Industrial Engineering is Human Effort Engineering and System Efficiency Engineering - Narayana Rao
Cost based engineering redesign is part of system efficiency engineering and is advocated by economists to get maximum utility from available resources. Factor prices and prices of goods and services are to be taken into account to design products and processes. Industrial engineering has taken up this responsibility in the engineering disciplines.
Engineering of cost of engineering activities is the core job of industrial engineering. Total cost industrial engineering is an augmented activity.
Engineering of cost of engineering activities is the core job of industrial engineering. Total cost industrial engineering is an augmented activity.
Industrial engineering came out of Henry Towne's ideas expressed in 1886 in ASME meeting. Engineers' involvement in cost accounting and use of cost information for decision making precedes this meeting and presentation. But the advocacy for including shop accounting and efforts to reduce cost of production as part of engineers' duties and education were made in 1886.
1886 - ASME - Henry Towne - Shop Management and Works Management - Shop Accounting
American Society of Mechanical Engineers (ASME) made the beginning in the field of works management and shop management.
Henry Towne, in a paper presented to the society (ASME) in 1886 observed that the work of all engineers, especially that of the mechanical engineers, includes the executive duties of organizing and superintending the operations of industrial establishments, and of directing the labor of the artisans whose organized efforts yield the fruition of his work.
To insure the best results, the organization of productive labor must be directed and controlled by persons having not only good executive ability, and possessing the practical familiarity of a mechanic or engineer with the goods produced and the processes employed, but having also, and equally, a practical knowledge of how to observe, record, analyze and compare essential facts in relation to wages, supplies, expense accounts, and all else that enters into or affects the economy of production and the cost of the product.
It will probably not be disputed that the matter of shop management is of equal importance with that of engineering, as affecting the successful conduct of most, if not all, of our great industrial establishments, and that the management of works has become a matter of such great and far-reaching importance as perhaps to justify its classification also as one of the modern arts. A vast amount of accumulated experience in the art of workshop management already exists, but there is no record of it available to the world in general. Surely this condition of things is wrong and should be remedied. The remedy should originate from engineers, and, for the reasons above indicated, particularly from mechanical engineers. So, Towne put forward the question, "why should it not originate from, and be promoted by The American Society of Mechanical Engineers?"
The discussion and the dissemination of useful knowledge in this specialty, group themselves under two principal heads, namely: Shop Management, and Shop Accounting. A third head may be named which is sub-ordinate to, and partly included in each of these, namely: Shop Forms and Blanks. Under the head of Shop Management fall the questions of organization, responsibility, reports, systems of contract and piece work, and all that relates to the executive management of works, mills and factories. Under the head of Shop Accounting fall the questions of time and wages systems, determination of costs, whether by piece or day-work, the distribution of the various expense accounts, the ascertainment of profits, methods of book-keeping, and all that enters into the system of accounts which relates to the manufacturing departments of a business, and to the determination and record of its results.
This work, if undertaken by the society, may be kept separate and distinct from the present work of the society (engineering work) by organizing a new "section" (which might be designated the " Economic Section'').
In the case of shop information of a manufacturing establishment, there is now in use, in connection with the manufacturing accounts and exclusive of the ordinary commercial accounts, some twenty various forms of special record and account books, and more than one hundred printed forms and blanks. .The primary object to which all of these contribute is the systematic recording of the operations of the different departments of the works, and the computation therefrom of such statistical information as is essential to the efficient management of the business, and especially to increased economy of production. All of these special books and forms have been the outgrowth of experience extending over many years, and represent a large amount of thoughtful planning and intelligent effort at constant development and improvement. The methods in use presently, would undoubtedly be of great value to others engaged in similar operations, and particularly to persons engaged in organizing and starting new enterprises. The society can provide a platform for explaining the present practices and many would come forward to engage in such a dialogue to benefit from the idea generated in the discussions.
Costs of products were reduced by many companies without encroaching upon the earnings of the men engaged and the results we know are quite striking.
A portion of the cost reductions indicated resulted from improved appliances, larger product, and increased experience, but after making due allowance for all of these, there remains a large portion of the reduction which, to the writer's knowledge, is fairly attributable to the operations of the peculiar piece-work system adopted. Henry Towne, promised to present the details and operations of this system followed in his company in the proceedings of the new section of the society, in due time. He expressed the hope that other, and probably much more valuable, information and experience relating to systems of contract and piece-work would doubtless be contributed by other members.
For the full paper of Towne
The Engineer as an Economist- Henry Towne
Henry Towne presented his ideas on involving labor in cost reduction work of the production organization in the paper "Gain Sharing" presented in 1889. This paper advocated bonus to all the employees based on the reduction achieved in the cost of production relative to a base year. Halsey in 1891 presented a paper and argued for production time as the basis for paying bonus to the individual workers. F.W. Taylor presented a more comprehensive system in 1895. It is very important to note that Taylor, proposed that organization of "Elementary Rate Fixing Department" as the fundamental step to achieve cost reductions. To implement the changes proposed by the rate fixing departments, differential piece rate system has to be introduced. "Elementary Rate Fixing Department" is the first appearance of industrial engineering department.
This work, if undertaken by the society, may be kept separate and distinct from the present work of the society (engineering work) by organizing a new "section" (which might be designated the " Economic Section'').
In the case of shop information of a manufacturing establishment, there is now in use, in connection with the manufacturing accounts and exclusive of the ordinary commercial accounts, some twenty various forms of special record and account books, and more than one hundred printed forms and blanks. .The primary object to which all of these contribute is the systematic recording of the operations of the different departments of the works, and the computation therefrom of such statistical information as is essential to the efficient management of the business, and especially to increased economy of production. All of these special books and forms have been the outgrowth of experience extending over many years, and represent a large amount of thoughtful planning and intelligent effort at constant development and improvement. The methods in use presently, would undoubtedly be of great value to others engaged in similar operations, and particularly to persons engaged in organizing and starting new enterprises. The society can provide a platform for explaining the present practices and many would come forward to engage in such a dialogue to benefit from the idea generated in the discussions.
Costs of products were reduced by many companies without encroaching upon the earnings of the men engaged and the results we know are quite striking.
A portion of the cost reductions indicated resulted from improved appliances, larger product, and increased experience, but after making due allowance for all of these, there remains a large portion of the reduction which, to the writer's knowledge, is fairly attributable to the operations of the peculiar piece-work system adopted. Henry Towne, promised to present the details and operations of this system followed in his company in the proceedings of the new section of the society, in due time. He expressed the hope that other, and probably much more valuable, information and experience relating to systems of contract and piece-work would doubtless be contributed by other members.
For the full paper of Towne
The Engineer as an Economist- Henry Towne
Gain Sharing, Piecework and Day Work Systems
Henry Towne presented his ideas on involving labor in cost reduction work of the production organization in the paper "Gain Sharing" presented in 1889. This paper advocated bonus to all the employees based on the reduction achieved in the cost of production relative to a base year. Halsey in 1891 presented a paper and argued for production time as the basis for paying bonus to the individual workers. F.W. Taylor presented a more comprehensive system in 1895. It is very important to note that Taylor, proposed that organization of "Elementary Rate Fixing Department" as the fundamental step to achieve cost reductions. To implement the changes proposed by the rate fixing departments, differential piece rate system has to be introduced. "Elementary Rate Fixing Department" is the first appearance of industrial engineering department.
Elementary Rate Fixing Department (1895 - Taylor)
Taylor started this department of section in his company and its successful record was presented to the ASME in 1895. This department has to study the productive capabilities machines and men in a scientific manner and establish the speeds at which machines can work and men can work and based on the speed information has to decide the time required for completing various jobs or tasks. Such scientific information has to be used to set piece rates. This department must have status equal to the engineering department of the organization. So Taylor organized the first industrial engineering department that is parallel to the engineering department of the company and is focused on the study of machines and men and in actual working on specific jobs and in designing best methods of working that reduce cost of production.
Taylor started this department of section in his company and its successful record was presented to the ASME in 1895. This department has to study the productive capabilities machines and men in a scientific manner and establish the speeds at which machines can work and men can work and based on the speed information has to decide the time required for completing various jobs or tasks. Such scientific information has to be used to set piece rates. This department must have status equal to the engineering department of the organization. So Taylor organized the first industrial engineering department that is parallel to the engineering department of the company and is focused on the study of machines and men and in actual working on specific jobs and in designing best methods of working that reduce cost of production.
Shop Management (1905 - Taylor)
Taylor responded to the call by Towne to described innovations in the field of management done by engineers who had done managerial work as part of engineer's functions. He contributed a paper on redesign of belts based on cost data (1893) and another paper on increasing productivity and reducing costs by organizing elementary rate fixing department and installing differential piece rate system.
In 1895, he presented a book length paper on shop management. He described many practices that will contribute to productivity improvement and effectiveness improvement. He also indicated the innovations of many others in the field of shop management. Taylor also contributed to discussions on shop accounting and its contribution to improving productivity.
In the paper "Shop Management", Taylor wrote, "The art of management has been defined, "as knowing exactly what you want men to do, and then seeing that they do it in the best and cheapest way."" No concise definition can fully describe an art, but the relations between employers and men form without question the most important part of this art. In considering the subject, therefore, until this part of the problem has been fully discussed, the other phases of the art may be left in the background. Once again, we have to carefully note this sentence. Taylor said, the many other items are left in the background and issues related to managing men are highlighted.
In 1895, he presented a book length paper on shop management. He described many practices that will contribute to productivity improvement and effectiveness improvement. He also indicated the innovations of many others in the field of shop management. Taylor also contributed to discussions on shop accounting and its contribution to improving productivity.
In the paper "Shop Management", Taylor wrote, "The art of management has been defined, "as knowing exactly what you want men to do, and then seeing that they do it in the best and cheapest way."" No concise definition can fully describe an art, but the relations between employers and men form without question the most important part of this art. In considering the subject, therefore, until this part of the problem has been fully discussed, the other phases of the art may be left in the background. Once again, we have to carefully note this sentence. Taylor said, the many other items are left in the background and issues related to managing men are highlighted.
Productivity is to be measured in cost terms.
Deo, Balbinder S; Strong, Doug brought the issue into prominence through an article in 2002.
Cost Measurement and Analysis-A Necessary Part of Industrial Engineering Education & Training
Author Deo, Balbinder S; Strong, Doug
IIE Annual Conference. Proceedings, 2002
Deo, Balbinder S.,(2001) 'Operation Based Costing Model for Measuring Productivity in Production Systems', PHD Thesis Submitted to The University of Manitoba (Canada), ProQuest Digital Dissertations, AAT NQ57506.
Learn or Revise Cost Accounting through these articles
Role of Costing and Cost Accounting in the Organizations
Introduction to Cost Terms - Review Notes
Traditional Cost Objectives and Their Utility
Job Costing - Review Notes
Activity-Based Costing and Activity-Based Budgeting
Process Costing - Review Notes
Learn or Revise Cost Accounting through these articles
Cost Accounting
23 to 26 April 2016Role of Costing and Cost Accounting in the Organizations
Introduction to Cost Terms - Review Notes
Traditional Cost Objectives and Their Utility
Job Costing - Review Notes
Activity-Based Costing and Activity-Based Budgeting
Process Costing - Review Notes
Cost of Sales Account Analysis
First Week 1 May to 5 May
Cost Information for Pricing Decisions
Cost Behavior Analysis and Relevant Costs
Costing for Strategic Profitability Analysis
Cost Information for Customer Profitability Analysis
Costing for Spoilage, Rework and Scrap
Costing for Quality, Time and the Theory of Constraints
Costing for Inventory Management, JIT and Backflush
Cost Information and Analysis for Capital Budgeting
Cost Information for Management Control and Performance Control
Cost Information for Transfer Pricing
First Week 1 May to 5 May
Cost Information for Pricing Decisions
Cost Behavior Analysis and Relevant Costs
Costing for Strategic Profitability Analysis
Cost Information for Customer Profitability Analysis
Costing for Spoilage, Rework and Scrap
Costing for Quality, Time and the Theory of Constraints
Costing for Inventory Management, JIT and Backflush
Cost Information and Analysis for Capital Budgeting
Cost Information for Management Control and Performance Control
Cost Information for Transfer Pricing
What is Industrial Engineering in practice?
It is the study of resource use to develop planning and control methods and data. Resource use is accounted for in units of resource as well as in money values. The money value of a resource is termed as cost or expense. Planning of resource use is also done in terms of units of resource and money terms. The objective of industrial engineering is resource use efficiency or elimination of waste of resources.
AACE, the Association for the Advancement of Cost Engineering, stated, "Most people would agree that ‘engineers’ and engineering — or, more generally, the ‘application of scientific principles and techniques’ — are most often responsible for creating functional things or strategic assets … "
Cost engineering profession advocates that an engineering professional must determine the activities needed to design and build a product, as well as estimate how long these activities will take and estimate the potential cost.
http://www.iienet2.org/details.aspx?id=21620
Industrial engineers have to justify their system improvement recommending through engineering economic analysis. As majority of the industrial engineering proposals are cost reduction projects, industrial engineers have to estimate costs using the existing method, costs using the proposed method and then calculate the summary profitability measures like NPV or IRR.
"Total cost industrial engineering is a framework that helps industrial engineers to visualize the total enterprise cost in terms of individual resources, various processes or methods, various systems and products which they analyse to eliminate waste or improve efficiency and drive total cost reduction, waste elimination and improve efficiency."
(The framework can be developed similar to the thesis Towards a conceptual framework for strategic cost management - The concept, objectives, and instruments
http://www.qucosa.de/fileadmin/data/qucosa/documents/5228/data/Title_250706.pdf)
Value chain analysis proposed by Michael Porter in the context of strategic analysis for differentiation and cost advantage can be the starting point of developing the model for visualizing the total enterprise cost in terms of segments meaningful for IE activity.
Value Chain Analysis - A Base for Total Cost Industrial EngineeringI proposed the concept of process cost industrial engineering on 26 February 2022. Process in industrial engineering refers to the process of producing a part, a subassembly or a full product. So a major portion of total cost will be the cumulative costs of various processes in the enterprise.
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Ideas to be included
Product ideas, product designs,production process plans, layout plans, inspection plans, maintenance plans etc. are part of the planning process. Industrial engineers' main responsibility is to take care of these engineering activities and their management. In this context an interesting paper to be read is
ROLE OF STRATEGIC PLANNING IN ENGINEERING MANAGEMENT, Kumar Krishen, Ph.D.
NASA Johnson Space Center, Houston, Texas 77058
http://ntrs.nasa.gov/archive/nasa/casi.ntrs.nasa.gov/19960023932_1996053021.pdf
In the abstract of the paper, this interesting statement is made.
The traditional roles of an engineer to design, develop, and streamline (a product and its) a manufacturing process for a product are still valued and relevant. However, the need for an engineer to participate in the process of identifying the product to be developed, the schedule and resources required, and the goal of satisfying the customer, has become paramount to achieving the success of the enterprise. When we include these endeavors in the functions of an engineer, management of “engineering” takes on a new dimension. In this paper, the ramifications of the changing and increased functions. of an engineer and consequent impacts on engineering management are explored.
System cost industrial engineering
Supply chain system cost industrial engineering
Manufacturing system cost industrial engineering
Information system cost industrial engineering
Quality system cost industrial engineering
Maintenance system cost industrial engineering
Accounting system cost industrial engineering
Accounting for industrial engineering decisions
Cost estimating for engineering economic analysis of method studies, value engineering studies, operation research models, human effort engineering studies
Standard Costing
Standard cost of the product - break up in terms of processes and methods evaluated or to be evaluated by IE department - break up in terms of components to be examined by value engineering methodology.
IE departments have to visualize the total cost of the enterprise in terms of subsystems, processes and methods they improve, select the ones they would like to study and improve and declare the benefits they envisage in the new methods. Thus each IE productivity improvement project has to contribute to the reduction of a planned cost of a period. This sort of visually mapping of the benefit of IE projects would make the contribution of IEs to organizations very clear and also will push the industrial engineering to put in right efforts.
Cost Elements - Total Cost
We can identify more elements now to account for the total cost of a manufacturing plant.
Materials: Direct and Indirect
Labor: Direct in the manufacturing processes, Indirect in the manufacturing support.
Machines: Processing, Inspection, Material handling, data processing (computers and network)
Energy
Information
Indirect Expenses
Total Cost - Sum of the Cost of Various Product Processes (Process Charts)
The total cost of the manufacturing plant has to be visualized as the sum of the costs of processes used in the organization. Production of each product follows a process and within that production of each part has a process chart. The process chart visualization also facilitates evaluation of the work of industrial engineering in the organization. IEs also get data on cost of the processes for which they are responsible for cost reduction through productivity improvement of material inputs, machine effort, human effort, energy and information.
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1
Cost Measurement and Analysis-A Necessary Part of Industrial Engineering Education & Training
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2002): 1-5.
2
Communicating cost and performance
Ding, Youmin; Strong, Doug; Deo, Balbinder. Industrial Management51. 4 (Jul/Aug 2009): 22-23,25,5.
3
Cost: The ultimate measure of productivity
Deo, Balbinder S; Strong, Doug. Industrial Management42. 3 (May/Jun 2000): 20-23.
4
Operation Based Cost Measurement Model
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2002): 1-7.
5
MODIFIED MULTIFACTOR PRODUCTIVITY APPROACH TO MEASURE PRODUCTIVITY OF OPERATIONS
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2004): 1-7.
6
COSTING PRODUCTION SCENARIOS - A SIMULATION MODELING APPROACH
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2004): 1-6.
Citation/AbstractFull textFull text - PDF (72 KB)
7
AN EVALUATION MODEL FOR A SYSTEM DESIGN - AN ECOLOGICAL PERSPECTIVE
Deo, Balbinder S. IIE Annual Conference. Proceedings (2007): 1034-1040.
8
Comparative Outcome Of Productivity Measures- A Case Study
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2003): 1-6.
9.
Fixing the Problem of Subjectivity in the Concept of 'Activity' in Activity Based Costing (ABC) - An Engineering Perspective
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2003): 1-7.
10. Developing Generic 'Cost Based MIS Modules' for Process Oriented System
Deo, Balbinder S; Sra, Jaspreet, MSc. IIE Annual Conference. Proceedings (2012): 1-11.
Total Cost Industrial Engineering - Bibliography
http://www.aacei.org/educ/cert/cct/cct_primer.pdf
Papers Published by Industrial Engineering Professors in Costing Area
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Marshall Spencer
Industrial Engineer at Johnson Controls
Huntsville, Alabama Area
(In linkedin discussions) -
http://www.linkedin.com/groupItem?view=&gid=75670&type=member&item=96855630
In my experience, developing the framework for "total cost engineering" is well worth the investment in resources if they are available (which is mostly the time required by the IE to champion it), and if the results will be utilized as reportable measureables by management. But a lot of cost-engineering information can "fall through the cracks" or be ignored by controllers simply because there may be no place for it in the ledger format used by traditional cost accounting.
There is usually a large rift between "cost" from an engineering perspective and "cost" as viewed by financial professionals. Therein lies the challenge.
An innovative IE can "translate" much of the engineering-cost data into something that a controller can use. But the controller must be willing to accept it.
By becoming proficient in understanding the "language" of financial people, the IE working in cost engineering will have an advantage and may find controllers more willing to accept cost-engineering information and put it into their measurables.
In college I completed a very good course in engineering economics of which there was no equivalent in the business curriculum at that school. It was not the same approach to accounting as taught in the accounting classes. I would like to see undergraduate IE curriculums try to bridge that gap. It has the potential to enable IE's and controllers to develop an alliance and work more effectively toward a common goal.
My reply to the comment
You said "In college I completed a very good course in engineering economics"
My thinking also stems from that foundation only. Every industrial engineering recommendation has to be profitable in the engineering economic analysis. If IEs recommend many cost reduction projects, EE analysis requires the cost of existing method and the costs of proposed method. To do EE analysis, IEs require cost data. So cost related industrial engineering analysis has to provide this data to IEs. Shall we call it "Cost industrial engineering" or simply as "Cost engineering". Cost industrial engineering focuses the attention of IEs on pulling data from various existing sources in the company and then manipulating the data to come out with information useful to aid IEs in the work. Total cost industrial engineering does the same thing at enterprise level.
I am happy with your support to the idea.
"In my experience, developing the framework for "total cost engineering" is well worth the investment in resources if they are available (which is mostly the time required by the IE to champion it), and if the results will be utilized as reportable measureables by management."
Details emerge slowly as some IEs think over the issue. If we bring an issue into the open and point out that there is scope, the beginning would be made. I have an advantage in the area to make some speculation, as my research work after PG in IE is in the area of stock markets and then I spent five years in conducting training programs in the modern developments in cost accounting and cost management. Now I am involved in developing and teaching "Introduction to industrial engineering" and "Strategic perspectives of industrial engineering"
I connected engineering economic analysis and cost analysis in my first few paragraphs of my note on TCIE. You also referred to the same background. That is a good coincidence. Thank you for the synergy.
http://www.nraoiekc.blogspot.com/2012/09/total-cost-industrial-engineering.html
Let me see, when can I develop some more detailed version on the topic.
Comment by D. Rajasekhar (23.9.2012)
Dear Narayana Rao,
I would like you to reflect on some of my views on Total cost industrial engineering.
I have read the contents in detail.
How is it different from Lean management ? Request your views.
With all my experience of 33 years in Mfg industry I would like to say cost focus without time element as an integral part is meaningless.
Very often many executives put emphasis on cost.
I have seen many Development Projects in my career did not deliver results due to step motherly treatment given to time over cost.
I have myself experienced Projects resulting in grand success by doing in time even with cost overrun.
In industry COQ ( cost of quality) often goes out of estimates due to poor management of time also.
That is why I always advocate my engineers TIME, QUALITY, COST and RISK.
My reply
In this concept of Total Cost Industrial Engineering, we may not be referring analytically to project cost. As you know, whenever any scientific relation is proposed, the concepts involved are specially defined.
This idea is an offshoot of an idea that the productivity improvement is to be expressed in cost. Productivity improvement is reduction in use of resources, and if at all it occurs, cost has to reduce. So we are having a map of total cost of the organization at a point in time, in terms of industrial engineering segment view of the enterprise and we want to see the contribution of industrial engineering as reduction of cost in some of the segments. It is to plan and do industrial engineering and show its contribution.
Cost, Quality, Time, Flexibility, Risk, Delivery are all important and industrial engineering may not cover all of them. Certainly time was a focus of industrial engineering and even now it is. This refers more to the operation times. We are not talking of trade offs between these dimensions which is an important managerial problem in operations management. The issue raised by you regarding time and cost of a project is a trade off problem and only a manager on the spot can understand the trade off involved. Your view is to be respected by us. But improvement in each dimension or relative improvement among dimensions is possible over time with effort.
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First published on 21.9.2012
Updated subsequently many times
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Total Cost Industrial Engineering - Research Papers
Total Cost Industrial Engineering - Research Papers
1. Cost: The ultimate measure of productivity
Deo, Balbinder S; Strong, Doug. Industrial Management42. 3 (May/Jun 2000): 20-23.
2. Cost Measurement and Analysis-A Necessary Part of Industrial Engineering Education & Training
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2002): 1-5.
3. Operation Based Cost Measurement Model
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2002): 1-7.
4. Comparative Outcome Of Productivity Measures- A Case Study
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2003): 1-6.
5. Fixing the Problem of Subjectivity in the Concept of 'Activity' in Activity Based Costing (ABC) - An Engineering Perspective
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2003): 1-7.
6. MODIFIED MULTIFACTOR PRODUCTIVITY APPROACH TO MEASURE PRODUCTIVITY OF OPERATIONS
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2004): 1-7.
7. COSTING PRODUCTION SCENARIOS - A SIMULATION MODELING APPROACH
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2004): 1-6.
8. AN EVALUATION MODEL FOR A SYSTEM DESIGN - AN ECOLOGICAL PERSPECTIVE
Deo, Balbinder S. IIE Annual Conference. Proceedings (2007): 1034-1040.
9. Communicating cost and performance
Ding, Youmin; Strong, Doug; Deo, Balbinder. Industrial Management51. 4 (Jul/Aug 2009): 22-23,25,5.
10. Developing Generic 'Cost Based MIS Modules' for Process Oriented System
Deo, Balbinder S; Sra, Jaspreet, MSc. IIE Annual Conference. Proceedings (2012): 1-11.
------------------------------------------------------------------------------------
1
Cost Measurement and Analysis-A Necessary Part of Industrial Engineering Education & Training
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2002): 1-5.
2
Communicating cost and performance
Ding, Youmin; Strong, Doug; Deo, Balbinder. Industrial Management51. 4 (Jul/Aug 2009): 22-23,25,5.
3
Cost: The ultimate measure of productivity
Deo, Balbinder S; Strong, Doug. Industrial Management42. 3 (May/Jun 2000): 20-23.
4
Operation Based Cost Measurement Model
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2002): 1-7.
5
MODIFIED MULTIFACTOR PRODUCTIVITY APPROACH TO MEASURE PRODUCTIVITY OF OPERATIONS
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2004): 1-7.
6
COSTING PRODUCTION SCENARIOS - A SIMULATION MODELING APPROACH
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2004): 1-6.
Citation/AbstractFull textFull text - PDF (72 KB)
7
AN EVALUATION MODEL FOR A SYSTEM DESIGN - AN ECOLOGICAL PERSPECTIVE
Deo, Balbinder S. IIE Annual Conference. Proceedings (2007): 1034-1040.
8
Comparative Outcome Of Productivity Measures- A Case Study
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2003): 1-6.
9.
Fixing the Problem of Subjectivity in the Concept of 'Activity' in Activity Based Costing (ABC) - An Engineering Perspective
Deo, Balbinder S; Strong, Doug. IIE Annual Conference. Proceedings (2003): 1-7.
10. Developing Generic 'Cost Based MIS Modules' for Process Oriented System
Deo, Balbinder S; Sra, Jaspreet, MSc. IIE Annual Conference. Proceedings (2012): 1-11.
Bibliography - Total Cost Industrial Engineering
Total Cost Industrial Engineering - Bibliography
http://www.aacei.org/educ/cert/cct/cct_primer.pdf
Papers Published by Industrial Engineering Professors in Costing Area
______________________
Comments on the idea
Marshall Spencer
Industrial Engineer at Johnson Controls
Huntsville, Alabama Area
(In linkedin discussions) -
http://www.linkedin.com/groupItem?view=&gid=75670&type=member&item=96855630
In my experience, developing the framework for "total cost engineering" is well worth the investment in resources if they are available (which is mostly the time required by the IE to champion it), and if the results will be utilized as reportable measureables by management. But a lot of cost-engineering information can "fall through the cracks" or be ignored by controllers simply because there may be no place for it in the ledger format used by traditional cost accounting.
There is usually a large rift between "cost" from an engineering perspective and "cost" as viewed by financial professionals. Therein lies the challenge.
An innovative IE can "translate" much of the engineering-cost data into something that a controller can use. But the controller must be willing to accept it.
By becoming proficient in understanding the "language" of financial people, the IE working in cost engineering will have an advantage and may find controllers more willing to accept cost-engineering information and put it into their measurables.
In college I completed a very good course in engineering economics of which there was no equivalent in the business curriculum at that school. It was not the same approach to accounting as taught in the accounting classes. I would like to see undergraduate IE curriculums try to bridge that gap. It has the potential to enable IE's and controllers to develop an alliance and work more effectively toward a common goal.
My reply to the comment
You said "In college I completed a very good course in engineering economics"
My thinking also stems from that foundation only. Every industrial engineering recommendation has to be profitable in the engineering economic analysis. If IEs recommend many cost reduction projects, EE analysis requires the cost of existing method and the costs of proposed method. To do EE analysis, IEs require cost data. So cost related industrial engineering analysis has to provide this data to IEs. Shall we call it "Cost industrial engineering" or simply as "Cost engineering". Cost industrial engineering focuses the attention of IEs on pulling data from various existing sources in the company and then manipulating the data to come out with information useful to aid IEs in the work. Total cost industrial engineering does the same thing at enterprise level.
I am happy with your support to the idea.
"In my experience, developing the framework for "total cost engineering" is well worth the investment in resources if they are available (which is mostly the time required by the IE to champion it), and if the results will be utilized as reportable measureables by management."
Details emerge slowly as some IEs think over the issue. If we bring an issue into the open and point out that there is scope, the beginning would be made. I have an advantage in the area to make some speculation, as my research work after PG in IE is in the area of stock markets and then I spent five years in conducting training programs in the modern developments in cost accounting and cost management. Now I am involved in developing and teaching "Introduction to industrial engineering" and "Strategic perspectives of industrial engineering"
I connected engineering economic analysis and cost analysis in my first few paragraphs of my note on TCIE. You also referred to the same background. That is a good coincidence. Thank you for the synergy.
http://www.nraoiekc.blogspot.com/2012/09/total-cost-industrial-engineering.html
Let me see, when can I develop some more detailed version on the topic.
Comment by D. Rajasekhar (23.9.2012)
Dear Narayana Rao,
I would like you to reflect on some of my views on Total cost industrial engineering.
I have read the contents in detail.
How is it different from Lean management ? Request your views.
With all my experience of 33 years in Mfg industry I would like to say cost focus without time element as an integral part is meaningless.
Very often many executives put emphasis on cost.
I have seen many Development Projects in my career did not deliver results due to step motherly treatment given to time over cost.
I have myself experienced Projects resulting in grand success by doing in time even with cost overrun.
In industry COQ ( cost of quality) often goes out of estimates due to poor management of time also.
That is why I always advocate my engineers TIME, QUALITY, COST and RISK.
My reply
In this concept of Total Cost Industrial Engineering, we may not be referring analytically to project cost. As you know, whenever any scientific relation is proposed, the concepts involved are specially defined.
This idea is an offshoot of an idea that the productivity improvement is to be expressed in cost. Productivity improvement is reduction in use of resources, and if at all it occurs, cost has to reduce. So we are having a map of total cost of the organization at a point in time, in terms of industrial engineering segment view of the enterprise and we want to see the contribution of industrial engineering as reduction of cost in some of the segments. It is to plan and do industrial engineering and show its contribution.
Cost, Quality, Time, Flexibility, Risk, Delivery are all important and industrial engineering may not cover all of them. Certainly time was a focus of industrial engineering and even now it is. This refers more to the operation times. We are not talking of trade offs between these dimensions which is an important managerial problem in operations management. The issue raised by you regarding time and cost of a project is a trade off problem and only a manager on the spot can understand the trade off involved. Your view is to be respected by us. But improvement in each dimension or relative improvement among dimensions is possible over time with effort.
Is lean management an industrial engineering innovation or operations management innovation? Lean management is a description of the Toyota Production system by Womack of MIT and it certainly became very popular idea. It in essence an industrial engineering initiative - because waste elimination or efficiency improvement is an industrial engineering concern for the last 100 years. Total Cost Industrial Engineering can become in one sense Cost Stream Mapping that helps industrial engineers to view the total cost in segments useful to them. So, it is imitating Value stream mapping, another idea that became popular. To support lean management, there is lean cost management and accounting. In a similar way, to support industrial engineering (lean management is a branded technique of IE -my view of it), there will be total cost industrial engineering.
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First published on 21.9.2012
Updated subsequently many times
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Total Productivity Model of Sumanth & Total Cost Industrial Engineering - The relation has to be explored.
Total Factor Productivity & Total Productivity Measurement
Lesson 307 of IEKC Industrial Engineering ONLINE Course Notes.
#IndustrialEngineering #Productivity #CostReduction #ProductivityMeasurement
Updated 26.1.2022, 25 Nov 2021, 30 April 2019,
7 Apr 2016, 9.9.2014
