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

WHY PRODUCTIVITY IS IMPORTANT

Improved Margin

Time Saving

Less Capital Input

Less Manpower

Higher Productivity

WHY PRODUCTIVITY IS IMPORTANT (Cont...)

Higher standard of living
Higher GDP per capita

Higher
Higher Productivity Investment

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
GAIN SHARE

MEASURE

IMPROVE

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

NO ORGANIZATION CAN CONTINUE TO EXIST UNLESS IT MAINTAINS A COMPETITIVE LEVEL OF PRODUCTIVITY
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