Industrial Management and Engineering Economy

1. Industrial Management and Engineering Economy By:- ErmiasTesfaye Addis Ababa University Addis Ababa Institute of Technology (AAiT) Mechanical Engineering Department

2. What is Management?

3. The verb manage comes from the Italian maneggiare (to handle — especially a horse) • Which in turn derives from the Latin manus (hand) • The French word mesnagement (later ménagement) influenced the development in meaning of the English word management in the 15th and 16th centuries

4. Definition of management • Management is the art of getting things done through people • Management is the process of getting activities completed efficiently and effectively with and through other people

5. What is this little lad doing? Do you know where he is going? Can you see where he is going? Do you know what could happen if he falls in the water? Can you really see what the consequences are going to be? Have you got the big picture in mind? With anything that one does in life you start with the end in mind. You decide what you want to achieve and then you decide how you will work towards achieving it. This is what management is.

6. Greatness Courage manage the creative tension between current reality and Futurereality NOW FUTURE Vision Reality

7. So That You and Your Followers Can Reach Our Vision Put Stepping Stones in Place Chart the Path

8. In general "management" identifies a special group of people whose job is to direct the effort and activities of other people toward common objectives. • Simply, management gets things done through other people by planning, coordinating and directing the activities of an organization • The decisions and judgments made are normally oriented to the needs of the organization

9. Why Management? • The Industrial Revolution brought about the emergence of large-scale business and its need for professional managers • Management became more important as the developments and complexities of technology and human relationships get more challenging to those who perform managerial functions

10. Shorter life-cycles for innovative technologies • Steam • Rail • Steel • Petrochemicals • Electronics • Aviation • Digital networks • Software • New media • Electricity • Chemicals • Internal-combustion • engine • Water power • Textiles • Iron 1st Wave 2nd Wave 3rd Wave 4th Wave 5th Wave 1785 1845 1900 1950 1990 1999 2020 60 yrs 55 yrs 50 yrs 40 yrs 30 yrs Source: The Economist, February 20, 1999

11. What managements strives for? • 'Management strives involving a group of people work together in the most effective and efficient manner to achieve stated goals in the best and most economical way'.

12. Functions of management • The subject of management can be considered a process involving certain functions that a manager performs • Decision making • Planning • Organizing • Staffing • Directing

13. 1. Decision making • Decision can be defined as an act involving mental process at a conscious level in choosing a course of action from available alternatives for the purpose of attaining a desired result

14. Five steps of Decision making • Fact gathering process to lay a solid foundation for understanding the situation • Recognition of the right problem • Generate as many alternatives as possible • Select the best alternative • Communicate the decision to others

15. 2. Planning • Planning involves the predetermining of the course of action to be taken in relation to the known event. It also includes anticipating the possibilities of future problems that might appear • Failing to plan means planning to fail.

16. Cont’d… • It is a systematic activity which determines when, how and who is going to perform a specific job. It is rightly said “Well plan is half done”.

17. Cont’d… • The increased importance of planning in a business enterprise results from various changes in the environment like • changes in technology, • government policy, • overall economic activity, • in the nature of competition and • in social norms and attitudes.

18. Cont’d… • There are different planning executed in different level of an organization • Strategic planning • Tactic planning • Operational planning

19. Cont’d… • In general, the planning process may systematically be composed of five elements: • Setting Primary & Intermediate Goals • Search for Opportunities • Formulation of Plans • Target Setting • Follow-up of Plans

20. Organizing • Organizing may be defined as the structure and process by which a group allocates its tasks among its members, identifies relationships and integrates its activities toward common objectives

21. Cont’d… • The organizing function of management brings together human and physical resources in an orderly manner and arranges them in coordinated pattern to accomplish planned objectives. • Each organizational resource (human, material, finance etc.) represent an investment from which the management system must get the return. Therefore, these resources should be organized properly for efficient and effective use of the same.

22. Cont’d… • A sound organization is necessary because it brings many benefits to the management of an enterprise. Some of the benefits are: • Good communication between the management and employees, • Sound basis to evaluate the performance of individuals and groups, • Well defined areas of works for each employee, • Coordination of activities of various individual, groups, etc., • Effective delegation and decentralization, • Adequate and effective control, • Difficulty in empire building in any segment of the enterprise, and • Stimulation of independent, creative thinking and initiative on the part of the employees.

23. Cont’d… • There are some principles of organization which are guide lines for thought to operating managers and researchers in an organization • Unity of Command • Exception Principle • Span of Control • Scalar Principle • Departmentalization • Decentralization

24. Cont’d… • the steps that are important when organizing an enterprise • Reflection on plans and objectives, • Establishing major tasks, • Dividing major tasks into subtasks, • Allocating resources and directives for subtasks, and • Evaluating the result of implemented organizing strategy.

25. Cont’d…

26. Staffing • Staffing deals with the workers and is worker-oriented • This function includes the process of placing the right person in the right organiza­tional position • The process of matching the people and the jobs is done by careful preparation of specifications necessary for positions and raising the performance of personnel by training and retraining of people to fit the needs of the organizational position

27. Controlling • Control is the process that measures current activities, quantitatively if possible, and guides it toward some predetermined goal, plan, policy, standard, norm, decision rule and criterion or yardstick. • The essence of control lies in checking and correcting actions against desired results in the planning process

28. Cont’d… • Controlling includes ensuring that employees perform the work allocated to them in the ways laid down, and with no wastage or duplication of time, effort or materials. • That involves much more than simply instructing a given number of employees to perform work; they must be supervised and managed so that their efforts achieve the desired results. • This requires that they are motivated, checked, guided, taught and encouraged.

29. Cont’d… • There are seven principles of control. • Strategic Point Control • Feedback • Flexible Control • Organizational Stability • Self-Control • Direct Control • Human Factor

30. Communication • It serves as a linkage by which the other functions explained are tied together • There are three types of communications in an organization • Organization charts show the flow of authority and the channels through which the vertical and downward communication flows • Horizontal type whereby, managers on the same level of an organization coordinate their activities without referring all matters to their superior • The informal type

32. Directing • For the same idea, different organizations use different terms such as • Leading • Executing • Supervising • Ordering and • Guiding • What ever terms are assigned to it, the idea of directing is to put into effect the decisions, plans and programs that have been worked out.

33. There are four types of leadership styles • The dictatorial leader maintains a highly critical and negative attitude in his relation with subordinates and advocates the accomplishment of tasks through fear of penalties • The benevolent - autocratic leader assumes a paternalistic role which forces the workers to rely on him for satisfaction. This type of leader must be exceptionally strong and wise individual, so that his personality generates respect and allegiance. The subordinates develop dependenceon the leader to the extent that they have very little chance of developing leadership qualities.

34. The democratic leader suggests better methods and tries to improve the worker's attitude. Unlike the others, not only he depends on his capabilities but encourages consultation with subordinates in planning, decision making and organizing. With this type of leadership satisfaction is gained through a feeling of group accomplish­ments. • The fourth type of leadership style is a laissez - faire type where the leader assumes the role of just another member of the group and depends completely on subordinates to establish their own goals and make their own decision

35. Characteristics of a Good Manager The Dual Aspects of any Manager's Job • The modern 'world of industry' is very complex, and this very complexity has led to what is called “specialization” and to the "division of labor” by which different people specialize in performing − and become specialists in − different types of work. • It follows, therefore, that the “technical” or "functional”, i.e. the specific work of different managers can and does vary enormously.

36. Cont’d… • Nevertheless, allthose different types of managers, and all others, should have considerable knowledge of the technical aspects of their jobs in addition to being proficient ‘managers of people’. • It is, in any case, not easy to train, supervise and control the work of others without knowing what they are or should be doing.

37. Cont’d… • So the duties of anymanager or supervisor comprise two quite different aspects: • The technical or functional aspectwhich is concerned with the work to be performedby his enterprise or department or section; and • The managerial aspectwhich is concerned with the people who are to perform that work in his enterprise or department or section.

38. Cont’d… • Some estimates show that a managing director may spend between 80% and 90% of his working hours on managerial matters and only 10% to 20% of his time on the technical activities. whilst senior managers may spend approximately 50% of their work time on managerial activities and 50% on technical activities; and supervisors and foremen may spend some 70% to 75% of their time on technical activities and only 25% to 30% of their time at work on the supervision of their subordinates

39. Cont’d…

40. Personal Qualities Needed for Managerial Success • Some of the more important personality traits of a successful manager are the following: Ability to Think Clearly and Logically: A manager needs to be able, as the result of training, to approach each situation and problem positively and objectively, without prejudgment or being distracted by irrelevancies. This requires him to think in a clear, orderly fashion and to marshal and arrange logically in his mind all the facts and information available to him.

41. Cont’d… 2. The Abilities to Make Decisions and to Act Decisively: These follow on from the foregoing, and also require a measure of self-confidence; a belief in one's own ability to succeed in solving problems in the right way, and in one's own ability to deal effectively with different situations and sets of circumstances.

42. Cont’d… • Defining as accurately as possible the problem which needs to be solved. • Obtaining all relevant information about the problem • Breaking down the problem into parts − very often the solution to one part is obvious and leads, logically, to the solving of other parts or the whole problem. • Comparing and judging the probability of success of any possible different solutions to the same problem, and their possible consequences on other areas. • Selecting the most attractive solution − making the decision

43. Cont’d… • The Ability to Use Initiative: from time to time a manager is bound to come across problems or situations which are outside his range of experience or outside the normal scope of his responsibly; the latter can, perhaps, arise when a senior is away or is unavailable for some reason. In such circumstances, particularly if action is urgently needed, the manager must not simply leave the matter until his senior is available or wait to be told what to do, but must initiate - that is, lead the action without waiting to be prompted.

44. Cont’d… • Ability to Handle Conflict: A good manager is calm, able to listen, is positively responsive to criticism and is able to handle conflicts and differences in a constructive manner. In order to handle conflicts well, a manager must be confident, self-assertive, fair and dominant. He should be highly tolerant of stress, as conflicts generally lead to stress and tension. This would require a sound mind in a sound body.

45. Cont’d… • Ability to Adapt Change and be Flexible: Any manager must be able to adapt to changes and, if necessary, to cope with changed circumstances, and ensure that his subordinates also do so. • Adaptability to different situations and flexibility of mind are also necessary in the routine, day-to-day running of a section, department or an entire enterprise.

46. Cont’d… • Ability to Be Emotionally Stable: In dealing with different problems and situations, some of which might be irritating, annoying, worrying or heated − or include emotional displays (e.g. tearful women, angry voices, etc.) by others − a manager must be sufficiently mature to keep calm and collected. He must be able to keep control over his own emotions and his temper whatever may the provocation be, and be able to concentrate his attention on the matter in hand, thinking clearly, logically, and avoiding hasty reactions.

47. Cont’d… • Stamina and Concentration: mental fitness to work long and hard without undue stress or strain. • Besides mental alertness, a manager needs to be able to concentrate his mind on the matter in hand even under the most tiring circumstances and/or when he is under pressure; to focus or keep one's mind intently fixed over a long period can be tiring, particularly as there will be many different matters requiring attention and concentration during a manager's working day.

48. Cont’d… • Drive and Determination: A manager needs the urge and enthusiasm to stimulate action, not only by himself, but by other people as well. He also needs the determination to keep going whatever the difficulties, adapting his actions and decisions to overcome problems encountered, and pressing on to a successful conclusion.

49. Cont’d… • Leadership: Leadership is the ability of a person to exert a positive influence over the thoughts, behavior and actions of others, and then to direct their thoughts, behavior and actions towards a common goal or objective.

50. Organization Structure • planned organizational structure must not be overlooked in the establishment of a new business. The stages in the setting up of an effective organizational structure are  • The activities which will be necessary to achieve the objectives of the business must be established.  • The various related activities should be grouped together into departments; the most logical grouping is by 'function', that is, by type of activity: production, marketing, finance, etc.  • The activities of a particular department will be further divided, and grouped together into sections;