1. LEARNING OBJECTIVES
To understand and explore different areas of Productivity Techniques and their applications in operations with the help of real life cases studies
Through the Industrial Visit and regular practice given to evolve solutions for case studies, the classroom knowledge will be put to application and at the same time their understanding will be put to evaluation
The students will acquire a new way of looking at the manufacturing sector in the entire supply chain journey

2. REFERENCE TEXTS Sr. No Reference Text 1
The Chronicles of a Quality Detective
Dr. Shrinivas Gondhalekar and Payal Sheth 2
Toyota Production System
Taiichi Ohno 3
SMED- A Revolution in Manufacturing
Shigeo Shingo 4
Gemba Kaizen
Masaaki Imai 5
The Toyota Way
Jeffrey Liker 6
Operations Management and Productivity Techniques
PN Mukherjee and T T Kachwala 7
Lean Thinking
James Womack and Daniel Jones 8
Out of the Crisis
Edward Deming 9
TPM for Process Industry
Tokutaro Suzuki 10
The New Rational Manager
Charles Kepner and Benjamin Tregoe 11
The Six Sigma Way
Peter S. Pande, Robert P. Neuman, Roland R. Cavanagh 12
Theory of Contraints
Eliyahu Goldratt 13
YouTube
Go to the Channel: Shrinivas Gondhalekar

3. What is difference between Manufacturing and Service ?
Factory
(converter)
Finished Goods
(Material)
Raw Material IN
OUT
Office
(converter)
Information
Processed Data
Data
Raw Information IN
OUT
Restaurant
(converter)
Satisfied Guest
Filled Stomach
Hungry Guest
Empty Stomach IN
OUT
Desiring Guest
Empty Bag
Retail Shop
(converter)
Satisfied Guest
Filled Bag IN
OUT

4. What is Productivity ? PROCESS Productivity = Output Input I/P O/P
Muda (waste)
Productivity = Output
Input
Productivity is the ratio between “Output of work” and “Input of Resources” used in the process of creating wealth –ILO Definition

5. Productivity People Material Machine Land Resources Productivity
A worker produces 100 pieces is now able to produce 130 pieces after undergoing training session
People
The productivity of worker has increased by 30%
1 ton of hot rolled steel would yield 800 kg of cold rolled steel; the rest being scrap.Factory manager changed the process parameters that enabled 900 kg of cold rolled steel to be generated from same amount of hot rolled steel
Material
The productivity of hot rolled steel that was 80% has gone upto 90%
Machine
Output of the machine shop was 100 pieces per shift. Prashant introduced few technical changes in the machine
These change increased the output to 120 units per shift
This implies 20% improvement in machine productivity
Land
A farmer used natural fertilizer for his land ,after which the yield of rice increased from 200 quintals/hectare to 300 quintals/hectare
Productivity of land has increased by 50%

6. Result The 4 Ms Needs brains, not money Machine Method Man Material
© Dr G 2008~

7. Other Definitions of Productivity
1950
1962
1965
1976
1979
1987
1955
OECD1
Davis
Fabricant
Kendrick and Creamer
Siegal
Sumanth
Goldratt
is the quotient obtained by dividing output by one of factors of production
Always a ratio of output to input
Family of ratios of output to input
Is minimizing the use of resources required to produce an output desired by the customer
Change in product obtained for the resources expanded
Functional definition for Partial, Total factor and Total Productivity
Functional definition for Partial, Total factor and Total Productivity
Note: 1 Organisation for Economomic Cooperation and Development

8. Is Productivity different from Performance?
Productivity -Performance
Is Productivity different from Performance?

9. CASELET
It takes 3 meters of cloth to make a suit .In a day Suraj is expected to make 50 suits. He makes 40 suits from 111 meters of cloth
-What is Suraj’s performance ?
-What is Suraj’s performance index?
What is Suraj’s cloth productivity index?
What is productivity of cloth?

10. CASELET -ANSWER
Suraj’s Performance – 40 suits
Performance Index – 40 X 100 = 80% 50
Cloth Productivity Index = 120 X100 = 108%
111
Cloth Productivity = 40 X100 = 0.36 suits/meter
111

11. Production-Productivity
Is Production same as Productivity?

12. Productivity –Example
Arr Engineering –an automobile component manufacturer is producing connecting rods for an OEM
MONTH
INPUT (Machine Hours)
OUTPUT (No. of units)
PRODUCTIVITY
NOVEMBER
90,000
99,000
DECEMBER
100,000
JANUARY
150,000
135,000
REPORT
The reports clearly show that there has been an increase in production with a simultaneous increase in machine hour consumption

13. Partial Productivity
Definition : Ratio of output to one class of input
At a given time it considers only one input and ignores all other inputs
It is important as it focuses utilization of one resource
Labour productivity is measured using utilization of labour-hours, whereas capital productivity is measured in Rupees

14. Partial Productivity –Example
As a part of new assignment , a trainee engineer of Icecream Products was asked to identify areas of productivity improvements. He collected data on all inputs and outputs of previous years operations being transformed into equivalent of money units. The table below gives details with all figures in lakh rupees
‘00000
Output
1000
Input
Human
300
Material
200
Capital
Energy
100
REPORT
Advantage :Easy to understand
Easy to obtain
Diagnostic tool to pin point an area of improvement
Disadvantage:Misleading if used alone
Cannot explain overall cost increase
Profit control is not precise
The trainee engineer plans to calculate the values of partial productivity to aid in his study. Please help him in his endeavour

15. Total Factor Productivity
In an effort to improve productivity of labour,company may install more machinery. Then productivity of labour will go up bringing down the capital productivity
Partial productivity that typically uses only one resource at a time fails to grasp this paradox
Historically labour and capital were considered to be the most significant contributors in the process of production
John Kendrick in 1951 emphasised labour and capital as only two input factors
Disadvantage of considering total productivity factors is that it does not consider impact of material and energy inputs (material typically forms 60% of the product cost

16. Multi-Factor Model of Productivity
Total Factor productivity model was further developed by Scott D Sink as Multi Factor Productivity Measurement Model in which he considered Labour, Material and Energy as major inputs
Capital was not considered in this model as it is the most difficult part to estimate how much of a capital is being consumed in a unit of time
Depreciation applied by accountants makes it further difficult to estimate actual capital being consumed

17. Total Productivity Model
Total Productivity Model developed by David J Sumanth in 1979
Sumanth considered five items as inputs ,those were Human,Material,Capital,Energy and Other Expenses
The model is applicable in manufacturing and service organization
Total Productivity = Total Tangible Output/Total
Tangible Input

18. Total Productivity Model
…Total Productivity = Total Tangible Output/Total
Tangible Input
Total Tangible Output =Value of finished units produced + dividends from securities+ interests from bonds + other incomes
Total Tangible Inputs = Value of human inputs + capital inputs+ materials purchased+energy inputs+other expenses (taxes,transport,office etc.)

19. Total Productivity Model
All quantifiable inputs are considered
Sensitivity Analysis can be done
Provides both firm level and operational unit level

20. Total Productivity Model
Caselet
ULever manufactures the product face wash, liquid handwash, premium soaps, and shampoos. The input for each of this product are classified as : Human (H), Capital (C), Material (M), Energy (E) and other expenses (X)
Product
Amount of input (Rs crores)
I/p
o/p H C M E X
Soaps 2 4 14 5 6 31 50
1.61
Face wash
2.5 10 8
35.5 55
1.5
Handwash 36 45
1.2
Gel 3 13 39 40
1.1
Total Input
9.5 37 47 19 29
141.5
190
1.34
Unit Head wants to know productivity of each of its product line.He also wants to know how productive his production line is as a whole.

21. American Productivity Centre (APC) Model
American Productivity Centre has been advocating a productivity measure that relates profitability with productivity and price recovery factor
Profit= Revenue-Expenses
Profitability = Sales/Costs = Output Quantities X Prices
Input Quantities X Unit Costs
Captures the effect of inflation.Changes in this factor over time indicate whether changes in input costs are absorbed,passed on,or overcompensated for, in the price of the firms output
Inclusion of this factor helps whether gains or losses of a firm are due to changes in productivity or its merely indicates the fluctuations in the prices
Of the material consumed and sold
Productivity x Price Recovery Factor
The APC model is different from other models in its treatement, by inclusion of Price Recovery Factor

23. Applications of Productivity Technique
The productivity technique concepts can be applied to all the functional areas without exception
Functional Areas IT
Materials
Production
Marketing
Finance
Personnel
JIT Purchasing
Materials Management and Control
Inventory Models
Operation Research
Method Study
Plant Layout
JIT Production
Accuracy of Demand Forecasting
Serviving Speed and Effectiveness
Product Mix
OTIF
Competitor’s Analysis (Value)
Reduce Working Capital Requirements
Reduction in Inventory
Training
Working Environment
Work Satisfaction
Attrition Reduction
Job Evaluation
Job Enrichment
Management Informaiton Service
ERP
MRP

24. Causes of Poor Productivity
Lack of Productivity Measures
Faulty Appraisal System
Complex Organization
Low Employee Involvement
Organizational Expansion
Improper Production Planning
Human Conflicts
Lack of training and education
Legislative Instructions
Technological Changes
Specialized Processes
Lack of latest information
Idle Time

25. Sumanth’s Five Pronged Approach to Productivity Improvement
Technology Based
Employee Based
Product Based
Task Based
Material Based
CAD
TQM VE
Work Measurement
Inventory Control
CAM
Financial Incentives
Product Diversification
Job Design
Supply Chain Management
Integrated CAM
Fringe Benefits
Product Standardization
PPC
Quality Assurance Control
Robotics
Education and Training
Research and Development
Material Handling
Energy Conservation Technology
Learning Curve
Benchmarking and Emulation
Material Recycling
Flexible Manufacturing System
Ergonomics
Advertising and sales promotion
JIT Manufacturing and Purchasing
Time Management

26. ILO Approach to Productivity Improvement
A Bad Design of Product
A Lack of Standardisation
A Incorrect Quality Standards
A Excess Materials
B Wrong Machine
B Process Not Operated Correctly
B Wrong Tools
B Bad Layout
B Operator’s Bad Working Methods
Basic Work Content
Total Work Content of the Product
Work Content added by defects in design of the product
Work Content added by inefficient methods of operation
Total Work Content
Classic ILO APPROACH was Task Based
Ineffective
Time
Work Content due to the product and processes

27. Hard Factors of Production
The tangible factors of production are known as the hard factors of production
Design of Machines
In proper condition for the material to be processed as well as the jobs to be performed
Correct use of Machines
Usage of right machines for the right job gives better productivity on the machine as well as better quality
Proper Maintenance
To keep machines in running condition one needs to properly maintain the machines
Raw Materials
Raw materials need to be checked as per standard specification to enable smooth processing on the m/c
Wage Bill and Conversion Cost
Comparable to the industry and if feasible should be lower than the compensation
Should be as per organizations technical and manufacturing capability so as to attain the highest level of productivity and efficiency in manufacturing and the product quality should be as good as the best in the market
Design of the products

28. Soft Factors of Production
The soft factors of production are those related to the work force
Employee Morale
Has a direct effect on the productivity of a firm,along with better quality of the product
Workers Participation
Participation of workers in problem solving or quality improvement activities like Kaizen Gemba and Quality Circles
Enhanced worker involvement
Increases profits for the organization by reduction in wastages and rejections
Mention about Toyota..Gurukul
Incentive schemes
Fair wages and incentive schemes rewarding good performance act as an impetus for higher productivity
Self Motivated
Self motivated work force gives the best all round performance in an organization
Solving problems on their own and keep on continuously improving their performance
Innovative workforce

29. Value Analysis and Value Engineering

30. Value is a function of ‘Desired Performance’ and ‘Cost’
What is ‘Value’?
Value is a function of ‘Desired Performance’ and ‘Cost’
Value = Desired Performance (P)
Overall Costs (C)
Desired performance is expressed by the term worth which is defined as the lowest cost to achieve the Use (work) function and Aesthtic (sell) function

31. An Introduction to Value Analysis and Value Engineering
In 1961,Lawrence D Miles in his book ‘Techniques of Value Analysis Engineering’ defined Value Analysis
VA is a step by step approach to identify the functions of a product, process, system or service; to establish a monetary value for that function and then provide the desired function at an overall minimum cost without affecting any of the existing parameters like Quality, Maintainability, Productivity, Safety and other Performance Characteristics
In the year 1954 ,US Navy Bureau of ships adopted same technique in their effort ‘cost avoidance’during the design stage and saved millions of dollars and named it as Value Engineering
Value Engineering is where the value of all the components used in the construction of a product from design to final delivery stage are completely analyzed and pursued

32. Difference between Value Analysis and Value Engineering
It indicates application on the product that is into manufacturing
It indicates application on the product at its design stage
In value analysis all factors come together including workers,subcontractors,engineers to make a team with total experience and knowledge
Value engineerin is always done by a specific product design(engineers) team
It may change the present stage of the product or operation
The changes are executed at the initial stages only
It is worked out mostly with the help of knowledge and experience
It requires specific technical knowledge