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LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity Engg & Management By Engr Dr. Ali Sajid Special Presentation for Pakistan Engineering.

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Presentation on theme: "LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity Engg & Management By Engr Dr. Ali Sajid Special Presentation for Pakistan Engineering."— Presentation transcript:

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2 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity Engg & Management By Engr Dr. Ali Sajid Special Presentation for Pakistan Engineering Council Leadership & Management Development Associates (LMDA) 28 Jan, 2009 Tel: (off)

3 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 LMDA A vision to make Pakistani Industry More Competitive By Enhancing capacity of Engineers

4 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Shakwa a Zulmat Shab "Don't curse the darkness -- light a candle." Chinese proverb.

5 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 The will to win, the desire to succeed, the urge to reach your full potentials are the keys to unlock the doors to the personal excellence Confucius

6 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Commencement address by Sir Winston Churchill at a graduation ceremony: "Never give up. Never give up. Never, never, never." - this was his entire speech.

7 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Good Mgmt Good management consists of showing average people how to do the work of superior people." (John D Rockerfeller, , US oil magnate and philanthropist.

8 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Difficulty "Difficulty is not an obstacle, it is merely an attribute".

9 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Stone Age "The stone age didn't end because they ran out of stones."

10 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Start viewing the probable as possible. You'll be surprised at what you can accomplish.

11 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 All this will not be finished in the first one hundred days. Nor will it be finished in the first thousand days, nor in the life of this administration, nor even perhaps in our lifetime on this planet. But let us begin. - John F. Kennedy

12 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 The best & most beautiful things in the world cannot be seen or even touched. They must be felt with the heart.

13 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Self-actualized people are independent of the good opinion of others. - Wayne Dyer

14 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 The greatest discovery of our generation is that a human being can alter his life by altering his attitudes. - William James

15 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Nature present us with an infinite variety of Attitudes - from gloomy mist to glorious sunshine. Our own moods, whether gloomy or bright, radiate to those around us.

16 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 We may affirm absolutely that nothing great in the world has ever been accomplished without passion. - George Hegel

17 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Two Parts of Empathy: Skill (tip of iceberg) & Attitude (mass of the iceberg).

18 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Eighty percent of success is related to ATTITUDE rather than competency.

19 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Attitude Your attitude determines your altitude.

20 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Pride is a personal commitment; it is an attitude which separates excellence from mediocrity.

21 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Attitude is a little thing that makes a big difference.

22 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Action Logic will not change an emotion, but action will.

23 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 The difference between a successful person and others is not a Lack of Strength, not a Lack of Knowledge, but rather in a Lack of Will.

24 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 The mold of a man's fortune is in his own hands. - Francis Bacon

25 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Passion We may affirm absolutely that nothing great in the world has been accomplished without passion. - Georg Wilhelm Friedrich Hegel

26 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Believe If you do not believe in yourself... chances are nobody else will.

27 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 You can have a positive attitude without talent and you can have talent without a positive attitude, but things really start happening when you have a positive attitude combined with talent.

28 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 To be conscious that you are ignorant is a great step to knowledge. - Benjamin Disraeli

29 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Leaders Are … in a Hurry

30 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Flexibility Whatever is flexible ….will grow; what ever is rigid & blocked will die Lao Tzu

31 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Goodness is the Only Investment that Never Fails Henry David

32 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Proj Mgmt Good Practices "I Praise Loudly. Blame Softly." (Catherine The Great, )

33 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Attitude in Projects Nothing can stop man with Right Mental Attitude from achieving his goals: Nothing on earth can help man with Wrong Mental Attitude - Thomas Jefferson

34 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Importance of Ethics in Org In law, a man is guilty when he violates the right of another. In Ethics, he is guilty, if only he thinks of doing so Immanuel Kant

35 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Personal Integrity in Org I look for three things in hiring People. The first is Personal Integrity, Second is Intelligence Third is a High Energy Level. But if you dont have the first, other two will kill you. Warren Buffett, CEO Berkshire Hathaway

36 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Rethinking in Industry The complacent company is a dead company. Success today requires The Agility & Drive to Constantly Rethink, Reinvigorate, React, & Reinvent. Bill Gates, Chairman Microsoft

37 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, Never to suffer would never to have been blessed.Never to suffer would never to have been blessed. Edgar Allan Poe ( )Edgar Allan Poe

38 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, Although the world is full of suffering,Although the world is full of suffering, it is full also of the overcoming of it. Helen Keller ( )Helen Keller

39 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, To do right is wonderful. To Teach others to Do the Right is even more wonderful – & much easier. - Mark Twain

40 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, Self-pity is our Worst enemy & if we yield to it, we can never do anything wise in this world - Helen Keller

41 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, Setting An Example is not the Main Means of Influencing Others, it is the only means. - Albert Einstein

42 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Education & Training in PM " A person who graduated, yesterday & stops studying today is uneducated tomorrow."

43 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Competitiveness Ability to get customers to choose your product or service over competing alternatives on sustainable basis.

44 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Competitiveness- Degree to which a country can, under free & fair market conditions, produce goods & services which meet the test of intl markets, while simultaneously maintaining & expanding the real incomes of its people over the long-term. OECD

45 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Competitiveness Competitiveness ---- continually sustained increases in productivity resulting in higher wages & living standards --- characterized by increasing export market shares. Competitiveness ---- demonstrated by "ability to meet, rest of free intl markets while expanding real income."

46 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 High standard of living Trade Productivity (Quality should exist) Investment in productive facilities (Factors, R&D, technology) Competitiveness Pyramid Source: Based on US Council on Competitiveness, 1995.

47 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Competitiveness depends on Productivity "Standard of living is determined by the productivity of a nation's economy, which is measured by the Value of goods & services (products) produced per unit of the nation's human, capital & Natural resources". Porter & Christensen, Harvard Business School

48 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 What is Productivity Ratio of output to input by large number of professionals. ILO Definition: Ratio between o/p of wealth produced & i/p resources used up in process of production. Comparative tool for mgrs, industrial engrs, economists, & politicians. Contd…

49 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Operation Management System Outputs Products, services, & other (pollution) Inputs Raw materials, human resources, capital (land, buildings, equipment), technology information. Feedback Product/ Service Design & Facilities Transformation Process Control Processes

50 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Indicators of Competitiveness Productivity is efficiency with which goods & services are produced & provided. Determined by previous investments & by quality & performance of workforce, technological innovation, quality of plant & equipment, & effectiveness with which these factors of production are utilized.

51 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Definition of Productivity Successful Tech Org create surplus through productive operations. Productivity, is output-input agreement on true meaning of due consideration for Quality & Time. Productivity = Outputs Inputs (within time period, quality considered)

52 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Concepts of Productivity Comparison b/w: Quantity of goods or services produced & Quantity of Resources Employed in turning out these goods or services. Stress is on productivity being Concern of production function only.

53 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Relationship b/w output generated by production or service system & input provided to create this output. Efficient use of resources – Labor, capital, land, materials, energy, information – In production of various goods & services.

54 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Concepts of Productivity Ratio of o/p to inputs -expanded inputs to include technology besides labor, materials, machine utilization. Siegel Considers Productivity as: Class conceivable measure depicting output per unit of associated input in sequence of compared period.

55 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Some Recent Attempt to Define Productivity Mali - Rational departure to define productivity as: Productivity is measure of how well resources are brought together in organizations & utilized for accomplishing set of results. Productivity is reaching higher level of performance with least expenditure of resources. Further Elaborates as. Productivity is combination of effectiveness & efficiency & Effectiveness related to performance, efficiency to resource utilization.

56 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Some Recent Attempt to Define Productivity Concept of Productivity Must: Serve as a tool in the hands of mgt to take corrective steps for productivity improvement & also should provide ready reference & comparison of performance with performance objectives of org. Productivity Perceived as: Indicator of how well goals or performance objectives or mission have been achieved.

57 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Concepts of Productivity Faraday -Productivity as Ratio of prescribed output to resources. Ramsay - Productivity as ratio of output to inputs based on concept of value addition. Formal definition of productivity: Productivity is Optimization (or maximization of economic resources & generation of new resources through creative thinking, research & development, & by use of all possible improvement techniques & methods.

58 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Some Recent Attempt to Define Productivity Productivity is measure of how well resources are brought together in organizations & utilized for accomplishing set of results. Productivity is reaching higher level of performance with least expenditure of resources. Further Elaborates as. Productivity is combination of effectiveness & efficiency & Effectiveness related to performance, efficiency to resource utilization.

59 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Some Recent Attempt to Define Productivity Concept of Productivity Must: Serve as a tool in the hands of mgt to take corrective steps for productivity improvement & also should provide ready reference & comparison of performance with performance objectives of org. Productivity Perceived as: Indicator of how well goals or performance objectives or mission have been achieved.

60 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Term Productivity encompassed everything, which concerns an org. Different meaning, definitions, interpretations & concepts emerged as experts working in various fields have looked at it from their own emphasis, perceptions & reference point they have before them.

61 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Difference b/w Production & Productivity Production is concerned with Activity of Producing goods & or services. Productivity is efficient utilization of resources (inputs) in producing goods or services (outputs). Production is quantity of output produced. Productivity is ratio of output produced in input (s) used.

62 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Higher productivity means accomplishing more with same amount of resources or Achieving higher output in terms of volume & quality for same input.

63 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Evolution of Productivity Concept in Modern Era Frederick Taylor: Father of Scientific Mgt Mech Engr – invented high speed steel cutting tools Got opportunity to know: First Hand Problems & Attitude of Workers. Major Concern To increase efficiency in production, to lower cost, Raise profits through higher productivity, possible increase in pay. To be Contd.

64 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Concept of Economic Man, - worker is motivated primarily by economic gain & o/p maximized only thru financial incentives. Differential Piece-Rate system, - workers receive higher rate of pay per piece produced after a fix number.

65 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Taylors Message of Productivity Various pay plans based on output for surplus. Give People their best opportunity to be productive, reward workers for individual productivity. Increase labor productivity not possible w/o: a) Providing ample reward, b) Adequate training, C) or Managerial help. Careful advance Planning by Manager Managers to design work systems for worker to do their best.

66 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Fredrick Concluded: Low Productivity is matter of ignorance on part of Labor & Mgt. Ignorance? Fair days work & Fair day pay Not enough inc in surplus to get more compensation. Productivity enhancement – answer to hi wages/profits.

67 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Problem faced in LDC is problem not of underdevelopment but rather of under mgt. Actually productivity is most serious challenge confronting mgt. Peter Drucker

68 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Contd… Productivity can be improved: 1. By increasing outputs to with same inputs. 2. By decreasing inputs but maintaining same output 3. By increasing outputs & decreasing inputs to change ratio favorably.

69 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity-Managers Perspective Use accounting ratios in achieving objectives of general mgt, which is usually interested in productivity measures that enable it to easily assess the present profitability of the company.

70 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity-Engineers Perspective Seek measures of Physical assets & other resources, such as Production per hr., man hrs. per unit, material requirements per unit, machine utilization, and space utilization, but they may fail to relate these to overall productivity.

71 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity- Behaviorists Perspective View productivity of people in organization, in terms of time they spend at work vs. total time available. A misleading measure.

72 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity-Accountants Perspective Costing & budgeting approach to productivity. When budget figures, rather than optimum achievable values, are used as standards, Could be a false impression of high productivity.

73 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity-Economists Perspective Partial measures, such as Labor productivity, Primary measures employed by economists. Total Factor & total productivity measures proposed, but again definitions do not agree.

74 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Misunderstanding about Productivity Myth # 1 Profitability is Measure of Productivity. Profit – Difference of some calculation of output value & some calculation of input costs. Function of several factors:- a) Status of demand & supply: b) Value of output:- Value of output can rise because of hi market prices resulting from more aggressive marketing, improved quality of product, influence with buyers. c) Input Costs:-

75 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Profit is not solely result of increased production efficiency. At expense of the LT objectives, it can be obtained by curtailing: (a) Training / HRD, (b) Maintenance, (c) Advertisement. (d) SHE (e) QWL (f) BMR Company may raise profit by: (a) Production building monopoly power, (b) Bribing purchasing agents, (c) Hypnotizing consumers, (d) Undermining a union or getting public subsidy. /export rebate Conclusion : Profitability can not be equated with productivity.

76 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Myth # 2 When you increase Quality, You decrease Productivity as Cost of Input increases. Quality & productivity go hand in hand Deming circle Quality is a specific dimension of productivity. A high productivity is not outcome of lowered specifications of products manufactured or services rendered.

77 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Quality & Productivity Go Together

78 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity & Managerial Performance Productivity is a summary measure of the quantity & quality of work performance, with resource utilization considered. It can be measured at the individual, group, or organization level.

79 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 THE QUALITY PRODUCTIVITY RELATION SHIP Contd… Less Re-Work More Productivity Improve Quality Lesson Re-work

80 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Demings Chain Reaction Improve Quality COST DECREASE BECAUSE OF LESS REWORK, FEWER DELAYS, BETTER USE OF RESOURCES PRODUCTIVITY IMPROVES CAPTURE MORE BUSINESS WITH BETTER QUALITY AND LOWER PRICE STAY IN BUSINESS Less Production COST JOBS, MORE PROFIT

81 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Quality is All Consuming Focus Org which seeks to decrease costs, improve productivity, decrease prices, increase market share & increase return on investment - without first building quality into systems – is gambling its long-term survival for short-term advantage. Improve quality Provide jobs & more jobs Increase market Decrease costs Return on investment Stay in business Improve productivity Decrease prices Demings Chain Reaction

82 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Positive Relationship b/w Quality & Productivity Reduced productivity is caused by quality defects, rework, & scrap. Improvement of quality transfers waste of man hours & of machine time into manufacture of good products & better service. (Dr. Edward Deming)

83 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Positive Relationship Between Quality & Productivity Reduced productivity is caused by Quality Defects, Rework, & Scrap. Improvement of quality transfers waste of man hours & of machine time into manufacture of good products & better service. (Dr. Edward Deming) Contd…

84 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Certain hidden & Non-productive Plant exists to rework & repair defects & returns, & if quality is improved, this hidden plant would be available for increased productivity. Any Quality Improvement that reduces defects - improvement in productivity. Same can be said, for services & for those firms in services businesses. Cost of quality improvement rarely exceeds savings from increased productivity. (Feigenbaum) Contd…

85 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Myth # 3 Productivity Can Be Judged by Output Output may be rising without increase in productivity e.g. input cost risen, disproportionately Increase in o/p compared with last year should also consider like price hike/inflation. Such an approach is result of being process oriented at the expense of paying attention to final results.

86 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Myth # 4 Productivity is Applied only in Manufacturing & Production alone.

87 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Myth # 5 Cost cutting always improves productivity When done in an indiscriminately make matters worse in long run Cut on info Tech use, Ban on Training etc.

88 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Myth # 6 Productivity is Labour Efficiency or Labour Productivity False assumption - single factor productivity analysis , UK Productivity in Agri Labor : Rose to 60% due to breeding, fertilizers sprays, land & tech (yield/hectare also increased) One Unit of Energy (fertilizer) grew less wheat in 83 than (Surprise) More appropriate yardstick of efficiency is then yield produced for each monetary unit spent. Productivity - much more than labour alone & take into account cost of energy, raw material & concern for unemployment / QWL.

89 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Myth #7 Productivity improvement requires billions of Rs and millions of trained persons. Common sense Short courses/formal train. Top level commitment Principles of TQM

90 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Greatest opportunity for increasing productivity is surely to be found in knowledge worker itself, & especially in mgt. Peter F. Drucker

91 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Financial & social benefits of productivity improvement strategy should be greater than implementation cost, in long run.

92 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Definition of Effectiveness & Efficiency Productivity implies effectiveness & efficiency individual & organizational performance. Effectiveness-Achievement of Objective. Efficiency: Achievement of ends with least amount of resources.

93 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Efficiency is concerned with means Effectiveness with ends.

94 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Efficiency is ratio of actual output attained to standard output expected. Example Output of machine is 120 units per hours while standard rate is 180 pieces per hour, machine's efficiency is 120/180 = or percent.

95 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Efficiency Extent of useful output compared to input. Least amount of resources must be used to achieve useful output. Wastage reduction.

96 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Efficiency -relationship between inputs & outputs and its comparison. If you get more output for a given input, you have increased efficiency. Managers deal with input resources that are scarce money people, equipment they are concerned with the efficient use of these sources. Mgmt- concerned with minimizing resource costs. (Efficiency). Mgt concerned with getting activities completed- (effectiveness). When managers achieve their org goals- effective.

97 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Balancing Effectiveness & Efficiency Effectiveness entails promptly achieving stated objectives. Efficiency enters picture when resources required to achieve an objective are weighed against what was actually accomplished. Mgrs are responsible for balancing effectiveness & efficiency. Too much emphasis in either direction leads to mismgt.

98 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Efficiency & Effectiveness Mgt, is concerned with minimizing resource costs w/o chances of failure. Efficiency is doing things right. Mgt is also concerned with getting activities completed, so it seeks effectiveness. Effectiveness is: Doing right things So efficiency is concerned with means & effectiveness with ends.

99 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 It is easier to be effective if one ignores efficiency. Some Production org- reasonably effective but extremely inefficient. They get their jobs done, but at a very high cost.

100 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Mgt in Engg Org must be concerned, then not only with Getting activities completed (effectiveness), but also with doing so as Efficiently as possible. Can organizations be efficient & yet not effective? Yes, By doing wrong thing well !

101 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Management Seeks Efficiency & Effectiveness Ends: Effectiveness Means: Efficiency Goals High attainment Low Waste

102 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Effectiveness/Efficiency Peter Drucker Effectiveness –Doing the right thing Efficiency –Doing things right

103 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity Index = Output Obtained Input expended = Effectiveness Efficiency Productivity Index=f (Effectiveness) F (Efficiency) Performance achieved Resource consumed

104 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Efficiency & effectiveness are interrelated. It is easier to be effective if one ignores efficiency. Federal Govt. in Islamabad are reasonably effective -extremely inefficient jobs done but at a very high cost.

105 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Major Issues of Productivity in Pakistan Inability to understand the basic concept of productivity. Inability to measure & manage productivity of white collar employees- main reason for PS inefficiencies.

106 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Major Issues of Productivity in Pakistan Considering productivity enhancing initiative as an additional overhead. Across the board Rewards / benefits disregarding - equivalent in productivity.

107 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Major Issues of Productivity in Pakistan Diffused and unclear authority under institutional setup & inefficiency in complex organizations, cause delays and time lags. Low labor productivity in Pakistan is causing –competitive imbalance.

108 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Major Issues of Productivity in Pakistan Manufacturing -we are losing competitiveness, due to higher costs of production as customers turn to low cost product.

109 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity in Pakistan: Issues & Lessons Financial & social benefits of Productivity Improvement Strategy are far greater than implementation cost in the long run.

110 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Increasing Productivity can break Vicious Circle of Poverty, Low Productivity & Unemployment

111 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Low Productivity Trap in Pakistan Conditionalities of donors. Low productivity growth (compared with input prices esp. labor and energy). Rising prices (domestic and export goods). Rising per unit (labor and energy) costs. Sluggish sales (in domestic and foreign markets). Unintended inventory in warehouses. Lower utilization of domestic plant capacity. Lagging capital formation (insufficient capital-labor ratio).

112 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Low Productivity in Pakistan This vicious cycle of poverty & unemployment can be broken by increased productivity. Increased productivity results in: –Optimal use of resources. –Better balance between different stakeholders of society.

113 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity Improvement in Pakistani Environment Productivity improvement will cause direct increase in standard of living. Pakistani GNP can grow without adding more input factors when productivity is improved. Productivity improvement will trigger economic growth.

114 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Lessons for Pakistani Industry Caterpillar has achieved 27% greater sales, through investments in productivity enhancement of its workforce & technology.

115 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Difference B/W Production & Productivity Production is concerned with the activity of producing goods and or services. Productivity is efficient utilization of resources (inputs) in producing goods or services (output) Production is the quantity of output produced; productivity is the ratio of the output produced to the input (s) used. Efficiency is the ratio of actual output attained to standard output expected. Example Output of a machine is 120 units per hours while the standard rate is 180 pieces per hour, the machine's efficiency is 120/180 = or percent Effectiveness is the degree of accomplishment of objectives. How well a set of result is accomplished reflects effectiveness, whereas how well the resources are utilized to accomplish the results refers to the efficiency. Productivity is a combination of both effectiveness and efficiency, since effectiveness is related to performance while efficiency is related to resource utilization.

116 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Efficient & effective use of resources – labour, capital, land, materials, energy, time, information, etc. in production of goods & services that meet users, needs & requirements. Productivity is combination of effectiveness & efficiency while Effectiveness is related to performance & efficiency to resource utilization. Rising & improving quality of working life do tend to go hand in hand.

117 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 How can Orgs Improve Their Productivity Productivity is composite of people & operations variables. To improve productivity, mgt needs to focus on both.

118 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity does not just happen by trying harder. It must be planned. But how do you plan for productivity, & what factors are involved? Frank. E. Cotton, Jr. Mississippi State University

119 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Task of mgt is to evaluate those factors with have bearing on productivity & take appropriate measures to use effectively.

120 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Increase Productivity Is Key To Global Competitiveness Japans prosperity in 1980s -due to growth in manufacturing productivity. Between Japans productivity increased - 5.5% U.S productivity gained only 2.8% annually. US firms responded over in 1990s -dramatic improvements. Caterpillar investments in productivity (workforce & its tech) resulted in: Higher customer satisfaction. Increasing market share 27% greater sales With 29% fewer employees.

121 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Critical Barriers/Problems Affecting Productivity Improvement Application on South Asia Family-controlled industry leading to earning easy money. Some Segments have monopolistic market, some hi competitive one. Erratic inflow of orders. Lack of productivity/quality culture. Shortage of funds & codification are at low level. Automation is not encouraged. Contd…

122 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Critical Barriers/Problems Affecting Productivity Improvement Application on South Asia Contd… Low priority of marketing & commercial activities, poor after service. Complicated govt. policy, rules & regulations. Inadequate communication facilities, particularly road transport. Energy shortage. Poor working conditions (light, ventilations, safety, housekeeping). Non availability of some basic material & components (to be imported), unreliable suppliers.

123 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Causes of Productivity Decline in Org Inability to measure, evaluate, & manage productivity of white collar employees. This causes shocking waste of resources. Rewards & benefits given without requiring equivalent in productivity & accountability. This causes spiraling inflation. Diffused authority & inefficiency in complex org, thereby, causing delays & time lags. Org expansion that lowers productivity growth. results in soaring costs. Low motivation among rising number of affluent workers with new attitudes. Late deliveries caused by schedules that have been disrupted by scarce materials. Contd…

124 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Causes of Productivity Decline in Projects Unresolved human conflicts & difficulties in teamwork, resulting in firms ineffectiveness. Increased legislative intrusions or antiquated laws, resulting in constrained mgt options & prerogatives. Specialization in work processes resulting in monotony & boredom. Rapid technological changes & high costs, resulting in decline in new opportunities & innovations. Increasing demand of leisure time causing disruption of time commitments. Practitioners inability to keep pace with latest information & knowledge.

125 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Critical Barriers to Productivity Improvement in any Project Too many hierarchical levels. Poor utilization of old factory & machinery. Skilled worker shortage. Overloaded engineering & design groups. Lack of time for development work. Trade unions adversity to productivity.

126 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Critical Barriers to Productivity Improvement Inadequate human resource development. Poor industrial relations. High absenteeism. Inefficient materials-handling facilities. Rigid & authoritarian management style. Excessive diversification. Poor documentation of technical problems. High social orientation.

127 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, TOTAL WORK CONTENT =

128 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014

129 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014

130 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014

131 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014

132 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity Thru Time and Motion Study

133 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Time and Motion Study: Defined A method created to determine the correct time it takes to complete a certain task A method to establish the one best way to perform a task

134 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Time and Motion Study: Purposes To end goofing off and to establish what constituted a fair days work To make sure that the job being evaluated does not include any unnecessary motion by the worker

135 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Functions of Time Studies Establish work standards: e.g. recommended times in which tasks should be completed by qualified, trained operators, without excessive fatigue, Set expectations which are fair to both employee and company. Identify sources of error, difficulty, sub- optimality, Improve an existing process, tool, or work environment,

136 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Functions of Work Standards Establish reasonable productivity targets for experienced workers, Provide productivity goals for training purposes, Eliminate waste, Make processes more consistent, Reduce product variability, improve quality.

137 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Time and Motion Study: History Frederick W. Taylor and his followers developed and refined the Time Study Frank B. Gilbreth and his wife Lillian developed and refined the Motion Study Historically the two studies are discussed individually, today they generally are discussed as one

138 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Time and Motion Study Historically: T&M Studies were used in the manufacturing industry to evolve pay scales with the thought that money was the only motivation for work

139 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Time and Motion Study Today: –T&M Studies can be effective for performance evaluations –T&M Studies can be used for planning purposes in order to predict the level of output that may be achieved –T&M Studies can be used to uncover problems and create solutions –T&M Studies can be used for time cost analysis

140 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Time and Motion Study: Objective The objective of the Time and Motion Study is to determine a normal or average time for a job, by using observers to record exactly how much time is being devoted to each task.

141 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 SCOPE ENHANCEMENT In 60s measurement alone found of little use Method Improvement made an integral part of TMS Now called Work Study

142 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Work Measurement Divided into Two parts –Method Study –Work Measurement

143 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 METHOD STUDY Systematic Recording & Critical Examination of existing and proposed processes as a means of applying easier and effective methods

144 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 OBJECTS OF METHOD STUDY Improvement of Processes and Procedures Improvement of Shop-floor layout Economy in human effort and reduction in fatigue Improvement in use of machines, material and manpower Development of better physical environment

145 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 There are two major categories of productivity External (Not controllable) Internal (Controllable)

146 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 External Factors Affecting Enterprise Productivity External factors include government polices and institutional mechanisms: political, social and economic conditions; the business climate; the availability of finance, power water, transport, communications and raw materials. They affect individual enterprise productivity, but the orgs concerned cannot actively control them.

147 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Internal Factors require different institutions, people, techniques & methods. External Factors – during planning phase. First step towards improving productivity in Services is to identify problem areas. External Factors are internal to govts, regional institutions, associations & pressure groups. Contd…

148 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Model of Internal Productivity Factors Internal Productivity Factors Soft Factors Hard Factors Service or Product Plant and Equipment Technology Materials and Energy People Organization and Systems Work Methods Management

149 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 Productivity Simple Rule# 1 Productivity is composite of people & operations variables. To improve productivity, mgt needs to focus on both. How can Organizations Improve Their Productivity?

150 LMDA Introduction by Prof. Dr. Ali Sajjid, TI June 3, 2014 THANKS


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