manufacture

(m n y -f k ch r) v. manufactured, manufacturing, manufactures v.tr. 1. a. To make or process (a raw material) into a finished product, especially by means of a large-scale industrial operation. b. To make or process (a product), especially with the use of industrial machines. 2. To create, produce, or turn out in a mechanical manner: "His books seem to have been manufactured rather than composed" (Dwight Macdonald). 3. To concoct or invent; fabricate: manufacture an excuse. v.intr. To make or process goods, especially in large quantities and by means of industrial machines. n. 1. a. The act, craft, or process of manufacturing products, especially on a large scale. b. An industry in which mechanical power and machinery are employed. 2. A product that is manufactured. 3. The making or producing of something.

[From French, manufacture, from Old French, from Medieval Latin *man fact ra : Latin man , ablative of manus, hand; see man-2 in Indo-European roots + Latin fact ra, working of a metal, from factus, past participle of facere, to make; see dh - in Indo-European roots.]

man ufac turable adj. man ufac tural adj. man ufac turing n.
The American Heritage Dictionary of the English Language, Fourth Edition copyright 2000 by Houghton Mifflin Company. Updated in 2009. Published by Houghton Mifflin Company. All rights reserved.

ThesaurusLegend:

Synonyms Related Words Antonyms Noun 1. manufacturing - the act of making something (a product) from raw materials; "the synthesis and fabrication of single crystals"; "an improvement in the manufacture of explosives"; "manufacturing is vital to Great Britain" manufacture, fabrication creating from raw materials - the act of creating something that is different from the materials that went into it formation, shaping - the act of fabricating something in a particular shape newspeak - deliberately ambiguous and contradictory language use to mislead and manipulate the public; "the welfare state brought its own newspeak" prefabrication - the manufacture of sections of a building at the factory so they can be easily and rapidly assembled at the building site
Based on W

Topics @ a Glance - Manufacturing Statistics Using Manufacturing Statistics Frequently Asked Questions What is Manufacturing?

Manufacturing is defined in the Macquarie Dictionary as the making of goods or wares by manual labour or by machinery, especially on a large scale. The activity of manufacturing includes any activity that fits the definition of manufacturing, irrespective of whether the activity relates to private individuals, organisations whose principal business is not manufacturing (e.g. retailers), or organisations whose principal business is manufacturing. Excluded are any activities undertaken by these persons and organisations that do not fit the definition of manufacturing (e.g. wholesaling or delivery activities of manufacturers). Another way of viewing manufacturing is

through an industry classification. The industrial classification used by the Australian Bureau of Statistics (ABS) is the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 edition ( cat. no. 1292.0) (see Classification used). The Manufacturing Division in the ANZSIC includes units mainly engaged in the physical or chemical transformation of materials, substances or components into new products (except agriculture and construction). The materials, substances or components transformed by units in this division are raw materials that are products of agriculture, forestry, fishing and mining, or products of other manufacturing units. Units in the Manufacturing Division are often described as plants, factories or mills and characteristically use power-driven machines and other materials-handling equipment. However, units that transform materials, substances or components into new products by hand, or in the unit's

home, are also included. Activities undertaken by units incidental to their manufacturing activity, such as selling directly to the consumer products manufactured on the same premises from which they are sold, such as bakeries and custom tailors, are also included in the division. The view excludes manufacturing activities undertaken by private individuals or organisations whose principal activity is not manufacturing. This is because an ANZSIC, or industry code, is allocated based on the predominant activity of an organisation. It is important to understand this difference between manufacturing activity and manufacturing industry as most of ABS statistics on manufacturing are based on an industry view. Manufacturing covers a myriad of inputs, processes and products. It embraces production of thousands of different types of goods. These range from ships to sugar

to sheep shearing equipment, and from micro circuits to motor vehicles to medicines. The number and complexity of the processes involved in the production of these goods varies. The extent of transformation involved in these processes form the basis of a view of manufacturing which differs from the standard industry, or ANZSIC, view. Some products are simple primary product manufactures such as flour, cheese, tanned hides and skins and pig iron. Some are simply transformed manufactures such as basic metal shapes (billets, coils, ingots), Portland cement, basic organic and inorganic chemicals (such as caustic soda). Others are moderately transformed manufactures such as wire rods, metal pipes and tubes, basic glass, soap and detergents, textile fabrics and tissue paper, while others are elaborately transformed manufactures such as prefabricated metal buildings, wire products, glassware, ceramic products, paints, medicines and perfumes.

The degree of mechanisation involved in the production process provides another view of manufacturing. Manufacturing in Australia covers a wide range of situations from highly mechanised production lines using robotics to simple mechanical activities such as soft drink bottling or concrete mixing through to production of fine jewellery by hand. manufacturing business definition
Using labor and capital to convert raw materials into finished or semifinished goods.
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importance

Manufacturing From Wikipedia, the free encyclopedia Jump to: navigation, search

Part of a series of articles on Industry

Manufacturing methods Batch production Job production Continuous production Improvement methods LM TPM QRM VDM TOC Six Sigma RCM Information & communication ISA-88 ISA-95 ERP SAP IEC 62264 B2MML Process control PLC DCS

Assembly of Section 41 of a Boeing 787 Dreamliner Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale. Such finished goods may be used for manufacturing other, more complex products, such as aircraft, household appliances or automobiles, or sold to wholesalers, who in turn sell them to retailers, who then sell them to end users the "consumers". Manufacturing takes turns under all types of economic systems. In a free market economy, manufacturing is usually directed toward the mass production of products for sale to consumers at a profit. In a collectivist economy, manufacturing is more frequently directed by the state to supply a centrally planned economy. In free market economies, manufacturing occurs under some degree of government regulation. Modern manufacturing includes all intermediate processes required for the production and integration of a product's components. Some industries, such as semiconductor and steel manufacturers use the term fabrication instead. The manufacturing sector is closely connected with engineering and industrial design. Examples of major manufacturers in North America include General Motors Corporation, General Electric, and Pfizer. Examples in Europe include Volkswagen Group, Siemens, and Michelin. Examples in Asia include Toyota, Samsung, and Bridgestone. Contents [hide] 1 History and development 1.1 Manufacturing systems: changes in methods of manufacturing 2 Economics of manufacturing 3 Manufacturing and investment 4 Manufacturing processes 5 Manufacturing categories 6 Theories 7 Control 8 See also 9 References 10 Sources 11 External links

[edit] History and development In its earliest form, manufacturing was usually carried out by a single skilled artisan with assistants. Training was by apprenticeship. In much of the pre-industrial world the guild system protected the privileges and trade secrets of urban artisans. Before the Industrial Revolution, most manufacturing occurred in rural areas, where household-based manufacturing served as a supplemental subsistence strategy to agriculture (and continues to do so in places). Entrepreneurs organized a number of manufacturing households into a single enterprise through the putting-out system. Toll manufacturing is an arrangement whereby a first firm with specialized equipment processes raw materials or semi-finished goods for a second firm. [edit] Manufacturing systems: changes in methods of manufacturing Craft or Guild system Putting-out system English system of manufacturing American system of manufacturing Soviet collectivism in manufacturing Mass production Just In Time manufacturing Lean manufacturing Flexible manufacturing Mass customization Agile manufacturing Rapid manufacturing Prefabrication Packaging and labeling Ownership Fabrication Publication [edit] Economics of manufacturing

According to some economists, manufacturing is a wealth-producing sector of an economy, whereas a service sector tends to be wealth-consuming.[1][2] Emerging technologies have provided some new growth in advanced manufacturing employment opportunities in the Manufacturing Belt in the United States. Manufacturing provides important material support for national infrastructure and for national defense. On the other hand, most manufacturing may involve significant social and environmental costs. The clean-up costs of hazardous waste, for example, may outweigh the benefits of a product that creates it. Hazardous materials may expose workers to health risks. Developed countries regulate manufacturing activity with labor laws and environmental laws. Across the globe, manufacturers can be subject to regulations and pollution taxes to offset the environmental costs of manufacturing activities. Labor Unions and craft guilds have played a historic role in the negotiation of worker rights and wages. Environment laws and labor protections that are available in developed nations may not be available in the third world. Tort law and product liability impose additional costs on manufacturing. Manufacturing may require huge amounts of fossil fuels. Automobile construction requires, on average, 20 barrels of oil.[3] [edit] Manufacturing and investment Surveys and analyses of trends and issues in manufacturing and investment around the world focus on such things as: the nature and sources of the considerable variations that occur cross-nationally in levels of manufacturing and wider industrial-economic growth; competitiveness; and attractiveness to foreign direct investors. In addition to general overviews, researchers have examined the features and factors affecting particular key aspects of manufacturing development. They have compared production and investment in a range of Western and non-Western countries and presented case studies of growth and performance in important individual industries and market-economic sectors.[4][5] On June 26, 2009, Jeff Immelt, the CEO of General Electric, called for the United States to increase its manufacturing base employment to 20% of the workforce, commenting that the U.S. has outsourced too much in some areas and can no longer rely on the financial sector and consumer spending to drive demand.[6] A total of 3.2 million one in six U.S. manufacturing jobs have disappeared between 2000 and 2007.[7] In the UK, EEF the manufacturers organisation has led calls for the UK economy to be rebalanced to rely less on financial services and has actively promoted the manufacturing agenda.

[edit] Manufacturing processes List of manufacturing processes Manufacturing Process Management [edit] Manufacturing categories Chemical industry Pharmaceutical Construction Electronics Semiconductor Engineering Manufacturing engineering Production engineering Process Engineering Industrial Engineering Biotechnology Emerging technologies Nanotechnology Synthetic biology, Bioengineering Energy industry Food and Beverage Agribusiness Brewing industry Food processing Industrial design Interchangeable parts Metalworking

Smith Machinist Machine tools Cutting tools (metalworking) Free machining Tool and die maker Global steel industry trends Steel production Metalcasting Plastics Telecommunications Textile manufacturing Clothing industry Sailmaker Tentmaking Pulp and paper industry Transportation Aerospace manufacturing Automotive industry Bus manufacturing Tire manufacturing Shipbuilding [edit] Theories Taylorism/Scientific management Fordism [edit] Control

Management List of management topics Total Quality Management Quality control Six Sigma [edit] See also Main article: Outline of manufacturing Howstuffismade [edit] References ^ Friedman, David (2006). "No Light at the End of the Tunnel". Los Angeles Times. New America Foundation. http://www.newamerica.net/publications/articles/2002/no_light_at_the_end_of_the_t unnel. Retrieved 2007-05-12. ^ Joseph, Keith (1976). "Monetarism Is Not Enough". Center for Policy Studies. Margaret Thatcher Foundation. http://www.margaretthatcher.org/commentary/displaydocument.asp? docid=110796. Retrieved 2007-05-12. ^ "World oil supplies are set to run out faster than expected, warn scientists". The Independent. June 14, 2007. ^ Manufacturing & Investment Around The World: An International Survey Of Factors Affecting Growth & Performance, ISR Publications/Google Books, revised second edition, 2002. ISBN 978-0-906321-25-6. ^ Research, Industrial Systems (2002-05-20). Manufacturing and Investment Around the World: An International Survey of Factors Affecting Growth and Performance. ISBN 9780906321256. http://books.google.co.uk/books? id=4H07TL4rvyYC&dq=isbn:0906321255. ^ Bailey, David and Soyoung Kim (June 26, 2009).GE's Immelt says U.S. economy needs industrial renewal.UK Guardian.. Retrieved on June 28, 2009. ^ "Factory jobs: 3 million lost since 2000". USATODAY.com. April 20, 2007. [edit] Sources Kalpakjian, Serope; Steven Schmid (August 2005). Manufacturing, Engineering & Technology. Prentice Hall. pp. 2236, 951988. ISBN 0-1314-8965-8.

[edit] External links

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importance of manufacturing industry

Although manufacturing now accounts for little over one fifth of total national output (GDP) and an even smaller share of total employment, many economists argue that the economic health of manufacturing has important implications for other industries. Manufacturing is not an island. If industrial production falls and thousands of jobs are shed, this has significant ripple effects through related service industries. The multiplier effects of a rise or fall in industrial production are important, not least for those regions of the UK whose traditional dependence on manufacturing industries remains well above the national average. Employment Effects Many service sector jobs depend on manufacturing there are close linkages between the sectors. Jobs lost in manufacturing cannot always be absorbed by increasing employment in the service industries. In May 1999, the journalist Will Hutton (author of The State We're In and The State to Come) wrote this about the problems facing manufacturing, and the significance for the regional economies of the UK

"A strong manufacturing sector is thus not a throwback but is fundamental to providing work in the West Midlands, West Yorkshire, the Welsh valleys and central Scotland, where the service sector can never thrive. It is based in the regional capitals, not in towns which are too small and too poor to sustain a strong service sector. Nor is manufacturing yesterdays economy. We will use more cars, ships, clothes, computers and televisions in 20 years time; the only question is how many we choose to manufacture here. Talk of the knowledge economy as if it exists only on disembodied computer terminals is silly; knowledge has to be represented in artifacts, and they have to be manufactured." A long term decline in industrial employment can create a major problem of structural unemployment where workers made redundant from industry experience occupational immobility and find it difficult to gain re-employment in sectors where new jobs are being created. Manufacturing and Productivity Manufacturing industry has over the years, been a major a source of rapid productivity growth. The sector has also offered higher than average wages for males in full-time employment. The long term decline of manufacturing has been and will remain a key cause of structural change in the British labour market. Manufacturing and the Balance of Payments A high percentage of total manufacturing output is exported overseas - indeed the sector is highly exposed to global economic forces such as changes in the exchange rate and fluctuations in the international economic cycle. The decline of manufacturing is shown by the widening deficit in trade in goods. In 2000, the gap between exports and imports of goods surged to nearly 29 billion. The deficit in finished manufactured goods was over 12.5 billion - twice the scale of deficit compared with 1998. Manufacturing and the Regional Economy Health is critical to regional economic balance and prospects of narrowing the North-South divide. Many of the towns with higher than average unemployment are those that have experienced recessions and slow growth in industrial production and the consequent job losses and plant closures. The key point is that there are strong inter-relationships between manufacturing and the rest of the economy. A deep recession in manufacturing could seriously damage overall prospects for economic growth - because of the negative multiplier effects and the wider impact on consumer confidence and business investment
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MANUFACTURING IS CRITICAL TO OUR ECONOMY:

Largest multiplier. Manufacturing has the largest multiplier of all sectors of the economy. Every dollar in final sales in manufacturing products supports $1.37 in other sectors of the economy. By contrast, the financial services sector generates only about 50 cents for every dollar of activity. Productivity powerhouse. Manufacturing productivity consistently outpaces productivity growth in other sectors of the economy. Between 1997 and 2005, multifactor labor productivity in manufacturing grew at an

average rate of 4.6 percent per year. This was 60 percent greater than in the private, non-farm economy as a whole. Productivity growth is perhaps the single most important determinant of average living standards.

Good wages and benefits. Todays manufacturing employees earn higher wages and receive more generous benefits than other working Americans. On average, manufacturing employees earn 23 percent more than workers in other parts of the economy. Diversified employment. Manufacturing employs workers at all skill and education levels. For non-college educated workers, manufacturing is a crucial source of good, often highly skilled jobs that pay above average wages. On average, non-college educated manufacturing workers made $1.38 per hour (or 9.2 percent) more than similar workers in the rest of the economy in 2006-07. Thus, manufacturing helps to reduce income inequality. Source of innovation. The manufacturing sector is of vital importance in maintaining our innovative capacity. Manufacturers are responsible for more than 70 percent of all business R&D, which ultimately benefits other manufacturing and non-manufacturing activity. Key to an improved trade balance. An increase in the production of manufactured exports and import-replacing goods in the United States will be necessary to bring down our trade deficit to sustainable levels and to reduce Americas international debt burden. Critical to other high value-added sectors of the economy. The maintenance of a strong and vibrant manufacturing sector is essential to other high valueadded sectors of the economy, including design, telecommunications, and finance.

THIS CALLS FOR A STRATEGY TO STRENGTHEN MANUFACTURING: At a minimum, it would:

Infrastructure. Provide businesses with a world-class infrastructure suited for higher-value production and advanced business services by increasing public investment. Low-cost energy. Reduce the cost of domestic energy and materials by taking greater advantage of the efficiency revolution, and by encouraging the expansion of the supply of natural gas, which is a principal energy source for American manufacturing.

Training of skilled workers. Address the shortage of certain skilled workers by establishing jobspecific training programs that would prepare and retrain workers for specific skills for which there is great demand. Reducing the tax burden. Lower the tax burden on companies locating investment and jobs in the United States by reducing the corporate income tax and the payroll tax, thereby reducing the cost of capital and the cost of laboreliminating the current incentives in the tax code to move investment overseas. Enforce U.S trade laws. Better use trade policy to protect American-based companies from unfair trade practices of mercantilist economies. In particular, the United States should do a better job of protecting Americanbased companies from supply surges from abroad and from the dumping of excess production during slowdowns in world economic growth, such as occurred after the 1997-8 world financial crisis and is occurring now. Increase global demand. Encourage greater middle class consumption abroad, which would increase demand for American-made goods and services and relieve the burden on the U.S. market as a dumping ground for the excess production of other economies. Fairly valued dollar. Seek an international understanding with Americas trade partners to prevent those economies from manipulating the value of their currencies to gain competitive advantage. Such an understanding should permit a decline in the value of the dollar to facilitate the reduction of the U.S trade deficit and to remove the competitive advantages American-

based companies now face. A decline in the value of the dollar would help American-based manufactures by making U.S. exports cheaper and U.S. imports more expensive.

How to Implement a Manufacturing System

>> Compliments of Microsoft Business Solutions

WINNING STRATEGIES FOR MANUFACTURING

>> Compliments of Microsoft Business Solutions

How to Implement a Manufacturing System

2003 Microsoft Corporation. All rights reserved. Microsoft and Microsoft Business Solutions are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries.

>> >>

How to Implement a Manufacturing System >> Microsoft Business Solutions 1

Assemble the Project Team and Leader

No two organizations ever implement the same manufacturing system in the same way. Combine the vagaries of different companies, business processes, people, and systems, and the directions for how to implement a manufacturing system take on the wandering complexities of James Joyces Ulysses. Yet just as the Joyce epic has crib notes, so, too, does manufacturing system implementation. In simplest terms, a successful implementation boils down to managing a handful of key activities: > Assemble a cross-functional project team with a respected project leader. > Understand why the organization needs the system (i.e., define your business pain) and why the pain exists (e.g., system issues and/or business-process issues). > Define the scope of the system. > Establish phases for system implementation. > Gather and define the organizations requirements of the system. > Prepare the organization for change. > Prepare people and data. > Manage scope creep. > Thoroughly test the functionality of the system. > Run and refine the system. Implementation requires assembling a cross-functional project team with constituents from all business units likely affected by the new system. At the heart of this group is the project team leader. Many personalities can fill this role, but good leaders always: > Know when to say no or at least not right away. > Possess the energy to question everything. > Are part diplomat and part drill sergeant. > Are disciplined and do what they say. > Deal deftly (and swiftly) with whiners, nay-sayers, and bullies. > Have enough authority to manage the project. > Make or find the time to do the project right. Every implementation project also requires an executive steering committee to keep the team focused and to occasionally play bad

Define Your Business Pain and Why It Exists

cop to the leaders good cop. Lack of top-executive participation in the project through a steering committee (or in smaller companies, through a key executive) is the primary reason for implementation failures. Every company typically has three to five business pains that call for a manufacturing system antidote, such as an inability to expand operations, an inoperable system, or an eroding customer relationship. A common driver of system change is the pain caused by changing customer requirements, as clients demand improved service levels or better systems integration. Pain can also come from the supply chain as a company attempts to manage materials more efficiently or to integrate supplier systems. External pains frequently are the manifestation of internal pains, such as an outdated system that can no longer manage production and thus fails to satisfy customer cost, quality, or deliverability needs. Recording and defining pains allow an organization to justify the need for a new manufacturing system, provided the underlying issues are indeed system-related. For example, a company may fail to satisfy customers (pain) because it ships late, its inventory is inaccurate, and its investment in inventory is too high or not enough (issues). The company realizes it must better manage its inventories (business objective) but first needs to understand the root causes of its inventory difficulties. Is it a system problem? A new system must positively impact the issues that cause the pain and help achieve business objectives, or it risks merely making old, mistaken-laden processes run faster at higher costs.

Define System Scope and Implementation Phases

The scope of the project is determined by the business objectives your organization hopes to achieve, the issues it hopes to resolve, and the functions impacted by those resolutions. (Scope can also be influenced by political or technological concerns.) Scope is delineated by duration or phases, and, depending on the breadth of your project and organization, the implementation could go live in a single day or extend over months as various departments and/or physical locations turn on their systems. Factors to consider in selecting a start sequence include ease of implementation, site accessibility to the project team and partners, and location of the best-prepared staff and mostthoroughly tested functionality. Project teams typically organize implementation phases by department, according to support of business objectives and how live departments will impact the processes of other connected but nonlive departments. For example, if the business objective is to maintain inventory accuracy, obstacles to overcome may include inaccurate bills of materials (bad data), poor inventory-movement procedures, and unorganized warehouses. Given those issues, an MRP implementation would likely proceed through Phase 1 financial modules to get the transactional elements in place that impact inventory data; Phase 2 planning functions, such

Gather and Define System Requirements

as master scheduling to begin feeding new data into the system; and Phase 3 tactical functions, such as shop-floor scheduling where new, accurate data is a system imperative.

While business pain triggers the need for a manufacturing system and an issues analysis helps to establish business objectives and system scope, these steps wont determine the specific requirements or design of the new system. A solid plan will carefully gather requirements from all departments within the systems scope. Remember that a new system may be an antidote for an organizations pain, but the implementation team is not a band of faith healers capable of miraculous achievements. Managing unrealistic expectations and requirements is a critical step and demands a rigorous review of all system and
How to Implement a Manufacturing System >> Microsoft Business Solutions 2

>> >> >> CASE STUDY

Assessing Pain

Multiple drivers of change

The Alabama Institute for the Deaf and Blind, Talladega, Ala., had several reasons for pursuing implementation of a new manufacturing system. The not-for-profit AIDB consists of numerous entities including Alabama Industries for the Blind, which employs blind and visually impaired workers to manufacture and sell products. AIDBs entities were running different manufacturing applications; its primary pain was the need to standardize on one system and to get all production units talking to one another. From an IT perspective, one of the first mandates that I had when I took over as director was that I wanted to find some way we could move everybody into a system that met the needs or 95 percent of the needs of every entity within AIDB, says Henry Segalas, AIDB IT director and implementation committee leader. That was really a dream, but as we started to face more and more dysfunction in existing systems, we realized this dream had to be a reality.

Missing functionality

At Knelson Concentrators, Langley, B.C., a manufacturer of gold-mining equipment, the pain was easy to define. The manufacturing and distribution functionality of its current system provided standard costing capabilities but could not track actual costs. As Knelsons business migrated toward make-to-order production, the company gradually realized the old system could not accommodate actual costing and that Knelson could not succeed without it.

Down and out

Mid-Continent Instruments, a Wichita, Kans., manufacturer of aircraft instruments, realized that its current MRP system simply didnt work. It was releasing manufacturing orders to the floor with incomplete production pulls, delaying orders so drastically that 15 percent of shipments were late. A new system was a necessity a clear example of system issues.

Process visibility and IT benefits

Gibson Guitar Corp., Nashville, Tenn., has more than a dozen divisions in the U.S. and Europe. All offices were using Microsoft Business Solutions financial and distribution applications, but Gibson also needed a manufacturing system in part to migrate from an old COBOL system that

>>

rode on two servers and consumed 15 percent to 20 percent of IT staff time. Gibson also required a new system to establish greater visibility of its processes and inventories, especially for tracking of finished-goods inventories as required by a lender.
How to Implement a Manufacturing System >> Microsoft Business Solutions 3

data requests. Too many organizations bend over backward to accommodate old processes or reporting methods that are archaic, wrong, or simply unnecessary. Successful project leaders tie requirements to the established objectives e.g., standardization, real-time plant data, or improved materials management and not to old processes. By limiting system selection and design to requirements based on old processes and methods, many companies unwittingly saddle themselves for another five years with inferior practices and missed opportunities. In system design sessions, prioritize requirements by viewing them within the context of current pains, issues, and a flowchart of current processes, while at the same time developing a vision of future processes and necessary requirements. These sessions should give weight to all departments impacted by the system so that you can assess all functionality required of the new system and its integration throughout the organization. As the vision develops, begin documenting system procedures. Record exactly how the system will be used for every step of any business activity it touches, such as releasing a manufacturing order to the floor or updating sales forecasts; this will help to create training documents and new procedures. The requirements planning process will be critical to system selection, and it also will help develop a cost/benefit analysis. At the very least, your team should calculate total cost of ownership (e.g., maintenance fees, staffing), which can prove helpful when comparing system vendors. When evaluating systems, some companies emphasize return on investment (ROI) calculations that assess quantifiable measures (e.g., costs) and qualitative measures (e.g., improved productivity). A key component in the cost/benefit analysis and the success of the implementation is selecting the right partner, with particular emphasis on both parties understanding the partners role. While this role may vary, the ideal partner will come with significant experience in manufacturing, in your industry, and with the system youll eventually implement.

>> CASE STUDY

Rolling Up Requirements
Individual needs to collective requirements
AIDB project leader Segalas originally identified the opportunity for a

system change based on anticipated de-support notices for existing systems, as well as awareness of arising needs in the organization. He created a draft proposal outlining the potential of a new integrated system and then invited each department affected by the system to add to his proposal. This collaborative list of requirements and priorities was then reviewed, narrowed down, and agreed to by all departments. An implementation committee (which incorporated one member and a backup from every department) then used the completed proposal to evaluate vendors and systems.

Prioritizing needs

Knelson mapped its current processes through all departments and came up with a requirements list for every area, says Pat Thornton, systems manager and project leader. The project team then reviewed and prioritized the list into a first phase of implementation. Although the project team took care to acknowledge every user request, it was realistic and clear about what could actually be implemented quickly and efficiently.

Departmental balance

>>

Gibson Guitar Corp., Nashville, Tenn., implemented its financials and distribution applications in one massive project across all 13 of its office sites, but chose the headquarters location as the first to deploy the systems manufacturing application. Gibson initially focused solely on the requirements of manufacturing, which resulted in the accounting department quickly responding, You cant do that. After Gibson placed the requirements of manufacturing and accounting on equal footing, the implementation proceeded more smoothly.
How to Implement a Manufacturing System >> Microsoft Business Solutions 4

Structure the Implementation and Prepare for Change

Prepare People

Your implementation success will hinge less on technology itself than on creating new, more efficient processes enabled by technology. As such, treat the system launch like the most important strategic project youll ever manage because it probably is. This will require a disciplined project-management schedule that includes an aggressive timeline, quality checks and milestones, and mandated attendance for team members at weekly meetings (all meetings, not just those that impact their departments, in order to provide peer scrutiny and pick up best practices from other departments). The implementation team must now begin to describe for all users the objectives, when they will realistically occur, new processes and system procedures, and the role of each department in training and testing. Be prepared for resistance. Some departments can be coaxed into compliance by educating them about specific improvements, while others may request system workarounds to ease process transitions; still other departments may require personnel changes. Realize that no matter how well youve prepared the organization, change will be difficult, particularly if you have unique, long-standing processes. Before system training hits the front lines, the

project team needs to be fully trained as early in the implementation process as possible (immediately following project planning). The project team members must be well-versed in order to design the system, train end-users, and define system procedures. All others affected by the system should receive some level of system training. How much training is a matter of debate. While some companies opt for large-scale training that includes an overview of the entire system with deep-dive breakouts for specific modules, most organizations have trouble devoting the time or resources for such exhaustive measures.

>> CASE STUDY

Change Management Issues

Transitional satisfaction
Knelson soothed the acceptance of changes between their old and new systems by establishing short- and long-term process changes. In the short term, the implementation team didnt argue too much over why someone would want the system to work a certain way (e.g., the way the old system worked). Instead, they tried to find a temporary solution that worked for the individual and then returned six weeks later to reassess the workaround. Those that worked and made business sense, stayed; those that didnt were discarded in favor of new processes.

Speak now

AIDB project leader Segalas put a premium on trust and respect, and formalized that into a Rules of Engagement for the implementation committee. Paramount was the mandate that no committee members complain or denigrate the project or process outside of the committee without first giving their peers an opportunity to respond. Segalas did not want subversive comments, no matter how casual, to erode the organizations confidence in the new system and wasnt shy about calling committee members out when they voiced frustrations outside the committee.

Partner perspectives

>> >> >>

Gibsons handcrafted production environment created a unique situation in that most staff were familiar only with Gibson processes and systems; they had never worked in any other type of facility. As a result, Gibson looked to its technology partner to offer process changes as the implementation progressed. According to Gibson project leader Mathew Mullins, if the company had done the implementation themselves, they probably would have designed a system very similar to their previous configuration and without significant process improvements.

Instead, most organizations will provide or users will demand training based around specific job functions and the screens that affect an individuals work. This can involve formal sessions delivered by the project team, meetings conducted within departments, or one-on-ones guided by a team member. Differences between the old and new systems as well as employee familiarity with the new system will indicate the appropriate level of training. For example, manufacturing personnel may have steeper learning curves because functions and processes that never occurred on the shop floor may now take place at new production-level terminals. Frequently, though, the problem isnt who and how much to train, but convincing employees of the need to get trained in the first place. Think out of

Data Integrity and Migration

the box, and use whatever methods necessary to get users up to speed. And budget in far more training time than you think youll need. Data migration is critical (i.e., garbage in, garbage out) and offers a tremendous opportunity to ease the transition and improve process efficiencies going forward by deleting unnecessary or redundant information. Data can be classified into one of four categories prior to migration: > Irrelevant data that can be left behind; > Questionable data that should not be transferred but retained; > Pertinent data that may prove useful and must be retained and cleansed; and > Priority data upon which the new system will rely and that must be thoroughly scrubbed. Start data migration as early in the implementation process as possible in order to train and develop the system using as much real data as possible and to ensure ample time to test data integrity. Remember that during data transfer its helpful to have staff well-versed in both the old and new system. Successful implementers also advise that you select a launch date that coincides with the start of a fiscal reporting period, preferably the fiscal year. While this can add to organizational stress by requiring you to close the books while booting up a new system, it prevents some data transfer issues and allows a fresh start with new data. Successful implementations follow these migration steps: 1. Define the scope of the data migration; 2. Identify the amount of data cleansing required; 3. Clean the data to be migrated; 4. Map legacy data to the new system; 5. Develop necessary data-migration tools; 6. Conduct initial data migration; 7. Run data-integrity checks; 8. Perform data-migration tests; 9. Make necessary changes; 10. Retest; and 11. Perform final migration.
How to Implement a Manufacturing System >> Microsoft Business Solutions 5

>> >> CASE STUDY

Training

Increase awareness

Pat Thornton, systems manager at Knelson, says greater participation from people in training and testing would have significantly aided his companys implementation. Knelson had a particularly tight implementation timeline (September to February) that crossed through the holidays, which may have impacted employee commitment. Knelson eventually required that its executives sit in on training to underscore its importance while also conducting daily Lunch and Learns for users. Each luncheon session covered a specific microtopic, which enabled Thornton to get live feedback from users about their requirements.

Never enough

Although Mid-Continent spent ample time training their staff, even that could have been supplemented with additional learning using

real data. Because the company completed its data conversion just before going live with its manufacturing module, training and testing were done on sample data. In hindsight, Mid-Continent wishes it had opted for real data during the training.

Training by committee

>>

AIDB did not conduct formal training sessions, but instead relied on implementation committee members to work within their departments to train peers on the screens specific to their job functions. Says Segalas: Their defined role was to prepare the people in their departments to do their jobs.

Manage Scope Creep

Test the System

No implementation proceeds without suggestions to alter or expand the original project. This scope creep requires a project team leader with both the authority and strength to make original decisions stick and, where the scope creep is legitimate to achieve business objectives, to revise the project. The steering committee is critical when creep arises because it carries veto power. In considering scope revisions, its vital that everyone understand what is native in the system and which additional functionalities will require a modification or integration with a third-party solution. This requires two steps: > Assess whether there is a gap between the new needs and the current systems out-ofbox capabilities. > Determine if an alternative to modification or third-party integration is possible, or if modification or third-party integration can be postponed. At each implementation milestone, you and your technology partner will manage scope creep and develop a list of gaps that still exist, along with corresponding solutions and timelines. As the system launch grows closer, its important that users adhere to a testing schedule and vigorously track and follow up on issues that arise from testing. This testing must be thorough and as close to post-launch conditions as possible; one successful method is the use of monitored sessions under the guidance of the implementation team conference room pilots that simulate real-world usage. If testing cant occur in pilots, team members must monitor individual testing sessions and ensure that no integration issues exist. Once the system is up and running, the refinement process typically consists of clean-ups to solve small problems, review of previous workarounds, a look at postponed issues and new issues that may have arisen, and planning of subsequent phases. Above all, make sure that a myopic focus on the system hasnt blinded you and your staff to the need to deliver improved processes that achieve your business objectives. Lastly, if youre the project leader, be sure to have a worst-case-scenario plan that will enable the organization to perform necessary business activities if serious problems occur. You may never need it, but the very process of preparing it will make you realize what could go wrong and how to fix it. You want your implementation to be remembered not for its glitches, but for the business objectives you achieved today and tomorrow. As you move forward with your implementation, make sure you follow the proven

Run and Refine the System

Dont Implement without Them

steps outlined in this paper. They have been proven many times in many projects and in many industries, and theyll continue to lead to success, provided you start and finish every project with the following must-have components: > Strong-willed project leader with time and resources; > Representative project team with time and resources; > Well-defined list of business objectives; > Rigorously critiqued list of system requirements; > Realistic but aggressive timeline; > Thoroughly documented system procedures; > Partner that is the right strategic fit with industry, manufacturing, and system experience; and > Thorough testing that can uncover any problems and ensure a smooth kick-off.
How to Implement a Manufacturing System >> Microsoft Business Solutions 6

>> >> >> >> >> CASE STUDY

Testing
Conference room pilots
Knelson Concentrators held a conference room pilot session seven weeks before the planned go-live date. We simulated a typical week at Knelson; we had all the users come in and practice based on the documentation we created on how to do the jobs they were doing in the old system in the new system, says Pat Thornton. Among the issues identified by the test was the lack of readiness among staff who had not adequately tried to learn the new system. After additional training, a second conference room pilot was conducted three weeks prior to go-live with the owner of the company and the VP of finance in attendance. People involved in this pilot knew that they as well as the system were being tested, and it went off without a hitch.
2003 Microsoft Corporation. All rights reserved. Microsoft and Microsoft Business Solutions are either registered trademarks or trademarks of Microsoft Corporation or Microsoft Business Solutions ApS or their affiliates in the United States and/or other countries.

>>

Microsoft Business Solutions Lone Tree Road Fargo, ND 58104-3911 e-Mail: mgpinfo@microsoft.com Phone: (888) 477-7989 Fax: (701) 281-6868

WINNING STRATEGIES FOR MANUFACTURING-

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Ways that Manufacturing Companies use IMPACT ERM For manufacturing companies, IMPACT ERM is the ideal Operational Risk Management software solution - for single sites or across a worldwide enterprise. IMPACT can help organizations with Regulatory Compliance, Management System Execution and Analytics & Reporting. Regulatory Compliance Manufacturing companies know that keeping up with the latest regulatory compliance requires vigilance. They also know that fine tuning risk performance within the constraints of the complex array of regulatory and standards

compliance (i.e. Six Sigma, cGxP, SOX, ISO 9001, ISO 14001, etc.) across a global enterprise requires serious focus, communication and collaboration. Trying to meet these demanding regulatory requirements affect local operations and global business strategies. Moreover, mounting international, regional and national regulations, laws and agreements have given rise to today's environmental concerns, such as increased liability for land contamination, take-back requirements for electronic devices, climate change and other environmental regulations. All the while companies have to satisfy quality compliance standards and focus on operating efficiencies to meet shareholder and customers expectations. So, the challenge is to keep up, ensure compliance and maintain profitability. Getting the right balance is never easy. And there are social, economic and reputation repercussions for whatever choices are made. IMPACT can help manufacturing companies strengthen risk mitigation competence and compliance by providing organizations with the tools and functionality it needs to identify the weaknesses in programs such as corporate assurance, regulatory compliance, risk analysis, management of change, engineering design, and asset maintenance. We have a long-standing commitment to helping companies identify risks and opportunities for process improvement. IMPACT ERM helps manufacturing companies in their compliance initiatives by helping to facilitate inspections, audits, findings and analysis delivering to management a high level of crucial and actionable information. Management System Execution IMPACT ERM helps manufacturing companies facilitate the management of system elements, compliance, continuous improvement, communication, analysis and reporting around a variety of management systems. IMPACT ERM excels in enabling the execution of these programs and provides the functionality to track processes and systems, identify risks, and analyze and report on compliance, risks and performance as well as demonstrate due diligence when required. IMPACT works with existing management systems providing the Enterprise Risk Management (ERM) backbone centralize, prioritize and mitigate risk exposures that are identified from both "reactive" incident management and "proactive" audit, assessment, or observation processes. IMPACT can help your organization consolidate disparate management systems into a single-integrated database system enabling the entire organization in continual process improvement. Analytics & Reporting Most manufacturing processes generate voluminous, sometimes minute-to-minute data with hundreds of process parameters. Turning data into actionable information is difficult and time consuming without the proper analytical and reporting tools. IMPACT provides sophisticated analysis, reporting and scenario development tools to help engage the workforce from the field to the corporate office in continual operational improvement. Customized views and visibility of the data allows the right people to access pertinent information on a timely basis to help determine "what" is driving the success and failure of processes and potential risks. Back to Top Business Value for Manufacturing Companies Measure, manage, and mitigate risk. IMPACT ERM delivers capabilities for operations planning, incident, assessment, quality and environmental management, regulatory compliance assessment, and other risk management. Integrated communication and workflow processes non-intrusively engage leadership and workforce in reactive as well as proactive risk identification and execution of action items to help strengthen risk reduction systems. Manufacturing companies of any size can rapidly and affordably deploy a standardized set of business processes based on industry best practices. As these processes propagate safer, more efficient practices throughout the enterprise, quality and productivity increase. These factors are generally where the highest profit margins are found. Build a consolidated register of risk. Many manufacturers face the same dilemma - they have islands of data scattered across several systems throughout the enterprise but no easy, centralized means for access. These systems are loaded with information about manufacturing processes, compliance and other pertinent data that can be leveraged to improve performance. Companies need a way to access the data and extract information easily to make collaborative, informed decisions fast and even in real-time. IMPACT software helps consolidate these management systems into a single-integrated database system interfacing with a variety of business systems. Understand patterns of operations and performance. IMPACT Exec Analytical & Reporting Tool provides sophisticated analysis, reporting and scenario development tools. They help Manufacturing companies analyze past experience to more accurately predict future requirements or gaps within the performance management system. Gaps and requirements become clear such as regulatory non-

compliance or potential for loss. Your system then engages all employees in prioritization of remediation and execution of action items.

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Organization within a manufacturing company is essential to smooth operations. smart management image by araraadt from Fotolia.com Organization is the key to operating a successful and orderly business. Each person in the company must know his role within the organization and must be cognizant of the chain of command. Organization structure is visually demonstrated through organization charts. An organization chart shows the chain of command of the company The proper flow of responsibility from the top of the organization down to the bottom is essential for the company to run in an efficient manner.

Executive Management
Executive management is the top of the organization An executive manager is a person with the title of Chief Executive Officer, Chief Operating Officer, President or other similar title. An executive manager has the ultimate responsibility of choosing a manufacturing strategy and is also ultimately responsible for the outcomes of that strategy. A wise executive manager will seek input and feedback from his subordinates when devising a manufacturing strategy.

Manufacturing or Production Manager

The manufacturing or production manager of an organization is the leader of the production workers and supervisors in the production facility. Most production managers report directly to the executive manager, where he is given his directives for managing the production process. A wise production manager will seek input and feedback from his production line supervisors and production employees regarding the effectiveness of the production strategy. The production manager usually reports the successes or failures of the predetermined manufacturing strategy to the executive manager.

Production Line Supervisors

Production line supervisors are the liaison between the production workers and the production manager. Although the production manager is responsible for the entire manufacturing facility, the production line supervisor is responsible for only the production, or assembly, line where he is stationed. A production line supervisor may be responsible for multiple assembly lines within a certain production line. It is essential for the production manager to relay the manufacturing strategy given to him to the production line supervisors that report to him.

Production Workers
The production worker is at the bottom of the manufacturing organizational chart. However, the production worker is one of the most important pieces to the manufacturing strategy set forth by executive management. The production worker, when trained properly and given the proper tools needed to complete his job efficiently, can be the reason for the success or failure of the manufacturing strategy. Production workers report to the production line supervisor.

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The Organizational Structure of a Manufacturing Company

Dwight Chestnut
Dwight Chestnut has been a freelance business researcher and article writer for over 18 years. He has published several business articles online and written several business ebooks. Chestnut holds a bachelor's degree in electrical engineering from the University of Mississippi (1980) and a Master of Business Administration from University of Phoenix (2004).
By Dwight Chestnut, eHow Contributor

Print this article

Manufacturers organize as needed to maximize productivity and increase quality assurances.

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Manufacturing companies must organize to maximize productivity, quality and shareholders' value. Because of the importance of quality, the organizational structure gives quality assurance special consideration.

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Structure and Function

The basic organizational structure of a manufacturing company follows the traditional hierarchical organizational structure, consisting of a Board of Directors, Chief Executive Officer (CEO), Chief Operations Officer (COO), department heads and then employees. However, because of the importance of quality in manufacturing, the head of quality or quality assurance ranks up there with the CEO, says Brek Maunfacturing.

1. Identification

Function
In the manufacturing industry, quality is everything. Just consider the automobile industry and how quality or the perception of quality can affect sales. In addition to internal quality specifications and assurances, companies have to meet international quality management standards such as ISO 9000, according to Praxiom.com.

Considerations
To improve quality, some manufacturing organizations use a matrix organizational structure close to the production line. This is where a production team, led by a production manager, can work together and make decisions and address production and quality issues without having to coordinate with department heads, according to FlatWorldKnowledge.com. Department heads focus on general operating policy in this scenario.

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ORGANIZATIONAL STRUCTURE
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Organizational structure refers to the way that an organization arranges people and jobs so that its work can be performed and its goals can be met. When a work group is very small and face-to-face communication is frequent, formal structure may be unnecessary, but in a larger organization decisions have to be made about the delegation of various tasks. Thus, procedures are established that assign responsibilities for various functions. It is these decisions that determine the organizational structure. In an organization of any size or complexity, employees' responsibilities typically are defined by what they do, who they report to, and for managers, who reports to them. Over time these definitions are assigned to positions in the organization rather than to

specific individuals. The relationships among these positions are illustrated graphically in an organizational chart (see Figures 1a and 1b). The best organizational structure for any organization depends on many factors including the work it does; its size in terms of employees, revenue, and the geographic dispersion of its facilities; and the range of its businesses (the degree to which it is diversified across markets). There are multiple structural variations that organizations can take on, but there are a few basic principles that apply and a small number of common patterns. The following sections explain these patterns and provide the historical context from which some of them arose. The first section addresses organizational structure in the twentieth century. The second section provides additional details of traditional, verticallyarranged organizational structures. This is followed by descriptions of several alternate organizational structures including those arranged by product, function, and geographical or product markets. Next is a discussion of combination structures, or matrix organizations. The discussion concludes by addressing emerging and potential future organizational structures.

ORGANIZATIONAL STRUCTURE DURING THE TWENTIETH CENTURY

Understanding the historical context from which some of today's organizational structures have developed helps to explain why some structures are the way they are. For instance, why are the old, but still operational steel mills such as U.S. Steel and Bethlehem Steel structured using vertical hierarchies? Why are newer steel mini-mills such as Chaparral Steel structured more horizontally, capitalizing on the innovativeness of their employees? Part of the reason, as this section discusses, is that organizational structure has a certain inertiathe idea borrowed from physics and chemistry that something in motion tends to continue on that same path. Changing an organization's structure is a daunting managerial task, and the immensity of such a project is at least partly responsible for why organizational structures change infrequently. At the beginning of the twentieth century the United States business sector was thriving. Industry was shifting from job-shop manufacturing to mass production, and thinkers like Frederick Taylor in the United States and Henri Fayol in France studied the new systems and developed principles to determine how to structure organizations for the

greatest efficiency and productivity, which in their view was very much like a machine. Even before this, German sociologist and engineer Max Weber had concluded that when societies embrace capitalism, bureaucracy is the inevitable result. Yet, because his writings were not translated into English until 1949, Weber's work had little influence on American management practice until the middle of the twentieth century. Management thought during this period was influenced by Weber's ideas of bureaucracy, where power is ascribed to positions rather than to the individuals holding those positions. It also was influenced by Taylor's scientific management, or the "one best way" to accomplish a task using scientifically-determined studies of time and motion. Also influential were Fayol's ideas of invoking unity within the chain-ofcommand, authority, discipline, task specialization, and other aspects of organizational power and job separation. This created the context for vertically-structured organizations characterized by distinct job classifications and top-down authority structures, or what became known as the traditional or classical organizational structure. Job specialization, a hierarchical reporting structure through a tightly-knit chain-ofcommand, and the subordination of individual interests to the superordinate goals of the organization combined to result in organizations arranged by functional departments with order and discipline maintained by rules, regulations, and standard operating procedures. This classical view, or bureaucratic structure, of organizations was the dominant pattern as small organizations grew increasingly larger during the economic boom that occurred from the 1900s until the Great Depression of the 1930s. Henry Ford's plants were typical of this

Figure 1a Organizational Structure growth, as the emerging Ford Motor Company grew into the largest U.S. automaker by the 1920s.

The Great Depression temporarily stifled U.S. economic growth, but organizations that survived emerged with their vertically-oriented, bureaucratic structures intact as public attention shifted to World War II. Postwar rebuilding reignited economic growth, powering organizations that survived the Great Depression toward increasing size in terms of sales revenue, employees, and geographic dispersion. Along with increasing growth, however, came increasing complexity. Problems in U.S. business structures became apparent and new ideas began to appear. Studies of employee motivation raised questions about the traditional model. The "one best way" to do a job gradually disappeared as the dominant logic. It was replaced by concerns that traditional organizational structures might prevent, rather than help, promote creativity and innovationboth of which were necessary as the century wore on and pressures to compete globally mounted.

TRADITIONAL ORGANIZATIONAL STRUCTURE

While the previous section explained the emergence of the traditional organizational structure, this section provides additional detail regarding how this affected the practice of management. The structure of every organization is unique in some respects, but all organizational structures develop or are consciously designed to enable the organization to accomplish its work. Typically, the structure of an organization evolves as the organization grows and changes over time. Researchers generally identify four basic decisions that managers have to make as they develop an organizational structure, although they may not be explicitly aware of these decisions. First, the organization's work must be divided into specific jobs. This is referred to as the division of labor. Second, unless the organization is very small, the jobs must be grouped in some way, which is called departmentalization. Third, the number of people and jobs that are to be grouped together must be decided. This is related to the number of people that are to be managed by one person, or the span of controlthe number of employees reporting to a single manager. Fourth, the way decision-making authority is to be distributed must be determined. In making each of these design decisions, a range of choices are possible. At one end of the spectrum, jobs are highly specialized with employees performing a narrow range of activities, while at the other end of the spectrum employees perform a variety of tasks. In

Figure 1b Organizational Structure traditional bureaucratic structures, there is a tendency to increase task specialization as the organization grows larger. In grouping jobs into departments, the manager must decide the basis on which to group them. The most common basis, at least until the last few decades, was by function. For example, all accounting jobs in the organization can be grouped into an accounting department, all engineers can be grouped into an engineering department, and so on. The size of the groupings also can range from small to large depending on the number of people the managers supervise. The degree to which authority is distributed throughout the organization can vary as well, but traditionally structured organizations typically vest final decision-making authority by those highest in the vertically structured hierarchy. Even as pressures to include employees in decision-making increased during the 1950s and 1960s, final decisions usually were made by top management. The traditional model of organizational structure is thus characterized by high job specialization, functional departments, narrow spans of control, and centralized authority. Such a structure has been referred to as traditional, classical, bureaucratic, formal, mechanistic, or command and control. A structure formed by choices at the opposite end of the spectrum for each design decision is called unstructured, informal, or organic.

The traditional model of organizational structure is easily represented in a graphical form by an organizational chart. It is a hierarchical or pyramidal structure with a president or other executive at the top, a small number of vice presidents or senior managers under the president, and several layers of management below this, with the majority of employees at the bottom of the pyramid. The number of management layers depends largely on the size of the organization. The jobs in the traditional organizational structure usually are grouped by function into departments such as accounting, sales, human resources, and so. Figures 1a and 1b illustrate such an organization grouped by functional areas of operations, marketing and finance.

BASIS FOR DEPARTMENTALIZATION

As noted in the previous section, many organizations group jobs in various ways in different parts of the organization, but the basis that is used at the highest level plays a fundamental role in shaping the organization. There are four commonly used bases.
FUNCTIONAL DEPARTMENTALIZATION.

Every organization of a given type must perform certain jobs in order do its work. For example, key functions of a manufacturing company include production, purchasing, marketing, accounting, and personnel. The functions of a hospital include surgery, psychiatry, nursing, housekeeping, and billing. Using such functions as the basis for structuring the organization may, in some instances, have the advantage of efficiency. Grouping jobs that require the same knowledge, skills, and resources allows them to be done efficiently and promotes the development of greater expertise. A disadvantage of functional groupings is that people with the same skills and knowledge may develop a narrow departmental focus and have difficulty appreciating any other view of what is important to the organization; in this case, organizational goals may be sacrificed in favor of departmental goals. In addition, coordination of work across functional boundaries can become a difficult management challenge, especially as the organization grows in size and spreads to multiple geographical locations.
GEOGRAPHIC DEPARTMENTALIZATION.

Organizations that are spread over a wide area may find advantages in organizing along geographic lines so that all the activities performed in a region are managed together. In a large organization, simple physical separation makes centralized coordination more

difficult. Also, important characteristics of a region may make it advantageous to promote a local focus. For example, marketing a product in Western Europe may have different requirements than marketing the same product in Southeast Asia. Companies that market products globally sometimes adopt a geographic structure. In addition, experience gained in a regional division is often excellent training for management at higher levels.
PRODUCT DEPARTMENTALIZATION.

Large, diversified companies are often organized according to product. All the activities necessary to produce and market a product or group of similar products are grouped together. In such an arrangement, the top manager of the product group typically has considerable autonomy over the operation. The advantage of this type of structure is that the personnel in the group can focus on the particular needs of their product line and become experts in its development, production, and distribution. A disadvantage, at least in terms of larger organizations, is the duplication of resources. Each product group requires most of the functional areas such as finance, marketing, production, and other functions. The top leadership of the organization must decide how much redundancy it can afford.
CUSTOMER/MARKET DEPARTMENTALIZATION.

An organization may find it advantageous to organize according to the types of customers it serves. For example, a distribution company that sells to consumers, government clients, large businesses, and small businesses may decide to base its primary divisions on these different markets. Its personnel can then become proficient in meeting the needs of these different customers. In the same way, an organization that provides services such as accounting or consulting may group its personnel according to these types of customers. Figure 2 depicts an organization grouped by customers and markets.

Figure 2 Customer/Market Organization

Figure 3 Matrix Structure

MATRIX ORGANIZATIONAL STRUCTURE

Some organizations find that none of the afore-mentioned structures meet their needs. One approach that attempts to overcome the inadequacies is the matrix structure, which is the combination of two or more different structures. Functional departmentalization

commonly is combined with product groups on a project basis. For example, a product group wants to develop a new addition to its line; for this project, it obtains personnel from functional departments such as research, engineering, production, and marketing. These personnel then work under the manager of the product group for the duration of the project, which can vary greatly. These personnel are responsible to two managers (as shown in Figure 3). One advantage of a matrix structure is that it facilitates the use of highly specialized staff and equipment. Rather than duplicating functions as would be done in a simple product department structure, resources are shared as needed. In some cases, highly specialized staff may divide their time among more than one project. In addition, maintaining functional departments promotes functional expertise, while at the same time working in project groups with experts from other functions fosters cross-fertilization of ideas. The disadvantages of a matrix organization arise from the dual reporting structure. The organization's top management must take particular care to establish proper procedures for the development of projects and to keep communication channels clear so that potential conflicts do not arise and hinder organizational functioning. In theory at least, top management is responsible for arbitrating such conflicts, but in practice power struggles between the functional and product manager can prevent successful implementation of matrix structural arrangements. Besides the product/function matrix, other bases can be related in a matrix. Large multinational corporations that use a matrix structure most commonly combine product groups with geographic units. Product managers have global responsibility for the development, manufacturing, and distribution of their own product or service line, while managers of geographic regions have responsibility for the success of the business in their regions.

STRATEGIC BUSINESS UNITS

As corporations become very large they often restructure as a means of revitalizing the organization. Growth of a business often is accompanied by a growth in bureaucracy, as positions are created to facilitate developing needs or opportunities. Continued changes in the organization or in the external business environment may make this bureaucracy a hindrance rather than a help, not simply because of the size or complexity of the organization but also because of a sluggish bureaucratic way of thinking. One approach

to encourage new ways of thinking and acting is to reorganize parts of the company into largely autonomous groups,

Figure 4 SBU Structure called strategic business units (SBUs). Such units generally are set up like separate companies, with full profit and loss responsibility invested in the top management of the unitoften the president of the unit and/or a senior vice president of the larger corporation. This manager is responsible to the top management of the corporation. This arrangement can be seen as taking any of the aforementioned departmentalization schemes one step further. The SBUs might be based on product lines, geographic markets, or other differentiating factors. Figure 4 depicts SBUs organized by geographic area.

EMERGING TRENDS IN ORGANIZATIONAL STRUCTURE

Except for the matrix organization, all the structures described above focus on the vertical organization; that is, who reports to whom, who has responsibility and authority for what parts of the organization, and so on. Such vertical integration is sometimes necessary, but may be a hindrance in rapidly changing environments. A detailed organizational chart of a large corporation structured on the traditional model would

show many layers of managers; decision making flows vertically up and down the layers, but mostly downward. In general terms, this is an issue of interdependence. In any organization, the different people and functions do not operate completely independently. To a greater or lesser degree, all parts of the organization need each other. Important developments in organizational design in the last few decades of the twentieth century and the early part of the twenty-first century have been attempts to understand the nature of interdependence and improve the functioning of organizations in respect to this factor. One approach is to flatten the organization, to develop the horizontal connections and de-emphasize vertical reporting relationships. At times, this involves simply eliminating layers of middle management. For example, some Japanese companieseven very large manufacturing firmshave only four levels of management: top management, plant management, department management, and section management. Some U.S. companies also have drastically reduced the number of managers as part of a downsizing strategy; not just to reduce salary expense, but also to streamline the organization in order to improve communication and decision making. In a virtual sense, technology is another means of flattening the organization. The use of computer networks and software designed to facilitate group work within an organization can speed communications and decision making. Even more effective is the use of intranets to make company information readily accessible throughout the organization. The rapid rise of such technology has made virtual organizations and boundarlyless organizations possible, where managers, technicians, suppliers, distributors, and customers connect digitally rather than physically. A different perspective on the issue of interdependence can be seen by comparing the organic model of organization with the mechanistic model. The traditional, mechanistic structure is characterized as highly complex because of its emphasis on job specialization, highly formalized emphasis on definite procedures and protocols, and centralized authority and accountability. Yet, despite the advantages of coordination that these structures present, they may hinder tasks that are interdependent. In contrast, the organic model of organization is relatively simple because it de-emphasizes job specialization, is relatively informal, and decentralizes authority. Decision-making

and goal-setting processes are shared at all levels, and communication ideally flows more freely throughout the organization. A common way that modern business organizations move toward the organic model is by the implementation of various kinds of teams. Some organizations establish selfdirected work teams as the basic production group. Examples include production cells in a manufacturing firm or customer service teams in an insurance company. At other organizational levels, cross-functional teams may be established, either on an ad hoc basis (e.g., for problem solving) or on a permanent basis as the regular means of conducting the organization's work. Aid Association for Lutherans is a large insurance organization that has adopted the self-directed work team approach. Part of the impetus toward the organic model is the belief that this kind of structure is more effective for employee motivation. Various studies have suggested that steps such as expanding the scope of jobs, involving workers in problem solving and planning, and fostering open communications bring greater job satisfaction and better performance. Saturn Corporation, a subsidiary of General Motors (GM), emphasizes horizontal organization. It was started with a "clean sheet of paper," with the intention to learn and incorporate the best in business practices in order to be a successful U.S. auto manufacturer. The organizational structure that it adopted is described as a set of nested circles, rather than a pyramid. At the center is the self-directed production cell, called a Work Unit. These teams make most, if not all, decisions that affect only team members. Several such teams make up a wider circle called a Work Unit Module. Representatives from each team form the decision circle of the module, which makes decisions affecting more than one team or other modules. A number of modules form a Business Team, of which there are three in manufacturing. Leaders from the modules form the decision circle of the Business Team. Representatives of each Business Team form the Manufacturing Action Council, which oversees manufacturing. At all levels, decision making is done on a consensus basis, at least in theory. The president of Saturn, finally, reports to GM headquarters.

THE FUTURE
Industry consolidationcreating huge global corporations through joint ventures, mergers, alliances, and other kinds of interorganizational cooperative effortshas

become increasingly important in the twenty-first century. Among organizations of all sizes, concepts such as agile manufacturing, just-in-time inventory management, and ambidextrous organizations are impacting managers' thinking about their organizational structure. Indeed, few leaders were likely to blindly implement the traditional hierarchical structure common in the first half of the century. The first half of the twentieth century was dominated by the one-size-fits-all traditional structure. The early twenty-first century has been dominated by the thinking that changing organizational structures, while still a monumental managerial challenge, can be a necessary condition for competitive success. SEE ALSO: Line-and-Staff Organizations ; Organizational Chart ; Organizational Development Howard Distelzweig Revised by Scott B. Droege

FURTHER READING:
Brews, Peter J., and Christopher L. Tucci. "Exploring the Structural Effects of Internetworking." Strategic Management Journal 25, no. 5 (2004): 429452. Hansen, Morten T., and Nitin Nohria. "How to Build Collaborative Advantage." MIT Sloan Management Review 46, no. 1 (2004): 2231. Lumpkin, G.T., and Gregory G. Dess. "E-Business Strategies and Internet Business Models: How the Internet Adds Value." Organizational Dynamics 33, no. 2 (2004): 161173. O'Reilly, Charles A., III, and Michael L. Tushman. "The Ambidextrous Organization." Harvard Business Review 82, no. 4 (2004): 7482. Ticoll, David. "Get Self-Organized." Harvard Business Review 82, no. 9 (2004): 1820.

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Howard Saint

Feb 13, 2006 @ 9:09 am

The matrix structure is no so correct, there is some elements missing please check
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Read more: Organizational Structure - strategy, levels, examples, advantages, manager, model, type, company http://www.referenceforbusiness.com/management/Ob-Or/OrganizationalStructure.html#ixzz1i3tWT4YZ Organizing Manufacturing Enterprises for Customer Satisfaction
HARRY E. COOK There is considerable dissatisfaction today with the so-called functional organization, as shown schematically in Figure 1 . It is not so functional anymore because it tends to support a sequential manner of product realization, which is believed to be a significant source of substandard cost, quality, and lead-time performance versus enterprises that operate in a more parallel fashion (Clark and Fujimoto, 1989b; Dertouzos et al., 1989; Hayes et al., 1988; and Stalk and Hout, 1990). However, before the onset of highly competitive, global markets, the functional organization seemed adequate to the task. In markets that were only weakly competitive, the enterprise could move slowly and still be successful. It could control quality by inspection. It could control costs by having design engineers measure their results against a design cost standard based on a process unlike the one that would actually be used to make the part. In searching for an organizational structure that better suits today 's highly competitive environment, it is useful to have a means of forecasting the effectiveness of a structure under consideration. The obvious approach is to look at the most successful companies, see how they are organized, and adopt their structure. However, organizational structure is not the only factor that determines the effectiveness of an enterprise. The culture and technology of the enterprise are also important. Culture

is manifested by the informal organization through working relationships and shared values (Allaire and Firsirotu, 1984; Bate, 1984). Technology is defined by the
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FIGURE 1 The functional organization shown with a sequential flow of work.

skills, tools, and methodologies employed by the enterprise in transforming input to output (Passmore, 1988). Thus, if we judge best structure from comparative studies, we have the problem of having to factor out the cultural and technological contributions to effectiveness, which is not straightforward to do. Another approach, which avoids this difficulty, is to draw upon classical administrative criteria. Administrative theory, whose origins date from Taylor's (1911) publication of The Principles of Scientific Management, was an attempt to illuminate rigorous principles for creating successful organizations. However, the classical administrative criteria do not, as originally intended, hold the stature of fundamental principles (Simon, 1976, pp. 2036). Simon argued instead that these socalled principles of organization are but part of the criteria for describing and diagnosing administrative situations. The purpose of this chapter is to identify the key criteria for diagnosing the administrative situation posed by a manufacturing enterprise and to use them to arrive at an organizational structure that should overcome the problems of the functional organization.

CRITERIA RELEVANT TO ORGANIZATIONAL STRUCTURE

The traditional bottom-line metrics for rating the effectiveness of a manufacturing enterprise are return on investment and market share. However, there are other metrics, or measures, of enterprise effectiveness, such as quality, cost, lead time (including flexibility), and innovation (Leong et al., 1990). Manufacturing enterprises that are successful in competing in highly competitive world markets have been found to score well on these metrics (Clark and Fujimoto, 1989b; Dertouzos et al., 1989; Hayes et al., 1988; and Stalk and Hout, 1990). It follows, therefore, in competitive markets, that a manufacturing enterprise should focus its energies not directly on the dependent bottom-line metrics but instead on goals that challenge the enterprise to score highly on a set of fundamental metrics that the enterprise can directly influence and which, in turn, drive the bottom line. These goals represent important criteria to be considered in arriving at an organizational structure. Another important consideration is the work plan that the enterprise uses for achieving the goals. Thus, the effectiveness of a proposed organizational structure can be evaluated from an administrative viewpoint by seeing how well it serves the classical criteria in administering the goals and the work plan. This can be determined using a process defined by the following steps: (1) Draw the structure of

the proposed organization, starting with boxes showing all the vice presidents and their titles. (2) Map onto this structure the locations where authority and responsibility for the product lies in terms of the goals and the steps of the work plan. (3) Judge whether the goals and the work plan authority and responsibility mappings pass or fail the classical administrative criteria. (4) Repeat the process until you find a satisfactory coarsegrained organization. (5) Repeat this process at the next lower level in the organization to evaluate the structure at finer and finer levels. (6) Stop the process when it begins to give bad answers.

CLASSICAL ADMINISTRATIVE THEORY

The classical administrative theorists did not arrive at one exact set of criteria. We will use those attributed to Urwick (Brech, 1958, pp. 371-378): Functionalization: The necessary units of activity involved in the objectof the enterprise should be analyzed, subdivided, and arranged in logicalgroups in such a way as to secure by specialization the greatest resultsfrom individual and combined effort. Correspondence: Authority and responsibility must be coterminous,coequal, and defined. Initiative: The form of the organization must be such as to secure fromeach individual the maximum initiative of which he is capable. Coordination: The specialized conduct of activities necessitates arrangements for the systematic interrelating of those activities so as to secure economy of operation. Reference from one activity to another shouldalways take the shortest possible line. Continuity: The structure for the organization should be such

FIGURE 2 Taguchi's paradigm for achieving a robust product and process design.

sulting from process and environmental noise. This step is based on Taguchi's definition of quality loss as the loss to society resulting from variations from specification. The final step is tolerance design, which offsets the singular nature of the added costs to manufacture a product to absolute precision by permitting a bounded level of statistical variance. Taguchi's methodology is chosen here under the strong belief that, other things being equal, products developed according to this paradigm will result in the least loss of quality due to variance from specification and also meet cost constraints. Moreover, starting with a given baseline process and product, application of Taguchi methods often simultaneously improves quality and reduce costs (American Supplier Institute, 1989).

APPLICATION OF THE CRITERIA

The statement of our problem then is as follows: Find the organizational structure that best satisfies the administrative criteria when the enterprise, using Taguchi's paradigm as a work plan, desires to score highly in terms of the fundamental metrics. The first administrative criterion listed

(functionalization) does not have to be considered any further as it is no more than a restatement of the problem. We will also hold judgment on the initiative and continuity criteria until we have looked at two different organizational structures for comparison. It is useful first to establish a baseline by evaluating the correspondence and coordination criteria for the functional organization. The results have been tabulated on a pass/fail basis in Table 1 based on mapping the three fundamental metrics and the three steps for Taguchi's paradigm organizational structure of Figure 1 . The correspondence criterion fails against every objective but one because the responsibility and authority for value to the customer (V), cost (C), the pace of innovation (1/dt), and the Taguchi paradigm are so diffuse across the functional structure. The pace of innovation for the functional organization is given a passing grade for its quantum leaps but a failing grade for continuous improvement. The coordination criterion for the product is also compromised in the functional organization as the reference from one activity to anotherfrom engineering to manufacturing, from manufacturing to purchasing, etc.requires crossing divisional boundaries and thus does not take the shortest possible line, which would be intradepartmental or intradivisional. The systems design step of the Taguchi paradigm requires close coordination between marketing, planning, and systems engineering. Parameter and tolerance design require close coordination between design engineering and manufacturing. All are in different divisions in the functional organization. Innovation again receives both pass and fail marks because quantum leaps often do not require much if any coordination for the initial inspiration; whereas, continuous improvement requires much coordination on a day-today basis. The above results would not change if the metrics used were quality, lead time, cost, and innovation. As noted above, the functional organization's fatal flaw is that it supported a sequential productrealization process. Based on our evaluation of this structure using the classical administrative criteria, we are able to give a more insightful description of its shortcomings: Simply stated, the functional organization is unable to administer the metrics and the work plan required to face off against worldclass manufacturers in highly competitive
TABLE 1 Pass/Fail Analysis of the Correspondence and Coordination Administrative Criteria for the Functional Organization versus the Three Metrics and Taguchi's Paradigm

The Three Metrics Value Correspondence F Cost F Pace P/F

Taguchi's Paradigm For Robust Design System F Parameter F Tolerance F

global markets. Thus, for success in today's environment, it is necessary to arrive at an organization that groups the right elements of the product-realization process into units such that the correspondence and coordination criteria are simultaneously satisfied for the product (the fundamental metrics) and the process (the steps in Taguchi's paradigm). There are myriad other ways than functional to divide the manufacturing enterprise for organizational purposes. When studying product design, the design process, and the manufacturing process, a useful division is often achieved by exploding the total system into subsystems which in turn factor into subsubsystems that eventually factor into components. In what follows, we will use the natural system/subsystem (SYS/SS) architectural breakdown of a product as the proposed organizational structure for developing and manufacturing the product. We will staff the organization and place authority and responsibility in a manner that satisfies the administrative criteria when tested against the fundamental metrics and Taguchi's paradigm. This organizational structure is shown in Figure 3 . Materials are input on the left side of each box, and all output leaves from the right. Connection points for material flow are shown with a mesh fill and connection points for information flow are shown with wavy fill. Control information enters at the top of each box. Like the traditional product organization, the SYS/SS structure is an example, and a very robust example, of a self-contained organization (Galbraith, 1977, p. 51; March and Simon, 1958, p. 29; Walker and Lorsch, 1970) that should generate a strong customer orientation. The customer is the unit labeled C. The SYS unit has the authority and responsibility for the traditional functions that consider the product as a complete unit. In the functional organization, these would be

marketing, sales, design, systems engineering, packaging, and final assembly. It is mandatory, for example, that packaging and final assembly responsibility and authority reside together in the SYS unit to satisfy the administrative criteria. The chief responsibility of the SYS unit is to understand the customer's changing needs and translate them into a set of specifications for each individual subsystem. The systems unit must, therefore, have the authority and skills to achieve this important task. Its hallmark should be the ability to be close to the customer and translate customer needs into product specifications that result in the optimum balance of product value and cost for the intended market segment. It should be hard to discern, for example, any boundaries within the SYS unit between what has traditionally been marketing and systems engineering. The units labeled SS1, SS2, and SS3 represent subsystem units. The SS3 unit is cross-hatched to indicate that it is (or could be) a supplier and not part of the parent organization. Subsystem units have the responsibility to supply the systems unit with subsystems that are
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FIGURE 3 Input, output, and control for an organization based on a SYS/SS architecture. For clarity, this figure does not show direct lines of communication from the SS units to the customer or the myriad feedback channels between the SYS and SS units.

and that satisfy the system specifications for the subsystem. The latter are defined through controls issued by the systems unit. It is important to understand the basic purpose of controls; they exist so that the system is optimized for the customer. Without controls, each subsystem unit would tend to

optimize the subsystem for which it is responsible, with the result that the overall system is suboptimal. The controls include cost, weight, package dimensions, and high-level performance criteria for each subsystem. The controls should represent the truly minimal number of specifications needed to generate the customers.

WHO REALLY IS THE CUSTOMER?

The question of defining who your customers are seems fairly easy, particularly if you have segmented your market properly and understand who you are trying to satisfy. However, a subtlety that frequently goes undetected by many firms is that the customer set can be divided into two partsthe apparent customer and the user. The apparent customer is the person or group of people who decide what product to buy and basically have control over the purse strings. The user is the person or group who physically uses the product or is the direct recipient of a service. One way to illustrate this significant difference is to relate a new product story from the history of a well-known dog food manufacturer. After surveying their customers carefully, the manufacturer decided that the greatest unfulfilled need their customers had was to somehow provide a food that overcame the greatest disadvantage of man's best friend, specifically, the dog's bad breath. It did not take the research department long to come up with a chlorophyll additive to their regular product, and they went into customers.

WHO REALLY IS THE CUSTOMER?

The question of defining who your customers are seems fairly easy, particularly if you have segmented your market properly and understand who you are trying to satisfy. However, a subtlety that frequently goes undetected by many firms is that the customer set can be divided into two partsthe apparent customer and the user. The apparent customer is the person or group of people who decide what product to buy and basically have control over the purse strings. The user is the person or group who physically uses the product or is the direct recipient of a service. One way to illustrate this significant difference is to relate a new product story from the history of a well-known dog food manufacturer. After surveying their customers carefully, the manufacturer decided that the greatest unfulfilled need their customers had was to somehow provide a food that overcame the greatest disadvantage of man's best friend, specifically, the dog's bad breath. It did not take the research department long to come up with a chlorophyll additive to their regular product, and they went into

Audit Department

Department Hierarchy

History of Department

Department's Working

Other Departments

Department's Hierarchy

The Audit Department is under the direct control of Sh. R.S. Kang, Chief Auditor and is headed by Sh. V.K. Kaushik, Section Officer (Audit). The Department has a strength of Six Auditors .

Hist ory

The Municipal Corporation, Chandigarh came into being with effect from 10.7.1994 vide Act No.45 of 1994 on the pattern of Punjab Municipal Corporation, Act, 1976. Audit is an instrument of Financial Control, acting as a safeguard on behalf of the Govt. against extravangenance carelessness of fraud on the part of the Govt. Servants in realization and utilitisation of money and other assests. The Local Audit Department came into existence the day local bodies were created in the states through legislation. The main purpose of the audit is to bring to the notice of the Administration lacunae in the rules and regulations and to suggest whatever possible ways and means for the execution of Plans and Projects with greater expenditure, efficiency and economy. Local Audit Department is under the administrative control of the Finance Department, Chandigarh Administration and is responsible for the audit of accounts of various local funds (including Municipal Corporation) of which it is either the statutory Auditor or the audit of which has been entrusted to it under the subordinate legislation or by virtue of Administrative instructions. Examiner, Local Audit Accounts, is the statutory Auditor for day to day examination of the accounts of the Municipal Corporation as laid down under section 176 to 180 of Punjab Municipal Corporation Act, 1976 (extended to union Territory Chandigarh) Act ,1994.

Working of the Department

Audit functions of the Corporation warrants Pre-Audit/Post Audit of monthly salary bills and arrear claims of more than 6000 regular and work charged staff of Municipal Corporation. The audit has to check the correctness of monthly deduction of provident fund alongwith contribution from the Municipal Corporation fund and trace amount of deductions and contributions in respect of each Corporation employee in Provident Fund Ledgers and Provident Fund Liability Register. The correctness of interest earned and allowed in respect of each account has also to be checked in audit at the close of each year. Admissibility of various advance such as House Building, Conveyance and provident Fund advances sanctioned to the employee of Municipal Corporation have to be checked in detail with reference to Govt.

instructions and provisions of Rules. Municipal Corporation, Chandigarh has seven Engineering Divisions. All the work bills of the contractors have to be checked by audit in detail. The duty of seeing that the bills of contractors have been prepared in accordance with the approved estimates, recorded measurements and sanctioned rates . First of all, Accounts Branch is responsible for the initial check of these bills. Before submission to Audit Branch, the work bills have to be checked by the Accounts Branch completely with reference to sanctions, rates measurements Books, Material at Sight Register/Stock Register, Tenders and Tender Register and completion Report etc., are to be made available to audit by the Accounts Branch, when the same is requisitioned by Audit. Nearly 6000 vouchers which include salary bills, work bills, recoupments bills permanent advances bills and various kinds of other bills are received in audit for pre-audit during month. Since all these bills of Temporary advances, Provident fund, Income Tax bills and contingent bills etc alongwith related records are checked in detail, involves considerable time and lengthy process to check bills. Serious objections, embezzlements, losses detected in audit are reported to the Examiner immediately for taking appropriate action. The scope of the audit of receipt is to see tha t there is no leakage of revenue, no demands have been omitted and that all possible sources of revenue have been tapped. Income realized is to be checked and thereafter entered in the cashbook and deposited in the bank on the same day or on the next working day in case the income was received late during the day. Remissions of taxes have to be looked into thoroughly by the Auditors and have to ensure that no improper and irregular remissions have been allowed. Audit has to see that the stock account of the Corporation stores has been properly maintained and that articles are traced in the receipt column in the stock register at the time of passing the bills in which payments are claimed and simultaneously the accuracy of issue entries made after the last purchase is also checked in audit. Under the provision of section 172(2) of the Act ibid day-to-day examination and audit of the Corporation account is to be conducted and a monthly report thereon is to be furnished to the Municipal Corporation, Chandigarh. In order that the statutory provisions of the Act are complied with, the Additional Examiner (Local Audit) of the Corporation has to ensure that the revenue receipt are checked regularly and prepared by the Corporation office in Form. After completing audit of monthly account for March, all subsidiary registers which are not put up for monthly checks are taken up for audit. All these registers are to be reviewed and arrears of taxes and fee scrutinized. Annual audit & inspection report of the accounts of Municipal Corporation Chandigarh is prepared after the close of each financial year and submitted to the Corporation for its compliance.

The Joint Secretary is the Head of Department and Finance Secretary is the Administration Secretary of the Local Audit Department. The Chief Auditor-cum-Additional Examiner being incharge of Resident Audit scheme of Municipal Corporation shall also be the Financial Advisor of the Corporation and shall be available to the Administration for advice on all financial matters involving economy, improvement in accounts and such other accounts matters in which his advice may be sought by the Administration. He would seek guidance from the Examiner Local Fund Accounts on doubtful points.

Municipal Corporation Chandigarh

New Delux Building, Sector 17 Chandigarh

Audit Department

Department Hierarchy

History of Department

Department's Working

Other Departments

Department's Hierarchy

The Audit Department is under the direct control of Sh. R.S. Kang, Chief Auditor and is headed by Sh. V.K. Kaushik, Section Officer (Audit). The Department has a strength of Six Auditors .

Hist ory

The Municipal Corporation, Chandigarh came into being with effect from 10.7.1994 vide Act No.45 of 1994 on the pattern of Punjab Municipal Corporation, Act, 1976. Audit is an instrument of Financial Control, acting as a safeguard on behalf of the Govt. against extravangenance carelessness of fraud on the part of the Govt. Servants in realization and utilitisation of money and other assests. The Local Audit Department came into existence the day local bodies were created in the states through legislation. The main purpose of the audit is to bring to the notice of the Administration lacunae in the rules and regulations and to suggest whatever possible ways and means for the execution of Plans and Projects with greater expenditure, efficiency and economy. Local Audit Department is under the administrative control of the Finance Department, Chandigarh Administration and is responsible for the audit of accounts of various local funds (including Municipal Corporation) of which it is either the statutory Auditor or the audit of which has been entrusted to it under the subordinate legislation or by virtue of Administrative instructions. Examiner, Local Audit Accounts, is the statutory Auditor for day to day examination of the accounts of the Municipal Corporation as laid down under section 176 to 180 of Punjab Municipal Corporation Act, 1976 (extended to union Territory Chandigarh) Act ,1994.

Working of the Department

Audit functions of the Corporation warrants Pre-Audit/Post Audit of monthly salary bills and arrear claims of more than 6000 regular and work charged staff of Municipal Corporation. The audit has to check the correctness of monthly deduction of provident fund alongwith contribution from the Municipal Corporation fund and trace amount of deductions and contributions in respect of each Corporation employee in Provident Fund Ledgers and Provident Fund Liability Register. The correctness of interest earned and allowed in respect of each account has also to be checked in audit at the close of each year. Admissibility of various advance such as House Building, Conveyance and provident Fund advances sanctioned to the employee of Municipal Corporation have to be checked in detail with reference to Govt. instructions and provisions of Rules. Municipal Corporation, Chandigarh has seven Engineering Divisions. All the work bills of the contractors have to be checked by audit in detail. The duty of seeing that the bills of contractors have been prepared in accordance with the approved estimates, recorded measurements and sanctioned rates . First of all, Accounts Branch is responsible for the initial check of these bills. Before submission to Audit Branch, the work bills have to be checked by the Accounts Branch completely with reference to sanctions, rates measurements Books, Material at Sight Register/Stock Register, Tenders and Tender Register and completion Report etc., are to be made available to audit by the Accounts Branch, when the same is requisitioned by Audit.

Nearly 6000 vouchers which include salary bills, work bills, recoupments bills permanent advances bills and various kinds of other bills are received in audit for pre-audit during month. Since all these bills of Temporary advances, Provident fund, Income Tax bills and contingent bills etc alongwith related records are checked in detail, involves considerable time and lengthy process to check bills. Serious objections, embezzlements, losses detected in audit are reported to the Examiner immediately for taking appropriate action. The scope of the audit of receipt is to see tha t there is no leakage of revenue, no demands have been omitted and that all possible sources of revenue have been tapped. Income realized is to be checked and thereafter entered in the cashbook and deposited in the bank on the same day or on the next working day in case the income was received late during the day. Remissions of taxes have to be looked into thoroughly by the Auditors and have to ensure that no improper and irregular remissions have been allowed. Audit has to see that the stock account of the Corporation stores has been properly maintained and that articles are traced in the receipt column in the stock register at the time of passing the bills in which payments are claimed and simultaneously the accuracy of issue entries made after the last purchase is also checked in audit. Under the provision of section 172(2) of the Act ibid day-to-day examination and audit of the Corporation account is to be conducted and a monthly report thereon is to be furnished to the Municipal Corporation, Chandigarh. In order that the statutory provisions of the Act are complied with, the Additional Examiner (Local Audit) of the Corporation has to ensure that the revenue receipt are checked regularly and prepared by the Corporation office in Form. After completing audit of monthly account for March, all subsidiary registers which are not put up for monthly checks are taken up for audit. All these registers are to be reviewed and arrears of taxes and fee scrutinized. Annual audit & inspection report of the accounts of Municipal Corporation Chandigarh is prepared after the close of each financial year and submitted to the Corporation for its compliance. The Joint Secretary is the Head of Department and Finance Secretary is the Administration Secretary of the Local Audit Department. The Chief Auditor-cum-Additional Examiner being incharge of Resident Audit scheme of Municipal Corporation shall also be the Financial Advisor of the Corporation and shall be available to the Administration for advice on all financial matters involving economy, improvement in accounts and such other accounts matters in which his advice may be sought by the Administration. He would seek guidance from the Examiner Local Fund Accounts on doubtful points.

Municipal Corporation Chandigarh

New Delux Building, Sector 17 Chandigarh