THE CONCEPT OF PRODUCTIVITY & ITS IMPLEMENTATIONBY T.M.JAYASEKERA
THE CONCEPT OF PRODUCTIVITY & ITS IMPLEMENTATIONPRESENTED BY T.M.JAYASEKERA B.Sc. Eng. MBA,C.Eng. FIE,FCIWEM,FIM.,FIMGT,MSLIM, MICE(Lond)Managing Director -Innovative Skills (Pvt.) Ltd291/50.Havelock Gardens ,Colombo -6-Tel/Fax594378
What is it?Why do we need it?How do we measure it? How do we improve it?How do we implement it ?
RESOURCES OF AN ORGANIZATIONWhether Public or Private;The resources that are available to them are:Land & BuildingsMaterialsPlant, Machines & EquipmentEnergyPeopleMoney
DEFINITION OF PRODUCTIVITY
Very simply,Productivity = Output InputFor any type of organization
EXAMPLES OF OUTPUTWhether the organization is public or private the outputs are ;Accomplishment of a taskLength of an outputDistance travelledNumber of pieces producedWeight of production
EXAMPLES OF OUTPUT(Contd.)
Volume of outputValue of outputNo. of documents processedTime taken to carry out a jobNo of jobs attendedNo. of customers served
EXAMPLES OF INPUTLabour force or man hours, man days. Etc..Labour cost (Rs)Area of land(in hectares)Kg. Of material or material cost in Rs.Volume of material or fluidLength of materialsquare area of spaceUnits of powerTime etc.
Output = Input Methods of improving ProductivityIncrease output while input remains sameDecrease input while output remains sameIncrease input resulting in a very large increase in outputDecrease input by a very large amount with a resultant small reduction in output
TYPES OF PRODUCTIVITY MEASURES
Single Factor productivityMulti Factor ProductivityTotal Factor Productivity
OTHER THOUGHTS ON PRODUCTIVITY
Productivity is an attitude of mindProductivity means doing something better today than yesterdayProductivity means continuous improvement
ACCORDING TO MICHAEL PORTERThe wealthy nations they are the productive nations
Productivity makes you wealthy, it allows you to support high wages, it allows you to support high returns on capital Michael Porter
WHY PRODUCTIVITY IS IMPORTANT
Higher standard of living Higher GDPper capitaHigherInvestment HigherProductivity
ARE WE STILL THE SECOND HIGHEST IN ASIA IN LITERACY?
We are not even in the first ten today.Countries with stronger economies have beaten us.
THE NEED OF THE HOUR
Massive Investment !Massive increases in productivity !
THE BASIC APPROACHES TO PRODUCTIVITY IMPROVEMENTInvestment in high output and modern plant & equipment and new technology - capital intensive approachImproving the efficiency and effectiveness of existing resources - better management approach
THE TWO ASPECTS OF PRODUCTIVITY
The soft or qualitative aspects - to create an environment conducive to productivityThe technical or quantitative aspect - to measure productivity
THE SOFT ASPECTS OF PRODUCTIVITYProductivity cultureTeam workQuality workDelighting customersWork ethicCaring for the work force
The quantitative aspects of productivity
By this is meant the concepts behind productivity measurement and their application to performance measurement at the economy and company level
National ProductivityIndustry ProductivityCompany ProductivityDivisional ProductivityBranch ProductivityIndividual Productivity
= GDP EMPLOYED WORK FORCE
This is a single factor productivity measure and therefore wrong inferences may be made by comparing one country with another
PRODUCTIVITY OF SRI LANKA
How do we compare with others in Asia
What inferences can we draw
ORGANIZATION PRODUCTIVITY- HOW TO MEASURE ?
The best method is to useAdded Value( as output) per single factor of output(Added value measures the wealth creation)
Calculating Added ValueThe subtraction method:(Wealth Generation Approach)Added Value = Total output less Bought-in materials and services The Addition method(Wealth Distribution Approach)Added Value = Labour cost + Depreciation + Taxes + Interest + Profit
EXAMPLES OF ADDED VALUE
Added Value per employeeAdded Value per Rs of labour costAdded Value per Kg of materialAdded Value per KWH of powerAdded Value per litre of fuel
MICRO-LEVEL PRODUCTIVITY INDICATORSRatios which measure:CompetitivenessLabour productivityCapital productivityBusiness Returns & profitabilityProcess Efficiency
Cross sectional comparison
Time series comparison
PRODUCTIVITY IS ALSO...
EFFICIENCY (Doing things right) + EFFECTIVENESS (Doing the right things) Do the right thing and do it right now
MISCONCEPTIONS ABOUT PRODUCTIVITYPeople fear, hate, feel let down, complain about productivity, very often because they have misunderstood it.
There are several misconceptions about Productivity
MISCONCEPTION - I
Productivity = Production
Productivity is merely a more sophisticated word for production
MISCONCEPTION - II
Productivity means only Labour Productivity
MISCONCEPTION - 3Productivity can be increased by getting people to work harder TRUE TO SOME EXTENT But this is labour intensity NOT real productivity. Real productivity means working more intelligently not harder
Higher productivity causes retrenchment and large scale loss of jobs
This may happen in the short term but the long term benefits outweigh this disadvantage
Misconception -4(Contd.) If there is low productivitythen in the long term there will be severe, large scale loss of jobs.
MISCONCEPTION - 5
Productivity is relevant only in manufacturing andnot relevant elsewhere
MISCONCEPTION - 6
Productivity can be increased by cutting costs across the board
MISCONCEPTION - 7Productivity and Quality are trade offs. You cannot increase one without affecting the other
MISCONCEPTION - 8 Productivity is directlyrelated to profits. In other words a profitable organization is always aproductive one
MISCONCEPTION - 9
Productivity is relevant only in an open economy
MISCONCEPTION - 10
Productivity is only for commercial enterprisesand not for the public sector
MISCONCEPTION - 11
Productivity is for organizations and not for you and me
SO DO NOT GET MISLED BY THESE MISCONCEPTIONS
HOW DO WE IMPROVE PRODUCTIVITY
First point to rememberis the M I G cycle
THE M I G CYCLEMEASUREIMPROVEGAIN SHARE
THE PROFIT GOAL
PROFIT = REVENUE - COSTS
Analyze the Revenues Analyze the Costs And then Prioritize
Find the Vital Few Components of cost
ANALYZE REVENUE SOURCES
CLOSELY LOOK ATLabour costsMaterial costsEnergy costsFinance costsOverhead costs
IMPROVING LABOUR PRODUCTIVITYImproving working conditions- lighting, ventilation, noise(music), temperature, work timesUsing appropriate and better toolsErgonomics and better work station layout.Improving factory, stores & office layout.Improving the method/process - use 5Ws & IHImproving the nutritional status of the workerImproving industrial housekeeping(5s) and safetyImproving welfare facilities and worker motivation
USE THE BRAINS OF THE WORKER Quality CirclesStaff Suggestion SchemesKaizen System(Seiri-sort,Seiton-Set-order, Seiso-clean-up-Shine Seiketsu- standardize, Shitsuke-Sustain-Training & Discipline)Self Directed Work Teams3 Mu -Muda(Waste), Muri-(Strain),Mura(Discrepancy)
IMPROVING CAPITAL PRODUCTIVITY
Implement TQM Reduce Working capitalReduce floor spaceUtilize machinery & equipment betteretc..
IMPROVING MATERIAL PRODUCTIVITY
Cheaper materialAlternative materialCheaper sourcesBetter utilization
IMPROVING ENERGY PRODUCTIVITY
Improve power factorReduce wastageChange processes for less heatingStudy working proceduresetc.
QUALITY OF WORK FORCEUse A system of comparison based onWork force performanceWork force characteristicsWork force organization & practices
PRODUCTIVITY STARTS WITH YOUThink of productivity every minuteBe organized - do 5sImplement 1 is best campaignOne hour meetingsOne page memosOne copy documentsOne minute telephone calls
IMPLEMENT A Kaizen cultureStaff suggestion schemeSmall group activities5sAn environment which appreciates productivityConvince the work force of benefits
THIS IS THE NATIONAL