functions of org

Function of organization•Before a device is designed an engineer must have the understanding of its use. Requirement for the device gives the context. Before we can manage people or resources we must know in what context we are working and understand the requirement of management for it.•Various functions are carried out in any manufacturing organization in order to operate the business. Consider the example of electric cattle manufacturer. Before considering how the business will operate following actions have already completed.

–Research carried out and product found viable–The company has adequate money to finance the operation

•Following areas be considered for profitable business of manufacturing kettles

–Buying of raw material–Transformation of raw material into saleable product–To sell the product at a price to earn profit

Buy partsManufacture and assemble parts package kettles

Sell kettles

BuyingMaking

selling

Function of organization•The parts required for the manufacturing of the kettle have to be procured and are to be kept in a safe storage where their receipt and expense can be controlled. The store system is also part of purchasing functions.•For expansion and development of the company, desired market share be obtained and for that how the company's product will be developed over a period of time must be determined. Company can achieve this by using research allied with design activity.•In case of kettle manufacturing a new type of heat exchanger mechanism be designed and then design for its manufacturing, producing drawing and parts list be considered.

Function of organization•The business should be profitable and for that it must be ensured that the expenditure for making kettle is less than its selling price, this introduces two further functions.

–Finance. •Calculating costs to make kettle including buying raw material•Enough cash for operating business is available and company can afford to wait for the payment of bills.

–Marketing•Match between customers need and product attributes to ensure profit•Customers need and competition offering

•Companies should ensure the quality functions. In kettle manufacturing appropriate safety standards should be ensured and the people in the company should know and have the ability to meet them.•People affairs like deployment, welfare, recruitment, selection etc are also considered.

Function of organization•In order to manufacture any product following functions are addressed.

–Buying and safe storage of materials (purchasing and stores)

–Manufacturing of product (operations)–Selling of product (sales)–Pricing of product and its competition (marketing)–Financing of business and cost of manufacture (finance)–Product development–Consistent product standards (quality)–People employed by the business (personnel)

Purchasing•A company has to purchase goods and services to feed all aspects of its operation from special parts required for research to paper products for washroom.•In purchasing activities it is necessary to clarify what is required, obtain supplies and ensure that business objectives are met.•It should ensure that the customer for the goods and services gets whatever is required without any delay.•Diversity of goods and services are required by different customers in a company and purchasing function has to meet all those requirements.•In a very large organization a large purchasing department handles all requirements of the number of buyers who are responsible for a particular type of good or service.

Purchasing•In a small company different departments are allowed to do their own purchasing.•The organization of purchasing is also affected by the quality system. In a central control system quality is ensured by parent company.•Role of purchasing function.

–In an engineering company majority of the purchases will be used to form a final product. This will require accounting of 50 % of total expenditure of the company.–Purchasing might involve

•Buying parts for production•Negotiating contracts for temporary staff•Assessing suppliers•Negotiating discounts for bulk purchases

–Purchasing function exists to meet the needs of the customers inside the organization in design, manufacturing, personnel or finance.

Purchasing•Organization of purchasing function

–A centralized purchasing department established in a company controls all aspects of procurement, stockholding and supply.–In smaller companies it is distributed to different departments having responsibility for buying the goods and services that they require.–An overall central purchasing policy is made which allows minimum cash flow control and define procedure for the selection of the suppliers and payments made to them.–Different people in the centralized department are given particular areas to which they specialize. Specific responsibilities for the procurement of the food, furniture, stationary and production parts may be given to different buyers.–Each user can develop very specialized knowledge of the market and provide greater economies.–Bulk purchases will lead to price saving.–Cost of placing orders will be minimized–Duplication of efforts will be avoided.

Purchasing•Organization of purchasing function

–In a decentralized purchasing department the buyer is able to react more quickly to a problem.–Certain departments of research and product development activities are given freedom to purchase items with minimum centralized control.–Designers and engineers can communicate with suppliers easily and they can get goods on adhoc and quick turn around basis.–Alternative of using central buyer may delay orders or it may be very bureaucratic.–Such problems should however not occur if purchasing function is properly organized.–Adhoc system has a potential problem of control exerted by the central management, it should therefore be accompanied by strict budget control.– Adhoc system should return to normalization as the device moves from prototyping to manufacture.

Purchasing organization

Materials manager

Buyer Non production parts

Buyer

production parts

Store keeper

Progress

chaser

Store personspacker

Purchasing•Activities in purchasing

–Following activities will be undertaken in purchasing function•Establishing purchasing policy•Sourcing•Buying•Stock control

–Establishing purchasing policy•It will define the rules by which the purchasing function will operate. For example criteria for selection of supplier, geographical location of supplier and specification of limits of amount on any one supplier.•Management should check implementation and monitoring of purchasing policy. This will be difficult in decentralised purchasing system.


–Sourcing•Sourcing is about finding suppliers who can meet the company requirements for goods and services. It will be done in close consultation with the department requiring the goods or services.•Sourcing should be carried out by a specialist in a specific area. For example software consultant should carry out sourcing for a software rather than someone with general knowledge of the field.•Second sourcing should also be carried out to find out an alternative supplier for goods and services.•The criteria for selection of suppliers should be defined in terms of

–Quality–Location–Delivery reliability–Financial stability of suppliers–Any other factors specific to the company objectives


–Buying•Buying will depend upon the types of parts or services being bought.•Buying production parts for stable production system will be done from a list indicating the parts required and where they can be obtained.•More specialist buying will require more detailed knowledge about actual goods and an understanding of the commercial implications of any contracts agreed.•Stock of frequently used items is held in stores. For these items new stock is purchased when a specified reorder is reached. •The quantity of new parts will also be specified. (example of ssl). This will be reorder quantity and will be calculated taking into account purchase price, discounts and stockholding costs.


–Buying•Call off schedule

–In this type of buying one order is placed and it covers all the parts that will be required for a specific period although they all may not be needed at the same time. The company then calls off the parts at the time when they need them. In this way the administration is reduced. There is no need to hold the stock of one large order.

•Lead time–It is time required to get the goods into the stores and available for manufacture after placing the order. it is a vital aspect and purchasing for manufacturing should be able to predict it.

•Buyers should have good communication with manufacturing so that they can act quickly in cases of urgency or any difficulties in supply.•Progress chasing

–It is following up of an order to ensure that goods are going to be delivered on time and in right quantity. A chaser is employed for this job.


–Stock control•It concerns the procurement, safe storage and release of materials. •A data base for materials used in an organization should be maintained. •Data base should include operation of store or ware house used for receiving, holding and release of goods.

Operations•It is the central business activity of the company. In a manufacturing company operations are the activities that transform raw materials into finished goods.•Majority of the engineering companies are involved in manufacturing even the designers should also be aware of manufacturing processes. •Management activities in the operations area.

–Management of people•In a manufacturing company majority of the workforce will be directly employed with in the operations function.•There are people from many different back grounds with in the same department.•Whatever is the no of people involved and whatever is their skill level and position in the company, they all have to be managed in a way so as to ensures that objectives of the operations function are met.

Operations•Management activities in the operations area.

–Management of people•The factors affecting managing the operations workforce are

–No of people in the operation function–How work force is organized–Level of automation in operation area–Personnel policy of the company–The activities in managing personnel of operations function are

»Personnel management»Man power planning»Training


–Management of people•Manpower planning has direct effect on output.•Skill level of available peoples and company's output targets should be compared to match the available capacity to the requirements.•If a worker can produce 2 units of output per hour than considering how many hours that worker is available, available capacity can be calculated. When it is done for whole workforce it will be possible to calculate any difference between what is available and what is needed.•Decision about recruitment, redundancy, working hours, shift work, overtime, planning for sickness, holidays and training can be taken.


–Management of people•Training is an important activity in manufacturing environment because of variety of skills and the fact that people have to be trained in new technologies.•Decisions regarding training requirements will be taken after employees appraisal interviews (assessing employees work performance) and manpower planning.•Training can be conducted on or off site•Effects of the training are on out put, more experienced people can be employed to provide on the job training to less experienced people.


–Management of machines and processes•Manufacturing requires many different machines and processes, many aspects of machine management have to be considered.

–Type of production–Level of automation–Complexity of processes–The processes used will depend upon

»Products being made»the design»No of products being produced»Available skill


–Management of machines and processes–The management activities relating to processes are

»Making decisions about types of production»Which processes are used»Monitoring and control of processes.

–Monitoring and controlling processes are important. Standard of workmanship and product specification should be set.–Many monitoring techniques have been developed, statistical process control is an example of such techniques. All such techniques are aimed to inform impending difficulties before the process has drifted out of specification.


–Management of machines and processes–Selection of equipment in management of machines is an important activity.–The factors in selection are

»Processes used in the company»Desired capacity of the company»Return the company will expect from purchase of any machine»Plans for expansion and technological changes that will affect the company's processes


–Production planning and control–It involves planning of people, machines and materials in order to ensure that output targets are met.–The factors are

»Lead time for manufacturing and purchasing»Production system used and its level of complexity»Size of the operations function»Objective set for operation area.

–Activities in production planning vary from long term forecasting to daily shop floor scheduling –The data needed for production planning

»Operational including stock data»Product information

–Main management activity is collection, monitoring and control of production data.

Operations•Organization of manufacturing

–Manufacturing takes raw material, parts and components and transform them into finished products.–This involves some processes from simple machining to complex assembly and test procedures.–Manufacturing activity reflects size of organization and diversity of products and processes.

Marketing and sales•Business sustains only if the company produces what customer wants to buy. Funds from external sources such as banks etc can only be drawn if they know that how the company will develop over the next few years.•Some companies deals with sales and marketing by one department and others deal them separately.•It has now been made part of product development function to overcome the communication problem. The engineers involved in product development function also carry out marketing.• Irrespective of Marketing method employed, market intelligence must be provided to company to meet its strategic goals.

Marketing and sales•Market research

–An activity undertaken by the organization with the purpose of gaining information about potential customers. There are four key elements.

•Analysis of current activities–It means monitoring current sales, trends in sales and so will give a picture who is buying what and where.

•Market intelligence–It involves what is happening in the market, analyzing new developments particularly what the competition are planning.

Marketing and sales•Market research

–There are four key elements•Market analysis

–Consumers reaction to new pricing policies and new advertisement campaign.–Assessment of the market potential of new products by contacting and gathering information from customers and potential customers.

•Product evaluation–After launch of the product, its evaluation is done to determine the effectiveness of the strategies adopted and to make any changes for the future.

Marketing and sales•Customers and markets

•All wealth and support for business comes from the customers. Some businesses have only one type of customer. E.g. a medical instrument company may supply to health services but a metal forming company may supply simultaneously to customers in food industry and car industry. There are many types of customers•End users

–They are the one who purchase a product and actually use it for its intended purpose. Every product is intended for an end user through distributors, who sell them to smaller retail outlets or a manufacturer of a product. (example chip manufacturer) –Selling direct to end user has an advantage to directly develop contacts with customers.


•OEM (original equipment manufacturer)–OEM purchases products from organization and incorporate them into product of their own which are then sold to end user or even to another OEM. (use of magnetron in microwaves) the company selling magnetron have several OEM customers/market–Such customers are very much desirable since they represent continues business for the organization. OEM contracts run for several years. organizations should have several OEM customers in order to overcome the danger of taking over the supply by the customer in order to reduce price.

•Retail customers–It means selling directly to individual customer. Retail is described as final point of sale of product that requires extensive distribution. Manufacturer supplies to the distributors who sell it to the retailer and he then sells it individually at a higher retailed price than that he bought from distributor.


•Displaced customer–They are the customers who have been separated from the person responsible for purchase. The product must meet the requirements of purchaser and actual customer. (example of scientific equipment needed by researcher and purchased by purchase committee, toys purchased by parents are used by the children and not by the parents)

•Segmentation–It is a process of dividing large number of customers into smaller groups each having its own distinct characteristics. –Car manufacturer may sub divide into smaller groups of customers of hatch back, saloon, sports or luxury cars. There are various range of engine sizes, accessories, instruments and colors etc. –The enormous range is offered to get greater number of customers.


•Segmentation–The segmentation of the customer groups becomes one off manufacturing. Heavy cost is involved in making a new model so it is very expensive. However so many choices are made available so that every user consider the model specifically tailored for him.

•Market refreshment–After segmentation of customers base and organizations have sold their products extensively, the demand status falls because all customers have best product to meet their needs–The organization stimulates customers base to offer something new. Market refreshment is the process through which this is achieved.–The customer buy a product not because of an absolute need for a given level of performances but because a relative need for performance.


•Market refreshment–The customer buy a product not because of an absolute need for a given level of performances but because a relative need for performance.

»Camera with easy operating features but not of 40s»computer advancements»Power to weight ratio of jet engine required by fighter jet

–Paint can not be refreshed every time it is changed when deteriorated.

Marketing and sales•Sales

–Selling means that buyers are found for the products that are available. Sales should ensure that customers needs are translated into production targets and to provide data for marketing and product development.–Following activities are carried out in sales department.

•Selling–Following type of selling may be used

»Selling by catalogue. Market products are sold to customers off the shelf. specifications for the product, price and delivery lead time will be known. Sales person should only have a superficial knowledge of the product but he should have good sales skills.


–Following activities are carried out in sales department.


»Selling by tender or quotation. This method is used when very specialist product/service is sold or when capital equipment purchases are made. Sales manager should have extensive knowledge of product. Following procedure will be adopted.»Purchaser sends out tender/quotation request to suppliers»A bid is prepared and is sent for evaluation to supplier. Supplier include full specifications of what ey can supply and in addition it includes all contractual terms for example cost, delivery, after sales service and warranty arrangements.




»Selling by tender or quotation. »It is sent to customer for valuation and if accepted a legal contract is made.

•Providing customer contact–Sales department provides first line contact to customers to answer the queries and problems resolved. It has an advantage of building relationship with the company and that other peoples in the company are not affected who are also not in a position to pay attention to customer.



•Translating customer requirements into production orders–Sales procedure should ensure that customers order be met in a way that they receive what they want. If the product is not available in stock, and is to be manufactured to order then customer's requirement should be fully understood. A production order form be filled and keying requirement be mentioned in it.

Finance•Finance function is concerned with bringing money into the company, how it is used and paying it out. Finance function should ensure effective control of these activities to meet the corporate goals.

–Organization of finance department.•A large organization has a director and finance function will be operated through a finance department. In small companies the owner/executive director will have this responsibility and he may use the services of an external advisor.•The department will employ accountant, ledger clerk, pay roll clerk . and others like some one dealing with taxation. It can also perform purchasing function. The size of the department will depend upon the size of the company.•Finance personnel have no other responsibilities, they are responsible for setting and monitoring financial policies such as defining spending limits and procedures for expenditures. They will also deal with external organizations such as revenue and banks etc.

Finance–Activities of finance department

•Bringing money into company.–Finance department is responsible for capital planning. Directors are asked to provide their requirements to execute their plans. Funding is managed by finance department. It involves taking loans, using reserves or increasing shareholding.

•Using money–To ensure that money is being used effectively cost of product should known so as to set sales price. Cash flow requirements should also be known. Finance department determines this info on the basis of data provided by operation department. The analysis of the product cost gives info about profit margin and then budgets are made.–Cash flow forecasting is an important task. It defines what company wants to achieve over a period of time and then shat would be required in terms of cash to be paid out. For example if a product takes three months to complete and gives require d profit, in between this period, material has to be procured and staff has to be paid. The finance function will strike a balance between making and receiving money

Product development•When the design of a product is undergoing improvements it is known as product development. The aim of this process is to produce products that customer will continue to buy.

–Activities of product development function•Identifying customers need•Product design specifications•Technical design•Preparing documentation•Product implementation

–Organization of product development function•Making structure. Meeting customer's requirement through marketing.•Design structure. Meeting customer's requirement through product designer.

Research•Research describes enquiry into fundamental workings of nature and is very intellectual process•Commercial engineering it describes extending the technologies of the organization. This may involve fundamental research as microprocessor manufacturer constantly research the fundamental operation of the miniature circuit. Commercial research means bringing established technologies into an organization.•Research function must managed like all other functions of the company. It is very expensive part time if not managed properly.•Communication issues are very important because researchers have to sell their ideas to others in the company.•The issues involved in successful management of research are how much profit it should consume, how radical be the organization new product and how links b/w research and customers made.•People in research are more technical and innovative in nature. They are more qualified and specialists than in other areas. Due to nature of the work the organization in research is less formal and relaxed.

Quality•ISO 8402 quality vocabulary defines quality

–“the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs”

•Quality should not be confused with expense. High quality does not mean high cost. A cheap pen that does it job for which made still be of high quality.•Quality goods are provided using two approaches

–Detecting defects using inspection and quality control to prevent defective product from being sold.–Preventing defect using quality assurance and Total Quality Management.

•Quality system. ISO 8402 defines–“the organizational structure, responsibilities, procedures, processes and resources for implementing quality management”

Quality•Quality system. ISO 8402 defines

–“the organizational structure, responsibilities, procedures, processes and resources for implementing quality management”–All good companies have some form of quality system to ensure implementation, use and monitoring of quality policy of their company.–Many follows ISO 9000 quality system. TQM is an extension of this standard. The philosophy of TQM is that quality should pervade al aspects of the business of the company and standard is limited to certain section of the business. In TQM there is emphasis on philosophy of employees and customer involvement .–The aim of the quality system is to provide systematic approach to design and manufacture in order to prevent failure and to provide objective, documented evidence that an agreed quality level has been achieved.–If quality standards of ISO 9000 are achieved it can be certified by an independent third party approved by UKAS (UK Accreditation service). Certification means that company can address new markets and increase sales.

functions of org

Documents