LEARNING OBJECTIVES To understand and explore different areas of Productivity Techniques and their applications in operations with the help of real life.

LEARNING OBJECTIVES

• To understand and explore different areas of Productivity Techniques and their applications in operations with the help of real life cases studies

• Through the Industrial Visit and regular practice given to evolve solutions for case studies, the classroom knowledge will be put to application and at the same time their understanding will be put to evaluation

• The students will acquire a new way of looking at the manufacturing/service sector in the entire supply chain journey

REFERENCE TEXTS

Sr. No Reference Text

1 The Chronicles of a Quality Detective Dr. Shrinivas Gondhalekar and Payal Sheth

2 Toyota Production System Taiichi Ohno

3 SMED- A Revolution in Manufacturing Shigeo Shingo

4 Gemba Kaizen Masaaki Imai

5 The Toyota Way Jeffrey Liker

6Operations Management and Productivity Techniques PN Mukherjee and T T Kachwala

7 Lean Thinking James Womack and Daniel Jones

8 Out of the Crisis Edward Deming

9 TPM for Process Industry Tokutaro Suzuki

10 The New Rational Manager Charles Kepner and Benjamin Tregoe

11 The Six Sigma Way Peter S. Pande, Robert P. Neuman, Roland R. Cavanagh

12 Theory of Contraints Eliyahu Goldratt

13 YouTube Go to the Channel: Shrinivas Gondhalekar

What is difference between Manufacturing and Service ?

Raw Material IN Factory(converter)

OUTFinished Goods

(Material)

DataRaw Information

INOffice

(converter)OUT

InformationProcessed Data

Hungry GuestEmpty Stomach

IN Restaurant(converter)

OUTSatisfied GuestFilled Stomach

Desiring GuestEmpty Bag

IN Retail Shop(converter)

OUTSatisfied Guest

Filled Bag

What is Productivity ?

PROCESSI/P O/P

Muda (waste)

Productivity = Output Input

Productivity is the ratio between “Output of work” and “Input of Resources” used in the process of creating wealth –ILO Definition

Material

Machine

People

Resources

• A farmer used natural fertilizer for his land ,after which the yield of rice increased from 200 quintals/hectare to 300 quintals/hectare

Productivity

Land

• Output of the machine shop was 100 pieces per shift. Prashant introduced few technical changes in the machine

• These change increased the output to 120 units per shift

• 1 ton of hot rolled steel would yield 800 kg of cold rolled steel; the rest being scrap.Factory manager changed the process parameters that enabled 900 kg of cold rolled steel to be generated from same amount of hot rolled steel

• A worker produces 100 pieces is now able to produce 130 pieces after undergoing training session

Productivity

• The productivity of worker has increased by 30%

• The productivity of hot rolled steel that was 80% has gone upto 90%

• This implies 20% improvement in machine productivity

• Productivity of land has increased by 50%

© Dr G 2008~

Result

MethodMachine

MaterialMan

Needs brains, not money

The 4 Ms

Other Definitions of Productivity

1950 1955 1962 1965 1976 1979 1987

OECD1 Davis Fabricant Kendrick and Creamer

Siegal Sumanth Goldratt

is the quotient obtained by dividing output by

one of factors of production

Always a ratio of output to input

Change in product obtained for the

resources expanded

Functional definition for Partial, Total factor and

Total Productivity

Family of ratios of output to input

Functional definition for Partial, Total factor and

Total Productivity

Is minimizing the use of resources required to

produce an output desired by the customer

Note: 1 Organisation for Economomic Cooperation and Development

Productivity -Performance

Is Productivity different from Performance?

CASELET

It takes 3 meters of cloth to make a suit .In a day Suraj is expected to make 50 suits. He makes 40 suits from 111 meters of cloth

-What is Suraj’s performance ?

-What is Suraj’s performance index?

- What is Suraj’s cloth productivity index?

- What is productivity of cloth?

CASELET -ANSWER

• Suraj’s Performance – 40 suits

• Performance Index – 40 X 100 = 80%

50• Cloth Productivity Index = 120 X100 =

108% 111• Cloth Productivity = 40 X100 = 0.36

suits/meter 111

Is Production same as Productivity?

Production-Productivity

MONTH INPUT (Machine Hours)

OUTPUT (No. of units)

PRODUCTIVITY

NOVEMBER 90,000 99,000

DECEMBER 100,000 100,000

JANUARY 150,000 135,000

Productivity –Example

Arr Engineering –an automobile component manufacturer is producing connecting rods for an OEM

The reports clearly show that there has been an increase in production with a simultaneous increase in machine hour consumption

REP

OR

T

Partial Productivity

Definition : Ratio of output to one class of input

• At a given time it considers only one input and ignores all other inputs

• It is important as it focuses utilization of one resource

• Labour productivity is measured using utilization of labour-hours, whereas capital productivity is measured in Rupees

‘00000

Output 1000

Input

Human 300

Material 200

Capital 300

Energy 100

Partial Productivity –Example

As a part of new assignment , a trainee engineer of Icecream Products was asked to identify areas of productivity improvements. He collected data on all inputs and outputs of previous years operations being transformed into equivalent of money units. The table below gives details with all figures in lakh rupees

The trainee engineer plans to calculate the values of partial productivity to aid in his study. Please help him in his endeavour

REP

OR

T

Total Factor Productivity

• In an effort to improve productivity of labour,company may install more machinery. Then productivity of labour will go up bringing down the capital productivity

• Partial productivity that typically uses only one resource at a time fails to grasp this paradox

• Historically labour and capital were considered to be the most significant contributors in the process of production

• John Kendrick in 1951 emphasised labour and capital as only two input factors

• Disadvantage of considering total productivity factors is that it does not consider impact of material and energy inputs (material typically forms 60% of the product cost

• Total Factor productivity model was further developed by Scott D Sink as Multi Factor Productivity Measurement Model in which he considered Labour, Material and Energy as major inputs

• Capital was not considered in this model as it is the most difficult part to estimate how much of a capital is being consumed in a unit of time

• Depreciation applied by accountants makes it further difficult to estimate actual capital being consumed

Multi-Factor Model of Productivity

Total Productivity Model

• Total Productivity Model developed by David J Sumanth in 1979

• Sumanth considered five items as inputs ,those were Human,Material,Capital,Energy and Other Expenses

• The model is applicable in manufacturing and service organization

• Total Productivity = Total Tangible Output/Total Tangible Input

Total Productivity Model

…Total Productivity = Total Tangible Output/Total Tangible Input

• Total Tangible Output =Value of finished units produced + dividends from securities+ interests from bonds + other incomes

• Total Tangible Inputs = Value of human inputs + capital inputs+ materials purchased+energy inputs+other expenses (taxes,transport,office etc.)

• All quantifiable inputs are considered

• Sensitivity Analysis can be done

• Provides both firm level and operational unit level

Total Productivity Model

Total Productivity Model

Caselet

ULever manufactures the product face wash, liquid handwash, premium soaps, and shampoos. The input for each of this product are classified as : Human (H), Capital (C), Material (M), Energy (E) and other expenses (X)

Product Amount of input (Rs crores) I/p o/p

H C M E X

Soaps 2 4 14 5 6 31 50 1.61

Face wash 2.5 10 10 5 8 35.5 55 1.5

Handwash 2 10 10 4 10 36 45 1.2

Gel 3 13 13 5 5 39 40 1.1

Total Input 9.5 37 47 19 29 141.5 190 1.34

Unit Head wants to know productivity of each of its product line.He also wants to know how productive his production line is as a whole.

American Productivity Centre (APC) Model

American Productivity Centre has been advocating a productivity measure that relates profitability with productivity and price recovery factor

Profit= Revenue-ExpensesProfitability = Sales/Costs = Output Quantities X Prices Input Quantities X Unit Costs Productivity x Price Recovery Factor

The APC model is different from other models in its treatement, by inclusion of Price Recovery Factor

THANK YOU