mm zg511-l1

BITS PilaniPilani Campus

Dr. T. C. BeraAssistant Professor ,

Dept. of Mech. Engg.

Manufacturing Organization and Management

(MM ZG511)

BITS Pilani, Pilani Campus

• The manufacturing environment Productivity and manufacturing management Background of manufacturing management Modern manufacturing management

• Engineering considerations Engineering functions and activities Research and developments

• The manufacturing system Organization and planning for manufacturing Design of manufacturing processes Industrial equipment Industrial maintenance Methods engineering Work measurement Material handling Physical facilities

Brief about Course Contents


• Manufacturing cost control Fundamentals of control Cost control

• Materials flow control Inventory management and control Purchasing Production planning and control


To enable the student to:• Methods and techniques, applicable on global basis to

manufacturing.• Provide a framework for the integration of technology,

personnel and organization.• Assist companies in maximizing the efficiency and

profitability of their investments in advanced manufacturing.

Scope and Objectives of the course


Amrine Harold T., “Manufacturing Organization and Management”, Pearson Education 6th Ed., 1993.

Text Book


i) Dan Babock ; Lucy Morce , “Managing Engineering and Technology”, 3/e, Prentice Hall, 2001.

ii) Fraidoon Mazda, “Engineering Management”, 1/e, Pearson Education, 2000.

Reference Books


Component Duration % Weightage Date & Time Remarks

EC-1 Details to be announced on LMS Taxila website by Instructor

15% Details to be announced on LMS Taxila website by Instructor

Assignment/Quiz

EC-2 2 Hours 35% Sunday, 10/02/2013 (Afternoon)2 PM – 4 PM

Mid-Semester Test(Closed Book)

EC-3 3 Hours 50% Sunday, 07/04/2013 (Afternoon) 2 PM – 5 PM

Comprehensive Exam (Open Book)

Evaluation Scheme & Exam Schedule

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Productivity and Manufacturing Management

Lecture-1


Various challenges to manage a manufacturing firm:Continuing inflation,Fluctuating energy costs, High taxes, Government regulations,Capital shortage,Worker dissatisfaction,Intense foreign competition,Inadequate productivity,

Introduction


Focus on productivity over the years has made countries like Japan, France, Germany, Italy, Great Britain, Canada, Korea, China and India.

USA which has only 5% of World’s population but produces 25% of World’s industrial output.

High productivity has been one of the keys to high standard of living in USA.

Productivity is the backbone of a nation’s economic progress.


Production vs. Productivity?• Production is the output of productive forces,

whereas productivity is a measure of output resulting from a given input.

• Productivity = (Output) / (Input).• Productivity may be designated in many different

ways: Output per worker’s direct labor hour, Output per group of workers, Output per unit of material, Output per unit of energy, Output per dollar of capital investment etc.

Productivity


• Productivity ratio is influenced by many relevant factors:Worker’s skill,Motivation and effort,Job methods used,Quality of workmanship,Employee innovation,Machines used Effectiveness of management.

Productivity


• Productivity is the backbone of economic progress of any nation.

• Higher productivity leads to higher standard of living. • Higher productivity results if more output can be got

from same input or same output can be got from less input or more increase in output with correspondingly lesser increase in input.

• Higher productivity results in reduction of costs as well as increased sales potential, more responsive customer service, increased cash flow and profits.

• Greater success in existing business can lead to expansion of operations and increase in number of jobs.

Why is high productivity important ?


• If wage increases without accompanying productivity increases to offset them, then it will lead to increased product cost and contribute to inflation.

• Significant productivity increases in long run cannot be achieved solely by increased worker effort.

• Real growth can happen only through capital investment in newer and better machines equipment and facilities.

• In addition, attention to improved worker motivation and incentives such as profit sharing increases productivity.


• Technology: Measuring productivity growth is to trace technical change.

• Efficiency: The quest for identifying changes in efficiency is conceptually different from identifying technical change. Full efficiency in an engineering sense means that a production process has achieved the maximum amount of output that is physically achievable with current technology, and given a fixed amount of inputs (Diewert and Lawrence, 1999).

• Real cost savings: A pragmatic way to describe the essence of measured productivity change. Although it is conceptually possible to isolate different types of efficiency changes, technical change and economies of scale, this remains a difficult task in practice.

Purposes of productivity measurement


• Benchmarking production processes: In the field of business economics, comparisons of productivity measures for specific production processes can help to identify inefficiencies.

• Living standards. Measurement of productivity is a key element towards assessing standards of living. • A simple example is per capita income, probably the most

common measure of living standards: income per person in an economy varies directly with one measure of labor productivity, value added per hour worked.


• Bureau of Labor Statistics of the US Department of Labor Productivity = output (units, parts, etc..)/labor hours

• If an operator can produce 20 items in an hour then productivity is 20/1 = 20.

• If the operator can produce 25 items in an hour then it is 25/1 = 25. If the operator can produce 20 items in half an hour then productivity is 20/0.5 = 40.

• For example output could be plan sales in Rupees and input in Rupees could be sum of labor costs, material cost, power cost, capital cost and miscellaneous cost.

Measurement of Productivity


• Generally it is common to compare current productivity figures with those of a past base period and the change is reported as a percentage (like increase of 10%).

• Alternatively, productivity may be expressed on the basis of index numbers which are commonly based on adding or subtracting the percent change from 100.

• Index numbers are popular as they can be used along with other index numbers like price index, inflation index etc and facilitates calculation of percentages as well as useful in drawing trend charts. Also they can be used to compare with productivity index published by Government agencies from time to time for various sectors which include manufacturing.


• Productivity measurement is not easy but difficult and hence many organizations may not have meaningful or accurate measurements. If a company produces same product year after year, then it becomes easy to measure productivity.

• Over a time period, product modifications, use of new raw materials, different quality standards, different manufacturing methods, different equipment, changed operator skills etc may happen.

• For effective productivity measurement, one must develop an index number then can take into account the contribution of each factor of production and then track them. Productivity measurement gives management a measure of operating efficiency and a means of evaluating progress.


• Manufacturing productivity in the US grew 2.5% per year from 1950 to 1985 whereas in Japan 8.5%, Germany 5.3%, France 3.5% etc.

• Significant increase in productivity in the long run can not be achieved by only increased worker effort, real growth can come through capital investment, better machines, equipment and facilities.

• Fujio Cho point out “waste is any thing other than the minimum amount of equipment, material, parts, space and worker’s time which are absolutely essential to add value to a product.

Productivity in the world


John Young submitted a plan to criticized US performance• Technology: the US is frittering away its lead in high tech

by spending too littlie on civilian R&D• Manufacturing: industry’s failure to master the discipline

of modern manufacturing. It dose little good to design state of the art products.

• Capital: the high cost of capital in US leads three problems (1) save too little(2) Govt. spend too much (3) tax system is biased

• Antitrust: needs to consider overall world market not just US market

• People: workers are still mired in adversarial relationship with management that may no longer serve the best interest of both parties and public

• Trade policy: US not kept up with new realities of world competition

HP’s John Young


• Restructuring the organization; • Rationalizing the product/service range; • Introducing financial incentive schemes; • Applying technology to reduce staff; • Redesigning products and/or processes; • Outsourcing/sub-contracting; • Implementing a quality improvement programme; • Conducting “productivity audits”; and • Changing the management information system

Basic approaches to productivity improvement


• The primary functions of management are Planning Organizing, Staffing, Directing and Controlling.

• Planning is goal setting at all levels and outlining the steps to achieve the goals.

• Organizing is dividing the job into various aspects and levels so that they can be assigned to various people.

• Staffing involves, hiring, training and placement of human resources for achieving the goals.

• Directing is the process of issuing orders and instructions to carryout plans.

• Controlling compares progress with plans for suitable action.

Perspectives of Modern Manufacturing


Nine practices are:1. Balanced emphasis on all phases of business activity.2. Willingness to take business risks and willingness for

information sharing.3. Take expert advice through specialists and consultants.4. Adopt decision making aids5. Great stress on market research, advertising, sales

promotion and distribution.6. Great emphasis on organizational structure7. Great emphasis on human resource development8. Great emphasis on work integrated learning programs

and industry.9. University Collaborations.

Nine practices


Manufacturing is important

Quality

People

Cost control

Focus and specialization

Old large, mass production plant can be horrible impediments to progress

Mechanization

Computer

Simulation and mathematical models

Characteristic of modern manufacturing


• Only organizations which aim to be world class can hope to compete in domestic and global markets.

• Increased emphasis on quality and strive for coveted awards like Malcolm Baldridge, Deming etc.

• Treating human resources as vital assets for the organization and strive for flat organizational structure with no functional barriers and empowering the employees to achieve corporate goals.

• Emphasis on cost control• Emphasis on focus and specialization

Characteristics of Modern Manufacturing


Realization that old large mass production plants are liabilities and trend is for small autonomous units with flexibility to produce large variety of products

Increasing importance to mechanization for achieving speed, accuracy and quality goals by deploying intelligent machines and flexible manufacturing systems.

Increasing use of computers for solving complex business, design, engineering, R & D, inventory, maintenance, quality problems.

Trend for using simulation and mathematical models to aid in decision making.

Characteristics of Modern Manufacturing


Market shareImprove basic education systemTransforming basic research to applied research Manufacturing excellenceWorld-class product (there will be great need for design,

marketing and manufacturing teams to produce high quality products

Challenges and opportunities in manufacturing


1. How may increased productivity offset increases in employee wages?

2. Why is high productivity in a plant important?

3. Is it easy or difficult to measure productivity? Discuss

4. A significant increase in productivity in the long run can not be achieved solely by increased worker effort. Is this statement correct? Why?

Questions


Thank You

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