Chapter 1 - Introduction

Dr. C. M. Chang

Only to be used by instructors who adopt the text:

C. M. Chang, “Engineering Management: Challenges in the
New Millennium,” Pearson Prentice Hall (2005)
Copyright © 2005 by Dr. Carl Chang
Course Objectives
• Review the engineering
management functions of
planning, organizing, leading
and controlling, introduce
business fundamentals of cost
accounting, financial
accounting, financial
management and marketing
management, and prepare
engineers to become effective
leaders in meeting the
challenges in the new
millennium
2
 Major Premises
• Technology and business savvy represents a
very powerful combination of great demand in
society
• Market environment is rapidly evolving
(changing marketplace complexities, web-
based technologies, globalization)
• Leaders with understanding of technology and
management perspectives are needed
• Engineers with proper management and
leadership training have great opportunities to
add value in the new century
3
 Focal Points
• Make engineers more effective as technical
contributors (understand managerial points
of view, effect teams coordination, drive to
add value)
• Ready engineers for managerial positions
(managerial functions, success factors,
leadership talents, business/management
perspectives, expectations, contributions
4
 Course Materials
• Required Text – “Engineering Management:
Challenges in the New Millennium,”
Prentice Hall (2005)
• Harvard Business School Case Materials

5
Grading Policy
• Case Studies
(Summary write-ups) -
25 Points
• Individual Term
Paper - 35 Points
• Final Exam - 40
Points

6
 Schedule – Fall 2004
• Introduction
• Planning
• Organizing
• Leading
• Controlling
• Case Studies (Variable dates)
• Engineers as Managers/Leaders
• Management in the New Millennium
• Final Exam

7
 Schedule – Spring 2005
• Cost Accounting
• Financial Accounting and Analysis
• Financial Management
• Marketing Management
• Case studies and Q/A
• Web-based Engineering Management Tools
• Globalization
• Final Exam
8
 Class Policy
• Attend all classes
• Read the chapters beforehand, as the
instructor will call upon students to discuss
specific topics from time to time.
• Participate in class discussions (weekly
lectures and HBS cases); Ask questions (in
class or by emails); Arrange face-to-face
meetings
• Complete all assignments (term papers and
exams) independently 9
 Case Studies
• Read HBS case materials and follow
guidelines (to be specified for each case)
• Prepare responses considering all
management issues relevant to the case - as
an external management consultant
• Actively participate in class discussion
• Summarize lessons learned and submit short
write-up when due
10
 Individual Term Papers
• Each student writes his/her own paper separately
• Pick a topic agreeable to instructor
• Conduct search (Internet, library) to define “Best
Practices,” list relevant practitioners in industry,
and discuss resulting impact/benefits
• Review results and define improvements
potentially possible due to technology change and
business process innovation
• Summarize findings, submit report by due date.
11
 Topic Selection Sheet
• Review suggested list of topics
• Select two (2), rank-ordered by (A) and (B)
Return sheet to instructor by due date or
sooner (by email)
• Suggestions of new topics are encouraged
• Instructor to assign one topic by email
• Faster respondents likely to get more time
to work on topic
12
Final Exam
• Open-book and take-
home HBS case
• Define problems and
select the best solution
among alternatives
• Discuss solution
implementation and risk
management
• Submit exam on time
13
Skills for Managers/Leaders

Administrative
Leadership Skills
Skills

Technical Skills

14
 Value Addition
• Increase Sales Revenue (new and
enhanced products/services - faster, better,
cheaper - to create greater customer
satisfaction)
• Reduced Cost to Do Business (simplified
product design, new technologies, improved
productivity, raised efficiency, reduced
inventory via supply chains, new production
and marketing partnerships and alliances)
15
 Value Mantra
• As a Mantra, engineers and managers alike
must focus on Work Which Adds Value
(large/small, direct/indirect, short/long-turn,
and certain/uncertain)

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 Value to Stakeholders
• Customers (Product quality,
service)
• Shareholders (ROI, EPS)
• Suppliers (Market position,
financial stability,
collaboration)
• Employees (Workplace,
compensation, stability)
• Community (Corporate
citizenship, brand image,
tax contribution)
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 Selected Definitions
• Efficiency - Accomplishing tasks with the
least amount of resources (time, money,
equipment/facilities, technology - know-
how, procedure, process, skills) - do things
right
• Effectiveness - Accomplishing tasks with
efforts commensurate with the value
created by these tasks - do the right things
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 Selected Definitions
• Strategic Decisions - Setting direction by
specifying what are right things to do, high
level engineering managers participate in
making strategic decisions
• Operational (Tactical) Decisions -
Engineers participate in defining how to do
things right (e.g., methods or procedures to
carry out a specific task/project efficiently)
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Four Dimensional Work

Work with boss

Peers, Engineering With self

Staff people Manager (Manage own time)

Work with
subordinates

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 Work of an Engineer
As Technical Contributor
• Understand objectives of tasks specified
• Develop action plan for implementation
• Define standards (performance metrics)
• Select methodology/techniques
• Implement task with proper efforts
• Generate results and secure value
• Report findings (impact, lessons)
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 Tips for Engineers
• Demonstrate Technical Competence & Innovative
capabilities
• Brush Up Communications skills (ask, listen, write
and talk)
• Show unfailing reliability to induce trust and
confidence
• Be Proactive in seeking challenging tasks
• Exhibit readiness for assuming larger responsibilities
(take courses, practice skills, gain experience)
22
 Typical Engineering Activities
• Design/development of products/processes
• Project engineering/management
• Value engineering and analysis
• Technology development and applied R&D
(laboratory, field)
• Production/manufacturing and construction
• Customer service
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Engineering Management
Functions

24
 Engineering Management
Functions
• Planning (forecasting, setting objectives, action
planning, administering policies, establishing
procedure)
• Organizing (selecting organizational structure,
delegating, establishing working relationship)
• Leading (deciding, communicating, motivating,
selecting/developing people)
• Controlling (setting performance standards,
evaluating/documenting/correcting performance)
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 Changing Work Content

First Line Supervisor Mid Manager Executive

Technical 70% 30% 5%

Managerial 25% 40% 25%
Visionary 5% 30% 70%

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 Learnable Skills
• Time management and work Habits
• Interpersonal skills to get along with people
• Team building, communications and
motivation skills
• Decision support tools (what-if analysis,
risk analysis, kepner-Tregoe decision tool,
problem solving, root cause analysis,
decision tree, optimization, etc.)
27
 Talents to Be Nurtured
Over Time
• Vision - Strategic thinking capabilities to set
direction or initiate new projects through
technological insight and intuition (lateral
thinking)
• Net-Working - Building a wide base of
business/professional connections
• Drive to Excel (competitive, proactive,
energetic, persistent)
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Interactions Between Groups

Customers

Marketing Sales/Service Warehouse

Design/Product Manufacturing Procurement

Engineering

Suppliers

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 Challenges In the New
Millennium
• Marketplace changes rapidly (Web-based
technologies, globalization, customer demand,
business networks) affecting how progressive
companies will be organized
• Engineering managers to lead by supervising
complex teams, innovating with vision for the
future, designing global products, and
organizing supply chains, apply global
resources to derive economies of scale and
scope. 30
Challenges In the New
Millennium
Inside Outside

Present Future

Local Global
31
 Challenges
• Inside - implement projects/programs;
manage people, technologies, and resources
to add value; develop new product features
to enhance company competitiveness;
define, control and reduce costs to improve
profitability; initiate technology projects to
sustain company position

32
 Challenges
• Outside - keep abreast of emerging
technologies and apply them to strengthen
company’s core competencies; apply web-
based tools to enhance operations and foster
customer relations; identify best practices to
improve engineering operations and surpass
them; create supply chain networks to
derive speed, quality and cost benefits
33
 Challenges
• Present - Do things right to keep company
operating smoothly; use Balanced
Scorecard to monitor non-financial and
financial performance; control costs and
eliminate wastes to attain profitability in the
short-run

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 Challenges
• Future - seek e-transformation opportunities
to create company profitability in the long-
run; introduce new generation products
timely; create vision for the future related to
technologies; Define what should be done for
technology-based success in the future

35
 Challenges
• Local - Utilize resources to best achieve
company’s objectives; take ethical and
lawful actions while taking into account
local conditions; maintain and nurture local
professional networks; share lessons gained
with people at other company sites

36
 Challenges
• Global - Apply location-based resources to
realize global economies of scale and scope
for achieving cost and technology
advantages; develop global professional
networks; acquire a global mindset; exercise
leadership roles in international settings

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 Assignments
• Read text - historical development of
engineering management
• Seek opportunities to practice EM skills
constantly - student societies, churches,
United Ways, other non-profit groups

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 Literature References
• Fraidoon Mazda, “Engineering Management,” Addison
Wesley (1997)
• Daniel L. Babcock, “Managing Engineering and
Technology,” Second Edition, Prentice Hall (1996)
• M. W. Cardullo, “Introduction to Managing Technology,”
John Wiley (1996)
• F. Lawrence Bennett, “The Management of Engineering,”
John Wiley (1996).
• H. J. Thamhain, “Engineering Management,” John Wiley
(1992)
39
 Literature References
• W. D. Compton, “Engineering Management: Creating and
Managing World-Class Organizations,” Prentice Hall (1997).
• Hamid Noori, “Managing the Dynamics of New Technology,”
Prentice Hall (1990)
• M. Badawy, “Developing Managerial skills in Engineers and
Scientists,” Second Edition, Van Nostrand Reinhold (1995)
• H. Uyterhoeven, “General Managers in the Middle,” Harvard
Business Review (Sept-Oct. 1989)
• S. R. Covey, “The Seven Habits of Highly Effective People,”
Simon and Schuster (1994)
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 Question #1.1
• Tom Taylor, the Sales Manager, was told by
his boss, Carl Bauer, to take an order from a
new customer for a batch of products. Tom
knew that the products involved would only
partially meet the customer’s requirements
and that Carl knew that. But, Carl insisted
that the order was too valuable to lose.
What should Tom do?
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 Question #1.2
• Nancy Bush, the plant manager, needs to decide
whether to make or buy a component for the
company’s core product. She would like the
advice of her production supervisors, since they
must implement his eventual decisions. However,
she fears that the supervisors will be biased
towards making the component in house, as they
tend to favor retaining more work for their people.
What should Nancy Bush do?
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 Question #1.3
• Student A works hard to finish her Masters degree
by the due date of January 8, in order to graduate on
February 4. She plans to fly back to her own
country immediately thereafter. If she graduates on
June 10, the next available graduation date, she will
need to pay tuition for one more semester. Her
advisor Professor B cannot accept the work as
presented, because the results of a major marketing
activity designed by Students A will become
available only after January 20, not before January
8. How can this problem be solved?
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 Question #1.4
• The engineering Manager proposes to install an
automated bar code scanner costing $4,000. He
estimates that he can save about 100 hours of
labor time per month because of its speed. He
further reasons that at the wage rate of $15/hour,
the benefit of using the scanner is $1,500/month
and the scanner can be paid back in 2.67 months.
• As the president of the company, do you agree or
disagree with the way he computes the
cost/benefit ratio? Why and why not?
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