Management Theory Review: Productivity Control

February 12, 2019

Productivity Control - Productivity Management

Principles of Management Revision/Review Articles - List

Productivity is a major concern in 1990s and will be one of the major concerns in the future also. - Koontz & O'Donnell - Principles of Management.

Productivity implies measurement and thus is connected to control in which also measurement is important.

Industrial engineering is the profession with focus on efficiency and productivity in engineering products, activities, processes and production systems. IIE's describes itself as the global association of efficiency and productivity professionals.

Productivity of knowledge workers is yet to be operationalized for measurement and improvement.

Koontz and O'Donnell and Weirich covered Operation related productivity improvement techniques in this chapter.

Operations research
Time event networks
Value engineering
Work simplification
Quality circles

In some editions of the book on Management, Koontz, O'Donnell and Weirich said, in reality, the entire book of management is about productivity.

14th Edition

In 14th Edition, Chapter 20 is titled as Productivity, Operations Management, and Total Quality Management.

The authors, say in a real sense, this whole book is about the improvement of productivity. How it will receive special attention in this chapter.

Undoubtedly, productivity is one of the major concerns of managers in the 21st century.

Productivity is the output-input ratio within a time period with due consideration for quality. Measurement of skill work is relatively easy, but it is more difficult for knowledge work.

Good management results in improvement of productivity.

Tools and Techniques for Improving Productivity

Value Engineering

Specific Steps:

1. Divide the product into parts.
2. Identify the costs for each part.
3. Identify the relative value of each part with respect to the lowest cost design alternative for a similar function.
4. Find a new approach for those items that appear to have a high cost and low value.

Work Simplification

This is a process of obtaining the participation of workers in simplifying their work. Training sessions are conducted to teach concepts and principles of techniques such as time and motion studies, work flow analyses, and the layout analysis methods.

Just-in-Time Inventory System

In this inventory system, safety stocks are drastically reduced. , Set up cost or ordering cost is also drastically reduced giving low batch quantities for production and ordering. There is emphasis on zero defects, and any defective part found during the subsequent operation is immediately sent back to the earliest state for repair and the reasons for the defect occurrence is investigated and corrected. For the system to work, dependable relations with suppliers are required and also well planned transport arrangement that collect parts frequently in a day from many suppliers in small quantities is required. Japanese companies have made successful implementation of JIT systems and rest of the world is now redesigning its systems to implement JIT system and improve productivity.

Lean Manufacturing

A study by MIT team on American, Japanese and European car manufacturers showed that Japanese were more productive as they use fewer workers, a shorter development time, lower inventories, few suppliers, less production space, and less investment to produce more models. Their delivery times are also small. MIT team named the Japanese systems as Lean Systems and popularised Lean manufacturing.

Lean manufacturing is creative application of industrial engineering by the Japanese IEs and managers and is now a popular productivity improvement methodology all over the world.

Managing Productivity

From Management, 11th Edition, Stephen P.. Robbins, and Mary Coulter

Improving productivity is an important and major goal in virtually every organization. For countries,

high productivity can lead to economic growth and development. Employees can receive higher wages and company profits can increase without causing inflation. For individual organizations, increased productivity gives them a reduction in cost and thus the ability to offer more competitive prices.

Over the past decade, U.S. businesses have made dramatic improvements to increase

their efficiency.

Examples

The Latex Foam International’s state-of-the-art digital facility in Shelton, Connecticut, boosted capacity by 50 percent in a smaller space but with a 30 percent efficiency gain.

Service companies and departments are also pursuing productivity gains.

Pella Corporation’s purchasing office improved productivity by reducing purchase order entry times anywhere from 50 percent to 86 percent, decreasing voucher processing by 27 percent, and eliminating 14 financial systems. Its information technology department slashed e-mail traffic in half and implemented work design improvements for heavy PC users such as call center users. The human resources department cut the time to process benefit enrollment by 156.5 days. And the finance department now takes 2 days instead of 6 to do its end-of-month closeout.

For global companies also improving productivity is an important objective and route to increase competitiveness.

McDonald’s Corporation drastically reduced the time it takes to cook its french fries—65 seconds as compared to the 210 seconds it once took, saving time and other resources.

The Canadian Imperial Bank of Commerce, based in Toronto, automated its purchasing function, saving several million dollars annually.

Skoda, the Czech car company, a subsidiary of Germany’s Volkswagen AG, improved its productivity through an intensive restructuring of its manufacturing process.

Productivity is a composite of people and operations variables. To improve productivity, managers must focus on both.

The late W. Edwards Deming, a renowned quality expert, believed that managers, not workers, were the primary source of increased productivity. Some of his suggestions for managers included planning for the long-term future, never being complacent about product quality, understanding whether problems were confined to particular parts of the production process or stemmed from the overall process itself, training workers for the job they’re being asked to perform, raising the quality of line

supervisors, requiring workers to do quality work, and so forth.

High productivity can’t come solely from good “people management.” The truly effective organization will maximize productivity by successfully integrating people into the overall operations system.

At Simplex Nails Manufacturing in Americus, Georgia, employees were involved as an integral part of the company’s much-needed turnaround effort. Some production workers were made part of a plant-wide cleanup and organization effort, which freed up floor space. The company’s sales force was retrained and were involved in developing ways to sell what customers wanted rather than what was in inventory. The results were dramatic. Inventory planning was changed on the basis of more accurate and reliable information, and was reduced by more than 50 percent. The plant now has 20 percent more floor space, orders became more consistent, and employee morale improved. The company recognized the important interplay between people and the operations system.

Updated 13 February 2019, 12 Feb 2016, 12 Feb 2014