Intro- Om, Strategy, Productvity
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Introduction to Operations Management
Suhas Rane
10/17/08
[email protected]
1
Agenda Historical Development of OM
Taylor, Henry Ford, Hawthorne Studies Operations Research, Computers & Adv. Opn. Technology.
OM in the Organisation Chart Six Basic Functions of Business O M. Definition Scope of Operations Mgmt.
Mfg. Industry v/s Service Industry Production Systems
“Input –Transformation –Output” Relationships Productivity Measurements Decisions & Activities in OM
10/17/08
[email protected]
2
Historical Development of OM
In olden days, did Production Systems exist ?
Features of Old production activities
10/17/08
Great Wall of China, Egyptian Pyramids, Taj Mahal Village Activities
Cottage System Hand Work Unorganized Unique. [email protected]
3
Historical Development of OM (Contd.)
1770 - 1800 : Series of events took place in UK 8 Great Inventions in UK, France, USA , mainly in Yarn Spinning Increase of UK colonies. Use of Machine Power facilitated gathering of workers in factories. Need to organize workers. Division of workers [email protected] into Small Specialized Task 10/17/08
4
Historical Development of OM (Contd.)
All this led to Industrial Revolution. Spread from UK to Europe to USA.
The missing factor – “Management” later provided by Management Thinkers, Researchers, Business leaders , Consultants.
10/17/08
[email protected]
5
Evolution of OM Phases in evolution of OM
10/17/08
Craft Production
Mass Production
Lean Management
Mass Customisation [email protected]
6
Historical Evolution of OM
F.W. Taylor (1856-1915) –
Father of Sc. Management Each worker trained for suitable job (according to his skill, strength, learning ability ) Standard Output Norms set per worker. Instructions Card, Routing Sheets, Material Specs -All Standardized. Supervision Incentive for motivation & increasing [email protected] 10/17/08 productivity
7
Historical Evolution of OM
Henry Ford (1913) – Moving Assembly Line concept Standardized product design Mechanized assembly line Specialized labour Interchangeable parts
10/17/08
Result : Av. labour per chassis reduced from 12.5 hrs to 93 min. [email protected]
8
Historical Evolution of OM
Hawthorne Studies
Until 1920s – OM emphasised on role of Org. Structure, Specialization, Planning & Control. (But not on human dimension)
Late 1920s - Harvard Research Team (led by Elton Mayo) conducted studies and established relationship between behaviour of workers & their job environments. [email protected]
10/17/08
9
Historical Evolution of OM
Operations Research
II World War - Complex problems of logistics control due to massive deployment of soldiers, supplies, planes, ships. For efficient utilization of resources, Allies formed O.R. teams in military branches.
Effective use of O.R techniques to solve [email protected] complex problems led to their applications in
10/17/08
10
Historical Evolution of OM
Computers & Advanced Operations Technology
10/17/08
1954 GE - computers to reduce clerical cost in pay roll. 1960s Op. managers started using computers for demand forecasting, purchasing, inventories, and subsequently developed MRP. Late 80s – CAD, CAM, FMS, ASRS (Automated Storage & Retrieval System), AIS ( Automatic Id System- thru barcode), TQM, MRP, JIT 1990s – [email protected] of reprogrammable m/cs (like11
Historical Events in O. M. Era
Events/Concepts Year
Originator
Steam engine
James Watt
1769
Industrial Division of labor 1776 Revolution Interchangeable parts 1790 Principles of scientific management Time and motion Scientific Manageme studies Activity scheduling nt chart Moving assembly line
10/17/08
[email protected]
Adam Smith Eli Whitney
1911
Frederick W. Taylor
1911
Frank and Lillian Gilbreth
1912
Henry Gantt
1913
Henry Ford
12
Historical Events in O. M. (cont.) Era
Events/Concep Dates Originator ts Hawthorne studies 1930 Elton Mayo
Human Relations
1940s Motivation theories 1950s 1960s Linear programming 1947 Digital computer 1951
Simulation, waiting Operation line theory, decision 1950s s Research theory, PERT/CPM MRP, EDI, EFT, CIM 10/17/08
1960s, 1970s
[email protected]
Abraham Maslow Frederick Herzberg Douglas McGregor George Dantzig Remington Rand Operations research groups Joseph Orlicky, IBM and others 13
Historical Events in O. M. (cont)
Era
Events/Conce pts
JIT (just-in-time) TQM (total quality Quality management) Revolutio Strategy and n operations Business process reengineering
10/17/08
Date Originator s 1970s Taiichi Ohno (Toyota) W. Edwards Deming, 1980s Joseph Juran Wickham Skinner, 1990s Robert Hayes Michael Hammer, 1990s James Champy
[email protected]
14
Historical Events in O. M. (cont) Date Originator s Globalizatio WTO, European Union, 1990s Numerous Era
Events/Concepts
n Internet Revolution
and other trade agreements Internet, WWW, ERP, Supply Chain Management
E-commerce
10/17/08
2000s countries 1990s ARPANET, Tim and companies Berners-Lee SAP, i2 Technologies, ORACLE, PeopleSoft 2000s Amazon, Yahoo, eBay, and others
[email protected]
15
OM in the Organisation Chart SIX BASIC FUNCTIONS OF BUSINESS
CREATION FINANCE
: :
PERSONNEL PURCHASING CONVERSION/ : (PRODUCTION) Goods. DISTRIBUTION : Customer) .
10/17/08
Product Selections / Idea Generation Managing Resources, Capital Acqn., keeping Financial Records. : H.R., Labour Relations. : Buying of required (Eqpt. + Material + Services) Changing Raw Materials to Economic Selling & Marketing (reaching the
[email protected]
16
O. M. Definition
Operations Management is the effective and efficient management of processes. A PROCESS has an input and value added output. The objective of a process is to add value by conversion from input to output.
10/17/08
[email protected]
17
What does Operations Manager Do?
Operations
Transformation Process
a function or system that transforms inputs into outputs of greater value
a series of activities along a value chain extending from supplier to endcustomer activities that do not add value are superfluous and should be eliminated
What is Operations Management?
10/17/08
design, conversion, and improvement of productive systems [email protected]
18
Transformation Processes
Physical : as in manufacturing operations Locational : as in transportation operations Exchange : as in retail operations Physiological: as in health care Psychological: as in entertainment Informational: as in communication
Is there any Business / Industry [email protected] 10/17/08 where an operation is not
19
Operations as a Transformation Process
INPUT •Material •Machines •Labor •Management •Capital
TRANSFORMATION PROCESS
OUTPUT •Goods •Services
Feedback 10/17/08
[email protected]
20
Operations Management Is functionally related to –
10/17/08
Marketing Finance and Accounting Human Resources Outside Suppliers [email protected]
21
INPUT RESOURCES LAND, BLDG
PLANT, M/C
MATERIAL
ENERGY
MANPOWER
OPERATIONS MANAGEMENT Obtains the facts Plans, Directs, Coordinates, Controls, Motivates in order to PRODUCE OUTPUT
PRODUCTS AND SERVICES 10/17/08
[email protected]
22
Mfg. v/s Services – What’s the difference? Business Organization Mfg. Industry
Creation of Goods
Production Mgmt
10/17/08
Service Industry Providing Services
Operations Mgmt
[email protected]
23
Mfg. v/s Services – What’s the difference? Manufacturing
Services
1.
Step by step conversion of Material
Service to satisfy customer
2.
Tangible & Stockable Output
Non-Stockable Output
3.
Mass Production with few variations
Customisation
4.
More M/c Oriented, Less Labour
More Mind Skill / Labour Oriented
5.
Factory Location – Near RM or Market, or Better Facilities
Near Customer
6.
Low / No Customer involvement in Conversion Process
Direct interaction between Customer and Process
10/17/08
[email protected]
24
A Systems View of Operations
Manufacturing System (e g. Television)
Inputs : Equipment, labour, parts, etc Conversion Process: Producing parts, Assembling Output: Television set Feedback: Defect rates, Customer response
Service System (e.g. Banking) Inputs : Clerks, equipment, cash, etc.. Conversion Process : Monetary transactions. Output : Loans, and deposits Feedback : Interest earned, Deposits received [email protected] 25 10/17/08
“Input –Transformation –Output” Relationships System
Primary Inputs
Resources
Transformation Fn.(s)
Typical Desired Output
Automobile Factory
Sheet steel, engine parts
Tools, equipment, workers
Fabrication and Assy. of cars (physical)
High-quality cars
Hospital
Patients
MDs, nurses, medical equipment
Health care (physiological)
Healthy individuals
Restaurant
Hungry customers
Food, chef, wait-staff, environment
Well-prepared, Well-served food; Stimulating environment
Satisfied customers
College or university
High school graduates
Teachers, books, classrooms
Imparting knowledge and skills (informational)
Educated individuals
Department store
Shoppers
Displays of goods, sales clerks
Attract shoppers, Promote products, Fill orders (exchange)
Satisfied customers
Distribution Centre
SKUs
Storage bins, stock-pickers
Storage and redistribution
Fast delivery, availability of SKUs
10/17/08
[email protected]
26
1. Planning
Mix of goods & services, Plant locations planning. Capacity planning, Production method. Equipment planning, Setting master schedules . Deciding No. of Shifts & work hours.
10/17/08
[email protected]
27
2. Organizing
Centralized or Decentralized Organized by functions, product or hybrid Assign responsibility for every activity Arrange supplier/ subcontractor network Establish maintenance policies
10/17/08
[email protected]
28
3. Controlling
Compare costs to budget Inspect the quality Compare labour hours to standards Compare work progress to schedule Compare inventory to targets
10/17/08
[email protected]
29
4. Directing
10/17/08
Personnel policies Employment contracts Issue job instructions Issue routings Issue despatch lists
[email protected]
30
5. Motivating
Encourage thru praise , recognition , tangible rewards Motivate thru enriched jobs & challenging assignments
6. Co-ordinating Common forecasts & Master Schedules Common standardised database Co-ordinate purchases, deliveries, design changes, Maintenance, Tooling. Respond to customer enquiries about [email protected] 10/17/08
31
7. Training & Development
Encourage employees to seek a better way Give more advanced job assignments Support employees in training programmes
10/17/08
[email protected]
32
Production Management Definition: (by E. S. Buffa) “Production Management deals with decision making related to production processes, so that resulting goods & services are produced according to specification, in the amount & by the schedule demanded and at minimum cost.”
Objectives of Prod. Mgmt. 1. 10/17/08
2.
Manufacturing Cost [email protected] Product Quality
33
Operations Strategy
Earlier : Concentration on Finance & Marketing strategies (Unaware of Operations Mgmt. as a strategic function)
1969 : Prof. Wickham Skinner (Harvard) described
“A firm lacking proper Operations Strategies is like an anchored ship. Finance, design and marketing may set the radar and expect the ship to steam off , but with anchors set, the ship won’t move, or moves reluctantly, [email protected] 34 10/17/08 dragging its burden”
Scope of Operations Mgmt. Long Term / Strategic Decisions
Product Selection & Design Process Selection & Planning Facilities Location Facilities Layout Capacity Planning
Short Term / Operational Decisions
10/17/08
1. 2. 3. 4. 5.
Production Planning & Control Inventory Control Quality Control Method Study / Work Study Maintenance & Replacement [email protected]
35
Production & Productivity
Production
Productivity pcs./hr.
Output (in No of Units)
Output ------------ No. of Input
10/17/08
[email protected]
36
Productivity Measures ( Output in terms of Input)
Machines Hour
-
Out put per Machine
Men
-
Out put per Man Hour
Materials of R.M.
- No of units produced per input (e.g. - No of Screws per Kg of
wire)
10/17/08
Power El. Power
-
Boiler
-
No of Pcs. per KW Unit of Kgs. of Rubber cured / Kg37
[email protected]
Productivity Measurements and their Need Myth 1. - Higher production mean Higher Productivity Automobile Manufacturing Co. Yr. 2004 : Annual Production = 50,000 Cars Yr. 2005 : Annual Production = 55,000 Cars
This means Production Increase = 10%
But in 2004 : 50,000 Cars with Cap. Invest. of 500 Cr. 2005 : 55,000 Cars with Cap. Invest. of 550 Cr.
10/17/08
2004 Productivity = 100 Cars / Rs. 1 Cr. Invest. 2005 Productivity = 100 Cars / Rs. 1 Cr. Invest i.e. Productivity Increase = Nil [email protected]
38
Myth 2 : Higher productivity mean working Harder. In fact adequate personal rest, contingency need to be provided to get continuous good quality of out put.
Myth 3 : Higher productivity means working faster. It may unnecessarily lead to errors, accidents and injuries.
Due 10/17/08
to such misconception [email protected] in people’s mind, 39
Productivity of an Organization
Sugar Mill crushed
Fabrication -
10/17/08
Kg. of sugar produced / Ton of sugar-cane
Tons of Fabrication / Kg. of Welding Rod
[email protected]
40
Productivity of a Service Function
Transporter Month.
Ton-km / Vehicle/
OR Ton-km / 1000 Lit. Diesel
Pharma. Marketing Div. Rs Order booked / MR /Month
10/17/08
[email protected]
41
Service Industry : Productivity Measures Business
Productivity Measure
Restaurant
Customers (meals) per hour
Retail Store
Sale per Sq. foot
Chicken farm
Kg. of meat per kg. of feed
Utility plant
Kilowatts per ton of coal
Paper mill
Tons of paper per ton of wood
10/17/08
[email protected]
42
Suhas Rane
10/17/08
[email protected]
1
Agenda Historical Development of OM
Taylor, Henry Ford, Hawthorne Studies Operations Research, Computers & Adv. Opn. Technology.
OM in the Organisation Chart Six Basic Functions of Business O M. Definition Scope of Operations Mgmt.
Mfg. Industry v/s Service Industry Production Systems
“Input –Transformation –Output” Relationships Productivity Measurements Decisions & Activities in OM
10/17/08
[email protected]
2
Historical Development of OM
In olden days, did Production Systems exist ?
Features of Old production activities
10/17/08
Great Wall of China, Egyptian Pyramids, Taj Mahal Village Activities
Cottage System Hand Work Unorganized Unique. [email protected]
3
Historical Development of OM (Contd.)
1770 - 1800 : Series of events took place in UK 8 Great Inventions in UK, France, USA , mainly in Yarn Spinning Increase of UK colonies. Use of Machine Power facilitated gathering of workers in factories. Need to organize workers. Division of workers [email protected] into Small Specialized Task 10/17/08
4
Historical Development of OM (Contd.)
All this led to Industrial Revolution. Spread from UK to Europe to USA.
The missing factor – “Management” later provided by Management Thinkers, Researchers, Business leaders , Consultants.
10/17/08
[email protected]
5
Evolution of OM Phases in evolution of OM
10/17/08
Craft Production
Mass Production
Lean Management
Mass Customisation [email protected]
6
Historical Evolution of OM
F.W. Taylor (1856-1915) –
Father of Sc. Management Each worker trained for suitable job (according to his skill, strength, learning ability ) Standard Output Norms set per worker. Instructions Card, Routing Sheets, Material Specs -All Standardized. Supervision Incentive for motivation & increasing [email protected] 10/17/08 productivity
7
Historical Evolution of OM
Henry Ford (1913) – Moving Assembly Line concept Standardized product design Mechanized assembly line Specialized labour Interchangeable parts
10/17/08
Result : Av. labour per chassis reduced from 12.5 hrs to 93 min. [email protected]
8
Historical Evolution of OM
Hawthorne Studies
Until 1920s – OM emphasised on role of Org. Structure, Specialization, Planning & Control. (But not on human dimension)
Late 1920s - Harvard Research Team (led by Elton Mayo) conducted studies and established relationship between behaviour of workers & their job environments. [email protected]
10/17/08
9
Historical Evolution of OM
Operations Research
II World War - Complex problems of logistics control due to massive deployment of soldiers, supplies, planes, ships. For efficient utilization of resources, Allies formed O.R. teams in military branches.
Effective use of O.R techniques to solve [email protected] complex problems led to their applications in
10/17/08
10
Historical Evolution of OM
Computers & Advanced Operations Technology
10/17/08
1954 GE - computers to reduce clerical cost in pay roll. 1960s Op. managers started using computers for demand forecasting, purchasing, inventories, and subsequently developed MRP. Late 80s – CAD, CAM, FMS, ASRS (Automated Storage & Retrieval System), AIS ( Automatic Id System- thru barcode), TQM, MRP, JIT 1990s – [email protected] of reprogrammable m/cs (like11
Historical Events in O. M. Era
Events/Concepts Year
Originator
Steam engine
James Watt
1769
Industrial Division of labor 1776 Revolution Interchangeable parts 1790 Principles of scientific management Time and motion Scientific Manageme studies Activity scheduling nt chart Moving assembly line
10/17/08
[email protected]
Adam Smith Eli Whitney
1911
Frederick W. Taylor
1911
Frank and Lillian Gilbreth
1912
Henry Gantt
1913
Henry Ford
12
Historical Events in O. M. (cont.) Era
Events/Concep Dates Originator ts Hawthorne studies 1930 Elton Mayo
Human Relations
1940s Motivation theories 1950s 1960s Linear programming 1947 Digital computer 1951
Simulation, waiting Operation line theory, decision 1950s s Research theory, PERT/CPM MRP, EDI, EFT, CIM 10/17/08
1960s, 1970s
[email protected]
Abraham Maslow Frederick Herzberg Douglas McGregor George Dantzig Remington Rand Operations research groups Joseph Orlicky, IBM and others 13
Historical Events in O. M. (cont)
Era
Events/Conce pts
JIT (just-in-time) TQM (total quality Quality management) Revolutio Strategy and n operations Business process reengineering
10/17/08
Date Originator s 1970s Taiichi Ohno (Toyota) W. Edwards Deming, 1980s Joseph Juran Wickham Skinner, 1990s Robert Hayes Michael Hammer, 1990s James Champy
[email protected]
14
Historical Events in O. M. (cont) Date Originator s Globalizatio WTO, European Union, 1990s Numerous Era
Events/Concepts
n Internet Revolution
and other trade agreements Internet, WWW, ERP, Supply Chain Management
E-commerce
10/17/08
2000s countries 1990s ARPANET, Tim and companies Berners-Lee SAP, i2 Technologies, ORACLE, PeopleSoft 2000s Amazon, Yahoo, eBay, and others
[email protected]
15
OM in the Organisation Chart SIX BASIC FUNCTIONS OF BUSINESS
CREATION FINANCE
: :
PERSONNEL PURCHASING CONVERSION/ : (PRODUCTION) Goods. DISTRIBUTION : Customer) .
10/17/08
Product Selections / Idea Generation Managing Resources, Capital Acqn., keeping Financial Records. : H.R., Labour Relations. : Buying of required (Eqpt. + Material + Services) Changing Raw Materials to Economic Selling & Marketing (reaching the
[email protected]
16
O. M. Definition
Operations Management is the effective and efficient management of processes. A PROCESS has an input and value added output. The objective of a process is to add value by conversion from input to output.
10/17/08
[email protected]
17
What does Operations Manager Do?
Operations
Transformation Process
a function or system that transforms inputs into outputs of greater value
a series of activities along a value chain extending from supplier to endcustomer activities that do not add value are superfluous and should be eliminated
What is Operations Management?
10/17/08
design, conversion, and improvement of productive systems [email protected]
18
Transformation Processes
Physical : as in manufacturing operations Locational : as in transportation operations Exchange : as in retail operations Physiological: as in health care Psychological: as in entertainment Informational: as in communication
Is there any Business / Industry [email protected] 10/17/08 where an operation is not
19
Operations as a Transformation Process
INPUT •Material •Machines •Labor •Management •Capital
TRANSFORMATION PROCESS
OUTPUT •Goods •Services
Feedback 10/17/08
[email protected]
20
Operations Management Is functionally related to –
10/17/08
Marketing Finance and Accounting Human Resources Outside Suppliers [email protected]
21
INPUT RESOURCES LAND, BLDG
PLANT, M/C
MATERIAL
ENERGY
MANPOWER
OPERATIONS MANAGEMENT Obtains the facts Plans, Directs, Coordinates, Controls, Motivates in order to PRODUCE OUTPUT
PRODUCTS AND SERVICES 10/17/08
[email protected]
22
Mfg. v/s Services – What’s the difference? Business Organization Mfg. Industry
Creation of Goods
Production Mgmt
10/17/08
Service Industry Providing Services
Operations Mgmt
[email protected]
23
Mfg. v/s Services – What’s the difference? Manufacturing
Services
1.
Step by step conversion of Material
Service to satisfy customer
2.
Tangible & Stockable Output
Non-Stockable Output
3.
Mass Production with few variations
Customisation
4.
More M/c Oriented, Less Labour
More Mind Skill / Labour Oriented
5.
Factory Location – Near RM or Market, or Better Facilities
Near Customer
6.
Low / No Customer involvement in Conversion Process
Direct interaction between Customer and Process
10/17/08
[email protected]
24
A Systems View of Operations
Manufacturing System (e g. Television)
Inputs : Equipment, labour, parts, etc Conversion Process: Producing parts, Assembling Output: Television set Feedback: Defect rates, Customer response
Service System (e.g. Banking) Inputs : Clerks, equipment, cash, etc.. Conversion Process : Monetary transactions. Output : Loans, and deposits Feedback : Interest earned, Deposits received [email protected] 25 10/17/08
“Input –Transformation –Output” Relationships System
Primary Inputs
Resources
Transformation Fn.(s)
Typical Desired Output
Automobile Factory
Sheet steel, engine parts
Tools, equipment, workers
Fabrication and Assy. of cars (physical)
High-quality cars
Hospital
Patients
MDs, nurses, medical equipment
Health care (physiological)
Healthy individuals
Restaurant
Hungry customers
Food, chef, wait-staff, environment
Well-prepared, Well-served food; Stimulating environment
Satisfied customers
College or university
High school graduates
Teachers, books, classrooms
Imparting knowledge and skills (informational)
Educated individuals
Department store
Shoppers
Displays of goods, sales clerks
Attract shoppers, Promote products, Fill orders (exchange)
Satisfied customers
Distribution Centre
SKUs
Storage bins, stock-pickers
Storage and redistribution
Fast delivery, availability of SKUs
10/17/08
[email protected]
26
1. Planning
Mix of goods & services, Plant locations planning. Capacity planning, Production method. Equipment planning, Setting master schedules . Deciding No. of Shifts & work hours.
10/17/08
[email protected]
27
2. Organizing
Centralized or Decentralized Organized by functions, product or hybrid Assign responsibility for every activity Arrange supplier/ subcontractor network Establish maintenance policies
10/17/08
[email protected]
28
3. Controlling
Compare costs to budget Inspect the quality Compare labour hours to standards Compare work progress to schedule Compare inventory to targets
10/17/08
[email protected]
29
4. Directing
10/17/08
Personnel policies Employment contracts Issue job instructions Issue routings Issue despatch lists
[email protected]
30
5. Motivating
Encourage thru praise , recognition , tangible rewards Motivate thru enriched jobs & challenging assignments
6. Co-ordinating Common forecasts & Master Schedules Common standardised database Co-ordinate purchases, deliveries, design changes, Maintenance, Tooling. Respond to customer enquiries about [email protected] 10/17/08
31
7. Training & Development
Encourage employees to seek a better way Give more advanced job assignments Support employees in training programmes
10/17/08
[email protected]
32
Production Management Definition: (by E. S. Buffa) “Production Management deals with decision making related to production processes, so that resulting goods & services are produced according to specification, in the amount & by the schedule demanded and at minimum cost.”
Objectives of Prod. Mgmt. 1. 10/17/08
2.
Manufacturing Cost [email protected] Product Quality
33
Operations Strategy
Earlier : Concentration on Finance & Marketing strategies (Unaware of Operations Mgmt. as a strategic function)
1969 : Prof. Wickham Skinner (Harvard) described
“A firm lacking proper Operations Strategies is like an anchored ship. Finance, design and marketing may set the radar and expect the ship to steam off , but with anchors set, the ship won’t move, or moves reluctantly, [email protected] 34 10/17/08 dragging its burden”
Scope of Operations Mgmt. Long Term / Strategic Decisions
Product Selection & Design Process Selection & Planning Facilities Location Facilities Layout Capacity Planning
Short Term / Operational Decisions
10/17/08
1. 2. 3. 4. 5.
Production Planning & Control Inventory Control Quality Control Method Study / Work Study Maintenance & Replacement [email protected]
35
Production & Productivity
Production
Productivity pcs./hr.
Output (in No of Units)
Output ------------ No. of Input
10/17/08
[email protected]
36
Productivity Measures ( Output in terms of Input)
Machines Hour
-
Out put per Machine
Men
-
Out put per Man Hour
Materials of R.M.
- No of units produced per input (e.g. - No of Screws per Kg of
wire)
10/17/08
Power El. Power
-
Boiler
-
No of Pcs. per KW Unit of Kgs. of Rubber cured / Kg37
[email protected]
Productivity Measurements and their Need Myth 1. - Higher production mean Higher Productivity Automobile Manufacturing Co. Yr. 2004 : Annual Production = 50,000 Cars Yr. 2005 : Annual Production = 55,000 Cars
This means Production Increase = 10%
But in 2004 : 50,000 Cars with Cap. Invest. of 500 Cr. 2005 : 55,000 Cars with Cap. Invest. of 550 Cr.
10/17/08
2004 Productivity = 100 Cars / Rs. 1 Cr. Invest. 2005 Productivity = 100 Cars / Rs. 1 Cr. Invest i.e. Productivity Increase = Nil [email protected]
38
Myth 2 : Higher productivity mean working Harder. In fact adequate personal rest, contingency need to be provided to get continuous good quality of out put.
Myth 3 : Higher productivity means working faster. It may unnecessarily lead to errors, accidents and injuries.
Due 10/17/08
to such misconception [email protected] in people’s mind, 39
Productivity of an Organization
Sugar Mill crushed
Fabrication -
10/17/08
Kg. of sugar produced / Ton of sugar-cane
Tons of Fabrication / Kg. of Welding Rod
[email protected]
40
Productivity of a Service Function
Transporter Month.
Ton-km / Vehicle/
OR Ton-km / 1000 Lit. Diesel
Pharma. Marketing Div. Rs Order booked / MR /Month
10/17/08
[email protected]
41
Service Industry : Productivity Measures Business
Productivity Measure
Restaurant
Customers (meals) per hour
Retail Store
Sale per Sq. foot
Chicken farm
Kg. of meat per kg. of feed
Utility plant
Kilowatts per ton of coal
Paper mill
Tons of paper per ton of wood
10/17/08
[email protected]
42
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