ENGINEERING MANAGEMENT LECTURE 3 PART 1
“MANAGERS WHO PLAN ARE AFFORDED AF FORDED WITH THE OPPORTUNITY TO CAREFULL CAREFUL LY ANALYZE ANALYZE SITUATIONS SITUATIONS WHICH DIRECTLY CONTRIBUTE TO EFFECTIVE DECISION MAKING”
THE NATURE OF PLANNING
There are many instances when managers are overwhelmed by various activities which at times becloud his judgement. This must be expected since anybody who is confronted by several situations happening simultaneously will loose sight of the more important concerns. To minimize mistakes in decision making, planning is undertaken.
A plan which is the output of planning, provides a methodical way of achieving desired results. Without the plan, some minor tasks maybe afforded major attention which may later on, hinder accomplishment of objectives.
Example
The management of an engineering firm was able to identify the need to hire additional three employees. The manager preceeded to invite applicants, screen them, and finally hired three of them. When the hiring expense report was analyzed, it involved more than the double amount spent by other firms in hiring the same number of people. When an inquiry was made, it was found out that the manager committed some errors of judgement. For instance, he used an expensive advertising layout in a newspaper when a single message will do. Also, it was found out that the absence of a hiring plan contribute to the high cost of hiring
PLANNING DEFINED
Planning refers to the management function that involves anticipating future trends and determining the best strategies and tactics to achieve organizational objectives.
It is also the selection and sequential ordering of task required to achieve an organization goal.
It is deciding what will be done, who will do it, where, when, and how will it be done, and the standards to which it will be done.
PLANNING AT VARIOUS MANAGEMENT LEVEL Since engineer managers could be occupying positions in any of the various management levels, it will be useful of them to know some aspects of planning undertaken at different management levels. Planning activities undertaken at various level are as follows: 1.
Top management level – Strategic Planning
2.
Middle management level – intermediate planning
3.
Lower management level – operational planning
Strategic planning
The term strategic planning refers to the process of determining the major goals of the organization and the policies and strategies for obtaining and using resources to achieve those goals.
In strategic planning, the whole company is considered, specifically its objectives and current resources.
The output of strategic planning is the strategic plan which spells out “the decision about long range goals and the course of action to achieve these goals.”
Intermediate Planning
Intermediate planning refers to the process of determining the contributions that subunits can make with allocated resources.
The intermediate plan is designed to support the strategic plan.
Operational Planning
Operational planning refers to the process of determining how specific task can be best accomplished on time with available resources.
The organization and types of planning undertaken 1.
Strategic Planning – president, general manager
2.
Intermediate planning – marketing manager, production manager, finance manager, personnel manager
3.
Operational Planning – industrial engineering manager, factory manager, quality control manager
THE PLANNING PROCESS
The process of planning consists of various steps depending on the management level that performs the planning task. Generally, planning involves the following:
1.
Setting organizational, divisional, or unit goals
2.
Developing strategies or tactics to reach those goals
3.
Determining resources needed and
4.
Setting standard
Setting Organizational, Divisional, or Unit Goals The first task of engineer manager is to provide a sense of direction to his firm, to his division, or to his unit. The setting of goals provide an answer to the said concern. If everybody in the firm is aware of the goals, there is a big chance that everybody will contribute his share in the realization of such goals.
Developing Strategies or Tactics to Reach Goals After determining the goals, the next task is to devise some measures to realize them. The ways to realize the goals are called strategies and these will be concern of top management. A strategy may be defined as a course of action aimed to ensuring that the organization will achieve its objectives. A tactic is a short term action taken by management to adjust to negative internal or external influences.
Determining the sources needed
When particular sets of strategies or tactics have been devised, the engineer manager will, then, determine the human and non human resources required by such strategies or tactics.
The quality and quantity of resources needed must be correctly determined. Too much resources in terms of either quality or quantity will be wasteful.
Setting Standards
When actual performance, corrections may be made or reinforcements given.
A standard may be defined as a quantitative or qualitative measuring device designed to help monitor the performance of people, capital goods, or processes.
TYPES OF PLANS Functional Area Plans 1. Marketing plan – this is the written document or blueprint in implementing and controlling the organization’s marketing activities related to particular marketing strategy. 2. Production plan – this is a written document that states the quantity of output a company must produce in broad terms and by product family. 3. Financial plan – it is a document that summarizes the current financial situation of the firm, analyzes financial needs, and recommends a direction for financial activities. 4. Human resource management plan – indicates the human resource needs of a company detailed in terms of quantity and quality and based on the requirements of the company’s strategic plan.
TYPES OF PLAN Plan with Time Horizon 1.
Short range plans – plans intended to cover a period of less than one year.
2.
Long range plans – plans covering a time span of more than one year
TYPES OF PLAN Plans According to Frequency of Use 1.
Standing Plans – These are plans that are used again and again, and they focus on managerial situations that recur repeatedly. 1.
Policies – broad guidelines to aid manager’s at every level in making decisions
2.
Procedures – describe exact series of actions to be taken in a given situation Rules – statements that either require or forbid a certain action
3.
2.
Single Use Plans – implement courses of action that are relatively unique 1.
Budget – plan which sets forth the projected expenditure for a certain activity and explains where the required funds will come from.
2.
Program – designed to coordinate large set of activities Project – limited in scope than a program and is prepared to suppport a program
3.
Parts of the Various Functional Area Plans The engineer manager may be familiar with engineering plans, knowing the details from the beginning to end. However, the ever present possibility of moving from one management level to the next and from one functional area to another presses the engineer manager to be familiar as well with the other functional area plans.
The contents of a marketing plan
The following must be contained in the marketing plan
1.
The executive summary - overall
2.
Table of contents
3.
Situational analysis and target market
4.
Marketing objectives and goals
5.
Marketing strategies
6.
Marketing tactics
7.
Schedules and budgets
8.
Financial data and control
CONTENTS OF THE PRODUCTION PLAN The production plan must contain the following 1.
The amount of capacity the company must have
2.
How many employees are required
3.
How many materials must be purchased
CONTENTS OF THE FINANCIAL PLAN 1.
An analysis of the firm’s current financial condition as indicated by an analysis of the most recent statements
2.
Sales forecast
3.
Capital budget
4.
Cash budget
5.
A set of pro forma (or projected) financial statements
6.
External financing plan
CONTENTS OF HUMAN RESOURCE PLAN 1.
Company or corporate mission
2.
Objectives and goals
3.
Strategies
Company of corporate mission refers to the strategic statement that identifies why an organization exists, its philosophy of management, and its purpose as distinguished from other similar organizations in terms of products, services, and markets.
MAKING PLANNING EFFECTIVE Planning is done so that some desired results may be achieved. At times, however, failure in planning occurs. Planning may be made successful if the following are observed: 1. Recognize the planning barriers 2. Use of aids to planning The planning Barriers are: 1. manager’s inability to plan 2. Improper planning process 3. Lack of commitment to the planning process 4. Improper information 5. Focusing on the present at the expense of the future 6. Too much reliance on the planning department 7. Concentrating only on the controllable variable
