duction schedules determined, and reports rendered by electronic computers —but these mammoth morons cannot be effective without planning by people. Cost Reduction In cost reduction emphasis is on production in general and on savings in direct labor specifically. Efforts in reducing direct labor costs should continue, but this is only a small area in which costs can be reduced. There are just as many, and perhaps more, opportunities for savings in the other areas of a business. One of the first things to do in cost reduction is to break down the large classifications of costs into understandable units. A division of costs could look like this: 1.
2.
3.
Production costs a. Equipment and maintenance b. Raw material usage c. Conversion—direct labor, including first-line supervision d. Conversion—indirect labor e. Supplies Administrative expenses a. Office salaries b. Office supplies c. Insurance d. Telephone, etc. Selling expenses a. Warehousing b. Inventory c. Transportation d. Salaries and traveling e. Advertising
This is a very rough breakdown, not meant to be complete. Each subdivision can be broken down further, but there is a practical limit in analysis of costs. For instance, "total raw material costs" means nothing by itself. When compared to last year's, last month's, and "standard," it has some meaning. By breaking down this total into each raw material, something to work with results. "Standard costs" are being used extensively in cost reduction programs. They can be applied to practically any operation. They give meaning to an analysis. Unfortunately, such specific "standards" are found primarily in production; are part of the product cost sheet. Cost sheet data are in detail, except for that all-inclusive factor "overhead." Almost all companies have product cost sheets; few have formal cost-reduction programs for offices (overhead) and sales activities. Yet there are many savings to be made in these areas. Competent analysis of office costs will almost always reveal unnecessary duties, unbalanced work loads resulting in idle time for some, overtime for others; poor layout of office equipment; inadequate instructions, or methods; and practically no "standard" costs to be used in a cost-reduction program. The sales field is almost devoid of cost36 A
reduction techniques. Perhaps "immune" might be a better word. Fortunately, a few companies are starting cost-reduction programs in the sales field and there will be more. Only in the area of inventory control and distribution, which is related to the sales activity, is effort being spent—but this is generally done by someone outside the sales staff. The " h o w " of doing things seems to evade some people. Not all have a systematic approach to problem solving— and there are many problems in management of inventories and costs. A helpful device is one asking six questions: 1. What is the problem? What is to be corrected? State it clearly. 2. What caused the problem—don't guess—what are the facts?
3. What program will be followed to correct problem? Decide what to do. Write out plan. Get it approved. 4. Who will do the job? 5. When will it be done? 6. Was the plan effective? The management of inventories and costs is a dynamic undertaking. This function in plant operation is like all others—it cannot be separated from people. Elaborate analyses are no good unless someone takes action on them. It seems to me that we in management might spend more time on human motivation, human productivity, and human cooperation if we are to be successful in the management of a business, yes, even in the management of inventories and costs. We must recognize the importance of the personal equation in cost-reduction programs.
TECHNICAL IM IN PRODUCTI F. J. HOLZAPFEL
Monsanto Chemical Co., St. Louis, Mo.
A S A plant grows, various plant functions are organized as separate entities. Each staff department often has a strong line organization under the supervision of an engineer or chemist. However, the line production organization usually retains the function of making technical improvements until a relative late stage in evolution of the plant. This stage often is characterized by a multiplicity of "technical assistants" or "assistants to," as well as a large number of steps in the line organization that begins with the production foreman and ends with the plant manager. Such an organization can be made to work well. However, all the production superintendents must be equally proficient in a wide variety of fields—production planning, employee handling and work force control, cost control, training of young engineers. It is difficult for the plant manager to coordinate technical effort scattered throughout his organization. A few of Monsanto's larger plants are using a modification of the plant organization, which has been very successful. Under this plan the number of levels in the line production organization is reduced, and the individual staff assistants are eliminated. At the same time a plant technical services department is created. The production organizations concentrate on process control, cost control, work-force training and control, and housekeeping. In the fields of safety, maintenance, personnel relations, warehousing and shipping, and technical improvements they are served by and share the responsibility
INDUSTRIAL AND ENGINEERING CHEMISTRY
with the plant staff groups. The technical services department is led by a man who has had production experience and reports directly to the plant manager. Typically, the department would include both experienced men and new employees—chemical engineers who have served in production, mechanical engineers who have supervised maintenance activities, an instrument engineer, a corrosion specialist, a few draftsmen. Activities of this department include: Development of new technically trained employees Process investigations Preparation of design data, estimates, project appropriation requests, equipment specifications, drawings, and sketches Economic evaluations Investigation of problems involving safety, health protection, and better housekeeping Demonstration (initial operation) of process modifications Production supervision relief assignments Liaison assignments with divisional and company staff departments, such as research, engineering, and sales Procedural and mechanical standards Miscellaneous assignments such as air-pollution abatement, sewage and sanitation control, and guide service for plant tours Among the questions for which a plant manager must have answers are : How can technical efforts be coordinated with those of production team? How shall projects be chosen? How shall short- and long-range efforts be balanced?
How can technical viewed and assayed?
efforts
be re-
Although it is easier to obtain answers to these questions if most of the work requiring technical effort is done by a single group, such grouping alone is not enough. We have found a formal job system desirable. Any member of the production organization and any member of the technical services department can initiate a request for work by the technical services department. The service request must include a statement of the problem and objective, estimated savings or other benefits, suggested approach and references, a preliminary evaluation of man-power requirements, and an estimate of the investment required. Where the service request originates outside of the technical services department, some member of that department will work with the originator of the idea on request to develop the necessary data. Thus the man who has an idea is less likely to be discouraged by the prospect of having to do the paper work necessary for control. Each service request is assigned a job number and is then forwarded for approval to a level which varies according to the estimate of the time required to complete the job requested. Copies of the service request are supplied to the production personnel and other interested parties. It is the responsibility of the technical service superintendent to see that the most profitable jobs are given priority. This is often a thankless task, as there is always a large backlog of service requests which are inactive because of insufficient personnel. It is here that an effective communications system becomes important, as it permits production and maintenance personnel to have a voice in assignment of priorities and to participate in guiding the work. Adequate communication and control are achieved through the issuance of progress reports, weekly job summaries, a monthly department report, and a monthly planning meeting with the plant manager and the heads of production and maintenance groups. At the end of each week each member of the technical services department prepares a brief penciled job summary for each job on which he worked during the week or on which he plans to work during the coming week. These summaries are used to inform interested parties of the progress on each job. Weekly job assignment schedules are prepared by the supervisory staff of the technical service department and are available to production supervision for review. At monthly intervals the work of the department is summarized in a report containing sufficient information about each job to identify it (descriptive title, justification, possible appropria-
tion, completion dates, etc.) and a brief paragraph which describes the work completed to date or planned. All jobs are listed—both active and inactive—so that this report may be used during a monthly planning meeting at which the plant manager and his staff may review the more important projects and re-establish priorities as needed. The work of the department is reported in detail in the form of progress reports en the individual jobs. These are issued for any given job, whenever there is something significant to report. Design data, evaluation, and results of a process investigation are examples of the types of information reported. Copies of these progress reports, as well as copies of the monthly department summary, are sent to the divisional research and engineering departments, as well as to the interested parties at the plant level, in order to keep the divisional staff groups informed as to the plant's technical problems. Where a problem is beyond the scope of the plant organization, it is referred to the appropriate divisional or company staff group. In order to improve the efficiency of such a department, it is desirable to prepare detailed written procedures for many of the activities of the department. These include the transmittal of design information to the maintenance and construction group and the preparation of capital additions budget work sheets.
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appropriation forecasts, production cost estimates, equipment and installation cost estimates, and requests for appropriations. Check lists are included for the indoctrination of new personnel. At first thought this may seem like regimentation. Instead, we are trying to organize the routine details in such a way as to give the men more time to display initiative and creative thinking in solving the technical problems. These formal procedures are invaluable in the training of new personnel. In addition, they provide a continuity and a consistency which might not otherwise exist because of the rapid turnover of personnel in this group. Young engineers are assigned to the technical services department for training and seasoning before transfer to other activities, and a steady procession of old hands moves back into this group. In general, we have found it desirable to avoid much specialization. Especially in the case of new men, we would like to have them acquire ability in a variety of fields. Moreover, most plant problems are of such a size or complexity that the gains resulting from the use of specialists would be nullified by the time lost in transferring the project from each specialized group to the next. We feel that specialization is the province of the high-powered divisional or company engineering group working on the big problems.
©raaïï ERNEST T. LINDSEY Celanese C o r p . o f America, Bishop, Tex.
As A technical man advances into broader management duties, he must assume several new responsibilities; one of the most important is safety of operations. The chemical industry by its very nature is potentially hazardous, but chemicals, which are included in manufacturing, can boast of a better record than the average for all manufacturing. The primary objective of safe operations is preservation of human life; the second is conservation of material resources. But no safety movement will be successful unless managers set the pace and keep the lead, unless the managers have a proper attitude toward safety and are willing to give sufficient time to develop a good over-all plant attitude toward safety. Managers must be safety-minded as well as productionminded. A safety program is based on three fundamental guards which must al-
ways be kept up—guards of standards, inspection, and training. Along with each new product or process come recommendations for reaction ratios, pressures, and temperatures, best suited types of equipment, and most desirable materials of construction. Those basic standards developed by research laboratories and pilot plants become guides for the design engineers and the men of production. Sound engineering in the design of equipment to be installed in our plants is the first step toward safe plant operation. The designer must take these research recommendations on operating pressures, temperatures, metals, equipment, and flows, and apply his standards. His standards for safe design and construction have come from engineering laboratories and field experiences. Standards are available for all phases of design and construction. Foundations for new construction are based on VOL. 48, NO. 11
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NOVEMBER 1956
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