Productivity Mgt

8/2/2019 Productivity Mgt

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MANAGEMENT OF PRODUCTIVITY

What is productivity?- a measure for effective utilization ofresources inan organization.


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Concept ofProduction & Operation

Types ofProducts

Tangible/IntangibleConsumer /Industrial

Consumer durable & Non-durable

Discrete/Continuous

Standard/Customized

Production Management


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When does someone buy a product?

Need Experience and Satisfaction

Choice of aparticular product from variety?Concept of value

How can we [add] improve value [function/cost]?

Can we define production now?Production Activities

- alter physical state, alter form, alter chemical

composition, alter metallurgical condition,

transport, preserve, store, impart knowledge,

information, give advicemedical advice, legal

opinion, give medical treatment


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What is management?

Important features of management

Efficiency & EffectivenessVisualize & Plan

Resource allocation

ReviewPDCA

Accountability for resource utilization

Production management

Coordinating production resources to meet

organizational objectives

Production resources: men, machines, equip.,

material, methods


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C/P

Ia

Ib

Ic

O/P

INFOFEEDBACK, ORDERS

??


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Organizational objectives

P,Q,C,D,E,F,S,H,E QCD

Production ManagementObjectives

Performance Objectives

Efficiency & Effectiveness

Quality

Lead times

Capacity utilization

Flexibility


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Cost Objectives

Explicit[visible]costs: material, labor, scrap,

rework, maintenance

Implicit [invisible]costs: inventory, stock-outs,

shortages, delayed deliveries, mat.handling,inspection, grievances, dissatisfaction, down time,

opportunity

Productivity


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RESOURCE UTILIZATION


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MATERIAL

OUTPUT

WASTE

(MUDA)

LABOR

CAPAITL

ENERGY

OTHERS

INPUT


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Comparison of Indian & Global industries

Comparison factors Japanesecompanies

US/European co.

General Indianco.

1.Cycle time fromproduction todevelopment

0.5 to 2years

1 to 2 years 3 to 6 years

2. inventory level A few days

of sales

One month

of sales

9 t0 12 months

of sales

3. output peremployee

Rs. 32 Lacs Rs. 12 Lacs Rs. 2.5 Lacs

4. rejection rate 3 to 4 PPM 30 to 40 PPM 8 to 20 RPH

5. quality cost withrespect to sale

3% to 5% 5% to 10% 35% to 45%


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wastes in factories

1.defects ( scrap and rework)

2. inventory3.waiting4. searching for5.over production6.down time7. poor vendor quality

8.manpower idle or misused9.excessive material handling10.setup time11. waiting time , delays12. customer complaints13. accidents

14. absenteeism15. waste of power [ electricappliances left on ], air [leakage],water [ leaking taps, overflowingtanks],


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wastes in offices

1. High document retrieval time

2. Visitors waiting time - high3. Customer waiting time is high4. Payment to suppliers delays4. Absenteeism, late coming5. Long telephone talks

6. Long memos7. Forgotten messages8. Concerned person notavailable9. Waste of paper/water/power

10. Mail addressed to wrongaddressee

11. Long processing time


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What does low productivity mean?

Costly conversion process, as moreinputs[resources] are required for same outputs

due to ineffective utilization of resources, costs

go up, costly products, high prices Shortages

No place for the company in Competitive

Environment


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Company will shortly close down

When so many such companies close down what

happens?

Unemployment, poverty, black marketing due to

shortages and an

unhealthy economy, law and orderproblems, deterioration of standard of living, a

weak economy, a poor country open to exploitation

What are the causes of low productivity?

Lack of delegation Poor contract review with customer


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Poor attitude Ignorance

Lack of training Poor PDCA on management decisions Poor overall management

What areproductivity improvement

initiatives?

Work study5S

Kaizen Management TQM JIT, kanban, pokayoke

6 - sigma


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Elimination of 3Ms (Muda - waste, Mura -

strain, Muri - discrepancy) OJT as a result of all or any of the aboveinitiatives and awareness training

Mathematical tools & models like Dr. Sumanths

model

ILO approachDr. Sumanths five pronged approach of material

based techniques, Technology based techniques,Task based techniques, Employee based

techniques, Product based techniques


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What are the gains of productivityimprovement?

Lean Organizations [NVAs & NPAs reduced,organizations are effective and efficient]

High morale

Products are popular, expanding business [QCDimproved]

Overall Prosperity, Better Standard of Living

To be an economic power National pride, happiness and prosperity forgenerations


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How do we instituteProductivityImprovement Measures?

No Termination As A Result Of ProductivityImprovement Measures

Train Your Own People in Specialized Areas &enable them to seek better employment

Multi skilling Stop recruitment when some one retires

redeploy people Compensate Voluntary Retirement


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Productivity Improvement And Unemployment

Growing economy, more opportunities forrewarding work Prosperity


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Why should we measure productivity?

For assessing efficiency of conversion ofconversion process

For practical resource allocation one should knowhow much is needed

For making objectives realistic For strategising productivity improvement, one

should know the current situation

For stimulating bench marking

For realistic profit planning For stimulating competitive action For using as base for rational collective

bargaining


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For facilitating direction of organizational effortstowards productivity objectives [measuremonitor

controldirect ]We must remember that productivity is not

Volume of production

Measure of profitabilityprofit under unusualdemand conditions A technique to make worker work harder but to

make work easier


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What is productivity so that we can measure?

Productivity= Out put / input

[ expressed in common units][Total production of goods and services /

labor+materials+capital+energy]

Total factor productivity

= net out put / labor + capital

[Net out put = total out putintermediate

materials and services purchased]

Partial productivity or factorial productivity1. Labor productivity[1] = total out put / labor hours used


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[2] = total out put / gross labor hours

2. Machine productivity

[1] = total out put / machine hours used[2] = total out put / gross machine hours

3. Material productivity

= Total out put / material used4. Land productivity

= total out put / area of land used

Index approach to productivity measurementProductivity indices enable comparison of

productivity levels at a base period and current

period


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Calculate Total productivity, total factor productivity and partial[factorial] productivity measures for the following data. Please notethat this company purchases the materials, energy & services. Plant &equipment is on lease.

Out put Rs.1000/-

Human input Rs.300/-

Material input Rs.200/-

Capital input Rs.300/-

Energy Rs.100/-

Other expense inputs Rs.50/-


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Productivity Index

output x price[current period] / input x cost [current

period]------------------------------------------

output x price [base period] / input x cost [base

period]

National Productivity council

Organization promoted by Government of Indiain 1958, headquarters at New Delhi

to promote productivity culture in the country andpromote productivity improvement in industry,

agriculture service infrastructure and other sectors

of economy


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non profit & tripartite in nature, govt., industry &labor

provides training and consultancy in productivityimprovement alsoundertakes promotional programs for Tokyo based

Asian productivity Council [APC]. India is a

founder member of APC

to make India a competitive economy improve quality of service by interacting as a

change agent between central & state governments a favorite project of the then prime minister of

India, Pt.Nehru


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Job Evaluation

What is Job Evaluation?

a procedure designed to rank jobs on a formalbasis to measure the worth of a job for compensation

purposes in relation to other jobs

Why Job Evaluation?

Establishes relative importance of the jobs Ensures rates for similar skills are at par in the

industry Limits leapfrogging

New jobs will be brought into the wage structure

at a proper level


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Gives clear cut picture of the person needed forthe job

Rational selection policies

Eliminates wage inequalitiesequity pay Basis for wage negotiations Who DoesJob Evaluation?

The evaluation committee, comprising ofworkmen,staff and if required an expert, internal

or external How is it

done?Steps in job evaluation are job analysis, jobdescription, job specification, job evaluation

Job analysis iscollection of job facts *


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* Skills involved, responsibility, job knowledge,mental application, dexterity and accuracy

* Physical demandsphysical activities, workingconditions, hazards* Purpose of the jobjob description : recording of the facts about job- how do we obtain facts?observation, interview,

questionnaire

* Job identificationtitle,dept., no., location ofthe job, date on information was collected* Job summeryoverall picture of the purpose,nature and extent of the job


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* Job dutiesduties and responsibilitiesJob specification* Written statement giving minimum humanqualities required for successful performance of

the job

like education, training and experience, physicaleffort, mental skill, supervision, responsibility


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Methods ofJob Evaluation: ranking, job

classification, factor comparison, point rating

method

Ranking method*Using job description arrange the jobs accordingto difficulty in performance. The job most difficult

is first, next in difficulty comes next and so on*Paired comparison method: is used for the above*Advantages: 1. Very simple

2. Adequate for small organizations* Disadvantages 1. Subjectivein nature


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2. not suitable if no of jobs are many in an

organization

Job classification* certain grades or classifications are fixed in thecompany by identifying certain critical key

characteristics of occupations.

*These key characteristics[setting the machine,carrying out critical maintenance work] represent

the grades

* Various jobs in the occupation are put in thesegrades*Advantages: 1.Very simple

2. new jobs are easily fitted in the grades easily

*


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*Disadvantages: 1. Subjectivein nature 2. Overlapping of jobs

takes place in grades Factor Comparison Method Identify key jobs which are clearly understood

by everyone in the organization [say, sweeper,

cook, driver, security guard or as in the

organization, welder, setter, tool maker]. Obtain

job specification for these jobs.

Identify key factors of these jobs like mentalability, skill, physical efforts and working

conditions

And evaluate on a scale of 05 these factors

A h j b i di d f h


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Arrange these jobs in ascending order for each

factor & then fit other jobs factor wise in this order

and allot points to each factor.

Fix monetary value to the factors and thereby to

the jobJobs

Factors

Security

guard

driver cook sweeper

Responsibility 4 4 3 1

Skill 2 4 4 1

Physical efforts 3 2 2 4

Working conditions 3 2 2 3

Total 10 12 11 9

P i t R ti th d


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Point Rating method Identify key jobs and obtain job specifications Establish clear understanding about worth of these jobs in theevaluation committee

Identify various factors important for performing jobs in the

company say, education, experience, physical requirement, working

conditions, hazards and allot points to them on a 0-100 scale based on

the importance to work. Then divide them into 5 levels. Allot points

to these levels.


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Fit the key jobs factor wise to the matrix. Find out what each jobweighs Now fit other jobs in the order

Total

points

Level I Level II Level III Level IV Level V

Educn. 50 10 20 30 40 50

Expn. 50 10 20 30 40 50

Phy.

Requ.

100 20 40 60 80 100

Work.

Condn.

50 10 20 30 40 50

Hazard 40 8 16 24 32 40


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Incentives

Incentive is an award for performance above

standard Such performance results into gain in productivity Management shares such gain with the workmenas per a mutually agreed scheme

Such a reward motivates workmen to performabove standard regularly which further enhances

productivity gains

Types of Incentives-Financial and non financial Financial incentives award monitory rewardaccording to an agreed scheme


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Non financial incentives recognize theperformer publicly

Why incentives fail?Loose industrial engg. Standards or outdatedstandards

Poorly designed planproduction incentive Vsproductivity incentive,safety, quality, over

production, no safeguards

Complexity in calculations

Inequities in earnings Pressure tactics by trade unions Poor supervisory practices


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Distrust between management and workmen dueto management failures

*No raw material

*Equipment failuresSalient features of a good incentive scheme

A transparent scheme, simple to understand &easy to calculate reward per person Timely payment Built in safeguards against safety and badquality Compensation is significant Productivity based, rather than quantity based


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Some financial incentive schemes Individual Incentive Plans

Straight Piece rate plans: example Standard hours plan: example Group Incentive Plans

Documents

Productivity Mgt