What is industrial engineering?
Industrial engineering
is the applied science of management. It directs the efficient conduct
of manufacturing, construction, transportation, or even commercial
enterprises of any undertaking, indeed, in which human labor is directed
to accomplishing any kind of work.
It
is of very recent origin. It is only just emerging from the formative
period. Its elements have been proposed during the past one or two
decades. The conditions that have brought into being this new applied
science, this new branch of engineering, grew out of the rise and
enormous expansion of the manufacturing system.
Industrial
engineering has drawn upon mechanical engineering, upon economics,
sociology, psychology, philosophy, accountancy, to fuse from these older
sciences a distinct body of science of its own. It provides guidelines
or direction to the work of operatives, using the equipment provided by
the engineer, machinery builder, and architect.
The
cycle of operations which the industrial engineer directs starts with
money which is converted into raw materials and labor; raw materials and
labor are converted into finished product or services of some kind;
finished product, or serv-ice, is converted back into money. The
difference between the first money and the last money is (in a very
broad sense) the gross profit of the operation. The starting level (that
is, the cost of raw materials and labor) and the final level (the price
obtainable for finished product) these two levels are generally fixed
by competition and market conditions. Profit of the operating cycle
varies with the volume passing from level, to level. Higher volumes lead
to greater profits. But with the efficiency of the conversions between
these levels also determines the profits. In the case of a hydroelectric
power-plant, there are conversion losses like hydraulic, mechanical
and electrical. In industrial enterprises the conversion losses are in
commercial, manufacturing, administrative and human operations. It is
with the efficiency of these latter conversions that industrial
engineering is concerned.
The
central purpose of industrial engineer is efficient and economical
production. He is concerned not only with the direction of the great
sources of power in nature, but with the direction of these forces as
exerted by machinery, working upon materials, and operated by men. It is
the inclusion of the economic and the human elements especially that
differentiates industrial engineering from the older established
branches of the profession. To put it in another way : The work of the
industrial engineer not only covers technical counsel and
superintendence of the technical elements of large enterprises, but
extends also over the management of men and the definition and direction
of policies in fields that the financial or commercial man has always
considered exclusively his own.
Two Phases of Industrial Engineering
In
general, the work of the industrial engineer, or, to use a yet more
inclusive term which is coming into general use, the efficiency
engineer, has two phases. The first of these is analytical we might
almost call it passive to distinguish it from the second phase, which is
synthetic, creative, and most emphatically active. The analytical phase
of industrial or efficiency engineering deals merely with the things
that already exist. It examines into facts and conditions, dissects
them, analyzes them, weighs them, and shows them in a form that
increases our useful working knowledge of the industry with which we
have to deal. To this province of industrial engineering belong the
collection and tabulation of statistics about a business, the accurate
determination and analysis of costs, and the comparison of these costs
with established standards so as to determine whether or not they are
normal. To this sort of work Harrington Emerson applies the term
“assays," speaking of labor assays, expense assays, etc., and
maintaining (with good reason) that the expert efficiency engineer can
make determinations of this sort as accurately, and compare them with
standards as intelligently, as an assayer can separate and weigh the
metal in an ore. To this province belong also such matters as systematic
inquiry into the means and methods used for receiving, handling, and
issuing materials, routing and trans- porting these materials in process
of manufacture, the general arrangement of the plant, and the effect of
this arrangement upon economy of operation. To this province belongs,
also, the reduction of these data and other data to graphic form as well
as summary measures, by which their influence and bearing upon total
result are often made surprisingly and effectively manifest.
The
purpose of the analytical function of industrial engineering is that
the out helps to visualize the operations of the business and enable
IEs to pick out the weak spots and the bad spots so that the right
remedies can be applied where they are needed. They make us apprehend
the presence and the relative importance of elements which would
otherwise remain lost in the mass, undetected by our unaided senses.
The
second phase of industrial engineering the active, creative and
synthetic phase, goes on from this point and effects improvements in
existing methods, devises new methods and processes, introduces
economies, develops new ideas. It makes us do the things we are doing
now more economically or shows us how to do a new thing that is better
than the old. To this part of works management belongs, for example, the
re-arrangement of manufacturing plants, of departments, or of
operations so as to simplify the process of manufacture; the correction
of inefficiencies, whether of power, transmission, equipment or labor;
the invention and application of new policies in management which make
the ideals and purposes of the head operate more directly upon the
conduct of the hands; the devising of new wage systems by which, for
example, stimulus of individual reward proportioned to output makes the
individual employee more productive.
Importance of Technincal Knowledge
The
exercise of these functions, whether analytical or creative, by the
industrial engineer or the efficiency engineer, requires that he shall
have technical knowledge and scientific training, but in somewhat
different form from the equipment of the mechanical engineer and
somewhat differently exercised.
Machinery, Materials, Methods and Men
Industrial
engineering deals with machinery; but not so much with its design,
construction, or abstract economy, which are strictly mechanical
considerations, as with selection, arrangement, installation, operation
and maintenance, and the influence which each of these points or all of
them together may exert upon the total cost of the product which that
machinery turns out.
It
deals with materials, but not so much with their mechanical and
physical constants, which are strictly technical considerations, as with
their proper selection, their standardization, their custody,
transportation, and manipulation.
It
deals very largely with methods ; but the methods with which it is
particularly concerned are methods of performing work; methods of
securing high efficiency in the output of machinery and of men; methods
of handling materials, and establishing the exact connection between
each unit handled and the cost of handling; methods of keeping track of
work in progress and visualizing the result so that the manager of the
works may have a controlling view of everything that is going on;
methods of recording times and costs so that the efficiency of the
performance may be compared with known standards; methods of detecting
causes of low efficiency or poor economy and applying the necessary
remedies.
It deals with management that is,
with the executive and administrative direction of the whole dynamic
organization, including machinery, equipment and men.
It
deals with men themselves and with the influences which stimulate their
ambition, enlist their co-operation and insure their most effective
work.
It deals with markets, with the economic
principles or laws affecting them and the mode of creating, enlarging,
or controlling them.
The
most important elements of industrial engineering are summed up in this
alliterative list machinery, materials, methods, management, men and
markets. And these six elements are interpreted and construed by the aid
of another factor whose name also begins with Money. Money supplies
the gauge and the limit by which the other factors are all measured and
adjusted.
Return on Expenditure
It
is the ever-present duty of the industrial engineer, of the efficiency
engineer, to study constantly, and to study constantly harder and
harder, so long as the smallest opportunity remains for getting more in
return for what he spends, or for spending less in payment for what he
gets. The function of the industrial engineer is to determine with the
utmost possible wisdom and insight whether and where any disproportion
(waste) between expenditure and return exists, to find the amount of the
disproportion, the causes of such disproportion, and to apply effective
remedies.
Competition and Efficiency and Cost Reduction
Competition
forces manufacturers to reduce costs. But the effort toward efficiency
being promoted by industrial engineering and industrial engineers is
giving to rise to more competition and to more cost reduction.
Competition took on a new meaning and new activity when the things began to be made first and sold after (as they are under the new mass manufacturing systems) instead of being sold first and made afterward, as they were under the older order. When you sell things already made, like lathes or high-speed engines or dynamos, off the sales-room floor, the prospective buyer can make the most absolute and intimate comparison between the things and their prices. He can compare accurately design, quality, cost before a word or a dollar passes. The necessity for offering the best goods for the least money and yet making a fair profit becomes vital and insistent, and so the knowledge of actual costs and the ability to reduce costs become fundamental.
Competition took on a new meaning and new activity when the things began to be made first and sold after (as they are under the new mass manufacturing systems) instead of being sold first and made afterward, as they were under the older order. When you sell things already made, like lathes or high-speed engines or dynamos, off the sales-room floor, the prospective buyer can make the most absolute and intimate comparison between the things and their prices. He can compare accurately design, quality, cost before a word or a dollar passes. The necessity for offering the best goods for the least money and yet making a fair profit becomes vital and insistent, and so the knowledge of actual costs and the ability to reduce costs become fundamental.
The
new and ethically fine ideal, promoted by industrial engineering is
efficiency, the reduction of costs and the elimination of waste for the
primary purpose of doing the thing as well as it can be done, and the
distribution of the increased profits thus secured among producer,
consumer, and employee. Efficiency is a concept as much finer than
competition as creation, conservation, is finer than warfare. It is a
philosophy an interpretation of the relations of things that may be
applied not only to industry but to all life. An interesting quote by
Harrington Emerson's in “Efficiency as a Basis for Operation and Wages
" is quiet apt here. “If we could eliminate all the wastes due to
evil, all men would be good; if we could eliminate all the wastes due to
ignorance, all men would have the benefit of supreme wisdom; if we
could eliminate all the wastes due to laziness and misdirected efforts,
all men would be reasonably and health-fully industrious. It is not
impossible that through efficiency standards, with efficiency rewards
and penalties, we could in the course of a few generations crowd off the
sphere the inefficient and develop the efficient, thus producing a
nation of men good, wise and industrious, thus giving to God what is
His, to Caesar what is his, and to the individual what is his. The
attainable standard becomes very high, the attainment itself becomes
very high. . . . Efficiency is to be attained not by individual
striving, but solely by establishing, from all the accumulated and
available wisdom of the world, staff-knowledge standards for each act by
carrying staff standards into effect through directing line
organization, through rewards for individual excellence; persuading the
individual to accept staff standards, to accept line direction and
control, and under this double guidance to do his own uttermost best."
Importance of Technical, Economic and Human Skills for Industrial Progress
Efficiency,
then, and in consequence industrial engineering, which is the
prosecution of efficiency in manufacturing, involves much more than mere
technical considerations or technical knowledge. The point is very
important, because true and stable industrial progress, whether for the
individual, the manufacturing plant or corporation, or the nation at
large, depends upon a wise co-ordination and balance between technical,
commercial, and human considerations. Every great industrial
organization and every great step in industrial progress to-day includes
all three elements, but they will perhaps appear more distinct if we
look at the origin and source of the manufacturing system, out of which
this new science of industry has sprung. The origin of the manufacturing
system was clearly enough the introduction of a group of inventions
that came in close sequence about the end of the eighteenth century and
be- ginning of the nineteenth. These were the steam engine, mechanical
spinning and weaving machinery, the steamboat, the locomotive, and the
machine-tool.
But the readiness of people to buy the products and services that these inventions could offer was due to economic or commercial conditions, not merely to the technical invention. In its larger relations, then, technical success depends upon commercial opportunity. There must be a potential market for the success of a technical invention for any entrepreneur to commercialize it. But it does not follow from this that technical progress is wholly subordinate to economic conditions. The inventor or the engineer is not of necessity merely a follower of progress in commerce or industry. Many of the great advances in branches of industrial achievement have been made by man who foresaw not only technical possibilities but commercial possibilities and who undertook not only to perfect the invention but to show the world the advantage of using it. I think this was substantially the case with wireless telegraphy, with the cash register and typewriter. No body had demanded these things because nobody had thought of them, and the productive act in each instance included not only technical insight into the possibilities of doing the thing, but human insight into the fact that people would appreciate these things and use them if they could be furnished at or below a certain cost. Modern industrial methods have shown us that in many cases there is no such thing as a fixed demand beyond which supply can not be absorbed, but that demand is a function of cost of production. The economic theory also states the same thing. There may be no demand at all for an article costing a dollar, but an almost unlimited demand for the same article if it can be sold at five cents. A large part of the work of the production engineer lies in the creation of methods by which the cost of production is decreased and the volume of production is thereby increased, with advantages to both the producer and the consumer.
The
third factor in industrial progress is the psychological factor, the
element contributed by the mental attitude, emotions, or passions of
men. I might suggest its possible importance by reminding you that there
were centuries in which the inventor of the steam engine, far from
being rewarded, would have been burned at the stake as a magician. This
would not have been because the extraordinary character of the
achievement was unrecognized, but because its nature was misinterpreted.
For any technical
proof , you must add to it, second, proof of the commercial or economic
argument, and third, that psychological force which convinces not the
reason, but the emotions. In all industrial engineering, which involves
dealing with men, this psychological or human element is of immense,
even controlling importance. The principles of the science are absolute,
scientific, eternal. But methods, when we are dealing with men, must
recognize the personal equation (which is psychologic) or failure will
follow.
To the technical man, it is an ever-present duty to keep in view absolute ideal of technical progress, to seek every chance for its advancement, and to mould conditions and men so as to obtain constantly nearer approach to these ideals; but in doing this he must never forget to attach full weight to economic conditions, and he must never allow himself to ignore human nature.
Success in handling men and women is one of the most important parts of the work of the industrial engineer, and it is founded on knowledge of human nature, which is psychology. Industrial engineers need to have technical skills, economic skills to understand the economic environment and economic justification for technical systems and understanding of behavioural science of men and women to make a success of his profession or career.
Footnote
1.
A systematic presentation of the field of industrial engineering from
an entirely different point of view and by a very different method will
be found in " Factory Organization and Administration," by Prof. Hugo
Diemer; McGraw-Hill Book Co.
Full chapter is available in
What is Industrial Engineering?
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