Productivity
Productivity
The prosperity of nations and organisations alike is recognized
as being dependent upon their comparative productivity. In times
of increasing competition, this has been brought sharply into
focus. Today, managers, supervisors and workers alike are all
under constant pressure to raise productivity. WHY? This is
because HIGHER PRODUCTIVITY provides opportunities for raising
the general standard of living including opportunities for:
a) increased real earnings. b) Improved working conditions and a
shorter working week. c) Larger outputs at lower cost per unit,
and therefore lower prices. d) A strengthening of the economic
foundations of human well-being (less industrial strife).
Productivity may be defined as the ratio of output over input.
Frequently measures as the output per machine-hour or output per
man-hour. However one should determine the key factor in
productivity ratios by considering the resources that make up
the greatest percentage of total costs. It is the productivity
of these factors that has to be improved upon to substantially
affect the entire situation in the firm as a whole.
Productivity in industry
In industries where labour costs are low compared with material
costs or the capital invested in plant and equipment, better use
of materials or plant will give greater scope for cost
reduction. On the other hand, in those industries where labour
costs are high compared with capital costs, it becomes important
that the highest output per worker is achieved.
Material productivity
The relative importance of each resource varies according to the
nature of the enterprise, the country in which it is operating,
the availability and cost of each type of product and process.
There are many industries in which the cost of raw materials
represent 60% or more of the cost of the finished product, the
balance of 40% being divided between labour and overhead costs.
Under such conditions, the productivity of materials becomes a
key factor in economic production or operation. Materials
productivity measures materials costs in terms of output. This
should be carefully monitored by VALUE ANALYSIS. Material
productivity reflects materials used and material cost.
Plant productivity
When an enterprise is machine dominated, one has to calculate
plant productivity.
Output in money value Machine hours
This measure of efficiency reflects a) downtime b) output rates
c) throughput
Management performance can be measured by the use of Value Added
Index:
A.V.I. = Total Employment Cost Value Added
(Value Added is the difference between value of output and input)
Added value index measures management performance because: a)
unlike profit, it is less affected by factors outside a
manager's control. b) It focuses on a fundamental task of
management - responsibility for employee productivity
The background to productivity:
To achieve the greatest increases in productivity, action must
be taken by ALL sections of the community: government, trade
unions, workers and employers.
a) Governments can create the conditions most favourable to
employers and workers to raise productivity by:
- providing a balanced programme of economic development taking
the necessary steps to maintain employment levels. - Creating
training opportunities for anyone becoming redundant as a result
of productivity improvement programmes. - Cultivating good
industrial relations.
b) trade unions can improve the standard of living of their
members by encouraging them to participate in schemes aimed at
raising productivity.
c) management must create good human relations and obtain the
cooperation of the workers, which is most essential for any
success. It should strive to create that climate favourable for
introducing productivity improvement programmes.
d) Workers - one of the greatest difficulties in obtaining the
active cooperation of the workers is the fear that raising
productivity will lead to unemployment. Resistance can generally
be reduced to a minimum if everybody concerned is made to
understand the nature of and reason for each step taken and has
some say in its implementation.
The manager's role
Many studies have shown a relationship between high productivity
and the manager/supervisor's interest in his subordinates as
individuals. Employees look at their supervisors as a source of
help; they are there to give them a sense of direction. Unless
supervisors are aware of this fact, improvement in productivity
cannot be achieved.
Every manager should be aware of the basic principles involved
in METHOD IMPROVEMENT. If there's always a better way, how do we
set about finding it?
METHOD IMPROVEMENT How the TOTAL TIME of a job is made up.
The time taken by a man or a machine to carry out an operation
or to produce a given quantity of product may be considered as
made up of:
1. Basic work content is the irreducible minimum time
theoretically required to produce one unit of output. It is the
time the product would take to manufacture or the operation to
perform if the design or specification were perfect, if the
process or method of manufacture or operation were perfectly
carried out, and if there were no loss of working time from any
cause whatsoever during the period of operation. 2. excess work
content: added by defects in design or specification of product
and by inefficient methods of operation or manufacture. 3.
ineffective time: due to shortcomings on the part of management
and/or worker.
HIGH PRODUCTIVITY is achieved where the EXCESS WORK CONTENT and
INEFFECTIVE TIME for a job are small or have been eliminated,
and the BASIC WORK CONTENT is a high percentage of the total
time for the job.
Refer to management techniques on how to reduce work content and
ineffective time.
No productivity improvement programme can succeed without:
- measurement. - Commitment. - Feedback. - Action.
All committed to IMPROVEMENT PROGRAMMES now. MANAGEMENT
CHALLENGE OF THE YEAR 2000
PERSUADE HUMAN BEINGS TO CHANGE, TO DO AN UN-NATURAL ACT.