PRODUCTIVITY, VALUE

ANALYSIS AND VALUE

ENGINEERING
PRODUCTIVITY, VALUE ANALYSIS AND
VALUE ENGINEERING
Productivity Concept
Productivity = Amount of Output
Amount of input
 Output can be measured in different units

like tons, money, number of units etc.

 Input can be in terms of human input,

material input, machine input, money

input and time input
Productivity Measures – Worker related
Worker’s Productivity
= Worker’s output in standard hours
Number of man hours of workers
Worker’s Group Productivity
= Units of output
Number of days
= Tonnage Produced
Number of workers
Labour Productivity
= Worker’s output in rupee value
Worker’s salary and wages in rupee
Other Direct Measures
Process Productivity
= Tonnes of steel Produced
Units of power consumed
Materials Productivity
= Production in Rupee value
Raw material + other supplies + packaging
material in rupee value
Other indirect Measures of Productivity
Capital Productivity = Value added
Capital employed
= Total Sales in Rupees
Depreciation of capital assets
Financial Productivity = PBT
Net Sales
= Sales in Rupees
Inventory in Rupees
= Net Sales
Fixed Assets
= Sales
Accounts Receivables
Total Factor Productivity
Production at standard price
Labour + Materials + Overheads
Efficiency & Effectiveness
 Efficiency orientation in an organisation

can improve productivity in short term and

can be achieved through improved process,
faster production lines, better utilisation of
materials and workers.
 Long term changes can be achieved
through improving overall effectiveness of
people at all levels in the organisation. This
may call for attitudinal changes, assigning
right jobs, giving right direction, training
and inculcating the value of customer
satisfaction among all employees in the
organisation.
 Productivity certainly improves by deploying
improved methods, systems, techniques
and people . But productivity is mush more
than that
 “Productivity is a state of mind” and the
should be to excel by providing value to
customer, contributing to society at the
same time ensuring that the organisation
continues to progress and thrive.
Measures to improve productivity
 Clearly define organisation mission

 Be customer oriented and proactive in

providing customer service

 Create a sense of belongingness and team

work
 Treat employees, vendors and partners
with respect
 Assign right people right job
 Ensure each employee knows company
goals, value and his own objectives
 Make the organisation flexible and learning
oriented
 Empower people and encourage creativity
 Learn from failures
 Introduce modern techniques like TQM,
BPR & IT for upscaling productivity.