FUNDAMENTALS OF INDUSTRIAL ENGINEERING

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Systems theory

A structured and systematic focus is the second skill required in an engineering approach. The term systematic was derived from the term system. This skill is used in order to understand the systemic relationships between an entity and its environment as well as the internal relationships within the entity. It forces one to focus on the relationships, be they sequential or causal, between en- tities. The cornerstone of a structured or systemic focus is the definition of the systems concept, which is a way by which the relationship between environmental requirements and satisfaction thereof can be understood.
This inevitably leads to the viewpoint that engineering is a multidisciplinary system within an environ- mental system that supplies input and expects output, and that a structured ap- proach is the means through w~ich engineering reacts. « SYSTEMS THEORY- the transdisciplinary study of the abstract organisation of phenomena, independent of their substance, type, or spatial or temporal scale of existence. It investigates both the principles common to all complex entities, and the (usually mathematical) models that can be used to describe them. Systems theory was proposed in the 1940s by biologist Ludwig von Bertalan.f/Y andforthered by Ross Ashby. Von Bertalanffy was both reacting against reductionism and attempting to revive the unity of science. He emphasised that real systems are open to, and interact with, their environments, and that they can acquire qualitatively new properties through emergence, resulting in continual evolution. Rather than reducing an entity to the properties of its parts or elements, systems theory focuses on the arrangement of and relations between the parts that connect them into a whole.

Cybernetics

If systems are viewed as a way through which interaction with the environment occurs, the performance of this interaction can be measured. If, according to the measurement, performance is not satisfactory the system responds by transfor- ming itself and measurement is repeated. This approach, also termed feedback control, lead to the discipline of cybernetics (Weiner: 49) being created. Feedback control can take place in real time. This, together with the complexity of the environment may hide the relationships between input and output. This often leads to discarding cybernetics in complex situations and limiting its application to engineering designed products. The theory however, is also applicable to com- plex real word systems such as social structure and business transformation even if limited to a way of thinking rather than through a formal application. Cyberne- tics leads to the notion of viewing systems as cycles that are adaptive and lear- mng.

Static and dynamic systems

The performance of a system can be assessed in both static as well as dynamic states. The static state focuses on the different levels of performance, whereas the dyna- mic state focuses on the transformation process that the system collectively expe- riences when its elements are left to interact mutually and with their environment. This interaction tends to either strive towards equilibrium (steady state), or it dis- plays a regenerative effect. System dynamics modelling is an approach initially proposed by Forrester (15,16) in order to model and analyse the dynamic behaviour of systems. The approach has since been employed to model industrial systems, ecological and agricultural systems, as well as the general environmental impacts of human development. System dynamics modelling, similar to feedback control theory applies fundamental laws of nature in order to derive the differential equations that de- scribe the dynamic behaviour of engineering systems. It focuses on the causal re- lationships between physical entities within the system. It subsequently employs a numerical approach towards the assessment of the dynamic behaviour of systems and solves the inherent differential equations recursively with the aid of computer processing. Simulation modelling as a subject area is based on this approach. System dynamics modelling represents a system in terms of levels where values are accumulated and which act as photographs of the system state at any given time, and rates (units/time) which exist for a predetermined time interval and influence or are influenced by these levels. These influences are defined as causal relationships between levels and rates. Feedback is constructed once this interac- tion has taken place. The modelling approach further distinguishes between systemic or physical flow, and causal flow, the latter being the information ordering the interaction between a cause and its effect. It is presumed that a rate always affects a level, whereas a level might or might not affect a rate. Whenever a level influences a rate, feedback is created since a rate always influences the corresponding level. A brief discussion of system dynamics modelling follows. There are many lessons to be learnt from system dynamics, but perhaps the most important of all is that there are always interrelationships between systems. Even if any given system is modelled as a closed and simple representation of reality, it is only possible because the environment was reduced to a few inputs and outputs through the assumptions that were made. System dynamics modelling has been applied to modelling of the systemic interaction between natural resources and the consumers of such resources (Meadows: 28,29). This analysis can be undertaken at a global level or at the level of a specific industry. « The most important part of our way of looking, the part that is perhaps least widely shared, is our systems viewpoint. A systems viewpoint is not necessarily a better one than any other, just a different one. Like any viewpoint, like the top of any hill you climb, it lets you see some things you would never have noticed from any other place and it blocks the view of other things. Systems training has taught us to see the world as a set of unfolding dynamic behaviour patterns such as growth, decline, oscillation, overshoot. It has taught us to focus on interconnections. We see the economy and the environment as one system. We see stocks and flows

Table of contents :

• Part One -Introduction
  • 1 OBJECTIVE
  • 2 BACKGROUND
  • 3 OBJECTIVES OF THE THESIS S
  • 4 SCOPE OF THE THESIS
  • 5 OVERVIEW
  • 6 APPROACH
  • 6.1 AN ENGINEERING APPROACH
  • 6.2 … TO BUSINESS TRANSFORMATION
  • 6.3 THE BUSINESS ENGINEERING PROCESS
    • 6. 3.1 Fundamentals
    • 6.3.2 Business analysis
    • 6.3.3 Businessdesign
    • 6.3.4 Business transformation
    • 6.3.5 Business operation
    • 6. 3. 6 Conclusion
  • 7 RESEARCH METHODOLOGY
  • 8 REFERENCES
• Part Two- Fundamentals
  • OBJECTIVE
  • 2 BASIC PRINCIPLES
  • 2.1 THE PHILOSOPHIC APPROACH
  • 2.2 ANALYSIS AND SYNTHESIS
    • 2.2.1 Perspective
    • 2.2.2 Analytic thinking in the Machine Age
  • 2. 2. 3 Synthetic thinking in the Systems Age
  • 2.2.4 Business thinking
  • 2.3 FUNDAMENTAL LOGIC
    • 2.3.1 Perspective
    • 2.3.2 Deductive logic
    • 2.3.3 Inductive logic
    • 2.3.4 Business logic
  • 3 BUSINESS TRANSFORMATION FUNDAMENTALS
  • 3.1 BUSINESS
  • 3.2 TRANSFORMATION
  • 4 FUNDAMENTALS OF THE ENGINEERING APPROACH
  • 4.1 BASIC PRINCIPLES
  • 4.2 INNOVATION
    • 4.2.1 The need for innovation
    • 4.2.2 The thinking process
    • 4.2.3 The innovation process
    • 4.2.4 Methods
    • 4.2.5 Relevance in business transformation
  • 4.3 STRUCTURED AND SYSTEMATIC
  • 4. 3.1 Systems theory
    • 4.3.2 The life-cycle concept
    • 4.3.3 Levels of abstraction
    • 4.3.4 Cybernetics
    • 4.3.5 System cost-effectiveness
    • 4.3.6 Static and dynamic systems
  • 4.3. 7 Complex non-linear systems
  • 4. 3.8 The learning organisation as basis for analysis of a business system
  • 4.3.9 Systems thinking
  • 4.3.10 Relevance in business transformation
  • 4.4 APPLIED SCIENCES
  • 4. 4. 1 Logic
    • 4.4.2 Modelling
    • 4.4.3 Simplification
    • 4.4.4 Forecasting
    • 4.4.5 Improvement
    • 4.4.6 Optimisation
    • 4.4.7 Decisionsupport
    • 4.4.8 Relevance in business transformation
  • 5 FUNDAMENTALS OF INDUSTRIAL ENGINEERING
  • 5.1 DEFINITION
  • 5.2 INDUSTRIAL ENGINEERING PROCESS
  • 5.3 THE PRINCIPLES OF INDUSTRIAL ENGINEERING
  • 5. 3.I Systems focus
    • 5.3.2 Productivity management
    • 5.3.3 Industrial Engineering skills
    • 5.3.4 The principles of Scientific Management
  • 5. 3. 5 The evolution of Industrial Engineering
  • 6 FUNDAMENTALS OF BUSINESS ENGINEERING
  • 6.1 BASIC PRINCIPLES
  • 6.2 BUSINESS ENGINEERING PROCESS
  • 6.3 APPLICATION
  • 6. 3.I The analytical approach
    • 6.3.2 The visionary approach
    • 6.3.3 The organic approach
    • 6.3.4 Comparison between the various application approaches
  • 6.4 BUSINESS ENGINEERING SKILLS AND METHODS
  • 7 CONCLUSION
  • 8 REFERENCES
• Part Three- Business Analysis
  • 1 OBJECTIVE
  • 2 BASIC PRINCIPLES
  • 2.1 ANALYSIS
    • 3.1.4 Technological environment
  • 3.1. 5 Ecological environment
  • 3.1. 6 Global environment
  • 3.2 BUSINESS ENVIRONMENT
    • 3.2.1 Value creation
    • 3.2.2 Stakeholders
    • 3.2.3 Value chain
    • 3.2.4 Industry
  • 3. 2. 5 Competitiveness
  • 3.3 INTERNAL ENVIRONMENT
  • 3. 3.1 The organisation’s strategy
    • 3.3.2 The leadership of the organisation
    • 3.3.3 Organisational behaviour
    • 3. 3. 4 The organisation’s core processes and competencies
  • 3.3.5 The organisation’s resources
  • 4 BUSINESS ANALYSIS METHODS
  • 4.1 ANALYSIS OF THE EXTERNAL ENVIRONMENT
    • 4.1.1 Econometric modelling and forecasting methods
    • 4.1.2 Scenario planning
  • 4.2 ANALYSIS OF THE BUSINESS ENVIRONMENT
    • 4.2.1 Balanced scorecard analysis
    • 4.2.2 Value discipline analysis
    • 4.2.3 Stakeholder analysis
    • 4.2.4 Value chain analysis
    • 4.2.5 Cause/effect analysis
    • 4.2.6 Benchmarking
    • 4.2. 7 Valuation and investment analysis
  • 4.2.8 Portfolio analysis
  • 4.2.9 Financial analysis
  • 4.2.10 Valueanalysis
  • 4.2.11 Marketanalysis
  • 4.2.12 Lifecycleanalysis
  • 4.2.13 Risk analysis
  • 4. 2.14 Due diligence investigations]
  • 4.3 ANALYSIS OF THE INTERNAL ENVIRONI’v. ENT
  • 4.3.1 Current status analysis
  • 4.3.2 Strategy analysis
  • 4.3.3 Business process analysis
  • 4.3.4 Leadership assessment
  • 4. 3. 5 Organisational culture
  • 4.3.6 SWOT-analysis
  • 5 CONCLUSION
  • 6 REFERENCES
• Part Four- Business Design
  • OBJECTIVE
  • 2 BASIC PRINCIPLES
  • 2.1 DESIGN AND ARCHITECTURE
  • 2.2 THE PRINCIPLES OF ARCHITECTURAL DESIGN
  • 2.3 THE PRINCIPLES OF ENGINEERING DESIGN
  • 3 BUSINESS ARCHITECTURE
  • 3.1 THE PRINCIPLES OF BUSINESS ARCHITECTURE
  • 3.1.1 Approach
  • 3.1.2 Architectural style
  • 3.2 BUSINESS ARCHITECTURE MODELS
    • 3.2.1 The McKinsey 7-S model
    • 3.2.2 The Arthur D Little mode/
    • 3.2.3 The business system diamond
    • 3.2.4 The star architecture
    • 3.2.5 The MIT 90s paradigm
    • 3.2.6 Architectural models from the CJM environment
  • 3.3 GENERIC BUSINESS ARCHITECTURE MODEL
    • 3.3.1 Dimensions
    • 3.3.2 Generic business architecture elements
    • 3.3.3 Environment
    • 3.3.4 Strategic architecture
    • 3.3.5 Structural architecture
    • 3. 3. 6 Cultural architecture
    • 3. 3. 7 Resource architecture
    • 3.3.8 Management architecture
  • 4 BUSINESS DESIGN PROCESSES
  • 4.1 APPROACH
  • 4.2 DESIGN PROCESSES
  • 4.3 GENERIC BUSINESS DESIGN PROCESS
    • 4. 3.1 Strategic architecture design process
    • 4.3.2 Structural architecture design process
    • 4.3.3 Cultural architecture design process
    • 4.3.4 Resource architecture design process
    • 4.3.5 Management architecture design process
  • 4.4 MODELLING CONVENTIONS
  • 5 GENERIC BUSINESS ARCHITECTURE
  • 5.1 GENERAL
  • 5.2 PRIMARY BUSINESS PROCESSES
    • 5.2.1 Marketing
    • 5.2.2 Supply chain
  • 5.3 SECONDARY BUSINESS PROCESSES
  • 6 CONCLUSION
  • 7 REFERENCES
• Part Five – Business Transformation
  • 1 OBJECTIVE
  • 2 BASIC PRINCIPLES
  • 2. I CHANGE AND TRANSFORMATION
  • 2.2 TRANSFORMATION LEVELS
  • 2.3 THE PARADIGM SHIFT
  • 3 EXTERNALCHANGE
  • 3. I APPROACH
  • 3.2 FUTURE SHOCK
    • 3.2.1 Transience
    • 3.2.2 Novelty
    • 3.2.3 Diversity
  • 3.3 THE THIRD WAVE
  • 3.4 THE GREAT TRANSITION
  • 3.5 MEGA TRENDS
  • 3.6 THE GLOBAL PARADOX
  • 4 INTERNAL CHANGE
  • 4. I EXECUTIVE REINVENTION
  • 4.2 TRANSFORMATIONAL LEADERSHIP
  • 5 BUSINESS TRANSFORMATION FRAMEWORK
  • 5. I THE DYNAMICS OF BUSINESS TRANSFORMATION
    • 5.1.1 Business transformation levels
    • 5.1.2 Business transformation modes
    • 5.1.3 Theories on business transformation
  • 5.2 BUSINESS TRANSFORMATION MODELS
  • 5. 2. I Burke and Litwin model
    • 5.2.2 Generic business transformation model
  • 5.3 THE HUMAN FACTOR IN TRANSFORMATION
    • 5.3.1 Resistance to change
  • 5. 3. 2 The burning platform
  • 6 BUSINESS TRANSFORMATION PROCESSES
  • 6. I APPROACH
  • 6.2 GENERIC BUSINESS TRANSFORMATION PROCESS
  • 6. 2.1 Strategic transformation process
    • 6.2.2 Structural transformation process
    • 6.2.3 Cultural transformation process
    • 6.2.4 Resource transformation process
    • 6.2.5 Management transformation process
  • 6.3 TRANSFORMATION MANAGEMENT PROCESSES
    • 6.3.1 Lewin’s approach
    • 6.3.2 Lawler’s approach
    • 6.3.3 Stokes’s approach
  • 6. 3. 4 Carr and Johansson’s approach
  • 6.3.5 Kotter’s approach
  • 6.3.6 Martin’s approach
  • 6.3. 7 Generic transformation management process
  • 6.4 IMPLEMENTATION TRACKING PROCESS
  • 6. 4.1 Business transformation output performance
  • 6.4.2 Business transformation process performance
  • 6.4.3 Business transformation input performance
  • 7 CONCLUSION
  • 8 REFERENCES
• Part Six- Business Operation
  • 1 OBJECTIVE
  • 2 BASIC PRINCIPLES
  • 2.1 INDUSTRIAL ENGINEERING PERSPECTIVE
  • 2.2 VALUE ADDITION
  • 2.3 OPERATIONAL VALUE DRIVERS
    • 2.3.1 Quality
    • 2.3.2 Speed
    • 2.3.3 Flexibility
    • 2.3.4 Return on invested capital
    • 2.3.5 Risk
    • 2.3.6 Waste
  • 2.4 VALUE ENGINEERING PRINCIPLES
  • 2.5 DYNAMIC NATURE OF VALUE
  • 2. 5.1 Familiarity
    • 2.5.2 Income and education
    • 2.5.3 Economic conditions
    • 2.5.4 Competition
  • 2. 5. 5 Industry regulation
  • 2.6 OPERATIONAL STRATEGY
  • 2. 6.1 Time value strategy
  • 2.6.2 Place value strategy
  • 2. 6. 3 Relationship-based strategy
  • 2. 6. 4 Mass-customisation strategy
  • 2. 6. 5 Risk reduction strategy
  • 3 OPERATIONS
  • 3.1 APPROACH
  • 3.2 OPERATIONS MANAGEMENT
    • 3.2.1 Quality improvement
    • 3.2.2 Lead-time reduction
    • 3.2.3 Flexibility improvement
    • 3.2.4 Expenditure reduction
    • 3.2.5 Risk improvement
    • 3.2.6 Waste improvement
  • 3.3 OPERATIONS RESEARCH
  • 3.3.1 Statistical analysis
    • 3.3.2 Optimisation
    • 3.3.3 Modelling
    • 3.3.4 Decision analysis
  • 3.4 VALUE ENGINEERING
  • 4 OPERATIONS MANAGEMENT PROCESSES
  • 4.1 APPROACH
  • 4.2 VALUE ENGINEERING PROCESS
  • 4.3 CONTINUOUS IMPROVEMENT PROCESS
  • 4.4 OPERATIONS RESEARCH SUPPORT
  • 5 CONCLUSION
  • 6 REFERENCES
• Part Seven – Conclusion
  • 1 OBJECTIVE
  • 2 OVERVIEW
  • 2.1 POINTSOFDEPARTUR£
  • 2.2 CONTRIBUTION OF THE THESIS
  • 2.3 OVERALL CONCLUSIONS
  • 2.4 SPECIFIC CONCLUSIONS
  • 3 THEORY
  • 3.1 AIMS OF THE BUSINESS ENGINEERING PROCESS
  • 3.2 PROPERTIES OF THE BUSINESS ENGINEERING PROCESS
  • 3.3 APPLICATION OF AN ENGINEERING APPROACH
  • 4 APPLICATION
  • 5 INSIGHT

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