $0.15 an hour above the employer's
basic rate of $0.32, his profit is 400 per cent
more than that of A. This man's speed is the
most economical both for the employer and for
himself. A speed greater than 4.5 miles an
hour is more than the normal man ought to
keep up. E is an abnormally fast traveler,
running at the rate of 5 miles an hour, the
Yukon average. His pay rises to $0.60 an hour,
his profit to $0.33 an hour, the profit alone
being more than the wages earned by A or B.
His profit is 1,000 per cent greater than that
of A.

E is a strenuous but not an efficient traveler.
His work costs more than that of either D or
C, and he will break down if he long continues
the pace. If greater speed is wanted the
method must be changed, not the strain in-

... . . Tst W«t

Actual service cost= B , t E n t B m w B mi w

W must increase as E t increases, W must
fall as E t falls. If this is not the law, then
there is no hope ahead, and civilization, discov-
ery, and appropriation of the energies in the
universe are disasters. But it is the law. Let
us illustrate by a single example. Sixty years
ago $5 of free gold to the ton, $100 of combined
gold to the ton, were about the lowest amounts
that it was profitable to work.

The average rate of wages for white men
was low. The time efficiencies of gold produc-
tion have been steadily improved, gravels are
now profitably washed that contain as little as
$0.05 to the ton, ores are mined and smelted
that contain as little as $5 to the ton. Gold
production has increased from $13,500,000, the
average before 1848, to $400,000,000 per an-
num. White men's wages have doubled and
250,000 men are now employed instead of
12,500 as formerly. Those who made money
from owning gold mines have invested it, de-
veloping other industries, creating still further
demand for employment. Let us assume that
the gold producers of the world should unitedly
demand a 2-hour day at the same wage per
hour, instead of the present 8-hour day, on the
supposition, firstly, that they would thus pro-
vide work for four times as many men, and
that a larger proportion of the output of the
mines would go to labor. The immediate effect
would be the closing down of nine-tenths of the
gold mines of the world, 225,000 men would be
thrown out of employment, other industries
would be curtailed, still further increasing the
supply of labor. The 2-hour provision might
stand, but either wages would drop until low
enough to make the reopening of the mines a
paying proposition, or increased efficiencies
would have to be applied to mining so as to
increase the output fourfold per man-hour of

More than ever before would it be necessary
to make motion studies and time determination
and to set up standards of supply, of distribu-
tion, of use as to every item of work. If wages
per hour are arbitrarily increased, the increase
can be safely provided for by increased effi-
ciency, and in no other way. If efficiency is
arbitrarily increased, wages will inevitably rise,
or effort will diminish.

What is true of materials and personal serv-
ice is equally true of investment charges. In-
vestment charges, like personal service, fall
into time for any performance and the cost per

I = T'R

in which T' indicates time in hours and R cost
per hour for capital charges.

If all the railroads of the United States are
worth $14,000,000,000, it is evident that the an-
nual capital charge for interest, depreciation,
insurance and taxes might be $1,000,000,000 —
that the actual capital charge per hour is
$114,155. If, therefore, as a token of respect
to the memory of a dead president, all railroads
should stop operations for 10 minutes at the
time of his funeral, the cost would be about
$20,000 in decreased efficiency of R, but the of-
ficials would hasten to make it up by increasing
the output of the subsequent hours, thereby
raising the efficiency of T.

As for materials and for service, so also we
must determine which T' and R in combination
result in the least cost.

In pay for services, the natural law is that
an increase ought to decrease time in larger
proportion, but in equipment it is very common
to increase R unwisely and very greatly for a
less decrease in T'. The same law prevails for
equipment as for materials and labor. Addi-
tions to equipment should decrease, not in-
crease, costs.

Muscular energy, whether of man or animal,
is available only a few hours a day, 8, 10, 12.
Uncarnate energy is available 24 hours a day.
The machinery in paper mills, in glass plants,
works 24 hours a day ; an ocean steamer on the
Pacific will throb steadily for twenty days, the
big generators at the world exposition in Chi-
cago and in St. Louis ran for six months with-
out a stop, big pumping machinery at mines
will work even longer without shutdown. There
is, therefore, double and treble investment
charge in working equipment only 10 or 8 hours
a day.

This was bad enough, but there was a
boom period after 1897 that owed its start to
the Yukon gold discoveries, to a European crop
failure with abundant crops here, and that was
further stimulated by the sudden expenditure
of one thousand million dollars in the Spanish
war. America suddenly resolved to scrap all
its old equipment and modernize from top to
bottom. Every railroad rebuilt its main lines
with new grades, easier curves, heavier rails
and ties, rebuilt its bridges, stations and ter-
minals, rebuilt or replaced its locomotives and
cars, built new shops and equipped them with
new tools. Every city rebuilt its business
blocks and its aristocratic residence section,
every street-car line was rebuilt and re-
equipped. Infected by the general contagion,
every industrial plant tried to increase its ca-
pacity. Paper mills doubled the width of the
paper machines, thus doubling their capacity,
iron mills became tonnage-mad, textile mills
increased their machines beyond the world's
output of textile fibres.

What are we going to do about it? There
are three correctives, and only three. Existing
equipment will gradually wear out, the country
will gradually grow, but during the period of
readjustment those plants that are inefficient
will be crowded to the wall and prematurely
die. Not only are American plants subject to
high equipment charges because running so
few hours a day, but even for the 8 or 10 or 12
or 24-hour day, they are over-equipped and
much of the machinery lies inactive.

We have again and again found that ma-
chines were not in operation over half the time
of a 9-hour day. When in operation they were
inefficient. It is not so long ago that a loco-
motive-tire lathe would be run 18, even 30
hours, to turn up a single pair of tires, work
that on the same machine ought not to take
over 3 hours.

The machine end-efficiency in some plants is
not over 4 per cent of the guaranteed capacity.
Eight hours out of 24 gives a work time-effi-
ciency of 33 per cent, not running half the time
during shop hours gives a shop time-efficiency
of 50 per cent; many machines exceed the re-
quirements of the work put to them, as when a
big planer is used instead of a shaper, this form
of efficiency dropping often to 70 per cent ; and
finally, machines are often run so slowly as to
show a speed efficiency of only 3.5 per cent.
When we reflect that there are other dependent
sequences in the material inter-relations, in the
work, and in the machine inter-relations, that
there are dependent sequences between ma-
terial and labor and machine, as when unneces-
sarily hard material lengthens the time of both
man and machine, or when defective machine
spoils material and wastes workers' time, or
when unskilled man spoils material and injures
machine — the marvel is not that industrial
operations are so inefficient, but that, consider-
ing the dependent sequences, they are in each
term of the sequence so high*

Actual investment cost=

EV E"f E ,u r E ,m r

It is a law that it usually pays to increase
quality of materials, that it usually pays to in-
crease quality of labor, that it usually pays to
increase quality of equipment, provided ma-
terials are efficiently used, labor efficiently
used, equipment efficiently used. Equipment
has hours about half those of labor when it
ought to work as long as materials, be con-
stantly on the job.

This relation of rate per hour to time is gen-
erally lost sight of. It is because it has been
lost sight of that over-equipment is the rule in
America. Materials, service and equipment are
worked up to the general cost formula :

Total cost=Materials+Service+Investment charges.
Total cost= QP +TW+ T'R

Usually only the greatest of industrial man-
agers realize that Q is more important than P ;
that T is more important than W, that R is
more important than 1", and that minimum
total cost is realized when QP is minimum,
TW the minimum, and T'R the minimum.

For all the operations or for any single unit

Total actual cost= g**? + ^Ljfi + ^-^

Eq B P Et Ew Bt' Br

This formula shows what records are wanted, namely, the six items of standard cost and the six or more items of corresponding efficiencies. No manager, no accountant, knows where he stands unless his records show him as to every operation :

The standard quantity of material

The efficiencies of material use

The standard price of material unit

The efficiency of price

The standard quantity of time units required
The efficiencies of time
The standard rate of wages for work of the
character done
The efficiency of wage rate
The standard quantity of time for equipment
The efficiencies of time use of equipment
The standard equipment rate per hour
The efficiencies of equipment use
The formula is equally applicable to a totalized operation costing one mill, as the page of  a periodical, or to the operation of all the rail- roads of the United States as one great unit.

Records as to each detail, aggregated into
records as to the whole, are one of the efficiency
principles; records as to each item and every
item today, records as to each and all items
throughout a long period of time. He who has
records of quantity and price — efficiencies of
both, of every unit of material used, whether
ton of rails or pint of oil ; who has records as
to time and wage rate for every operation, and
the efficiencies ; who has records as to time and
investment charge per hour for every operation
— he is in a position to apply the other practi-
cal principles and thus bring actual up to ideal.
Records of this kind are simpler, cost less to
keep up, than the usual industrial and cost
records of great companies.

Cost accounting can be very simply and easily developed from the cost formula. The elabora-
tion would carry us too far from the subject of records, reliable, immediate, adequate and per-

In a periodical publication, as to each page there is material, personal service, equipment
charge; and if the weekly edition runs to 2,000,000 copies of 80 pages each, a saving of
the one one-hundred-thousandth part of a cent in cost per page means $800 in a year, enough
to leave some profit after paying the salary of a man whose sole duty might be to prevent this
minute waste.

When the formula is applied to railroad oper-ating cost it inevitably shows that E is low.
We have all seen locomotive safety valves pop-ping and black smoke issuing from stacks.
There is waste of fuel, but fuel is the largest
single material item in railroad operation,
amounting in fact to one-third of all material
expense. We have all seen railroad day labor-
ers dawdling over their work; but common
labor, notoriously of poor efficiency, is the
largest service item in railroad operation, being
about one-eighth of the whole. We have all seen
superfluous equipment, whole roads paralleled;
and even if there were not an item of duplica-
tion, is it not conceivable that with a complete
understanding of the problems by people, by
government and by managers, railroads might
secure money at 4 per cent instead of 6 per
cent, thus reducing equipment interest charges
$280,000,000* a year? By the test of the cost
formula we can at least analyze every item of
expense, determine standards and efficiencies,
and strive for waste elimination. The cost
formula is one of the instruments wherewith
wastes can be detected and measured ; but even
as Kepler proved by measurement that all
planets moved in elliptical orbits, so does the
proper measurement of costs show where the
savings, if made, must necessarily go.

The savage destroys, the barbarian squan-
ders, but the civilized man conserves. QP
therefore measures civilization, TW measures
civilization, and T'R measures civilization.
There is scarcely a conceivable limit to
quality, but quantity, natural resources, are
limited; there is scarcely a conceivable limit

* This item was not included in the recent estimate of a pre-
ventable railway operating loss of $1,000,000 a day.

to human skill; but each individual's span of
time is inexorably limited. Friction and clum-
siness, duplication and waste, can be eliminated
from equipment; but each machine's life is
limited. As to material, shall we use radium
or shall we use sulphur; as to equipment, shall
we use the old round blunderbuss bullet or shall
we use the slim modern pointed bullet which
travels twice as fast, goes four times as far,
and weighs half as much ; as to equipment, shall
we use subways built with 4 per cent money
advanced by the city, or shall we travel on slow
surface cars drawn by horses and earning 10
per cent? As to equipment, shall we use the
king's couriers on the king's highway or shall
we use the telephone over a 1,000-mile gap?
Shall the workers idle the long days through
and be content with yams and a gee string?

Civilization is high when QP is low; civil-
ization is high in which T'R is low; but
reductions in QP, reduction in T'R must be
balanced by increases in TW. Records, the
instruments by which these relations are dis-
covered and determined, are not dry and mo-
notonous ; they are an inspiration and a guide.

This is the final problem : —

Shall ultimately more of us work less time
each, W remaining low, or shall we all work a
reasonable time and greatly increase W? Hav-
ing increased our command over materials, over
equipment, what shall we do with the gain? I
once heard an eloquent labor-union leader ex-
pound his creed : "Eight hours for work, eight
hours for play ; eight hours for sleep, and eight
dollars a day." Eight hours for sleep— yes;
eight hours for work — why not more or less as
we find pleasure and delight or aversion and
pain in it? A dollar an hour! Why not what
we are entitled to through elimination of ma-
terial and equipment wastes ? Eight hours for
play? There are moments in a man's existence
that count more than monotonous months —
the moment when Charles the Hammer learned
that the Saracens were in rout; the moment
when Columbus learned that land was lifting
to westward; the moment when Lister con-
ceived of asepsis, when Pasteur conceived the
germ theory. Many of the minutes of the eight
hours for play can be expanded into moments
worth while, through the conquest of matter
and of time.

Gebraucht der Zeit, sie geht so schnell von hinnen.
Doch Ordnung lehrt Euch Zeit gewinnen!


Commentary by KVSSNRao

A fairly lengthy chapter