Download - Unit-1 (Industrial Management))
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 1/75
INDUSTRIAL MANAGEMENT
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 2/75
Importance of Management:- Accomplishment of Goals.
Effective utilization of resources
Sound organization
Providing vision and foresight
Harmony in work
Help and motivates employees in achieving personal objectives.
Development of society and nation.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 3/75
MANAGEMENT AS SCIENCE OR ART
MANAGEMENT AS A SCIENCE:-
Science is a systematized body of knowledge pertaining to particular field
of enquiry.
Contains concepts, hypotheses, theories and principles to explain cause and
effect relationship between 2 or more factors. To be organized as science, a discipline should have:-
Have a method of scientific enquiry
Establish cause and effect relationship
Principles should be verifiable
Ensure predictable results
Universal applications
Management is systematized body of knowledge and the researchers uses
scientific techniques to collect and analyse data about human cause and
effect relationship.
Management is called as a science but its not a perfect science.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 4/75
R easons for inexactness of management as science:-
Many principles of mgmt. not supported by research.
Difficult to establish cause and effect relationship
Applications of principles depends upon situations and factors.
Mgmt. deals with the people at work and it is very difficult to predict their behavior
accurately.
MANAGEMENT AS AN ART:-
Art signifies the application of knowledge and personal skills to brings out desired
result.
Science is learnt, an art is practiced.
Science is to seek knowledge and art is to apply knowledge.
Features of AR T:-
Denotes personal Skills
Signifies practical knowledge
Helps in achieving concrete results
Creative in nature
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 5/75
Management as an art :- Practice of management does involve the use of knowledge of
management concepts, principles and techniques.
Manager has to apply his personal skills to deal with various
problems in org.
Management is situational
Art of management can be mastered through continuous practice. Management is creative.
MANAGEMENT AS BOTH SCIENCE AND ART:-
Its both science and art.
Science as contains certain universal truth
Art as managing requires application of certain skills which are personal possession of manager.
Manager be a applied scientist, possess the specialised knowledge
of mgmt. and skills to put this knowledge into practice.
Its been remarked that management is the oldest of arts and the
youngest of science.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 6/75
MANAGEMENT AS A PROFESSION
Profession ³ an occupation backed by specialised body
of knowledge and training and to which entry is
regulated by representative body.
R equirement of Profession:-
a) Specialised field of knowledge
b) R estricted entry based on the knowledge and training
c) R epresentative or professional association
d) Ethical code of conduct for self ± regulation.e) Social recognition
f) Professional fee.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 7/75
ProfessionalProfessional CriteriaCriteria ManagementManagement
Specialised body of knowledge It has a systematised body of knowledge andprinciples
Entry based on education and
training
Entry does not require any prescribed qualification
and training
Professional Association No professional assc. Of which membership isessential. In India, AIMA but not essential to hold itsmembership to be a manager
Code of Ethics Managers are not bound by any common code of conduct.
Service responsibilities Service is not the only goal for management.Growing concern for social responsibility of mgmt.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 8/75
Management can be considered a profession :-
Mgmt. is supported by well defined body of knowledge that
can be taught and learnt.
There is need for the formal education and training in
management to acquire competency for application of
management principles, techniques and skills.
C ertain associations of managers have been formed in
different countries in the world.
Several associations of Managers like AIMA have prescribed
code of conduct for their members.
Managers are aware about their social res ponsibilities that¶s
how they are guided by service motive.
Management cant be fully regarded as a profession:-
E ntry to management profession is not restricted .
Need not to have a all India re presentative association.
There are no ethical code of conduct for the managers.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 9/75
DEVELOPMENT OF I.M.
History can be traced to the industrial revolution in
England and other European nations during 18th and19th century.
Development of different schools of mgmt. during
industrial revolution, rise of factory system, growth of
trade unionism, expansion of industrial trade,consumerism, etc.
Harold Koontz ³ Management theory Jungle´ due to
divergent direction of management thoughts.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 10/75
Industrial Revolution:- R esult of invention from 1760 to 1820.
Need of inventions due to increased demand of products due
to widening of markets.
Beyond the capacity of the industry to meet increasing
demand with labor intensive techniques. Some prominent inventions:-
James Hargreaves µspinning genny¶ (1764), R ichard Arkwright µ
waterframe¶ (1779), Crompton µ Mule spinner¶ , Cartwright µ
Powerloom¶, and invention of steam engines.
Significant contributions of Industrial revolution were:-
i. Growth of engineering industries
ii. R ise of chemical industries
iii. Use of power driven machines.
iv. R evolution in iron making
v. Advancement in coal mining.
vi. Development of means of transport.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 11/75
Impact of industrial revolution on
IndustrialManagement:-
Large scale production
Change of form of ownership
Factory system
Specialisation
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 12/75
EMINENT CONTRIBUTORS
Robert Owen (1771-1858):-
Started factory at Manchester for manufacturing textile
machinery.
Became Managing director of Charlton Twist company.
Began cooperative moment in 1828 in R ochdale, England. R eferred as Father of Personnel Management.
Worked for developing spirit of coop. between management
and works.
Practiced the idea that workers should be treated as human,
made prov. like reduced working hours, housing facilities,education of workers and children, etc.
He preached personnel mgmt. pays dividend to the employees
and is an essential part of every manager¶s job.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 13/75
Charles Babbage (1792-1871):- British mathematician at Cambridge University from 1828 to 1839.
Invented mechanical calculator in 1832 and conceived analytical
machine in 1833 later termed as computer.
Known for the book ³ On the Economy of Machinery and
Manufacture´ (1832).
Perceived that methods of science and mathematics could be applied
to solve factory problems.
He was an mathematical management scientist
Especially interested in economics of division of labor and the
development of scientific principles.
Daniel C. McCallum:- Tried to find out solutions to managerial inefficiencies, plaguing rail
roads at that time.
Approach to run railroad was one of system, commonsense, reports
and control.
Initiated job descriptions, promotions on the basis of merits andmade eo le res onsible and accountable for their o erations.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 14/75
APPROACHES TO MANAGEMENT
Empirical Approach.
Operational Approach
Contingency Approach.
Systems Approach
Quantitative Approach
Behavioral Science Approach
Human Relation Approach.
Management Process Approach
Scientific Management Approach
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 15/75
Scientific Management:- Industrial Revolution in England necessitated the
development of new management principles and practices.
Need of bringing people together for the purpose of working
together.
Establishment of formal organizational structure, formal linesof authority, factory systems and procedures.
Management movement known as ³ Scientific Management´
Fredrick Winslow Taylor (1865-1915), emphasized the need
the need for adopting scientific approach.
Important aspects, standard time, standard output, standardcost, standardisation of production process, change in the
attitude of management and workers.
Supporters, Henry L. Gantt, Frank Gilberth, Lillian Gilberth,
Harrington Emerson, etc.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 16/75
Management Process Approach:- Perceive management as a process consisting of planning,
organising, commanding and controlling.
R egards management as a universal process.
The process school is also called as ³ Traditional´ or
³Universalist´ school. Henry Fayol is regarded as the father of this school.
Supporters, Oliver Sheldon, J.D. Mooney and Chester I.
Bernard.
Human Relations Approach:-
R ecognising the importance of human element in org.
Elton Mayo, Hawthrone Experiment and investigated the
myriad of informal relationships, social cliques, patterns of
communication and informal leadership.
Lead to trend known as ³ Human relation movement´
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 17/75
Behavioral Science Approach:- Utilises and uses the methods and techniques of social sciences such
as psychology, sociology, social psychology and anthropology.
Pioneer of this school, Gantt and Munsterberg.
As per them, study of management must be centered around the
people and their interpersonal relations.
Concentrated on motivation, individual drives, group relations,
leaderships, group dynamics and so forth.
Contributors, Abraham Maslow, Fredrick Herzberg, Victor Vroom,
Douglas McGregor.
Quantitative Approach:- Using of scientific tools for providing scientific basis for managerial
decisions.
Management problems can be expressed in terms of mathematical
symbols and relationships.
Linear programming, CPM, PER T, Break even analysis, Game
theory and queuing theory widely popular.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 18/75
Systems Approach:- Composed of elements or subsystems that are related and
dependent on each other.
Based on generalization that an organisation is a system and its
components are inter-related and independent.
Basic feature, more importance given to the over- all effectiveness
of the system rather then sub-system.
Founder, Chester I. Bernard.
Emphasises on the communication and decision process through
out the organisation.
Contingency Approach:- Also known as situational approach.
Basis, internal functioning of organisation must be consistent
with the demands of technology and external environment and
needs of its members.
Suggest, there is no one best way to handle any management
problem.
3 major parts :- i) environment, ii) management concepts,
principles and techniques , iii) contingent r¶ship between the two.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 19/75
Operational Approach:- Advocated by Koontz and O¶Donnell.
Recongnises there is a central core of knowledge about
managing which exist in management such as line and staff,
patterns of departmentation, span of management, managerial
appraisal and various managerial control techniques.
Regards management as universally applicable body of knowledge that can be brought to bear at all levels of managing and
in all types of enterprises.
Also recognises actual problem manager face and the envt. in
which they operate may vary between enterprises and levels.
Emperical Approach:- Management is the study of the experience of managers.
Knowledge based on experience of successful managers can be
applied by other managers in solving problems and in making
decisions.
Based on the analysis of the past experience and uses the case
method of study and research.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 20/75
APPLICATIONS OF INDUSTRIALMANAGEMENT
elps in development of the org. for achievement of group goals.
Helps in finding out efficient and economical work methods.
Helps to find out the economic lot size work required during processing.
Helps in schedule of work.Tries to find out standard performances.
Maintains discipline though control over the employees.
Keeps co-ordination among the staff at various levels.
Proper distribution of work and machines among the workers to secure
maximum output.
It improves efficiencies.Suggest new ideas and improvements.
Helps in cost control, rating and budgetary control.
Makes arrangement for payment on scientific basis.
Takes care of trade, finance, insurance, store and banking policies.
Gives due importance to labor grievances and their psychology.Helps in improving the competitive position of the organisation.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 21/75
SCOPE OF IM
EngineeringManagementEngineeringManagement
Improvement of work conditionImprovement of work condition
InternalInternal
Vendor Development,
Customer Need Analysis, etc.
Vendor Development,
Customer Need Analysis, etc.
ExternalExternal
Lighting, Noiseandvibration,
fatigue,ventilations, etc.
Lighting, Noiseandvibration,
fatigue,ventilations, etc.
Improvement inManagerialDecisions
Improvement inManagerialDecisions
Organizationalproblems:-Leadership,
Motivation, Automation, Org.
culture, etc.
Organizationalproblems:-Leadership,
Motivation, Automation, Org.
culture, etc.
Improvement inWorkplace,method andprocedures
Improvement inWorkplace,method andprocedures
Work study,system analysis,layout planning,
planning, directing,control,
scheduling, etc
Work study,system analysis,layout planning,
planning, directing,control,
scheduling, etc
Improvement inproduct and
services
Improvement inproduct and
services
TQM, Value engg.,Business process
re-engg.,Benchmarking.
TQM, Value engg.,Business process
re-engg.,Benchmarking.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 22/75
ACTIVITIES OF I.M. Manufacturing Engineering:-
i. Equipment selection and specialization
ii. Design of tools, jigs and fixtures.
Methods of Engineering:-
i. WorkMeasurement
ii. Determination of allowances
iii. Computation of standard time
Production planning and control:-
i. Material Management ( Raw material, semi-finished , finished and
components)
ii. Machines and manpower iii. Routing
iv. Estimating
v. Scheduling
vi. Dispatching
vii. Expediting
viii. evaluation
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 23/75
Plant layout and material handing.
Organization management
Inspection and quality control
Wages and incentives
Budgetary control and cost control.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 24/75
FUNCTIONS OF INDUSTRIALENGINEERING.
Organization and management methods.
Plant location and plant layout
Materials handling methods. Methods engineering.
Time study
Production, planning and control.
Statistical quality control Cost control
Job evaluation
Wage incentives
Operation research.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 25/75
PRODUCTIVITY
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 26/75
DEFINITION No single definition of productivity.
European Productivity Council ³ is an attitude of mind. It is a
mentality of progress , of the constant improvement of that
which exist. It is the certainty of being able to do better today
than yesterday, and continuously. It is the constant
adaptation of economic and social life to changing conditions;
it is the continual effort to apply new techniques and
methods. It¶s the faith in human progress´.
Another definition widely acceptable andcommonly used ³ productivity as the ratio of output to
input in a productive system´.
As per definition productivity can be improved by either:- Producing more output with the same inputs, or
Using lesser inputs to produce same output.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 27/75
Different views on productivity from different perspectives:-
Economics:- effect of envt. and govt. regulation.
Industrial engg.:- Stress on effects of methods and work flow onproductivity.
Psychologist and management:- job design or other human relationapproach.
Complexity to define productivity, as it encompasses inputs,
outputs ad the conversion process of techno-social-commercial environment of production system.
Difficult to measure when end product is multiple commodities,not homogeneous in nature and has a number of by-products.
Out is converted into standard hours i.e. time allowed for a product delivered to stores by an individual worker or a group of workers.
Eg. Total time allowed to product 1 unit = 15 mins (.25 hrs.)
Units to be produced: 1000 units
Total time = .25 x 1000 = 250 hours.
Standard time is calculated with consideration to ideal situation with
respect to normal speed of a worker and his willingness to work.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 28/75
Productivity = Labor utilisation X Labor efficiency
= Standard hours X Available shift hours
Available shift hrs. Actual hours worked
= Standard hours/ Actual hours worked
In capitalist industry labor productivity has little significance.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 29/75
PRODUCTIVITY, EFFICIENCY AND EFFECTIVENESS
Efficiency:- It is the ratio of actual output attained to the
standard expected output. Indicates how well the resources
are utilised to accomplish the targets or results.
Effectiveness:- Degree of accomplishing the objectives. Productivity:- The combined result or effect of efficiency
and effectiveness.
Productivity Index:- Performance achieved
Input resources consumed
= Effectiveness/Effeciency
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 30/75
Efficiency, Effectiveness and productivity of a production system
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 31/75
DIFFERENT APPROACHES Partial Productivity:-
Defined on the basis of class of the input being considered.
Eg. Increase in labor and its impact on the increased output isrepresented by productivity.
Same for capital productivity, material productivity, etc. Advantages:-
Good diagnostic measure to identify areas where improvements may be done.
Easy to calculate as independent of other inputs.
Easy to understand.
Easy pin-pointing the logic for improvement.
Easy to benchmark (compare) with other industries.
Data may be easily generate
Limitations:- Misleading if used out-of-context.
Doesnt contain overall effect of the system of performance.
Focused areas of improvement are difficult to identify.
It gives the myopic view of performance.
Misses holistic approach.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 32/75
Productivity of Labor = Output
Number of workers or No. of man hours
Man Hrs = No. of workers employed x No. of hrs. worked.
Capital Productivity = Output
Total Capital Employed
Productivity of Material = Output
Material
Productivity of machine = Output
Machine Hrs. worked
Productivity of Land = Output
Area of Land used.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 33/75
TOTAL FACTOR PRODUCTIVITY Ratio of net input to the sum of labor and capital
inputs.
Net output = Total output Intermediate goods or services
Labor + capital inputs Labor + capital Input Advantages:-
Relatively easy to compile data from company records
Preferred as easy to compare in cross-industry context.
Limitations:-
Many important inputs like material , energy, etc., are ignored. Net-output does not reflect the efficiency of prod. System in a
proper way.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 34/75
TOTAL PRODUCTIVITY It¶s the ratio of total output to the sum of all input factors.
Advantages:-
Considers all the outputs and inputs factors.
More accurate representation of real economic performances.
Easy for top management to understand the company
performance.
If used with the partial productivity, areas of improvement may
be identified.
Easy for cost accountants to compare.
Easy to do sensitivity analysis.
Limitations:-
Difficult to generate company wise and sector wise data.
Many indirect measures of input/output are ignored.
TPI = Total production of goods and services
Labor + Capital + Materials + Power
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 35/75
PRODUCTIVITY AND PROFITABILITY Basic Productivity Ratio:- Prod. = Output/Input.
Productivity may be measured in terms of physical units,
monetary units, depending upon the availability of data and
requirement of specific situations. Increase in the productivity occurs when the ratio of output
to input rises from one period to the next.
Profitability = (Revenue ± Cost)/ Investment
Profitability can be increased by reducing costs and that
would also increase the productivity. A decrease in the price of the product may lead to
decrease profitability even though productivity my be rising
or vis-à-vis.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 36/75
IMPORTANCE OF PRODUCTIVITY
Increase inProductivity
Reduction inCost
Increase inProfits
Competitiveadvantage
BetterQuality of
life
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 37/75
FACTORS AFFECTINGPRODUCTIVITY
Categories of factors
Internal factors:-
a) Technological factor :-
Size and capacity of plant
Product design and standardisation
Timely supply of material and fuel
Rationalisation and automation measures
Repairs and maintenance
Production planning and control
Plant layout and location
Material handling system
Inspection and quality control
Machinery and equipment used
R
esearch and development Inventory control.
Internal Factors or controllable
External Factors or uncontrollable
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 38/75
b). Human Factors:- Existence of adequate skilled personnel in the org. for increasing the
productivity.
Two forces which affect the productivity of human labor are:-
i. Ability to work
ii. Willingness to work.
c). Financial Factors:-
Adequate amount of capital required for running the org.
d). Material and Energy:-
Efforts to reduce consumption of energy and materials.
Factors to be considered:-
i. Selection of quality material
ii. Control of wastage
iii. Effective stock control
iv. Development of sources of supply
v. Optimum energy utilization and energy savings.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 39/75
External Factors:- Natural factors ( physical, geographical and climatic conditions)
Sociological Factors ( social customs, traditions and social institutions)
Government policy (industrial policies, licensing policies, taxation
policy, etc.
Managerial Talent ( Professional managers)
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 40/75
FACTORS FOR INCREASINGINDUSTRIAL PRODUCTIVITY
Improved raw materials
Better technology
Scientific selection and training of workers
Work study
Research and development
Good working conditions
Provision for incentives
Harmonious relationship Quality and cost consciousness
Workers participation in management
Quality Circles (small group of workers which regularly meets to
discuss problems, investigate causes, recommend solutions and
authorised to take corrective actions)
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 41/75
PRODUCTION SYSTEMS Process by which goods and services are created.
Other words, conversion of raw materials into semi-finished ad finished products with the help of certain
production process.
Aim of any prod. system is produce economically thegoods and services required by the customers.
Essential to plan, organize, direct and control.
All these activities together known as production
management.
Performed by the production manager.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 42/75
PRODUCTION MANAGEMENT
Concept of Production:- Traditionally used with the reference to manufacturing activity
resulting in output of goods.
Scope have been widened as its also include the production of
services, as banking, insurance, teaching, defense , etc. Production function of acquiring inputs ( materials, capital,
manpower, etc.) and transforming them into goods andservices desired by customers.
Output it measured in terms of predetermined standards of quantity,quality and time schedules and provides feedback to input andtransformation subsytems for corrective actions.
Inputs: humans,
financial , physical,
technological.
Transformat
-ion process
Outputs:
goods and
services
Control
Input-output model
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 43/75
Production Management:- As per Elwood S. Buffa, Prod. Mgmt. deals with decision
making related to production process, so that resulting goods
and services is produced according to the specifications, inthe amounts and by schedule demanded and at minimumcost.
In simple words, prod. Mgmt. deals with the managerial functionsrelated to the design of the production system and operationand control of the production system i.e. production planning andcontrol.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 44/75
FUNCTION AND SCOPE OF
PRODUCTION MANAGEMENT
Design of product
Design of production system
Production planning and control
Selection of location
Layout of plant
Selection of plant and equipment
Research and development
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 45/75
TYPES OF PRODUCTION SYSTEM
Prod. system a framework within which conversion of input into output occurs.
Types of production system:- A. Production or continuous manufacturing.
a) Line production or synthetical industries.
b) Flow production or analytical industries
B. Job production
C. Intermittent production
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 46/75
CONTINUOUS PRODUCTION
Where facilities are standardised as to routines and flowsince inputs are standardised.
Involves continuous production of goods in anticipation of customer demand rather then in response to customerdemand.
Eg. Petroleum, chemical, cement, steel and sugarindustries.
Classified: (i) Flow or analytical industries (ii) Line orsynthetical industries.
Flow or analytical industries:- Breaks up the material into several parts along with the processor
production.
Arrangement is not flexible.
Eg. Oil refinery.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 47/75
Mass Production or synthetical industries:- Involves mixing upto two or more materials to manufacture a product.
Identical particles are produced in vary large quantities.
Eg. Electrical appliances.
Continuous manufacturing process lends to standardizationof prod. techniques and to mechanization, in order to keep
labor cost comparatively lower. Main characteristics :-
Flow of material is continuous with little or no queuing at any stageof processing.
Machines and plant layout ( Special purpose machines and plant and assembly stages are laid out on the basis of product layout).
Material handling comparatively less, firstly materials move throughshort distance between stages and secondly material handling ismechanised by conveyors and transfer machines.
Relatively low skilled labor is necessary.
Manufacturing cycle time is very short.
Supervision is relatively easier as only few instructions are required.
Interruptions due to breakdowns and absenteeism seriously affect rod.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 48/75
JOB ORDER PRODUCTION Manufacture of products to meet specific customer
requirements of special orders.
Quantity is usually small.
Mainly concerned with special projects, models, proto-types,special machinery or equipments to perform specialised and
specific tasks, components or sub-assemblies to providereplacement or repairs.
3 types of on the basis of regularity of production:-i. A small number of pieces produced only once.
ii. A small number of pieces produced intermittently when the need arises.
iii. A small number of pieces produced periodically at a known intervals of time.
Planning become complex as one order all together different from the other.
Skilled labor is required to handle variety of jobs.
Eg. Brick making, shoe industry, customized machine making.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 49/75
Output is mainly governed by the plant capacity andimmediate increase in plant capacity is impractical.
Scheduling is dependent on the assessment of productiontimes.
Main Characteristics:-
Small production runs, single or product designed andmanufacture strictly to customer specifications.
Flow of materials and components between different stages,highly discontinuous due to imbalanced operation.
Relatively longer manufacturing cycle time as relatively longdelays occur due to lack of materials, imbalanced work flow, designchanges , etc.
Machines are arranged according to process layout as it differfrom product to product.
Highly skilled and versatile workers are necessary.
Highly competent general engineers used for close supervision.
Unit cost of production is high as cannot take advantage of largescale buying and automation.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 50/75
BATCH PRODUCTION Manufacture of number of similar articles, either to meet a
specific order or to satisfy continuous demand.
When the production of particular batch is completed, plant and equipment can be used for the production of similar or
other products. 3 types under batch production:-
i. A batch produced only once.
ii. A batch produced repeatedly at irregular intervals when the needarises.
iii. A batch produced periodically at known intervals to satisfy
continuous demand. 2 principle problems:-
Size of the batch ( number of components to be produced per lot)
Scheduling of production.
Solution depends on whether the production is governed
by the external orders or whether the plant is producingfor internal consum tion.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 51/75
Characteristics:- Characterised by short production run and frequent changes in set
ups.
It needs high investment.
Planning, routing and scheduling changes with fresh batch of orders.
Skilled labor capable of handling variety of jobs is required.
Supervisors need considerable knowledge of specific process. Plant and equipment are procured and arranged to obtain flexibility.
Material handling is less as compared to job order production.
Disruptions due to machine breakdown, absenteeism do not seriouslyaffect production as another machinery can be used, another operatorfrom another machine can be shifted.
Eg. Electronic goods, medicines, eatable products, etc.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 52/75
CHARACTERISTICS OF PRODUCTION
SYSTEMSCharacteristics Job order type Batch
ProductionContinuousproduction
Examples Prototype models,machine tools, spcl.Projects, large turbogenerators, shipbuilding material, etc.
Shoe-making, clothmanufacturing, castingprocess, chemicalplants, etc.
Automobile industry,electrical appliances,household appliances,sugar mills, toy manf.Co., glass manf., etc.
End Product qualityand product design
Non-standard. Verysmall. The product design changes fromone order to another
Standard (similar) widerange of products aremanufactured in smallquantities of lots. Theproduct design changesfrom lot according to
product specifications
Standard (identical).Few standards productsare manufactured inlarge quantities. Theproduct design is to bedone only once.
Equipment Used General Purpose General Purpose Special purpose
Type of plant layout Process Plant (functional)
Process layout orcombination
Product layout
Skill of Worker Highly skilled to handlespecial jobs
Skilled since there isfrequent changes in
product design machineset up for each lot
Semi-skilled orunskilled. Since
manufacturing activitiesbecome routine function
Characteristics Job order type Batch production Continuous
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 53/75
Characteristics Job order type Batch production Continuousproduction
Supervising difficulties Much Less Quite less
Material handling
equipment
Mobile Less mobile, conveyors
can also be used
Built in type wide scope
for mechanised materialhandling systems
In Process inventories High Relatively low Low, since production iscontinuous
Unit Cost of item High Less Quite less
Prior Planning Complex Easy Very easy
Control Complex Easy Very easy
Balance of load Easier and flexible Relatively difficult Very difficult coz of perfect balancing of prod.Line
Job instructions Complex and in details asthe job changes everytime
Few job instructions whenthe prod. of another lot begins.
Only at the out set of new job. Once instructionsgiven becomes routine
Investment in machineand equipment
Few machines arerequired as arranged inprocess layout.Investment in machine is
less
Investment in machinescomparatively more
High investment inmachine since there maybe duplication of machinefor each production line
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 54/75
ORGANIZATIONAL OWNERSHIP
Firm an ownership organization which combines factorsof production in a plant for the purpose of producing goodsor services and selling them at profit.
Selection of type of ownership:- Size and nature of business to be started
Technical difficulties.
Market competition and scope of the articles in the market.
Capital required
Limitations and restrictions put forth by the Govt. in connection
with grant of loans , foreign exchange and other such things.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 55/75
TYPES OFOWNERSHIP
PrivateEnterprise
Individualownership
PartnershipJoint Stockcompanies
Private Ltd. co.
Public Ltd. co.
Co-operativesector
enterprise
Producer co-op. society
Consumer co-op.
Housing co-opsociety
Credit co-opsociety
Public sectorEnterprise
Govt. Deptt.
Govt. co.
Statutory corp.
StatutoryBoard.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 56/75
INDIVIDUAL OWNERSHIP
Also known as single proprietorship or one man business
Simplest and oldest form.
Individual entrepreneur supplies the entire capital.
Organises and manages and take entire risk.
Have the entire authority and responsibility for decision making,policy making and working.
Profits and losses are of his own.
Can be started by anyone having initiative, tact, selling aptitudeand little capital.
Legal Liability:- covers all his possessions and creditor can collect
his personal property. Applications:-
For small scale business requiring small capital which can be spared byone man. Eg. Agriculture, cottage industries, retail trade, etc.
Where the risk cover is not to heavy.
Where management by one person is possible.
Where local market is available.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 57/75
Advantages:-
Simple and easy
Least legal formalities
Quick decisions and prompt actions
Quality production
Better labor relationship
Personal attention to customers
Small capital Maintenance of secrecy
Incentive
Flexibility.
Disadvantages:-
Limited capital
Unlimited liability Personal limitations
Small income
Cannot compete with a big business
Short life ( if a owner dies business may collapse
Division of labor is not possible (one man show)
No economies of large scale.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 58/75
P ARTNERSHIP ORGANIZATION At one stage of development it becomes impossible for one man to
control the business and to contribute the necessary capital.
Enters into a partnership with other person who can provide theassistance as well as capital for business.
Partnership may be formed to start a new business altogether.
Formed usually to combine capital, labor and varied skills.
Partnership is owned by 2 or more people (upto 20).
Shares powers, responsibilities and profits according to agreement.
As per Indian Partnership Act, 1932 The relation between twoor more persons who have agreed to share profit of a business,
carried on by all or any of them acting for all. Formation:-
Formed either verbally or written agreement (preferred).
Written agreement is known as Partnership Deed.
Contains terms and conditions relating to partnership and regulations governinginternal management.
Lay down rights and duties of partners.
Have to be duly stamped and sealed and registered in Court of Law.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 59/75
Enjoys legal status and serve as legal evidence.
Contains of Deed:- Name of the firm
Nature of business
Date of starting of business
Duration of partnership
Rate of interest in the capital invested.
Money contributed by each partner. Allotment of managerial functions among partners.
Share profit and loss and proportion.
Salary if any allowed to managing partners.
Basis of inclusion of new partners.
Amount which can be withdrawn by each partner.
Aim of partnership and manner of dissolution.
Provision of arbitration for settling the disputs.
Statement to be prepared by partners containing:- Name of the firm.
Place of business principal place and branches if any.
Name and addresses of all partners
Date of joining the firm in case of every partner.
Duration if any.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 60/75
TYPES OF P ARTNERS
Participate in the working
Jointly responsible for liab., obligations anddefects.
General Partner
Liability and debts limited to the extent of capital.
Not entitled to interfere in the administation
Limited partner
Take active part in the formation and management of business and may also get salary in addition of profit.
Active or ManagingPartner
Dont take active part in business.
Contribute capital and get the part of profit.
Sleeping and silent partner
Lend their reputed name for the companys reputation
Dont invest money nor take part in the management.Nominal Partner
Below 18 yrs of age.
Allowed with the consent of other partners.
Liability limited to their investment.Minor Partner
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 61/75
Advantages:- Easy formation
More capital
Diverse talent
Less possibility of error of judgement
Prompt decisions
Large economies
Personal factor ( personal relationship with employees and the customers) Division of labor
Simple dissolution
Cautious and sound approach.
Disadvantages:- Unlimited liability
Short life ( death or retirement of any partner, it can come to an end) Insufficient capital
Disagreement
Less secrecy
Non-transfer of partnership
No direct relation between efforts and rewards
Lack of public confidence.
Parameter Individual ownership Partnership
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 62/75
p p
Membership Individual owner Minimum 2 and max. 50
Formation No agreement is required Through Partnership Deed
Capital Limited capital Comparatively larger capital
Registration Not required Necessary under the Partnership Act, 1932
Risk/Profit Individual owner bear entire risk andenjoy entire profit
Risk spread among partners andprofit is shared as per agreement
Management Individual manages entire business Shared by the partners
Secrecy Individual owner can easily maintainthe secrets
Can be leaked if partner leaves thebusiness.
Soundness ofDecisions
Individual not be expert in all aspectsof business
Problem examined from more thanone view point hence decisions aremore sound
Suitability For small scale business Small as well as medium scalebusiness
Division of labor Not possible Partners may divide the workamong themselves.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 63/75
JOINT-STOCK COMP ANY
Formed and registered under Indian Companies Act, 1956.
Capital is contributed by a large number of persons, in theform of shares of different values.
The purchaser of shares are known as shareholders.
Managing body i.e. Board of Directors, elected byshareholders.
Definition of company an artificial person having anindependent legal entity and a perpetual succession withdistinctive name and a common seal having a commoncapital divided into shares of fixed value which aretransferable and carry limited liability.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 64/75
CHARACTERISTICS
Created by registering or incorporating an association of persons under the Company Act.
Has a separate legal entity distinct of its members.
Artificial person
Perpetual life and a very stable existence.
Have a common seal.
Separation of ownership from management.
Limited liability of shareholders.
Lower tax liability. Easy transferability of shares
Wide distribution of risk of loss.
Large membership
Statutory regulations provided under Indian Companys Act,
1932.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 65/75
Definition of Joint-stock company legal business ownedby the shareholders having limited liability and managedby an elected Board of directors.
Formation:- Promoter prepares a scheme of business.
Secure the cooperation of 6 more persons ( min. 7 to form a co.).
Promoters prepares the following documents:- Memorandum of association
Articles of association
List of persons who have consented to be the Directors of the company along withthe consent in writing of such persons.
Declaration by an advocate confirming all the requirement of Act fulfilled.
Name and addresses of promoters.
Memorandum of Association contains:- Name of the company
Its name and objectives
Location of head office.
Amount of share capital
Kind and value of each share. Declaration of limited liabilit .
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 66/75
ShareholdersBoard of Directors
Auditor
Executivecommittee
GeneralManager
Sales deptt.
Purchase deptt.
AccountingDeptt.
Production
Deptt.
Bankers
Organization structure of Joint-Stock company.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 67/75
TYPES OF JOINT STOCK
COMP ANIES 2 types of joint stock companies:-
Private limited company
Public limited company
Private Limited Company:-
Capital collected from the private partners, some may be active whileothers being sleeping.
Restricts the right to transfer shares and avoid public to take up shares
Number of member between 2 to 50, excluding employee and ex-employee shareholders.
Need not to file documents like consent of directors, list of directors, etc.
with the Registrar of Joint Stock Companies. Need not obtain certificate of commencement of business from the Registrar.
Need not to circulate, the balance sheet, P /L account, etc. among itsmembers, but need to hold its annual general meeting.
Must get its account audited.
Have to send a certificate along with the annual return to the Registrar
stating does not have shareholders more than 50 excluding employee and ex-employee shareholders.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 68/75
Public Limited
Company:-
Capital is collected from the company by the issue of shares.
Number of shareholders should not be less than 7, no limit for themaximum number of shareholders.
Have to file the documents like consent of Directors, list of directors,directors contract, etc., along with memorandum of association andarticles of association.
Have to issue prospectus to the public.
Have to allot shares within 180 days from the date of prospectus.
Can start business only after getting the certificate of commencebusiness.
Has to hold statutory meeting and to issue a statutory report toall members and also to Registrar of companies.
Easy transferability of shares.
Directors are subject to rotation
Have to get the account audited every year by registered auditor.
Send financial statement to all its members and to the registrar.
Had to hold general meeting every year.
Managing agents gets a fixed percentage of net profit every year.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 69/75
Advantages:- Large capital
Limited liability of members
Transferability of shares.
Perpetual succession.
Specialist services
Risk is shared.
Have stability, efficiency and flexibility of management.
Disadvantages:- Too much legal formalities.
Managed by big shareholders.
Managed by the high paid official and objectives might contradict that
with of owners. Commitment of frauds are possible.
BODs can use their position for personal profits ( sell or purchase of shares)
Difficult to maintain secrecy.
Team spirit lacks.
Lack of accountability due to divided responsibility.
.No. Particulars Pvt. Ltd. Public Ltd.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 70/75
1. Membership Confined to the close friends andrelatives, they contribute for capitaland public can not be invited.
Its open to the General public and anyperson can contribute and becomeshareholders.
2. Limits tomembership
Min. 2 and max. 50 Min. 7 and no max. limit.
3. Election ofdirectors
No need of holding statutory meetingto elect directors
Statutory meeting has to be held andthe shareholders elect the directors.
4. Resale of shares Cannot be resold or transferredwithout the consent of the co.
Shares can be easily resold and transferwithout the co. consent.
5. Audit of Accounts No legal provision of the audit of co.saccount.
Accts. have to be audited andcirculated among the members.
6. Min. capital Can be started with any amount without any legal binding
Min. lay down capital is legally requiredbefore starting of a business.
7. Name Has to use words Pvt. Ltd. at the
end of its name
Has to use only the word Ltd. at the
end of its name.
8. No. of Directors Min. 2 Min.3
9. Legal Control Less legal controls Regulations are more strict
10. Remuneration of
Directors
Less restrictions for Directors
remuneration
Remuneration of directors is restricted
to 11% of net profit.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 71/75
COOPERATIVE ORGANIZATIONS
( SOCIETIES) Due to the hardships suffered by exploited class compelled
it to unite for their economic uplift through self and mutualhelp.
Lead to the evolution of cooperative movement.
Industrial coop. and consumer coop. were developed inGermany.
Definition of Coop. Organization:- it is a form of org., wherein persons, irrespective of caste, creed ad
religion voluntarily associate together as human beings, on the basis of
equality for the fulfillment of their common economic interest. As per ILO, A coop. org. is an association of persons, usually of
limited means, who have voluntarily joined together to achieve acommon economic even through the formation of a democraticallycontrolled organization, making equitable contributions to the capitalrequired and accepting a fair share of risks and benefits of theundertakings.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 72/75
FEATURES
Voluntary organizations
Open memberships
Economic and democratic management
Profit is not important
Spirit of cooperation
Unity
Common interest
Cooperative status
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 73/75
AIM AND OBJECTIVES OF
INDUSTRIAL COOPERATIVES@ To purchase and supply raw materials, tools and equipment
to members.
@ To secure contracts and execute them with the help of
members.@ To market the finished goods of members.
@ To purchase machinery for giving on hire to members.
@ To borrow funds from members and non-members.
@ To grant loans and advances to members on the security of
raw-materials and finished goods belonging to them.
@ To undertake all such activities as are conducive orincidental to the accomplishment of aforesaid objectives.
@ To safeguard the interest of poorer sections of community.
5/13/2018 Unit-1 (Industrial Management)) - slidepdf.com
http://slidepdf.com/reader/full/unit-1-industrial-management 74/75
FORMATION
Application to be submitted to the Registrar of Cooperative societies.
Application provide all essential information like name andaddress of the society, its aims and objectives, particulars
of share capital , etc.
Application should be signed by atleast 10 members.
Should be accompany duplicate copies of Bylaws i.e. rulesand regulation governing internal organization andmanagement of the society.
Registrar after scrutiny of documents will issue acertificate of registration and the society will be formed.