ENGINEERING MANAGEMENT Engineering Management MANAGEMENT entails “The Basic Functions” to efficiently reach a company's goals which are PLANNING, ORGANIZING, STAFFING, COMMUNICATING, MOTIVATING, LEADING, AND CONTROLLING RESOURCES. How One May Become A Successful Engineer Manager Management must seek to find out the objectives of the organization, think of ways how to achieve them, decide on the ways to be adapted and the material resources to be used, determine the human requirements of the total job, assign specific tasks to specific persons, motivate them, and provide means to make sure that the activities are in the right direction. Successful engineer managers do not happen as a matter of chance, although luck is contributory factor. It is very important for the engineer manager to know the various factors leading to successful management. According to Kreitner, there are at least three general preconditions for achieving lasting success as a manager. ability motivation to manage, and opportunity Managerial ability Managerial ability refers to the capacity of an engineer manager to achieve organizational objectives effectively and efficiently. Effectiveness ( positive result ), according to Higgins, refers to a description of “whether objectives are accomplished”, while efficiency (convenient and mabilis )is a “description of the relative amount of resources used in obtaining effectiveness.” Motivation to Manage Many people have the desire to work and finish specific tasks assigned by superiors, but not many are motivated to manage other people so that they may contribute to the realization of the organization’s objectives. Opportunity Successful managers become possible only if those having the ability and motivation are given the opportunity to manage. The opportunity for successful management has two requirements namely obtaining a suitable managerial job, and finding a supportive climate once on the job. Functions of the Engineer in the Organization RESEARCH - where the engineer is engaged in the process of learning about nature and codifying this knowledge into usable theories. DESIGN AND DEVELOPMENT – where the engineer undertakes the activity of turning a product concept to a finished physical items. Design for manufacturability and value engineering teams are charged with improvement of designs and specifications at the research, development, and production stages of product development. TESTING – where the engineer works in a unit where new products or parts are tested for workability. MANUFACTURING – where the engineer is directly in charge of production personnel or assumes responsibility for the product CONSTRUCTION – this is where the construction engineer (civil engineer usually) is directly in charge of the construction personnel or may have responsibility for the quality of the construction process SALES – where the engineer assists the company’s customers to meet their needs, especially those that require technical expertise. CONSULTING – where the engineer works as consultant of any individual or organization requiring his services. GOVERNMENT – where the engineer may find employment in the government performing any of the various tasks in regulating, monitoring, and controlling the activities of various institutions, public or private. TEACHING – where the engineer gets employment in a school and is assigned as a teacher of engineering courses. Some of them become deans, vice presidents, and president. MANAGEMENT – where the engineer is assigned to mange groups of people performing specific tasks. The Ten Roles Of Management According To Henry MintzBerg Henry Mintzberg is a Canadian scientist. He is specialized at organization structures and organization design. According to him, management is to be divided in to ten roles divided in three categories. In this model, a role is nothing more than the expectations and responsibility that one person has by occupying this position. The Ten Roles Of Management The Monitor: He actively searches and seeks for company information and he maintains interpersonal contact. The Disseminator: He does nothing more than forwarding the right information to the right people. He also makes memos and calls other personnel. The Spokesperson: He represents the company or division to the outside. This can be the media, other companies, clients, or even to the supply chain. The Figurehead: He performs symbolic activities and receives visitors. He also contacts successful job applicants, for example The Leader: He motivates and leads a company’s unit or operation. This might sound generic and more of a characteristic, but he also designs and coordinates with the team and other managers. The liaison: He maintains the information links within the company and with the supply chain. The entrepreneur: He invents new ideas and business opportunities. He also initiates and starts new projects according to the company’s strategic goals. The Disturbance Handler: He’s the one to contact when there are any disruptions. For example, when a production line fails or when the supply chains fail to deliver on time. The Resource Allocator: He ensures that each process receives a fair and good number of resources in order to use for their sub process of transformation. The negotiator: he does the same as the spokesperson, only he represents the unit or organization to the supply chains side. He also works with sponsors and distributors to make agreements. What Are Managerial Competencies? Competency – a combination of knowledge, skills, behaviors, and attitudes that contribute to personal effectiveness Managerial Competencies – sets of knowledge, skill, behaviors, and attitudes that a person needs to be effective in a wide range of positions and various types of organizations Why are Managerial Competencies Important? You need to use your strengths to do your best You need to know your weaknesses You need developmental experiences at work to become successful leaders and address your weakness You probably like to be challenged with new learning opportunities Organizations do not want to waste human resources Globalization deregulation, restructuring, and new competitors add to the complexity of running a business A Model of Managerial Competencies Managerial Effectiveness Communication Competency Planning and Administration Competency Strategic Action Competency Self-Management Competency Global Awareness Competency Teamwork Competency Communication Competency Ability to effectively transfer and exchange information that leads to understanding between yourself and others Informal Communication Used to build social networks and good interpersonal relations Formal Communication Used to announce major events/decisions/ activities and keep individuals up to date Negotiation Multicultural Competency Used to settle disputes, obtain resources, and exercise influence Understanding, appreciating and responding to diverse political, cultural, and economic issues across and within nations Cultural knowledge and understanding of the events in at least a few other cultures Cultural openness and sensitivity to how others think, act, and feel Respectful of social etiquette variations Accepting of language differences Planning and Administration Competency Deciding what tasks need to be done, determining how they can be done, allocating resources to enable them to be done, and then monitoring progress to ensure that they are done Information gathering, analysis, and problem-solving from employees and customers Planning and organizing projects with agreed upon completion dates Time management Budgeting and financial management Teamwork Competency Accomplishing tasks through small groups of people who are collectively responsible and whose job requires coordination Designing teams properly involves having people participate in setting goals Creating a supportive team environment gets people committed to the team’s goals Managing team dynamics involves settling conflicts, sharing team success, and assign tasks that use team members’ strengths Strategic Action Competency Overall Mission Understanding the overall mission and values of the organization and ensuring that employees’ actions match with them Integrate Understanding how departments or divisions of the organization are interrelated Strategies Taking key strategic actions to position the firm for success, especially in relation to concern of stakeholders Self-Management Competency Developing yourself and taking responsibility Integrity and ethical conduct Personal drive and resilience Balancing work and life issues Self-awareness and personal development activities FUNCTION OF MANAGEMENT Management entails “The Basic Functions” to efficiently reach a company's goals which are PLANNING, ORGANIZING, STAFFING, COMMUNICATING, MOTIVATING, LEADING, AND CONTROLLING RESOURCES. The Basic Functions of Management 1. Planning The primary management function, the one on which all others depend. Managers engaged in planning develop strategies for success, establish goals and objectives for the organization, and translate their strategies and goals into action plans. To develop long-term strategies and goals, managers must be well informed on a number of key issues and topics that could influence their decisions. Strategic plans outline the firm's longrange (two to five years) organizational goals and set a course of action the firm will pursue to reach its goals. These long-term goals encompass eight major areas of concern: market standing, innovation, human resources, financial resources, physical resources, productivity, social responsibility, and financial performance. A good strategic plan answers: · Where are we going? · What is the environment? · How do we get there? Tactical plans typically focus on departmental goals and cover a period of one to three years. Their limited scope permits them to be changed more easily than strategic plans. Tactical plans lay out the actions and the allocation of resources necessary to achieve specific, short-term objectives that support the company's broader strategic plan. Operational plans designate the actions and resources required to achieve the objectives of tactical plans. Operational plans usually define actions for less than one year and focus on accomplishing a firm's specific objectives such as increasing the number of new subscribers by 5 percent over the next six months. Managers use and study the information below to set a firm's longterm course of direction during a process called strategic planning. Budgets Production schedules Industry and economic data Customer preferences Internal and external data Competition and so on. Managers Translate the Vision into a Meaningful Mission Statement are the employees responsible for performing these five functions in addition to a number of other duties to coordinate the organization's work. These duties, or roles, fall into three main categories: Interpersonal roles. Managers perform ceremonial obligations; provide leadership to employees; build a network of relationships with bosses, peers, and employees; and act as liaison to groups and individuals both inside and outside the company (such as suppliers, competitors, government agencies, consumers, special-interest groups, and interrelated work groups). Informational roles. Managers spend a fair amount of time gathering information by questioning people both inside and outside the organization. They also distribute information to employees, other managers, and outsiders. Decisional roles. Managers use the information they gather to encourage innovation, to resolve unexpected problems that threaten organizational goals (such as reacting to an economic crisis), and to decide how organizational resources will be used to meet planned objectives. They also negotiate with many individuals and groups, including suppliers, employees, and unions. 2. Organizing the process of arranging resources to carry out the organization's plans is the second major function of managers. During the organizing stage, managers think through all the activities that employees carry out (from programming the organization's computers to mailing its letters), as well as all the facilities and equipment employees need in order to complete those activities. They also give people the ability to work toward organizational goals by determining who will have the authority to make decisions, to perform or supervise activities, and to distribute resources. Top Managers They are the upper-level managers who have the most power and who take overall responsibility for the organization. An example is the chief executive officer (CEO). Top managers establish the structure for the organization as a whole and they select the people who fill the upper-level positions. Top managers also make long-range plans, establish major policies, and represent the company to the outside world at official functions and fund-raisers. Middle Managers They have similar responsibilities, but usually for just one division or unit. They develop plans for implementing the broad goals set by top managers, and they coordinate the work of first-line managers. In traditional organizations, managers at the middle level are plant managers, division managers, branch managers, and other similar positions— reporting to top-level managers. But in more innovative management structures, middle managers often function as team leaders who are expected to supervise and lead small groups of employees in a variety of job functions. Similar to consultants, they must understand every department's function, not just their own area of expertise. Furthermore, they are granted decision-making authority previously reserved for only high-ranking executives. First-line Managers (or supervisory managers) They oversee the work of operating employees, and they put into action the plans developed at higher levels. Positions at this level include supervisor, department head, and office manager. They are at the bottom of the management pyramid Three levels of a corporate hierarchy before acting. Moreover, they know how to utilize the appropriate emotion at the right time and in the right amount. Motivation. Motivated managers are driven to achieve beyond expectations— their own and everyone else's Empathy. Empathetic managers thoughtfully consider employees' feelings, along with other factors, in the process of making intelligent decisions. Social skill. Socially skilled managers tend to have a wide circle of acquaintances, and they have a knack for finding common ground with people of all kinds. They assume that nothing important gets done by one person alone and have a network in place when the time for action comes The three broad categories of leadership style are autocratic, democratic, and laissez-faire 3. Directing or Leading • Autocratic leaders make decisions without consulting others • Democratic leaders delegate authority and involve employees in decision making. Even though their approach can lead to slower decisions, soliciting input from people familiar with particular situations or issues may result in better decisions. • Laissez-faire leaders take the role of consultant, encouraging employees' ideas and offering insights or opinions when asked. The laissez-faire style may fail if workers pursue goals that do not match the organizations. However, the style has proven effective in some situations. Laissez-faire, is sometimes referred to as free-rein leadership. The French term laissez faire can be translated as "leave it alone," or more roughly as "hands off." Leading—the process of influencing and motivating people to work effectively and willingly toward company goals—is the third basic function of management. Managers with good leadership skills have greater success in influencing the attitudes and actions of others, both through the demonstration of specific tasks and through the manager's own behavior and spirit. Additional studies have shown that managers with strong interpersonal skills and high emotional quotients (EQs) tend to be more effective leaders. The characteristics of a high EQ include: Self-awareness. Self-aware managers have the ability to recognize their own feelings and how they, their job performance, and other people are affected by those feelings. Moreover, managers who are highly self-aware know where they are headed and why. Self-regulation. Self-regulated managers have the ability to control or reduce disruptive impulses and moods. They can suspend judgment and think 4. Controlling Controlling is the fourth basic managerial function. In management, controlling means monitoring a firm's progress toward meeting its organizational goals and objectives, resetting the course if goals or objectives change in response to shifting conditions, and correcting deviations if goals or objectives are not being attained. The Control Cycle Many firms control for quality through a four-step cycle that involves all levels of management and all employees. First step, top managers set standards, or criteria for measuring the performance of the organization as a whole. In the second step of the control cycle, managers assess performance, using both quantitative (specific, numerical) and qualitative (subjective) performance measures. In the third step, managers compare performance with the established standards and search for the cause of any discrepancies. If the performance falls short of standards, the fourth step is to take corrective action, which may be done by either adjusting performance or reevaluating the standards. If performance meets or exceeds standards, no corrective action is taken. Management Skills Interpersonal Skills - To communicate with other people, work effectively with them, motivate them, and lead them are interpersonal skills. Technical Skills - A person who knows how to operate a machine, prepare a financial statement, program a computer, or pass a football has technical skills: Managers at all levels use administrative skills, which are the technical skills necessary to manage an organization. Conceptual Skills - Managers need conceptual skills to see the organization as a whole, in the context of its environment, and to understand how the various parts interrelate. Conceptual skills are especially important to top managers. These managers are the strategists who develop the plans that guide the organization toward its goals. A key managerial activity requiring conceptual skills is decision making, a process that has five distinct steps: (1) recognizing the need for a decision, (2) identifying, analyzing, and defining the problem or opportunity, (3) generating alternatives, (4) selecting an alternative and implementing it, and (5) evaluating the results. 5. Staffing "the management function that determines human resource needs, recruits, selects, trains, and develops human resources for jobs created by an organization." Staffing is undertaken to match people with jobs so that the realization of the organization's objectives will be facilitated. Staffing is important since it is concerned with assigning jobs with skills, ability, aptitude, talents, and specializations. In this way, manpower is efficiently utilized. Human resource planning activities 1. Forecasting – an assessment of future human resource needs in relation to the current capabilities of the organization 2. Programming – translating forecasted human resource needs to personnel objectives and goals. 3. Evaluation and control – monitoring human resource action plans and evaluating their success. 6. Motivation A motivating force; incentive a force which excites and drives a person to action It is subjective and qualitative, rather than objective and quantitative Motivation varies with time (for example the age of the person) and not logical entity. There are two main types of motivation driver: Primary motivation drivers, which are instinctive (natural), such as hunger, thirst, pain. Secondary motivation drivers, which are learned, for example that certain behavior gives pleasure. 7. Communicating It is a process of sharing information through symbols, including words and message. Communication may happen between superior and subordinate, between peers, between a manager and a client or customer, between an employee and a government representative. It may be done faceto-face or through printed materials, or through an electronics device like telephone. AGGREGATE PLANNING Aggregate Planning at Frito-Lay More than three dozen brands, 15 brands sell more than $100 million annually, 7 sell over $1 billion Planning processes covers 3 to 18 months Unique processes and specially designed equipment High fixed costs require high volumes and high utilization Demand profile based on historical sales, forecasts, innovations, promotion, local demand data Match total demand to capacity, expansion plans, and costs Quarterly aggregate plan goes to 36 plants in 17 regions Each plant develops 4-week plan for product lines and production runs Job assignments Ordering Job scheduling Dispatching Overtime Part-time help Sales and Operations Planning Coordination of demand forecasts with functional areas and the supply chain Typically done by cross-functional teams Determine which plans are feasible Limitations must be reflected Provides warning when resources do not match expectations Output is an aggregate plan Decisions must be tied to strategic planning and integrated with all areas of the firm over all planning horizons S&OP is aimed at 1. The coordination and integration of the internal and external resources necessary for a successful aggregate plan 2. Communication of the plan to those charged with its execution New product plans Requires A logical overall unit for measuring sales and output A forecast of demand for an intermediate planning period in these aggregate terms A method for determining relevant costs A model that combines forecasts and costs so that scheduling decisions can be made for the planning period Capital investments AGGREGATE PLANNING Facility location/expansion The objective of aggregate planning is usually to meet forecast demand while minimizing cost over the planning period The Planning Process Top Executives Long-range plans (over one year) Capacity decisions critical to long range plans Issues: Research and Development Operations managers with sales and operations planning team Intermediate-range plans (3 to 18 months) Issues: Sales and operations planning Production planning and budgeting Setting employment, inventory, subcontracting levels Analyzing operating plan Operations managers, supervisors, foremen Responsibility Short-range plans (up to 3 months) Scheduling techniques Issues: Combines appropriate resources into general terms Part of a larger production planning system Disaggregation breaks the plan down into greater detail Disaggregation results in a master production schedule Aggregate Planning Strategies 1. Should inventories be used to absorb changes in demand? 2. Should changes be accommodated by varying the size of the workforce? 3. Should part-timers, overtime, or idle time be used to absorb changes? – May not be sufficient to balance demand and capacity 4. Should subcontractors be used and maintain a stable workforce? 2. Back ordering during high-demand periods 5. Should prices or other factors be changed to influence demand? Requires customers to wait for an order without loss of goodwill or the order Most effective when there are few if any substitutes for the product or service Often results in lost sales Capacity Options 1. Changing inventory levels Increase inventory in low demand periods to meet high demand in the future Increases costs associated with storage, insurance, handling, obsolescence, and capital investment Shortages may mean lost sales due to long lead times and poor customer service 2. Varying workforce size by hiring or layoffs Match production rate to demand Training and separation costs for hiring and laying off workers New workers may have lower productivity Laying off workers may lower morale and productivity 3. Varying production rates through overtime or idle time Allows constant workforce May be difficult to meet large increases in demand Overtime can be costly and may drive down productivity Absorbing idle time may be difficult Subcontracting Temporary measure during periods of peak demand May be costly Assuring quality and timely delivery may be difficult Exposes your customers to a possible competitor 5. Using part-time workers Useful for filling unskilled or low skilled positions, especially in services DEMAND OPTIONS 1. Influencing demand – Use advertising or promotion to increase demand in low periods – Attempt to shift demand to slow periods 3. Counterseasonal product and service mixing Develop a product mix of counterseasonal items May lead to products or services outside the company’s areas of expertise MIXING OPTIONS TO DEVELOP A PLAN A mixed strategy may be the best way to achieve minimum costs There are many possible mixed strategies Finding the optimal plan is not always possible Chase strategy Match output rates to demand forecast for each period Vary workforce levels or vary production rate Favored by many service organizations Level strategy Daily production is uniform Use inventory or idle time as buffer Stable production leads to better quality and productivity Some combination of capacity options, a mixed strategy, might be the best solution METHODS FOR AGGREGATE PLANNING Graphical Methods Popular technique Easy to understand and use Trial-and-error approaches that do not guarantee an optimal solution Require only limited computations DECISION MAKING What is Decision-making? Decision-making may be defined as “the process of identifying and choosing alternative courses of action in a manner appropriate to the demands of the situation.” Decision-making, according to Nickels and others, “is the heart of all the management functions.” Decision-making is a responsibility of the engineer manager. It is understandable for managers to make wrong decisions at time. The wise manager will correct them as soon as they are identified. The bigger issue is the manager who cannot or do not want to make decisions. Management must strive to choose a decision option as correctly as possible. Since they have that power, they are responsible for whatever outcome their decisions bring. The higher the management level is, the bigger and the more complicated decision-making becomes. Example: The production manager of a certain company has received a written request from a section head regarding the purchase of an air conditioning unit. Almost simultaneously, another request from another section was forwarded to him requiring the purchase of a forklift. The production manager was informed by his superior that he can only buy one of the two requested items due to budgetary constraints. The production manager must now make a decision. His choice, however, must be based on sound arguments for he will be held responsible later on, if he had made the wrong choice. The Decision-making process 1. Diagnose Problem 2. Analyze Environment 3. Develop viable Alternatives 4. 5. 6. 7. Evaluate Alternatives Evaluate and adapt decision results Implement decision Make a choice The Decision-making process Diagnose problem – if a manager wants to make an intelligent decision, his first move must be to identify the problem. If the manager fails in this aspect, it is almost impossible to succeed in the subsequent steps. Analyze the environment – the environment where the organization is situated plays a very significant role in the success or failure of such an organization. It is therefore, very important that an analysis of the environment be undertaken. Components of the Environment. The environment consists of two major concerns: the internal and external Internal environment – refers to organizational activities within a firm that surrounds decision-making. External environment – refers to variables that are outside the organization and not typically within the short-run control of top management. Develop Viable Alternatives – oftentimes, problems may be solved by any of the solutions offered. The best among the alternative solutions must be considered by management. This is made possible by using a procedure with the following steps: Prepare a list of alternative solutions. Determine the viability of each solutions. Revise the list by striking out those which are not viable. Evaluate Alternatives – after determining the viability of the alternatives and a revised list has been made, an evaluation of the remaining alternatives is necessary. This is important because the next step involves making a choice. Make a choice – after the alternatives have been evaluated, the decision-maker must now be ready to make a choice. This is the point where he must be convinced that all the previous steps were correctly undertaken. To make the selection process easier, the alternatives can be ranked from best to worst on the basis of some factors like benefit, cost, or risk. that managers tend to use the qualitative approach when: Implement Decision – refers to carrying out the decision so that the objectives sought will be achieved. To make implementation effective, a plan must be devised. The problem is fairly simple. The problem is familiar. The costs involved are not great. Evaluate and Adapt Decision Results – In implementing the decision, the results expected may or may not happen. It is, therefore, important for the manager to use control and feedback mechanisms to ensure results and to provide information for future decisions. Immediate decisions are needed. Make a choice – after the alternatives have been evaluated, the decision-maker must now be ready to make a choice. This is the point where he must be convinced that all the previous steps were correctly undertaken. To make the selection process easier, the alternatives can be ranked from best to worst on the basis of some factors like benefit, cost, or risk. Implement Decision – refers to carrying out the decision so that the objectives sought will be achieved. To make implementation effective, a plan must be devised. Evaluate and Adapt Decision Results – In implementing the decision, the results expected may or may not happen. It is, therefore, important for the manager to use control and feedback mechanisms to ensure results and to provide information for future decisions. Control – refers to actions made to ensure that activities performed match the desired activities or goals, that have been set. Feedback – refers to the process which requires checking at each stage of the process to assure that the alternatives generated, the criteria used in evaluation, and the solution selected for implementation are keeping with the goals and objectives originally specified. In decision-making, the engineer manager is faced with problems which may either be simple or complex. To provide him with some guide, he must be familiar with the following approaches: Qualitative evaluation – refers to evaluation of alternatives using intuition and subjective judgment. Stevenson states Quantitative evaluation – refers to the alternatives using any technique in a group classified as rational and analytical. Inventory models – consists of several types all designed to help the engineer manager make decisions regarding inventory. They are as follows: Economic order quantity model – this one is used to calculate the number of items that should be ordered at one time to minimize the total yearly cost of placing orders and carrying the items in inventory. Production order quantity model – this is and economic order quantity technique applied to production orders. Back order inventory model – this is an inventory model used for planned shortages. Quantity discount model – an inventory model used to minimize the total cost when quantity discounts are offered by suppliers. Queuing theory – is one that describes how to determine the number of service units that will minimize both customer waiting time and cost of service. The queuing theory is applicable to companies where waiting lines are a common situations. Network models – these are models where large complex tasks are broken into smaller segments that can be managed independently. The tow most prominent network models are: The program evaluation review technique – a technique which enables engineer managers to schedule, monitor, and control large and complex projects by employing three time estimates for each activity. The critical path method – this is a network technique using only one time factor per activity that enables engineer managers to schedule, monitor, and control large and complex projects. Forecasting – there are instances when engineer managers make decision that will have implications in the future. Regression analysis – the regression model is a forecasting method that examines the association between two or more variables. It uses date from previous period to predict future events. Regression analysis may be simple or multiple depending on the number of independent variables presents. When one independent variable is involved, it is called simple regression, when two or more independent variables are involved, it us called multiple regression. Simulation – is a model constructed to represent reality, on which conclusions about real-life problems can be used. It is a highly sophisticated tool by means of which the decision maker develops a mathematical model of the system under consideration. Linear programming – is a quantitative technique that is used to produce an optimum solution within the bounds imposed by constraints upon the decision. Linear programming is very useful as a decision making tool when supply and demand limitations at plants, warehouse, or market areas are constraints upon the system. Sampling theory – is a quantitative technique where samples of populations are statistically determined to be used for a number of processes, such as quality control and marketing research. When data gathering is expensive, sampling provides an alternative. Sampling, in effect, saves time and money. Statistical Decision-theory – refers to the “rational way to conceptualize, analyze, and solve problems in situations involving limited, or partial information about the decision environment.” Economic Order Quantity S = Fixed Cost H = Holding Cost D = Demand Definition: Fixed Cost - Fixed cost refers to the cost of a business expense that doesn’t change even with an increase or decrease in the number of goods and services produced or sold. Fixed costs are commonly related to recurring expenses not directly related to production, such as rent, interest payments, insurance, depreciation, and property tax. Holding Cost – this is the cost associated to storing unsold inventory Demand – Consumers demand to purchase a product or service • Order Frequency (N): N = D/Q N = Frequency • Optimum Order Interval - Tdays = # of Production days per year / N