Production & Operations Management

POM – Productivity
Module
for
INMANTEC, Ghaziabad.
By
Prof S.S.Sharma
(System Dynamics)
 Productivity

Objective is to introduce:
• Basic concept of Productivity
• Factors affecting productivity
• Methods of improving productivity
 Productivity

 Production :
 Process of transformation of raw material and other
inputs in to finished good or services
 Transforming inputs in to outputs by adding values
 “Value addition to new material”
 Productivity

 Economic Point of View

Productivity means the yield from:
 Each factor of production (land, labour, capital, plant and
machinery and organization)
 Each input (raw material, fuel, time and knowledge)
 And overall yield of the joint factors and resources in
combination.
 Productivity

 Management perspective:

In broad sense “Productivity is the quantitative relationship
between what we produce and resources which we use”.
 To get higher outputs over given input.
 Productivity

 Conventional outlook on productivity:

 Productivity is the efficiency of labour
 Only efficient functioning of the manpower can contribute to
productivity improvement.
 Productivity

Productivity :
 “Efficiency of production”
 f ( surplus efficiency of all points of production)
 f (Men, material, management)
 Productivity

Productivity :
• Productivity is the Functional efficiency of all factors of
production and all other sub-systems of all such factors.
 Productivity is the efficiency of total factors and not efficiency of
labour alone (single factor approach).
 Productivity

Factors which effects productivity :

• Natures and quality of Raw material
• Basic nature of process employed
•
Amount and quality of Plant and Equipment Utilized
• Volume Continuity and uniformity of production
• Effective utilization of manpower
 Productivity

Improvement of Productivity
• Long Term Measures:
 Improve basic process by research and development
 Provide more and improved physical means of producing
 Will require capital investment
 Productivity

Improvement of Productivity
• Intermediate Term Measures:
 Simplify and improve the product and reduce variety. Product
standardization.
 May require capital investment.
 Productivity
 Improvement of Productivity
• Short Term Measures:
 Improve methods of operation
 Improve planning and control
 Improve skill and competency of the manpower
 Multi-tasking of manpower
 Increase manpower effectively where required.
 Will require little or no capital investment.
 Improvement of Productivity

Short Term Measures:

•
Improve Method of operation:
 Industrial engineering approach (work study technique) to be integrated with
technical considerations.
 Improvement in planning and organizing
 Manpower effectiveness improvement at all functional levels through
continuous systematic training.
 Increased employee involvement, commitment & motivation at work
reinforced by managerial policies and practices
 Corporate Sickness & Productivity
Productivity is effect of sum-total efficiency of each & every functional area .
Industrial sickness at macro level has direct relationship with productivity achievement
figures of the company and the total factor productivity indices.
Some of the Important factors attributing to Corporate Sickness:
1.Quality of management
2. Impractical or no planning
3.Lack of financial Control
4. Diversion of resources
5. Inadequate attention to research and development
6. Technological Obsolescence
7. Poor Industrial relations
 Productivity
Productivity Measurement
• Productivity is a common measure of how well a country,
industry or business unit is using its resources (or factors of
production)
• Productivity a relative measure, two ways of comparison:

Comparison with similar operations within industry,

(i.e. Comparing productivity among the different stores in a franchise)

 Measure productivity over time period within the same operations
 Productivity Measurement

Productivity Measures:

• Partial Measure
• Multifactor Measure
• Total Measure
 Productivity Measures

Partial Productivity Measure

 Concerned with ratio of output to a single input.
Examples:
• Output / Labour, or
• Output / Capital, or
• Output / Material, or
• Output / Energy
 Productivity Measures

• Multifactor Productivity Measure:

 Concerned with ratio of output to a group of inputs (but not all inputs)

Examples:
Output / Labour + Capital + Energy
Or

Output / Labour + Capital + Material

 Productivity Measures

•
Total Productivity Measure

Concerned with ratio of all outputs to all inputs.

May be used to describe productivity of a department, entire organization or
industry.

Examples:
Output / Inputs
Or
Goods & Services Produced / All resources Used
 Productivity Measurement

Problem:
Sashtri & Sons, a furniture manufacturing company has provided the following
data. Compare the labour, raw material and supplies productivity and total
productivity of 2001 and 2002.

2001 2002
Output : Sales value of production 1,100,000 1,750,000

Input : Labour 500,000 750,000

Raw Materials & Supplies 400,000 625,000
Capital Equipment & Depr. 35,000 60,000
Other 110,000 240,000
 Productivity Measurement

Solution:
2001 2002
Partial Productivity
Labour 2.20 2.33
Raw Materials & Supplies 2.75 2.80
Total Productivity 1.05 1.04
 Productivity Measurement

Partial Measures of Productivity:

Business Productivity Measures
Restaurant Customers (meals) per labour hour
Retail Store Sales per square foot
Chicken Farm Kg. of meat per Kg of feed
Utility Plant Kilowatts per ton of coal