ii productivity measurement in malaysia shipbuilding
TRANSCRIPT
ii
PRODUCTIVITY MEASUREMENT IN MALAYSIA
SHIPBUILDING INDUSTRY
AHMAD AZMEER BIN ROSLEE
A dissertation submitted in partial fulfillment of the
requirements for the award of the degree of
Master of Engineering (Marine Technology)
Faculty of Mechanical Engineering
Universiti Teknologi Malaysia
MAY 2009
iv
To my wife and my son whose sacrifice a lot during this period of study and support
that made me stronger every single day. For my family and friends who gave their
utmost support.
v
ACKNOWLEDGEMENT
All praise to Allah SWT, the Most Gracious and Most Merciful, Who has
created the mankind with knowledge, wisdom and power. Being the best creation of
Allah, one still has to depend on other for many aspects, directly and indirectly. This
is, however, not an exception that during the course of study, I had received so much
help, cooperation and encouragement that I need to duly acknowledge.
In the first place, I would like express my sincere appreciation to my
supervisor, Tn Hj Yahya Samian, for encouragement, guidance, friendship and
valuable comments in completion of this work. Without his continuous and
supportive effort, this thesis would not have been the same. I also came across
several people who are very nice enough to offer help in term of ideas and physical
assistance.
I also would like to relay a deep and warmest gratitude to my father, mother
and brothers for their understanding, patient and support in this period of study. To
my beloved wife Yasrina Yasim and my son, Ahmad Adam who experience the most
suffering and endure pain of sacrifice, I truly cannot replace it. All I can do is to
dedicate all my hard work in completing this thesis to you.
Finally, special gratitude to Mr. Khairol Basri, Mr. Mohd Fazli, Mr.
Muhammad Kharris, Mr. Zuraimi, Mr Mohd Harris, Miss Roslin, Mr. Sallehudin and
all my friends in UniKL MIMET especially those who directly influence my thought
in this thesis. Last but not least, many thanks for my friends who are unnamed here
and were involved directly or indirectly during my study.
vi
ABSTRACT
Despite the importance of Productivity Measurement in representing company’s
competitiveness, its implementation in Malaysia’s shipyard has not widely known
and properly documented. This research project is carried out with the aim of
determining the present methods and effectiveness of Productivity Measurement
employed in local shipyards. The result of the finding was then used to propose more
effective methods that are able to represent productivity level accurately. In this
study, selected shipyard from various sizes had been surveyed with the sole purpose
to determine the Productivity Measurement method use in their workplace.
Concurrently, a form was developed to assist shipyard in measuring, collecting,
recording and documenting proper productivity measurement data. Both survey and
form was developed based on the Organizational for Economic Cooperation and
Development recommendation. The form has been evaluated and tested at the
shipyard to ensure its validity and practicality to be used in context of Malaysia’s
shipbuilding environment. The form was then improved to suit the feedback received
from both survey and pilot study. The result of the study is a more comprehensive
Productivity Measurement method that is able to measure, record and analyze the
actual productivity of a shipyard in term of capital, labour, machine and energy.
vii
ABSTRAK
Walaupun Penilaian Produktiviti dalam mewakili daya saing sesebuah syarikat
adalah penting, penggunaannya didalam limbungan kapal di Malaysia masih belum
diketahui dan tiada dokumentasi yang teratur mengenainya. Tujuan utama kajian ini
dijalankan adalah untuk menyelidik kaedah Penilaian Produktiviti yang digunakan
sekarang dan keberkesanannya di limbungan kapal tempatan. Keputusan penemuan
ini akan digunakan untuk mencadangkan kaedah lebih berkesan yang dapat mewakili
nilai produktiviti secara tepat. Didalam kajian ini, beberapa limbungan kapal
tempatan yang mempunyai saiz berbeza telah dibanci dengan tujuan utama untuk
mendalami kaedah Penilaian Produktiviti yang digunakan ditempat kerja mereka.
Dalam pada itu, satu borang telah dihasilkan untuk membantu limbungan kapal
didalam menilai, mengumpul, merekod dan mendokumen data penilaian produktiviti
yang betul. Kedua-dua bancian dan borang yang dibangunkan adalah bertunjangkan
cadangan daripada Organizational for Economic Cooperation and Development
(OECD). Borang yang dihasilkan telah dinilai dan diuji untuk memastikan ianya sah
dan praktikal digunakan didalam konteks persekitaran pembinaan kapal diMalaysia.
Borang itu kemudiannya dimajukan dengan mengambilkira pandangan daripada hasil
bancian dan kajian awal. Hasil kajian ini ialah kaedah Penilaian Produktiviti
menyeluruh yang dapat menilai, merekod dan menganalisa nilai produktiviti sebenar
di limbungan kapal didalam konteks pelaburan, pekerja, mesin dan tenaga.
viii
TABLE OF CONTENTS
CHAPTER TITLE` PAGE
DECLARATION i
DEDICATION iv
ACKNOWLEDGEMENTS v
ABSTRACT vi
ABSTRAK vii
TABLE OF CONTENTS viii
LIST OF TABLES xi
LIST OF FIGURES xii
LIST OF APPENDICES xiii
1 INTRODUCTION 1
1.1 Introduction 1
1.2 Background of Study 3
1.3 Problem Statement 4
1.4 Objectives 4
1.5 Thesis Organisation 5
ix
2 LITERATURE REVIEW 6
2.1 Introduction 6
2.2 Productivity Methods 6
2.3 Partial Productivity Measurement 7
2.3.1 Labour Productivity 8
2.3.2 Machine Productivity 10
2.3.3 Energy Productivity 14
2.3.4 Capital Productivity 15
2.4 Multifactor Productivity Measurement 16
2.4.1 Capital Labour Multifactor Productivity 17
2.4.2 KLEMS Multifactor Productivity 18
2.5 Conclusion 18
3 RESEARCH METHODOLOGY 20
3.1 Introduction 20
3.2 Research Scope 20
3.3 Research Activity 21
3.3.1 Development of Survey Form and
Survey
24
3.3.2 Productivity Measurement Form
Development
28
3.3.3 Form Evaluation Analysis 29
3.4 Conclusion 30
x
4 RESULT ANALYSIS AND DISCUSSION 31
4.1 Introduction 31
4.2 Survey Result 32
4.2.1 Productivity Measurement Technique 33
4.2.2 Capital Productivity 34
4.2.3 Labour Productivity 35
4.2.4 Machine Productivity 36
4.2.5 Energy Productivity 37
4.3 Productivity Measurement 38
4.3.1 Denominator 38
4.3.2 Numerator 39
4.3.3 Productivity Formula 41
4.3.4 Productivity Measurement Formula 43
4.3.5 Productivity Measurement Form 44
4.3.6 Sample of Calculation 48
4.4 Conclusion 50
5 DISCUSSION AND CONCLUSION 51
5.1 Discussion 51
5.2 Future Research Work 52
5.3 Conclusion 52
REFERENCES 54
Appendices A – B 56-62
xi
LIST OF TABLES
TABLE NO TITLE PAGE
2.1 Example of Partial Productivity and Multifactor
Productivity Measurement
7
2.2 Basic Partial Productivity Measurement 8
3.1 Research Activity Planning Chart 23
4.1 Shipyard Background 32
4.2 Current Productivity Measurement Usage in
Malaysia’s Shipyard
32
4.3 Productivity Measurement Practice 33
4.4 Capital Productivity Measurement Activity 34
4.5 Labour Productivity Measurement Activity 35
4.6 Machine Productivity Measurement Activity 36
4.7 Energy Productivity Measurement Activity 37
4.8 Denominator Description 39
4.9 Numerator Description 41
4.10 Productivity Measurement Formula 42
4.11 Basic Parameter 49
4.12 Single Factor Productivity 49
4.13 Multifactor Productivity 49
xii
LIST OF FIGURES
FIGURE NO TITLE PAGE
3.1 Flow Chart Research Activities 22
4.1 Numerator Used in Measuring Productivity 41
4.2a Productivity Measurement Method 43
4.2b Productivity Measurement Method 44
4.3 Productivity Measurement Form 46
xiii
LIST OF APPENDICES
APPENDIX TITLE PAGE
A Productivity Measurement Survey Form 56
B Productivity Measurement Form (First
Design)
62
CHAPTER 1
INTRODUCTION
1.1 Introduction
In order to compete with other shipbuilding nation, Malaysia needs to set up a
new standard in shipbuilding quality. A lot of studies have been carried out on how
to make sure Malaysia shipbuilding industry have higher level of competitiveness
[1]. Often, the results do not reflect the current level of competitiveness and
therefore, it is not valid. The major problem of this pattern is they did not apply the
right Productivity Measurement method and formula.
Productivity can be termed as an index that measures output (goods or
services) relative to the input (labor, materials, energy and other resources) used to
produce them [2]. In mathematical term, the productivity is best represent by the
following formulae [2],
Output Productivity = Input x 100%
2
There are 4 Single Factor Productivity that listed in [1] to accompany above
mentioned basic formulae. They are labour, machine, capital and energy
productivity.
In order to show the importance of productivity, there is a very clear
relationship between it and competitiveness level. In 2008, Daewoo Shipbuilding &
Marine Engineering (DSME) recorded the highest labor productivity last year among
the big 4 shipbuilders in South Korea [3]. DSME have around to 11,830 employee
and posted revenue of KRW 11.0746trn ($29.26bn at 1000 krw = RM 2.70). Which
means one employee manage to get revenue of some KRW 935m, higher than that of
Hyundai Heavy Industries (HHI), the world's biggest shipbuilder. HHI, of which
employees total 26,103, posted revenue of KRW 764m per employee in 2008 while
Samsung Heavy Industries (SHI) whose employees amount to 11,882 achieved
revenue of KRW 897m per worker in the year [3]. All these four shipyards put Korea
as a frontrunner in the shipbuilding business and Malaysia shipbuilding is nowhere
near that figure.
In order to deal with the productivity problem, it is important if local shipyard
can sort out the several issues pointed out in the previous research by Maritime
Institute of Malaysia [2]. Several important factors that closely related to the
productivity is pointed out such as that there are not enough skilled worker and lack
of good engineering infrastructure and machineries. However, the research is not
based on the competitiveness level hence the real figure cannot be estimated. If the
shipyards apply the right Productivity Measurement method, the can straight away
see the real problem they currently faced.
Therefore it is important that this project is given hard look. This project
main goal is to investigate the real problem behind the usage of the Productivity
Measurement (PM) method and what are the systems that are currently being used.
The outcome of this project could help the shipyard to measure their productivity in
better way and the productivity value will be more representative. The value can then
be used to improve the productivity and the will also achieve higher level of
competitiveness along the way.
3
This research also intends to develop proper Productivity Measurement form
that can help local shipyards to use current technique in a better way. Finally, it is
hopeful that this research work can contribute to the competitiveness of Malaysia’s
shipyards.
1.2 Background of Study
This research is carried out to gain knowledge on current practice of
Productivity Measurement in Malaysia’s shipyards. This is very important as
Malaysia’s shipyard productivity data is nowhere to be seen. It is very hard to use
this data and if it is there, it is not presentable. Malaysian Industrial Development
Authority (MIDA), a government arm to promote local industries does not have any
data on shipbuilding industry [4].
This research is divided into two stages. In the first stage, it can be concluded
that there are two goals that need to be fulfilled. The first stage in this research is a
Productivity Measurement Survey. The first goal in this stage is to investigate the
current technique on how the measurement of each productivity factor is taken. The
questionnaire is being distributed to all 59 shipyards that register as Malaysian
Association of Shipowner (MASA) member [5].
The second goal is to compare all of current method with the Organizational
Economic Cooperative and Development (OECD) suggested method. It is essential
to do a comparison study with OECD that have over 40 years of experience in
dealing with economic statistic and promoting good industry practice to developing
nation. By doing so, this research project have a strong spine to justify the
importance of it.
The second stage in this research is the designing of the new Productivity
Measurement form. The new PM form will be based on both OECD recommendation
4
and current practice. A selected shipyard is chosen as a subject of the study as it is an
A class shipyard that continuously deal with respectable client.
The result from this research can help industry to realize that the PM methods
must be fully understood to ensure that they are using the right method. Shipbuilding
industry also will gain knowledge on how the correct formula to be used. The new
PM form also is an alternative for them to use in the transition period because it is
designed to accommodate current practice.
1.3 Problem Statement
The research carried out is related to the Productivity Measurement method
practiced in local shipyard. Therefore, it is important to line out its issue. There are 3
main issues that will be focused in this research work;
1) What is the present status of the productivity measurement in the local
shipyard?
2) How effective is the present Productivity Measurement Methods?
3) How can it be improved further?
5
1.4 Objective
The objectives for this research are as follow;
1) To identify the status and effectiveness of the present productivity
measurement methods implemented by Malaysia shipyards
2) To propose suitable productivity measurement method that is able to provide
accurate representation of the productivity in Malaysia shipyards
1.5 Thesis Organization
The thesis will be divided into 6 chapters where it start with Introduction and
followed by the Literature Review. In the third chapter, the Research Methodology
will be fully explained. This is to help any future related work can be conducted
easily by understanding the work flow. Chapter 4 contains analysis on the outcome
of the project work. Discussion and Conclusion is presented in the Chapter 5.
Reference and Appendix sections will be the closing section of this thesis
CHAPTER 2
LITERATURE REVIEW
2.1 Introduction
This chapter discusses about the basic concept and types of Productivity
Measurement that currently in practice. It covers the simple Partial Factor
Productivity or also known as Single Factor Productivity and flexible Multifactor
Productivity. This chapter clearly dedicated to understanding all productivity
methods available as suggested by OECD. It is best to start the chapter with a brief
explanation and differences between available productivity methods and divide all
concepts into 2 sections. The latter 2 topics will be accompanied with several sub-
sections.
2.2 Productivity Methods
Productivity is one of the most research and studied method in the
manufacturing industry [6]. This is because all industries particularly and
7
manufacturing industry specifically wants higher return for their investment.
Therefore, they need to closely monitor the productivity value. In order to understand
how correct the measurement of the productivity, OECD is referred. OECD [7]
suggestion to use Multifactor Productivity for one-off product cannot be ignored.
However, the Multifactor Productivity is based on the Single Factor Productivity.
Table 2.1 shows the comparison between both methods [2].
Table 2.1: Example of Partial Productivity and Multifactor Productivity
Measurement
Partial Productivity
(Labour Productivity)
Unit produced Productivity =
Man hour
Multifactor Productivity
Unit price
Productivity = Labor cost + Material
cost + Overhead
Based on its simplicity, it is understandable why productivity is the main
tools to control and monitor the manufacturing process over the past 3 decades.
However, in order to fulfill the current trend, where the industry needs to move really
fast, the new productivity tools have emerged. The productivity formulas are more
complex but it still uses the same fundamental.
2.3 Partial Productivity Measurement
In the early 70s, the productivity revolves around labour input. The product is
calculated based on how many of working hours to determine the productivity.
However, the concepts totally evolve in the 80s. There is a need to introduce
technology contribution in the productivity measurement. The introductions of new
agriculture technologies such as breeding, fertilizing and spraying have increased the
8
productivity of British agriculture business [8]. Although the labour working hour is
still the same but the productivity has rose up to 60%. This is where the partial
productivity starts taking place.
From the example, it also clearly stated that by introducing new technologies,
the capital investment also has increase. In this factor, partial productivity is
important because although the labour productivity has increase, there may be
reduction in the capital productivity. Finally, the same concepts also applicable to the
energy consumption productivity where the usage of the new technology may also
increase the energy usage hence decrease the productivity.
This four main factor is the backbone of the Partial Productivity
Measurement are clearly mentioned and defined in [1]. Independently, they are
called Single Factor productivity. Table 2.2 clearly differentiates all 4 factors [1];
Table 2.2: Basic Partial Productivity Measurement
Partial Productivity Measurement
Labour Machine Capital Energy
2.3.1 Labour Productivity
It is important to note that the most important productivity factor is the
labour. This is because labour is the main drive behind the productivity measurement
although there are another 3 factors. One research found out that the production
workers comprise about two-thirds of the total shipbuilding and repair workforce.
The study also shows that there is around 60 percent of their total workforce hours
Output Labor
Output Output Output Machine Capital Energy
9
are attributed to production workers [9]. This shows how important the labour factor
is.
Labour factor also is the main element in calculating the Growth Domestic
Product (GDP) and Gross National Product or GNP. For example, a 1984 report by
Singapore National Productivity Board stated that that more than half of the
contribution to the increase in GNP is attributed to the labour productivity [10]. In
turn, the same factor also can be use in studying Philippines economy. The labour
productivity in Philippines is only 2.3 % and clearly it has direct impact on low GDP
[11].
There are several other factors that contribute to the labour productivity but
according to [9], only two major factors that needs to be considered. The first factor
is the value added of the product once it is produce by the workers. It is
understandable this is the main consideration as shipbuilding industry does not
involve mass production product. Therefore, the value added of each product need to
be assessed.
However, the value added is not a concrete value. The value added is
normally a value that is projected from an experienced production engineer. This is
because the engineers need to estimate the saleable value of the product once it
finished undergo one stage of manufacturing process and the formula to calculate it
can be seen below [9].
Value Added = Saleable Value - Cost
By taking the value added formula, the productivity for labour can be written as
below [7].
10
Value Added Labour Productivity =
No of Workers
[9] also stressed out the importance of knowing the number of output.
However, the report did not state the specific output per labour productivity
measurement. In order to find out what is important in this productivity
measurement, [7] is referred. Below are the labour output productivity formulas that
are useful in the shipbuilding industry [7] [8] [9] [12].
Units of Output Labour Productivity =
Manhour
Output Value Labour Productivity =
Manhour
Units of Output Labour Productivity =
Shift
Units of Output Labour Productivity =
No of Workers
2.3.2 Machine Productivity
Since the European industrial revolution in 19 centuries, the machineries have
very big impact in industry worldwide. With the present of machineries in the
shipbuilding industry, lots of improvement can be seen. The working hours or
11
manhours are greatly reduced and the bigger ship with greater payload value such as
Very Large Crude Carrier (VLCC) and Ultra Large Crude Carrier (ULCC) already
strolling in the world today.
However, the machineries itself cannot increase the productivity value by
reducing the working hours alone. Although the working hours can be significantly
reduced, the machineries itself need to be considered as one of the productivity
factor. As a continuation from section 2.2.1 Labour Productivity, we can clearly
conclude that although the labour productivity played major influence, the
machineries that involve also need to be considered.
For example, there are several time wasting incident occurred during
workers-machines interaction. If this incident can be eliminated, the machine
productivity can be increased. Although some of the incident is contributed by the
workers, the time taken is considered under machineries time. Below are several
incidents that may reflect the machine productivity [13].
a) The time taken by the operator to load the item for manufacturing process
b) The time taken to transfer the part program to the motion controller
c) The setting up time taken by the operator to make the machine operate
d) The time taken by the machine to run the part program performing
manufacturing process
e) The time taken by the operator to unload the processed workpiece
f) The quality and precision of the finished part, poor quality increases the work
required subsequently
g) The down time of the machine
Clearly, by machine productivity is also vital and the need to control or
monitor it is there. Usually, productivity is closely related with time. If the machine
wasting time can be reduced, then the productivity can be increased. In order to
monitor the wasting time, Lone Oak Technologies, LLC, a consultant company that
produced Productivity Calculator, stated that the machine productivity is loss due to
four factors.
12
The first factor is Job Changes. The requirements of each machine are
different. Therefore, it is hard for workers to master all the machine technologies.
The workers also have to keep up with the new design and new machineries. Bear in
mind that the shipbuilding industry is not a mass production business. These
additional factors are a burden to the workers because they do not have time to do
specialization job like their counterpart in the mass-production industry. In this
factor, there are two time factor need to be considered which are
a) Mean Time to Change Jobs (MTCJ)
b) Mean Pieces Per Job (MPPJ)
The second factor is the Faults. An easy example to describe this factor is the
usage of the photocopy machine. There should be a clearance or lead time to do the
maintenance as it is wrong to assume the photocopier to run smoothly all the time as
the will be always a problem such as paper stuck or scanning error. The same
problems apply to all machineries and equipments. However, these type of fault can
be eliminate or reduce with proper maintenance planning. Below are the time criteria
for faulty.
a) Mean Time to Clear Fault (MTCF)
b) Mean Cycles Between Faults (MCBF)
The third factor that contributes to the low of machine productivity is the
Repair. Once the machine is broken down, the technicians need to call for help. From
this time onwards, the time is considered a repair time. Usually the repair time is
longer than the fault as external help is needed to overcome the problem. The factors
that need to be considered in the repair factor are
a) Mean TimeTo Repair (MTTR)
b) Mean Cycles Between Service Calls (MCBSC)
13
The Skipped Cycles is the final factor that contributes to the time wasting and
leads to the low productivity in the machine industry. Once the machine is fixed and
running, it is assumed to have normal operating capability. This is normal conception
of the industry. Usually, the older machine capability will decrease in time.
However, this factor is usually ignored in calculating the productivity. Below is the
factor that falls under Skipped Cycle category
a) Cycle Efficiency
In conclusion for this topic, Machine Productivity usually deals with machine
time rather than manhour. Formulas might be useful for the shipbuilding is listed as
below [2] [7] [8] [13].
Units of Output Machine Productivity =
Machine hour
Units of Output Machine Productivity =
Machine
Cost of Product Machine Productivity =
Machine hour
Value Added of Product Machine Productivity =
Machine hour
14
2.3.3 Energy Productivity
Energy is another Partial Productivity Measurement component that is closely
related to the machineries. With current industry trend that opt to go for bigger
machineries, it seems that the energy consumption becomes one of the most
important factor when buying or selling it. This is also back by a fluctuating oil price
where energy producer tend to hold the energy price at high rate. Therefore, the
industry prefers to have low energy consumption with high machine capabilities.
Study by [14], claims that the world spend around RM 20 trillion (USD 5
trillion) in energy in 2004. This includes energy wasting. The figure makes up 8% of
global Growth Domestic Product (GDP). The result from the study shows that the
energy productivity has a long way to go to reduce wastage. Hence, low energy
consumption machineries is welcomed to help boost the value of energy
productivity.
As mentioned earlier, there is direct relationship between the energy and
machines. However, because both are the factor for the single factor productivity, it
cannot mix together unless if the Multifactor Productivity value is to be analyzed. [7]
[8] [15] suggest single energy formula for energy productivity. Below are the
formulas that might be useful to be applied in the shipbuilding process.
Units of Output Energy Productivity =
Kilowatt hour
Cost of Product Energy Productivity =
Kilowatt hour
15
Although it appears that the energy productivity is the least concern in this
research, it must be included as the value is applicable in the multifactor productivity
calculation. According to [7], the energy productivity is treated as an intermediate
input in the KLEMS Multifactor Productivity formula. (KLEMS stands for capital-
labour-energy-materials-services, a multifactor productivity calculations suggested
by OECD)
2.3.4 Capital Productivity
Capital productivity is being treated as a primary input in the [7]. There is a
conflict between [2] and the [7] where the machine productivity is being treated as
one factor in the capital productivity. However, in this research, machine and capital
productivity is separated as better and clearer explanation can be gained.
The inputs that often linked with the capital productivity are initial
investment, investment or cost for the projects and stocks. As for the output, the
factors that usually put into consideration are profits the company makes, the number
of product produced and the value added of the product.
However, the capital productivity is a unique case. This is because it revolves
around the investment so it is impossible split the investment into several projects.
Therefore, the capital productivity is usually coupled together with the labour
productivity. [16] report shows the clear comparison between the Capital
Productivity, Labour Productivity and Labour-Capital Productivity.
All these Fomula should be derived and understood carefully so that
miscalculation can be avoided. The report from [12] suggest that Capital Productivity
index should be interpreted with care since partial measures can be very misleading
if taken alone, as they include amongst other factors, the effects of the substitution of
one resource for another, such as capital for labour
16
According to [16], capital input is an estimate of the services derived from the
stock of physical assets and software. The assets included are machineries, computers,
software, communications and other information processing equipment, other fixed
business equipment, structures, inventories, rental residences, and land.
In conclusion, after the outcome from several reports [7] [8] [12] [16] [17]
indicates that the Capital Productivity formulas can be listed as below
Value Added of Product Capital Productivity =
Cost or Investment
Units of Output Capital Productivity =
Cost or Investment
Profit Capital Productivity =
Cost or Investment
2.4 Multifactor Productivity Measurement
Multifactor Productivity Measurement (MFP) is defined by the [7] [8] as
relating a measure of output to a bundle of inputs. As mentioned in the previous
section, the Multifactor Productivity is a very powerful tool. Both [7] [8] outlines the
Multifactor Productivity (MFP) Measurement is very useful in assessing an
economy’s underlying productive capacity or also known as potential output.
Multifactor productivity is also always mistaken with the Total Productivity
[18]. The Total Productivity concept is a combination of all the Partial Productivity
17
measurement parameter/value. Therefore, the Total Productivity measurement is one
of the MFP and the assumption that both are the same is wrong.
Although there are several ways to combine the Partial Productivity
Measurement to have a MFP measurement, there are only two powerful methods
underlines by [7]. The methods are Capital-Labour Productivity and KLEMS
Productivity. Both methods are use based on the gross output and the value added.
The [16] [17] also promotes the same MFP methods by presenting their report in
“output per combined units of labour and capital inputs” productivity. [16] [17] also
currently expanding their MFP report to include OECD’s KLEMS MFP method.
Therefore, it is worth to view what is the Capital-Labour Productivity and KLEMS
Productivity are all about.
2.4.1 Capital Labour Multifactor Productivity
In the value added productivity measurement, this type of MFP can represent
the industry capacity to contribute to economy growth of income per unit of primary
input. This MFP can illustrate how productively combined labour and capital inputs
are used to generate value added. However, this MFP did not include machine
productivity and therefore it cannot provide accurate measure of technical change.
This is the disadvantages of the Capital Labour MFP [7]. Nevertheless, this MFP is
easy to use and the data needed is easily available. Below are the formulas that is
useful in this method
Quantity index of value added
Capital-Labour Productivity = Quantity index of combined labour and
capital input
18
Quantity index of gross output
Capital-Labour Productivity = Quantity index of combined labour and capital
input
2.4.2 KLEMS Multifactor Productivity
The idea of the emergence of KLEMS MFP is to combine capital-labour
productivity method and other intermediate factor. The intermediate factors in this
method are energy, materials and services. The KLEMS MFP [7] also reflects
efficiency change, capital scale and variations in capacity utilisation. This technique
also can represent the technical change because the incorporation of materials factor.
However, the drawback of this technique is the difficulties in getting data as there are
too many uncertainties. Listed below is the formula that is used in this method.
Quantity index of gross output KLEMS Productivity =
Quantity index of combined inputs
2.5 Conclusion
Single Factor Productivity is vital in determining each of the major
productivity indices. All 4 listed Single Productivity measurement formulas that are
derived will result independent value as suggested by all the literature. This is
important because they need to stay clear from other productivity factor to ensure the
correct index numbers or values are acquired. It is also important to have total
independent value because it is the requirement in determining Multifactor
19
Productivity. Although the MFP is much more powerful tools than the Single Factor
technique, it is very hard to be used. Ability to correctly measure Single Factor
Productivity can help in dealing with the MFP techniques.
All formulas mentioned previously will be use either directly or some minor
adjustment is needed before it can be inserted in the survey form. However, there
will be few additional formulas because the productivity methods are not a rigid
system yet it possessed great flexibility. Hence, it is important to have higher options
as long as it has OECD basic recommendation.
CHAPTER 3
RESEARCH METHODOLOGY
3.1 Introduction
This chapter discusses how the research work is carried out, its scope and why.
Brief discussion on every step involved is also included. Both stages of research that is
mentioned in the previous section will also be discussed in detail. Flow chart and
planning chart are also included to help the description.
3.2 Scope of Study
The research work is limited to the following scope
1) Survey on productivity measurement in Malaysia
21
- Survey form is distributed to the shipyards listed by MASA [5].
2) In-depth Productivity Measurement at a selected shipyard
- Only one shipyard is chosen for this case study. This is due to the amount to
be collected is vast and requires close observation and feedback.
3) Product from Production Department
- In making sure that the productivity measurement is effective and reliable,
this research will only concentrate on shipbuilding product or sub-product.
4) Productivity measurement methods
- Only two types of measurement that will be used in this research. Firstly,
Partial Productivity measurement will be used. The main reason is that the
partial productivity is the most common method used in the mass-production
industry while Multifactor Productivity (MFP) measurement which is much
more accurate for the mass production.
3.3 Research Activity
The main activity that is planned to execute this research study is shown in
Figure 3.1. Some of the activities are running concurrently as the results are
independent. Table 3.1 present the project scheduling covering research work done in
32 weeks. Each of theses activity will be discussed in detail in the following sections.
22
DISTRIBUTE SURVEY
FORM TO REGISTERED SHIPYARD WITH MASA
EVALUATE CURRENT
TECHNIQUE
RETRIEVED SURVEY
FORM
ANALYSIS
START RESEARCH WORK
SELECT 1 SHIPYARD FOR CASE
STUDY
GATHER INFORMATION
ON THEORETICAL PRACTICE
DEVELOPE PRODUCTIVITY
MEAUREMENT FORM
REDESIGN PRODUCTIVITY
MEASUREMENT FORM
RESULT IMPROVED
FORM
CONCLUSION
Figure 3.1: Flow Chart Research Activities
Table 3.1: Research Activity Planning Chart
Semester I Semester Break Semester II Activity
W5
W6
W7
W8
W9
W10
W
11
W12
W
13
W14
W
15
W1
W2
W3
W4
W5
W6
W7
W1
W2
W3
W4
W5
W6
W7
W8
W9
W10
W
11
W12
W
13
W14
Literature Review
Survey
Data Gathering
Survey Analysis
Case Study
Preliminary Finding Analysis Overall Analysis
Evaluation Research Writing
Dissertation Presentation
3.3.1 Development of Survey Form and Survey
In order to understand the problem, preliminary work is carried out. The best
way to find out what is the problem related to this research is to have a site visit and
interview people who directly involve in the shipbuilding industry.
Two initial interviews have been carried out in October 2008. During this
interview, one Production Manager and one Production Engineer are involved. The
Production Manager stated that his company only based on the profit gains over the
capital investment or total cost. Below are the other findings from this first interview:
• The company uses only manhours to calculate cost of each project
• The company relied heavily on the surveyor or also known as cost estimator
to project the value of each project
• There is no direct involvement of the Production Engineer or Production
Manager in the Project Estimation process
The second interview is with the Production Engineer who heavily involved in
several key projects at his company. Below are the extracted information from the
interview:
• The company also relied heavily on the manhours to calculate cost
• One researcher who attached at the company found out that out of 8 working
hours per day, only 4 hours is effectively use for project work.
• The productivity revolves around profit that the company gains
From both interview, it is justifiable that this research must be carried
accordingly as the shipbuilding industry Malaysia need to be safeguarded. Despite the
25
discouraging information gained from the interview, both interviewees are willing to
help in this research
This survey form questions is centered on the current productivity measurement
practice in Malaysia. The survey will tell us on whether the shipyards have systematic
productivity control and monitoring process or they just consider price of the output
product per input cost as general productivity calculation or worst, they do not have any
productivity measurement. In conclusion, the form should be designed to ensure all the
required data is retrieved
The content of the survey is mainly on how they configure and measure their
productivity. This is to ensure that the preliminary work that is carried out initially have
basis and can be numerically evaluated.
OECD is a well known structure that has over 40 years of experience in dealing
with economic and social data statistic [7]. One of the OECD main missions is to assist
developing nation in achieving greater success by providing probable solution,
experiences and identifying good practice. Therefore, it is important for Malaysia’s
shipbuilding industry to know where it lies in line with the OECD’s productivity
measurement recommendation.
The Survey Form also can help this project to understand Malaysia’s
shipbuilding culture better. OECD model alone cannot help to determine the success of
the industry because it is designed based on the Europe industries culture. It can be
deemed as an ineffective if this project did not incorporate or consider local culture
when the survey is carried out.
The content of the survey form is mainly revolving around the probable
Productivity Measurement usage in the industry. The form is designed as simple and
reasonable as possible as it is the important tools in this project. The formulation listed
26
in the survey is based on the basic productivity measurement formula the shipyard
involved is assisted in everyway possible to make sure the survey is a success.
The Survey Form starts with information on the research and researcher’s basic
particular. The reason why this is put in the first place is to ensure that the respondent is
confident about this survey and willing to cooperate. Apart from that, it is also a way to
show that all the valuable information that they will give is in the right hand and it will
not be use for other purpose aside from education.
The Survey Form contains three parts. Each of part has different aims. The first
part of the Survey Form is on Company’s Particulars. In this parts, the question that been
asked is about size of the company and the information on the company’s representative
who respond to this survey. Clear instruction is inserted in the beginning of the
questionnaires in order to make sure the respondents are qualified person.
This is very valuable information especially it can be a proof that this survey is
being run in accordance manner. It also can be seen as the shipyards are honest and
willing to share their information for this project. The information also is very important
as several confirmations can be made after the respondent return the survey back. This
helps this research to come up with several possible assumptions which can be seen later
in the following.
In the second part of the Survey Form, a set of questions on the company’s
practice is arranged in the suitable manner to avoid any confusion. The second parts start
with 2 very basic but important questions. The first one is on the shipbuilding activity at
the shipyards and the second one is the Productivity Measurement Process at the
shipyard. The latter question’s aim is to distinguish the shipyards that have the
Productivity Measurement technique to the one that do not. Shipyards that do not have
Productivity Measurement techniques are request to proceed to Part 3.
27
Further on, the questions continue with major category on the Productivity
Measurement technique. Questions on Productivity Measurement technique frequency
and opinion on current technique follow after that. Part 2 continues with question on
Productivity Measurement practiced at the shipyards. The questions are arranged in
suitable manner by putting the most influence method to the least sequence. The
arrangement of the methods can be seen below in Appendix A. This part ends with a
question on improvement of current Productivity Measurement practice.
Part 3 of the survey start with a question on the understanding of Productivity
Measurement itself. The first two questions main purpose is to acquire knowledge on
why the shipyard does not use any techniques to measure their productivity. Although it
seems very simple question, the impact to this survey is very great.
Later on, the question on whether the shipyards know that the importance of the
Productivity Measurement technique. This question purpose is to dig the shipyard
knowledge on their awareness of the Productivity Measurement and the impact it can
have in their business.
Next question in this survey is on the probability of the Productivity
Measurement usage in the future. This question is much more like a suggestion question.
The main purpose of this question is to lead the shipyards into believing that the
Productivity Measurement process is beneficial to them. However, it is also there to
acquire knowledge on whether they willing to change after knowing the benefit of this
method.
The final question in Part 3 is on the barrier the shipyards encountered that lead
to them not using any of these techniques. This question has the most option in the entire
survey so that it can help this project to understand the problem faced by the
shipbuilding industry. There are also blank spaces for the respondents/shipyards to put
any other answer that is not given as option.
28
The outcome of this question will lead to the belief that there are still obstacles
that are faced by several shipyards although the Productivity Measurement method is a
proven technique and is used more than 4 decades. The answers can help this research to
understand the shipbuilding industry better and more accurate conclusion can be made at
the end of this project.
[5] is referred to have acquire particular on targeted shipyards. All these
shipyards are sent one copies of survey form. The target for the survey form to be
returned is 55% and it will consider as end of this phase. However, it is hopeful that the
target of 70% can be achieved so that a reliable conclusion can be made. Though, as this
survey is a “Representative Survey”, if every shipyard in each class submits their
response, the result can be considered as acceptable. Hence, the lowest number of
response should be no less than 5, which represent shipyard class A to E
A Representative Survey is a survey that is carried out on major or dominant
subject and not based on the quantity of the subject. This is because, the outcome of this
survey already reflect the industry’s practice. Therefore, in this survey form, there are no
rating scales correlations involved [14].
3.3.2 Productivity Measurement Form Development
This phase can start without the first survey to be concluded as it will not affect
the results gained here. The selected Shipyard is chosen as a subject of the study as it is
an A class shipyard. The shipyard’s ability to attract client and continuously engaged in
shipbuilding projects is seems as the perfect candidate for this research.
29
During this phase, the manufacturing and fabrication work on selected workpiece
is studied. The productivity measurement will be conducted at the Production
Department. Selected manufacturing process will be evaluated closely as the value
added of finished product will also be estimated. Data such as man-hour, estimated cost
involve and estimated selling price of finish product will also be recorded. Partial
Productivity and Multifactor Productivity measurement and will be calculated
throughout the process. The entire process is recorded on a form.
Product Manufacturing Evaluation Form is designed to execute this task. The
form is based solely on the suggestion by [7]. The form will be kept on adjusted and
evaluated until it suits the engineer’s needs. Interview session also will be conducted
concurrently to gain their input on how to design better form.
The first design is based heavily on the OECD Manual. Current practice by local
shipyard is to resolve to the old trick where simplicity is important. From the first
design, several conclusions can be made such as the form creates discomfort among
engineers, it is hard to be filled in and unfamiliar with the formula as it incorporate
Multifactor Productivity technique
3.3.3 Form Evaluation Analysis
This is a continuation from previous activity. In the previous activity, the
selected shipyard is visited several times and the manufacturing process is observed.
Interviews also are carried out during this process. Production Engineer, Quality
Assurance personnel and skilled workers all give their feedback during this phase.
From their valuable feedback, the new Productivity Measurement form is
designed. The form is based on the feedback gained form the Survey Form, Interview
30
Session and OECD Manual. Apart from that, a confidential Productivity Measurement
Form acquired from one shipyard is also used as a based to design the new form.
The design of the second form is biased toward its flexibility to incorporate both
current technique and theoretical suggestion [7]. In this case, [7] only acts a guideline
and border and the current practice take the centerstage. The accompany Single Factor
and Multifactor Productivity is attached to ensure although the shipyards resort to use
current practice, at least the use the right formula. A Microsoft Excel format of this form
also is produced complete with automatic calculation for each productivity measurement
techniques.
3.4 Conclusion
This research work has been carefully crafted covering all the necessary steps.
The questionnaire/survey form has been developed after going through several
improvements as to ensure that the result of survey is valid. Verification process has also
been carried out in order to ensure the applicability of the proposed method
CHAPTER 4
PRODUCTIVITY MEASUREMENT METHOD
4.1 Introduction
This chapter discusses the how the Productivity Measurement method is
designed. It starts with the discussion on the result of the survey. The survey result will
determined what the current Productivity Measurement methods are and how they are
used. The result from this survey is then used to determine the Productivity
Measurement which is discussed in detail in the subsequent section. The result of the
Productivity Measurement method is then presented as Product Manufacturing
Evaluation Form.
32
4.2 Survey Result
There are 7 shipyards that take part in this survey. Table 4.1 summarize a little
bit of shipyards background. The validity of the survey is proven because there is a least
one shipyard represent each class. All shipyards also have various percentage of
shipbuilding activity which is the main concern of this research. Meanwhile, the result
that is presented in Figure 4.2 shows that there are over 85% shipyards in Malaysia that
have Productivity Measurement in their workplace.
Table 4.1 : Shipyard Background
No Shipyard Shipbuilding Activity % Size
1 A 51 - 75 B
2 B 26 - 50 E
3 C 51 - 75 D
4 D <25 C
5 E 76 - 100 C
6 F 76 - 100 D
7 G 26 - 50 A
Table 4.2 : Current Productivity Measurement Usage in Malaysia’s Shipyard
Answer Number of Shipyard Percentage
Yes 6 85.71
No 1 14.29
Total Shipyard 7 100.00
33
Result for the current Productivity Measurement method usage is divided into 5
sub-sections. The first sub-section discusses the overall usage and the following sub-
sections briefly discusses on the important factors.
4.2.1 Productivity Measurement Technique
From the survey, it is important to note that there are four shipyards that use all
four Productivity Measurement techniques. In turn, only one shipyard that does not have
any techniques to measure their productivity. The shipyards also have various
frequencies period measuring their productivity as can be seen in Table 4.3 below.
Table 4.3 : Productivity Measurement Practice
No Shipyard Capital Labour Machine Energy Productivity
Measurement Frequency
1 A √ √ √ √ Monthly
2 B √ √ √ √ Monthly
3 C √ √ Weekly
4 D √ √ √ Daily
5 E √ √ √ √ Weekly
6 F NA
7 G √ √ √ √ Weekly
34
4.2.2 Capital Productivity
It is important to evaluate capital productivity methods that the shipyards
currently use as it is the important parameter in the Capital-Labour productivity. Table
4.4 shows that only one company that does not use Capital Productivity technique. It is
also important to note that there are 4 shipyards that use formula (a) which is based on
the profit and cost ratio. Clearly, the profit per cost formula is very important for these
shipyards and it will be taken into account when dealing with the Productivity
Measurement method.
Table 4.4 : Capital Productivity Measurement Activity
No Shipyard (a) (b) (c)
1 A √
2 B √
3 C √
4 D NA
5 E √
6 F NA
7 G √
35
4.2.3 Labour Productivity
Labour Productivity result is also as important as the capital productivity. Table
4.5 indicates that the most usage techniques are
a)
Units of Output Productivity = Manhour
b)
Cost of Product Productivity = Manhour
These formulas are used by 3 shipyards. Survey also found out that there are 3
shipyards that use more than 1 labour productivity techniques.
Table 4.5 : Labour Productivity Measurement Activity
No Shipyard (a) (b) (c) (d) (e) (f)
1 A √
2 B √ √
3 C √
4 D √
5 E √ √
6 F NA
7 G √ √
36
4.2.4 Machine Productivity
Table 4.6 shows that Units of Output per Machine Hour is the most dominant
technique. There are 4 shipyards that apply this technique in their workplace. Another
important finding is one shipyard use 2 techniques to evaluate its productivity. The other
formula that is important in this technique is;
Cost of Product Productivity = Machine Hour
Table 4.6 : Machine Productivity Measurement Activity
No Shipyard (a) (b) (c) (d)
1 A √
2 B √
3 C NA
4 D √
5 E √
6 F NA
7 G √ √
37
4.2.5 Energy Productivity
The formulas used in local shipyards are equally divided. The mentioned
formulas are;
(a)
Units of Output Productivity = Kilowatt Hour
(b)
Cost of Product Productivity = Kilowatt Hour
Therefore, both formulas will be used in the designing of the Productivity
Measurement method later on. Table 4.7 summarise the result of this technique. Result
also shows that one shipyard does not apply this technique.
Table 4.7 : Energy Productivity Measurement Activity
No Shipyard (a) (b)
1 A √
2 B √
3 C NA
4 D √
5 E √
6 F NA
7 G √
38
4.3 Productivity Measurement
From the survey result, we need to justify the usage of all formulas. These
formulas are streamlined with the OECD requirement. It is best to know the importance
each parameter. Following sub-section describes the functions of each parameter.
Subsequently, the Productivity Measurement Methods that are applicable in Malaysia’s
shipyard also mentioned thereafter.
4.3.1 Denominator
Denominator for every formula is based on every technique. Therefore, there is
restriction when recognizing the parameters. Each denominator must carry the burden of
making sure the index resulted represent the productivity technique. The denominator is
chosen based on the survey result are listed in the Table 4.8. Brief explanation on each
denominator also described.
Once the core parameter is determined, the numerator for every Productivity
Measurement techniques need is assessed. The assessment for the numerators that are
combined with the denominator is discussed in the following sub-section.
39
Table 4.8 : Denominator Description
PRODUCTIVITY
TECHNIQUE DENOMINATOR DESCRIPTION
Capital Cost/Investment
It is use to determine the return of
investment. The index value also gives
an idea on the products new value
compare to the raw material value.
Labour Manhour
It is use to determine how productively
labour is used to generate product. It is
also effective to determine the index
value time consume by workers to
improve product value.
Machine Machine Hour
The index values generated represent the
effectiveness of machine in
manufacturing product and improve its
value. One formula has index value that
changes if there is capital change.
Energy Kilowatt Hour
The only parameter suggested by OECD
that result an index value to include
important changes such as product
manufactured and product added value
4.3.2 Numerator
Determining the important parameter for numerator is the most important issue
in developing the Productivity Measurement method. There is no restriction in
establishing the parameter for numerator so it must be chose carefully. The survey
40
helped to narrow down current usage and OECD also is heavily relied where it is not
covered. Pie chart in Figure 4.1 shows the numerator usage in local shipyard.
Figure 4.1 : Numerator Used in Measuring Productivity
All numerators except value added are widely used in local shipbuilding
industry. However, it is the most valuable numerator that is suggested by OECD. Hence,
that numerator should be taken seriously in designing the Productivity Measurement
method. Table 4.9 summarised the definition for each numerator.
41
Table 4.9 : Numerator Description
NUMERATOR DESCRIPTION
Profit Important parameter to determine return or capital
productivity index
Unit of Output Parameter to determine the index value of product
manufactured
Value Added
The most important parameter that function determine
the quality of product manufactured and later on act as a
basis for profit estimation
Cost of Product Provide impact of capital changes because it includes
every cost that may involves
Output Value
The product initial value estimates after each
manufacturing process after considering the value added.
Only applicable to the labour productivity.
4.3.3 Productivity Formula
Formula involves in the Productivity Measurement should be easy to use and
applicable in Malaysia shipbuilding context. All formulas derived are based on the
denominators and numerators that are being short listed before. Table 4.10 listed the
productivity techniques and its individual formulas.
42
Table 4.10 : Productivity Measurement Formula
PRODUCTIVITY
TECHNIQUE FORMULA
Profit Cost/Investment Capital
Value Added of Product Cost/Investment
Output Value Manhour
Value Added of Product Manhour
Units of Output Manhour
Labour
Cost of Product Manhour
Units of Output Machine Hour
Cost of Product Machine Hour
Machine
Value Added of Product Machine Hour
Units of Output Kilowatt Hour
Cost of Product Kilowatt Hour
Energy
Value Added of Product Kilowatt Hour
43
4.3.4 Productivity Measurement Procedure
The Productivity Measurement process should be control so that the data taken
can be considered as valid. Figure 4.2 shows the procedure that should be followed
when measuring and recording the productivity
Production department personnel to initiate
process
Insert machine parameter in the form
Determine manufacturing / production process
Determine raw material value, no. of workers and machine involved
A
Start process
44
Estimate value added and selling price for each product
Calculate the Productivity Index based on the formula given
Calculate output value
Collect various data and filled in the form during manufacturing / production
process
A
Finish process
Figure 4.2 : Productivity Measurement Method
4.3.5 Productivity Measurement Form
The design of the form is induced from standard format applied in one of the
shipyard. The form is very complicated as it asked for OECD recommendation practice.
45
A case study carried out shows that several OECD is not applicable to be applied in the
shipyard. The design of the first form can be seen in the Appendix B.
The second form is designed to address difficulties the first form faced.
Recommendation from selected shipyard engineer is put forward and current practice is
the main priority in this stage. This Form is called Product Manufacturing Evaluation
Form as to ensure it’s adaptability to the current trend as suggested by the shipyard
engineer. The name also suggests that this form should not be treated as an additional
form but a replacement of current manufacturing standard form. Figure 4.3 shows the
said Productivity Measurement form
The form is accompanied by the formulas that are derived in the previous
section. The formulas also are come with the alphabet representation for ease of use.
1. Capital Productivity
D - C Profit Pr = = Cost/Investment B
C - B Value Added of Product Pr =
Cost/Investment = B
46
Product Manufacturing Evaluation Form
Name (P.I.C)
Product Description
Initial Value Final value Value Added Selling Price
Labour
No. of workers
Total working hours Cost per hour Total Cost
Unit Produced (Optional)
1. 2. 3. 4. 5. TOTAL
Energy Consumption
Machine Total
Machine Hours
Rating Usage Percentage Total Cost
1. 2. 3. 4. 5. TOTAL
Remarks
A B C D
E F G H I
MK L N OJ
Figure 4.3 : Productivity Measurement Form
47
2. Labour Productivity
3. Machine Productivity
4. Energy Productivity
Units of Output ∑I Pr =
Machine Hour =
∑K
Cost of Product B Pr =
Machine Hour =
∑K
Units of Output ∑I Pr =
Kilowatt Hour =
∑M
Cost of Product B Pr =
Kilowatt Hour =
∑M
Value Added of Product C - B Pr =
Machine Hour =
∑K
C Output Value Pr = = ∑F Manhour
Value Added of Product C - B Pr = = ∑F Manhour
Units of Output ∑I Pr = = ∑F Manhour
B Cost of Product Pr =
Manhour = ∑F
48
Value Added of Product C - B Pr = =
Kilowatt Hour ∑M
5. Capital Labour Productivity
Average Added Value Index Quantity Index Value Added
6. KLEMS Productivity
Pr = Capital-Labour Input Index
= (Average Capital Index) + (Average Labour Index)
Pr = Quantity Index Value Added
Combined Index = (Average Capital Index) + (Average Labour Index) +(Average Machine Index) + (Average Energy Index)
Average Added Value Index
4.3.6 Sample of Calculation
During case study, the manufacturing of one storage tank is observed and the
some data below is taken. The storage or also known as loose tank main function is to
hold lubricant onboard of a ship. Table 4.11 contains basic parameters that are
determined in the beginning of the calculation process. The result for the Productivity
Measurement techniques is summarised in Table 4.12 and Table 4.13
49
Table 4.11 : Basic Parameter Steel Parameter Value Unit
Length 1.2 m Beam 1.2 m
Thickness 0.005 m Volume 0.0072 m3 Density 7850 kgm-3 Mass 56.52 kg
Cost Value Unit
Steel Price (RM) 3868.8 per tonne Price (RM) 218.66
6 sides (RM) 1311.987
Energy Value Unit Electric tariff 36.6 kWh
Table 4.12 : Single Factor Productivity Productivity Technique Formula 1 Formula 2 Formula 3 Formula 4
Capital 0.4375 0.15 - -
Labour 120.96 15.78 0.07 105.18
Machine 0.14 210.37 31.56 -
Energy 0.0095 13.96 2.09 -
Table 4.13 : Multifactor Productivity Productivity Technique Index Value Percentage
Capital Labour 0.4078 40.78
KLEMS 0.3376 33.76
50
4.4 Conclusion
From the sample calculation, it is noted that there is significant different in the
index value of the Single Factor Productivity and Multifactor Productivity. Therefore, it
is hard to justify which value is much more representative. However, it is suggested that
local shipyard to use the Capital Labour Productivity technique to start with because it is
much easier to implement.
CHAPTER 5
DISCUSSION AND CONCLUSION
5.1 Discussion
The survey results clearly help to indicate which Productivity measurement
techniques that currently by the Malaysia’s shipyard. It is also give valuable
information in term of which techniques that are most used. Subsequently, the result
is used to develop Productivity Measurement form which is applicable to both current
technique and recommendation by Organisational for Economic Cooperation and
Development.
The form is then validated by the industry and sample of project is taken to
test the form. The form is attached together with the Multifactor Productivity
technique to promote its usage. The form clearly can adapt current requirement and
additional formula sheet is really helpful.
The data taken is then calculated and compared. As predicted, the values for
Single Factor Productivity are stand alone and have no impact against other
Productivity Measurement. Meanwhile, both Multifactor Productivity techniques gave
nearly similar value to each other. KLEMS have lowest value because it considers all
Single Factor Productivity techniques and it is more representative compare to the
52
Capital Labour Productivity. However, its difficulty to implement may drive the
shipyard away.
5.2 Future Research Work
This research only covers the Productivity Measurement techniques but not
the measuring process. It is important to monitor the measuring process from the
beginning and use the new develop Productivity Measurement to take the
measurement. It is suggested that, in the future, a pilot study is carried out to find out
the effectiveness of productivity measuring process. The case study may comprise
topics such as Productivity Measurement process evaluation and factors influencing
the measurement process
5.3 Conclusion
A study about Productivity Measurement method with the aim to determine
the present status and to propose an improved system has been carried out
successfully. The conclusions of this study can be summarized as follows;
1. Although Malaysia shipyards already have an established Productivity
Measurement system, the index value generated from the methods is consider
not representative.
2. Proposed Productivity Measurement forms are able to help shipyard to
measure, calculate, record and document the productivity data effectively. It is
also capable in helping the shipyard to calculate both current and proposed
method and generate index value accurately.
53
The proposed Productivity Measurement Methods has also been verified by
potential users / experts who show that it can be implemented in local in the near
future.
54
REFERENCES
1. Nazery Khalid, The Malaysian Shipbuilding and Ship Repairing Industry : Addressing Current Issues and Charting The Way Forward, Seminar on ‘The State and Future of Malaysian Shipyards : Towards Improve Capability and Capacity’, 2006
2. William J. Stevenson, Productions/Operation Management, Sixth Edition,
Irwin/McGraw Hill, US, 1999
3. Vietnam Maritime Social Network http://www.vinamaso.net/news-events/shipbuilding-repair/daewoo-no1-productivity.html , 4 May 09; 4.20 pm
4. Malaysian Industrial Development Authority http://www.mida.gov.my/beta/view.php?cat=42&scat=603 , 7 May 09; 11.00 am
5. Malaysia Shipowners' Association (MASA), Malaysia Maritime Yearbook 2007/2008, 2008
6. Erik Brynjolfsson, VII Pillars Of Productivity, Optimize Magazine, Issue 22,
May 2005,
7. OECD Manual, Measurement Of Aggregate And Industry-Level Productivity Growth, France 2001
8. Joseph Prokopenko, Productivity Management: A Practical Handbook, 1st
Edition, International Labour Organisation, 1987
9. National Security Assessment of the U.S. Shipbuilding and Repair Industry, U.S. Shipbuilding and Repair, May 2001
10. Singapore National Productivity Board
http://www.photius.com/countries/singapore/economy/singapore_economy_national_productivit~1546.html, 7 May 09; 2.00 pm
11. International Labour Organisation, Key Indicators of the Labour Market, 5th
edition, 2007 12. Republic of Mauritius, Labour Productivity and Unit Labour Cost Report, 2004
13. William Hart, Getting the Most from your High-Speed Inserter: The 4 Primary
Productivity Factors, Lone Oak Technologies, LLC, 2005
55
14. Peter Garforth, Managing Energy Productivity: A Competitive Prerequisite, 2005 ACEEE Summer Study on Energy Efficiency in Industry, New York, 2005
15. McKinsey Global Institute, Curbing global energy demand growth: The energy
productivity opportunity, 2007
16. Bureau Labour Statistics, United State Department of Labour, Preliminary Multifactor Productivity Trends 2006 Report for Private Business Sector and Private Nonfarm Business Sector, 2007
17. Bureau Labour Statistics, United State Department of Labour, Preliminary
Multifactor Productivity Trends 2006 Report for Private Business Sector and Private Nonfarm Business Sector, 2008
18. Erwin Diewert, The Challenge of Total Factor Productivity Measurement, ,
Journal International Productivity Monitor, Volume 1, 2000
19. Rebecca Freeman, Labour Productivity Indicators: Comparison Of Two Oecd Databases Productivity Differentials & The Balassa-Samuelson Effect , OECD, 2008
APPENDIX A
PRODUCTIVITY MEASUREMENT
SURVEY FORM
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SURVEY
PRODUCTIVITY MEASUREMENT IN MALAYSIA SHIPBUILDING INDUSTRY (This survey is to be filled by Production Department Personnel or any person who directly involved with the field of Productivity Measurement, Productivity Control or Productivity Monitoring Process) Kindly send back this questionnaire before 27 December 2008 to the address below Ahmad Azmeer bin Roslee UniKL MIMET, Jalan Pantai Remis, 32200 Lumut, Perak. Telephone No : 05 – 690 9055 Fax No : 05 – 690 9091 / 05 – 690 9092 Please complete all the questions below. Please mark the best option that represents your company. Part 1: Company Particulars Company Name : ………………………………………………….. Address : ………………………………………………….. ………………………………………………….. ………………………………………………….. Shipyard Class : A B C D E F Telephone Number : ………………………………………………….. Fax Number : ………………………………………………….. Contact Person : ………………………………………………….. (Person who directly involved with this survey)
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Part 2: Productivity Measurement Methods 1. What is the percentage of shipbuilding activities in your company?
< 25 % 26 % - 50 %
51 % - 75 % 76 % - 100 % 2. Do you have Productivity Measurement Methods/Techniques/Formats that
you apply during shipbuilding process at your company? If your answer is NO, please proceed to the Part 3.
3. What is the Productivity Measurement Methods/Techniques/Formats that you
currently use at your company? You may tick more than one.
YES
MACHINE PRODUCTIVITY
CAPITAL PRODUCTIVITY
NO
ENERGY PRODUCTIVITY
LABOUR PRODUCTIVITY
Please State: _____________________________________
OTHER METHOD
Note:
1. Capital Productivity revolves around gains that are made per project over investment before the project started
2. Labour Productivity is about the product produced or the value of the product by the labour over the time taken.
3. Machine Productivity is about product produced by the machine over the machine usage (time, money, etc)
4. Energy Productivity can be defined as the usage of energy to produce the product.
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4. What is the frequency of this method being used? Please answer it based on one project.
ONCE DAILY
WEEKLY FORTNIGHTLY
MONTHLY
Please State: _____________________________________
OTHERS 5. Do you think that the current method reflect your productivity? 6. Please tick any productivity measurement method/formula that you use in
your shipyard. You may tick more than one. Productivity is represented with “Pr” symbol
a) Capital Productivity
YES NO
Profit Pr = Cost/Investment
Units of Output Pr =Cost/Investment
Value Added of Product Pr = Cost/Investment
Others
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b) Labour Productivity
c) Machine Productivity
Units of Output Pr = Manhour
Units of Output Pr =Shift
Value Added of Product Pr = Manhour
Cost of Product Pr =Manhour
Units of Output Pr = Workers
Output Value Pr =Manhour
Others
Units of Output Pr = Machine hour
Value Added of Product Pr = Machine hour
Cost of Product Pr =Machine hour
Others
Units of Output Pr =Machine
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d) Energy Productivity Cost of Product Pr =
Kilowatt hour Units of Output Pr = Kilowatt hour
Others
7. If you were given a chance to change how the productivity measurement
method is conducted during the shipbuilding process, will you do it?
YES NO That is all for Part 2. You do not have to answer the questions in Part 3 as it is only applicable for the shipyards that do not have the Productivity Measurement Method applied in their shipbuilding process?
~ THANK YOU VERY MUCH FOR YOUR TIME AND EFFORT ~ Part 3: Productivity Measurement’s Knowledge 1. Do you know what the Productivity Measurement Methods means is?
YES NO 2. Do you know how to calculate Productivity?
YES NO 3. Do you know how important is Productivity in determining the successful of a
project?
YES NO
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4. Do you intent to use Productivity Measurement Method in the future if is suggested that it can bring more success to your shipyard?
5. What will you think the biggest in implementing Productivity Measurement in
the shipyard? You may tick more than one.
~ THANK YOU VERY MUCH FOR YOUR TIME AND EFFORT ~
YES NO
LACK OF TIME LACK OF EXPERTISE
ADDITIONAL WORK NOT ENOUGH EXPOSURE
LACK OF SUPPORT FROM OTHER STAFF
OTHER REASON
1. _________________________________________________________
_________________________________________________________
2. _________________________________________________________
_________________________________________________________
3. _________________________________________________________
_________________________________________________________
APPENDIX B
PRODUCTIVITY MEASUREMENT FORM
(FIRST DESIGN)
Product Manufacturing Evaluation Form
Product
Product Description
Initial Value Process value Added value
Remarks
Labour
Start Finish Value per hour Level
Remarks
Energy Consumption
Machine Time taken Cost Other cost
Remarks
Machine Time taken Cost Other cost
Remarks
Machine Time taken Cost Other cost
Remarks
Time
Preparation Process Rework Refine/Others
Remarks
Production
Labour Productivity Time Taken Unit Produced
No of Workers Manhour Remarks
Machine Productivity Time Taken Unit Produced Remarks
Energy Productivity Consumption Unit Produced Remarks
Notes