Engineering ManagementChapter 2 Planning – Lecture 1, 2 &3 Spring 2015 Go Green! Please think before printing these lecture slides. Text Book • Title: Engineering Management in the New Millennium • Author: Dr. C. M. Chang • Edition: 2005 • Publisher: Pearson Prentice Hall 2 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 Chapter 2 Planning 2.1 INTRODUCTION • Planning, a major function of engineering management, is the work done by an engineering manager to predetermine a course of action. Planning defines who will do what, how, where, when, and with which resources. The purpose of planning is to enhance the effectiveness and efficiency of the company by providing focus and direction (Coke 2002; Hamel and Prahalad 1994). Planning is made necessary by rapid changes in technology (such as Web-based tools, enterprise resource-planning software, broadband communications options, and mobile access), environment (customers, global resources, competition, and market7. place), and organization (such as mergers, acquisitions, supply-chain networks, alliances, and outsourcing). In this chapter, we will discuss the differences between strategic and operational planning, the planning roles of engineering managers, and the four specific planning activities every engineering manager needs to master. 4 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 1 INTRODUCTION • Planning is the work done to predetermine a course of action. in order to provide focus and direction for enhancing the efficiency and effectiveness of the company 5 .2. and (c) Organization (mergers & acquisitions. how.Planning • Planning is made necessary by rapid change of (a) Technology ( web-based tools. mobile access). (b) Environment (globalization. where. networks. broadband communications options. when and using which resources to do the what work 6 . competition. outsourcing and alliances) • Planning defines who. marketplace). Planning 7 . physical resources equipment.Strategic Planning • Define future activities which are worth doing by the unit/company to assure that the company applies its resources (skilled manpower. business relationships) effectively to achieve its short-term and longterm goals 8 . money. time. facilities. sales. technology leadership position.Strategic Planning Questions • What are the company’s vision. market share. with what investment and which technology? • Which new/improved product streams to offer by when (considering product life cycle)? 9 . mission and value system? • What specific goals (profitability. global penetration) to accomplish by when. Product Life Cycle 10 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .Strategic Planning Questions . Mission and Vision • Mission • Vision . 11 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .Company Aspiration • Why do we exist? • Market capital • Whom are we serving? • Business standing • What do we do to serve them? • Ranking in industrial sector • Market Share • Others.Strategic Planning Questions . Strategic Planning Questions .Sample Corporate Values • Innovation • Trust and openness • Honesty • Quality of work Life • Quality • Empowerment • Social responsibility • Initiative • Continuous improvement • Stability • Collaboration • Diversity and equal opportunity • Respects for others • Open communications • Accountability 12 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . develop. distribution. logistics.Strategic Planning Questions (cont’d) • What core technologies (design. service) to maintain. production. service)? • With which performance metrics to monitor corporate progress? 13 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . acquire and/or apply? • Which business networks/partnerships to create (suppliers. comarketing. production. scenarios.Tools for Strategic Planning • Market research • SWOT analysis • Sensitivity analysis (whatif.Strategic Planning . Monte Carlo) • External benchmarking • Technology forecasting • Product life cycle analysis 14 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . Certain future events are more predictable than others. such as the forecast of discontinuities-technological innovations. Prediction of the future.-are virtually impossible to predict accurately. The strategy-making process cannot be formalized. but a synthesis (creation) process. Planners must have in-depth knowledge and relevant hands-on experience of the subject at hand in order to set forth useful strategies.Major difficulties 1. Other predictions. as it is not a deductive. 3. Strategies cannot be detached from the subject involved. 15 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . for example. Applicable experience and insight. seasonal variations of weather and election-year cycles. Random process of strategy making. 2. changes of governmental regulations affecting marketplace competition. price increases. etc.Strategic Planning . Lack of long-term commitment from company management 5.Major difficulties Strategic plans often fail due to one or more of the following seven reasons: 1. Not having both an internal and external focus 4. Failure to identify critical success factors for the company 3.Strategic Planning . causing difficulties in adjusting to the changing environment 7. Reluctance of senior management to accept responsibility for tough decisions 6. for example. by limiting the strategy only to short-term needs and processes of the company 2. Failure to properly communicate the plan and thus not securing support and management buy-in 16 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . Not leaving enough flexibility in the plans. Not thinking strategically. As the engineering managers move up the corporate ladder. product.1 Assist Their Own Superiors in Planning It is important that engineering managers spend time and effort to actively assist their direct superiors in planning.5 PLANNING ROLES OF ENGINEERING MANAGERS Engineering managers at low levels will predominantly devise operational plans to achieve the short-term goals of the unit or department. and (d) communicating the resulting outputs of planning-programs. 2. expertise.2. with emphasis placed on technology. schedules. and production planning. they are expected to participate increasingly in strategic planning. They may find it useful to follow the planning guidelines listed next in order to add value to the company. and insights of staff. and budgets-to help effectuate buy-in from others. (c) raising insightful questions to challenge conventional assumptions.5.2 Ask for Support from Subordinates In order to optimally benefit from the knowledge. 17 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . (b) offering alternative interpretations to data available. and marketing). These tasks may include: (a) analyzing hard data (industry.5. 2. engineering managers are encouraged to engage their staff and other employees in the planning activities. competition. performance evaluation). This is to maximize the value added by the daily activities (Lane and Wayser 2000). task specification. and scanning emerging technologies. that are deemed important for advancing one's own career. continuing education. so that high-value tasks are completed before others. progress monitoring.5.2.5 PLANNING ROLES OF ENGINEERING MANAGERS 2. 18 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .3 Develop Active Plans It is quite self-evident that engineering managers need to perform a number of planning tasks: A. according to the value each task may add. All managers need to plan and prioritize their personal daily tasks (such as problem solving. Also to be included in the daily to-do list are tasks such as networking. staff meetings. TIme management. the relevant performance metrics used to measure success. preferred methodologies. deliverables. Managers must also secure authorization from upper management before initiating work related to the projects and programs.5 PLANNING ROLES OF ENGINEERING MANAGERS B. These details include budgets. Projects and programs.2. 19 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . expertise and personality to participate in the project and seek their inputs regarding tasks. Engineering managers need to plan projects and programs assigned to them by upper management. and task duration. They should carefully select staff members with the relevant skills. and dates of completion. resource requirements. engineering managers need to fully understand the applicable project objectives. In planning for projects and programs. They should then integrate all inputs to draft a project plan and distribute the plan among all participants to iteratively finalize the relevant details. and the significance of the outcome of such projects and programs to the company. 2. preserve.5 PLANNING ROLES OF ENGINEERING MANAGERS C. Managers should plan to systematically capture. Corporate know-how comes in many types and forms. Certain other cognitive knowledge is typically retained mentally by the experts. Corporate know-how. published memoranda. 20 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . and trouble-shooting guides. operational manuals. such as insights related to procedures or perfected ways of designing specific products and services of the company. Others. and widely disseminate such know-how in order to maximize its use within the company. The preservation of corporate know-how is of critical importance to the company for maintaining and enhancing its competitiveness in the marketplace. is easy to retain. Managers need to find effective ways to induce such experts to externalize these skills and insights for use by others in the company. Certain documentable knowledge. such as patents. may require extra efforts to preserve. Typically. personality conflicts. 21 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . engineering managers are busy resolving conflicts that may arise from disagreements in task priorities. Problem-solving expertise is yet another type of corporate know-how worth preserving. interpretation of data. and other conflicts Managers need to solve these problems promptly.2. What should be planned under these circumstances is the preservation of the learning experience garnered from each incident so that the company will become more efficient in solving similar problems in the future. customer complaints. Corporate know-how (Continued). They should be mentally prepared to jump from one task to another to handle such time-sensitive issues.5 PLANNING ROLES OF ENGINEERING MANAGERS C. cheaper. and faster) • Reengineering and simplifying specific operational processes to increase efficiency • Outsourcing specific tasks to augment cost effectiveness 22 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . product customization to serve customers better. self-service.2. and a Web-based inquiry center) • Initiating new programs to promote healthy consumer relationships • Developing new products with upgraded attributes (for example. These tasks include • Utilizing new technologies to simplify and enhance the products and services of the company • Looking for business partners to form supply chains offering new or enhanced services to customers (for example. Proactive tasks. Engineering managers should plan to devote their efforts to proactively pursue certain other tasks. an informationon-demand system.5 PLANNING ROLES OF ENGINEERING MANAGERS D. to assure that the company applies its resources efficiently to achieve its short-term and long-term goals 23 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .Operational Planning • Define tasks/events to be accomplished with the least amount of resources within the shortest time. Operational Planning Questions • What is the most efficient way of accomplishing a project/task with known objectives (doing things right) ? • How to link up with three best suppliers in the marketplace for parts needed? • What are the operational guidelines for performing specific work? 24 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . test and analysis procedures • Operational guidelines 25 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .Tools • Project management including action planning • Design.Operational Planning . ROE) • Employee-Related (turnover ratio) • Competition-Related (market share. cost of innovation.Operational Planning . # new products per year) • Financial (gross margin. profitability. product life cycle cost) • Process-Related (time to market. satisfaction score. unit product cost. growth rate) 26 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .Sample Performance Metrics • Customer-Related (product defect count. 27 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . Production-quality is reject rate and deviation from specifications (view of a production engineer). Quality may be defined differently by different people in a company. Value based-quality is defined in terms of price and costs (view of a marketing person). Examples are shown here: A.1 Example #2. B.1. Different people in a company may have different interests and perspectives in defining quality.1. Which quality definition is the correct one for the company to adopt? Example #2.Example #2. Explain why that is usually the case. 28 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . • For the company to succeed in the marketplace. quality is in the eyes of the beholder. User based-Quality is the degree to which a product satisfies the customer's needs.Example #2.1 C. Customers do not appreciate less or more quality than they need (view of a customer). D. The user-based definition is preferred. Product based-Quality is related to the number of attributes offered by a product (view of a product designer). 6.We shall InshaAllah continue… Chapter 2 Planning – Lecture 2 2.5 Technology Forecasting Khawar Ayub FAST NU Lahore Campus 29 26-Feb-15 . Activities Related to Planning . g.Forecasting • To estimate and predict future conditions and events (e. competition and economy.customers. marketplace . global supply chains. products. manpower. capital and facilities) 31 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . technology.. joint ventures) • Induce innovation through forecasted needs 32 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .alliances. facilities and business relations .Purposes of Forecasting • Set bounds for possibilities to help focus on specifics • Form basis for setting objectives • Promote inter-group coordination • Provide basis for resources allocation (manpower. budget. intuition. intermediate and long terms) • Select forecasting techniques (e.Steps to Forecast • Identify critical success factors for achieving company goals • Determine forecasting horizon (short.. statistics. judgment) • Predict future states and their probability of occurrence 33 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .g. trend analysis. g.. wars. sales.General Comments on Forecasting • Major economic events tend to change gradually over time • Future events tend to result from current and past occurrence. production. in the absence of disruptive changes (e. technology break through) • Important sources of market information: Customers. natural disaster. service people 34 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . Criteria for Future-Oriented Ideas • Consistency with company’s objectives • Technical feasibility to implement • Financial viability • Marketplace compatibility 35 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . exposure and broad perspectives may have a better chance to accurately forecast the future technology impact 36 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .Technology Forecast • Impact of new technology on business performance is difficult to forecast • Engineering managers are in the best position to do forecasting • Teams of people with divergent experience. Examples of Challenging Questions • Will the next waves of new products be the smart appliances? What will be the impact, if many products are made smart, as the processors are getting more powerful and intelligent devices getting smaller and more mobile (e.g., RFID) • What might be the impact of nano-technology? • How about the “info-imaging” technologies? • Any value of the “molecular computing” companies like Hewlett Packard and IBM are working on? 37 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 Examples of Challenging Questions (cont’d) • How to gauge the impact of “pervasive computing” on the consumer markets, as IBM is developing rings, earrings, bracelets, eyeglasses and other miniature devices to provide access to Internet? • How quickly will PCs lose market values, once alternative devices are becoming available to access internet and home appliance, purchase goods/ services, and activate entertainment programs remotely? 38 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 Technology Forecasting - Some Guidelines for Engineers • Read broadly and think deeply • Remain curious about new technological inventions and innovative applications • Ask critical questions and exchange ideas with networked professionals • Focus on potential applications of new technologies which could add value to future customers 39 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 Action Planning • Benefits: (1) Focus on critical areas in need of management attention, (2) Select specific results to be accomplished, (3) Set metrics to facilitate measurement and control, (4) Clarify accountability and permit delegation, (5) Encourage teamwork, (6) Ensure the continuation of overall performance evaluation 40 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 Action Planning • Planning Process (1) Analyze Critical needs. (3) Define metrics to measure performance. (2) Set Objectives (what results to be accomplished). (6) Develop a budget (resources to allocate) 41 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . (5) Determine dates of task initiation and completion. (4) Specify actions steps (sequence and priority of tasks to perform). duties.(A) Analyze Critical Needs • Needs are to be defined with respect to position charter. and company goals: (1) development needs. (2) maintenance needs. and (4) strategic needs • Short-term and long-term needs 42 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . management expectations. (3) deficiency needs. in order to be useful 43 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .(B) Set Objectives • Objectives are set to satisfy the critical needs: Write results statement (e.g. what desirable future state to be in and by when) • Objectives need to be specific and measurable.. external and internal • Metrics need to be defined with doers’ participation and consent 44 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . percentages.Write standards statement • Metrics need to be quantitative (using numbers. resources parameters) . cost figures.(C) Define Metrics • Metrics are what takes to measure the attainment of the objectives (be reasonable and pertinent) . define sequential relationship between steps. define contingencies to manage risks 45 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . and assign people to each action step (getting doer’s to agree) • Evaluate risk for completing the steps planned.(D) Specify Action Steps • List major action steps. determine resources requirements for each. identify work contents. specify expected results. (E) Determine Schedule • Determine dates of initiation and completion of each task • Allow scheduling flexibility (slag) to account for contingency. emergency and other difficult-to-predict deviations from plan • Focus on management of critical path tasks to avoid any overall delays 46 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . support staff. travel expenses. etc.) • Revise action steps. materials.(F) Develop Budget • Determine the basic resources units (man-hours. if projected cost exceeds value expected 47 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . pilot tests. experiments. management review. man-weeks) to accomplish each steps • Define other resources (computation. contract services. equipment usage. team leader. service providers.) involved are satisfied 48 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .Remarks on Action Planning • Involve doers in action planning • Apply computer-based tools (e. doers.. Microsoft Project. etc. Timeline) to generate PERT or GANTT charts • Include risks and contingency steps • Iterate planning process until all parties (top management.g. which he received with honor.1 On the eve of leaving his alma mater. Apparently. Joe Engineer remembers the encouraging words of the commencement speaker.1 Question # 2. what he needs is a road map into the future.1 • This is where planning makes its immense contributions.” He is of course excited about his new Master of Engineering degree.Question # 2. • (1) Conceive a list of mutually exclusive and collectively exhaustive objectives. which on attainment will lead Joe Engineer to an exciting and happy life. “Graduation is the happy beginning of an exciting life ahead. How can you help him? Answer # 2. 49 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . But he is also a bit confused about what to do now to make his new life exciting and happy. (c) Professional/technical achievements.Question # 2. (b) Look for a job in a prestigious firm. Demonstrate own technical excellence and establish oneself as a capable. (d) Social support. where learned skills can be best utilized for both the company and self. reliable and fast-learning worker 50 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .. (b) Respect and recognition by peers. (a) Learn to save and invest (set up an internet trade account and use automatic deposit to start save money and practice prudent investment. (e) Health • (2) Define tasks to be completed in the next 5 years aiming at accomplishing parts of these objectives.1 • Examples: (a) Money/wealth. (b) Practice Engineering Management principles and get promoted into mid management positions of a large company. produce.1 (c) Apply self to learn. and invest more in stocks. Seek opportunities to publish technical papers and/or develop patents. Try options trading. Maximize savings in 401(k) and IRA accounts. Stay in contact with college friends and develop new ones constantly (e) Exercise and eat healthy foods. innovate and excel. • (3) Define tasks to be completed in the next 5 to 10 years aiming at accomplishing parts of these objectives.Question # 2. Set up savings accounts for kids college education. (d) Get a mate who has earning power and start family. (a) Continue to save and invest. Become active in professional societies. Write a long term career plan so that the needed preparations are timely initiated. 51 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . 1 (c) Practice leadership skills to excel at work. (f) Spend quality time with family and manage relationships. Ask for a transfer to another department. Seek opportunities to broaden own experience base. both professionally and socially. if to do so will broaden own exposure to other important managerial functions.Question # 2. (d) Continue to network with old friends and make new friends. either inside or outside the company. (e) Exercise regularly and eat healthy foods. • (4) Define tasks to be completed in the next 10 to 15 years aiming at accomplishing parts of these objectives (a) Manage own savings and investment programs actively. 52 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . Get development training to acquire new skills. Continue to broaden own experience base to ready oneself for bigger and better jobs. (b) Seek promotion to Director's level. and become active in societies and industrial committees. 53 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . get more patents. Develop an active network of business contacts and relations. (e) Continue exercise and eat healthy foods. (f) Manage family relationships. • (5) Define tasks to be completed in the next 15 to 20 years aiming at accomplishing parts of these objectives. (d) Continue manage the network of friends and acquaintances.Question # 2. Achieve recognition by peers in industry .1 (c) Present papers at professional conferences. we need to qualify the stated career objective a bit: Becoming an CEO of a publicly held multinational company at age of 60.2 Joe Engineer took a course while going to graduate school at SUNY- Buffalo. Obviously. There. He wants some guidance on career planning. How can you help him? • Answer # 2. this assumption may not be valid for privately held small and medium size companies. But he is convinced that a proper planning will help him to have an orderly progression in his career.3 Example # 2.SET OBJECTIVES AND SPECIFY SU-GOALS • Before starting the planning process. Let us make one more assumption here. namely that in order for Joe Engineer to be entrusted with a certain management position in a publicly held major company. 54 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . it is generally required that he has successfully demonstrated certain sets of business/management capabilities beforehand. He thinks that it would be cool to become an CEO at the age of 60 and retiring at 65 with a net worth of $10 MM. He knows that luck plays a big role in one’s life. he learned the importance of planning.2 1.Example # 2. Vice President at 45 D.Example # 2.3 • To achieve the big objective. Joe Engineer needs to specify a few sub-goals leading to it. Manager at 35 F. The milestones listed below are typical: A. Corporate President at 55 B. Division President at 50 C. Director at 40 E. Supervisor at 30 G. Group Leader at 25 55 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . (5) Engineering management. such as (a) Public speaking and writing (b) Business analysis and planning (c) Public relations (d) Problem solving and conflict resolution (e) Interpersonal skills (f) Negotiations (g) Business Relations development (h) Others. such as (1) Strategic management. (4) Project/program management. (3) Operational management. 56 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .3 • The CEO of a major company must be familiar with many functional areas. (2) Business management. (8) Financial control. and (9) Globalization.Example # 2. (6) Production/manufacturing. (7) Marketing management. The future CEO must be able to demonstrate sufficiency in various skills. office politics. • A.3 2. job pressure. DEVELOP ACTION PLANS. prestige. money versus travel. and related factors. A plan such as the one shown below should be considered by Joe Engineer.Example # 2. What are the "success factors" involved? • Understand own strengths and weaknesses. 57 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . • Understand own personality and value systems. • Talk with experienced engineers to obtain insights related to costs and benefits of the targeted objectives. Power. if any. • Take pertinent tests. • Understand own career objectives and the requirements to succeed. • Confirm desirable objectives. balance between work and home. • Understand own requirements for happiness. Preparation (by 1/02) • Collect pertinent career development references and gain perspectives. 50 to 60 hour week. • Practice engineering management principles by doing volunteer work. Group Leader • • Get a M. say 1/02) • Exposed to engineering management concepts and practice (e.g. • Do networking inside and outside the company (join technical societies.E. take EAS 521 and 522) • Practice good interpersonal skills. attend technical conferences. etc.Example # 2. 58 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .3 B.). write technical papers. degree to demonstrate technical competence (by a date. • Know some professional people well. if needed. • Attain recognizable technical achievements. Supervisor • • Seek training on supervision. • Demonstrate innovation.3 C. and sales through business interactions and/or sales • Function as a gatekeeper for technology. • Continue networking and become known to many others inside and outside the company. • Demonstrated management potential. 59 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . production.Example # 2. to help establish self as a technical leader. • Take advanced technical courses. • Practice teamwork with dedication. • Become known as a good problem solver. • Broaden self into marketing. Manager • Shown sophistication in strategic planning operation. and all other engineering management skills • Global and domestic marketing. service and customers.3 • D. • Demonstrated capability in interaction with sales. • Formed networks with important people a various levels 60 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . • Achieved organization-wide recognition.Example # 2. production. • Demonstrated leadership in strategic planning affecting company. • Mastered the technology-marketing interface. • Active in industrial trade/technical groups. • F. • Have real friends in high places. Vice President 61 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .3 • E.Example # 2. • Made major contributions to direct company's businesses • Get Harvard Executive Training. • Recognized for operation efficiency. • Capable of representing company to the press. Director • Be widely known in own industry. savings program. 62 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .Issuing Policies • Policies are directives. travel expenses and trip report. etc. drug policy. technical publications. plant safety. promulgated to address repetitive questions and issues of general concern • Examples: Hiring/firing guidelines. progress reports. EEO. educational refunds. medical insurance. staff meeting. retirement benefits. performance appraisal. Purposes of Policies • Save management time and efforts. as they address the common and repetitive questions of interest to a large number of employees (policy manuals. or human resources group) 63 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . web posting) • Capture the distilled experience and past learning of the company • Facilitate delegation (administered by the secretaries. free managers to focus on important work. reducing conflicts due to interpretation difference.) 64 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .Characteristics of Policies • Apply uniformly to all employees • Being relatively permanent. encourage teamwork. encourage skills building via education and seminar attendance. etc. when in force • Foster corporate objectives (assure equal treatment of all. procurement. facility maintenance. ISO 9002 certification. equipment operation. installation. customer service. waste disposal. customer order processing. manufacturing.Establishing Procedures • Procedures are standardized (tried-and-true) method of performing work • Examples: Product design. and others 65 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . project management. work reproducibility) • Simplify training • Save corporate memory (know-how. knowledge. proven practices) 66 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . heuristics. resource conserving.Importance of Procedures • Preserve the “best” way to perform repetitive work (efficiency-focused) • Provide the basis for method improvements • Insure standardized action (quality control. Developing Procedures (1) Concentrate on critical needs (2) Chart the work (3) Review work (4) Propose procedure (5) Improve procedures (6) Formulate/ communicate procedures 67 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . resources) (3) Study work characteristics (Why is it necessary? What results to get? When is best time. outputs. workflow. skills.Developing Procedures (1) Concentrate on critical repetitive work of time-consuming and high demand nature (2) Chart the work (inputs. where is best place. and who is best person to develop it?) 68 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . and enable its consistent administration) • (5) Define regular improvements to procedures • (6) Formulate procedures and communicate widely to assure understanding and acceptance by all involved 69 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .Developing Procedures (cont’d) • (4) Propose procedures (keeping to a minimum to avoid being restrictive. Ingredients of Good Planning 70 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . check validity frequently (2) People .Key Ingredients (1) Assumptions .Efforts to implement plan must be commensurate with value expected of the plan (effectiveness doctrine) 71 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . forecast future states. (3) Benefit versus Cost .Get information.Consider involving doers and introduce changes gradually to avoid resistance. and study/select alternatives. Key Ingredients (cont’d) • (4) Small but Sure Steps .Design a series of small steps to reach the expected results.Secure commitment of sufficient resources to achieve plan objectives 72 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . allow timely control and mid-course corrections • (5) Change in Future .Anticipate changes in future conditions and include contingency steps with fallback strategies • (6) Commitment . the risks of failure.5 There are always risks associated with the experimentation of a new manufacturing process or with the entry into a new global market. reputation.g. value) of the venture. time delay. How should one decide to proceed or not to proceed with a risky venture? What is the proper level of risks to take? Answer # 2. company bankruptcy. What is the maximum pay-out (e. should it luckily turn out to be successful? 2. etc.Question # 2. loss of market share.5 All new ventures have inherent risks. 3.5 Question # 2.)? 73 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . Why is the venture deemed to be risky? How likely are all risk factors expected to play out in reality? What contingency steps are available to minimize the impact of these risky factors? Answers to these questions will lead to an assessment of the probability of success for the venture. In deciding to take or not to take the risks of going forward with the venture.g.. What is the adverse impact on company.. should the venture fail (e. several questions need to be answered first: 1. 5 A typical set of guidelines on avoiding taking unwarranted risks may include the following: (a) The cost of going forward with the venture must be much smaller than the expected value of the risky venture (the probability of success multiplied with the maximum payout of venture) (b) The adverse impact on company must be smaller than the maximum pay-out of the venture. 74 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .Question # 2. needing staff support 2. SWOT (strengths. 5. Analyze available data (checking data accuracy. opportunities and threats) analysis. etc. search on external databases. Apply judgment to data and formulate strategies. needing staff participation. customer feedback. competitive information. 4. project plan preparation proof reading.6 The Marketing Director needs to submit a strategic plan for entering a new market. business alliance. financial projections. binding).Question # 2. weaknesses. risk analysis. forecasting).6 Question # 2. needing staff support. (2) Delegating some parts of the plan to subordinates. He knows he needs long periods of uninterrupted time.6 1. What are the factors the Director needs to consider when he picks the best way to create this plan? Answer # 2. Create the plan (graphics. 75 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . what-if analysis. in order to benefit from different viewpoints. printing. technology development. He considers two options: (1) Staying at home to develop the plan. Collect critical market information (market research. interpretation. needing staff support 3.). Get staff feedback. to be done by the Director himself. Without protection. this niche could become slowly eroded by the anticipated introduction of a new low-price low quality product by the competition. Time is of essence. performance. Thus. delivery and logistics. 76 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . The company must act quickly.2 Question # 2. What should the company do? Answer # 2. The purpose is to reach and understand customers in this new low-price low-quality niche so that they may be served better in the future. Follow the competition closely to understand the features of their new products and evaluate the market reaction to them.2 The company has always been focused on the high-quality high-price end of the market. then the company should introduce the imported products to compete directly at a discounted price.Question # 2. 2. the strategic plan to protect company's position should include: 1. the company must find ways to protect its current market share in the high-price high-quality niche.2 • Obviously. Now. 3. If the market shows signs to accept the competition's new products. market intelligence indicates that some competitors are planning to enter the low-price low-quality end of the market. Explore the option of importing a low-price and low-quality product to the market and make inquiry to understand cost. 2 One obvious alternative is for the company to drive out the competition using the imports. then the company should develop a new medium-price and mediumquality products aiming at recovering some of its lost customers.Question # 2. If company registers a decline in sales realized in the high-price and high-quality market niche. based on a "second brand" strategy. 77 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . 4. 78 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . We strive to · Properly plan. • Discipline . · Pay attention to detail.? Please advise.Question # 2.3 Mission and value statements are indicative of the directions to which a company is headed.3 1.The complexity of our work and our tough business environment demand a high degree of discipline and cooperation. employees and stockholders by being the preeminent building block supplier to the computing industry. fund and staff projects. · Clearly communicate intentions and expectations.3 Question # 2. · Make and meet commitments. Answer # 2. INTEL CORPORATOIN Our mission .S.Do a great job for our customers. · Conduct business with uncompromising integrity and professionalism. What are typically included in the statements of Mission and Value of some well-known companies in the U. · Take pride in our work • Result Orientation .We are results oriented.3 • Quality . · Confront and solve problems. · Do the right things right.Question # 2. · Continuously learn. · Execute flawlessly.Our business requires continuous improvement of our performance to our Mission and Values · Set challenging and competitive goals. and improve. · Focus on outputs. · Assume responsibility. develop. 79 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . We strive to: · Set challenging goals. · Learn from our successes and mistakes. · Encourage and reward informed risk taking.3 • Customer Orientation . We strive to: · Listen to our customers. · Communicate mutual intentions and expectations. 80 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . · Challenge the status quo.Question # 2. • Risk Taking . we strive to: · Embrace change. · Make it easy to work with us. · Serve our customers through partnerships with our suppliers. · Deliver innovative and competitive products/services.Partnerships with our customers and suppliers are essential to our mutual success.to maintain an innovative environment. · Listen to all ideas and viewpoints. cost. technology and experience throughout General Motors. · Be an asset to our community. 81 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 .A productive and challenging work environment is the key to our success.Question # 2. and customer satisfaction through the integration of people. · Be open and direct. · To transfer knowledge. SATURN CORPORATION The Mission of Saturn · To market vehicles developed and manufactured in the United States that are world leaders in quality.3 • Great Pace to Work . 2. We strive to: · Respect and trust each other. · Have fun. · Recognize and reward accomplishments. technology. · Work as a team. and business systems. we will fulfill our mission. · To meet our customers' needs. we will create real partnerships with these organizations. We believe that all people want to be involved in decisions that affect them. and we will work with them to help them feel ownership of Saturn's mission and philosophy. our products and services must be world leaders in value and satisfaction. trust. responsible team members who understand that change is critical to successes are Saturn's most important asset. training. · To meet our members' needs. fairness. We will strive for openness. and respect with them. believe that meeting the needs of Saturn customers. and we will seek to cooperate with government at all levels. respect and dignity.3 The Philosophy of Saturn We the Saturn Team. By continuously operating according to this philosophy.Question # 2. in concert with the UAW and General Motors. · To meet our suppliers' and dealers' needs. · To meet our community neighbors' needs. Creative. and neighbors is fundamental to fulfilling our mission. motivational. We will develop the tools. we will create a sense of belonging in an environment of mutual trust. and education that each member needs. dealers. 82 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . we will be a good citizen and protect the environment. suppliers. members. 83 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . trust and respect for the individual. and continuous improvement.3 • The Core Value of Saturn • As a final complement of Saturn's mission and philosophy statements. the founding team enunciated five core values: commitment to customer enthusiasm. teamwork. commitment to excel.Question # 2. 4 • Question # 2.4 What are included in the operational guidelines some industrial companies have developed? Please advise.4 A typical set of operational guidelines may emphasize the following: • Employees are the most important asset to our organization (respect and listen to them) • Quality of our product/service must never be compromised (total quality concept. • Answer # 2. while not neglecting innovation for major step-change in performance) • Each action that is taken should add value to the final product or service (eliminating wasteful and unnecessary steps) • Timely response of the system to changing external conditions is paramount to success (time to market is a key competitive factor in today's marketplace) • Integrity in all actions by all employees is paramount (all shareholders must have confidence in the enterprise) 84 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . as measured by customers) • The system must continuously improve all aspects of its operation (seeking a stream of incremental improvement.Question # 2. involving (1) forecasting.Summary • Planning is an important engineering management function. with performance being unpredictable • Others planning activities are administrative/ operational in nature and should appear relatively easy to everyone 85 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . (2) action planning (3) issuing policies and (4) establishing procedures • Forecasting and strategic planning are difficult. as lawyers are known to be typically disinterested in trouble-shooting computer systems. The company also provides around-the-clock services to ensure that the combined hardware and software system performs reliably. This product-bundling strategy works out well for the company.1 to 2. 2. and review its advantages and disadvantages. the Critical Path Method (CPM) is a tool used widely in industry. (Continued on next slide) 86 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . and the sales revenue of XYZ increases dramatically during its first three years in business.7 In planning for a project. Elucidate the basic concepts and techniques involved.8 yourself and submit as an assignment.8 XYZ Company has been a one-product company focused on developing and marketing a of innovative ERP software specialized for law firms and operated in computers running on a proprietary operating system software developed by the company. Now write answers to Question # 2. Customers purchase both the hardware and software as a bundled package from XYZ company.5 First study the proposed answer to Question # 2.1 to 2.5 given in the lecture slides to learn how to answer Engineering Management questions. 2.Assignment # 2 (Due next Thursday – 5 Mar) Question # 2.1 to 2. illustrate by using an example. The president of XYZ Company recognizes the potential threat imposed by these new ERP software products. Design and explain this counterstrategy. 87 Khawar Ayub FAST NU Lahore Campus 26-Feb-15 . market intelligence shows that new ERP software products are now being introduced by competitors.Assignment # 2 (Due next Thursday – 5 Mar) However. These new ERP software products are quite capable of performing all of the data processing functions typically required by law firms. these new ERP software products can run on any computers using their existing operating systems. Furthermore. thus eliminating the need for customers to purchase dedicated computers. He wants to know the best counterstrategy he should plan and implement. We shall InshaAllah continue… Chapter 3 Organizing Khawar Ayub FAST NU Lahore Campus 88 26-Feb-15 .