You need to be able to identify the various functions within an engineering company. These include both commercial and engineering aspects of the company’s operation. The commercial functions include sales, marketing, distribution, commissioning, finance and purchasing. The engineering functions can include R&D, design, manufacturing, product development, quality and planning. Product support is another, extremely important, area of engineering.
You should also be aware that non-engineering companies often require input from engineering services, such as maintenance of services and equipment. In addition to understanding the functions performed within an engineering company you must also be able to recognize the main responsibilities attached to key job roles within both the commercial and engineering functions.
The most important function within an engineering company (or any company for that
matter) is overall management and control so this is where we will begin our
investigation of how engineering companies operate.
The production workflow and some of the functions in an engineering firm are shown
in Figure 1.1. This production workflow starts with suppliers that provide an input to
the various engineering processes. The output of the engineering processes is
delivered to the customers. You may find this easier to recall by remembering the
The three functions that we have included in the diagram (there are many more in a
real engineering firm) operate as follows:
Planning The planning function ensures that the correct engineering processes
are in place and also that the workflow is logical and timely.
Control The control function ensures the quality of the output and the costeffectiveness
of the processes.
Purchasing The purchasing function ensures that supplies are available as and
when required by the engineering processes.
The essential business activities performed in an engineering company can be
grouped together under the general headings of planning, controlling and organizing
(see Figure 1.2). The first of these activities, planning, is absolutely fundamental to
the correct functioning of an engineering company. If no planning is done then activities are almost certainly going to be very ineffective. What is planning? It is the
sum of the following activities:
• setting the goals for an engineering company
• forecasting the environment in which the engineering company will operate
• determining the means to achieve goals.
Setting goals or objectives is the first step in planning. It determines the direction an
engineering company is going. It encourages all engineering company members to
work towards the same end otherwise members are likely to set their own objectives,
which will conflict with each other. Good objectives make for rational engineering
companies that are more coordinated and effective. The objectives must therefore
be set by the most senior management group in an engineering company so that all
of its staff can be given clear direction. If the goals are clearly stated, logical and
appropriate for the business then they act both as motivators and yardsticks for
Once the engineering company has clear direction the next step is to analyse the
environment and forecast its effect on the business. For example, an engineering
company that makes lawn mowers may set objectives so that, within 5 years, it will:
• achieve a 30% share of the market
• be acknowledged as the market leader
• be the accepted technological leader
• be highly competitive on price
• operate internationally.
When it forecasts its environment it may conclude that:
• new designs will be marketed by competitors
• new battery technology will become available to support cordless mowers
• there will be a sharp decline in demand for manual lawn mowers.
Its designs are technically very sound but are being threatened by new rotary `hover’
models that are proving attractive to customers. It has to decide how to deal with the
threat, either to improve its existing design concept so that customers continue to
find them attractive or to follow the new trend and produce products based on new
design concepts. Forecasting the environment allows the company to set new
objectives and to prepare plans to meet its revised goals. Companies that fail to go
through this process will go into decline in the long run because they are ignoring the
changing world around them.
Once the goals are refined and changed in the light of environmental forecasting
then plans can be made to achieve the goals. Some plans will not change that much
while others will be dramatically affected by the changing environment. For this
reason plans can be classified as follows:
• standing plans
• single use plans
• strategic plans
• tactical plans.
Standing plans are those that are used many times, and remain relatively unaffected by environmental change. Examples are employment, financial, operating and marketing policies and procedures. For example, hiring new employees involves standard procedures for recruitment and selection. Another example would be the annual routines for establishing budgets.
Single use plans are those that are used once only, such as those for the control of a unique project or specific budgets within an annual budget. (Budgets themselves are single use plans even though the procedures used for producing them are standing plans.)
Strategic plans are the broad plans related to the whole engineering company and include forecasting future trends and overall plans for the development of the engineering company. They are often in outline only and very often highly subjective, involving judgments made by top managers. For example, a plan may be made to build an entirely new factory based on forecasts of demand. This plan is strategic, and if the plan is wrong and the sales forecasts on which it is based do not materialize, then the results for a company could be devastating.
Tactical plans operate within the strategic plan. The new factory has to be brought into commission and production has to be scheduled and controlled. Plans for the latter are tactical, since they focus on how to implement the strategic plan.