Productivity

Standard of living
Definition of productivity
Standard of living

 The extent to which a person is able to provide the

things that are necessary for sustaining and enjoying
life.
 Standard of living of a representative family differs
greatly in different parts of the world.
 What is considered a necessity in one part of the
world could be considered a luxury in the other.
 Basic necessities of a minimum decent standard of
living: Food, clothing, housing and hygiene. Also,
security and education also considered constituents.
 Greater the amount of goods and services produced in
any community, the higher its the average standard of
living.
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Standard of living
 There are two ways of increasing the amount of goods
and services produced:
- Increase the employment and investment in creating
jobs. So that more people are producing goods
required for the society.
- Increase productivity. Same amount of labor produces
more goods.
We want:
 More and cheaper food by increase in agricultural
productivity
 More and cheaper clothing and housing by increased
industrial productivity
 More hygiene, security and education by increasing
overall productivity.
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Productivity

 Ratio between output and input.

 Arithmetic ratio between the amount produced and
the amount of any resources used in the production.
 The resources may be: land, material, plant,
machines, tools, labor. It could be combination of all!
 Over a period of time, one can say that productivity
has increased.
 How?
 Combination of improved technology, better planning,
greater skills etc.

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Productivity

 Note that, increased production does not mean

increased productivity.
 Higher productivity means that more is produced with
the same expenditure of resources; that is, at the
same cost in terms of land, material, machine, time or
labor.
 Alternatively, same amount is produced at less cost in
terms of land, labor, material etc; thereby releasing
some of these resources for the production of other
things.

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Productivity and standard of living

 If more is available at the same cost, or the same

amount is available at lesser cost the whole
community benefits.
 As per the ILO, higher productivity provides ways for
raising the standard of living by:
1. Larger supplies of both consumer goods and capital
goods at lower cost and prices
2. Higher real earnings
3. Improvement in working conditions, e.g. by reduced
working hours
4. In general, strengthening of the economic
foundations of human well-being.
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Allocation of Total Task Time

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Productivity in industry

 Many factors affecting productivity of each

organization; also, they are dependent.
 Depending on the individual environments, decisions
are to be made.
 Industries where labor and capital costs are low
compared to the material costs, better use of material
and plant gives the greatest scope of cost reduction.
 In countries where capital and skilled labor are in
shortage compared to unskilled labor, one should look
to increase the output per machine or per skilled
worker.
 Increasing the number of unskilled workers may be
beneficial if by doing so an expensive machine or
skilled craftsmen are enabled to increase production.
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Government’s responsibility

 Government can create conditions favorable to raise

productivity. It can:
1. Have a balanced programs of economic
development
2. Take steps necessary to maintain employment
3. Make opportunities for employment.
 Last step is specifically important for a developing
country like India.
 Government should make provisions for workers
who are going to loose jobs because of technology
improvement – training and education programs.
 Example: India’s First Five-Year Plan (1952).
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Management’s responsibility

 The main responsibility for raising productivity in an

individual organization lies with the management.
 It can implement productivity programs.
 It can create a positive environment and obtain co-
operation of the employees.
 Trade unions should encourage its members to
provide such co-operation when the productivity
program is beneficial to workers, as well as the
organization on the whole.
 We will look at management’s role in increasing
productivity of individual resource:

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Productivity of material

At the design stage:

 Ensure least consumption of material,
 Purchase equipments and plants such that
consumption of material is economical.

At the operation stage:

 Use of correct process
 Right use of the process
 Operator training
 Proper handling and storage of products at all stages
 Proper packaging to reduce damage in transit

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Productivity of land, machines and
manpower
 Effective utilization and maximum productivity is an
important source of cost reduction.
 Reduction in the original specification, before the land
is purchased saves capital outlay (as well as interest
expenses)
 A savings in material which has to be imported saves
import duty and excise.
 Productivity of manpower and machines is typically
measured in terms of time (man-hours; machine-
hours).

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Factors tending to reduce productivity

Work content added due to the product

 The product or its components are designed
such that it is impossible to use most
economical manufacturing processes.
 Excessive variety or lack of standardization.

 Incorrect quality standards.

 Excessive amount of material removal

required.

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Factors tending to reduce productivity

Work content added due to process

 Incorrect machine (and/or hand tool)
used
 Process not operated properly

 Non-optimal layout with wasted

movements.
 Working methods of operation causing
wasted movements, time and efforts.
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Factors tending to reduce productivity
Ineffective time due to management
 Marketing policy which demands unnecessarily large
number of products.
 No standardization of components between as well as
within products.
 Failing to meet customer’s requirement from the
beginning.
 No plan for flow of work.

 Improper supply of material, equipment.

 Improper maintenance of plant and machines.

 Insufficient safety measures.

 Improper working conditions resulting in interrupted

work.
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Factors tending to reduce productivity

Ineffective time within the control of

worker
 Taking time off without good cause: by
lateness, by idling at work etc.
 Careless workmanship causing scrap or
rework.
 Failing to observe safety standards.

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Management techniques
to reduce work content
Nature of management

 Management is the organization and control of human

activity directed towards specific ends.
 Management techniques are systematic procedures of
investigation, planning and control which can be
applied to management problems.
 Systematic approach to the solution of the problems
proceeds step by step from known to the unknown,
always on the basis of ascertained facts.
 Since management deals with human beings, it can
never be completely scientific, and must partly be
regarded as an art.

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Reduce work content due to the product

 Coupling of product design and process design phases

(design products such that most economical processes
can be used).
 Pilot project/ prototyping to avoid mistakes at a
advanced stage (very common in chemical
companies).
 Standardization of components.

 Setting correct quality standards

Stricter standards lead to increased manufacturing time,

lenient standards lead to greater variability.
 Knowing the customer – Management should conduct
market research and consumer surveys to know the
customer better. Compiled by Mrs.Reena Pant 19
Reduce work content due to the method

 Process planning – Identification of correct

machines for the process. In chemical industry,
this is specified by the R&D division or the
license seller.
 Process research – Identification of best
manufacturing technique.
 Proper maintenance.
 Method study – Combine with process planning
to give most suitable tools for the operative.
Includes factory layout, working methods of
the operative.
 Operator training – Improve working methods
of the operative. Compiled by Mrs.Reena Pant 20
Reduce ineffective time due to the
management
 Strategic decisions – Which markets to enter
can affect ineffective time to a great extent.
 Production planning – It is planning of proper
programs of work so that plant and workers
are kept supplied without having to wait.
 Proper programs should be applied only on the
basis of sound standards of performance.
 Work measurement – Setting up those
standards.
 Material control – Workers and machines
should not be idle because of non-availability
of material and tools.
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Reduce ineffective time within control of
the worker
 Training.
 Make worker want to reduce ineffective time.
(Create conditions to make the worker get on
with his work. Hawthorne effect)
 Effective personnel policy and management’s
attitude towards the worker.
 Good relationship between management and
worker.
 A sound wage structure, including incentive
schemes (typically based on time standards
derived from work measurement).
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