In 1900, US engineering academic, Hugo Diemer, a keen disciple of F.W.Taylor's scientific management approach, started using the term "Industrial Engineering" (IE) to describe a fusion of engineering and business disciplines.
In 1908 Diemer was appointed head of Mechanical Engineering at Penn State College. In the following year he set up the world's first IE department at the college. Diemer spread his IE message through his writings (like his popular book Factory Organization and Administration) and his network of prominent figures like Taylor, Henry Gantt and Frank Gilbreth. The Society for Industrial Engineering was set up in 1917 which merged into the Society for the Advancement of Management (SAM) in 1936. The resultant lack of a specific professional body was addressed with the foundation of the American Institute of Industrial Engineering in 1948.
In the following year, students at the Georgia Institute of Technology set up Alpha Pi Mu as a College Honor Society specifically for industrial engineering students. In 1950 Penn State set up their Alpha Pi Mu chapter and now there are 72 university chapters in the US. These chapters have played an important part in sustaining the popularity of IE in the US. In 1981 the AIIE dropped the American from its name to become the Institute of Industrial Engineering (IIE) and reflect the increasingly international nature of its membership.
Over the years the definition of IE has evolved and progressively broadened. For example one current definition of IE is "a body of knowledge concerned with the design, improvement and installation of integrated systems of people, materials, information, equipment and energy. It draws upon specialized knowledge and skill in the mathematical, physical, and social sciences together with the principles and methods of engineering analysis and design, to specify, predict, and evaluate the results to be obtained from such systems."
Perhaps the breadth of this coverage has contributed to a loss of focus, with Industrial Engineering methodology tending to be overshadowed by more recently and narrowly defined techniques like Lean Management, Six Sigma and Business Process Re-engineering, as well as by the increasing popularity and relevance of: marketing, human resources, IT and personal computing.
In 2008 in an attempt to improve its appeal, (and possibly avoid confusion with the Institute of International Education and the Institute of International Economics), the IIE considered changing its name to the Institute of Industrial and Systems Engineers (IISE). In 2009 Penn State celebrated the centenary of Hugo Diemer's original creation which is now called the Harold and Inge Marcus Department of Industrial and Manufacturing Engineering.