Industrial Engineering Data and Measurements

Lesson 12 of   Industrial Engineering ONLINE Course   - Introduction to Industrial Engineering Module

Lesson 11. Industrial Engineering Economic Analysis

Lesson 13. Value Creation for the Organization by Industrial Engineers - Productivity Engineering Potential

Relevant Principles of Industrial Engineering

Productivity measurement - Principle of Industrial Engineering

To maintain system level focus, productivity measures at system level have to be developed and used. The relation between productivity measures at the enterprise level, process level, and work station level have to be established to facilitate decision making.

Work measurement - Principle of Industrial Engineering

To determine the best combination of motion elements, measurements of the time required to do each motion as well as bundles of motion are needed. Work measurement is an important measure in industrial engineering to select the best work method for machine elements, purely manual work elements or a combination of man-machine work elements. It is useful to set day’s task for an operator. Task-based incentives can be set based on the standard time which is an output of work measurement.

Cost Measurement - Principle of Industrial Engineering

Productivity improvement has to lead to decreased cost at the unit level for products. The ultimate proof of productivity improvement is the reduced unit cost reflected in the reported unit cost of products. As cost accounting is a well-developed independent area now with statutory bodies in many countries, industrial engineers have to work in cooperation with them to get the representative cost figures that are reliable for decision making.

Industrial Engineering Data and Measurements

Industrial engineering is engineering done in response to data generated as engineering products are produced or as engineering processes are used in the organizations. The important data used in industrial engineering are costs, human factor related data, time taken for completing machine tasks, manual tasks and man-machine tasks, productivity related data, defects related data and resource related data.

Cost data is the earliest focus for industrial engineers. Henry Towne and F.W. Taylor first focused on cost data based industrial engineering. Then, the importance of task completion times was pointed out by Halsey and Taylor came out with time study to find the time taken by manual tasks. Taylor also pointed out to the need to calculated machine task completion times by formulas. Tayor and Gilbreth focused on fatigue and its measurement. The definition of productivity emerged and productivity measurement started. Both Taylor,  who advocated redesign or tasks, methods and processes and Miles who advocate redesign of products strongly emphasized the objective of maintaining the quality of the system, product or process while redesigning for cost reduction. Thus industrial engineers have to make defect or quality measurement before and after redesign and make sure that quality deterioration does not take place in any dimension.

Thus number of IE measurements have to be made by industrial engineers to do industrial engineering and present persuasive redesign projects to management for implementation.

Cost Measurement and Analysis-A Necessary Part of Industrial Engineering Education & Training

Balbinder S. Deo and Doug Strong
Balbinder S. Deo, Assistant Professor, Department of Finance & Management Science,
College of Commerce, University of Saskatchewan, 25 Campus Drive, Saskatoon, SK,
Canada S7N 5A7.
Doug Strong, Professor in the Department of Industrial Engineering, University of Manitoba,
Winnipeg, Manitoba, Canada R3T 5V6.

Some Important Points made in the paper.

One of the basic duties of Industrial Engineering professionals is to make improvements in operations, and systems of operations, to reduce the cost of operations.

Two assumptions play a major role in promoting the use of physical measures of productivity.


1. There exists an inverse relationship between physical measures of productivity and cost.
2. Increasing the physical productivity of resources used in production operations can reduce the cost of production of a manufactured product or service.

These relationships may hold true provided reduction in the physical quantity of one resource in one operation does not increase the consumption of other resources in the same operation and / or in other operations of the production system. Gain in the physical productivity of one resource may cause loss in others. For example, increase in the productivity of labor by employing high production capacity machines may cause loss in the productivity of machinery employed or vice versa. In a similar fashion, within a production system, gain in physical productivity measure of one functional area may cause loss in productivity of other related functional areas.

Improvement in productivity at the firm level, not just at the functional level, can be helpful in reducing the cost of production.

The measurement activity done by cost accounting accounts for material, labor and expenses. To do this all resources used by the organization are recorded for the purchase, use and salvage disposal if any. Thus resources are measured as part of cost measured. Defects and defectives produced are also recorded in cost accounting records based on shop production data.

Cost Measurement in Engineering Profession - An Historical Perspective

Increasing sales and reducing cost of production by productive use of resources in operations can achieve increase in profit. The use of cost as a measure of productivity is not new among engineering professionals. Literature describing the history of engineering provides significant evidence of its use and promotion among engineers by the pioneers of the profession.

Henry C. Metcalf (1885), as a superintendent of ordnance depots,  realized the importance of cost measurement and analysis in manufacturing.   He proposed to measure costs to the minutest detail possible within the organization to measure the efficiency of manufacturing and administration operations and also to create plan of cost of operations by knowing the detailed elements of cost involved for each operation performed on a product during manufacturing process. He published his thoughts in a book titled “The Cost of Manufactures and the administration of Workshops, Public and Private” in 1885, for providing guidance to other engineering professionals in the field.

Henry Towne (1886), another engineering professional, wrote a paper titled ‘Engineer as an Economist’ for one of the meetings of The American Society of Mechanical Engineers. According to him, determination of cost was one of the important duties of an engineer. To achieve this end he proposed the establishment of a separate shop accounting section at each workshop level to collect cost related information to meet the cost information needs of engineering professionals.

Hugo Diemer (1910), is the first faculty member  of Industrial Engineering subject at Pennsylvania State College, quoted F.W. Taylor's  appeal to engineering professionals to take up the responsibility of cost related data collection and analysis as part of profession.

Charles Buxton Going  published a book titled, "Principles of Industrial Engineering" in 1911. He called industrial engineering, “New branch of engineering grown out of the rise of, and enormous expansion of the manufacturing system.” This branch of engineering, according to him, “Has drawn upon mechanical engineering, economics, sociology, psychology, philosophy and accountancy to form a distinct body of science of its own”. In this definition of industrial engineering, inclusion of the subjects of economics and accountancy testify to the fact that the cost measurement and analysis was regarded as part of industrial engineering theory and practice at that time.

Howell, in his presentation at the 1995 International Industrial Engineering Conference, advised industrial engineers to reclaim their traditional industrial engineering responsibilities, such as, measurements of labor costs, manufacturing methods, and productivity improvement, along with other responsibilities so that their demand in industry, job title and functional identity remains intact. According to him, cost estimation should be one of the areas for which an industrial engineer should also be responsible and accountable.

Recent Developments

Recent studies by Barnes (1991), Dhavale (1992), and Eaglesham (1998), found in the Industrial Engineering literature on Activity Based Costing technique, broadly point out that some industrial engineers take interest in cost measurement.

Lenz and Neitzel (1995)  developed their own methodology to develop a cost simulation model. In this model, they have used a cost equation that consists of eight components, such as station cost; labor cost; overhead cost; inventory cost; automation cost; capacity cost; material cost; and indirect cost. In this type of modeling, they claimed, all performance measures can be translated into costs by applying cost equations to the results of factory model.

Deo (2001)14 developed an Operation Based Costing model to measure cost of each resource in each operation, and the cost of each operation in a production system. In this model, an operation is considered as the basic unit of production system. The structure of the model matches the typical structure of an operation.

It is observed by the authors  that cost measurement and analysis is slowly becoming one of the basic requirements for various job openings related to industrial and manufacturing engineering area.  Education and training of industrial engineers in cost measurement and analysis, can give them an extra advantage in raising productivity and reducing cost in industrial organizations. Industrial engineering schools and departments need to introduce the subject as a necessary part of industrial engineering education and training for future generation of industrial engineers.

Work Measurement

F.W. Taylor focused on reduction of machine time and operator times as the foundation for productivity improvement. So the machine time and operator time have to be measured and the rationale behind the time taken has to be understood. Science needs to be developed to hypothesize and validate input variables and time required to complete various elements of operations and processes. Then inputs can be modified using engineering alternatives and time can be reduced. Taylor gave the name of "Time Study" to this process of measuring time, understanding the time taken to do a task and reducing the time by redesigning the process, operations and elements.

Hence in industrial engineering, to improve performance and productivity, time taken to complete tasks and elements are measured. Time taken by men for manual elements, time taken by machines for machine elements and time taken by robots etc. are measured in work measurement either by direct observation or standard data or predetermined standard data which is more universal. Time taken by machine elements are determined by formulae determined for various machines and processes.

Illustration: Milling - Estimation of Machining Time

Productivity Measurement

Productivity in simple terms is production quantity for unit of each resource utilized. These simple measures are called partial productivity measures.  Productivity can be measured for unit input of  various combinations of resources by defining unit of inputs appropriately. For output from a specific machine can be measured. Output of manpower of a section can be measured.  Productivity is also defined by unit of total resources. In this case, all outputs and inputs are expressed in money terms.

As an example, output of a machine tool can be calculated and whether it is improving or not over time can be assessed. Productivity improvement occurs if the output of the machine tool per unit time is increasing over time. The output can be expressed as output of parts or as revenue earned or material removed or as cost of production. The decision of the output is based on the appropriateness to the situation in the organization.

Waste Measurement

Waste elimination is the objective of industrial engineering. The paper "Scientific Management" by Taylor is focused on eliminating waste of human effort in unnecessary and inefficient motions, movements and activities of men.

It is Taiichi Ohno, we brought the waste measurement into more focus with his 7 waste model.

In the TPM model, six big losses and as a further breakup 16 losses were indicated. Now measuring these wastes with respect to standards and eliminating these wastes apart from improving the standard themselves has become a significant pursuit. Hence waste measurement is now an important IE Measurement activity.

Lesson 11. Industrial Engineering Economic Analysis

Lesson 13. Value Creation for the Organization by Industrial Engineers - Productivity Engineering Potential

Updated on 29 May 2020,  26 May 2020,  4 June 2019, 28 May 2019