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Industrial Engineering is System Efficiency Engineering. It is Machine Effort and Human Effort IE. 3.02+ Million Page View Blog. 200,000+ visitors. (36,500+ pv, 21000+ visitors in 2024.)------------------ Blog Provides Industrial Engineering Knowledge: Articles, Books, Case Studies, Course Pages and Materials, Lecture Notes, Project Reviews, Research Papers Study Materials, and Video Lectures. 2025 - New Project - Effective Industrial Engineering and Productivity Management.

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Saturday, January 25, 2025

Cost Leadership Strategy and Industrial Engineering

Open access

The mediating roles of cost leadership and cost focus strategies on innovation capabilities and export performance. Results from an emerging country

Cogent Business & Management

Volume 11, 2024 - Issue 1

https://www.tandfonline.com/doi/full/10.1080/23311975.2024.2375410#abstract

The Journal of Industrial Engineering and Strategic Management (IESM)

The Journal of Industrial Engineering and Strategic Management (IESM) is an international open-access journal (online) published semi-annual by Pouyan Press which was founded in 2019. The Journal contributes to advance the understanding of phenomena related with all aspects of industrial engineering and strategic management. IESM includes contributions, but not limited to, in the following fields: Systems Engineering, Supply Chain Management, Quality Management, Financial Engineering, Human Factors, Project Management, Leadership, Organization Structure, Methods and Techniques for Evaluating and Understanding Competitive, Production and Management Systems, Strategic Resource Allocation, entrepreneurship and Organizational Purpose, Sustainability and Corporate Social Responsibility. Articles submitted to this journal could also be concerned about the most significant recent developments on Industrial engineering and Strategic management. The journal also provides a forum where Strategic Management researchers can obtain information on relevant new developments in Project Management. We encourage the submission of articles that make a genuine Industrial engineering contribution to a challenging Project Management by Strategic Approach.

https://www.iesmj.com/

28.8.2012

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

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

Bibliography

http://www.costleadershipstrategy.com/

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

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

Cases Studies on Total Productive Management and Competitive Advantages

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

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

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

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

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

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

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

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

Strategic Perspectives in Industrial Engineering - 2013 - Course Page

Syllabus

1. Cost, Efficiency and Productivity - Strategic Issues

2. Scientific Management - Strategic Management Relation

3. Industrial Engineering and Cost, Efficiency and Productivity Management

4. Industrial Engineering, Strategic Cost Management and Total Cost Management

5. Importance of Cost in Porter's Theory of Competitive Advantage

6. Industrial Engineering and Value Chain Analysis

7. Total Productivity Management - Strategic Productivity Management

8. Total Industrial Engineering

9. Lean Systems and Industrial Engineering

10. Sustainability Movement and Industrial Engineering

Topics and Suggested Study Material

1. Cost, Efficiency and Productivity - Strategic Issues

Cost Leadership Competitive Strategy
http://nraomtr.blogspot.com/2012/08/cost-leadership-competitive-strategy.html

Cost is a strategic issue
Tony Grundy
Long Range Planning
Volume 29, Issue 1, February 1996, Pages 58–68

Cost is a strategic issue. It needs to be continuously optimised in the context of the entire business model of the organisation. Often, the very business model itself may need to change to ensure the organisation remains competitive. Execution of any chosen strategy has to be carefully managed to ensure the appropriate balance between revenue growth and cost. Cost management not only has to be treated as a strategic issue, but as a change which needs resources and support from the top.

PWC
http://www.pwc.co.uk/assets/pdf/pwc-strategic-cost-mgt-sep07.pdf

Competitive Strategy and Productivity Growth, 2006 paper
  http://www.ipe.ro/rjef/rjef3_06/rjef3_06_6.pdf

Competitiveness, Strategy and Productivity
Chapter 2 of Stevenson, 11 edition, Operations Management
  http://highered.mcgraw-hill.com/sites/dl/free/0073525251/886181/stevenson11e_sample_ch02.pdf

Business Process Efficiency - Honing a Competitive Edge
Adobe - 2008 White Paper
http://www.usfst.com/media/white%20papers/FSTUS/issue-10/Adobe_FST_US_10.pdf

2. Scientific Management - Strategic Management Relations

Is Industrial Engineering a Strategic Function
  http://nraoiekc.blogspot.in/2012/08/is-it-industrial-engineering-strategic.html

  A New Charter for Industrial Engineers
  http://nraoiekc.blogspot.in/2012/02/new-charter-for-industrial-engineers.html

3. Industrial Engineering and Cost Management

The New Role of Industrial Engineers May Not Include Traditional Industrial Engineering Practices
Michael Sanders, Ph.D.and Kenneth Morrison, Ph.D.
Industrial & Manufacturing Engineering & Business
Kettering University

4. Industrial Engineering, Strategic Cost Management and Total Cost Management

5. Importance of Cost in Porter's Theory of Competitive Advantage

6. Industrial Engineering and Value Chain Analysis

7. Total Productivity Management

Productivity Strategy and Business Strategy: Two Sides of the Same Coin
Arnold S. Judson
Interfaces, Vol. 14, No. 1, Strategic Management (Jan. - Feb., 1984), pp. 103-115

  Strategic Total Productivity Optimization
  http://nraoiekc.blogspot.in/2013/08/strategic-total-productivity.html

8. Total Industrial Engineering

9. Lean Systems and Industrial Engineering

Lean Systems in Various Business and Industry Functional Areas
Motion and Time Study in Lean - Stewart and Myers - Book - 2002

10. Sustainability Movement and Industrial Engineering

Strategic Perspectives in Industrial Engineering 2012 Course Page
http://nraoiekc.blogspot.in/2012/08/strategic-perspectives-in-industrial.html

Friday, October 27, 2023

Industrial Engineering Strategy - Enterprise Level Industrial Engineering

New.

Popular E-Book on IE,

Introduction to Modern Industrial Engineering. #FREE #Download.

In 0.1% on Academia.edu. 3600+ Downloads so far.

https://academia.edu/103626052/INTRODUCTION_TO_MODERN_INDUSTRIAL_ENGINEERING_Version_3_0

Lesson 366 of Industrial Engineering ONLINE Course - Productivity Management Module

Levels of Industrial Engineering in Engineering Organizations.

Enterprise Level to Engineering Element Level Industrial Engineering.

BOEING EXCELLENCE AWARD FOR COLLABORATION IN PRODUCTIVITY, WORKPLACE SAFETY AND ERGONOMICS

Industrial engineering is profit engineering. (Taiichi Ohno)

Would you not like to budget for profit?

Industrial engineering is profit engineering. If a company is not employing industrial engineering it is unnecessarily foregoing profits inherent in the products that it developed and designed to the performance satisfaction of good number of users. Profit conscious managers and owners have to understand and employ industrial engineering to achieve the full profit potential of their products.

What are your strategic decisions related to industrial engineering function?

1. What is your productivity/Efficiency Improvement - Cost Reduction goal?

2. Are you planning to realize experience curve effect benefits?

3. How much of the cost reduction - productivity improvement should come from specialist industrial engineers and other engineers and managers?

4. What will be the ratio of industrial engineers to other engineers and managers?

5. What bottlenecks or limiting factors have you identified in you facilities?

6. What techniques are going to receive special emphasis?

7. What is your training plan for specialist industrial engineers and other engineers and managers?

8. What is the top management attention to industrial engineering - productivity improvement - cost reduction activity?

9. What is the research and development budget for IE activity?

10. What is the total budget for productivity improvement? What is the budget for productivity projects to be initiated by industrial engineering department? What is the budget for productivity projects to be initiated by operating departments?

11. What is your learning plan?

3% productivity increase every year will make production double in 24 years from the same resources. Industrial Engineering increases prosperity of the society.

What is the long term goal of your IE department?

1. What is your productivity/Efficiency Improvement - Cost Reduction goal?

Total productivity management promoted by Japan Management Association, covered as a chapter in the Maynard Handbook (5th Edition) advocates setting up targets for cost reduction and productivity improvement. Similarly, Yamashina talks of manufacturing cost reduction deployment as a strategic decision in his world class manufacturing implementation. Total industrial engineering is one of the pillars of WCM promoted by Yamashina.

The productivity improvement target can be allocated to each industrial engineer/process owner combinations also. (Value creation target for industrial engineers).

2. Are you planning to realize experience curve effect benefits?

Experience or learning curve effect is identified as one of the strategic cost drivers by strategic management literature in implementing cost leadership strategy (Creating and Executing Strategy: The Quest for Competitive Advantage, 14 Edition, Arthur Thompson Jr., A.J. Strickland, John E. Gamble and Arun K Jain, Tata McGraw Hill, 2006 p.119). Companies have to determine the slope of their learning curve and assess whether it is in line with the industry and have to take actions to improve learning in organization. Hence they have to plan to realize the experience curve effect.

3. How much of the cost reduction - productivity improvement should come from specialist industrial engineers and other engineers and managers?

F.W. Taylor (1911) identified that production work was being carried out without the support adequate science. Taylor developed science of machine working as well as manual working in certain activities and developed his scientific management thought and promoted industrial engineering as a subject and as a full discipline in engineering institutions. He recommended specially educated and trained industrial engineers to take up the work of developing science in various production activities and improvement of production processes using the science. According to Taylor, foreman at that time was already overloaded and similar is the case with senior production managers also as they were working without the support of staff specialists.

By 1930s, the situation changed. Alan Mogensen identified that processes redesigned by industrial engineering using the recent discovered science can further be improved by the involving operators and supervisors as they observe many minor improvement opportunities in the doing the work day after day. He came out with work simplification program to involve operators, supervisors and engineers in operation/process improvement. According to Allen Mogensen, Work Simplification is the organized use of common sense — on the part of everyone Involved — to find easier and better ways of doing work.

Toyota Motors made exemplary use of utilizing the knowledge of every body in the production system to improve processes and operations. Now companies have a policy choice to make. What proportion of planned cost reduction will come from science/analysis based projects from industrial engineers and what proportion will come from line organization. The targets have to be included in the budgets of the various departments accordingly.

An answer for the amount of productivity improvement to be carried out by industrial engineers.
Value Creation for the Organization by Industrial Engineers - Productivity Engineering Potential
https://nraoiekc.blogspot.com/2020/03/value-creation-model-for-industrial.html

4. What will be the ratio of industrial engineers to other engineers and managers?

This decision is contingent of the decision above. The company has to employ some industrial engineers to promote total industrial engineering. Above that the number of IEs to be employed and their engineering background, and functional experience depends on the company's policy decisions regarding the planned cost reduction and responsibility given to IE and line departments.

5. What bottlenecks or limiting factors have you identified in you facilities?

Manufacturing cost reduction deployment is a topic in project appraisal chapter of financial management books as well as engineering economics and managerial economics books. They recognize that certain project proposals contain cost reduction a the benefit of the project. Yamashina in his WCM explicits recognizes cost reduction projects as a major input into the budgeting process and comes out with a mathematical model to select a cost reduction project portfolio for the coming period. In this context, company has to identify its limiting factors or bottlenecks whose productivity has to be improved by employing industrial engineering techniques. Based on this identification, the company personnel may come up with productivity improvement projects that make a significant improvement in the operation of the bottleneck facilities.

6. What techniques are going to receive special emphasis?

IE techniques are continuously refined and new techniques are being developed. The company has to opportunity of taking decisions on the intensive use of some techniques during the coming periods. For example many companies in India are now focusing on six sigma and industrial engineering techniques named as lean manufacturing or Toyota Production System to realize cost reduction and productivity improvement.

7. What is your training plan for specialist industrial engineers and other engineers and managers?

Based on the strategic decisions in the area of industrial engineering, the company has to conduct training programs to sensitize the employees on the need to use specified techniques and provide skills to those employees who presently do not have them. There is always a need to share recent success stories within the company as well as from other companies.

8. What is the top management attention to industrial engineering - productivity improvement - cost reduction activity?

If productivity is a strategic issue (it is for many companies as world's top companies declare their productivity improvement and cost reduction targets - Volkswagen and Coca Cola in 2014), top management has to participated in planning, organizing, resourcing, directing and controlling productivity improvement. They need to allocate time and participate in various activities related to productivity. Long time back, when Birla group was introducing WCM, in the first work shop of defect or waste identification, it was said that K.K. Birla, the chairman of the group himself participated to observe the work place and identify waste. Motilal Oswal, Motilal Oswal Securities Limited was another CEO, who participates in many training programmes organized by the company with enthusiasm.

9. What is the research and development budget for IE activity?

If companies have to use industrial engineering and enjoy the increased profits, they have to contribute to its theoretical development and first time application of the theory in company systems. Theoretical development is referred to as research and first time application is referred to as development. While, the big companies have a major responsibility to fund big projects, even smaller companies can contribute through their industry associations, industrial engineering professional organizations. In the context, it is important to note that the 2014 National Conference on Industrial Engineering by NITIE, was sponsored by BHEL, RCF, Neyveli Lignite Corporation and Adani Gas Ltd.

10. What is the total budget for productivity improvement?

What is the budget for productivity projects to be initiated by industrial engineering department? What is the budget for productivity projects to be initiated by operating departments?

Every year, the company has to ask for productivity improvement project proposals and include them as part of their investment budgets. Some companies do it and report them to shareholders.

11. What is your learning plan?

Continuous learning of engineering and industrial engineering are essential for industrial engineering. The technologies adopted in the recent years in the processes of the organization have to be learned by industrial engineers. Some of the learning happens when the new technologies were evaluated for adoption. Some learning happens during the installation. But bulk of the learning by industrial engineers happens after the processes start running.

Tweeddale J.W - Technology and Productivity

Tweeddale J.W. (1982) Productivity Enhancement: An Approach to Managing Beneficial Change in a Military-Industrial Work Setting. In: Mensch G., Niehaus R.J. (eds) Work, Organizations, and Technological Change. NATO Conference Series (II Systems Science), vol 11. Springer, Boston, MA

https://books.google.co.in/books?id=wt_iBwAAQBAJ Page 259

The paper describes the fund allocation and schemes for productivity improvement projects in Navy in 1982. It is good

Related articles and Papers by Narayana Rao, K.V.S.S.

1. * Definition of Industrial Engineering

"Industrial Engineering is human effort engineering and system efficiency engineering."

(Narayana Rao)

“Definition of Industrial Engineering: Suggested Modification”, Udyog Pragati, October-December, 2006.

Definition published in IIE (International) magazine "Industrial Engineer," March 2010.

2.“The Basic Role of the Industrial Engineer”, Udyog Pragati, October-December, 1999.

3.“Definition of Industrial Engineering: Suggested Modification”, Udyog Pragati, October-December, 2006.

4.“Industrial Engineering: A Neglected Discipline in Management Literature,” Proceedings of AIMS 5th International Conference on Management, Hyderabad, December 2007.

5.“Role of Industrial Engineers in Technology Commercialization”, Proceedings of AIMS 5th International Conference on Management, Hyderabad, December 2007.

6.“The Concept of Human Effort Engineering: HR Dimension,” International Conference on Management, HK Institute of Management & Research, Mumbai, 20-21 March, 2009.

7.“Human Effort Engineering and Human Resource Management,” Proceedings of HR Seminar organized by Naval Dockyard, Mumbai, 15th October 2009.

8.“Industrial Engineering and Basic Engineering Disciplines – Is Link Missing?”, AEDGE International Conference, HK Institute of Management & Research, Mumbai, Oriental Institute of Management, Mumbai, and University Utara Malaysia, 4-6, March, 2010.

9.“Industrial Engineering of Systems - System Industrial Engineering,” Proceedings of Tenth global Conference of Flexible Systems Management, GloGift, Keio University, Yokohama, Japan July 26-27, 2010.

10.“Taylor to Yamashina - Employee Involvement in Industrial Engineering Projects,” Full paper reviewed and accepted for the 2011 Industrial Engineering Research Conference, IIE, USA, Reno, Nevada, May 2011

11.“The Primary Role of Industrial Engineer – Efficiency Management Internal Consultant to Engineering Managers”, Udyog Pragati, July – September,2013

12.“The Objective and Organization of Industrial Engineering – Intent of Founders of the Discipline”, IIIE International Conference on Managing Supply Chain for Global Competitiveness, Nagpur, 25 – 27 October 2013.

13.Technology Efficiency Engineering - An Important Task of Industrial Engineering”, Proceedings of 2nd International Conference on Industrial Engineering, ICIE 2013.

14.“Industrial Engineering and Productivity Management in Coal Mining and Utilization: A Study with Special Reference to India”, Proceedings of 32 Annual International Pittsburgh Coal Conference, Pittsburgh, October 5 – 8, 2015.

15.“Machine Work Study – Man Work Study – Taylor’s Conceptualization of Scientific Study of Man-Machine Systems”, Proceedings of National Conference – NCIETM 2016 held at NITIE, Mumbai, 17 – 19, November 2016.

16.“Principles of Industrial Engineering”, IISE (Global Association of Industrial Engineering) Annual Conference, Pittsburgh, May 2017. Principles were developed and presented for the first time in the discipline.

17.“Functions and Focus Areas of Industrial Engineering”, Under Print (Coming issue of Udyog Pragati, published by NITIE.

Effectiveness First and Efficiency Next. Organizations have to be effective and efficient simultaneously. Processes have to be effective and efficient simultaneously. Operations have to be effective and efficient simultaneously. - Narayana Rao

Papers on Industrial Engineering and Strategy

THE DEVELOPMENT OF A STRATEGIC INDUSTRIAL ENGINEERING PHILOSOPHY
P. Leonard, P.S. Kruger and C.M. Moll
Department of Industrial and Systems Engineering
University of Pretoria, South Afric2006 paper based Phd thesis
https://repository.up.ac.za/bitstream/handle/2263/6752/Development_Leonard(2006).pdf?sequence=1

Thesis
A strategic engineering philosophy
Leonard, Pierre
URI: http://hdl.handle.net/2263/24132
Date: 2005-05-09
https://repository.up.ac.za/handle/2263/24132

https://repository.up.ac.za/bitstream/handle/2263/24132/01thesis.pdf?sequence=2&isAllowed=y

IE Strategy - by Ingenics Consultancy

https://www.ingenics.com/en/planning-realization/industrial-engineering/

Updated 2023 - 27.10.2023, 16.10.2023, 8.10. 2023, 26.5.2023

2022 - 28.5.2022, 11.3.2022

2021 - 29.8.2021

2020 - 18 July
2018 - 21 May

First published 2 December 2014

Wednesday, January 12, 2022

Cost Reduction - Concept Papers, Cases, Reports and News

Books - Cost Reduction - Cost Management

When Lean Enterprises Collide: Competing Through Confrontation

Robin Cooper

Harvard Business Press, 1995 - Business & Economics - 379 pages

When Lean Enterprises Collide reveals a new theory of competition in which lean manufacturers create the most innovative product at the lowest price. These firms engage in a game of constant and lightning-fast leapfrogging in pursuit of transitory gains. This is the confrontation strategy, and it will shape the competitive landscape for lean enterprises.

Cooper shows that the key to success in such an environment is the careful balance of cost, quality, and functionality - the survival triplet - in which cost is the critical element. He describes eight innovative cost management techniques - including target costing and value engineering - that have emerged in Japanese firms to manage costs across the value chain. Leading manufacturers must use aggressive cost management along with TQM and time-to-market to develop products with the appropriate mix of quality, cost, and functionality to satisfy the customer.

Evidence of this relentless confrontation strategy and the hidden role of cost management within it emerged during Cooper's five-year study of the management systems inside twenty Japanese companies, including Olympus, Nissan, Citizen, and Komatsu.

https://books.google.co.in/books/about/When_Lean_Enterprises_Collide.html?id=sIckcFP-QbQC

Concept Papers

CFD for Productivity in Design
http://nraoiekc.blogspot.com/2012/08/cfd-software-being-promoted-as-cost.html

Robust Design Optimization for Productivity in Design Departments
http://nraoiekc.blogspot.com/2012/08/robust-design-productivity-during.html

Riding the Storm in 2012 - How to make cost reduction possible? Deloitte White paper
http://deloitteblog.co.za.www102.cpt1.host-h.net/wp-content/uploads/2012/08/How-to-make-enterprise-cost-management-sustainable.pdf
Easy efficiency opportunities have dried up. But still cost reduction is required. This means more strategic, agrresive cost and performance initiatives have to be taken up by companies.

Sustained Cost Reduction - Bain & Co.
http://www.bain.com/publications/articles/sustained-cost-transformation.aspx

Sustained Cost Transformation - Bain
http://www.bain.com/consulting-services/performance-improvement/sustained-cost-transformations.aspx

Supply Chain Cost Reduction

Supply Chain Cost Reduction UPS
http://harshbudholiya.blogspot.in/p/cost-reduction.html

https://www.e-logistics.ups.com/solutions/white_papers/wp_real_value.pdf

Supply Chain Development for the Lean Enterprise: Interorganizational Cost Management

1st Edition

By Robin Cooper, Regine Slagmulder

ISBN 9781563272189

Published June 18, 1999 by Productivity Press

544 Pages

https://www.routledge.com/Supply-Chain-Development-for-the-Lean-Enterprise-Interorganizational-Cost/Cooper-Slagmulder/p/book/9781563272189

Top Consultants in Cost Reduction

Strategic Cost Reduction: Services Overview - Accenture
http://www.accenture.com/us-en/Pages/service-strategic-cost-reduction-services.aspx

Sustained Cost Transformation - Bain
http://www.bain.com/consulting-services/performance-improvement/sustained-cost-transformations.aspx

Sustainable Cost Reduction - Deloitte
http://www2.deloitte.com/us/en/pages/operations/solutions/about-our-strategic-cost-reduction-services.html

Cost Management and Cost Reduction - KPMG
https://www.kpmg.com/ro/en/services/advisory/performance-technology/business-performance-services/cost-management-cost-reduction/pages/default.aspx

Design to Value - McKinsey
http://www.mckinsey.com/client_service/operations/expertise/product_development/design-to-value

Sustainable Cost Reduction - PWC
http://www.pwc.com/us/en/industry/entertainment-media/sustainable-cost-reduction.jhtml

Scope and Challenge Papers

2012

Achieving Sustainable Cost Reduction in Investment Banks - Accenture
http://www.accenture.com/us-en/blogs/accenture-core-trading-blog/archive/2012/07/02/achieving-sustainable-cost-reduction.aspx

For Photovotaics cost reduction is a priority
http://www.pv-tech.org/guest_blog/high_efficiency_grabs_the_headlines_but_cost_reduction_remains_the_priority

IT Cost Reduction - CIOs are using New Technologies
http://www.accenture.com/us-en/Pages/insight-it-cost-reductions-new-technologies.aspx

Case Studies and News

August 2012

Cost Reduction Opportunity in Imaging Systems in Companies

The process of optimizing the imaging and output infrastructure unnecessarily high costs and underutilized assets. IDC Research studied nine large enterprises in the United States, Europe, and Asia and found the majority of organizations studied reported major problems related to overall cost awareness of their imaging hardware, their ability to assess device utilization, and high costs of maintaining an often aged and out-of-date fleet of printers, copiers, and multifunction devices. Based on the experiences of these nine companies and other research, IDC published a white paper that looks at the unnecessary costs and inefficiencies that typically exist within these resources and the significant opportunities to achieve cost savings, boost employee productivity, and speed up core business processes from tighter integration between the document advances of hardcopy devices and business process workflows.
http://ievarunmitra.blogspot.in/2012/08/cutting-costs-and-maximizing-return-on.html

May 2011

Lean Processes Trim $1.3M in Costs From ORs at Michigan's Oakwood Annapolis Hospital
http://www.beckershospitalreview.com/or-efficiencies/lean-processes-trim-13m-in-costs-from-ors-at-michigans-oakwood-annapolis-hospital.html

DuPont™ Surlyn® as a Seal Layer Enables Increased Productivity During Filling of Resealable Tubular Bags
http://www2.dupont.com/food-beverage/en-us/fb/press-release/surlyn-seal-productivity.html

Updated 12.1.2022, 6 March 2015, 21 Feb 2013

Monday, December 10, 2018

Development Strategy for Industrial Engineering

Applied Industrial Engineering - Industrial Engineering 4.0 is a growth opportunity for Industrial Engineering Profession in the World

Summary of

"Thinking about the Application and Development Strategy of Industrial Engineering"

Quan-qing LI, Ming LI
(C)2011, IEEE

Characteristics of Industrial Engineering

Analysis of the origin of industrial engineering, reveals that the original industrial engineering has the following characteristics:

1. It is developed to solve management problems of production side of manufacturing industry. (F.W. Taylor mentioned that management or entrepreneur or financial capitalists/investors focused on marketing and finance and production was left to superintendents and foremen. The systems content of production management activity was very low and reliance was on the persons and their knowledge based on their experience and thinking.)

2. Efficiency was the objective and Industrial Engineering was called "Efficiency Engineering" also.

3. The subject reflected the characteristic of "Thing Big, Act Small." The big aspect refers to the objective, the efficiency and cost of of the production activity of the enterprise. The small aspect refers to the action point. The IE activity can start from little things such as an individual worker's action, working tool, workflow (a step of the process) and so on.

Application Range of Industrial Engineering

The authors say it is sufficient to say that IE analyses and improves objects and people. Materials and equipment are objects. Operation of objects requires energy. Also operation is based on information. Hence the term objects covers material, machine, energy and information.

Two Kinds of Technology - Specialized Engineering and Industrial Engineering

Basic Engineering - Industrial Engineering (Effort Engineering - Productivity Engineering)

Processes or systems convert input into output through a conversion process.

Input ------------- Conversion -------------> Output

In the conversion task, two kinds of technology play a big roles. One is the technology to realize physical and chemical change which transforms the input into desired shape having the desired properties and functions. This technology is created by various specialized engineering branches in various products. The second type of technology modifies the first technology or redesigns the first core technology into combination (integration) and collocation, and makes the system more efficient and less costly (maintaining the quality). The second technology is called the industrial engineering technology. The first technology pays main attention to production process. The second technology pays attention to production management issues of productivity and cost reduction.

For any system, improving efficiency and reducing cost are its inspiring objectives.

Reasons for Neglecting Industrial Engineering Technology

Specialized engineering technology is the necessary condition of the system existence and running. Without it the system is unable to run, so it cannot be neglected. With industrial engineering the system can be run better for more profits and less waste. But many entrepreneurs are satisfied with the normal running of the system and do not aspire after the good that is possible with additional effort.

Second, the specialized engineering technology is produced first. Industrial engineering technology is produced after a time lag (hysteresis).

Third the benefit of specialized engineering technology is immediate, appearance of the production system. The benefits waste elimination methods take more time to show significant results.

Development Stages of Industrial Engineering in Various Technologies

In each technology we can see:
1. Germination period.
2. Cornerstone-laying period
3. Growth period
4. Slow growth or maturity period.

In each technology, the four periods will appear. As specialized engineering disciplines create new technologies, there will be germination period during which industrial engineers have to explore and understand the new technology and identify the productivity levers and barriers. They have to develop productivity science of the new technology. Based on the science they have to develop productivity engineering solutions. As productivity solutions are demonstrated, more and more organizations adopt them and the growth phase will start. The growth period is extended by new scientific and engineering solutions. Productivity management innovations related to the new technology may also come into existence. As technology matures, IE related to the technology also stagnates.

The authors feel in manufacturing sector, IE is in slow growth period. In service industry, it is still in cornerstone-laying period.

Difficulties Faced by IE in Extending Its Applications

1. Industrial engineering applications have to customized to the organizations. Hence its extension is made difficult.

2. Similarly industrial engineering is technology specific. Industrial engineering is nearly the technology of "one-to-one" to solve the problem.

3. The hysteresis involved in developing IE solutions and the possibility of running the systems based on specialized engineering solutions for a long period means, the application of IE can be delayed in the new technologies.

4. The idea, "Think Big, and Act Small" may not be working right. IE does not have methods that aid thing big. IEs are not happy with micro level initiatives and improvements. Hence IE as an activity is negatively impacted from both sides.

Suggestions to Speed up the Application and Extension of Industrial Engineering

1. Popularize the basic purpose of industrial engineering. It is seeking more efficiency. Do not be satisfied with the present level of efficiency. Search for ideas in productivity science, productivity engineering and productivity management. Develop applications in house. Contact consultants, researchers and academicians.

2. The industrial engineering has to speed up research and development. It needs innovations in research (science), technology (engineering) and methods. Only innovations in technology and methods can be used by the organizations and therefore can provide growth to industrial engineering profession.

Innovations in Industrial Engineering - Changing Landscape of Industrial Engineering

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You can view the full article in

https://wenku.baidu.com/view/c139c207bed5b9f3f90f1c2f.html

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Applied Industrial Engineering Implementation Steps - Industrial Engineering 4.0 Context

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Related Article

Applied Industrial Engineering Bulletin
IE in New Technologies - IE with New Technologies
http://nraoiekc.blogspot.com/2017/12/applied-industrial-engineering-2017.html

Monday, May 21, 2018

Strategy, Cost and Industrial Engineering - Presentation - Transcipt

Strategy, Cost and Industrial Engineering

Books referred

Strategic Management and Competitive Advantage

J.B. Barney and W.S. Hesterly

Strategy

Decisions that assure that a firm has products or services that have a profitable demand for a long period of time

Competitive Advantage

A firm has competitive advantage when it is able to create more economic value than rival firm or firms.

Economic value is the difference between the perceived benefits gained by a customer and the full economic cost the product or service.

Gaining or Increasing Competitive Advantage

Increasing the perceived benefits gained by a customer (Differentiating the product or service by providing more benefit – Product/service improvement based strategy).

Decreasing the full economic cost the product or service (Cost based strategy).

Business Level Strategies

Two Generic Business Level Strategies

Cost Leadership: generate economic value by having lower costs than competitors

Example: Wal-Mart

Product Differentiation: generate economic value by offering a product that customers prefer over competitors’ product

Example: Harley-Davidson

Industrial Engineering and Cost of Products

Industrial engineering optimizes (minimizes) cost of resources to produce the products and services at the designed level of quality.

Industrial engineering uses rationalization to identify wastes and eliminates them from products and processes.

IE and Continuous Improvement

IE encourages all the employees to contribute ideas to reduces costs in various microlevel elements and tasks that help in continuous reduction of cost elements.

IE and Cost Reduction/Process Improvement Projects

IE department periodically undertakes process improvement projects to incorporate the latest efficiency improving technologies into the processes and contributes to cost reduction.

Industrial engineering identifies engineering changes in products and processes in the system that give productivity improvement and cost reduction.

Periodic Mathematical Optimization of Costs

Thus there are opportunities to do mathematical, statistical and OR based optimization periodically.

Cost Leadership Business Strategy

A firm that chooses a cost leadership business strategy focuses on gaining advantages by reducing its cost to below those of all its competitors

Popular companies following cost leadership strategies

Ryanair – Air travel

Timex and Casio – watches

BIC – disposable pen and razors

Walmart - Retail

What factors or actions create cost advantage?

Economies of scale

Diseconomies of scale create cost advantage sometimes – Mass versus Lean production

Experience difference – Learning curve economies

Acquisition of low cost productive inputs

Technology advantages independent of scale

Management policies

Economies of Scale

average cost per unit falls as quantity increases until the minimum efficient scale is reached

are a cost advantage because competitors may not be able to match the scale because of capital

requirements (barrier to entry).

international expansion may allow a firm to have enough sales to justify investing in additional

capacity to capture economies of scale.

Diseconomies of Scale

are an advantage for those who do not have diseconomies of scale

occur when firms become too large and bureaucratic

are a risk of international expansion

Learning Curve Economies

a firm gets more efficient at a process with experience

the more complicated/technical the process, the greater the experience advantage

international expansion may propel a firm down the experience curve because of higher volumes

Differential Low-Cost Access to Productive Inputs

may result from:

history—being in the right place at the right time

being first into a market—esp. foreign markets

locking up a source—buying all of its output

Technology Independent of Scale

may allow small firms to become cost competitive

advantage typically accrues to the ‘owner’ of the technology—may or may not be the ones who actually use the technology

size of the advantage depends both on how valuable and protectable the technology is

Industrial engineering department plays a key role in this.

Policy Choices

firms get to choose how they will serve the market

we’ll offer level of quality that is inexpensive to produce

firms can make policy choices that give people incentives to reduce cost at every opportunity

Organization: Having staff consultants who decrease costs on a continuous basis using IE methods.

Cost Leadership & Competitive Advantage

A source of cost advantage will lead to competitive advantage if that source is:

Valuable

Rare

Costly to Imitate

Organized (Implemented Appropriately)

Updated 2018 - May 2018

First published 22 September 2013

Wednesday, March 4, 2015

Experience Curve, Continuous Cost Reduction and Breakthrough Cost Reduction through Industrial Engineering

Experience Curve, Continuous Cost Reduction and Breakthrough Cost Reduction or Continuous Productivity Improvement and Breakthrough Productivity Improvement.

I created the framework for industrial engineering activity by saying it can be applied to technical processes, business processes and managerial processes. If the classification can be made more finer, it is applicable to various processes in that detailed classification. So one question is what is the contribution of industrial engineering in technical process, managerial processes and business processes. An effort to give an estimate of the contribution is required.

Second question is the experience curve effect. Experience effect is discussed in various subjects like strategic management, operations management and of course in industrial engineering subject the concept of experience effect.

If we are able to reduce the total cost of production by 5% every year, in seven years by the time production doubles (assuming a growth rate of 10% of production every year), the cost will come down to 69.8% of the production cost previous to the year in which the cost reduction process started.

Average cost per unit or unit cost in the 7 year, when cumulative production doubles in 7 years with 5% cost reduction in total cost of production per year - 0.698 (0.95^7)

I think cost reductions of this order are happening in many industries.

Friday, September 21, 2012

Monday, August 27, 2012

Cost Leadership Strategy and Product Specification and Design Choices

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

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

Understanding Customers Important for Cost Leaders

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

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

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

Cost Leader Companies in Various Industries - Strategic Programs

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

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

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

Saturday, August 18, 2012

Is Industrial Engineering a Strategic Function?

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

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

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

Board and Its Responsibilities

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

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

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

Sunday, June 17, 2012

Strategic Decisions and Role of Industrial Engineering - Bulletin - Information Board

Business Strategy Game
http://www.docstoc.com/docs/33760861/The-BUSINESS-STRATEGY-Game

Business Strategy Game Evaluation
http://sbaweb.wayne.edu/~absel/bkl/.%5Cvol33%5C33ah.pdf

DISCIPLINARY LINKS BETWEEN SCIENTIFIC MANAGEMENT AND STRATEGY DEVELOPMENT - MIT Working paper - 2009

Beyond World Class Productivity: Industrial Engineering Strategy Revisited

http://books.google.co.in/books?id=_U1OyLvUn9kC
Springer 2010, 231 pages

Read its preface in html format in
http://dc349.4shared.com/doc/ZE3TVPWp/preview.html

Thinking about the application and development strategy of industrial engineering

Industrial Engineering and Engineering Management (IE&EM), 2011 IEEE 18Th International Conference on
Date of Conference: 3-5 Sept. 2011
Author(s): Quan-qing Li
Zhengzhou Inst. of Aeronaut. Ind. Manage., Zhengzhou, China
Ming Li
Volume: Part 3
Page(s): 2125 - 2129
Product Type: Conference Publications

Abstract

The tradition industrial engineering emphasis on micro-management, but the development of the future industrial engineering will pay first attention to the macro-problems.

It has analyzed the relationship of the specialized engineering technology and the industrial engineering technology in the integrated system, and pointed out: because the industrial engineering technology has the seeking optimization characteristic and the hysteresis of developing time, the research and application for industrial engineering technology falls behind to the specialized engineering technology.

It has further pointed out that the application and extension of industrial engineering will appear the development period and slow growing period of any technology

In slow growing period, it will develop slowly, even stagnate. This paper has analyzed the reasons which cause this situation and proposed the countermeasures.

Sunday, May 20, 2012

Continuous Improvement as Business Strategy - Article

Article in Management Services Magazine - Autumn 2009

http://www.ims-productivity.com/user/custom/journal/2009/autumn/MSJ19-Autumn-2009.pdf
pp. 32 - 36
Case study of Corus

Tuesday, May 15, 2012

It's Time to Rethink Continuous Improvement - HBR Blog Post by Ron Ashkenas

Ron Ashkenas is a managing partner of Schaffer Consulting and a co-author of The GE Work-Out (It is a six sigma related initiative) and The Boundaryless Organization. His latest book is Simply Effective.

Innovation thinker Vijay Govindarajan says, "The more you hardwire a company on total quality management, [the more] it is going to hurt breakthrough innovation. The mindset that is needed, the capabilities that are needed, the metrics that are needed, the whole culture that is needed for discontinuous innovation, are fundamentally different."

The author concludes:

Continuous improvement doesn't have to be incompatible with disruptive innovation.

But unless we think about continuous improvement in more subtle, nuanced, and creative ways, we may force companies to choose between the two.

http://blogs.hbr.org/ashkenas/2012/05/its-time-to-rethink-continuous.html

Industrial engineering have to take note of the ideas in this blog post.

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