9.6 Application of cluster analysis in marketing management—case study
9.6.9 Limitations of case study
Owing to the inherent data insufficiencies, 11 factored variables were dropped and the remaining 18 were used for this study. These 18 variables were assumed to be representa- tive of the initial data elements and were used for determining the significant ones that affect penetration. All underlying data were for the year 2001 only.
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Fundamentals of systems engineering
coordinating techniques in business organization, and adapting technological innova- tions toward achieving increased performance. They also stimulate awareness of the legal, environmental, and socioeconomic factors that have a significant impact on engi- neering systems. Industrial and systems engineers can apply creative values in solving complex and unstructured problems in order to synthesize and design potential solutions and organize, coordinate, lead, facilitate, and participate in teamwork. They possess good mathematical skills, a strong desire for organizational performance, and a sustained drive for organizational improvement.
In deriving efficient solutions to manufacturing, organizational, and associated prob- lems, ISEs analyze products and their requirements. They utilize mathematical techniques such as operations research (OR) to meet those requirements, and to plan production and information systems. They implement activities to achieve product quality, reliability, and safety by developing effective management control systems to meet financial and produc- tion planning needs. Systems design and development for the continual distribution of the product or service is also carried out by ISEs to enhance an organization’s ability to satisfy their customers. Industrial and systems engineers focus on optimal integration of raw materials available, transportation options, and costs in deciding plant location. They coordinate various activities and devices on the assembly lines through simulations and other applications.
The organization’s wage and salary administration systems and job evaluation pro- grams can also be developed by them, leading to their eventual absorption into management positions. They share similar goals with health and safety engineers in promoting product safety and health in the whole production process through the application of knowledge of industrial processes and such areas as mechanical, chemical, and psychological principles.
Modern industrial organization Ever-increasing competition
(increased number of competitors)
Dwindling foreign exchange reserve thus affecting importation of spares
Political instability of governments in operating environments that discourages
investments
Stiffer requirements for international competitiveness
(i.e., ISO standards)
High sophistication in quality of products demanded by
customers
Unstable and stiffer government policies on importation of spares, labor recruitment (i.e., minimum wage), quality of products (i.e.,
ISO 9000 and 14000)
High capital intensiveness of plant expansion
Uncertain customer demand (quantity specification)
Unstable skilled workforce (high turnover on search for
“greener pastures”)
Unstable and higher costs of power supply for operation
Figure 10.1 The complex nature of today’s industrial organizational environment.
187 Chapter ten: An overview of industrial and systems engineering
They are well grounded in the application of health and safety regulations while antici- pating, recognizing, and evaluating hazardous conditions and developing hazard-control techniques.
Industrial and systems engineers can assist in developing efficient and profitable busi- ness practice by improving customer services and the quality of products. This would improve the competitiveness and resource utilization in organizations. From another per- spective, ISEs are engaged in setting traditional labor or time standards and in the rede- sign of organizational structure in order to eliminate or reduce some forms of frustration or wastes in manufacturing. This is essential for the long-term survivability and the health of the business.
Another aspect of the business that the ISEs could be useful in is making work safer, easier, more rewarding, and faster through better designs that reduce production cost and allow the introduction of new technologies. This improves the lifestyle of the populace by making it possible for them to afford and use technological advanced goods and services.
In addition, they offer ways of improving the working environment, thereby improving efficiencies and increasing cycle time and throughput, and helping manufacturing organi- zations to obtain their products more quickly. Also, ISEs have provided methods by which businesses can analyze their processes and try to make improvements upon them. They focus on optimization—doing more with less—and help to reduce waste in the society.1 The ISEs give assistance in guiding the society and business to care more for their work- force while improving the bottom line.
Since this handbook deals with two associated fields—industrial and systems engi- neering—there is a strong need to define these two professions in order to have a clear perspective about them and to appreciate their interrelationships. Throughout this chap- ter, these two fields are used together and the discussions that follow are applicable to either. Perhaps the first classic and widely accepted definition of Industrial Engineering (IE) was offered by the then American Institute of Industrial Engineering (AIIE) in 1948.2 Others have extended the definition. “Industrial Engineering is uniquely concerned with the analysis, design, installation, control, evaluation, and improvement of sociotechnical systems in a manner that protects the integrity and health of human, social, and natural ecologies. A sociotechnical system can be viewed as any organization in which people, materials, information, equipment, procedures, and energy interact in an integrated fash- ion throughout the life cycles of its associated products, services, or programs (see foot- note 2). Through a global system’s perspective of such organizations, industrial engineering draws upon specialized knowledge and skills in the mathematical, physical, and social sciences, together with the principles and methods of engineering analysis and design, to specify the product and evaluate the results obtained from such systems, thereby assuring such objectives as performance, reliability, maintainability, schedule adherence, and cost control (Figure 10.2).
As shown in Figure 10.2, there are five general areas of industrial and systems engineer- ing. Each of these areas specifically makes out some positive contributions to the growth of industrial and systems engineering. The first area shown in the diagram is twofold, and comprises sociology and economics. The combination of the knowledge from these two areas helps in the area of supply chain. The second area is, mathematics, which is a powerful tool of ISEs. Operations research is an important part of this area. The third area is psychology, which is a strong pillar for ergonomics. Accounting and economics both
1http://www.orie.cornell.edu/~IIE.
2http://www.iienet.org.
constitute the fourth area. These are useful subjects in the area of engineering economics.
The fifth area is computer. Computers are helpful in CAD/CAM, which is an important area of industrial and systems engineering.
According to the International Council on Systems Engineering (INCOSE),3,4 systems engineering is an interdisciplinary approach and means to enable the realization of suc- cessful systems. Such systems can be diverse, encompassing people and organizations, software and data, equipment and hardware, facilities and materials, and services and techniques. The system’s components are interrelated and employ organized interaction toward a common purpose. From the viewpoint of INCOSE (see footnote 3), systems engi- neering focuses on defining customer needs and required functionality early in the devel- opment cycle, documenting requirements, and then proceeding with design synthesis and systems validation while considering the complete problem. The philosophy of sys- tems engineering teaches that attention should be focused on what the entities do before determining what the entities are. A good example to illustrate this point may be drawn from the transportation system. In solving a problem in this area, instead of beginning the problem-solving process by thinking of a bridge and how it will be designed, the systems engineer is trained to conceptualize the need to cross a body of water with certain cargo in a certain way.
The systems engineer then looks at bridge design from the point of view of the type of bridge to be built (see footnote 4). For example, is it going to have a suspension or super- structure design? From this stage he would work down to the design detail level where systems engineer gets involved, considering foundation soil mechanics and the placement of structures. The contemporary business is characterized by several challenges. This requires the ISEs to have skills, knowledge, and technical know-how in the collection, analysis, and interpretation of data relevant to problems that arise in the workplace. This places the organization well above the competition.
The radical growth in global competition, constantly and rapidly evolving corporate needs, and the dynamic changes in technology are some of the important forces shaping the world of business. Thus, stakeholders in the economy are expected to operate within a complex but ever-changing business environment. Against this backdrop, the dire need for professionals who are reliable, current, and relevant becomes obvious. Industrial and
3http://www.hra-incose.org.
4http://www.incose.org.
Industrial and systems engineering
Sociology Economics
+ Mathematics Psychology
Accounting + Economics
Computer
Supply chain
Operations research
Ergonomics Engineering economics
CAD/CAM
Figure 10.2 Some areas of industrial and systems engineering and related disciplines.
189 Chapter ten: An overview of industrial and systems engineering
systems engineers are certainly needed in the economy for bringing about radical change, value creation, and significant improvement in productive activities.
The ISE must be focused and have the ability to think broadly in order to make a unique contribution to the society. To complement this effort, the organization itself must be able to develop effective marketing strategies (aided by a powerful tool, the Internet) as a competitive advantage so that the organization could position itself as the best in the industry.
The challenges facing the ISE may be divided into two categories: those faced by ISEs in developing and underdeveloped countries, and those faced by engineers in the developed countries. In the developed countries, there is a high level of technological sophistication that promotes and enhances the professional skills of the ISE. Unfortunately, the reverse is the case in some developing and underdeveloped countries. Engineers in underdeveloped countries, for instance, rarely practice technological development, possibly owing to the high level of poverty in such environments. Another reason that could be advanced for this is the shortage of skilled manpower in the engineering profession that could cham- pion technological breakthrough similar to the channels operated by the world economic powers. In addition, the technological development of nations could be enhanced by the formulation of active research teams. Such teams should be focused with the aims of solv- ing practical industrial problems. Certain governments in advanced countries encourage engineers (including ISEs) to actively participate in international projects funded by gov- ernment or international agencies. For the developing and underdeveloped countries, this benefit may not be gained by the ISE until the government is challenged to do so in order to improve on the technological development of the country.
Challenges before a community may be viewed from the perspective of the problem faced by the inhabitants of that community. As such, they could be local or global. Local challenges refer to the need must be satisfied by the engineers in that community. These needs may not be relevant to other communities, for example, the ISE may be in a position to advise the local government chairman of a community on the disbursement of funds on roads within the powers of the local government. Decision-science models could be used to prioritize certain criteria, such as the number of users, the economic indexes of the vari- ous towns and villages, the level of business activities, the number of active industries, the length of the road, and the topography or the shape of the road.
Soon after graduation, an ISE is expected to tackle a myriad of social, political, and economic problems. This presents a great challenge to the professionals who live in a society where these problems exist. Consider the social problems of electricity genera- tion, water provision, flood control, etc. The ISE in a society where these problems exist is expected to work together with other engineers in order to solve these problems. They are expected to design, improve on existing designs, and install integrated systems of men, materials, and equipment so as to optimize the use of resources. For electricity distribu- tion, the ISE should be able to develop scientific tools for the distribution of power genera- tion as well as for the proper scheduling of the maintenance tasks to which the facilities must be subjected.
The distribution network should minimize the cost. Loss prevention should be a key factor to consider. As such, the quality of the materials purchased for maintenance should be controlled, and a minimum acceptable standard should be established. In solving water problems, for instance, the primary distribution route should be a major concern. The ISE may need to develop reliability models that could be applied to predict the life of com- ponents used in the system. The scope of activities of the ISE should be wide enough for them to work with other scientists in the health sector on modeling and control of diseases
caused by water-distribution problems. The ISE should be able to solve problems under uncertain conditions and limited budgets.
The ISE can work in a wide range of industries, such as the manufacturing, logistics, service, and defense industries. In manufacturing, the ISE must ensure that the equip- ment, manpower, and other resources in the process are integrated in such a manner that efficient operation is maintained and continuous improvement is ensured. The ISE functions in the logistics industry through the management of supply-chain systems (e.g., manufacturing facilities, transportation carriers, distribution hubs, retailers) to fulfill cus- tomer orders in the most cost-effective way (see footnote 1). In the service industry, the ISE provides consultancies in areas related to organizational effectiveness, service quality, information systems, project management, banking, service strategy, etc. In the defense industry, the ISE provides tools to support the management of military assets and military operations in an effective and efficient manner. The ISE works with a variety of job titles.
The typical job titles of an ISE graduate include industrial engineer, manufacturing engi- neer, logistics engineer, supply-chain engineer, quality engineer, systems engineer, opera- tions analyst, management engineer, and management consultant (Figure 10.3).
Experiences in the United States and other countries show that a large proportion of ISE graduates work in consultancy firms or as independent consultants, helping compa- nies to engineer processes and systems to improve productivity, effect efficient operation of complex systems, and manage and optimize these processes and systems.
After completing their university education, ISEs acquire skills from practical expo- sure in an industry. Depending on the organization that an industrial or systems engineer works for, the experience may differ in depth or coverage. The trend of professional devel- opment in industrial and systems engineering is rapidly changing in recent times. This is enhanced by the ever-increasing development in the Information, Communication and Technology (ICT) sector of the economy.
Process engineer Quality control
Solid works engineer Project engineer
Business dev.
Consultant Production engineer
Safety engineer Plant engineer Manufacturing Quality engineer Industrial engineer
Industrial/ systems engineer
Test engineer Maintenance engineer
Corporate env.
Sytems engineer Design engineer Logistic engineer Supply chain engineer
Material engineer Master scheduler Six sigma (automotive)
Quality assurance Figure 10.3 Job titles of industrial and systems engineers.
191 Chapter ten: An overview of industrial and systems engineering
Industrial and systems engineering is methodology-based and is one of the fastest grow- ing areas of engineering. It provides a framework that can be focused on any area of inter- est, and incorporates inputs from a variety of disciplines, while maintaining the engineer’s familiarity and grasp of physical processes. The honor of discovering industrial engineering belongs to a large number of individuals. The eminent scholars in industrial engineering are Henry Gantt (the inventor of the Gantt chart) and Lillian Gilbreth (a coinventor of time and motion studies). Some other scientists have also contributed immensely to its growth over the years. The original application of industrial engineering at the turn of the century was in manufacturing a technology-based orientation, which gradually changed with the develop- ment of OR, cybernetics, modern control theory, and computing power.
Computers and information systems have changed the way industrial engineers do business. The unique competencies of an ISE can be enhanced by the powers of the com- puter. Today, the fields of application have widened dramatically, ranging from the tradi- tional areas of production engineering, facilities planning, and material handling to the design and optimization of more broadly defined systems. An ISE is a versatile professional who uses scientific tools in problem solving through a holistic and integrated approach.
The main objective of an ISE is to optimize performance through the design, improvement, and installation of integrated of human, machine, and equipment systems. The uniqueness of industrial and systems engineering among engineering disciplines lies in the fact that it is not restricted to technological or industrial problems alone. It also covers nontechnologi- cal or non-industry-oriented problems also. The training of ISEs positions them to look at the total picture of what makes a system work best. They question themselves about the right combination of human and natural resources, technology and equipment, and infor- mation and finance. The ISEs make the system function well. They design and implement innovative processes and systems that improve quality and productivity, eliminate waste in organizations, and help them to save money or increase profitability.
Industrial and systems engineers are the bridges between management and engi- neering in situations where scientific methods are used heavily in making managerial decisions. The industrial and systems engineering field provides the theoretical and intel- lectual framework for translating designs into economic products and services, rather than the fundamental mechanics of design. Industrial and systems engineering is vital in solving today’s critical and complex problems in manufacturing, distribution of goods and services, health care, utilities, transportation, entertainment, and the environment. The ISEs design and refine processes and systems to improve quality, safety, and productivity.
The field provides a perfect blend of technical skills and people orientation. An industrial engineer addresses the overall system performance and productivity, responsiveness to customer needs, and the quality of the products or services produced by an enterprise.
Also, they are the specialists who ensure that people can safely perform their required tasks in the workplace environment. Basically, the field deals with analyzing complex sys- tems, formulating abstract models of these systems, and solving them with the intention of improving system performance.