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Productivity PRODUCTION CONCEPT Production Concept is a concept where goods are produced without taking into consideration the choices or tastes of your customers. It is one of the earliest marketing concepts where goods were just produced on the belief that they will be sold because consumers need them. Practiced by earlier industrials, it soon became an standardized practice. Ford , considered as one of the early champions of this concept once remarked that Americans can get any car from Ford until it is black. This is one of the most famous quotes in Marketing stressing the importance of Production concept and level of stress and importance given to it. But with the continuous industrialization and more and more players entered into the market, the space available to sell your product have squeezed because too many people were selling the same product that is why it became too obvious that the mass production of goods which is the heart and soul of production concept can no longer work because of too many me too products so the focus slightly shifted from Production concept to Customization concept where each and every product is manufactured and delivered according the tastes and choices of the customer. Dell is considered to be the pioneer of this field. There are two contexts in which the concept of production is used. Generally, In philosophy, Concept of production is a philosophy which can be defined as the preference of buyers for goods and services on the basis of their affordability and easy availability. Another concept of production is that it is the philosophy which is adopted by few companies to manufacture their products without taking into consideration the choices and the tastes of the consumers. In the second context, the concept of production is one of the earliest concepts of marketing. For example, a company manufactures sugar because it knows that in the end consumers will surely buy sugar. TYPES OF PRODUCTION There are several different methods of handling the conversion or production process Job, Batch, Flow and Group. The various methods of production are not associated with a particular volume of production. Similarly, several methods may be used at different stages of the overall production process. 1. Job Method With Job production, the complete task is handled by a single worker or group of workers. Jobs can be smallscale/low technology as well as complex/high technology. Low technology jobs: here the organisation of production is extremely simply, with the required skills and equipment easily obtainable. This method enables customer's specific requirements to be included, often as the job progresses. Examples include: hairdressers; tailoring High technology jobs: high technology jobs involve much greater complexity - and therefore present greater management challenge. The important ingredient in high-technology job production is project management, or project control. The essential features of good project control for a job are: - Clear definitions of objectives - how should the job progress (milestones, dates, stages) - Decision-making process - how are decisions taking about the needs of each process in the job, labour and other resources Examples of high technology / complex jobs: film production; large construction projects (e.g. the Millennium Dome) 2. Batch Method As businesses grow and production volumes increase, it is not unusual to see the production process organised so that "Batch methods" can be used. Batch methods require that the work for any task is divided into parts or operations. Each operation is completed through the whole batch before the next operation is performed. By using the batch method, it is possible to achieve specialisation of labour. Capital expenditure can also be kept lower although careful planning is required to ensure that production equipment is not idle. The main aims of the batch method are, therefore, to: - Concentrate skills (specialisation) - Achieve high equipment utilisation This technique is probably the most commonly used method for organising manufacture. A good example is the production of electronic instruments. Batch methods are not without their problems. There is a high probability of poor work flow, particularly if the batches are not of the optimal size or if there is a significant difference in productivity by each operation in the process. Batch

methods often result in the build up of significant "work in progress" or stocks (i.e. completed batches waiting for their turn to be worked on in the next operation). 3. Flow Methods Flow methods are similar to batch methods - except that the problem of rest/idle production/batch queuing is eliminated. Flow has been defined as a "method of production organisation where the task is worked on continuously or where the processing of material is continuous and progressive," The aims of flow methods are: - Improved work & material flow - Reduced need for labour skills - Added value / completed work faster Flow methods mean that as work on a task at a particular stage is complete, it must be passed directly to the next stage for processing without waiting for the remaining tasks in the "batch". When it arrives at the next stage, work must start immediately on the next process. In order for the flow to be smooth, the times that each task requires on each stage must be of equal length and there should be no movement off the flow production line. In theory, therefore, any fault or error at a particular stage In order that flow methods can work well, several requirements must be met: (1) There must be substantially constant demand If demand is unpredictable or irregular, then the flow production line can lead to a substantial build up of stocks and possibility storage difficulties. Many businesses using flow methods get round this problem by "building for stock" i.e. keeping the flow line working during quiet periods of demand so that output can be produced efficiently. (2) The product and/or production tasks must be standardised Flow methods are inflexible - they cannot deal effectively with variations in the product (although some "variety" can be accomplished through applying different finishes, decorations etc at the end of the production line). (3) Materials used in production must be to specification and delivered on time Since the flow production line is working continuously, it is not a good idea to use materials that vary in style, form or quality. Similarly, if the required materials are not available, then the whole production line will come to a close - with potentially serious cost consequences. (4) Each operation in the production flow must be carefully defined - and recorded in detail (5) The output from each stage of the flow must conform to quality standards Since the output from each stage moves forward continuously, there is no room for sub-standard output to be "reworked" (compare this with job or batch production where it is possible to compensate for a lack of quality by doing some extra work on the job or the batch before it is completed). The achievement of a successful production flow line requires considerable planning, particularly in ensuring that the correct production materials are delivered on time and that operations in the flow are of equal duration. Common examples where flow methods are used are the manufacture of motor cars, chocolates and televisions. CONCEPT OF PRODUCTIVITY Productivity is an overall measure of the ability to produce a good or service. More specifically, productivity is the measure of how specified resources are managed to accomplish timely objectives as stated in terms of quantity and quality. Productivity may also be defined as an index that measures output (goods and services) relative to the input (labor, materials, energy, etc., used to produce the output). As such, it can be expressed as: Hence, there are two major ways to increase productivity: increase the numerator (output) or decrease the denominator (input). Of course, a similar effect would be seen if both input and output increased, but output increased faster than input; or if input and output decreased, but input decreased faster than output. Organizations have many options for use of this formula, labor productivity, machine productivity, capital productivity, energy productivity, and so on. A productivity ratio may be computed for a single operation, a department, a facility, an organization, or even an entire country. Productivity is an objective concept. As an objective concept it can be measured, ideally against a universal standard. As such, organizations can monitor productivity for strategic reasons such as corporate planning, organization improvement, or comparison to competitors. It can also be used for tactical reasons such as project control or controlling performance to budget. Productivity is also a scientific concept, and hence can be logically defined and empirically observed. It can also be measured in quantitative terms, which qualifies it as a variable. Therefore, it can be defined and measured in absolute or relative terms. However, an absolute definition of productivity is not very useful; it is much more useful as a concept dealing with relative productivity or as a productivity factor.

Productivity is useful as a relative measure of actual output of production compared to the actual input of resources, measured across time or against common entities. As output increases for a level of input, or as the amount of input decreases for a constant level of output, an increase in productivity occurs. Therefore, a "productivity measure" describes how well the resources of an organization are being used to produce input. Productivity is often confused with efficiency. Efficiency is generally seen as the ratio of the time needed to perform a task to some predetermined standard time. However, doing unnecessary work efficiently is not exactly being productive. It would be more correct to interpret productivity as a measure of effectiveness (doing the right thing efficiently), which is outcome-oriented rather than output-oriented. TYPES OF PRODUCTIVITY Productivity is usually expressed in one of three forms: partial factor productivity, multifactor productivity, and total productivity. Each one is now discussed. 1. PARTIAL-FACTOR PRODUCTIVITY - The standard definition of productivity is actually what is known as a partial factor measure of productivity, in the sense that it only considers a single input in the ratio. The formula then for partial-factor productivity would be the ratio of total output to a single input. Managers generally utilize partial productivity measures because the data is readily available. Also, since the total of multifactor measures provides an aggregate perspective, partial factor productivity measures are easier to relate to specific processes. Labor-based hours (generally, readily available information) is a frequently used input variable in the equation. When this is the case, it would seem that productivity could be increased by substituting machinery for labor. However, that may not necessarily be a wise decision. Labor-based measures do not include mechanization and automation in the input; thus when automation replaces labor, misinterpretation may occur. Other partial factor measure options could appear as output/labor, output/machine, output/capital, or output/energy. Terms applied to some other partial factor measures include capital productivity (using machine hours or dollars invested), energy productivity (using kilowatt hours), and materials productivity (using inventory dollars). 2. MULTIFACTOR PRODUCTIVITY - A multifactor productivity measure utilizes more than a single factor, for example, both labor and capital. Hence, multifactor productivity is the ratio of total output to a subset of inputs: A subset of inputs might consist of only labor and materials or it could include capital. Examples include: Obviously, the different factors must be measured in the same units, for example dollars or standard hours. 3. TOTAL FACTOR PRODUCTIVITY - A broader gauge of productivity, total factor productivity is measured by combining the effects of all the resources used in the production of goods and services (labor, capital, raw material, energy, etc.) and dividing it into the output. One example, is a ratio computed by adding standard hours of labor actually produced, plus the standard machine hours actually produced in a given time period divided by the actual hours available for both labor and machines in the time period. Total output must be expressed in the same unit of measure and total input must be expressed in the same unit of measure. Total productivity ratios reflect simultaneous changes in outputs and inputs. As such, total productivity ratios provide the most inclusive type of index for measuring productivity and may be preferred in making comparisons of productivity. FACTORS AFFECTING PRODUCTIVITY There is quite a variety of factors which can affect productivity, both positively and negatively. These include: 1. capital investments in production 2. capital investments in technology 3. capital investments in equipment 4. capital investments in facilities 5. economies of scale 6. workforce knowledge and skill resulting from training and experience 7. technological changes 8. work methods 9. procedures 10. systems 11. quality of products 12. quality of processes 13. quality of management 14. legislative and regulatory environment 15. general levels of education

16. social environment 17. geographic factors The first 12 factors are highly controllable at the company or project level. Numbers 13 and 14 are marginally controllable, at best. Numbers 15 and 16 are controllable only at the national level, and 17 is uncontrollable. DIFFERENCE BETWEEN PRODUCTION AND PRODUCTIVITY 1. Productivity of an organization is defined as the ratio of outputs produced by the organization and the resources consumed in the process. And we can describe productivity mathematically as: Productivity = Output / Inputs. Here the output refers to the quantity of and services produced by the company, and inputs refers to the quantities of resources such as labor, material, physical facilities, and energy consumed for producing the same. 2. Production is the total output produced by an organization in a given period. These outputs consist of the goods and services that are supplied by a company to its customers. Productivity is concerned with the inputs used in the process. Thus productivity represents only the numerator in the above equation for productivity. Productivity is used to assess the extent to which certain outputs can be extracted from a given input. We can measure productivity for a single input resource such as manpower used, or for multiple resources. There can be many different types of productivity measurement depending on the type of resources considered. Some of the most common types of productivity measurements include labor productivity, machine or capital productivity, material productivity, and land productivity. Here the term land is used to denote all natural resources rather than just land. 3. Managers also need to pay attention to the total production to make sure that a company is meeting the requirements of products and services required by the customers.Managers also need to pay attention to production for production planning and scheduling. Similarly, long term planning of sales volumes and production capacities also requires focusing on production. 4. Productivity is a concept, whereas production is a fact 5. Production is achieved by means of resources; productivity is measured through means of maximum manpower, machinery. Financial support. 6. Production is a variable, dependent on many factors such as labor availability, motive power, etc. whereas productivity is the optimum measure of what or how much can be achieved or realized. MASLOWS THEORY HIERARCHY OF NEEDS If motivation is driven by the existence of unsatisfied needs, then it is worthwhile for a manager to understand which needs are the more important for individual employees. In this regard, Abraham Maslow developed a model in which basic, low-level needs such as physiological requirements and safety must be satisfied before higher-level needs such as self-fulfillment are pursued. In this hierarchical model, when a need is mostly satisfied it no longer motivates and the next higher need takes its place. Maslow's hierarchy of needs is shown in the following diagram: Maslow's Hierarchy of Needs

Self-Actualization Esteem Needs Social Needs Safety Needs Physiological Needs

Physiological Needs: Physiological needs are those required to sustain life, such as: air water nourishment sleep

According to Maslow's theory, if such needs are not satisfied then one's motivation will arise from the quest to satisfy them. Higher needs such as social needs and esteem are not felt until one has met the needs basic to one's bodily functioning. Safety: Once physiological needs are met, one's attention turns to safety and security in order to be free from the threat of physical and emotional harm. Such needs might be fulfilled by: Living in a safe area Medical insurance Job security Financial reserves According to Maslow's hierarchy, if a person feels that he or she is in harm's way, higher needs will not receive much attention. Social Needs: Once a person has met the lower level physiological and safety needs, higher level needs become important, the first of which are social needs. Social needs are those related to interaction with other people and may include: Need for friends Need for belonging Need to give and receive love Esteem: Once a person feels a sense of "belonging", the need to feel important arises. Esteem needs may be classified as internal or external. Internal esteem needs are those related to self-esteem such as self respect and achievement. External esteem needs are those such as social status and recognition. Some esteem needs are: Self-respect Achievement Attention Recognition Reputation Maslow later refined his model to include a level between esteem needs and self-actualization: the need for knowledge and aesthetics. Self-Actualization: Self-actualization is the summit of Maslow's hierarchy of needs. It is the quest of reaching one's full potential as a person. Unlike lower level needs, this need is never fully satisfied; as one grows psychologically there are always new opportunities to continue to grow. Self-actualized people tend to have needs such as: Truth Justice Wisdom Meaning Self-actualized persons have frequent occurrences of peak experiences, which are energized moments of profound happiness and harmony. According to Maslow, only a small percentage of the population reaches the level of selfactualization. Implications for Management - If Maslow's theory holds, there are some important implications for management. There are opportunities to motivate employees through management style, job design, company events, and compensation packages, some examples of which follow: Physiological needs: Provide lunch breaks, rest breaks, and wages that are sufficient to purchase the essentials of life. Safety Needs: Provide a safe working environment, retirement benefits, and job security.

Social Needs: Create a sense of community via team-based projects and social events. Esteem Needs: Recognize achievements to make employees feel appreciated and valued. Offer job titles that convey the importance of the position. Self-Actualization: Provide employees a challenge and the opportunity to reach their full career potential. However, not all people are driven by the same needs - at any time different people may be motivated by entirely different factors. It is important to understand the needs being pursued by each employee. To motivate an employee, the manager must be able to recognize the needs level at which the employee is operating, and use those needs as levers of motivation. Limitations of Maslow's Hierarchy - While Maslow's hierarchy makes sense from an intuitive standpoint, there is little evidence to support its hierarchical aspect. In fact, there is evidence that contradicts the order of needs specified by the model. For example, some cultures appear to place social needs before any others. Maslow's hierarchy also has difficulty explaining cases such as the "starving artist" in which a person neglects lower needs in pursuit of higher ones. Finally, there is little evidence to suggest that people are motivated to satisfy only one need level at a time, except in situations where there is a conflict between needs. Even though Maslow's hierarchy lacks scientific support, it is quite well-known and is the first theory of motivation to which many people they are exposed. To address some of the issues of Maslow's theory, Clayton Alderfer developed the ERG theory, a needs-based model that is more consistent with empirical finding PRODUCTIVITY VS STANDARD OF LIVING Standard of living- The extent to which a person is able to provide the things that are necessary for sustaining and enjoying life. Standard of living of a representative family differs greatly in different parts of the world. What is considered a necessity in one part of the world could be considered a luxury in the other. Basic necessities of a minimum decent standard of living: Food, clothing, housing and hygiene. Also, security and education also considered constituents. Greater the amount of goods and services produced in any community, the higher its the average standard of living. There are two ways of increasing the amount of goods and services produced: - Increase the employment and investment in creating jobs. So that more people are producing goods required for the society. - Increase productivity. Same amount of labor produces more goods. We want: More and cheaper food by increase in agricultural productivity More and cheaper clothing and housing by increased industrial productivity More hygiene, security and education by increasing overall productivity. Productivity: Ratio between output and input. Arithmetic ratio of the amount produced to the amount of any resources used in the production. The resources may be: land, material, plant, machines, tools, labor. It could be combination of all! Over a period of time, one can see if the productivity has increased. Note that, increased production does not mean increased productivity. Higher productivity means that more is produced with the same expenditure of resources; that is, at the same cost in terms of land, material, machine, time or labor. Alternatively, same amount is produced at less cost in terms of land, labor, material etc; thereby releasing some of these resources for the production of other things. Productivity and standard of living: If more is available at the same cost, or the same amount is available at lesser cost the whole community benefits. As per the ILO, higher productivity provides ways for raising the standard of living by: Larger supplies of both consumer goods and capital goods at 1. Lower cost and prices higher real earnings 2. Improvement in working conditions, e.g. by reduced working 3. Hours In general, strengthening of the economic foundations of 4. human well-being. Productivity in industry: Many factors affecting productivity of each organization; also, they are dependent. Depending on the individual environments, decisions are to be made. Industries where labor and capital costs are low compared to the material costs, better use of material and plant gives the greatest scope of cost reduction. In countries where capital and skilled labor are in shortage compared to unskilled labor, one should look to increase the output per machine or per skilled worker. Increasing the number of unskilled workers may be beneficial if by doing so an expensive machine or skilled craftsmen are enabled to increase production.

Factors tending to reduce productivity: Work content added due to the product design for a manufacturing firm: The product or its components are designed such that it is impossible to use most economical manufacturing processes. Excessive variety or lack of standardization. Incorrect quality standards. Excessive amount of material removal required. Work content added due to process: Incorrect production process (and/or machine) used Process not operated properly Non-optimal layout with wasted movements. Working methods of operation causing wasted movements, time and efforts. 13 Ineffective time due to management. Marketing policy which demands unnecessarily large number of products. No standardization of components between as well as within products. Failing to meet customers requirement from the beginning. No plan for flow of work. Improper supply of material, equipment. Improper maintenance of plant and machines. Insufficient safety measures. Improper working conditions resulting in interrupted work. Ineffective time within the control of worker: Taking time off without good cause: by lateness, by idling at work etc. Careless workmanship causing scrap or rework. Failing to observe safety standards.