June 20, 2016

Internet of Things (IoT) - Very Big Business/Value Opportunity 2025

$11.1 Trillion Value Opportunity in IoT by 2025

2015 McKinsey Estimate

What is Internet of Things?

The Internet of Things refers to the networking of physical objects through the use of embedded sensors, actuators, and other devices that can collect or transmit information about the objects. The data amassed from these devices can then be analyzed to optimize products, services, and operations. Perhaps one of the earliest and best-known applications of such technology has been in the area of energy optimization: sensors deployed across the electricity grid can help utilities remotely monitor energy usage and adjust generation and distribution flows to account for peak times and downtimes. But applications are also being introduced in a number of other industries.

IDC defines IoT as a network of networks of uniquely identifiable end points (or things) that
communicate without human interaction using IP connectivity — be it locally or globally. It is not an
individual technology that can be implemented in isolation but it is an integral part of an "innovation
platform" tying together multiple IT systems and teams within and sometimes outside an organization.

The Internet of Things Is Part of the Third Wave of IT-Driven Competition

For hundreds of years, the types of products that were produced were mechanical, and
value-chain activities were performed manually. This has changed with successive waves of
information technology.

WAVE 1: VALUE CHAIN AUTOMATION. In the 1960s and 1970s, IT automated previously manual processes of information collection and processing in individual activities across the value chain, such as order processing and billing, which improved productivity.

WAVE 2: VALUE CHAIN DISPERSION AND INTEGRATION. In the 1980s and 1990s, the Internet enabled connectivity and integration across the value chain. Customer relationship management stitched together what had been separate processes; supply chains became more global, efficient, and optimized; and again, productivity improved. So value chains got extended nationally and globally but were connected through internet.

WAVE 3: SMART, CONNECTED PRODUCTS. In this wave, information technology is embedded in the products themselves.  A product becomes “smart” when technology, such as a sensor, is embedded in the product. A product becomes “connected” when one product is connected to another. With miniaturization and ubiquitous connectivity, it is possible to make all types of products smart
and connected.

According to a report from McKinsey & Company's Global Institute released in 2015,  IoT has the potential to be worth between $3.9 and $11.1 trillion by 2025. The value includes productivity improvements, time savings, and improved asset utilization, as well as an approximate economic value for reduced disease, accidents, and deaths. So, it does not represent revenue of IoT equipment, software and services selling companies.

The report includes some estimated segment values:

Vehicles: Autonomous vehicles and condition-based maintenance, with an estimated value of $210 to $740 billion

Cities: Public health and transportation: $930 billion to $1.7 trillion

Outside Logistics and navigation: $560 billion to $850 billion

Health and fitness: $170 billion to $1.6 trillion

Construction operations optimization, as well as improve health and safety of operators: $160 billion to $930 billion

Retail environments: Automated checkout: $410 billion to $1.2 trillion

Factories: Operations and equipment optimization: $1.2 billion to $3.7 trillion

Offices: Security and energy: $70 billion to $150 billion

Home: Chore automation and security: $200 billion to $350 billion

The growth of IoT applicatgions  means  IT departments and CIOs  have to plan learn the skills related to IoT systems and applications and plan corporate strategies around the new technology that could be worth trillions in just 10 years' time.

Business Scope  2014 Estimate:

2015 Estimate


Industrial Giants are making Massive Investments in Industrial IoT
Even predictions of $60 trillion by 2030 are being made.

GE into IoT in a Big Way - Offering  Predix - IoT Platform

February 2016

GE committing $1 billion to dvelop IoT based business. IoT involves placing sensors on gas turbines, jet engines, and other machines; connect them to the cloud; and analyze the resulting flow of data to identify ways to improve machine productivity and reliability.

IoT can also be used to improve yields from operations. The average recovery rate of an oil well is 35%. The rest of crude is left in the earth because available technology makes it too expensive, If improvement in technology raises yield by 1%, the world’s output will increase by 80 billion barrels the equivalent of three years of global supply. The economic benefits are  huge and IoT offers a way to find protable solutions.

In September 2015, GE projected its revenue from software products would reach $15 billion by 2020, three times its 2015 bookings. GE expects that IoT platform and software  Predix, a cloud-based platform for creating Industrial Internet applications will contribute a big portion of that increased revenue.

GE  began developing the IoT solution in 2012.  Initially, it was developed for GE. Now it is offered on the market.

The driving force behind taking Predix to market was the scope of the opportunity: GE determined that the market for a platform and applications in the industrial segment could reach $225 billion by 2020.2  The company developed  the commercial version, Predix 2.0, and in October 2015 made the platform directly available to channel and technology partners as well as customers who could use the platform to build their own set of analytics. .

Platform Benefits

Predix was designed to be a software platform. The platform has open standards and protocols that allow customers to more easily and quickly connect their machines to the Industrial Internet. The platform can accommodate the size and scale of industrial data for every customer at current levels of use, but it also has been designed to scale up as demand grows. Apart from what GE offers, customers may develop their own custom applications for use on the Predix platform, GE executives are working to build a developer community and create a new market for apps that can be hosted on the Predix platform. Finally, data security, a concern for many companies considering IoT applications, is embedded at all platform application layers: services enablement, data orchestration, and infrastructure layers.

IoT Pilots

A pilot is often an essential step of the adoption process. In early 2015, GE executed a four-week engagement with one of the largest global energy companies, which wanted to reinvent how it manages corrosion related maintenance its “static” equipment — specifically, its storage tanks used during oil and gas processing.   During the four-week exercise, after discussions with various experts related to the design and maintenance,  GE team developed a software solution that helped engineers to “walk through” the equipment digitally. This provided reliability engineers new insights they could  to better manage those assets. The project was a success and offered GE a way to discuss future engagements.

GE hopes to have three more customers booked by early 2016 to run pilots of Predix offerings. GE executives see the pilots as a way to bring customers onto the selling team. Global spending on the Industrial Internet was $20 billion in 2012. Analysts were forecasting that number would reach $514 billion by 2020, creating nearly $1.3 trillion in value.


Sam Ransbotham the author of the article in MIT Review is an associate professor of information systems at the Carroll School of Management at Boston College and the MIT Sloan Management Review guest editor for the Data and Analytics Big Idea Initiative. He can be reached at sam.ransbotham  at the rate bc.edu and on Twitter at @ransbotham.

Digital Reimagination

Five key technologies (Digital Five Forces)  are  maturing and  precipitating
the shift to the Digital Consumer Economy. These are Mobility and Pervasive Computing, Big Data,
Social Media, Cloud, and AI-Robotics. These forces are  being used in various permutations
and combinations to drive new applications. As a result, new Digital Composite Forces are emerging.

Foremost among them is the Internet of Things, which combines mobility and pervasive computing,
big data, cloud, and—increasingly—artificial intelligence.

Large number of  devices can be connected to the IoT  driving new economic opportunities. “Digital Reimagination.” involves leveraging a combination of the Digital Five Forces and Digital Composite Forces to reimagine the enterprise along one or more of six dimensions: business models, products and services, customer segments, channels, business processes, and workplaces.

Recently,  a major global engine manufacturer created a new services stream by using sensor-collected big data to predict failures on their engines. When such a failure is predicted, the vehicle operators are automatically sent notifications along with directions to the nearest service center. There is value creation in this initiative. It gave new maintenance revenue to the manufacturer, but, this has also helped the customer  by reducing inconvenient breakdowns.

$14.4 trillion of value - IOE (Internet of Every Thing) by Cisco - 2013 Estimate for 2022

In other words, between 2013 and 2022, $14.4 trillion of value (net profit) will be
“up for grabs” for enterprises globally — driven by IoE.

Where is the value?

The five main areas:
1) asset utilization (reduced costs) of $2.5 trillion;
2) employee productivity (greater labor efficiencies) of $2.5 trillion;
3) supply chain and logistics (eliminating waste) of $2.7 trillion;
4) customer experience (addition of more customers) of $3.7 trillion; and
5) innovation (reducing time to market) of $3.0 trillion.
http://www.cisco.com/c/dam/en_us/about/ac79/docs/innov/IoE_Economy.pdf  - Cisco 2013 report.

Cisco report has value estimate for countries and regions.

Various reports on Market Size

Updated  24 June 2016,  24 Mar 2016, 23 Mar 2016

June 17, 2016

Understanding Your Products Through IoT and Data Analytics

Using IoT Data to Understand How Your Products Perform

HBR June 2016

General Electric has announced that it will spend $1 billion dollars onn IoT.

Survey of 795 large companies (average revenue of $22 billion) in North America, Europe, Asia-Pacific, and Latin America by TCS found that  average per-company spending on IoT initiatives — was $86 million in 2015.  It is projected to grow to $103 million by 2018.

 Use of IoT is increasing. Producers are installing sensors in their products.

But, only 6% of companies selling products with less than $100 price tags had embedded wireless sensors in their offerings. In contrast, 54% of companies whose products’ average sales price was between $1 million and $10 million did have digital sensors that communicated product performance back to them.

Four key elements to use  IoT to get the ultimate truth on product performance:

1. Getting customers to agree to have their products monitored, which in turn means giving them something of value in return.  Customer must have some benefit.

2. Product performance data must be processed and acted upon quickly. Real time data analysis capability has to be developed.

3. A culture that accepts the truth, however bad. Companies have to accept bad performance of their products and communicate to the customer the anticipated problems. Do rectification of them.

4. “Reimagining the business” must become the mantra.  It is like reengineering. Now branded as reimagining. Understand the services of IoT offers and redesign your business around the power and potential of IoT. Creative effort to use IoT in innovative way is required to see new things before others or understand what others have done through newspaper or digital media news.

A to Z of Marketing Management - Principles, Methods, Techniques, Strategies, Tactics and Tools

Collection of  Marketing Articles from Blogosphere

2016 Articles

What do you think will be single biggest trend in digital media and technology in 2016?
The Metrics That Marketers Muddle - MIT Sloan Management Review
CRM: More Than Just A Marketing Management Tool


Accessible segments, Action campaigns, Adaptation, Adoption, Ad placement policies and services, Advertising,Advertising elasticity, Advertising effectiveness

Analysis of Consumer Markets


Brand Positioning


Competitive Strategies for Followers and Nichers
Consumer Behavior
CRM: More Than Just A Marketing Management Tool


Determinants of Customer Satisfaction and Loyalty

Developing Enterprisewide or Company Wide Marketing Orientation

Direct Marketing






Integrated Marketing Communication - Kotler and Keller Chapter Summary
International and Global Marketing





Marketing Concept - Kotler

Management of Marketing Department and Function
Managing Product Lines and Brands
Managing Wholesaling and Retailing Network

Marketing and New Product Development
Marketing Channel Management – Important Issues
Marketing Communication: Channels and Promotion Tools
Marketing Logistics

Marketing Management for Service Firms
Marketing Management Research - Propositions
Marketing Public Relations
Marketing Research and Market Demand Forecasting

Marketing Strategies for Challenger Firms
Marketing Strategy - Differentiating and Positioning the Market Offering
Marketing Strategy for New Industry Products
Marketing Strategy - Marketing Process - Kotler's Description

Market Segmentation and Selection of Target Segments



Online Marketing


Planning in the Marketing Process
Pricing Strategy and Tactics




Sales Force Management
Sales Process and Sales Training
Sales Promotion
Scanning the Marketing Macroenvironment - Philip Kotler's Book Chapter Summary


The Metrics That Marketers Muddle - MIT Sloan Management Review




What do you think will be single biggest trend in digital media and technology in 2016?




June 14, 2016

Supply Chain Cost Reduction

Industrial Engineering of Supply Chains

The cost reduction effort on any system will involve simplification effort. Systems are made complex by functional designers by adding various features. Industrial engineers in their quest for efficiency need to examine the contribution of various complex features to the profit potential of the system and need to simplify where needed.

Simplification Area Tools

The product portfolio Rationalization & Product Portfolio Planning

The product design Design for Manufacturability

Part and raw material variety Standardization

Manufacturing processes Lean, continuous flow mfg.

WIP inventory Just-in-time

Finished goods inventory Build-to-Order

The distribution network BTO & ship direct

Order entry Configurators & data links

The vendor base Vendor/Partnerships

Supply chain logistics Product line rationalization

Product design for lean production



The Supply Chain Cost Management: The Aim & Drive Process for Achieving Extraordinary Results

Hardcover: 256 pages
Publisher: AMACOM (October 31, 2007)
Language: English
ISBN-10: 0814474756
ISBN-13: 978-0814474754

• identify critical costs in the supply chain

• measure secondary and tertiary costs

• develop strategic options

• reduce, change, or eliminate activities that produce costs

• implement an action plan

• verify the plan with cost monitors

• continually improve and modify the process


Excerpts from the Book: Build-to-Order & Mass Customization, David M. Anderson

The Page http://www.halfcostproducts.com/index.htm is also very useful page to read

Supply Chain Industrial Engineering - Video Presentation



Supply Chain Engineering - One Year Masters Course - Georgia Institute of Technology - IE School.

They should have titled the course

Supply Chain Industrial Engineering



Interesting Web Pages and Blog Posts

7 ways everyone can cut supply chain costs

How to Reduce Costs through Supply Chain Network Optimization

Original Knol - 460

Updated  17 June 2016,  4 July 2014, 24 Nov 2011, Earlier published on Knol

Industrial Engineering Knowledge Revision Plan - One Year Plan

January - February - March - April - May - June

June 4, 2016

Work Measurement

Purpose of Work Measurement in Today's Industrial Situation.

Efficient methods are selected with the help of work measurement techniques when time is the most important parameter for deciding the efficiency of a method. Even if cost is the decision variable, we have to know the manpower time and machine times to calculate the cost of a method.

Optimization of plans and management decisions are done with work measurement results.

Work Measurement in Taylor's Time

One Reason was understanding the output that can be produced by a man. Taylor improved the working method, and gave rest breaks that would result in maximum output per day. But he used work measurement to find the minimum time in which a first class workman is able to do a given element of work.

F.W. Taylor came out with stop watch time technique that measured time taken for each element of an operation and systematized the work measurement procedures. Based on these time studies standard times of various work pieces were determined and fair job for the day of the worker was established using these standard times. Incentive systems were put in place to provide scope and income opportunity for production above the standard rate and also to provide motivation to reach the standard and exceed the standard.









Industrial Engineering Knowledge Revision Plan - One Year Plan

January - February - March - April - May - June

July - August - September - October - November - December

Updated  4 June 2016, 16 Dec 2011

June 3, 2016

Interesting Books on EBSCO Host

30 Days to Social Media Success

Gail Z Martin

Marketing with Social Media : A LITA Guide

Thomsett-Scott, Beth C.

June 1, 2016

Component Areas of IE: Human Effort engineering and System Efficiency Engineering

"Industrial Engineering is human effort engineering and system efficiency engineering."
This statement appeared in IIE magazine "Industrial Engineer" in March 2010 issue.

In the year 2015-16, Institute of Industrial Engineers changed its name to Institute of Industrial and Systems Engineers. It was explained by some of the proponents of the name change is required to focus the attention of industrial engineers on the big picture of the enterprise. Otherwise industrial engineers are more focused on the time study of single operator and improvement of single work stations. But in my thinking, system was always present. All the pioneers of industrial engineering Taylor, Gilbreth and Emerson mentioned systems and carried out enterprise level changes. All of them worked with men and other resources. Hence, a major classification of industrial engineering areas can be made as system efficiency engineering and human effort engineering.

The following subjects or techniques form part of industrial engineering tool kit and can be categorized under human effort engineering and system efficiency engineering. More detailed articles are written for each topic

Human Effort Engineering

1. Principles of Motion Economy and Motion Study.
Therbligs, SIMO chart, Chronocycle graph
2. Work Measurement
Stop watch time study, worksampling, PMTS - MTM, MOST
3. Ergonomics

4. Safe Work Practice Design
Personal protective devices

5. Wage Incentives and Job Evaluation

System Efficiency Engineering

1. Method Study and Methods Efficiency Design
Process analysis, operation analysis, work station design
2. Value Engineering

3. Statistics Based Techniques: Statistical Quality Control (SQC), Statistical Process Control (SPC), and Six Sigma Projects etc.

4. Mathematical Optimization, Operations Research and Quantitative Techniques
Linear programming models, Integer programming, Non-linear programming
5. Plant Layout Studies for reduction of material movement, operator movement and movement of salesmen etc.

6. Engineering Economics
Engineering Economic Appraisals of projects submitted by Engineering Departments

7. Specialised Functional IE Solutions: SMED. Lean Manufacturing, BPR


Related Papers and Articles

IE Tool Kit in Hospitable Food Service Sites.
IE magazine article, 2010
Operation Research Methodologies in Industrial Engineering: A Survey
Authors: Robert E. Shannona; S. Scott Longb; Billy P. Bucklesa
IIE Transactions, Volume 12, Issue 4 December 1980 , pages 364 - 367

Industrial Engineering Job Description - Boeing


June First Week - IE Knowledge Revision


Industrial Engineering Knowledge Revision Plan - One Year Plan

January - February - March - April - May - June

July - August - September - October - November - December

Updated 1 June 2016, 16 Dec 2011

Pioneering Efforts of Taylor, Gilbreth and Emerson

Contribution of F.W. Taylor to Industrial Engineering

Taylor developed efficient methods, advocated scientific management that advocated study of work by engineers and shop managers. Taylor developed both scientific study of machine work and man work. He also developed stop watch time study to find the improvement in working time due to various changes proposed by industrial engineers/scientific managers.

Productivity Improvement in Machine Shops through Scientific Machine Work and Man Work by Taylor

F.W. Taylor - Shop Management - With Appropriate Sections

F.W. Taylor Scientific Management - With Appropriate Sections

Contribution of F.W. Gilbreth

Frank B. Gilbreth, the engineer who conceived the "Motion Study" Principles (techniques for manual productivity improvement) once visited a British-Japanese Exposition. There a demonstration of polishing shoes was being held to help the sales of Japanese shoe polish.

Casually walking and talking with his friend, Gilbreth stopped to view the shoe polish wrapping demonstration. Gilbreth watched for a few moments, then simply said, "They are really skilled, but they could produce more." He timed the fastest girl and without hesitation, ascended the platform. He found she was being paid on a piecework basis and said, "I’m going to tell you how to earn more money, but you must follow my instructions." He changed the location of her supplies and showed her how to wrap and set aside more efficiently. He timed her again after several cycles. When he rejoined his friend he said, "When she gets the hang of it she’ll be making twice her former earnings."

That is an example of the applied results of using Gilbreth’s Motion Study Principles. Industrial Engineers used these guiding rules throughout the United States. Gilbreth said if his Motion Study Principles had not been previously applied to any manual work, by their application the productivity would be doubled or more.

In the late 1940’s, James S. Perkins, an Industrial Engineer, on a research assignment for the Western Electric Company, was at the University of Iowa, where he met Mrs. Gilbreth, who was a speaker at the Industrial Engineering Conference there. She visited with him and reviewed his research. Gilbreth’s film studies, research and conclusions, preserved by James Perkins extend into many diverse areas:

•Motion and Fatigue Study
•Skill Study
•Plant Layout and Material Handling
•Inventory Control
•Production Control
•Business Procedures
•Safety Methods
•Developing Occupations for the Handicapped
•Athletic Training and Skills
•Military Training
•Surgical Operations

Gilbreth developed the route model technique to improve the flow of materials in manufacturing operations. When he first developed it, Gilbreth said that several of his engineering friends, at an engineering meeting, laughed themselves to death, but that it was quickly accepted by Plant Managers. He found that by its use, the layout distance was often cut by 75% and product processing time was reduced substantially. Further, plant productivity was usually increased by 15 to 25%.

Gilbreth’s cyclegraph technique, to learn about skill, was one of his significant contributions. He demonstrates this technique in the film and also shows the three-dimensional model he made from the pictures of a drilling operation. He said, "The expert uses the motion model for learning the existing motion path and the possible lines for improvement. An efficient and skillful motion has smoothness, grace, strong marks of habit, decision, lack of hesitation and is not fatiguing."

Contribution of Harrington Emerson

Harrington Emerson contributed to the systems efficiency focus of industrial engineering. His book Twelve Principles of Efficiency was classic.

He discussed efficiency design of organization through 12 principles

1. Clearly defined ideals.
2. Common sense
3. Competent counsel
4. Discipline
5. The fair deal
6. Reliable, immediate and adequate records
7. Despatching
8. Standards and schedules
9. Standardized conditions
10. Standardized operations
11. Written standard-practice instructions
12. Efficiency-reward

Standards and standardization as a basis for efficiency was strongly advocated by him. Nearly two hundred companies adopted various features of the Emerson Efficiency system, which included production routing procedures, standardized working conditions and tasks, time and motion studies, and a bonus plan which raised workers' wages in accordance with greater efficiency and productivity [Guide].

Industrial Engineering Knowledge Revision Plan - One Year Plan

January - February - March - April - May - June

July - August - September - October - November - December

Updated  2 June 2016, 16 Dec 2011

Principles of Motion Economy

Industrial Engineering Article Series

Industrial Engineering Principles - Principles of all Subjects of Industrial Engineering Discipline

Principles of Motion Economy are to be used in motion design, motion analysis, motion study of human operators. Motion design is a technique of Human Effort Engineering, a core focus area of Industrial Engineering. They can also be used in robot motion design.


Use of the Human Body

1. The two hands should begin as well as complete their motions at the same time.

2. The two hands should not be idle at the same time except during rest periods.

3. Motions of the arms should be made in opposite and symmetrical directions and should be made simultaneously.

4. Hand and body motions should be confined to the lowest classification with which it is possible to perform the work satisfactorily.

5. Momentum should be employed to assist the worker wherever possible, and it should be reduced to a minimum if it must be overcome by muscular effort.

6. Smooth continuous motion of the hands are preferable to straight line motions involving sudden and sharp changes in direction.

7. Ballistic movements are faster, easier and more accurate than restricted (fixation) or controlled movements.

8. Work should be arranged to permit an easy and natural rhythm wherever possible.

9. Eye fixations should be as few and as close together as possible.

Arrangement of the workplace

10. There should be a definite and fixed place for all tools and materials.

11. Tools, materials and controls should be located close to the point of use.

12. Gravity feed bins and containers should be used to deliver material close to the point of use.

13. Drop deliveries should be used wherever possible.

14. Materials and tools should be located to permit the best sequence of motions.

15. Provisions should be made for adequate conditions for seeing. Good illumination is the first requirement for satisfactory visual perception.

16. The height of the work place and the chair should preferably arranged so that alternate sitting and standing at work are easily possible.

17. A chair of the type and height to permit good posture should be provided for every worker.

Design of tools and equipment

18. The hands should be relieved of all work that can be done more advantageously by a jig, a fixture, or a foot-operated device.

19. Two or more tools should be combined wherever possible.

20. Tools and materials should be prepositioned whenever possible.

21. Where each finger performs some specific movement, such as in typewriting, the load should be distributed in accordance with the inherent capacities of the fingers.

22. Levers, hand wheels and other controls should be located in such positions that the operator can manipulate them with the least change in body position and with the greatest speed and ease.


Ralph M. Barnes, Motion and Time Study Measurment of Work, John Wiley & Sons, New York, 1980

______________ ______________
More Details in
Principles of Motion Economy - Some More Details


Related content
Industrial Engineering Knowledge Center

Originally posted at
http://knol.google.com/k/ principles-of-motion-economy

Industrial Engineering Knowledge Revision Plan - One Year Plan

January - February - March - April - May - June

July - August - September - October - November - December

Updated 1 June 2016, 16 Dec 2011

Industrial Engineering - Introduction

Industrial Engineering - Definitions

Industrial engineering 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 . 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 is the inclusion of the economic and the human elements especially that differentiates industrial engineering from the older established branches of the profession (Going, 1911) [1].

“Industrial engineering is the engineering approach applied to all factors, including the human factor, involved in the production and distribution of products or services.” (Maynard, 1953) [2]

“Industrial engineering is the design of situations for the useful coordination of men, materials and machines in order to achieve desired results in an optimum manner. The unique characteristics of Industrial Engineering center about the consideration of the human factor as it is related to the technical aspects of a situation, and the integration of all factors that influence the overall situation.” (Lehrer, 1954) [3]

“Industrial engineering is concerned with the design, improvement, and installation of integrated systems of men, materials, and equipment. It draws upon specialized knowledge and skill in the mathematical, physical, and social sciences together with the principles and methods of engineering analysis and design, to specify, predict, and evaluate the results to be obtained from such systems.” (AIIE, 1955). [4]

"Industrial engineering may be defined as the art of utilizing scientific principles, psychological data, and physiological information for designing, improving, and integrating industrial, management, and human operating procedures." (Nadler, 1955) [5]

“Industrial engineering is that branch of engineering knowledge and practice which

1. Analyzes, measures, and improves the method of performing the tasks assigned to individuals,

2. Designs and installs better systems of integrating tasks assigned to a group,

3. Specifies, predicts, and evaluates the results obtained.

It does so by applying to materials, equipment and work specialized knowledge and skill in the mathematical and physical sciences and the principles and methods of engineering analysis and design. Since, however, work has to be carried out by people; engineering knowledge needs to be supplemented by knowledge derived from the biological and social sciences.” (Lyndall Urwick, 1963) [6]

"Industrial engineering is concerned with the design, improvement and installation of integrated systems of people, materials, information, equipment and energy. It draws upon specialized knowledge and skill in the mathematical, physical, and social sciences together with the principles and methods of engineering analysis and design, to specify, predict, and evaluate the results to be obtained from such systems." [7]

"Industrial engineering is an art for creating the most efficient system composed of people, matters, energy, and information, by which a specific goal in industrial, economic, or social activities will be achieved within predetermined probabilities and accuracy. The system may be for a small single work station, a group, a section, a department, an institution or for a whole business enterprise. It may be also be of a regional, national, international, or inter-planetary scope."(Sawada, 1977) [8]

“Industrial Engineering is Human Effort Engineering. It is an engineering discipline that deals with the design of human effort in all occupations: agricultural, manufacturing and service. The objectives of Industrial Engineering are optimization of productivity of work-systems and occupational comfort, health, safety and income of persons involved.” (Narayana Rao, 2006) [9]

"Industrial Engineering is Human Effort Engineering and System Efficiency Engineering. It is an engineering discipline that deals with the design of human effort and system efficiency in all occupations: agricultural, manufacturing and service. The objectives of Industrial Engineering are optimization of productivity of work-systems and occupational comfort, health, safety and income of persons involved."(Narayana Rao, 2009) [10]

Total Industrial Engineering is "a system of methods where the performance of labor is maximized by reducing Muri (unnatural operation), Mura (irregular operation) and Muda (non-value added operation), and then separating labor from machinery through the use of sensor techniques." (Yamashina)

( Source: http://wenku.baidu.com/view/a1cdf8ec4afe04a1b071de84.html)

"Industrial Engineering is Human Effort Engineering and System Efficiency Engineering. It is an engineering-based management staff-service discipline that deals with the design of human effort and system efficiency in all occupations: agricultural, manufacturing and service. The objectives of Industrial Engineering are optimization of productivity of work-systems and occupational comfort, health, safety and income of persons involved."(Narayana Rao, 2011) [Added to this knol on 14.9.2011]


1. Going, Charles Buxton, Principles of Industrial Engineering, McGraw-Hill Book Company, New York, 1911, Pages 1,2,3

2. Maynard, H.B., “Industrial Engineering”, Encyclopedia Americana, Americana Corporation, Vol. 15, 1953

3. Lehrer, Robert N., “The Nature of Industrial Engineering,” The Journal of Industrial Engineering, vol.5, No.1, January 1954, Page 4

4. Maynard, H.B., Handbook of Industrial Engineering, 2nd Edition, McGraw Hill, New York, 1963.

5. Nadler, Gerald, Motion and Time Study", McGraw-Hill Book Company, Inc., New York, 1955

6. Urwick, Lyndall, F., “Development of Industrial Engineering”, Chapter 1 in Handbook of Industrial Engineering, H.B. Maynard (Ed.), 2nd Edition, McGraw Hill, New York, 1963.

7. http://www.iienet2.org/Details.aspx?id=282

8. Sawada, P.N., "A Concept of Industrial Engineering," International Journal of Production Research, Vol 15, No. 6, 1977, Pp. 511-22.
9. Narayana Rao, K.V.S.S., “Definition of Industrial Engineering: Suggested Modification.” Udyog Pragati, October-December 2006, Pp. 1-4.
10. Narayana Rao K.V.S.S., Industrial Engineering

Industrial Engineering is a Management Function

Industrial engineering (IE) discipline emerged out of the involvement of engineers in management of engineering departments. It is management function. Frederick Taylor identified the short coming in the shop management that engineers really do not understand how operators are using machines or handtools. It is not proper management of manufacturing activity. Taylor came with the theory that managers have to know how work is to be done by operators and must have the capability to train them. Managers have to specify standard operating procedures. Taylor used time study as the tool to identify the best practices or methods being used by operators at that point in time and based on them developed standard operating procedures that improved productivity. Along with it, Taylor developed theory of various work methods, conducted experiments and came out with improvements in man-machine system productivity. Gilbreth came with a different approach of developing micromotions used by operators to carry any activity. He developed optimal methods by removing certain nonvalue adding micromotions and specifing more optimal micromotions. Harrington Emerson, developed principles of efficiency for manufacturing organizations.

Within the management functions its present focus of industrial engineering is on the design of work done by operators and improvement of efficiency of systems and processes.

In certain companies, IE department was made a part of management services department which was appropriate. Management accounting, Management controls, Management audit, Industrial engineering and some more such similar functions can be organized under management services departments. Such a departmentation clearly recognizes that these sections or functions are functions of management assisting management in planning, organizing and directing resources.


Explanation for the Words "Industrial" and "Engineering" in Industrial Engineering

Difference between Pure Engineering and  Industrial Engineering

Pure Engineering creates  technical products.

Industrial Engineering is engaged in evaluation and improvement of the technical product created by the pure engineers so that at the price offered by the customers to buy a specified quantity of production, profit is made by the firm through resource use minimization and through further iterations profit is further increased.

That is why Taiichi Ohno termed it Profit engineering
Target costing developed in Japan best explains the role of industrial engineering.

IE techniques are primarily used for improving technical processes and managerial processes of technical processes (planning, organizing, resourcing, executing and controlling of technical tasks and processes) for increasing productivity. All IE pioneers worked in engineering concerns. They improved technical processes as well as managerial methods and processes used to manage technical processes.

F.W. Taylor improved metal cutting, machines, and management of machine shop through his functional management scheme.

Gilbreth improved bricklaying process by making changes in techniques. Then he proceeded to make fatigue studies to decide the speed at which workers can function and also time.

As an augmented activity, IE is applied to business processes and managerial activities related to business processes.

The emphasis on engineering tasks is the engineering component of industrial engineering. Emphasis on making products profitable is the explanation for the term "industrial". Technical products are made commercial products or industrial products by IEs by reducing their costs below the prices quoted by potential consumers and still further reducing the costs by eliminating wastes so that profit is maximized through increase in sales (due to lower prices) as well as reduction in unit costs.

The basis for reduction of costs is better explained by value engineering. A potential customer quotes a price for a new product by the services it provides to him and by comparison to the prices that he is paying for current equipment that he is using. So for reducing the costs of a proposed product to bring it in line with customer's quote, industrial engineers have to study the architecture of the current products being used by potential customers. They need to get ideas for redesigning the proposed product by understanding how the required functions are being provided by the existing products being currently used at a lower cost. In investigating the product, the processes being used for producing them also come into investigation.

1908 – The industrial engineering department at Penn State is founded by Hugo Diemer, a pioneer in the field. Diemer coined the term “industrial engineering” in 1900 to describe the fusion of engineering and business disciplines. Diemer is named the first head of the department.

The fusion created by Taylor, Gilbreth, Diemer and Going is the efficiency improvement of engineering systems to make projects viable and prosperous.

What is Industrial Engineering?


Narayana Rao

June First Week - IE Knowledge Revision


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Updated  27 May 2016,  16 Dec 2011