productivity management
TRANSCRIPT
Lean Thinking…
Process Thinking…
Process Innovation…
Value Chain, Value Creation and Value Sharing..
Human Error Reduction …Design
Universal and portable Products
Perfection…
How to Manage World Class Operations?
Productivity
Partial measures ◦ output/(single input)
Multi-factor measures ◦ output/(multiple inputs)
Total measure ◦ output/(total inputs)
Productivity = Outputs
Inputs
Productivity Growth
Current Period Productivity – Previous Period Productivity
Previous Period Productivity
Productivity Growth =
Measures of Productivity
Partial Output Output Output Output
measures Labor Machine Capital Energy
Multifactor Output Output
measures Labor + Machine Labor + Capital + Energy
Total Goods or Services Produced
measure All inputs used to produce them
Units of output per kilowatt-hour
Dollar value of output per kilowatt-hour Energy
Productivity
Units of output per dollar input
Dollar value of output per dollar input
Capital
Productivity
Units of output per machine hour
machine hour Machine
Productivity
Units of output per labor hour
Units of output per shift
Value-added per labor hour
Labor
Productivity
Examples of Partial Productivity Measures
Example
10,000 Units Produced
Sold for $10/unit
500 labor hours
Labor rate: $9/hr
Cost of raw material: $5,000
Cost of purchased material: $25,000
What is the
labor productivity?
Example--Labor Productivity
10,000 units/500hrs = 20 units/hour
or we can arrive at a unitless figure
(10,000 unit* $10/unit)/(500hrs* $9/hr) =
22.22
Can you think of any advantages or
disadvantages of each approach?
Example--Multifactor Productivity
MFP = Output
Labor + Materials
MFP = (10,000 units)*($10)
(500)*($9) + ($5000) + ($25000)
MFP = 2.90
Annual Productivity Growth
-2
0
2
4
6
77 79 81 83 85 87 89 91 93 95 97 99
Year
An
nu
al
%
Ch
an
ge
Factors Affecting Productivity
Capital Quality
Technology Management
Factors Affecting Productivity
Standardization
Use of Internet
Computer viruses
Searching for lost or misplaced items
Scrap rates
New workers
Cuts in health benefits
Factors Affecting Productivity
Safety
Shortage of IT workers
Layoffs
Labor turnover
Design of the workspace
Incentive plans that reward productivity
Improving Productivity
Develop productivity measures
Determine critical (bottleneck) operations
Develop methods for productivity improvements
Establish reasonable goals
Get management support
Measure and publicize improvements
Don’t confuse productivity with efficiency
Bottleneck Operation
Operation
Bottleneck
Operation
Operation
Operation
Operation