thailand productivity and competitiveness · 1 thailand productivity and competitiveness dr. phanit...

1

Thailand Productivity and CompetitivenessDr. Phanit LaosiriratExecutive Director

Thailand Productivity Institute

2

World Competitiveness rankings 2007:

Thailand

World Competitiveness rankings 2007:

Thailand

Source: IMDSource: IMDSource: IMDSource: IMDSource: IMDSource: IMDSource: IMDSource: IMD

2003 2004 2005 2006 20072003 2004 2005 2006 2007

28

2625

29

33

3

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3333333329292929252525252626262628282828ThailandThailandThailandThailand

2323232322222222262626261616161621212121MalaysiaMalaysiaMalaysiaMalaysia

333322222222666610101010Hong KongHong KongHong KongHong Kong22223333333322224444SingaporeSingaporeSingaporeSingapore

5050505040404040

272727273333333319191919

1111111129292929

2005200520052005

54545454525252524949494949494949IndonesiaIndonesiaIndonesiaIndonesia45454545424242424343434341414141PhilippinesPhilippinesPhilippinesPhilippines

29292929323232323131313132323232KoreaKoreaKoreaKorea27272727272727273030303042424242IndiaIndiaIndiaIndia24242424161616162121212124242424JapanJapanJapanJapan

18181818171717171212121217171717TaiwanTaiwanTaiwanTaiwan15151515181818182222222227272727ChinaChinaChinaChina

2007200720072007200620062006200620042004200420042003200320032003CountryCountryCountryCountry

Source : IMD WORLD COMPETITIVENESS YEARBOOK 2007

4

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4848484842424242393939394242424243434343InfrastructureInfrastructureInfrastructureInfrastructure

3434343425252525252525252121212125252525BusinessBusinessBusinessBusiness

2727272721212121141414142020202018181818GovernmentGovernmentGovernmentGovernment

15151515191919197777999913131313EconomicEconomicEconomicEconomic

2007200720072007200720072007200720062006200620062006200620062006200520052005200520052005200520052004200420042004200420042004200420032003200320032003200320032003THAILANDTHAILANDTHAILANDTHAILANDTHAILANDTHAILANDTHAILANDTHAILAND

5

Economic PerformanceEconomic Performance

5555555553535353515151514646464643434343IndonesiaIndonesiaIndonesiaIndonesia

4545454545454545363636363232323236363636PhilippinesPhilippinesPhilippinesPhilippines



44444444555555557777SingaporeSingaporeSingaporeSingapore


6

Government EfficiencyGovernment Efficiency






2007200720072007200720072007200720062006200620062006200620062006200520052005200520052005200520052004200420042004200420042004200420032003200320032003200320032003Country

7

BusinessEfficiency

BusinessEfficiency







8

InfrastructureInfrastructure






2007200720072007200720072007200720062006200620062006200620062006200520052005200520052005200520052004200420042004200420042004200420032003200320032003200320032003Country

9

PRODUCTIVITYPRODUCTIVITY

5454545451515151484848484242424226262626Productivity in Productivity in Productivity in Productivity in services services services services ((((PPPPPPPPPPPP))))

5050505044444444424242424343434324242424Productivity in Productivity in Productivity in Productivity in industry industry industry industry ((((PPPPPPPPPPPP))))

53535353474747475050505032323232----Agricultural Agricultural Agricultural Agricultural Productivity (PPP)Productivity (PPP)Productivity (PPP)Productivity (PPP)

5454545452525252515151514444444427272727LabourLabourLabourLabour Productivity Productivity Productivity Productivity (PPP)(PPP)(PPP)(PPP)

5555555552525252515151514343434325252525Overall Productivity Overall Productivity Overall Productivity Overall Productivity (PPP)(PPP)(PPP)(PPP)

IndonesiaPhilippinesThailandMalaysiaSingaporeCountryCountryCountryCountry

Business EfficiencyBusiness Efficiency

�� !�"� !2" ก0!�5671*!8%*�� !�"� !2" ก0!�5671*!8%*

Purchasing Power Parity (PPP) * Background information 2006

10

Stage of developmentStage of developmentStage of developmentStage of developmentStage of developmentStage of developmentStage of developmentStage of developmentStage of developmentStage of developmentStage of developmentStage of development

Taiwan

Korea

Thailand

Transition Transition Transition Transition 2222----3333

Philippines

Indonesia

Malaysia

Singapore

Innovation Innovation Innovation Innovation drivendrivendrivendriven

EfficiencyEfficiencyEfficiencyEfficiencyTransition Transition Transition Transition 1 1 1 1 ----2222

Factor Factor Factor Factor drivendrivendrivendriven

11111111 22222222 33333333

11

Global Competitiveness Index :Global Competitiveness Index :Global Competitiveness Index :Global Competitiveness Index :Global Competitiveness Index :Global Competitiveness Index :Global Competitiveness Index :Global Competitiveness Index :Global Competitiveness Index :Global Competitiveness Index :Global Competitiveness Index :Global Competitiveness Index :

Basic Requirements

•Institutions

•Infrastructure

•Macro and Primary Education

Basic RequirementsBasic Requirements

•Institutions

•Infrastructure

•Macro and Primary Education

Efficiency Enhances

•Higher Education and Training

•Market Efficiency (goods, labor,

financial)

•Technological Readiness

Efficiency EnhancesEfficiency Enhances

•Higher Education and Training

•Market Efficiency (goods, labor,

financial)

•Technological Readiness

Innovation and Sophistication

Factors

•Business Sophistication

•Innovation

Innovation and SophisticationInnovation and Sophistication

FactorsFactors

•Business Sophistication

•Innovation

Key for

factor-driven

economies

Key forKey for

factorfactor--drivendriven

economies

Key for

efficiency-driven

economies

Key forKey for

efficiencyefficiency--drivendriven

economies

Key for

Innovation -driveneconomies

Key forKey for

Innovation Innovation --drivendriveneconomies

Sub Sub Sub Sub Sub Sub Sub Sub -------- indexesindexesindexesindexesindexesindexesindexesindexes

12

0

1

2

3

4

5

6

7

Institution

Infrastucture

Macroeconomy

Health and primary education

Higher education and trainingMarket efficiency

Technological readiness

Business sophistication

Innovation

Thailand Economies in transition from 1 to2

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Thailand Total Factor ProductivityThailand Total Factor Productivity

Source: World Bank

Figure 1.1 Sources of Grow th in the Total Economy,

1977-2004

1

2

3

4

5

6

1975 1980 1985 1990 1995 2000 2005

Year

Index

Total

Employm ent

Capital

TFP

Labor quality

Source of Growth in the Total Economy: 1977-2004

TFP

14

Lewis, William W. (2004). The Power of Productivity: Wealth, Poverty, and the Threat to Global Stability. Chicago: University of Chicago Press.

15

Sustainable Economy

GDP Growth (%)

Sustainable Economy

GDP Growth (%)

ProductivityGrowth (%)

Labor IntensiveLabor share (%)

Technological Advancement

TFP growth (%)

Capital IntensiveCapital share (%)

Good Mgt.

Practices

Industry

UpgradingPeople&

Knowledge

Modern

Technology

Competitiveness Standard of Living

QUANTITY QUALITY

Focusing on Firm Level

16

Major Production Indicators

0 0 0 0

อาหาร0.96

ส่ิงทอ0.98 ช้ินสวนฯ

0.93

คาเฉล่ีย0.97

0

0.2

0.4

0.6

0.8

1

1.2

Raw.Lost/Raw.Used Yield

380.4387.4140.72523.89LP (VA/Man-hour)

0.840.910.630.8Capacity (Y:Z9[�Z//Y:Z92\89%&&%9�]%*)

3.538.390.043.23% Unplanned Machine Downtime

88.7887.470.4293.15% Meet Production Plan

Avg.Auto. PartTextilesFoods

Food TextileAuto Parts

Avg.

17

PPM Defective Part

37,208

7,36311,182 12,389

0

5000

10000

15000

20000

25000

30000

35000

40000

อาหาร สิ่งทอ ชิ้นสวน คาเฉลี่ยFirst Quality Yield: Finished Goods

98.88

93.08

98.7198.17

90

91

92

93

94

95

96

97

98

99

100

อาหาร สิ่งทอ ช้ินสวน คาเฉลี่ย


Food Textile Auto Parts Avg.

18

19.3

31.5

10.5

22.5

15.9 16.3

5

9.8

0

5

10

15

20

25

30

35

อาหาร สิ่งทอ ช้ินสวน คาเฉลี่ย

DOS Raw. DOS Fin.Goods

88.59

4.638.05

4.26

51.16

79.45

4.17

19.05

81.88

4.3

14.59

n.a.0

10

20

30

40

50

60

70

80

90

100

P.VC/P.C E/P.C LC/P.VC

อาหาร ส่ิงทอ ชิ้นสวน คาเฉล่ีย

DOS = Days of Supply

Production Variable Cost/Production Cost Energy Cost/Production Cost Labor Cost/Production Variable Cost


Food Textile Auto Parts Avg.

19


On Time Delivery

100

85.66

92.89

98.6

75

80

85

90

95

100

105

on time delivery 100 85.66 92.89 98.6

อาหาร ส่ิงทอ ชิ้นสวน คาเฉลี่ยFood Textile Auto Parts Avg.

20

# of FTEs Participating in Purchasing Process of 1,000 Mil. Baht

International Benchmarking

19.80

6.90

4.31

0.00

5.00

10.00

15.00

20.00

25.00

Median (ไทย) Top Performance (ไทย) Median (OSBC)

FTEs

Median (Thai) Top Performance (Thai) Median (OSBC)

21

# of FTEs in the intermediate processes per 1,000 Mil. Baht Purchases


Raw Materials PlanningSelection and Contracts

Invoicing and Delivery Supplier Evaluation

3.44

1.22

0.74

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00


FTEs

7.11

3.36

0.50

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00


FTEs

3.72

1.54

0.89

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00


FTEs

2.41

1.01

0.62

0.00

0.50

1.00

1.50

2.00

2.50

3.00


FTEs



Median (Thai) Top Performance (Thai) Median (OSBC) Median (Thai) Top Performance (Thai) Median (OSBC)

22


Time Spent Issuing 1 Purchase Order (Hour)

24.00

2.00 2.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00


ชั่วโมง


Hour

23


Value Per Each Order

67,038.87

153,561.00

249,751.25

0.00

50,000.00

100,000.00

150,000.00

200,000.00

250,000.00

300,000.00


บาท


Baht

24


Percentage of Fragmented Orders

100.00

59.00

38.22

0.00

20.00

40.00

60.00

80.00

100.00

120.00


รอยละ


Percent

25


# of Orders per FTE

966.07

1713.70

412.50

0.00

200.00

400.00

600.00

800.00

1000.00

1200.00

1400.00

1600.00

1800.00


คําสั่งซื้อ

More Productive


Order

26


Percentage of Orders Placed to Top 10 Suppliers

59.06

78.00

66.50

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00


รอยละ


Percent

27


Percentage of Orders that Donct Meet Quality Requirements

0.58

0.06

0.98

0

0.2

0.4

0.6

0.8

1

1.2


รอยละ


Percent

28


Percentage of Supplier On-Time Delivery

92.50

98.00

85.00

75.00

80.00

85.00

90.00

95.00

100.00


รอยละ


Percent

29


# of Days Used to Fulfill Payment

45.00

70.20

47.50

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00


วัน


Day

30


# of Days Supplier Used to Deliver Raw Materials

7.00

3.00

14.00

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00


วัน


Day

31

Inter-Industrial Benchmarking

32

Inter-industrial Benchmarking

29.59

14.45

18.90 19.71

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

เฟอรนิเจอรไม ผลิตภัณฑยาง สิ่งทอ อาหารแปรรูป

FTEs

Furniture Rubber Textiles Processed Food

# of FTEs Participating in Purchasing Process of 1,000 Mil. Baht

33

Total Costs Spent on the Purchase of 1,000 Baht


10.68

4.52

6.28

2.84

0.00

2.00

4.00

6.00

8.00

10.00

12.00

เฟอร นิเจอรไม ผลิตภัณฑยาง ส่ิงทอ อาหารแปรรูป

บาท


Baht

34


4.00

24.00 24.00

16.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00


ชัว่โมง


Time Spent Issuing 1 Purchase Order (Hour)

Hour

35


21,479.43

109,089.94

54,800.00

87,848.68

0.00

20,000.00

40,000.00

60,000.00

80,000.00

100,000.00

120,000.00

เฟอรนิเจอรไม ผลิตภัณฑยาง ส่ิงทอ อาหารแปรรูป

บาท


Value Per Each Order

Baht

36


1,144.89

996.07 964.86

833.33

0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

1,400.00

เฟอร นิเจอรไม ผลิตภัณฑยาง สิ่งทอ อาหารแปรรูป

คําสั่งซื้อ


# of Orders per FTE

Order

37


46.07

60.67 60.00

71.53

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00


รอยละ


Percentage of Orders Placed to Top 10 Suppliers

Percent

38


1.99

0.13

1.41

0.50

0.00

0.50

1.00

1.50

2.00

2.50


รอยละ


Percentage of Orders that Donct Meet Quality Requirements

Percent

39


90.00

95.00

90.00

95.00

87.00

88.00

89.00

90.00

91.00

92.00

93.00

94.00

95.00

96.00


รอยละ


Percentage of Supplier On-Time Delivery

Percent

40


45.00

52.50

60.00

35.00

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

เฟอร นิเจอรไม ผลิตภัณฑยาง สิ่งทอ อาหารแปรรูป

วัน


# of Days Used to Fulfill Payment

Day

41


8.50

3.00

14.00

6.00

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00


วัน


# of Days Supplier Used to Deliver Raw Materials

Day

42

Number of Days to Obtain Different Licenses/Permits/Approvals/ Certificates

Avg. St. Dev. Coeff. Variat. Median N. Obs.

Ministry of Commerce 10 20 1.9 2 964

Department of Industrial Works 17 22 1.3 7 926

Immigration Department 10 14 1.4 3 80

Land Office 13 22 1.7 3 131

Local Government 10 15 1.6 2 419

Approval for Construction 36 40 1.1 30 242

Import Permit 13 18 1.4 7 164

Operating License 39 58 1.5 30 188

Number of Days to Process Application for Different Export Incentives

Avg. St. Dev. Coeff. Variat. Median N. Obs.

E-commerce Export Promotion 33 145 4.4 7 56

Promotion of Thailand Brands 41 61 1.5 30 62

Exports Promotion to new market (2003-2005) 18 19 1.0 10 39

Distribution Networking 32 48 1.5 23 12

Arrange sale promotion with Department store 17 13 0.7 7 11

Export one stop service 15 13 0.9 11 14

Prime Minister’s Export Award 2003 (PM Award) 21 20 1.0 14 13

Deduction on Cost of Developing Websites 28 16 0.6 30 10

Tax Incentives for Offshore Trading Via Websites 30 31 1.0 23 8

Unnecessary Legislative BurdenUnnecessary Legislative Burden

43

Productivity Master Plan 2007

1. Labor Skills Enhancement1. Labor Skills Enhancement 1.1 Upgrade labor skills both new entry and existing labor forces to be ready for

global competition

1.2 Setup labor standards in strategic sectors and establish fair labor

compensation

1.3 Promote and build network of training centers both private and public

especially inside the factories

1.1 Upgrade labor skills both new entry and existing labor forces to be ready for

global competition

1.2 Setup labor standards in strategic sectors and establish fair labor

compensation

1.3 Promote and build network of training centers both private and public

especially inside the factories

2. Upgrade the Managerial Skills 2. Upgrade the Managerial Skills 2.1 Promote more Information Technology Utilization in Factory2.2 Encourage Continuous Productivity Enhancement2.3 Encourage Benchmarking and Best Practices Network Among Industrial

Associations2.4 Promote Productivity Awareness and Motivation

2.1 Promote more Information Technology Utilization in Factory2.2 Encourage Continuous Productivity Enhancement2.3 Encourage Benchmarking and Best Practices Network Among Industrial

Associations2.4 Promote Productivity Awareness and Motivation

3. Improve Machine Efficiency3. Improve Machine Efficiency3.1 Promote Research and the Development of Machine Improvement3.1 Promote Research and the Development of Machine Improvement

4. Develop Shared Logistic System Within the Various Industry Groups4. Develop Shared Logistic System Within the Various Industry Groups

5. Encourage the Establishment of Industrial Network5. Encourage the Establishment of Industrial Network

4.1 Promote and Support Private Sector to Develop SharedLogistic System4.1 Promote and Support Private Sector to Develop SharedLogistic System

5.1 Encourage Collective Capability Building Among Industrial Groups(Cluster &Supply Chain)

5.1 Encourage Collective Capability Building Among Industrial Groups(Cluster &Supply Chain)

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