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