THE CONCEPT OF PRODUCTIVITY & ITS IMPLEMENTATION
BY
O. P. PANDEY
PRODUCTIVITY
• What is it?• Why do we need it?• How do we measure it? • How do we improve it?• How do we implement it ?
DEFINITION OF PRODUCTIVITY
• Very simply,
• Productivity = Output
Input
For any type of organization
EXAMPLES OF OUTPUT
• Volume of output• Value of output• Time taken to carry out a job
EXAMPLES OF INPUT
• Labour force or man hours, man days. Etc..• Labour cost (Rs)• Machinery deployed at Site• Material cost in Rs.• Volume of material
Improved Margin
Less Capital Input
Higher Productivity
Time Saving Less Manpower
WHY PRODUCTIVITY IS IMPORTANT
WHY PRODUCTIVITY IS IMPORTANT (Cont...)
Higher standard of living
Higher GDPper capita
Higher
Investment Higher
Productivity
ACCORDING TO MICHAEL PORTER
• “…The 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
RESOURCES OF AN ORGANIZATION
• Whether Public or Private;The resources that are available to them are:
• Land & Buildings• Materials• Plant, Machines & Equipment• Energy• People• Money
IMPROVING PRODUCTIVITY
• Output = • Input • Methods of improving Productivity• Increase output while input remains same• Decrease input while output remains same• Increase input resulting in a very large
increase in output• Decrease input by a very large amount with
a resultant small reduction in output
TYPES OF PRODUCTIVITY MEASURES
Quantitatively, Productivity is ratio of cost / value of outputs and inputs
Factor Productivity(Input = Raw Material, Labor etc.)
Multi Factor Productivity(Input = Raw Material, Labor, capital, energy,
water, chemicals, additives etc.)
Total Factor Productivity(All inputs including management, technology etc)
OTHER THOUGHTS ON PRODUCTIVITY
• “Productivity is an attitude of mind”• “Productivity means doing something better
today than yesterday”• “Productivity means continuous
improvement”
THE BASIC APPROACHES TO PRODUCTIVITY IMPROVEMENT
• Investment in high output and modern plant & equipment and new technology
- capital intensive approach• Improving the efficiency and effectiveness
of existing resources
- better management approach
PRODUCTIVITY IS ALSO...
• EFFICIENCY
(Doing things right)
+• EFFECTIVENESS
(Doing the right things)
“Do the right thing and do it right now”
MISCONCEPTIONS ABOUT PRODUCTIVITY
• People 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 - 3
• Productivity 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
MISCONCEPTION -4
• 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 productivity
then in the long term
there will be severe,
large scale loss of jobs.
MISCONCEPTION - 5
Productivity is relevant
only in manufacturing and
not relevant elsewhere
MISCONCEPTION - 6
Productivity can be
increased by cutting costs
across the board
MISCONCEPTION - 7
Productivity and
Quality are trade offs.
You cannot increase one
without affecting the other
MISCONCEPTION - 8
Productivity is directly
related to profits. In other
words a profitable
organization is always a
productive one
MISCONCEPTION - 9
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 remember
is the M I G cycle
THE M I G CYCLE
MEASURE
IMPROVE
GAIN SHARE
IMPROVING LABOUR PRODUCTIVITY
• Improving working conditions- lighting, ventilation, noise(music), temperature, work times
• Using appropriate and better tools• Ergonomics and better work station layout.• Improving factory, stores & office layout.• Improving the nutritional status of the worker• Improving industrial housekeeping and safety• Improving welfare facilities and worker motivation
IMPROVING MATERIAL PRODUCTIVITY
• Cheaper material• Alternative material• Cheaper sources• Better utilization
IMPROVING ENERGY PRODUCTIVITY
• Improve power factor• Reduce wastage• Study working procedures
etc.
FACTOR INFLUENCING PRODUCTIVUTY AT SITE
• Material• Labour / Workmen• Plant & Machinery
FACTOR EFFECTING PRODUCTIVITY
• Right deployment of equipment at right time.• Deployment of right trained people for
particular job.• Identification of deployment of resource in
proper time.• Creating healthy safe environment of work
place.• Regular training of workmen and staff to
achieve better productivity.• Regular maintenance of equipment deployed at
work place.
FACTOR EFFECTING PRODUCTIVITY
• Proper supervision of work at site.• Developing work procedure for each and every
activity.• Identification of risk and take necessary action
to mitigate it in time.
MAKE PRODUCTIVITY A WAY OF LIFE
• Think Productivity• Talk Productivity• Demonstrate Productivity• Be Productive at Home, on the Road, and
in Office
WHAT IS PRODUCTIVITY IMPROVEMENT?
• Productivity improvement is not just doing things better
• More importantly, it is doing right things better
• It is a process of change
• To improve Productivity it is therefore necessary to manage change
IMPACT OF PRODUCTIVITY IMPROVEMENT
• IMPROVING PRODUCTIVITY CAN OFFSET THE IMPACT OF SOME OF THE PROBLEMS OF DEVELOPING COUNTRIES WHERE RAPID POPULATION GROWTH, GROWING INDEBTEDNESS & INFLATION ARE VERY COMMON .
COMPETITIVE LEVEL OF PRODUCTIVITY
j NO ORGANIZATION CAN CONTINUE TO EXIST UNLESS IT MAINTAINS A COMPETITIVE LEVEL OF PRODUCTIVITY
j ORGANIZATIONS WHICH DO NOT SUCCEED IN THIS ARE DOOMED TO FAIL THROUGH STAGNATION FOLLOWED BY BANKRUPTCY OR CLOSURE
REMEMBER!
Productivity
starts with
You !
A VERY BIG THANKS
TO
ALL OF YOU