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,
• 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
 Skills for Managers/Leaders

Administrative
Leadership Skills
Skills

Technical Skills

5
 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)

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)

6
 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)

7
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

• 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)

8
 Four Dimensional Work

Work with boss

Peers, Engineering With self

Staff people Manager (Manage own time)

Work with
subordinates

9
 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)

10
 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)

11
 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

12
Engineering Management Functions

13
 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)

14
 Changing Work Content

First Line Supervisor Mid Manager Executive

Technical 70% 30% 5%

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

15
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.)

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)
16
 Interactions Between Groups

Customers

Marketing Sales/Service Warehouse

Design/Product Manufacturing Procurement

Engineering

Suppliers

17
 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.

18
Challenges In the New Millennium

Inside Outside

Present Future

Local Global

19
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

• 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

• 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 20
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

• 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

• 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

21
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)

22
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)

23
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?

24
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?

25
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?

26
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?

27