Productivity
Executive Summary As a partial requirement of MBA 501: Managing Business Operations of the Masters degree program in Business Administration this research study is carried out on Productivity & Quality Management. ... 0 under Measuring Productivity in Manufacturing and Service Organizations different measures of productivity are explained and a productivity measurement application in the considered manufacturing organization is discussed. ... 0 Measuring Productivity in Manufacturing and Service Organizations 1.1 Definitions of productivity and explanation What is Productivity. Productivity is defined as a ratio of output quantity (i. ... Productivity can be improved by improving quality of the product, process and the management systems. Even though there is a definition for productivity the productivity measurement depends on the nature of the products manufactured, nature of the services offered, nature of the inputs consumed etc. Productivity Measurement An organization it is made of systems. ... These objectives should be measured to find the productivity of the systems and if the productivity of these systems is high then it indicates a higher level of productivity in the organization. When we measure the productivity of a system we have to consider the inputs and output of the system. ... There are three main measures of productivity. (i) Physical Productivity Physical productivity is measured by dividing the number of units manufactured by the raw materials consumed. Physical productivity is further classified as Total Factor Productivity and Partial Productivity. Total Factor Productivity=Output/ (Labour+Raw Material+Capital+Energy) Dividing the output by a single input derives partial productivity. Eg: Labour Productivity=Output/Labour Energy Productivity=Output/Energy When improving productivity in an organization it is important to look at the total productivity as it considers all the inputs. If you look at only partial productivity that reflects a single input and trying to reduce this single input component could have an impact on some other input component and in turn would lead to a reduction in total productivity. (ii) Value Productivity In value productivity calculating the value of the inputs and the value of outputs are taken into consideration. Value Productivity=Value of the Output/Value of the inputs (iii) Value Added productivity Value addition is the wealth created by the organization in its conversion process. Value added productivity is the difference between Value of the output and the Value of the Raw materials consumed. Value added productivity=Output Value-Raw Material Value In addition to the above the organization will have a vision, and a mission to accomplish the vision. ... 2 Productivity Measurement in the Manufacturing Sector When measuring the productivity in the manufacturing sector we are required to identify the inputs and the outputs. Examples for Inputs in the manufacturing sector are, (i) Labour (ii) Machine Hours/days (iii) Area of Land (iv) Weight of Raw materials (v) Area of space (vi) Volume of Fuel Consumed Examples for outputs in the manufacturing sector (i) No of units produced (ii) Length of the units produced When measuring the productivity we must consider the most critical input. ... In a manufacturing environment No of quality rejects and No of customer rejects in a given period are also productivity measures. ... 3 Productivity measurement in the Service sector In service sector there might not be a physical output to consider when measuring the productivity. ... 4 Productivity Measurement Application in a Manufacturing Organization. ... Since 60% of the cost is from the knitting process it is considered as the most critical operation when calculating the productivity. Since there is a direct output the following productivity measures can be applied. Inputs=(Total machine hours+Capital+Energy+Raw Material) Physical productivity=No of garments manufactured/Inputs Value productivity=Value of the garments Manufactured/Value of the total Inputs Value Addition=(Sales-Raw Material Cost)/Standard hours sold In addition to the above overall productivity measurements, individual departments have their own performance measures. ... Employers generally turn to extrinsic forms of motivation to improve productivity on these jobs. ... Provides information on defects by each process point so that timely corrective measures could be applied to eradicate loss on productivity.