Industrial Management for Food Engineering

Students

By: Desta Getie (MSc)

NOVEMBER 2024, DEBRE BIRHAN UNIVERSITY

Objectives of the course
 The course enables students to
understand basic principles/concepts of:
 Industrial management and organization;
 Industrial plant design;
 Effective material management;
 Management and resource allocation; and
 Engineering economy.
 Chapter-1

Basic Management Concepts

and Industrial Productivity
 Basics of Management and
Industrial Organizations
Topics to be covered
Introduction to management
Functions of management
 Planning
 Organizing
 Directing
 Controlling
Managerial roles and skills
Organization
Basics of Productivity
 Brainstorming

What is industry?

What is management?

What is industrial management?

 Introduction
• Industrial Management is the combination
of two words ( industrial and management)
Industrial :implies industry may be defined as
the application complex and sophisticated
methods to the production of economic
goods and service.
Industrial Management: is The branch of
engineering, that deals with the creation and
management of systems that integrates people,
materials and energy in productive ways.
 Concepts of Management
Management is the art of getting things done through people.
 Management is the attainment of organizational goals in an effective and
efficient manner through planning, organizing, staffing, directing and
controlling organizational resources.
 It is The effectively use of Organizational resources (5Ms) such as
Men(human beings), Money, Machines, Materials and Methods.
 Management is a rational approach to decision making using a system of
mathematical models and processes, such as operations research and
management science.
 Management is the development of a systems model, characterized by
input, processing, and output, and directly identifies the flow of resources
(money, equipment, facilities, personnel, information, and material)
necessary to obtain some objective by either maximizing or minimizing
some objective function.
 Conti…
Louis E Boone & David L Kurtz- “The use of
people and other resources to accomplish
objectives”.
William F. Glueck, “Management is effective
utilization of human and material resources
to achieve the enterprise’s objectives ”.
Frederick Taylor defines Management as
“the art of knowing what you want to do in
the best and cheapest way”.
 Continue…
 Management is both science and art.
 As a science, it is a collection of systematic
knowledge, collection of truths and inferences
after continuous study and experiments. It has
fundamental principles discovered.
 As an art, uses the known rules and principles
and uses the skill, expertise, wisdom,
experience to achieve the desired result.

9
 Management concerns
 Efficiency
 Efficiency is getting the most output
from the least amount of inputs in order
to minimize resource costs.
 “Doing things right”
 Achieving the objectives in time
 The level of output that is achieved
with a given level of inputs.
 Effectiveness
 Effectiveness is completing activities
so that organizational goals are
attained.
 “Doing the right things”
 Achieving the objectives on time
 Elemental Definitions

Efficiency and effectiveness

By: Dagne T. 2019 11

 Characteristics of Management
 Management is
Concerned with Group  Management is relationship
Efforts/Activity. building within and outside
 Management is Dynamic. the organization.
 Management is an
 Management is Goal environment oriented activity.
Oriented Activity.  Management has its own
 Management is an Art of tools and techniques.
Getting Things Done.  Management is leadership
 Management is a System responsibility, not just an
activity.
of Authority.  Management is concern with
performance results and
accomplishment.
Where applied Management?

13
 Basics of Management
Management and leadership
• ‘Leadership is the ability to influence the attitudes and behaviors
of others where as Management is the formal process of decision
and command.
Manager
A manager is someone whose primary responsibility is to carry
out the management process within an organization to achieve
the organizational goals.

Managerial skills

14
 Function of management
Classical management is usually considered
to have five functions or principles:
● Planning
● Organizing
● Staffing
● Controlling
● Directing
 a. Planning
 Planning is determining the objectives and formulating
the methods to achieve them.
 Planning is the process of specific setting objectives for
the future and developing courses of action to
accomplish them.
 Planning is deciding in advance - what to do, when to do
& how to do.
 plan is a future course of actions and it bridges the gap
from where we are & where we want to be. It is an
exercise in problem solving & decision making.
 Thus, planning is a systematic thinking about ways &
means for accomplishment of pre-determined goals.
 A job well planned is half done!
 Planning
 During planning one needs to ask oneself the following:

 What am I trying to accomplish i.e. what is my

objective?
 What resources do I have and do I need to
accomplish the same?
 What are the methods and means to achieve the
objectives?
 Is this the optimal path?

17
 Steps in Planning
1. Determining the goals or objectives for the
entire organization.
2. Making assumptions on various elements
of the environment.
3. Decide the planning period.
4. Examine alternative courses of actions.
5. Evaluating the alternatives.
6. Real point of decision making.
7. Make derivative plans.
 b. Organizing
 Organizing is the process of dividing work into convenient tasks or duties.
:
 allocating resources (people, equipment, and money) to carry out the
company’s plans
 Grouping of various positions into departments and sections,
 Assigning duties to individual positions, and
 Delegating authority to each positions so that the work is carried out as
planned.
 Organizing involves:
 Determine what is to be done/ Division of Work.
 Assign Tasks: Departmentalization.
 Link Departments: Hierarchy Development
 Decide how much Authority to Designate/ Authority, Responsibility and
Delegation.
 Decide the Levels at which Decisions are to be made / Centralization vs.
Decentralization
 Decide how to Achieve Coordination.
Conti…
Organizing is ongoing process: because jobs may be
enlarged, diminished or eliminated; additional positions
may be created; new production methods may be
instituted; new management skills may be required;
reporting relationships may be altered.

The steps that are important

when organizing an enterprise
 c. Staffing
 the process of placing the right person in the
right organiza­tional position.
 Selecting and training individuals for specific job
functions, and charging them with the
associated responsibilities.
 Determining the number of employed personnel
in an organization or program, Also called
workforce.
 d. Directing/Leading
 the process of providing focus for employees and
motivating them to achieve organizational goals.
 Provides positive and dynamic leadership.
 Provides proper motivation of personnel.
 Ability to command people.
 Attracting people to the organization.
 Marshaling and allocation of resources
 Creating good working conditions
 Directing involves developing a climate of individual
integrity, corporate honesty, and high productivity.
 e. Controlling
 Controlling is comparing actual to expected performance and
taking corrective action when necessary.

 Controlling is a three-step process of measuring progress

toward an objective, evaluating what remains to be done, and
taking the necessary corrective action to achieve or exceed the
objectives. These three steps—measuring, evaluating, and
correcting—are defined as follows:
 Measuring: determining through formal and informal reports
the degree to which progress toward objectives is being made.
 Evaluating: determining cause of and possible ways to act on
significant deviations from planned performance.
 Correcting: taking control action to correct an unfavorable
trend or to take advantage of an unusually favorable trend.
 Steps in Controlling

 Establish Standards of Performance.

 Measure Actual Performance.
 Compare Performance to Standards.
 Take Corrective Action.
Managers job titles
• Supervisor
• Teamleader
• Sales Manager
• Department head
• Vice President (VP)
• Managing Director
• President
• Chief … Officer (CxO)
– CEO
 Type or Levels of managers
• Top-level managers or senior management:
 At this level, managers are responsible for charting
the company's path. Once that's in place, they
convey it to all employees.
• Middle-management: People in middle
management might oversee an entire department or
a large team within a department.
• First line managers or supervisors: Direct
supervisors manage employees.
 They're responsible for making sure work is done
on time and correctly.
 They also inform middle management of any issues
and set an example for employees.
 Management skills
 Conceptual skill
– Able to see the big picture or making complex decisions
– it is the mental capacity to develop plans, strategies and vision.
 Human or interpersonal skill
– Be able to work well with others, individually and in group
– Abilities to resolve conflict, motivate, lead, and communicate
effectively with other workers.
– In short, it is the ability to work with other people in teams.
 Technical skill
– Specialized knowledge and abilities that can be applied to specific
tasks.
– In short, the ability to use the knowledge or techniques of a
particular discipline to attain ends.
– The knowledge and the ability to use tools, techniques and
procedures that are specific to their particular field
 Conti…
Relation of management hierarchies to
managerial skills

27
Conti…
 Functions of
Management
Importance of management functions to managers in each level

By: Dagne T. 2019 29

 Organizational Structure
What is an Organization?
• An organization is a collection of people working together in a
coordinated and structured fashion to achieve one or more
goals.
• organization is a formal relationship between people in
various positions in the organization.
• And it shows who supervises whom, & how various jobs and
departments are linked together to make and achieve
coordinated system.
• the process of organization implies the arrangement of
human & nonhuman resources to make a meaningful whole
that accomplishes organizational objectives.
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 What is Organizational Structure ?
 A social unit of people, systematically
structured and managed to meet a need or to
pursue collective goals on a continuing basis.
 It is a framework within which an
Organization arranges it’s lines of authorities
and communications and allocates rights and
duties.
Organizational Structures: Departmental structure
 Organizational Structure

Types of Organizational Structure

– Tall Organizational Structure
– Flat Organizational Structure
– Virtual Organizational Structure
– Boundary less Organizational Structure

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 Organizational Structure

Tall Organizational Structure

• Large, complex organizations often require a taller

hierarchy.
• In its simplest form, a tall structure results in one long
chain of command similar to the military.
• As an organization grows, the number of management
levels increases and the structure grows taller.
• In a tall structure, managers form many ranks and each
has a small area of control.
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 Organizational structure

Flat organizational structure

• Flat structures have fewer management levels, with
each level controlling a broad area or group.
• Flat organizations focus on empowering employees
rather than adhering to the chain of command.
• By encouraging autonomy and self-direction, flat
structures attempt to tap into employees 'creative
talents and to solve problems by collaboration.

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 Organizational structure

Virtual organizational structure

• Virtual organization can be thought of as a way in which an
organization uses information and communication
technologies to replace or augment some aspect of the
organization.
• People who are virtually organized primarily interact by
electronic means.
• For example, many customer help desks link customers and
consultants together via telephone or the Internet and
problems may be solved without ever bringing people together
face-to-face.
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 Organizational structure

Boundary less organizational structure

• A boundary less Organizational structure is a
contemporary approach in Organizational design.
• It is an organization that is not defined by, or limited to
the horizontal, vertical or external boundaries imposed by
a pre-defined structure.
• It behaves more like an organism encouraging better
integration among employees and closer partnership with
stakeholders.
• It’s highly flexible and responsive and draws on talent
wherever it’s found.de By: Dagne T. 2019 37
 Organizational structure

Importance of organizational structure

– Increases effectiveness and efficiency.
– Reduces redundant actions.
– Promotes teamwork.
– Improves communication.
– Contributes to success or failure.to

By: Dagne T. 2019 38

 Basics of Productivity
• Productivity is a common measure
of how well resources are being
used or a measure of the efficient
use of resources usually expressed
as the ratio of output to input.
Productivity, the relative efficiency of
economic activity—that is, the amount
of products or services produced
compared to the amount of goods and
labor used to produce.
 Conti…
 Labor Productivity
 Quantity (or value) of output / labor hrs
 Quantity (or value) of output / shift
 Machine Productivity
 Quantity (or value) of output / machine hrs
 Energy Productivity
 Quantity (or value of output) / kwh
 Capital Productivity
 Quantity (or value) of output / value of input

Outputs
Productivity =
Inputs
Measures of Productivity
Measures of Productivity
 Measures of Productivity
Example 2
 5,500 units/500 hours = 11
 5,500 Units Produced
units/hour
 Sold for $35/unit
Or we can arrive at a unitless
 500 labor hours are used figure:
 Cost of labor: $25/hr  (5,500 units*$35/unit)/(500
 Cost of raw material: $5,000 hours * $25/hr) =15.4
 Cost of overhead: 2 x labor costMFP = (5,500 units)*($35)
What is the labor productivity? (500hrs.)*$25/hr. +
What is the multifactor ($5000) + 2*(500hrs.)*$25/hr.
productivity?
MFP = 4.52
 Productivity Growth

Example 3: Labor productivity on the ABC assembly

line was 25 units per hour in 2014. In 2015, labor
productivity was 23 units per hour. What was the
productivity growth from 2014 to 2015?
 Measures of Productivity
Example 4
 Assume that you have just determined that your service
employees have used a total of 2400 hours of labor this
week to process 560 insurance forms. Last week the same
crew used only 2000 hours of labor to process 480 forms.
 Which productivity measure should be used?
 Answer: Could be classified as a Partial Measure (labor
productivity).
 Is productivity increasing or decreasing?
 Answer: Last week’s productivity = 480/2000 = 0.24, and
this week’s productivity is = 560/2400 = 0.23. So,
productivity has decreased slightly.
 Factors affecting productivity
 Standardization  Incentive plans that
 Technology reward productivity
 Searching for lost or  Capacity utilization
 Location
misplaced items
 Scrap rates  Layout
 Inventory
 Labor turnover,
 Scheduling
layoffs, new workers
 Equipment breakdowns
 Safety
 Part and material
 Bottlenecks
shortages
 Methods  Inadequate investment
 Design of the in training & education of
workspace the employees
 Key Steps for Improving Productivity

 Develop productivity measures for all

operations
 Determine critical (bottleneck) operations
 Develop methods for productivity
improvements
 Establish reasonable goals
 Get management support (make it clear that
management supports and encourages
productivity improvements.)
 Measure and publicize improvements
 Invest on labor force by training and education
Thank you
 Assignment-1
Submission date: within a week
1. A company that makes shopping carts for supermarkets recently
purchased new equipment, which reduced the labor content needed to
produce the carts. Information concerning the old system (before adding
the new equipment) and the new system (after adding the new machines)
includes:
Old System New System
Output/hr 80 84
Workers 5 4
Wage $/hr 10 10
Machine $/hr 40 50
a) Compute labor productivity for both the Old System and the New
System.
b) Compute total factor productivity for both the Old System and the New
System.
c) Suppose production with old equipment was 30 units of cart A at a
price of $100 per cart, and 50 units of cart B at a price of $120. Also
suppose that production with new equipment is 50 units of cart A, at a
price of $100 per cart, and 30 units of cart B at a price of $120.
Compare total-factor productivity for the old and the new systems.
2. A company has introduced a process improvement that reduces
the processing time for each unit and increases output by 25% with
less material but one additional worker.
Under the old process, five workers could produce 60 units per hour.
Labor costs are $12/hour, and material input was $16/unit.
For the new process, material input is now $10/unit and overhead is
charged at 1.6 times direct labor cost. Finished units sell for $31
each.
a) Compute single factor productivity of labor in the old system.
(Compute it in four possible ways.)
b) Compute all factor productivity for both old and new systems.
Factor Old System New System
Output 60 60(1.25) = 75
# of workers 5 6
Worker cost $12/hr $12/hr
Material $16/unit $10/unit
Overhead 1.6(labor cost) 1.6(labor cost)
Price 31 31
3. A milk factory seeks advice from an external consulting company
concerning its business and production processes. The final consulting report
describes several steps to increase productivity including implementation of
cutting-edge processing techniques through more powerful filtering systems.
Existing System Proposed System

Workers 12 9

Milk Output/hour 1,000 gallons 1,400 gallons

Wage Rate/hour $12 $12

Filtration Cost/hour $120 $170

a) Calculate the labor productivity for the existing as well as the proposed
system.
b) Find the Total-Factor Productivity for both systems.
c) Assume that current processing includes 700 gallons of Grade-A milk sold
at $2.40/gallon and 300 gallons of Grade-B milk at $1.90/gallon.
Furthermore, assume that under the proposed system, processing will
include 600 gallons of Grade-A milk at $2.40/gallon and 400 gallons of
Grade-B milk at $1.90/gallon. Compare all-factor productivity for both the
existing and the new system.
d) Is the proposed system acceptable? Why?