Productivity
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Production and Quality Management
By the nature of their work, production managers and quality managers are the most harassed people as, among other things they are concerned with the improvement of productivity and quality which entails their attention to be diverted to a large number of fields simultaneously such as production, techniques involving statistical and technical methods, standards and regulations, industrial engineering, computer integration, industrial relations, automation control, facility control, production planning, measurement control, material utilization, operations research, vender evaluation and negotiations, customer complaints, payments of bills, market research, production review meetings, etc. Even though they are fully committed to improve productivity and quality and reduce wastage, owing to lack of time they are unable to devote adequate attention for such activities. Whatever they do in this area, are done by them in an informal manner. At the same time, being intimately associated with all aspects of production and quality only they are ideally suited to study the existing system and suggest modifications to improve the same. The realization of these aspects has given rise to a new discipline called Productivity and Quality Management. Productivity and quality managers are relieved in their routine production and quality management functions and are inducted formally to improve productivity and quality.
Productivity management is defined in the following manner:
“Productivity management is a formal management process involving all levels of management and employees with the ultimate objective of reducing the cost of manufacturing, distributing and selling of a product or service through and integration of the four phases of productivity cycle, namely, productivity management , evaluating, planning and improvement.”
Quality management is defined as follows:
“Quality Management is a method for ensuring that all the activities necessary to design, develop and implement a product or service are effective and efficient with respect to the system and its performance.”
What is Output
While productivity is seen as the ratio of output to input, it needs to be understood as to what constitutes the numerator �output’. Take the case of a car tyre manufacturing company. If during the financial years 1996-97 and 19997-97 its output has been as follows:
Output
Year
1996-97
1997-98
No. of Tyres produced
16000
20000
Life of a Tyre in km.
20000
15000
Price of a tyre in Rupees
1600
Has the productivity gone up from 1996-97?
Assume that the level of input has been the same during both the years.
If one looks at the number of tyres produced, the year 1997-98 has shown a 25% [(20000-16000)/16000] increase in productivity. However, if the output is viewed as tyre-km, then the picture is reversed. The output in the year 1996-97 was 320 million tyre-km as against only 300 million tyre-km in the year 1997-98. So, the productivity, on this count, has gone down by (320-300)/300*100=6.66%. If the output is viewed in monetary terms then there is no change in the output and it is constant at Rs.32 million.
One has to be, therefore, cautious while speaking about productivity. One or two of the above measures or all the measures may be relevant depending upon the situation at hand. For instance, at present when the competition is very hot, the monetary angle may be less relevant than capturing a sizeable share of the market; in such cases, the number of tyres produced is the most relevant figure. Lowering of the price could only be a short-term tactic to capture a larger slice of the tyre market. At other times, production in terms of its rupee value might be more suitable as a measure of productivity. From the long term point of view, customer satisfaction is vital. It will, therefore, be appropriate to consider the life of the tyre in the productivity calculations. In which case, tyre-km may be one of the suitable measures for measuring productivity.
Production and Productivity
There appears to be some confusion with regard to the terms �production’ and �productivity’. Production deals with the quantity or the number of items produced. On the other hand, productivity is the ratio of the output and the input after having reduced the numerator and the denominator of this ratio to a common unit or dimension. Production is the process of producing goods or services. Productivity is concerned with the optimum utilization of resources in the process of converting them into product or services.
Industrial engineering as a separate discipline, was developed to take care of this function of management. This does not mean that production managers should not take interest in productivity or that the industrial engineers not be concerned with production. These two groups should work as a team and merge as one to create the ideal working condition. There are, however, practical difficulties to achieve the specified ideal condition. Ours is an era of specialization. One individual or group cannot become experts in all fields. Hence, separate identification of these groups as �managers’ and �industrial engineers’ has a distinct advantage. All the same, these two are complementary to each other. Industrial engineers give emphasis on the engineering aspect of production processes to get maximum utilization of resources.
Production managers are leaders to lead a team of supervisors and workers and create a favorable working environment which make the systems and people to deliver maximum output for minimum input. If employees are not recognized as the greatest asset, no amount of sophisticated techniques of management or scientific layout of factory by industrial engineers can improve production and productivity. Production and productivity are only possible by keeping morale and motivation of the workers high which will promote a sense of belongingness and loyalty among