ENGINEERING MANAGEMENT

INTRODUCTION TO ENGINEERING MANAGEMENT

Adam Smith’s Contribution to the Field of
Management

• Wrote the Wealth of Nations (1776)

• Advocated the economic advantages that
organizations and society would reap from the
division of labor:
• Increased productivity by increasing each
worker’s skill.
• Time saved that is commonly lost in changing
tasks.
• The creation of labor-saving inventions and
machinery.
Competitive Advantage

• Four sets of factors contribute to a nation’s well-being (Michael

Porter)
• Resource, labor cost, skills and education of people
• Demand conditions of a nation (market size, advertisement)
• Suppliers (location of suppliers)
• Firm’s strategy and structure and rivalry
 Difference between a Manager and Management

 A Manager is someone who coordinates and oversees the work of

other people so that organizational goals and objectives can be
accomplished.

 Management in all business areas

and organizational activities are the acts
of getting people together to accomplish
desired goals and objectives.

 Organizations comprises of people working together and

coordinating their actions to achieve specific goals. 4
 Difference between Objectives and Goals

What are Goals?

 A goal is a short statement of a desired outcome to be
accomplished over a long-time frame, usually three to five years.
 It is a broad statement that focuses on the desired results and does
not describe the methods used to get the intended outcome.
Some common examples of business goals include the following:
 Maximizing profits  Growing revenues
 Increasing efficiency  Providing excellent customer service
 Becoming an industry leader  Creating a brand
 Becoming carbon-neutral 5
 Resources needed by an Organization

Resources
Resources are organizational assets and include:
 People  Machinery  Raw materials
 Information  Skills  Financial capital

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Levels of Management

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 First-line Managers

• Individuals who manage the work of non-

managerial employees.

Middle Managers
Classification • Individuals who manage the work of first-line
of Managers managers.

Top Managers

• Individuals who are responsible for making

organization-wide decisions and establishing
plans and goals that affect the entire organization.

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Level of Management
Skill and Level of Management

Conceptual and
design skills

Human skills

Technical skills
 Management in New Era
The Internet

• changes the way management must think and act

• chief web officer will be one of the most important jobs
- will oversee information systems and strategies
- will create and manage business relationships via new
communications technologies
• great companies will capitalize most fully on the Web’s potential
• distinction between Internet and non-Internet companies is
fading
Management in New Era (Cont.)

Globalization

• isolationism is a thing of the past

• multinational enterprises have sales offices all over the
world
• corporations use their transnational status to operate
beyond the control of national governments
• even small firms that do not operate on a global scale
must make strategic decisions based on international
considerations
Management in New Era (Cont.)

Knowledge management
• set of practices aimed at discovering and harnessing an
organization’s intellectual resources
• unlock people’s expertise, skills, wisdom, and
relationships
• intellectual capital is the collective brainpower of the
organization
Collaboration across “boundaries”
• capitalize on the ideas of people outside the traditional
company “boundaries”
• must effectively capitalize on customers’ brains
• get customers to think creatively to identify new product
and service ideas
Managing for Competitive Advantage

Cost Competitiveness Innovation

Competitive advantage is a position of a

company in a competitive landscape that allows the
company earning return on investments higher than
the cost of investments.

Quality Speed
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 Managing for Competitive Advantage

 Cost Competitiveness
• costs are kept low enough so that you can realize profits and price your
products at levels that are attractive to consumers
• key is efficiency - accomplishing goals by using resources wisely and
minimizing waste
 Quality
• excellence of a product, including its attractiveness, lack of defects,
reliability, and long-term durability
• importance of quality has increased dramatically
• must identify specific elements of quality to correct problems, target needs,
and deliver world-class value

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 Managing for Competitive Advantage

 Speed
▪ often separates winners from losers in world competition
▪ speed became a vital requirement in the 1990s since requirement has
increased exponentially
 Innovation
▪ the introduction of new goods and services
▪ important to adapt to changes in consumer demands and to new sources of
competition

Best managers and companies delivering all four.

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 Organizational Performance

Measures how efficiently and effectively managers use resources to satisfy

customers and achieve goals.
 Efficiency
A measure of how well resources are used to achieve a goal.
Usually, managers must try to minimize the input of resources to attain the same goal.

 Effectiveness
A measure of the appropriateness of the goals chosen (are these the right goals?), and
the degree to which they are achieved.
Organizations are more effective when managers choose the correct goals and then
achieve them. 17
Efficiency and Effectiveness

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Managerial Functions

Planning
Defining goals, establishing strategies to achieve goals, developing plans to
integrate and coordinate activities.
Organizing
Arranging and structuring work to accomplish organizational goals.
Leading
Working with and through people to accomplish goals.
Controlling
Monitoring, comparing, and correcting work.
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Managerial Functions

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 Managerial Functions

 Planning
Planning is the process used by managers to identify and select
appropriate goals and courses of action for an organization.
3 steps to good planning
1. Which goals should be pursued?
2. How should the goal be attained?
3. How should resources be allocated?
The planning function determines how effective and efficient the
organization is and determines the strategy of the organization.

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 Managerial Functions

 Organizing
In organizing, managers create the structure of working relationships
between organizational members that best allows them to work
together and achieve goals.
• Managers will group people into departments according to the tasks
performed.
• Managers will also lay out lines of authority and responsibility for members.
An organizational structure is the outcome of organizing. This structure
coordinates and motivates employees so that they work together to
achieve goals.
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 Managerial Functions

 Leading
In leading, managers determine direction, state a clear vision for
employees to follow, and help employees understand the role they play
in attaining goals.
• Leadership involves a manager using power, influence, vision,
persuasion, and communication skills.
• The outcome of the leading function is a high level of motivation and
commitment from employees to the organization.

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 Managerial Functions

 Controlling
In controlling, managers evaluate how well the organization is achieving
its goals and takes corrective action to improve performance.
• Managers will monitor individuals, departments, and the organization
to determine if desired performance has been reached.
• Managers will also take action to increase performance as required.
• The outcome of the controlling function is the accurate measurement
of performance and regulation of efficiency and effectiveness.

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 Managerial Roles and Skills

A role is a set of specific tasks a person performs because of

the position they hold.
Roles are directed inside as well as outside the organization.
There are 3 broad role categories:
1. Interpersonal Role
2. Informational Role
3. Decisional Role

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 Managerial Roles and Skills

 The interpersonal roles involve people (subordinates and persons outside the organization)
and other ceremonial and symbolic duties.
 The three interpersonal roles include figurehead, leader, and liaison.

 The informational roles involve collecting, receiving, and disseminating information.

 The three informational roles include monitor, disseminator, and spokesperson.

 Finally, the decisional roles entail making decisions or choices and include entrepreneur,
disturbance handler, resource allocator, and negotiator.

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Managerial Roles and Skills

Skills Needed at Different Management Levels

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 Managerial Roles and Skills

Skills Approach
 Technical Skills
Knowledge and proficiency in a specific field
 Human Skills
The ability to work well with other people
 Conceptual Skills
The ability to think and conceptualize about abstract and
complex situations concerning the organization
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 Operations Management

 Operations is that part of a business organization that is responsible

for producing goods and/ or services.
 Goods are physical items that include raw materials, parts,
subassemblies such as motherboards that go into computers, and final
products such as cell phones and automobiles.
 Services are activities that provide some combination of time,
location, form, or psychological value.

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 Operations Management

 While the operations function is responsible for producing products and/or

delivering services, it needs the support and input from other areas of the
organization.
 Business organizations have three basic functional areas, as shown below:

 It doesn’t matter whether the business is a retail store, a hospital, a

manufacturing firm, a car wash, or some other type of business; all business
organizations have these three basic functions. 30
 Operations Management

 Finance is responsible for securing financial resources at favorable prices and

allocating those resources throughout the organization, as well as budgeting,
analyzing investment proposals, and providing funds for operations.

 Marketing is responsible for assessing consumer wants and needs, and selling
and promoting the organization’s goods or services.

 Operations is responsible for producing the goods or providing the services

offered by the organization.

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 Operations Management

 To put this into perspective, if a business organization were a car,

operations would be its engine.
 And just as the engine is the core of what a car does, in a business
organization, operations is the core of what the organization does.
 Operations management is responsible for managing that core.
 Hence operations management is the management of systems or
processes that create goods and/or provide services.

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 Operations Management

 Operations and supply chains are intrinsically linked, and no

business organization could exist without both.
 A supply chain is the sequence of organizations - their facilities,
functions, and activities that are involved in producing and delivering a
product or service.
 The sequence begins with basic suppliers of raw materials and
extends all the way to the final customer.

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 Operations Management

Facilities might include warehouses, factories, processing centers,

offices, distribution centers, and retail outlets.
Functions and activities include forecasting, purchasing, inventory
management, information management, quality assurance, scheduling,
production, distribution, delivery, and customer service.

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 Operations Management

The diagram provides another

illustration of a supply chain: a
chain that extends from wheat
growing on a farm and ends with
a customer buying a loaf of
bread in a supermarket.

The value of the product

increases as it moves through
the supply chain.

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 Operations Management

Value-added is the term used to describe the difference between the cost of inputs
and the value or price of outputs.
In nonprofit organizations, the value of outputs (e.g., highway construction, police
and fire protection) is their value to society; the greater the value-added, the
greater the effectiveness of these operations.
In for-profit organizations, the value of outputs is measured by the prices that
customers are willing to pay for those goods or services.
Firms use the money generated by value-added for research and development,
investment in new facilities and equipment, worker salaries, and profits.
Consequently, the greater the value- added, the greater the amount of funds
available for these purposes. Value can also be psycho- logical, as in branding.
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Operations Management

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Operations
Management

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Operations Management

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Operations Management

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Operations Management

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Scopes of Operations Management

Operations Management includes:

 Forecasting
 Capacity planning
 Scheduling
 Managing inventories
 Assuring quality
 Motivating employees
 Deciding where to locate facilities
 Supply Chain Management (SCM)
 And more . . .

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Operations Interfaces

Industrial Engineering

Distribution Maintenance

Purchasing
Public
Operations Relations

Legal

Personnel

Accounting MIS
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