History and Background

Jeff Pankoff, a registered professional engineer, came to work for National Corporation after receiving a mechanical engineering degree. After he arrived at National, he was assigned to the engineering department. Soon thereafter, Jeff realized that he needed to know more about statistics, and he enrolled in the graduate school of a local university. When he was near completion of his master of science degree, National transferred Jeff to one of its subsidiaries in Ireland to set up an engineering department. After a successful three years, Jeff returned to National's home office and was promoted to chief engineer. Jeff's department increased to eighty engineers and technicians. Spending a considerable time in administration, Jeff decided an MBA would be useful, so he enrolled in a program at a nearby university. At the time when this project began, Jeff was near the end of the mBa program.

National Corporation, a large international corporation with annual sales of about $600 million, employs 8,000 people worldwide and is a specialty machine, component, and tool producer catering to automotive and aircraft manufacturers. The company is over a hundred years old and has a successful and profitable record.

National is organized in divisions according to machine, component, and tool production facilities. Each division is operated as a profit center (see Exhibit 2-1). Jeff was assigned to the Tool Division.

National's Tool Division produces a broad line of regular tools as well as specials. Specials amounted to only about 10 percent of the regular business, but over the last five years had increased from 5 percent to the current 10 percent. Only specials that were similar to the regular tools were accepted as orders.

National sells all its products through about 3,000 industrial distributors located throughout the United States. In addition, National employs 200 sales representatives who work with the various distributors to provide product seminars.

The traditional approach to project assignments is used. The engineering department, headed by Jeff, is basically responsible for the purchase of capital equipment and the selection of production methods used in the manufacture of the product. Project assignments to evaluate and purchase a new machine tool or to determine the production routing for a new product are assigned to the engineering department. Jeff assigns the project to the appropriate section, and, under the direction of a project engineer, the project is completed.

The project engineer works with all the departments reporting to the vice president, including production, personnel, plant engineering, product design (the project engineer's link to sales), and time study. As an example of the working relationship, the project engineer selects the location of the new machine and devises instructions

Exhibit 2-1. The Tool Division of National Corporation

Exhibit 2-1. The Tool Division of National Corporation

for its operation with production. With personnel the engineer establishes the job descriptions for the new jobs as well as for the selection of people to work on the new machine. The project engineer works with plant engineering on the moving of the machine to the proper location and instructs plant engineering on the installation and services required (air, water, electricity, gas, etc.). It is very important that the project engineer work very closely with the product design department, which develops the design of the product to be sold. Many times the product designed is too ambitious an undertaking or cannot be economically produced. Interaction between departments is essential in working out such problems.

After the new machine is installed, an operator is selected and the machine is ready for production. Time study, with the project engineer's help, then establishes the incentive system for the job.

Often a customer requests certain tolerances that cannot be adhered to by manufacturing. In such a case, the project engineer contacts the product design department, which contacts the sales department, which in turn contacts the customer. The communication process is then reversed, and the project engineer gets an answer. Based on the number of questions, the total process may take four to five weeks.

As the company is set up, the engineering department has no authority over time study, production, product design, or other areas. The only way that the project engineer can get these departments to make commitments is through persuasion or through the chief engineer, who could go to the vice president of manufacturing and engineering. If the engineer is convincing, the vice president will dictate to the appropriate manager what must be done.

Salaries in all departments of the company are a closely guarded secret. Only the vice president, the appropriate department manager, and the individual know the exact salary. Don Wolinski, the vice president of manufacturing and engineering, pointed out that this approach was the "professional way" and an essential aspect of smooth business operations.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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