Productivity

Productivity refers to the efficiency of the production system. It is the concept that guides
the management of production system. It is an indicator to how well the factors of
production (land, capital, labor and energy) are utilized.

Factors Influencing Productivity

Factors influencing productivity can be classified broadly into two categories:
A. controllable (or internal) factors and
B. un-controllable (or external) factors.

A.CONTROLLABLE FOR INTERNAL FACTORS

1. Product factor: In terms of productivity means the extent to which the product meets output
requirements product is judged by its usefulness. The cost benefit factor of a product can be
enhanced by increasing the benefit at the same cost or by reducing cost for the same benefit.
2. Plant and equipment: These play a prominent role in enhancing the productivity. The
increased availability of the plant through proper maintenance and reduction of idle time
increases the productivity. Productivity can be increased by paying proper attention to
utilization, age, modernization, cost, investments etc.

Factors influencing productivity

A.
1. Technology: Innovative and latest technology improves productivity to a greater extent.
Automation and information technology helps to achieve improvements in material
handling, storage, communication system and quality control. The various aspects of
technology factors to be considered are:

i. Size and capacity of the plant,

ii. Timely supply and quality of inputs,
iii. Production planning and control,
iv. Repairs and maintenance,
v. Waste reduction, and
vi. Efficient material handling system.
2. Material and energy:
Efforts to reduce materials and energy consumption brings about considerable
improvement in productivity.

1. Selection of quality material and right material.

2. Control of wastage and scrap.
3. Effective stock control.
4. Development of sources of supply.
5. Optimum energy utilization and energy savings.
6. Human factors:
Productivity is basically dependent upon human competence and skill. Ability to work
effectively is governed by various factors such as education, training, experience
aptitude etc., of the employees. Motivation of employees will influence productivity.
7. Work methods: Improving the ways in which the work is done (methods) improves
productivity, work study and industrial engineering techniques and training are the
areas which improve the work methods, which in term enhance the productivity.
8. Management style: This influence the organizational design, communication in
organization, policy and procedures. A flexible and dynamic management style is a
better approach to achieve higher productivity.
B. UNCONTROLLABLE (OR) EXTERNAL FACTORS

1. Structural adjustments: Structural adjustments include both economic and social

changes. Economic changes that influence significantly are:

a. Shift in employment from agriculture to manufacturing industry,

b. Import of technology, and
c. Industrial competitiveness.
Social changes such as women’s participation in the labor force, education, cultural values,
attitudes are some of the factors that play a significant role in the improvement of productivity.
2. Natural resources: Manpower, land and raw materials are vital to the productivity
improvement.
3. Government and infrastructure: Government policies and program are significant to
productivity practices of government agencies, transport and communication power, fiscal
policies (interest rates, taxes) influence productivity to the greater extent.
C. Total Productivity Measure (TPM)
It is based on all the inputs. The model can be applied to any manufacturing organization or
service company.
D. Total productivity =Total tangible output +Total trangible input
E. Total tangible output = Value of finished goods produced + Value of partialunits produced +
Dividents from securities + Interest+ Other income
 F. Total tangible input = Value of (human + material + capital + energy+ other inputs) used.
The word tangible here refers to measurable.
G. The output of the firm as well as the inputs must be expressed in a common measurement
unit. The best way is to express them in rupee value.
H. Partial Productivity Measures (PPM)
Depending upon the individual input partial productivity measures are expressed as:
I. Partial productivity =Total output%Individual input
J. Labor productivity =Total output%Labour input(in terms of man hours)
K. Capital productivity =Total output%Capital input
L. Material productivity =Total output%Material input
M. Energy productivity =Total output%Energy input
N. One of the major disadvantages of partial productivity measures is that there is an over
emphasis on one input factor to the extent that other input are underestimated or even
ignored.
O. Productivity Improvement Techniques
TECHNOLOGY BASED
1. Computer Aided Design (CAD), Computer Aided Manufacturing (CAM), and
Computer Integrated Manufacturing Systems (CIMS): CAD refers to design of products,
processes or systems with the help of computers. The impact of CAD on human productivity
is significant for the advantages of CAD are:

a. Speed of evaluation of alternative designs,

b. Minimization of risk of functioning, and
c. Error reduction.

A.
 1. CAM is very much useful to design and control the manufacturing. It helps to achieve the
effectiveness in production system by line balancing.
a. Production Planning and Control
b. Capacity Requirements Planning (CRP), Manufacturing Resources Planning (MRP II)
and Materials Requirement Planning (MRP)
c. Automated Inspection.
2. Computer integrated manufacturing:
Computer integrated manufacturing is characterized by automatic line balancing, machine
loading (scheduling and sequencing), automatic inventory control and inspection.

1. Robotics
2. Laser technology
3. Modern maintenance techniques
4. Energy technology
5. Flexible Manufacturing System (FMS)
B. EMPLOYEE BASED

1. Financial and non-financial incentives at individual and group level.

2. Employee promotion.
3. Job design, job enlargement, job enrichment and job rotation.
4. Worker participation in decision-making
5. Quality Circles (QC), Small Group Activities (SGA)
6. Personal development.
C. ATERAL BASED

1. Material planning and control

2. Purchasing, logistics
3. Material storage and retrieval
4. Source selection and procurement of quality material
5. Waste elimination.
D. PROCESS BASED

1. Methods engineering and work simplification

2. Job design evaluation, job safety
3. Human factors engineering.
E. PRODUCT BASED

1. Value analysis and value engineering

2. Product diversification
3. Standardization and simplification
4. Reliability engineering
5. Product mix and promotion.
F. TASK BASED

1. Management style
2. Communication in the organization
3. Work culture
4. Motivation
5. Promotion group activity.
ILLUSTRATION 1:
A company produces 160 kg of plastic moulded parts of acceptable quality by consuming 200 kg of
raw materials for a particular period. For the next period, the output is doubled (320 kg) by
consuming 420 kg of raw material and for a third period, the output is increased to 400 kg by
consuming 400 kg of raw material.
SOLUTION:
During the first year, production is 160 kg
Productivity =Output% Input=160%200=0.8 0r 80%

For the second year, production is increased by 100%

Productivity =Output% Input=320%420=0.76 or 76%

For the third period, production is increased by 150%

Productivity =Output% Input=400%400=1.0 i.e., 100%↑

From the above illustration it is clear that, for second period, though production has doubled,
productivity has decreased from 80% to 76% for period third, production is increased by 150% and
correspondingly productivity increased from 80% to 100%.

ILLUSTRATION 2 :
The following information regarding the output produced and inputs consumed for a particular time
period for a particular company is given below:

The values are in terms of base year rupee value. Compute various productivity indices.
SOLUTION:
Partial productivity
Labor productivity =output%Human input=10,000%3,000=3.33

Capital productivity =output%Capital input=10,000%3,000=3.33

Material productivity =output%Material input=10,000%2,000=5.00

Energy productivity =output%Energy input=10,000%1,000=10.00

Other misc. expenses =output%Other misc. input=10,000%500=20.00

Total productivity =Total output%Total input=Total output(Human + Material + Capital + Energy +

Other misc. input)=10,000%3, 000 + 2, 000 + 3, 000 + 1,000 +500=10,000%9,500=1.053
Total factor productivity (TFP) =Net output%( Labor +Capital) Input=Total output - Material and
services purchased%(Labor + Capital) Input

Assume that the company purchases all its material and services including energy, misc. and
equipment (leasing). Then,

Total factor productivity =10,000 - (2000+3000+1000+500)%3000+3000=3500%6000=0.583

Elements of Production Planning and Control

This is important to note that production plan is the first and the foremost element of PPC. Planning
refers to deciding in advance what is to be done in future. A separate planning department is
established in the organization which is responsible for the preparation of policies and plans with
regard to production to be undertaken in due course. The planning department prepares various
charts, manuals production budgets etc., on the basis of information received from management.
These plans and charts or production budgets are given practical shape by carrying various elements
under production control. If production planning is defective, production control is bound to be 13
adversely affected. For achieving the production targets, production planning provides sound basis
for production control. One needs to remember that production plans are prepared in advance at top
level whereas, production control is exercised at machine shop floor (bottom level) where actual
production is taking place. Some important elements of PPC have been depicted in the figure as
below:

The important elements may be listed as following:

1. Materials: planning for procurement of raw material, component and spare parts in the right
quantities and specifications at the right time from the right source at the right place. Purchasing,
storage, inventory control, standardization, variety reduction, value analysis and inspection are the
other activities associated with material.
2. Method: choosing the best method of processing form several alternatives. It also includes
determining the best sequence of operations (process plan) and planning for tooling, jigs and fixtures
etc.

Machines and equipment: manufacturing methods are related to production facilities available in
production systems. It involves facilities planning, capacity planning, allocations, and utilization of
plant and equipment, machines etc.
4. Manpower: planning for manpower (labour and managerial levels) having appropriate skills and
expertise.
5. Routing; determining the flow of work material handling in the plant, and sequence of operations
or processing steps. This is related to consideration of appropriate shop layout plant layout,
temporary storage location for raw materials, component and semi-finished goods, and of materials
handling system.
Route Sheet: a route sheet is a document providing information and instructions for converting the
raw material in finished part or product. It defines each step of the production operations and lay
down the precise path or route through which the product will flow during the conversion process.
Route sheet contains following information:
a) The operation required at their desired sequence
b) Machines or equipment to be used for each operations
c) Estimated set-up time and operation time per piece
d) Tools, jigs, and fixtures required for operations
e) Detailed drawings of the part, sub-assemblies and final assemblies
f) Specification, dimensions, tolerances, surface finishes and quality standard to be achieved
g) Specification of raw material to be used
h) Speed, feed etc. to be used in machines tools for operations to be carried on.
i) Inspection procedure and metrology tools required for inspection
j) Packing and handling instructions during movement of parts and subassemblies through the
operation stages.
6. Estimating: Establishing operation times leading to fixations of performance standards both for
worker and machines. Estimating involves deciding the quantity of the product which needs to be
produced and cost involved in it on the basis of sale forecast.

Estimating manpower, machine capacity and material required meeting the planned production
targets are like the key activities before budgeting for resources. 15
7. Loading: machine loading is the process of converting operation schedule into practices in
conjunctions with routing. Machine loading is the process assigning specific jobs to machines, men,
or work centers based on relative priorities and capacity utilization. Loading ensures maximum
possible utilization of productive facilities and avoid bottleneck in production. It‘s important to either
overloading or under loading the facilities, work centers or machines to ensure maximum utilization
of resources.
8. Scheduling: scheduling ensure that parts and sub-assemblies and finished goods are completed as
per required delivery dates. It provides a timetable for manufacturing activities.

Purpose of scheduling:
a) To prevent unbalance use of time among work and centers and department.
b) To utilize labour such a way that output is produced within established lead time or cycle time so
as to deliver the products on time and complete production in minimum total cost.

9. Dispatching: This is concerned with the execution of the planning functions. It gives necessary
authority to start a particular work which has already planned under routing and scheduling
functions. Dispatching is release of orders and instructions for starting of production in accordance
with routing sheet and scheduling charts.
10. Inspection: This function is related to maintenance of quality in production and of evaluating the
efficiency of the processes, methods and labours so that improvement can be made to achieve the
quality standard set by product design.
11. Evaluating: The objective of evaluating is to improve performance. Performance of machines,
processes and labour is evaluated to improve the same.
12. Cost control: Manufacturing cost is controlled by wastage reduction, value analysis, inventory
control and efficient utilization of all resources.
Scope of Production Planning and Control
a) Nature of Inputs

To manufacture a product, different types of inputs are used. The quality of the product depends
upon the nature of the inputs are used. Hence the planning is done to determine the nature of various
types of inputs which is a complicated process.
b) Quantity of Inputs

To achieve a level of production, determination of quantity of the inputs and their composition is
very important. A product can be prepared only when there is an estimate of the required
composition of inputs.
c) Proper Coordination

It ensures the proper coordination among the workforce, machines and equipment. This leads to
avoidance of wastages and smooth flow of production.
d) Better Control
Production planning is the method of control. For a better control, planning is a precondition. Only
then, one can compare the performance and calculate the deviations which lead control of the
production.
e) Ensure Uninterrupted Production

The planning of materials ensures the regular supply of raw materials and other components. The
regular flow of materials and supplies are helpful in the uninterrupted production.
f) Capacity Utilization

There is a need to use the available resources effectively. It is helpful in bringing down various costs
of production.
g) Timely Delivered

If there is good production planning and control, there will be timely production and the finished
product will be rushed to the market in time. This also ensures the better relationship with the
customers.
Factors affecting Production Planning and control
a) Use of Computers: Modern factories are using office automation equipment like PC, punch cards
etc. It helps accurate computation of required of men and machine.
b) Seasonal Variations: Demand of certain products is affected by seasons, for instance umbrellas
and raincoats during the monsoons and outputs. Production planning and control must take such
changes into consideration while planning and control activities of inputs and outputs.
c) Test Marketing: In an aggressive marketing strategy new products are to be test marketed in order
to know the trends. This is a short- cycle operation, intermittent in nature and often upsets regular
production.
d) After Sales Service: This has become an important parameter for success. In after sales services,
many items are returned for repair. These are unscheduled Work and also overload the production
line.
e) Losses due to Unpredictable Factors: Losses occur due to accidents, fire and theft of production
inputs, mainly materials and Components. These are unpredictable. Shortage of input due to such
factors upset the planned production schedule in time and quantity.
f) Losses due to Predictable Factors: There are losses of inputs, due to natural engineering
phenomena like production losses and changes in consumption of materials and occurrence of
defectives.

Work study in Production and Operation Management

“Work study is a generic term for those techniques, method study and work measurement which are
used in the examination of human work in all its contexts. And which lead systematically to the
investigation of all the factors which affect the efficiency and economy of the situation being
reviewed, in order to effect improvement.”
Framework of work study
 Work Study in Management Science

Work study is a means of enhancing the production efficiency (productivity) of the firm by
elimination of waste and unnecessary operations. It is a technique to identify non-value adding
operations by investigation of all the factors affecting the job. It is the only accurate and systematic
procedure oriented technique to establish time standards. It is going to contribute to the profit as the
savings will start immediately and continue throughout the life of the product. Method study and
work measurement is part of work study. Part of method study is motion study, work measurement is
also called by the name ‘Time study’.

Advantages of Work Study

Following are the advantages of work study:
1. It helps to achieve the smooth production flow with minimum interruptions.
2. It helps to reduce the cost of the product by eliminating waste and unnecessary operations.
3. Better worker-management relations.
4. Meets the delivery commitment.
5. Reduction in rejections and scrap and higher utilization of resources of the organization.
6. Helps to achieve better working conditions.
7. Better workplace layout.
8. Improves upon the existing process or methods and helps in standardization and
simplification.
9. Helps to establish the standard time for an operation or job which has got application in
manpower planning, production planning.

WORK MEASUREMENTS
 Work measurement is also called by the name ‘time study’. Work measurement is absolutely
essential for both the planning and control of operations. Without measurement data, we cannot
determine the capacity of facilities or it is not possible to quote delivery dates or costs. We are not in
a position to determine the rate of production and also labor utilization and efficiency. It may not be
possible to introduce incentive schemes and standard costs for budget control.

Objectives of Work Measurement

The use of work measurement as a basis for incentives is only a small part of its total application.
The objectives of work measurement are to provide a sound basis for:
1. Comparing alternative methods.
2. Assessing the correct initial manning (manpower requirement planning).
3. Planning and control.
4. Realistic costing.
5. Financial incentive schemes.
6. Delivery date of goods.
7. Cost reduction and cost control.
8. Identifying substandard workers.
9. Training new employees.
Techniques of Work measurement in Production Management
For the purpose of work measurement, work can be regarded as:
1. Repetitive work: The type of work in which the main operation or group of operations repeat
continuously during the time spent at the job. These apply to work cycles of extremely short
duration.
2. Non-repetitive work: It includes some type of maintenance and construction work, where the
work cycle itself is hardly ever repeated identically.
Various techniques of work measurement are:
1. Time study (stop watch technique),
2. Synthesis,
3. Work sampling,
4. Predetermined motion and time study,
5. Analytical estimating.
Time study and work sampling involve direct observation and the remaining are data based and
analytical in nature.
1. Time study: A work measurement technique for recording the times and rates of working for
the elements of a specified job carried out under specified conditions and for analyzing the
data so as to determine the time necessary for carrying out the job at the defined level of
performance. In other words measuring the time through stop watch is called time study.
2. Synthetic data:
A work measurement technique for building up the time for a job or pans of the job at a
defined level of performance by totaling element times obtained previously from time studies
on other jobs containing the elements concerned or from synthetic data.
 3. Work sampling:
A technique in which a large number of observations are made over a period of time of one or
group of machines, processes or workers. Each observation records what is happening at that
instant and the percentage of observations recorded for a particular activity, or delay, is a
measure of the percentage of time during which that activities delay occurs.
4. Predetermined motion time study (PMTS):
A work measurement technique whereby times established for basic human motions
(classified according to the nature of the motion and conditions under which it is made) are
used to build up the time for a job at the defined level of performance. The most commonly
used PMTS is known as Methods Time Measurement (MTM).
5. Analytical estimating:
A work measurement technique, being a development of estimating, whereby the time
required to carry out elements of a job at a defined level of performance is estimated partly
from knowledge and practical experience of the elements concerned and partly from synthetic
data. The work measurement techniques and their applications are shown in the following
table.

Work Measurement techniques in Operations Management

Work measurement techniques and their application

Job Sequencing Rules

Job Sequencing Rules include the following:
 Earliest Due Date - Within some organizations, they sequence jobs based off their earliest due
date. This is at times referred to as due date assignment, and it places high priority on processing
jobs with early due dates. You can measure job shop quality performance through the number of
late jobs, average tardiness across late jobs, and average tardiness among all jobs.
 Shortest Processing Time - Another common method of job sequencing based on completion time
is shortest processing time. Shortest processing time assigns jobs with the shortest processing
times first. Similar to the longest processing time scheduling method, shortest processing time
requires a time estimation for each job. Shortest processing time can effectively reduce average
flow time for jobs.
 Longest Processing Time - The longest processing time method assigns highest priority jobs with
the longest processing time. When scheduling longer jobs first, schedulers can reduce a large
amount of much more time consuming jobs at the end of the job schedule. This form of job
sequencing is extremely beneficial to manufacturers.
 First-Come, First Serve - A large sum of shops utilize the first-come, first-served job sequencing
method. This method processes orders in the order of arrival at their production facility. Arrival
time is a key component and factor within the job sequencing rule, which is what separates it
from other methods such as longest processing time and shortest processing time. No estimation
time is required for first come, first serve job scheduling.

A form of job sequencing software includes PlanetTogether’s advanced planning and scheduling
software (APS). Advanced planning and scheduling software (APS) can provide thorough insight
within a manufacturing operation that is attempting to boost efficiency within their facility .