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Productivity 2

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17 views20 pages

Productivity 2

Uploaded by

Sabbir Azim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Productivity

Farjana Sakila
Lecturer
TEM Department
Butex
Introduction to Production:
• Definition: Production is any process or procedure
developed to transform a set of inputs like men,
materials, capital, information & energy into a
specified set of outputs like finished products &
services in proper quantity & quality, thus achieving
the objectives of an enterprise. The essence of
production is the creation of goods & services, may
be by the transformation of raw materials or by
assembling so many parts. Production in everyday
life can be seen in factories, offices & hospital etc.
Productivity
 Productivity can be defined as an economic measure of
output per unit of input. Inputs generally include labor
and capital, while output is typically measured in
revenues.
 Productivity is the measure of how well the resources are brought
together in an organization & utilized for accomplishing a set of
objectives.
 Productivity is the multitier effect of efficiency & effectiveness.
Productivity can be expressed as: Productivity = (Output/Input)
•Productivity can be increased:
•Increasing the production (output) without
increasing the inputs
•Keeping the production same but decreasing the
inputs
•Reducing the wastage and rejection rate
•Increasing the rate of output compared to the
rate of input
•Establishing reasonable goals for improvements
•Applying automation and using modern
technology
Efficiency & Effectiveness
• Efficiency is a measurable concept, quantitatively
determined by the ratio of output to input.
• "Effectiveness", is a relatively vague, non-
quantitative concept, mainly concerned with
achieving objectives.
• Effectiveness also implies to wisely using the
resources. In contrast to efficiency, effectiveness is
determined without reference to costs. Efficiency
means "doing the things right", while effectiveness
means "doing the right things".
Comparison among Productivity, Efficiency and Effectiveness
Productivity Efficiency Effectiveness
Productivity is generally Efficiency refers to doing Effectiveness refers to doing the
regarded as a measure of things in a right manner. right things. It constantly
outputs divided by inputs. measures if the actual output
Scientifically, it focuses on meets the desired output.
getting the maximum
output with minimum
resources.
Productivity = η = Actual output There is no such relation.
output/input attained/standard output

Productivity includes Efficiency is all about Effectiveness focuses on


creating a mission focusing on the process, achieving the ‘end’ goal.
statement, goals, and importance is given to the
values. ‘means’ of doing thing
Productivity is about Effectiveness is about Effectiveness is about
maximizing the capacity doing the right task, doing the right task,
and use of resource. completing activities and completing activities and
achieving goals. achieving goals.
Productivity means the Efficiency means doing Effectiveness means
economic measure of things the right way. doing the right things.
inputs and outputs.
Dynamics of Productivity change:
Improvement in Productivity

Increase in
Wages

More output Increase in


In demand Better Machine
For
Goods and services

Reduction
Lower of Greater
In product cost
Prices Employment

More Profit Higher


More Saving
Investment
Dynamics of Productivity change

• Productivity improvements results in lower cost per unit


by effective utilization of all the resources & reducing
wastage. Lower cost per unit contributes to increased
profit levels so that company can reinvest the surplus in
new technology, equipments & machines. This will
result in further productivity increase & also there is a
greater employment generation due to new
investments. The Productivity increase results in higher
wages to the employee as profit potential of the
company increase thereby increasing purchasing power
of the worker.
Factors influencing productivity :
Two categories:
 Controllable or internal factors
 Non-controllable or external factors

Controllable or internal factors:


1. Product 6) Work methods
2. Plant & Equipment 7) Management Style
3. Technology 8) Financial Factors
4. Materials 9) Sociological factors
5. Human Factors

Non-controllable or external factors:


1. Structural Adjustments (Economic & Social)
2. Natural resources
3. Government policy
4. Infrastructure
Productivity improvement technique:

Process Based Technology Based Material Based

Productivity improvement technique

Product Based Management Based Employee Based


Cont..
Technology Based:
1.CAD,CAM,CIMS
2.Robatics
3.Laser technology
4.Modern maintenance technology
5.Energy technology
6.Flexible manufacturing technology
Employee Based:
1.Financial & Non-financial incentives at individual/group levels.
2.Emploee promotion
3.Job design, job enlargement, job enrichment
4.Worker participation in decision making
5. Quality circles
6.Personal development
Cont..
Material Based:
1.Material planning & control
2.Purchasing,logistics(transport)
3.Material storage
4.Source selection & procurement of quality material.
5.Waste elimination
6.Material recycling & reuse

Process Based:
1.Methods Engineering & Work simplification
2.Job design, job evaluation, Job safety
3.Human factors engineering
Cont..
Product Based:
1.Value analysis & value engineering
2.Product diversification
3.Standardisation & simplification
4.Product Mix & promotion

Management Based:
1.Management style
2.Communication in organization
3.Work culture
4.Motivation
5.Promoting group activity
Productivity measures:
Partial Productivity measures (PPM),
Partial Productivity = (Total Output/Individual
Input)
 Labour Productivity = (Total Output/Lobour Input)
 Capital Productivity = (Total Output/Capital Input)
 Material Productivity = (Total Output/Material Input)
 Energy Productivity = (Total Output/Energy Input)
• Total-factor or Multi-Factor productivity:
It is the ratio of net output to the sum of associated labor and capital
inputs.
Net output
Total-factor Productivity = ––––––––––––––––––
(Labor + Capital) input

Output- Material & Service purchased


= –––––––––––––––––––––––--------------------
(Labor + Capital) input

Though, the total factor productivity and multifactor productivity are


same, in many cases the multifactor productivity is expressed as follows:
Output at standard price
• Multi-factor Productivity = ----------------------------------------------------
Labor cost + Material Cost + Overhead
Total Productivity Measure (TPM) :

• Total Productivity = (Total tangible output/Total tangible


input)

 Total tangible output = Value of finished goods produced +


value of partial units produced + dividends from securities +
interest + other income

 Total tangible input = value of (human + material + capital +


energy + other inputs)
Advantages and Limitations
Advantages Limitations
A) Partial
1) Easy understand and Calculate 1) Misleading if used alone
2) Helps to do pin point improve 2) No consideration of overall impact
B) Total factor productivity
1) Data from company records is relatively 1) No consideration for material and
easy to obtain energy input
2) Value added approach 2) Difficult to relate value added approach
to production efficiency
C) Total Productivity
1) Easy and accurate representation of 1) Data obtaining difficulty
total picture of company
2) Easy related to total costs 2) Require special data collection system
3) Considers all quantifiable outputs and
inputs
Expectations from productivity
Management and High return on investment (ROI), Higher
Entrepreneurs market share & corporate image
Managers Maximum utilization of resources, lower unit
cost, higher quality
Workers Higher wages, safer work environment,
increased quality of work life
Suppliers Payment receive, continuous order
Customers Lower costs, quality, reliability, safety &
timeliness of delivery
Government Economic development, employment
generation, more exports
Share holders Higher dividends
Levels of productivity measurements
• International
• National
• Industry
• Company
• Individual resource
Productivity measurement Models
• Craig & Harris model
• Taylor- Davis Model
• APC Model

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