1.concept of productivity

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EFFICIENCY• EFFICIENCY IS THE RATIO OF THE

ACTUAL OUTPUT TO THE STANDADARD OUTOUT EXPECTED.

• HOW WELL THE RESOURCES ARE UTILISED TO ACCOMPLISH THE RESULT IS REFERRED TO AS EFFICIENCY.

• DOING JOB IN RIGHT WAY IS EFFICIENCY.

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EFFECTIVENESS• EFFECTIVENESS IS THE DEGREE

OF ACCOMPLISHMENT OF OBJECTIVES.

• HOW WELL THE SAID RESULT IS ACCOMPLISHED REFLECTS THE EFFECTIVENESS.

• DOING A RIGHT JOB IS EFFECTIVENSS.

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PRODUCTIVITYProductivity is defined as the ratio of output to input. The organisation is productive if it achieves its’ goals by transferring input to output at the lowest cost. Productivity is the combination of both effectiveness and efficiency.

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PRODUCTIVITY = OUTPUTINPUT

= COST+ADDED VALUECOST

= GROSS INCOME GROSS EXPENDITURE

= VALUE OF OUTPUTVALUE OF ALL INPUT

NATIONAL PRODUCTIVITY = GNP

POPULATION

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MODEL FOR LOW PRODUCTIVITY TRAP

LOW PRODUCTIVITY GROWTH

LAGGING CAPITALFORMATION

RISING UNIT COST

LOWER UTILISATIONOF PLANT CAPACITY

RISING PRICES

SLUGGISH SALES

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PROBLEM WITH INDIAN INDUSTRIES

• First generation systems.• Second generation people.• Third generation concept.• Fourth generation computers.• Fifth generation aspirations.

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REASONS FOR LOW PRODUCTIVITY

• Inefficient Method• Bad Working Conditions• Unsafe Practices• Penny-wise Pound Foolish Policies

• Absence Of pride In our own product

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• Grasshopper sales policies• Honest wrong beliefs• Rigid perceptions• Lack Of scientific management

REASONS FOR LOW PRODUCTIVITY

(Contd…)

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PARTIAL PRODUCTIVITYPartial Productivity is the ratio of output to one class of input.Labour Productivity = Output

Human InputMaterial Productivity = Output

Material InputCapital Productivity = Output

Capital InputEnergy Productivity = Output

Energy Input

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TOTAL FACTORPRODUCTIVITY

Total Factor Productivity is the ratio of the net output to the sum of associated labour and capital input.Net Output = Total Output -

Intermediate Materials &Services purchased.

Total Factor = Total Output -Productivity Intermediate Materials &

Services PurchasedLabour + Capital Input

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TOTAL PRODUCTIVITY

Total Productivity is the ratio of total output to the sum of all input factors.

Total Productivity = Total Output Human + Material + Capital + Energy + Other Expenses

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Following data are available for a company:

Output = Rs.100000Materials = Rs.30000Labour = Rs.20000Capital = Rs.10000Energy = Rs.10000Others = Rs.10000

Find out : Partial Productivity, Total Factor Productivity and Total productivity.

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Partial Productivity :

A) Labour Productivity = 100000 20000 = 5

B) Material Productivity = 10000030000 = 3.33

C) Capital Productivity = 10000010000 = 10

D) Energy Productivity = 10000010000 = 10

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Total Factor = [100000 -(30000+10000)]Productivity 20000 + 10000

= 6000030000 = 2

Total Productivity= 10000030000+20000+10000+10000

= 1.25

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FACTORS WHICH CAN IMPROVE PRODUCTIVITY

• Working Conditions• Method Study• Work Measurement• Efficient Maintenance Management• Long Term Planning

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• Cycle Time Reduction• Value Engineering• Value Analysis• Scrap Reduction• Efficient Marketing Management• Training & Education

FACTORS WHICH CAN IMPROVE PRODUCTIVITY

(Contd…)

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• Quality Circle• Total Quality Management• Re-engineering• Just In Time• Creativity Techniques• Root Cause Analysis

FACTORS WHICH CAN IMPROVE PRODUCTIVITY

(Contd…)

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FACTORS AFFECTINGPRODUCTIVITY

FACTORS FREQUENCY (%)Human Related Factors36.34Communication & 27.05Control ProcessStructure Related13.66Resource Availability 7.92Equipment & Machinery 9.02RelatedOthers 6.01

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ORGANISATION PRODUCTIVITY

Ability = Knowledge x SkillMotivation = Attitude x SituationPotential = Ability x MotivationHumanPerformanceOrganisational = Human PerformanceProductivity x Resources

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SUMANTH FIVE APPROACH

Sumanth Five Approach for productivity improvement :

1. Technology based2. Material based3. Employees based4. Product Based5. Task Based

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TECHNOLOGY BASED :• CAD• CAM • CIM • Robotics• Laser Beam Technology• Maintenance Management• Rebuilding Old Machinery• Energy Conservation Technology

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MATERIAL BASED :

• Inventory Control• Material Requirement Planning• Quality Control• Materials Handling System

Improvement• Materials Re-use and Recycling

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EMPLOYEES BASED :• Financial Incentives• Non-financial Incentives• Job enrichment• Job enlargement• Job rotation• Worker’s participation• Training• Working condition improvement• Flexi-time

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PRODUCT BASED :• Value Engineering• Value Analysis• Product Diversification• Product Simplification• Emulation• Advertising & Promotion

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TASK BASED :

• Work Study• Method Study• Work Measurement• Job Evaluation• Human Factors Engineering

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TOTAL PRODUCTIVITY MODELTotal = Total Tangible OutputProductivity Total Tangible Input

Total Tangible = Value of Finished productOutput + Value of Partial Units

Produced+ Dividends from Securities+ Interest from Bonds+ Other Income

Total Tangible = Value of Human InputInput + Value of Materials Input

+ Value of Capital Input+ Value of Energy+ Value of Other Expenses

Value of Human = Workers + Managers +Input Professionals + Other Staff

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Value of Capital = LandInput + Plant & Building

+ Machinery+ Working Capital

Value of = Basic Raw Materials +Materials Bought Out Materials

Value of Energy = Oil + Gas + Coal +Water + Electricity

Other Expenses = Travel + Taxes + Professional Fees +Marketing + R&D +General Admin.Expenses

TOTAL PRODUCTIVITY MODEL

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AMERICAN PRODUCTIVITY CENTRE MODEL (APC)

Here Productivity measurement related to profitability.

Profitability = SalesCost = Out Quantity x PriceInput Quantity x Unit Cost = Output Quantity x PriceInput Quantity Unit Cost = Productivity x Price RecoveryFactor

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Inclusion of Price Recovery Factor shows whether Gains or Losses of a firm are due to changes in productivity or due to fluctuation of prices of materials consumed and sold.

AMERICAN PRODUCTIVITY CENTRE MODEL (APC)

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ILO APPROACH TO PRODUCTIVITY IMPROVEMENT

• Preliminary Diagnosis.• Organisation Development & Performance

Improvement Planning.• Organisation Diagnosis & Action Planning.• Implementation of Action Programme.• Review & Revision

Five phases of this approach are :

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Procedures to improve Productivity based on 27 published actual cases :

• Identify and Prioritise objectives.• Fix criteria for output.• Prepare action plan.• Eliminate known barriers to

productivity.• Develop productivity measuring

methods.

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• Calculate base period productivity.• Execute Action Plan.• Measure and Report.• Motivate workers and supervisors

to improve productivity.• Maintain momentum.

Procedures to improve Productivity based on 27 published actual cases :

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THE ACCELERATING ORGANISATION

It is not enough to be the biggest and the best and even to be getting better.

The only sustainable competitive advantage is your organisation’s ability to learn, change and improve faster than any potential competitor.

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The new authority will be :Member led, Officer driven, Customer focussed; A team environment, where the whole is greater than the sum of its parts; A flat management structure, where employees are fully empowered and decisions are developed close to the culture of learning rather than blame.

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A clear sense of direction and purpose. A firm commitment to delivering high quality public services through a combination of direct provision and effective partnership.

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Findings from survey why customers do not come back to you :

1. Die 1%2. Move away 3%3. Other finds 5%4. Competitive reasons 9%5. Project dissatisfaction 14%6. Because of an attitude 68%

of indifference towardsthe customer by some of your employees.