Productivity.
Productivity. Means a measure of the quantity of output per unit of input. This input could be the man-hours spent on producing that output or it could be the number of machine-hours spent or the amount of material consumed. Formula is Productivity = Amount of output/ Amount of input.
What is an output? The amount of something produced by a person, machine, or industry
Different inputs and productivity measures. Inputs are of varied types: o Human. o Material. o Machinery. o Money. o Technology. o Time. Productivity can then be judged on each of the inputs. Certain inputs are critical and therefore, very important from the productivity point of view. Example. Productivity= Number of units of power generated / Number of Kg of gas used up for that generation.
Other partial and indirect measures. While labor productivity has been of much importance since the birth of management science, there are other inputs which are also important. o Materials. o Capital. o Management. o Know how. o Technology. o Time. Capital productivity= Value Added / Capital employed. Inventory turnover= Sales / Inventory.
Multifactor productivity. It is right to say that the productivity measure should represent or reflect the overall capability and not focus on only one set of costs. The reason being that with the single factor productivity measures, it is easy to increase the productivity of one factor by replacing it with another. Formula for Total Factor Productivity= Production at standard price / Labor + material + overhead + capital invested.
Efficiency and Effectiveness. When the prime motive is efficiency rather than effectiveness, the productivity improvements happen to be generally of a short – term nature.
Differences between Efficiency and Effectiveness. Efficiency, has as an objective to create quantity and quality, its goal is to improve the process and / or the product, and it questions how to perform a task (whether in production, marketing or any other area), and it has as a satisfaction measure “Is everything running well?”. Effectiveness has as an objective to enhance the value to the customer and, therefore, to the society, its goal is to determine the right direction for the organization and the value that need to be generated, and it questions determine the right direction for the organization and the value that need to be generated, and it has as a satisfaction measure “Are we aiming right?”.
Quantity orientation. Several managers, from the top to the junior level, are busy saving their skins because, their productivity or performance is measured by the numbers without relating to the ultimate objective of the organization of providing value to the customer. Efficiency, by its very description, is reactive.
Business Process Reengineering. Companies sought to increase organizational productivity through radical changes by means of Business Process Reengineering (BPR). BPR is about taking a hard look at why the organization does the things that way it does.
Benchmarking. While carrying out with Total Quality Management and Business Process Reengineering, the company should have a basis of establishing performance goals. These basis, which should be the best practices in the industry, are called the benchmarks. There are o Internal benchmarking. o Competitive benchmarking. o Functional benchmarking. o Generic benchmarking.
Role of Technology in improving productivity. Technological development plays an important part in enhancing industrial productivity. Improvement in technology enables a firm to produce a given quantity of outputs with fewer inputs. Technological change has three components: i. Invention. Refers to a new product for the customer or a novel method or process. ii. Innovation. Is an invention that’s applied for the first time. iii. Diffusion For the technology gains to continue in the future and for it to spread to other related functions in the organization, the technology must diffuse.
4.0 Industry.
Measures to increase productivity So, what needs to be done in order to increase productivity? o Be clear about your organization’s mission. o Be customer oriented. o Be proactive and chart out organization’s direction to provide service to the customer. o Communicate this understanding, care and concern for the customer and the organization’s direction to all employees and all those who interact / contribute in the value chain.
Tata Business Excellence Model
Leadership: Strong and visionary leadership is crucial for driving business excellence.
Strategic Planning: Effective strategic planning ensures alignment of goals and actions.
Customer Focus: Meeting and exceeding customer expectations is essential for success.
Process Management: Efficient and effective processes drive operational excellence.
People Development: Investing in employee development leads to a skilled and motivated workforce.
Continuous Improvement: Embracing a culture of continuous improvement fosters innovation and growth.
Results Orientation: Focus on achieving measurable results and delivering value to stakeholders.
Innovation: Encouraging creativity and innovation drives competitive advantage.
Partnerships: Collaborating with partners and stakeholders enhances overall performance.
Sustainability: Integrating sustainable practices ensures long-term success.