IOM00 Industrial Organization and Management

Reviewer - Midterms

Part III. Resource Planning

Resource planning is the process of determining what resources are required to deliver
projects and then allocating and scheduling the work based on team capacity.

Why is resource planning important?

Resource planning provides a reliable basis to start projects and improves the chance of
delivering them on time and within budget.

 Increase efficiency, as you know what resources you need and how they’re allocated to
project tasks.
 Improve project success rates by matching the right skill sets to the right tasks.
 Track capacity and availability so if unforeseen resource needs arise, you’ll be ready to
address them.
 Monitor progress to keep projects on budget and work on track. You can see what each
person should be working on and for how long.
 Plan and predict your resource availability for future projects, which helps your team
become more organized in the long term.
 Improve job satisfaction and retention in your team—less burnout or overwhelmed team
members.

What Is Research and Development (R&D)?

The term research and development (R&D) is used to describe a series of activities that
companies undertake to innovate and introduce new products and services. R&D is often the
first stage in the development process. Companies require knowledge, talent, and investment in
order to further their R&D needs and goals. The purpose of research and development is
generally to take new products and services to market and add to the company's bottom line.

Industrial Research: "Industrial research" means planned research or critical investigation

aimed at the acquisition of new knowledge and skills for developing new products, processes or
services or for bringing about significant improvement in existing products, processes or
services.

Development Research
This model involves a department composed of industrial scientists or researchers, all of who
are tasked with applied research in technical, scientific, or industrial fields. This model facilitates
the development of future products or the improvement of current products and/or operating
procedures.

Applied research aims to solve specific practical problems or address immediate needs. It
takes the findings from basic research and applies them to real-world situations.

Applied research in industry embraces the following research processes:

a. Market Research
The chief aims of market research are to test consumer acceptance of products to develop data
for manufacturing schedules and prices, and to provide a source of new ideas for development.
Marketers employ a variety of techniques to conduct market research, but some of the more
common include: qualitative marketing research, such as focus groups; quantitative marketing
research, such as statistical surveys; experiment techniques such as test markets;
observational techniques such as ethnographic (on-site) observation. The change from intimate
producer-consumer contact to wide separation of producers and consumers has been likened to
a broken circular chain in which marketing research supplies the missing link.

There are three basic marketing research methods:

1. Observation: gathering data by watching, measuring, or counting but without
direct questioning; trying to determine what is happening or what the situation is by direct visual
investigation (on-site), such as observation in a supermarket as to length of time taken in
deciding on a purchase, or a pedestrian traffic count at a shopping mall.

2. Survey: includes interviews and questionnaires by mail, telephone, or face-to-

face; the questions must be carefully framed for easy understanding by the respondent and to
elicit pertinent answers, and the sample to be surveyed should be statistically representative of
the universe being investigated.

3. Experiment: actual test of products, markets, uses, or methods are set up under
controlled conditions; it is a research design in which the selected hypothetical solutions is put
into effect on pilot scale to determine its eventual performance in real situations.

b. Materials Research
Research in materials in linked with product development, since the discovery and improvement
of materials frequently leads to new products and lower costs on existing products. Powder
metallurgy, for example, now produces finished physical shapes without melting, forging, rolling,
extruding, or machining. Hard metals and alloys such as those of tungsten which could not be
worked into usable forms by any other method can be put to industrial use in powdered form, as
in cemented-carbide cutting tools and in wearing surfaces of inspection gages. By powder
metallurgy, softer metals can be formed into small machine parts. Self-lubricating sleeve
bearings and ball bearing retainers, long –wearing oil-pump gears for automobile engines, oil
injector nozzles for diesel engines, fine wire mesh filter screens, friction faces for brakes and
clutches, and self-oiling automobile door striker plates are only a few of the many applications
resulting from research in powder metallurgy. This type of research and development has
played a big part in recent years in making plastics, resins, aluminum and magnesium alloys,
synthetic rubber substances, synthetic textile fibers, commercial glass items, and other new
materials available in quantity for the manufacture of new products and for improvement in
existing products.

c. Product Research
The importance of product research to the continuing prosperity of the enterprise has already
been stressed. It embraces the stimulation of new product concepts to fill the needs of
customers and prospective customers, the process of actually developing new products, and
the search for new and original uses for existing products. Allied with these activities are studies
to open up new possibilities of by-product utilization. A problem in product research may be
approached by directing fundamental research principles toward intensive product application.
Or the project may remain from start to finish one of applied product research. A well-rounded
program makes use of both approaches.

d. Equipment and Process Research

Important to the manufacture of a product is the development of processes that are adequate to
produce it in the quantity and quality desired. Frequently a product can be made on a minute
scale in a research laboratory, whereas the manufacture of that product on a large scale,
utilizing the laboratory process, may be quite impracticable. It is then the function of process
research to develop methods of manufacturing it on the scale desired. Similarly, certain
standards of quality may be set-up for the product which may not be easily adhered to in large-
scale production. Here again, research study is required to develop methods of maintaining
quality in production manufacture.

Pilot Plants
Pilot plants carry on in miniature or in small lots the manufacturing operations involve in
full-scale production while the research staff in cooperation with plant engineers and others
observes and perfects the test runs, equipment and manufacturing processes. This technique is
relatively simple and inexpensive medium for perfecting processes and operations before large-
scale production is undertaken.

PHYSICAL FACILITIES

Trends in Plant Location

The following considerations are some of the newer trends in plant location:
1. place plants away from congested cities

2. locate plants on planned industrial center called as industrial parks

3. find a locality with growing competition for a particular industry

4. spread out plants by decentralization either horizontal or vertical

5. determine a site with existing pollution control for water, air, noise, and land

Plant Services

Plant facilities to be installed for the comfort and effectiveness of employees:

Air-conditioning
An air-conditioning system controls the circulation, temperature, and humidity of air and
removes dust, odors or bacteria in the air of an enclosed space. Industrial air conditioning,
which involves a substantial capital investment because of its large capacity, is being
increasingly recognized as a worthwhile expense because it maintains employee efficiency,
safeguards health, reduces production costs, and protects both the product and the equipment
from loss in value caused by excessive heat, temperature or dust.
Natural temperature may be too high or too low for working in comfort. Some industrial
processes require constant temperatures throughout the year while others need controlled
humidity or the removal of airborne dust particles. Large air-conditioning systems pipes the
coolant from centralized compressor plant, draws air into the chiller apparatus, cleans, cools,
humidifies, and then distributes the cool air through the building by a system of ducts, with
provision for the elimination of stale air. When a smaller area is to be air-conditioned, self-
contained air conditioners installed at windows may suffice. For bigger rooms, a “split” air-
conditioning unit may be preferred because of its cooling capacity and less noise qualities.
Moisture is also added to the air in evaporative cooling.
Manufacturing processes and materials may give off obnoxious gases and harmful
substances such as soot and bacteria. Practically all machine tools generate heat while some
give off smoke, dust or fumes. Dust is collected by filters and electrostatic air cleaners. Air
motion purity are encouraged by the proper positioning of incoming air ducts exhaust outlets to
move fresh air throughout the entire area. Bacteria odors are removed by means of ozone and
germicidal lamps.

Lighting
Good illumination means the economical provision of the right amount and proper kind of
light as the work to be done may require. Satisfactory lighting reduces fatigue, helps prevent
accidents, and improves morale. It decreases spoilage, raises the quality of workmanship, and
increases production. It is gained by providing adequate intensity for the activity to be carried
out and the light is diffused without glare and marked shadows. More light must be provided
when the work requires careful attention to detail or a high degree of accuracy. Since eyestrain
is caused by constant adjustment to varying intensities of light, all parts of the room should be
illuminated. Strong contrasts in intensity between working areas and the rest of the room must
be avoided. Glare, which may be either direct or reflected, is the excessive concentration of light
and may be caused by too great intensity, poor location of light fixtures, improper diffusion, or
annoyingly bright reflecting surfaces. Such glare may be corrected by locating the light fixtures
at a higher level, the use of flat paint, over bright reflecting surfaces, and placing of frosted
shades around the light sources. Once as efficient lighting system has been installed, attention
must be given to proper maintenance. Windows and walls must be kept clean since films of dust
and dirt on them can cause as much as 50% loss in interior light. Light bulbs, reflectors, and
shades should be regularly cleaned. The management should keep a regular maintenance
schedule for washing windows, cleaning reflectors and lamps so that this important attention to
illumination may not be neglected.

Noise Control
Reduction or elimination of objectionable noises lessen is the wear and tear on
employees’ nerves, reduces mental fatigue, and improves morale. The control of noise and
vibration results in an increase in the amount of work performed, improvement in quality, and a
lower accident rate. Such control may be through the following ways:
1. Lubricating machines, bearings, gears, spindles, for a quieter operation.
2. Mounting machines and other equipment on rubber, cork pads, springs, or felt.
3. Isolating the source of noise or noise producing machines.
4. Enclosing the source of noise with sound-resistant partitions or noise-confining walls.
5. Installing acoustics ceilings, wall, and floors to absorb sound.
Industrial noise may disturb the persons living near the plant and also affects the community
relations.

Employee Services
In all practical instances, it is necessary to allow considerable space and provide
adequate funds the employee facilities such as locker rooms, rest rooms, showers, water
coolers, lunch rooms, time clocks, first-aid clinics, waiting sheds, and car parks.
Some recently designed plants locate all employee facilities in the basement or on
mezzanines in the center of the production area. Basements also provide the opportunity for
subterranean aisles, entrance tunnels, and service passageways without interrupting
production. Off-street parking for employees’ cars is a requisite in today’s plants. Employee
recreation areas on company grounds are now commonplace. Fences around the plant or
property with properly placed gates improve the appearance and provide protection against
pilferage, sabotage, and trespassers. Landscaping of the grounds and employee entrances
makes the place pleasant to work in, reflects the progress of the firm, and give good impression
to visitors.
Utilities
Various plant utilities commonly required or expected in the industry. Such utilities may
be needed for actual manufacturing, safety of workers, and protection of property.
Three separate water systems may be necessary:
(1) potable water;
(2) process water for cooling/air conditioning/toilets; and
(3) water for fire-fighting equipment (usually under higher, pressure).

Liquefied Petroleum Gas (LPG) is also piped through plants to provide process heating and
drying. Steam is used in power-generating equipment, for process purposes, and sometimes for
heating. Fuel oils may be stored in underground tanks and pumped to the point of use.
Compressed air often required for pneumatic equipment, may be supplied by large compressors
and piped to where needed. Liquid-waste disposal systems may be necessary, especially if the
dumping of such liquid wastes into lakes and rivers adversely affect others. Air pollution control
may be required if the manufacturing process gives off fumes and smoke. Plant communication
facilities are vital for many operations and provision must be made for switchboard telephones,
public address systems, and security warning devices. For fire protection, an automatic sprinkler
system may be provided to spray the area with water as soon as the smoke or temperature
indicates the presence of fire. Other fire-fighting equipment with which the plant should be
provided are portable fire extinguishers, hydrants, and fire buckets. Big industrial plants have
their own fire trucks/fire engines and a trained fire brigades.

PRODUCTIVITY IMPROVEMENT

Productivity – the relationship of the volume of goods and services produced to the physical
inputs produced in its production.

Indicators of Productivity Improvement

Pointers that show areas most needing improvement includes:

1. high scrap, reprocessing, rework, and repair costs
2. backtracking of material flow caused by poor plant layout
3. bottlenecks
4. excessive overtime
5. excessive manual handling of materials at the workplace
6. employee grievances without true assignable causes

Factors Affecting Productivity

The factors that directly or immediately influence productivity fall into the following:
1. increase in tangible capital per worker
2. improvement in the quality of labor
3. efficient use of capital and labor

Methods of Increasing Productivity

These processes in increasing production are the following:

1. Specialization – refers to the narrowing of the field of activity. A company may specialize
in products. Instead of putting out a variety of household electronic products, a company may
specialize in only a few kinds of video players, which it would then develop to a high degree of
quality and perfection. Specialization may be applied to processes, equipment’s or labor skills.
2. Product simplification – refers to the reduction in the number of types, sizes, forms,
designs, colors and other characteristics of a product. When a manufacturer of clothing reduces
his products to three basic sizes of small, medium, and large, he engages in simplification. If
instead of putting out shirts of numerous designs and interlocking colors, he puts out only a few
basic and plain colors of shirts, he uses simplification to reduce his inventories of raw materials,
to lower costs of manufacturing, and increase efficiency of the manufacturing process. The use
of a Snap-on plastic cap reduces the cost of both materials and labor. The current trend toward
miniaturization is one of the many forms of simplification.

Miniaturization is the creation of ever-smaller scales for mechanical, optical, and electronic
products and devices. Miniaturization is a continuing trend in the production of technology. The
human race has the tendency towards building and manufacturing smaller- scale products due
to the desire for size efficiency. Items which take up less space are more desired than items
which are bigger and bulkier because they are easier to carry, easier to store, and much more
convenient to use. The mobile phone, from the first to the third generation, there is a general
decrease in its size and weight. These first instances of miniaturization eventually led to the
creation of current sciences such as nanotechnology.

Nanotechnology- sometimes shortened to "Nanotech", refers to a field whose theme is the

control of matter on an atomic and molecular scale. Generally nanotechnology deals with
structures 100 nanometers or smaller, and involves developing materials or devices within that
size.

3. Product diversification- is the direct opposite of simplification. It involves the addition of

lines of products, types, and models. It likewise affects materials, components, and
manufacturing methods and processes, but in the direction of increased complexity. There are
three basic approaches to product diversification:
a. horizontal diversification- venture into new products which do not significantly affect
existing products and utilize the manufacturing, marketing, or financial know- how and facilities
of the enterprise. These are known as complimentary products produced by like processes or
equipment (e.g., printing plants which publish books, magazines, and newspapers and do job
printing) or sold in common markets (e.g., refrigerators, ranges, washing machines, and window
air conditioners made separately in the home-appliance enterprise but sold through the same
distribution facilities). Certain products which are seasonal or for which the demand is not stable
are complementary in that they can be so scheduled as to keep manufacturing facilities busy
during otherwise slick periods.
b. vertical diversification- integration into materials, components, or subsequent or
satellite products. Here the company's objective is to find greater profit opportunities in "making"
rather than "buying"-or "selling." Satellite products "spin off" from the principal product as in the
case of by-products, where material from the product can be used in subsidiary items (e.g.,
meat processing gives rise to glue, grease, soap, shortening, fertilizer, and a host of other
items) and auxiliary products, where one product used in the manufacture of another is offered
for sale (e.g., a metalworking company marketing a machine developed originally for its own
processes).
c. lateral diversification- confines of its own industry and into unrelated products. Much
of today's diversification into unrelated products takes place through merger with or acquisition
of an enterprise in a different industry. Such diversification seldom has economic justification in
operating advantages but does "spread the risk" against demand for a particular product falling
off and is often the means for exploiting a new growth product deemed to have a good profit
potential.

4. Mechanization- refers to the development of machines to perform as much of the

manufacturing process as possible. Manual skills of workers are supplanted by machine skills. A
mechanized printing establishment may use a folding and binding machine to take over the
work of twenty laborers in the end processes of preparing books.

5. Automation - refers to the addition of handling and control equipment to automatic

machines for continuous automatic production through a series of operations without human
guidance and control. Human effort is further reduced to a bare minimum and where servo-
mechanisms even take over supervision and adjustments of operating machinery. More output
is obtained from the investment in facilities. Quality is more uniform, work is safer, and
production scheduling is virtually automatic.
Automation in manufacturing takes two forms:
a. continuous- embracing a complete process of fabrication, assembly, finishing
and inspection.
b . segmented- intermittent automation of sections of a process
Automation in manufacturing further classified into two applications:
a. "hard" automation- associated with expensive, fixed purposed machinery operating
for long-run high-volume manufacture of identical items.
b. "soft" automation-associated with computer and its peripheral apparatus as in
robotics with the used of artificial intelligence

5. Standardization refers to the setting up of standards or specifications for measurement

of size, quality, form, measure, weight, or other similar feature that allow the interchanging of
certain parts in different products, or the furnishing of raw materials and parts by different
suppliers. For instance, the socket and wattage are standardized and the light bulbs are
interchangeable. Automobile or jeep parts are standardized by manufacturers to enable mass
production and easier repairs.

Range of Industrial Standards

The exceptionally wide range of common industrial standards deal with the following:
1. Product standards- established the formulas, physical characteristics, quality, and
performance of a particular product or line of products for the purpose and or reproduction and
sale. Product standards generally protect and benefit consumers by assuring them of articles
that are interchangeable, uniform in quality and performance, and often lower in price.

2. Engineering design standards- are concerned directly with the component puts that make
up the product. A company making several similar products may standardize on certain sizes of
bolts, screws, fittings, etc., which are to be used in the design of its products. Drawings and
specifications for these parts are usually catalogued by number, so that a designer or
draftsperson confronted with the need for some such part has only to look in the catalogue for
the standardized part that best serves his or her purpose. Instead of sketching the part, he or
she merely refers to it by number on the drawing. The burden of proof for a request to modify or
add to the list of standardized parts rests with the designer. Design standards play an important
part in world trade, with interchangeability one of the principal benefits derived from their
universal application. Now industries dealing in foreign trade are in the forefront of those
pushing for more international engineering design standards, with participation of the American
National Standards Institute (ANSI) in the International Standards Organization (ISO).

3. Material standards - are those which concern the composition, form, size, and finish as well
as the types of materials used. Any material standards can be readily set forth in a set of
specifications listing the required properties of the material desired. For example, a specification
for Manila rope might include a notation as to the kind of fiber desired, the diameter, the weight
per foot of length, the oil content, as well as the braking strength. Raw materials are almost
always purchased to specifications, but it is equally important that standard specifications also
be established for supply items such as tool bits, drills, cutting and lubricating oils, grinding
wheels, and belting, as well as for repair parts.
4. Quantity standards - deal with the control of materials, production, and cost, relate to the
quantity of the finished product to be completed within a given period, the amount of raw
materials, in-process materials, and supply materials required, the production rate per person or
per machine, the overhead cost per machine-hour, and any number of other similar standards
that are in constant use in industry today in the operation of productive facilities.
5. Process standards- include the standardization first of all of operating methods and second
of operational performance or work effort from the point of view of procedures. These phases of
process control are necessary to the efficient operation of the enterprise both considered here
primarily from the standpoint of their functions:
a. operating methods dealing with the efficiency of the equipment and plant operating
practices, and
b. operational performance dealing with the efficiency of the employees.

In either case, the standards are established from scientific analysis, past experience, or both,
to define what should reasonably be expected in the control of process. Any deviations of the
actual results as compared with the standards are carefully scrutinized for opportunities of
correction and improvement.

6. Equipment standard cover the rating, capabilities, installation, and servicing requirements,
etc., of processing and materials-handling equipment, tools, jigs, and fixtures. Electrical and
dimensional characteristics for machine tools are two areas in which such standards have
attracted considerable interest in recent years.

7. Safety standards are rules, regulations and practices which assure the safety of employees
while on company premises.

8. Administrative-practice standards are those dealing with clerical and operating

procedures, systems, and records in the realm of administering company policy. Examples of
such standards are purchasing procedures, inventory routines, production control methods,
personnel records, and accounting systems.

Basic Approach for Improving Productivity

The most basic and fundamental approach for improving productivity in all types of
business includes:
1. 5S- is a Japanese derived approach which aims to make discipline and orderliness a way of
life for or a habit of everyone in a company. Considering that this is the most basic approach to
productivity improvement.
• SEIRI or to SORT unnecessary items and dispose them accordingly;
• SEITON or to SYSTEMATIZE and arrange items in good order for use;
• SEISO or to SWEEP and clean the workplace;
• SEIKETSU or to SANITIZE and maintain high standards of housekeeping;
• SHITSUKE or SELF-DISCIPLINE or doing the necessary things without being
told.
5S is a basic productivity improvement tool which covers quality improvement, cost
reduction, shortening of delivery time, improvement of safety through housekeeping with the
active participation of all the company employees. 5S goes beyond simply maintaining a clean
workplace but also includes making the company operations more productive through the
elimination of loss and waste.

2. Total Productive Maintenance (TPM)- aims to "maximize the effective use of the man-
machine system at the minimum life-cycle cost." TPM is really all about removing or eliminating
losses caused by dis operation of machines, machine breakdowns, and poor machine
maintenance. Also TPM introduce efforts to adapt, modify and refine equipment to increase
flexibility, reduce material handling, and promote continuous flow.
3. Just-in-Time (JIT) or "Kanban System"- includes the reduction or elimination of obstacles
to the rapid flow of materials from invoice-in to invoice-out of the final products. The main
philosophy behind the JIT system is the production of only the necessary units in the required
quantities of the desired quality at the time they are needed. If this kind of manufacturing system
is applied, unnecessary inventories will become a thing of the past and warehouses and storage
areas may even be eliminated. "Kanban" a Japanese word means a visible record, such as a
billboard, card, label, or sign.

4. Total Quality Management (TQM) - is an approach which is centered on quality, based on

the participation or involvement of all members of a company (top management, middle
management and rank-and-file), and which aims at long term success through customer
satisfaction and the provisions of benefits to the members of the organiza- tion and the society
to which the organization belongs. "Kaizen" is another significant TQM concept which was
introduced by Masaaki Imai, a Japanese management consultant. "Kaizen" means
improvement. Moreover, it means continuing improvement in personal life, home life, social life,
and working life.

5. Benchmarking - is a systematic continuous process of comparing an organization's

functions, products or processes with those of "best" or "leader" in the industry, finding out how
that organization achieves their performance level and applying them to their own organization.
It is intended to help employees develop its own strategies or tactical plans and processes to
reach or exceed that level. The objectives of benchmarking are (a) to determine what and
where improvements are called for, (b) to analyze how other organizations achieve their high
performance levels, and (c) to use this information to improve performance.

Part 4 - PRODUCTION PLANNING & CONTROL

Production Planning Objectives

Production planning is aimed at achieving a manufacturing output that will achieve one or
more of the following objectives:
1. bring a prescribed level of profit;
2. capture a desired share of the market demand;
3. operate the plant at the predetermined level of efficiency;
4. utilize available plant facilities; and
5. create a specified number of jobs.

In our competitive-enterprise system, the profit, motive is a predominant factor, for upon it may
rest the justification for, and in fact, the very survival of the enterprise. Planning provides the
necessary information upon which is based manufacturing decisions that to a large extent
determine the future profit potential of the enterprise. Whether profits are realized in turn greatly
influences the influx of capital, personnel, and customers. No one feels secure about investing
in, working for, or doing business with a concern that appears to be skidding downhill.

Production Control - regulates the orderly flow of materials in the manufacturing process from
the raw state to the finished product.

PRODUCT FLOW
Production Planning & Control (PPC) Functions

The basic steps in production planning are:

1. Routing- is the determination of the sequence to be followed by the material in process from
one machine to another and from one section to another. It establishes the operations, their
path and sequence, and the proper class of machines and personnel required for these
operations. While routing is a major responsibility of the production-control function, it is also
connected with the field of product development in designing a product that can be readily
manufactured. The routing procedure for a new product/part consists of following activities:
a. Analysis/determination of parts/components to make or purchase
b. Analysis/determination of materials needed
c. Determination of sequence of manufacturing operations
d. Determination of lot sizes
e. Determination of the scrap factors
f. Analysis of the cost

2. Scheduling - is the application of time allotments or timetables in the production process. It

ensures timely completion of orders and avoids work stoppage from any cause whether from
lack of parts, materials, equipment, supplies, or men. It specifies when each unit in process
should arrive at each work point, how long each work process should take, and the sequence of
job orders. A master schedule is prepared, and then department or section schedules, so that
any lack of capacity can be corrected to ensure a balanced flow of production. An allowance
may have to be provided for interruptions due to such causes as machinery breakdowns, power
failures, or transport delays. A section which falls behind schedule will have to be brought back,
through overtime work or outside purchase.

The basic steps in production control are:

3. Dispatching- consists essentially of the issuance of orders in terms of their priority as

determined by scheduling. It includes the assignment of work to the operators at their machines
or workplaces. Some of the activities frequently delegated to the dispatcher are listed as
follows:
a. The assignment of work to the machines or workplaces
b. The authority to prepare, assemble and issue to their point of use the necessary
materials, tools, fixtures, and gages.
c. The issuance of the orders and production forms necessary to the performance of
work and to the reporting of production, payroll, and cost data.
d. The responsibility for controlling the progress of material at each operation
e. The authority to move work from one operation to the next.
f. The liaison function linking the plans of the routing and scheduling office with the
performance of the manufacturing divisions

4. Follow-up or Expediting- is that branch of production-control procedure which regulates the

progress of materials and parts through the production process. Although it is the agency
charged with the responsibility for the production orders after they are dispatched, it is
nevertheless closely interrelated with dispatching. Follow-up serves as a catalytic agent to fuse
the various separate and unrelated production activities into the unified whole that means
progress. It concerns itself with the reporting of production, data and the investigating of
variances from the predetermined time schedules. As such, follow-up endeavors to see that the
promise is backed up by performance.

Preventing Production Delays

An ounce of prevention is far more valuable than a pound of cure where delays in industrial
production are concerned. Common causes of delays for which the expediter can help
administer the remedy include:
1. Errors in Planning. These are essentially errors of production management whereby
equipment is scheduled with work beyond its capacity to produce. Setups are excessive as the
result of scheduling uneconomically small lots, or work force demands have been
underestimated. The follow-up clerk by his close association with plant conditions is often able
to discover such errors and have them rectified before serious trouble is caused.

2. Lack of Materials, Tools, or Equipment. Here the problem may be a basic one of improper
planning, or it may derive from a delivery failure which could have been prevented by closer
follow-up by the purchasing department or the production expediter.

3. Equipment Breakdown. Preventive maintenance and duplication of vital pieces of

equipment help minimize delays from breakdowns. However, the expediter can assist in seeing
that prompt transfer is arranged to the alternate, or "stand-by" equipment as breakdowns do
occur.

4. Excessive Rejections. Materials scrapped at any point in the process in excess of the scrap
factor allowed subsequently cause a shortage in the finished item. The follow-up clerk is
instrumental in setting in motion the machinery to replace the defective material and in
expediting the replacement lot so as not to delay the production of the finished item.

5. Out-of-balance In-process Inventories. Where the bank of materials builds up, to a point of
excess between some operations with a resultant starvation of material between other
operations, slight retardation in production can cause operators to run out of work. The follow-
up clerk must then take steps to level off the float to a point where the idle worker and idle-
machine time from this cause is eliminated.

MATERIAL FLOW

Classes of Industrial Materials

Industrial materials can be divided into six main classes as follows:

1. Raw materials- These refer to the materials in an unprocessed condition. Metal

bars/tubes/sheets, castings, forgings, plastics, rubber, cloth, commercial chemicals,
leather hides such as skins of animals are examples.

2. Purchased parts- These are items used in the assembly of the product which are
obtained from outside sources. Bolts, nuts, screws, lock washers, bearings, bushings,
gears, tires, etc. are typical purchased parts.

3. In-process materials. These are used in the products on which work has been
performed to change the products' form, size, physical or chemical characteristics.
Examples are shoe upper cut from a leather hide, chisel from a metal bar, a sandblasted
and painted casting, etc.

4. Finished products. These are goods completely manufactured and inspected and
ready for shipment to a customer. Examples are completed machine tap, a finished pair
of shoes, a decorated cast aluminum base, etc.

5. Production supplies. These are consumable materials used in the manufacturing

process which do not become part of the product. Examples are files, grinding wheels,
taps, drills, beltings, oils, grease, welding electrodes, acetylene gas, electrical tapes,
sandpapers, paints, varnish, stationeries, pencils, etc.
 6. Equipment items. These are expendable parts of machines and other physical facilities,
such as fittings, valves, fuses, electrical cords, pilot lamps and others, considered as not
in the strict sense, as repair or replacement items. But they are considered such
because they are subject to the same control.

Materials Management

This is concerned with controlling the kind, amount, location, movements, and timing of the
various commodities used in and produced by the industrial enterprise. This management
started out of a plan to produce something from the raw materials exploited into other parts and
materials and finished products with the use of machineries and equipment required in the
manufacturing process. It is considered a partner of production control. Its responsibility ends
when the correct finished product is in proper condition and quantity and is passed on to the
end users or customers.

Advantages of Materials Management

Some of the identified advantages of adopting the concept of materials management are as
follows:
1. forced cooperation between purchasing and production
2. tighter inventory control
3. efficiency in coordination
4. better communication

Scope of Material Flow Control

Effective control of materials embraces four phases:

1. Procurement- encompasses broader area and covers the responsibilities performed by

purchasing as well as other functions of material supervision and management, such as
inventory control, receiving, incoming inspection, and salvage operations. Procurement
covers production control, traffic, and shipping.

Purchasing describes the process of buying, identifying the need, selecting supplies,
negotiating prices, and following up to insure effective delivery.

The effectiveness of procurement based on four major factors:

a. quality- maintain standard of quality as established by specifications
b. quantity- maintain continuity of supply based-on production and materials requirement
c. price- lowest cost consistent with quality and service required
d. time- on-time delivery of required quantity linked with production schedules

2. External transportation- The external transportation of materials involves the following

functions:
a. receiving- acceptance of incoming materials.
b. traffic- transportation of both outgoing and incoming items
c. shipping- preparation of finished goods for delivery to customer

There may be several alternative modes of transportation available for the shipment of
materials and finished goods:
a. sea transport
b. motor freight
c. railway freight
d. air freight
Containerization- packing materials/products in standardized box-like containers for handling
convenience and pilferage protection. Containers have been loaded with merchandise, sealed
at the manufacturer's facility, and transported via truck or ship.

3. Internal transportation- wide variety of mechanized handling and transporting

devices can be moved mechanically through out the plant. Functionally, there are two general
types of material-handling equipment:
a. floor-type- hand trucks, pallet jacks, fork lift trucks, belt conveyors, etc.
b. overhead-type- cranes, hoists, elevators, cable cars, chain conveyors, etc.

4. Inventory control or storekeeping- aimed at ensuring that an adequate but not

excessive stock of materials is on hand at all times to meet operating requirements. By
maintaining an excess inventory, huge sums of money are tied up, resulting in lost of interest or
gain. By not maintaining adequate inventory, delays are caused in the production process and
as a result products do not reach the market in time and sales are lost. In order to run an
efficient and effective production system, a balance must be maintained between these two
conditions. Inventory control covers raw materials inventories, goods in process inventories,
and finished stock inventories, and supplies inventories. Control of inventories avoids
unnecessary waste. A failure to have adequate control may result in the scrapping or throwing
to "salvage" of useful items. Control of inventories not only prevents wastage and minimizes
theft, but also facilitates cost accounting of the manufacturing process.

Just-in-Time Inventory Control (JIT) - schedules materials to arrive and leave as they are
needed; also known as zero inventory systems, stockless systems, or kanban systems.