Sharing the important well defined factors of "Productivity Improvement"
WHAT IS PRODUCTIVITY IMPROVEMENT?
Productivity improvement is to do the right things better and make it a part of continuous process. Therefore it is important to adopt efficient productivity improvement technique so as to ensure individuals and organization’s growth in productivity. The aim of this is to make & understand the productivity improvement, various techniques of productivity improvement, work study and its relation with productivity improvement
¨PRODUCTIVITY & PRODUCTIVITY IMPROVEMENT CONCEPT:
¨¨1. Productivity is the ratio between output/input & quantitative relationship between what we produce and what we have spent to produce.
¨2. Productivity is nothing but reduction in wastage of resources like men, material, machine, time, space, capital etc. , also can be expressed as human efforts to produce more and more with less and less inputs of resources so that there will be maximum distribution of benefits among maximum number of people.
¨3. Productivity denotes relationship between output and one or all associated inputs.
¨4. Productivity is an attitude of mind, mentality of progress of the constant improvement of that which exists & brings a certainty of being able to do better than yesterday & continuously. It is constant adoption of economic and social life to changing conditions with continual effort to apply new techniques and methods having faith in human progress.
¨5. Productivity means a balance between all factors of production that will give the maximum output with the smallest effort.
¨6. Productivity is the ratio between the volume of output as measured by production indicates with corresponding volume of labour input measured by production indices.
7. Productivity of a certain set of resources (input) is therefore the amount of goods or services (output) which is produced. Land and building, materials, machines, manpower (labour), technology etc. are the resources of a manufacturing company.
8. Productivity highly improved means that more is produced with the same expenditure of resource i.e., at the same cost in terms of land, materials, machine, time or labour & alternatively it means same amount is produced at less cost vise-versa that is utilized.
EXAMPLE:
1. Improved Productivity of Materials:
A skilled cutter is able to cut 90 sets/working day of wallet from cow leathers & where a unskilled labour is able to cut only 50 sets/working day of the same wallet from the same cow leathers. Here the productivity of the skilled worker is 45% greater than unskilled labour.
2. Improved Productivity of Machines:
A sewing machine without a tool is able to stitch 80 pcs. per working day Considering that through the use of a tool in the sewing machine the output is 120 pcs. then the productivity of that machine increased by 34% than sewing machine without the tool.
3. Improved Productivity of Men & Method:
An employee who is producing 40 pcs per hour. Considering that with the improved methods of work that the same employee will be able to produce 50 pcs per hour, then productivity of that employee will be improved by 20%. Thus it can be said that more output results into higher productivity or improvement from same amount of resources which means lower money costs and higher net money returns per unit of output.
Thus it can be said that more output results into higher productivity of the improvement from same amount of resources which means lower money costs and higher net money returns per unit of output.
¨Productivity - the outputs particularly in the form of physical pollution must be controlled in the context of increasing concern of society for clean environment and sustainable development.
¨¨Productivity improvements - products must be designed to satisfy customer need with optimum consumption of resources without the generation of waste in the manufacturing process.
¨SUMMARY OF PRODUCTIVITY CONCEPT
¨1. Productivity as an objective concept:
¨- It can be measured, ideally against a universal standard.
¨- Organizations can monitor productivity for strategic reasons such as corporate planning,
¨organization improvement or comparison to competitors.
¨- Can be used for tactical reasons such as project control or controlling performance to budget.
¨2. Productivity as scientific concept:
¨- Can be logically defined & empirically observed.
¨- It can be also measured in quantitative terms
¨which qualifies it as a variable & therefore it can be defined and measured in absolute or relative terms.
¨- It is much more useful as a concept dealing with relative productivity or as a productivity factor.
¨3. Productivity as a measure concept:
¨- Useful as a relative measure of actual output of production compared to the actual input of resources measured across time or against common entities.
¨- As output increases for a level of input or as the amount of input decreases for a constant level of output, an increase in productivity occurs.
¨- “Productivity measure” describes how well the resources of organization are being used to produce input.
¨4. Productivity as an efficiency concept:
¨- Productivity is often confused with efficiency.
¨- Efficiency is generally seen as the ratio of the time needed to perform a task to some predetermined standard time. However, doing unnecessary work efficiently is not exactly being productive.
¨- It would be more correct to interpret productivity as a measure of effectiveness (doing the right thing efficiently), which is outcome-oriented or output-oriented.
¨- Output/labour, output/machine, output/capital or output/energy.
¨5. Productivity as a Factor concept:
¨5.1. Partial Factor Productivity:-
¨- Considers a single input in the ratio.
¨- Partial factor productivity would be – the ratio of total output to a single input.
¨5.2. Multi-Factor Productivity:-
¨- Utilizes more than a single factor.
¨- Multi-factor productivity is the ratio of total output to a subset of inputs.
¨- A subset of inputs might consists of only labour & materials or it could include capital.
¨5.3. Total Factor Productivity:-
¨- Measured by combining the effects of all the resources used in the production of goods & services (labour, capital, raw material, energy etc.) and dividing it into the output.
¨Importance of higher productivity:
A Firm or department have to undertake a number of key steps towards in improving productivity & they are as follows:-
¨- Develop productivity measures for all operations; measurement is the first step in managing & controlling an organization.
¨- Look at the system as a whole in deciding which operations are all critical; it is over-all Productivity that is important.
¨- Develop methods for achieving productivity improvement, such as soliciting ideas from workers (perhaps organizing team of workers, engineers & managers), studying how other firms have increased productivity & re-examining the way work is done.
¨- Establish reasonable goals for improvement.
- Make it clear that management supports & encourages productivity improvement. Consider incentives to reward employees for their contributions.
- Measure improvements & publicize them.
- Don’t confuse productivity with efficiency. Efficiency is a narrower concept that pertains in getting the most out of given set of resources, productivity is a broader concept that pertains to use of overall resources.
¨Therefore it is essential to know the importance of higher / improved productivity in manufacturing company/organization & can be summarized as follows:
¨¨1. Productivity is a key to prosperity:
¨Rise in production which has direct impact on reducing the cost per unit & reduction in sales price. It increases wages for employees & increased profits for organization.
¨¨2. Higher productivity requires elimination of waste in all forms:
¨It is necessary to eliminate wastage in raw material, time, men, machinery & space etc. to improve productivity. Several techniques like work study, statistical quality control, inventory control, operations research & value analysis etc. are used to minimise wastages of resources.
¨Factors of Productivity Improvements:
¨There are varieties of factors which can affect productivity both positively & negatively are listed below & in this some factors can be controlled & some cannot be controlled due to natural limitations:
¨ 1. Capital investments in production.
¨ 2. Capital investments in technology.
¨ 3. Capital investments in equipment.
¨ 4. Capital investments in facilities.
¨ 5. Economics of scale.
¨ 6. Workforce knowledge & skill resulting from training/experience.
¨ 7. Technological changes.
¨ 8. Work methods.
¨ 9. Procedures.
¨10. Systems.
¨11. Quality of products.
¨12. Quality of processes.
¨13. Quality of management.
¨14. Legislative & regulatory environment.
¨15. General level of education.
¨16. Social environment.
¨17. Geographical factors.
Some Techniques for Measurement of Productivity:
¨1. Productivity has been defined as the ratio of output to input. An increase in productivity means an increase in output that is proportionally greater than increase in input.
¨2. Productivity may be measured either on aggregate basis or individual basis. On aggregate basis, output is composed with all inputs taken (added) together. This is called as “total productivity”. On individual basis, output is compared with any one of the input factor & this is called as “partial productivity” or “factor productivity”.
¨This below index measures the productivity of the entire organization with use of all resources. It is a way of evaluating efficiency of entire plant or firm.
¨ Total output Total production of goods and services
¨ Total productivity index = ----------------- = -------------------------------------------------------
¨ Total inputs Labour + Material + Capital + Energy
¨The ways in which input and output are measured can provide different productivity
measures. Disadvantages of productivity measures have been the distortion of the
measure by fixed expenses and also the inability of productivity measures to consider
quality changes (e.g., output per hour might increase, but it may cause the defect rate
to rise). It is easier to conceive of outputs as tangible units such as number of items
produced, but other factors such as quality should be considered.
¨Experts have cited a need for a measurement program that gives an equal weight to
quality as well as productivity. If quality is included in the ratio, output may have to
be defined as something like the number of defect-free units of production or the number of units which meet customer expectations or requirements. Therefore, it is very much essential to understand different techniques of measuring the productivity and its improvement.
In practice, there are multiple productivity improvement techniques.
¨Productivity Improvement Indices:
Factor productivity or partial productivity indices are of following types:
¨i) Labour Productivity:
¨The important function in any production set-up is that the budgeted quantity of work must be achieved over a period of time.
¨Labour productivity depends upon how labours are utilised.
¨Labour productivity can be higher or lower depending on factors like availability of work load, material, working tools, availability of power, work efficiency, level of motivation, level of training, level of working condition (comfortable or poor) etc.
Labour productivity can be measured in terms of hours or money.
¨Total output
Labour productivity = -------------------
¨ Labour input
Total quantity produced
Labour productivity (in terms of hours) = -----------------------------------------------------------
Actual man hours required to produce that quantity
Total cost (or sales value) of output produced
Labour productivity (in terms of money) = --------------------------------------------------------
Amount in terms of rupees spent on workers
The productivity of labour can be increased by increasing efficiency of labour and reducing labour time.
ii) Material Productivity:
Production system converts raw material into finished product with the help of manual, mechanical or chemical processes.
Material productivity plays important role in cost of production.
Material productivity depends upon how material is effectively utilised in its conversion into finished product.
Material productivity depends upon percentage of rejection, creation of scrap, level of spoilage, obsolescence, work wastage etc.
¨Material productivity can be expressed as:
¨ Total out put
¨Material productivity = --------------------- or
¨ Material input
¨ Number of units produced
¨Material productivity = ------------------------------------
¨ Total material cost
¨
Material productivity can be increased by using skilled workers, adequate machine tools, good design of product etc.
¨iii) Machine Productivity:
¨Production system converts raw material into finished product through mechanical or chemical process with the help of machines and equipments.
¨Machine productivity depends upon availability of raw material, power, skill of workers & machine layout etc.,
Total output
¨Material productivity = ---------------------------- or
¨ Material input
¨ Output in standard hours
¨Material productivity = ------------------------------------------
¨ Actual machine hours
¨iv. Capital Productivity:
¨For any production set-up, facilities of machines, tools, land etc. are required which are assets of organisation & capital is needed for such assets. As huge capital is locked in assets, their effective utilization is absolutely necessary. Capital productivity depends on how effectively assets are utilized.
Therefore decision is necessary to take about replacement of fixed assets. Early replacement of fixed assets brings down maintenance cost but requires capital expenses. On the other hand, late replacement of fixed assets improves ratio of production to capital expenditure, but it increases maintenance cost.
Organization spent large amount (direct expenditure) for assets like direct material, direct wages, land, building, equipment etc. But a production system incurs a lot of direct expenditure like salaries of manpower employed in planning, store keeping, record keeping, inspection etc. Indirect labour is also used for material movement, good housekeeping, cleaning etc. Indirect expenditure is incurred on indirect material like tools, oils, lubricant etc.
Total output Total output
Capital productivity = --------------------- or Capital productivity = ------------------------
Capital input Capital employed
SHARING WHAT I HAD LEARNT FROM MY LITTLE TENURE OF 35+ YEARS SERVED IN LEATHER GOODS MANUFACTURING SECTOR WHICH HAD BEEN MENTIONED ABOVE WELL ELABORATED VALUABLE CONTENTS GIVEN BY GREAT AUTHORS.
SUNDARAMURTHY VELMURUGAN, a2z Leather Professional Consultancy, Pondicherry. contact: whatsapp +918973231705