July 22, 2019

The Nature and Purpose of Planning - Review Notes

The Nature and Purpose of Planning

Every manager has to select objectives for his enterprise, department, section, unit or group. Based on the objectives he has to set goals for a specific period and make plans that contain ways of reaching the set goals. Planning in general is explained as generating alternatives and selection of the most suitable alternatives from among them for solving a problem. The problem in this context has positive connotation also. How to achieve growth is a problem which has a positive implication only.

Therefore planning is deciding in advance what to do, how to do it, when to do it, and who is to it.

Essential nature of planning can be described by four major aspects:
1. Its contribution to objectives.
2. Its primacy among the manager's tasks.
3. Its pervasiveness
4. The efficiency of plans

1. Its contribution to objectives (Plans must have effectiveness).

Every major plan and its supporting plans should contribute to the accomplishment of the purpose and objectives of the enterprise. It means plans have to be effective.They have to deliver the required output. Organized enterprise exists for the accomplishment of group purpose through deliberate cooperation that is voluntary involvement of people in the enterprise for achieving the objectives and sharing the rewards.

2. Its primacy among the manager's tasks.

Managerial operations of organizing, staffing ( resourcing), leading (executing) and controlling are done to accomplish the objective through plans. Hence planning logically precedes the execution of all the other managerial functions.  Planning is primary task of managers.

3. Its pervasiveness

All managers from the first line supervisor to the chief executive officer of a company are to do planning. At lower levels we may term it as operational planning and at higher levels we may term it as strategic planning. The amount of time spent in planning may vary with the level. CEOs may spend more time planning and organizing and departmental heads may be there to take care of resource acquisition, leading people in their departments and controlling the department performance. But policy making and administering policies can be differentiated. Some managers at higher levels may be more involved in policy making and some other managers are more involved in taking decisions based on the policy.

4. The efficiency of plans

The effectiveness of a plan pertains to the degree to which it achieves the purpose or objectives. The efficiency of the plan refers to the contribution to the objectives, offset by the costs and other factors required to formulate and operate it. More simply stated if sales is taken as an objective, the total sales revenue is the contribution of the plan to the objective and the profit which is the difference between sales revenue and total cost is the efficiency. A plan may enhance the attainment of an objective, say it can get more sales but at an unnecessarily high cost. Hence as a part of planning, efficiency of the plan has to be analysed and improved. Industrial engineering discipline focuses  primarily on  the efficiency of engineering activities and plans and it was extended to other areas like business processes and managerial processes in industrial and commercial concerns. Industrial engineering was also embraced by hospitals in a big way.

Koontz and O'Donnell specially observed that efficiency aspect has to be applied not only in money terms to various resources used in production and service activities but also to the individual and group satisfaction of human resources.

Types of Plans


Objectives are the ends toward which the activity of an organization is aimed.


Goals represent the rate at which objectives of an organization are achieved. Goals quantify the objective with a time frame. For example, if a country has the objective of switching to unconventional sources of energy, the goals could specified as so many gigawatts of energy by end of year 2012.


Values represent stable long lasting belief about what is important. They are evaluative standards that help us define what is right or wrong, good or bad, in the world. Some organizations declare their values and make them known to all. They are also subject to the planning process.

Grand strategies

According to R.N. Anthony strategies result from the processes  of deciding "on objectives of the organization", "on changes in these objectives", "on the resources used to attain these objectives", and "on policies that are to govern the acquisition, use, and disposition of these resources." The main meaning and usefulness of grand strategies are to describe a type of planning program of a broad nature which gives over-all direction to the other and more detailed programs of an enterprise. The emphasis in grand strategies is on the pattern of basic objectives of the organization and goals and the major policies and plans for achieving them.

The purpose of grand strategy of an enterprise is to determine and communicate, through a system of major objectives and policies, a picture of what kind of enterprise is envisioned. A framework is given in the grand strategy which is a useful plan to guide company thinking.

Koontz and O'Donnell give the opinion that strategy is not a new type of plan actually. It is a program. But the concept of strategy is practically very useful and its importance in guiding detailed planning justify its separation as a different type of plan.

Competitive strategies

Competition exists where two or more persons strive for the same goals under conditions in which not all can gain from them. Competitive strategy is a plan made in the light of the plans of a competitor. The plans are made either with an estimate of plans of competitor or plan is a reaction to the strategic move of competitor either announced or executed.  To estimate the competitor's plans, a manager has to put himself in his competitor's place and develop a set of plans for his competitor, using the knowledge he has regarding the objectives and the circumstances in which the competitor is operating. No doubt some industrial espionage will be tried to get an understanding of competitor's plans.


Policies are general statements which guide or channel thinking in decision making of subordinates. Policies delimit an area within which a decision is to be made and assure that the decision will be consistent with and contribute to objectives. Policies tend to predecide issues, and avoid repeated analysis. Polices are based on analysis and once pronounced avoid repeated analysis.


Procedures are plans and they establish a method of handling activities. They specify a chronological sequence of required actions.


A rule is the simplest type of plan. A rule requires that a specific and definite action be taken or not taken with respect to a situation.


A program is a complex of policies, procedures, rules, task assignments assembled to carry out a given course of action. A program is supported by necessary capital and operating budgets.


A budget is a plan. It is a statement of expected results expressed in numerical terms.


Objectives are referred to some authors with different terms. Purposes, missions, goals or targets are the terms used to refer to objectives. Mission is usually used in military enterprises and occasionally in churches and government. "Goals" and "targets' often carry the notation of specific quantitative end. Sometimes the end can be qualitative also. Koontz and O'Donnel used the chapter on objectives to discuss all the various types of terms used in relation to objectives.

Social objectives

It is interesting to note that the discussion of objectives is started with the section social objectives.The objectives of a private enterprise have to be in harmony with the ends for which a society is organized. Whenever the actions and objectives of a private enterprise are thought be against the objectives of the society, legal action is initiated to regulate it or suppress it.

United States has a statement of nation purpose set forth in the Declaration of Independence. The preamble of the Constitution of USA states:

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

All subordinate enterprises in USA, be it a school, church, hospital, government agency or business firm should have objectives which are harmonious with and supportive to national objectives.

Enterprise Objectives

The plural form is used to stress the fact that enterprises have mutliple objectives. Drucker asserted that there are eight areas in which objectives of performance and results have to set by all enterprises. They are: Market Standing, Innovation, Productivity, Physical and Financial Resources, Profitability, Manager Performance and Development, Worker Performance and Development, and Public Responsibility.

For each area or function that company identifies as necessary for survival there has to be objective.

Principles to be followed in setting objectives:

1. Objectives have to be practically achievable. The organization must be able to do some thing to achieve each objective that it has set.
2. The objectives have to support the enterprise purpose, its contribution to the customer.
3. If long range objectives and short range objectives are specified, there must be integral relationship between them.
4. At various points of time prioritization among objectives may be required.
5. Objectives have to be specific and actionable and verifiable
6. Objectives have to planned. There are the result of planning process or activity.
7. Objectives have to be communicated to those charged with building plans to meet them. 

These different types of plans once again described in details in later articles which are summaries chapters written on them.

It is important to remember that planning is rational approach to goal achievement.

Another interesting question is what should be the planning period.

Koontz and O'Donnell advise us to use commitment principle to answer that. The principle says logical planning encompasses a future period of time necessary to fulfill, through a series of actions, the commitments involved in decisions made today.

They clarify saying that long range planning is not really planning for future decisions, but visualising the future impact of today's decisions and satisfying ourselves that impact contribute to the achievement of our objectives. A plan is actually a decision. Certain commitments of resources can only be recovered over  a long period of time and such decisions require long range planning. Certain commitments are recovered quickly and can be reversed quickly also and short range planning is sufficient for them.

Whenever a long term plan exists, short range plans must be in alignment with them. Therefore, all managers must be informed of the long range plans adequately.

Related topics

The Nature and Purpose of Planning
The Nature of Organizing
Resourcing - A Function of Management
Leading - Introduction
Planning and Execution - Theory and Practice
The System and Process of Controlling

Strategy in Various Functional Management Areas

Marketing Strategy - Differentiating and Positioning the Market Offering
Supply Chain Strategy: Achieving Strategic Fit and Scope

Updated on 23 July 2019

2 May 2019, 27 Jan 2016, 16 Jan 2014, 22 July 2014, 12 Dec 2011

July 21, 2019

Operations Management - Processes and Supply Chains - Karjewski et al. 12th Ed. Content

Chapters, Sections and Learning Goals

Chapter 15. Supply Chain Sustainability

FedEx - Comment on FedEx's supply chain sustainability activities

The three Elements of Supply Chain Sustainability

Reverse Logistics

Energy Efficiency

Disaster Relief Supply Chains

Supply Chain Ethics

Managing Sustainable Supply Chains

Table of Contents
1. Using Operations to Create Value

Supplement A: Decision Making


2. Process Strategy and Analysis

3. Quality and Performance

4. Capacity Planning

Supplement B: Waiting Lines

5. Constraint Management

6. Lean Systems

7. Project Management


8. Forecasting

9. Inventory management

Supplement C: Special Inventory Models

10. Operations Planning and Scheduling

Supplement D: Linear Programming

11. Resource Planning


12. Supply Chain Design

13. Supply Chain Logistic Networks

14. Supply Chain Integration

15. Supply Chain Sustainability

Appendix: Normal Distribution


Supplement E: Simulation

Supplement F: Financial Analysis

Supplement G: Acceptance Sampling Plans

Supplement H: Measuring Output Rates

Supplement I: Learning Curve Analysis

Supplement J: Operations Scheduling

Supplement K: Layout


Review of Evolution of Basic Management Theory and Functional Management Subjects

Review of Management

1. Evolution of Management Thought and Theory
2. Evolution of Scientific Management
3. Principles and Laws of Management - Taylor (1903 & 1911) and Gillette & Dana (1909)
4. Science and Philosophy of Management - A. Hamilton Church (1914) & Oliver Sheldon (1924)
5. Principles of Management - Henri Fayol (1916), Koontz & O'Donnell
6. Evolution of Production Management 
7. Evolution of Productivity Management
8. Evolution of Marketing Management
9. Evolution of Human Resource Management
10. Evolution of Organizational Behavior
11. Evolution of Accounting
12. Evolution of Financial Management
13. Evolution of Supply Management and Supply Chain Management
14. Evolution of Business Logistics Management
15. Industrial Management - Evolution of The Subject

Review of selected research papers in various management areas

July 20, 2019

Advertising - An Essay in 1909

Adapted based on the essay in

Economic Advertising Magazine


Vol 1., No. 9,   May, 1909

Straight Talks


As a matter of fact, the true advertising expert, like the true scientist, realizes that his knowledge of the profession is limited by his experience and his knowledge of human nature. We may carry the analogy further. The scientist knows much, but he is well aware of the fact that he is only a student of universal law himself. The true advertising expert  he knows that general publicity — and by general publicity we mean all sorts and conditions of advertising — is the mightiest selling lever of our rushing business age, he refuses to talk in mysterious terms about it. 

Advertising has been called "Printed Salesmanship," but that definition is far from being comprehensive enough. Because some of the best commercial literature produced is not printed salesmanship at all. 

The primary object of all good advertising literature is not so much to actually sell goods as to create a demand for certain lines of goods or products. There are times when it is necessary to make one's advertising take the place of real live salesmen, as in the mail order business. But, as a general rule, the merchant or manufacturer invests money in newspaper and periodical space for the purpose of creating a demand for his goods. Therefore, the accepted definition will not do. Indeed, there can be no very exact definition of advertising in general, because the business is just as wide and varied as the commerce of the world. Speaking broadly, all modern publicity is an essential factor, some say the essential factor, in our present system of distribution. It creates a demand for certain brands of goods, but it does not actually sell goods, because it is not generally designed and executed for that purpose. In judging an ad. the question should be: "Will it create a demand for the goods?" unless the copy is planned and executed for mail order purposes. 

There is value in the concept  of  of "Printed Salesmanship" — copy that DOES sell goods. The production of that sort of copy should be the constant aim of every man in the advertising business. 
The ability to produce such copy places the adman in the van of his profession, and his services at a premium. 

Joseph of early biblical fame was perhaps the first genius in the advertising business. After being sold into captivity by his brethren, he so shrewdly advertised his own ability to do things that, in a few short years, he was prime minister to Pharaoh— the real uncrowned king of all Egypt. You can take our word for it, without consulting the clergy, that if Joseph had not talked big— made a strong bluff— he would have passed away as an insignificant and unknown slave. Future generations would never have heard his name. However great he might have been, he would have remained unknown if he had not asserted positively that he could do things. He looked honest. His assertions were believed. And he made good. The same law holds good right down through the ages.

The origin of the advertising business, as it is known today, lay in the necessity of man having to make his wants known. Gradually it dawned on the born leader of men that he would have to demonstrate his capabilities as a leader. The chance to demonstrate his superiority may have happened, but in the majority of cases the kings, warriors, counsellors, and legislators of the early world asserted their inherent greatness by words or bearing. Somehow they advertised. The 
people believed in them — licensed them to get busy and they made good. 

What we often call American bluff is really not bluff at all. It's oftener confidence. Our cousins south of the line know things, and they know that they know them. Hence they state their ability to accomplish things in the most matter-of-fact way. They advertise. And incidentally we may mention that advertising has not only built up the huge business concerns of the United States — it has also built up the country. 

We have endeavored to bring out two very important points, viz., self-confidence largely makes the man, and advertising creates great business institutions and nations. He who has attained greatness must have advertised in one form or another — he must have caused some people to believe implicitly in his ability to accomplish things. Without advertising no great man comes to his own — without publicity no great event can happen. This is in no way idealistic, it is merely sound commercial sense. 

A separate Essay

Advertising Media 

While Copy is the First Essential in all Judicious Advertising Campaigns the Choice of Media is all

If the best advertising copy frequently appears in the worst media,  all the genius and exactness one can put into advertising matter may be absolutely futile as far as selling the goods is concerned. The choice of media is by all odds the most important part of an advertising campaign.  Good copy is the fundamental essential, but its significance is worse than commonplace if it is not read.

Industry has been likened to war — active, relentless, and unceasing. The manufacturers and big merchants of the world are the generals in the game. These master spirits have somehow gained a knowledge of the rules governing success.

The manufacturer surveys a certain territory, sometimes a whole country, as a big buyer for his product. He is convinced that it is superior to the product of most of his competitors. He knew exactly how to perfect his product, but he is not very certain of the best possible means of marketing it. If the young manufacturer captures a big market, he must fight huge aggregations of capital with ingenuity. He cannot, as a general rule, place an effective field force on the road right at the outset. He knows, or sincerely believes, that his product is just what the people want, and his problem is to get it into the hands of the people at the minimum expense. If he could only line up the dealers — secure their active co-operation, success would be assured.

This is where the trade paper floats into our consideration as the good angel of distribution, and shrewd men are agreed in believing that it should be all that. The dealers are the outworks which the manufacturer must capture before he proceeds to land the central and important party of all commerce — His Majesty — The Consumer.

The proper trade or class publication is the most effective of all advertising media for the very simple reason that there can be no waste circulation. Space in a trade journal which fulfils its mission is worth a high price. Before placing good copy in any medium the advertising man should know its circulation in round figures. No evasion on this point should be considered for a second of time. The publisher has a certain commodity for sale — that commodity is white space. Its value to the buyer is determined by a journal's circulation and its class of readers. A trade paper should cover the trade — that is 75% of the trade all the time. An excellently conducted class publication may attain that circulation. It seldom exceeds it. We should know the circulation — actual, all told, paid-up circulation of any trade paper before handing over any business to it. We should know its circulation in the different provinces or states, cities, towns, and townships. The declaration of a trade paper's circulation should certainly be
an informing document.

And then the wary advertising man will find out exactly what subscribers think of the paper — how much or how little importance the merchants of the country attach to it. All these points decide the value of a trade journal as an advertising medium. Of course the trade paper which fulfils its mission
is the best and cheapest advertising medium in the world.

The daily and weekly newspapers, when carefully selected, are always effective media. Their selling power is potential to say the least. But — they must be carefully selected.

In marketing a product the general advertisers seem to gauge the value of a campaign by results, regardless of the cost. Because there is a direct relationship between cost and results, we desire to emphasize one or two points which are too often overlooked. If a manufacturer can sell a million dollars' worth of goods at a 15% cost, is there any good solid reason why he should spend 20 or 25% to do that million dollars' worth of business? No, there is positively no reason why a manufacturer should throw away $50,000 annually. Many continental advertisers do that very thing. We do not need to look far for evidence of this fact. Most of us have noticed a product advertised in big city dailies and also advertised in the dailies or weeklies of towns and villages within an easy radius of the city at the same time.

The advertising man should make it his business to know more than the figures about any medium. He should know the class of a paper's readers. If a city daily is read by the farmers of a community, it is obviously a waste of money to advertise in their local papers. The urban and rural population
attach more significance to an ad. appearing in the city dailies or weeklies at any rate. This does not say that we should ignore the value of space in country and small city papers. It only means that the advertising man should be careful not to duplicate his copy. The newspapers are the most effective
advertising media we have.

The choice of media is governed by the nature of the campaign. Sometimes a big advertiser will cover the country by provinces or states, and in such cases the work of the advertising man is simplified. Most newspapers give a sworn statement regarding their circulation. But the class of readers is generally more important than the number. As an illustration — it would be poor business policy to advertise automobiles in a workingman's paper. And it would be as foolish to advertise
stoves, as heating apparatus, in a paper read by the upper middle class. The newspapers are about the easiest advertising mediums to select. Their standing is very readily understood and explained. And, with the exception of small, insignificant publications, the dailies must fulfil their mission or they cannot live.

The selection of weekly periodicals and monthly magazines calls for more careful consideration. The ordinary man can very readily find out the exact value of a trade journal or newspaper to his client, but it isn't quite so easy to determine the value of a magazine or weekly with extraordinary circulation. Canada is blessed with a few publications of this kind, but, if circulation statements are correct, magazine publishers are certainly philanthropic.

It is different with similar publications in the United States and England. Magazines are potential selling forces, or factors in the selling game. The advertising pages of McClure's magazine are called " the market place of the world." And there's considerable truth in the same. The price of space in
the popular monthlies and weeklies, on both sides of the Atlantic, is enormous, ranging from $150 per page per insertion, up to $2,000 and more. Apparently no firm, however wealthy, can afford to advertise in the popular monthlies or weeklies without serious consideration. The price is ruinous, and in nearly every case far ahead of proportionate returns. The magazines, which the people buy voluntarily, are by all odds the best advertising media of this class. Where enormous circulation is the result of unusual activity in the circulation department, the price of space is easily 50% too high. The
advertising man must discriminate between good, bad, and indifferent circulation. Munsey's magazine may be termed good circulation, because there is no mad endeavor on the part of
the publisher to boost the circulation. The people buy it because they want it. They are not cozened or flattered or forced into subscribing for the magazine by the adroit ingenuity of clever canvassers. We could name quite a number of so-called popular magazines, on the other hand, which are not popular
at all. For the simple reason that 50% of their subscribers do not want, and certainly do not read them.

The writer spent three months in the U.S. investigating this matter. He found that over 50% of the people he called on were subscribers to a popular magazine (so-called) which they never read.

It is an easily demonstrated fact that only the least intelligent class of a community are trapped in this way. They are not readers. In the majority of cases they could not buy the articles or products advertised at any rate. To price space in this kind of a magazine on a circulation basis is something
akin to fraud. And yet, there are more than one or two well-known periodicals doing that very thing.

The advertising man of the future will want to know more than mere circulation figures about some magazines. He will want to know how the circulation is secured. It is a notorious fact that many people are simple enough to buy things they do not want — books they do not read — magazines they never open. Even sensible men, men in a position requiring the exercise of brains and ingenuity, will often subscribe for a magazine because of the personality of the canvasser, or out of pure good nature — not because they are interested in the publication at all. Is it any wonder advertising experts bewail the fact that their ads. are not read? They wearily admit that their ads. do bring results, but when an excellent piece of copy appears issue after issue in a magazine with several hundred thousand of a circulation, and barely pays for itself, we are safe in asserting that there's a nigger in the wood-pile.

Circulation figures should be only considered as the basic fact of a circulation statement. The class of readers should be known. The political stand of a newspaper should be compared with the trend of political opinion locally. Because we're buying the probable attention of readers — not mere claims.

 T. J. S.,    T. Johson Sterward, Editor

The copy of the magazine is available in Archive.org

Evolution of Marketing Management

Edward David Jones
First  Professor of Marketing
Taught first university course in marketing. 1902

History of sales methodologies

History of Marketing

Hans Domizlaff, 1939, Brand Technology, 22 laws of advertising

The Rise of Marketing and Market Research
H. Berghoff, P. Scranton, U. Spiekermann
Springer, 29-Oct-2012 - History - 312 pages
This volume serves up a combination of broad questions, theoretical approaches, and manifold case studies to explore how people have sought to understand markets and thereby reduce risk, whether they have approached this challenge with a practical view based on their own business acumen or used the tools of scholarship.

Rowntree and the Marketing Revolution, 1862-1969
Robert Fitzgerald
Cambridge University Press, 2006 - Business & Economics - 768 pages
Rowntree and the Marketing Revolution, 1862-1969 is a major study in the history of marketing in economic development, in addition to being a history of a well-known international company. Marketing history remains a neglected field of study, yet Rowntree's commercial success has been the direct result of applied marketing methods and major advances in product development, branding and advertising. It is surprising that marketing and mass consumption has been so neglected; yet Rowntree was a marketing pioneer. The company had in addition a prominent role in questioning managerial organization, business culture, industrial relations, restrictive practices, and multinational business. This book offers a comprehensive account of a company and its industry, but pursues themes and seeks to answer areas of debate, illuminating the ways in which marketing contributed to the growth of an enterprise.

Old School: 5 Killer Examples of Content Marketing in History
by Shayla Ebsen on 04/01/2013

1904: Jell-O recipe book

J.L. Stearns of Elmore Country was marketing here yesterday.

Vol. 1, No. 1,  September, 1908

Scientific Management in Marketing

Definition of Marketing by Butler

Western Australia Wheat Marketing Act

Marketing Methods (1918) by Ralph Starr Butler

The elements of marketing,
Author: Paul Terry Cherington
Publisher: New York, The Macmillan Company, 1920

Brand Management 1931

The story of  brand management began on May 13, 1931, with an internal memorandum from Neil McElroy (1904-1972),  who had come to P&G in 1925 right after his graduation from Harvard College. While working on the advertising campaign for Camay soap, in a now-famous memo, he argued that more concentrated attention should be paid to Camay, and by extension to other P&G brands as well. In addition to having a person in charge of each brand, there should be a substantial team of people devoted to thinking about every aspect of marketing it. This dedicated group should attend to one brand and it alone. The new unit should include a brand assistant, several "check-up people," and others with very specific tasks.

The concern of these managers would be the brand, which would be marketed as if it were a separate business. In this way the qualities of every brand would be distinguished from those of every other. In ad campaigns, Camay and Ivory would be targeted to different consumer markets, and therefore would become less competitive with each other. Over the years, "product differentiation," as businesspeople came to call it, would develop into a key element of marketing.

McElroy's memo made good sense to P&G management, and its proposals were approved up the corporate hierarchy and endorsed with enthusiasm by President Deupree.

Thus was born the modern system of brand management.

Kotler 1967

Philip Kotler published his first edition of "Marketing Management" in 1967.

First Edition

Kotler's big idea in 1967 was that companies ought to be driven by customers and markets, rather than by the intuition of marketing executives. He went on to bring analytical thinking into the marketing field to add to the rich description of markets.

Kotler's stated that  marketing needed more logical processes for making decisions and he based his textbook on ideas synthesized from economics, behavioral science, management theory and mathematics.

Kotler had been trained as an economist at the University of Chicago and MIT. As a result, he introduced mathematical models to help companies allocate marketing resources, including setting the size and goals of the sales force. The companies need a process for making decisions about how many salespeople to hire, how much to spend on advertising, how much to spend on sale promotion which was not available. Kotler filled the gap.

Kotler's original goal was to write a textbook to use in his own classes but  he was delighted and surprised to see his become a big success.

Kotler joined the Kellogg School faculty in 1962 and is now the  Distinguished Professor of International Marketing.

July 18, 2019

Business Ethics - Study Materials - Notes

Business Ethics 

Business Ethics – Introduction
Moral Standards and Moral Judgments – Approaches

Business System - Free Markets - Ethics
Ethics in the Market Place and Distribution System

Ethics in the Factory
Ethics in the Supply Chain

Ethics - Supply Chain

Code of ethics - SCMA

The ethical supply chain
New research from APICS, Supply Chain Management Review and Loyola University Chicago finds that operating a responsible supply chain is an increasing priority. But gaps remain between practice and the goal.
By Judd Aschendbrand, Jennifer Proctor and Bob Trebilcock · November 14, 2018

July 17, 2019

1912 - Review of Industrial Management by ASME Committee

Total 63 paragraphs are there in the report.

60 Your committee hoped to present statistics on the extent to which labor-saving management is in use. This could not be realized. Many industrial managers whom we have addressed have not honored us with their confidence in this direction. In fact, it seems as if a secretive stage is now with us. There are two reasons for withholding such information. The first is identical with the one that has developed 66 trade secrets and secretiveness in regard to machines, tools and processes, the desire to keep things of value away from competitors. The second is a belief that in the minds of some persons a reflection is cast upon the ability of the executives of an industrial establishment if outside experts are employed. Frequently a system of management is referred to as the development of some one
in the organization, although it was installed by a management expert, employed for the purpose.

63 These results indicate certain advantages to both employer and employe. But it is charged that the movement has not yet entirely justified itself from the economic viewpoint, for it has not reduced the cost of product to the consumer. The implication is that its possibilities will not be realized until employers, employees and the public are alike benefited. With this view we are in most hearty accord. Laborsaving machinery has brought the comforts that we all enjoy today. Labor-saving management promises to extend those comforts. Where properly administered it is conserving labor and is thus contributing to the good of society at large, and although the benefit to the consumer may not yet be generally felt, it has already developed to a certain extent and will continue to develop as the natural result of increased production.

J. M. Dodge, Chairman
L. P. Alford, Secretary
D. M. Bates
H. A. Evans
Wilfred Lewis
W. L. Lyall
W. B. Tardy
H. R. Towne
Sub-Committee on

July 16, 2019

Value Engineering - Introduction

                                         Narayana Rao K.V.S.S. on Cover Page of Business Today 
October 22 - November 6, 1997

Product Industrial Engineering

We can use the term 'Product Industrial Engineering' to described the efficiency improvement carried out by industrial engineers in the product designs.

Product Design Efficiency Engineering - Component of Industrial Engineering
(Functions and Focus Areas of Industrial Engineering)

Value Analysis and Value Engineering - Miles Way (L.D. Miles)

Value engineering has for its purpose the efficient identification and elimination of unnecessary cost. First article on the topic was written by L.D. Miles in 1949. Link available in this article.

Value Engineering - Introduction - Video Presentation


What is Value Engineering?

Value engineering has for its purpose the efficient identification of unnecessary cost, i.e., cost which provides neither quality nor use nor life nor appearance nor customer features. It focuses the attention of engineering, manufacturing, and purchasing on one objective – equivalent performance for lower cost. It results in the orderly utilization of low cost alternative materials, low cost alternative processes including new processes, and abilities of specialized suppliers to procure items at lower costs.

Lawrence D. Miles is the pioneer of this technique. He wrote the book - Techniques of Value Analysis and Engineering - in 1961. His designation at that time was Manager, Value Service, General Electric Company. He published the first article on value analysis in 1949 in American Machinist.

Functional design is not tampered:
Inherent in the philosophy of value engineering is the full retention for the customer of the usefulness and esteem features of the product. Miles argued emphatically right at the beginning of his book, “Techniques of Value Analysis and Engineering” that identifying and removing unnecessary cost, and thus improving the value, must be done without reducing in the slightest degree quality, safety, life, reliability, dependability, and the features and attractiveness that the customer wants.

What is Value?

Miles described  four types of value.

1. Use value: The properties and qualities which accomplish a use, work, or service.
2. Esteem value: The properties, features, or attractiveness which cause us to want to own it.
3. Cost value: The sum of labor, material, and various other costs required to produce it.
4. Exchange value: Its properties or qualities which enable us to exchange it for something else we want.

Even though Miles did not describe it that way, I feel value analysis or engineering is concerned with cost value without in anyway decreasing the use value, esteem value and exchange value

Value Analysis Techniques

Miles provided 13 ideas as value analysis techniques.
  1. Avoid generalities
  2. Get all available costs
  3. Use information from the best source
  4. Blast create and refine
  5. Use real creativity
  6. Identify and overcome roadblocks
  7. Use industry experts to extend specialized knowledge
  8. Get a dollar sign on key tolerances
  9. Utilize vendors’ available functional products
  10. Utilize and pay for vendors’ skills and knowledge
  11. Utilize specialty processes
  12. Utilize applicable standards
  13. Use the criterion, “would I spend my money this way?”
Value Analysis Techniques - Video Presentations

Play List - All 13 Value Analysis Techniques
https://www.youtube.com/watch?v=BHH-QZ29EOo&list=PL6W3qaSriFEgzI80uqu4ygW5jJsDCCyJf ________________

The list can be reorganized in this way to show their role in value engineering

At the start of the value engineering exercise some people will object to the project with some general statements.
    1. Avoid generalities  - Don't accept general statements. Try to find out the real objection and confirm whether it is a valid objection.
      Information Phase

      During information phase get information relevant to the product under evaluation
        2. Get all available costs
        3. Use information from the best source
        4. Get a dollar sign on key tolerances - Part of analysis, but it can be treated as information phase as routine information collection activity.

        Searching for low cost alternative materials, standard products and processes. 
        To reduce product through design changes, low cost alternative materials, components and production processes are to be identified.
          5. Utilize vendors’ available functional products
            6. Utilize specialty processes
              7. Utilize applicable standards

              After searching and identifying low cost alternatives which may be of use in redesign, redesign will start.
                8. Use the criterion, “would I spend my money this way?”  - This idea refers to certain components that are having high costs. This gives rise to the feeling money is being wasted and forces the VE team to look for alternatives in more focused manner.
                  9. Blast,  create and refine - Blasting the current design by identifying a possible low cost alternative. Create is technically showing that the new alternative is a feasible. Refine is commercial design of the new alternative to go into the product

                  10. Use industry experts to extend specialized knowledge - The value engineering team has to approach industry experts to use new materials and new processes appropriately. 

                  11. Utilize and pay for vendors’ skills and knowledge - Vendors who can offer new process capabilities must be supported for developing the solution needed by the VE team.
                    12. Use real creativity - Creativity is required to identify the solution to the value engineering problem. A value engineer knows the function that he has to provide and he must be able to pick the relevant material, component or process from the collection of the information that he has gathered.

                    During presentation of the solution, a value engineer is likely to face objections. He must be prepared for these objections and answer them so that objection is answered adequately and the questioner is satisfied that the new solution is a suitable redesign.
                      13. Identify and overcome roadblocks

                      More detailed description of techniques

                      The Right Way to use the Techniques
                      Choose appropriate techniques to value engineer the specific product.

                      Arrange the techniques in best order for the particular job.

                      Use each technique imaginatively and effectively.

                      Use the techniques iteratively until useful information is developed to the extent that direction for decision and action is available.

                      To use the techniques an analyst requires special knowledge.

                      Value engineer is not a functional designer. He will have access to functional designers as needed in his value work. Hence his knowledge is not specialized to particular areas like mechanical engineering, electrical engineering, automobile engineering, or aerospace engineering. Knowledge required for high-grade value work is extremely broad.
                      The specialized knowledge required in value improvement work consists of information on materials, processes, functional products, sources of functional knowledge, approaches to function performance, and practical ideas for economical function performance.
                      It is important that the value engineer’s library of special knowledge contains a comprehensive volume of trade knowledge backed by efficient means for a quick recall of needed information. Value engineer also needs well-organized references to a maximum number of persons of special skills that may be consulted in connection with each problem.
                      Value engineers need develop a database having the association between properties of materials and costs apart from material and its cost. Similarly a database that shows the relationship between the properties of products produced by various processes and the cost of each process, including the material used is also valuable.

                      This topic will be discussed in more detail in a separate article 'Knowledge Required for Value Engineering'.

                      Job Plan for Value Engineering
                      Phase 1. Orientation: Understand the customers’ needs and wants. Understand the functions performed by the product and the contribution of each part and each feature of the part and the complete product to the functions to be performed by the product.

                      Value engineer has to make sure that he does not diminish the contribution of the product to the customers' needs and wants.
                      Phase 2. Information: Collection of information on quantities, vendors, drawings, materials, manufacturing methods, and costs.
                      Techniques to be used:
                      Get all available costs
                      Get a dollar sign on key tolerances

                      Phase 3. Speculation: Using all the techniques of value analysis to come out with alternative low cost materials and methods to produce components and the product. Creativity is to be employed here. Value engineer has to involve experts from various disciplines to help with ideas.
                      Techniques to be used:

                      Blast, create and refine

                      For each function to be performed by a product or a component, find alternative products, materials or processes that serve the function to a great extent but at a less cost. These alternative ideas do not satisfy the specified or required function completely but they do to a significant extent. Identify they function they perform and the cost involved,

                      During the blast activity use these techniques.
                      • Utilize vendors’ available functional products
                      • Utilize and pay for vendors’ skills and knowledge

                      • Utilize specialty processes
                      • Utilize applicable standards
                      • Use the criterion, “would I spend my money this way?”

                      All the five techniques have the potential to suggest lower cost alternatives


                      In create phase, the technique of "Use real creativity" needs to be employed to come out with ways by which the low cost alternatives identified during the blast stage can be modified to accomplish the specified function to a much greater extent with pertinent increase in cost. During this stage also the improvement in function and the increase in cost are to be clearly identified.


                      In this step, much more creativity is used and also the techniques "Use industry experts to extend specialized knowledge" and  "Utilize and pay for vendors’ skills and knowledge" are used to refine the ideas developed during the create step to come out with a refined alternative that fully accomplishes the specified function at a lower cost. During refine step, some more functionality is added as well as some additional cost.

                      Phase 4. Analysis:  Technical and cost analysis of the alternative proposed.

                      The techniques to keep in mind and use during this stage are:

                      Avoid generalities

                      Use information from the best source

                      Identify and overcome roadblocks

                      Phase 5. Program planning: Approach the specialists to further refine the selected alternatives. Inform the specialists the accepted suggestions and give mandate to them to take steps to implement the suggestions.
                      Phase 6. Program execution: Pursue regularly the specialists and vendors to get their inputs on various tasks assigned to them. The output of this phase is a detailed design, successful trail  pilot  run of a manufacturing process or  a confirmed estimate from a vendor for supplying a component, material or sub assembly.
                      Phase 7. Status summary and conclusion. The results of the value engineering study are to be presented to decision makers. The reports needs to have a summary sheet as well as the full supporting documentation.  The value engineering project is concluded when the product is manufactured and distributed at the lowered cost as per the value engineering study.

                      Special Knowledge Required

                      In practically all fields, the operator used special tools and special or field specific knowledge. Value analysis and engineering is no exception.

                      Reach of knowlege: For value analysis, the knowledge required is extremely broad.
                      Nature of knowledge: Information on materials, processes,  and functional products.
                      Form and Constitution of Knowledge Fund: Handbooks, catalogues, charts, price lists, product and process descriptions, tables etc.
                      Listing of specialized Competence: Value analysis requires consulting specialists and specialized sources. So a list of consultants as well as special publication is required for various materials, processes and components.

                      Qualifications and Training for Value Analysts and Engineers

                      Qualifications: Logic, creativity, ability to make rapid searches, recall, ability to quickly sort out useful information,  synthesis of solutions, selection of promising alternatives.

                      Knowledge: Understanding of the properties of materials, and of manufacturing processes, their potentialities, and their limitations.

                      Traits required: Imagination, initiative, self-organization, cooperative attitude,
                      Attitude: belief in the importance of value

                      Training: Three weeks class room followed by six months of practical work.
                      Another round of three weeks class room followed six months of practical work
                      Another round of three weeks.

                      For further study:

                      First article by L.D. Miles in 1949  http://minds.wisconsin.edu/handle/1793/3948 download the file 35.5 pdf from this page.

                      Lawrence D. Miles, Techniques of Value Analysis and Engineering, McGraw-Hill Book Company, New York 1961.

                      Note on Value Engineering

                      Especially gives Juran's and Clawson's comments on value engineering

                      Value Engineering - NPC, Chennai (77 page Document. Available online)
                      History of Value Engineering

                      1.17 minutes


                      Related Knols

                      Related Web Pages

                      Value Engineering
                      VALUE ENGINEERING MANUAL 
                      International society of Value Engineering
                      SAVE International - Value Engineering, Value Analysis, Value ...
                      Value Engineering Consultancy
                      Value Engineering, Value Management, and Value Analysis ...
                      Value Engineering in Highway Constructino
                      Value Engineering - Design - FHWA
                      SAP Value Engineering Module
                      SAP Business Process Expert Community - Value Engineering
                      Whitehouse Circular on Value Engineering

                      Circular No. A-131 -- Value Engineering
                      Value Engineerig Web Portal
                      VeToday Value Engineering Web Portal - Value Engineering ...
                      Value engineering programs and studies at Wisconsin-Madison by Snodgras
                       Value Engineering of Highways - Procedure Manual
                       Value World Issues
                      October 1996

                      Value Engineering -  Case Studies



                      Originally posted at  Knol Number 4

                      Industrial Engineering Knowledge Revision Plan - One Year Plan

                      January - February - March - April - May - June

                      July - August - September - October - November - December

                      Value Engineering is a Subject in the following IE Programmes

                      EM 627  University of New Haven

                      IE 6220 Wayne State University

                      Updated  17 July 2019,  8 June 2019, 31 May 2019, 10 April 2019, 9 August 2018,   17 July 2017,   27 June 2015
                      First Published on blog  15 December 2011

                      July 2, 2019

                      Pioneering Efforts of Taylor, Gilbreth and Emerson

                      Contribution of F.W. Taylor to Industrial Engineering

                      Taylor developed efficient methods, advocated scientific management and  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.

                      Taylor was involved in the activities of American Society of Mechanical Engineers (ASME) from the very early years. In year 1886, when Henry Towne called for the study of management, accounting and economics by engineers, Taylor was present in the meeting and he participated in the discussion of cost accounting system proposed by Metcalf. Thus Taylor already had active participation in study of accounting, economics and productivity improvement.  Subsequent to the presentation of papers on productivity gain sharing by Towne, and Halsey Taylor presented his ideas on piece rate system and daily wage system that included mechanism for time study and process improvement. Taylor also presented a paper on redesign of belt system based on collection of data for 10 years on cost of the belting system. Thus Taylor laid the strong foundation for redesign of engineering components and systems based on the accumulated cost data and economic decision making.

                      Taylor's Industrial Engineering

                      Industrial Engineering Described in Shop Management by F.W. Taylor

                      Time Study - Explanation by F.W. Taylor

                      Industrial Engineering and Productivity Improvement Described in Scientific Management by F.W. Taylor

                      Foundation of Scientific Management

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

                      Illustration of Human Effort Productivity Improvement - Pig Iron Handling 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."

                      Gilbreth's motion study was described by Taylor in his book "Scientific Management."

                      Illustration of Human Effort Productivity Improvement - Bricklaying Improvement by Gilbreth

                      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 4 July 2019,  31 May 2019,   2 June 2016, 16 Dec 2011