In this blog post, we’ll explore what industrial engineering is and the role it plays in modern society through various examples.
Industrial Engineering? When I tell people I majored in industrial engineering in college, I often hear them say, “I’m not really sure what that is.” In fact, industrial engineering is one of those fields where it’s hard to guess what you’ll learn just from the name of the department. Consequently, there are many misconceptions about industrial engineering.
Let’s look at an everyday example that clearly illustrates the nature of industrial engineering. Sometimes, a flight ticket from Washington, D.C., via Incheon to Manila is cheaper than a direct flight from Washington, D.C., to Incheon. While it’s easy to assume that the longer the distance, the higher the price, actual airfare isn’t determined solely by operating costs. Modern management science shows that analyzing how much consumers are willing to pay and setting prices accordingly is a more effective way to maximize a company’s profits.
Why do such prices occur? First, passengers using the direct Washington, D.C.–Incheon route often choose it to minimize layover wait times and the inconvenience of transfers. Therefore, they are more likely to pay high fares comparable to those of other airlines. However, it is difficult to fill all seats with these passengers alone. Since aircraft incur fixed operating costs regardless of the number of passengers, it is crucial to sell as many seats as possible. Therefore, airlines sometimes employ a strategy of offering the Washington, D.C.–Incheon–Manila route at a lower price than competing airlines to attract passengers traveling on the Washington, D.C.–Manila route.
While this example is intuitive, in reality, airlines determine ticket prices by considering numerous factors, including routes, seat classes, seasons, and changes in demand. It is virtually impossible to make such decisions based solely on human experience. Rational decisions can only be made by utilizing mathematics, statistics, computer science, and optimization techniques; this field is known as “management science.” In English, it is known as “Operations Research (OR),” which literally translates to “operational research.” This discipline developed significantly during World War II to facilitate efficient decision-making for complex military operations, and today it has established itself as one of the core fields of industrial engineering. Building on this background, industrial engineering is still widely applied across various fields, not limited to specific industries.
Recently, financial engineering—a branch of industrial engineering—has also emerged as an important field. Just as farmers enter into contracts to fix prices in advance of harvest—a practice known as “battegi”—various contracts are made in financial markets to trade future risks. These transactions serve as a means to reduce price volatility risks and manage future uncertainty. Financial instruments such as futures, options, and swaps—which cover a wide range of assets including crude oil, steel, agricultural products, metals, and exchange rates—are prime examples. To calculate the fair value of these instruments and analyze their risks, advanced mathematical techniques such as probability theory, statistics, optimization, and stochastic processes are employed, and industrial engineering plays a crucial role in applying these analytical techniques to real-world industries and financial markets.
As such, industrial engineering is a discipline that provides engineering-based solutions to various problems arising in business and industrial settings. In other words, nearly every field that involves the scientific and systematic analysis of complex problems in industry and management can be a subject of research in industrial engineering. Today, industrial engineering broadly encompasses various fields such as management science, production and operations management, data science, systems design, ergonomics, supply chain management, and artificial intelligence applications. It is closely linked to nearly every industry sector that requires engineering analysis—including manufacturing, as well as the IT industry, semiconductors, biotechnology, logistics, finance, consulting, and the platform industry.
In South Korea’s educational environment, where the humanities and sciences are distinct, it is not uncommon for business majors to lack an engineering understanding, and for engineering majors to lack business knowledge. Industrial engineering plays a crucial role as a discipline that bridges these two fields. By combining engineering thinking with knowledge of economics and business administration, it enables graduates to demonstrate problem-solving capabilities across a wide range of industries. In fact, industrial engineering majors are entering a wide variety of fields, including manufacturing, IT companies, the financial sector, consulting firms, public institutions, research institutes, and graduate schools, and are also actively engaged in entrepreneurship.
Some liken industrial engineering to a conductor leading an orchestra composed of numerous engineering disciplines. I believe industrial engineering is akin to an “alchemist of engineering” in that it freely traverses various disciplines and combines them to create new value. In this sense, industrial engineering is a highly broad yet practical field, and its importance is growing even more in today’s world, where data, artificial intelligence, and automation technologies are advancing rapidly. While industrial engineering was not widely recognized in the past, it has now established itself as a field that plays a pivotal role across various industries. Therefore, misunderstanding industrial engineering as a discipline focused solely on learning specific technologies stems from a failure to properly grasp its true value.
