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PM Lecture5, 18-03

The document discusses various ways to improve productivity through quantitative measurement. It explains that productivity can be increased by raising outputs or lowering inputs. Specific strategies mentioned include improving quality to reduce rework, controlling costs by increasing output without raising costs, seeking employee suggestions, regulating work flow, minimizing waste and downtime, and installing modern equipment. The document also stresses the importance of training and motivating employees to reduce absenteeism and turnover.

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Shakeel Ahmad
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© © All Rights Reserved
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Download as PPTX, PDF, TXT or read online on Scribd
10 views

PM Lecture5, 18-03

The document discusses various ways to improve productivity through quantitative measurement. It explains that productivity can be increased by raising outputs or lowering inputs. Specific strategies mentioned include improving quality to reduce rework, controlling costs by increasing output without raising costs, seeking employee suggestions, regulating work flow, minimizing waste and downtime, and installing modern equipment. The document also stresses the importance of training and motivating employees to reduce absenteeism and turnover.

Uploaded by

Shakeel Ahmad
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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PRODUCTIVITY IMPROVEMENTS

AND
QUANTITATIVE MEASUREMENT
PRODUCTIVITY IMPROVMENT
Since the equation is expressed as a fraction, productivity
can be increased by either increasing the top, or numerator
of a fraction, or decreasing the bottom, or denominator of a
fraction.
To increase productivity, the supervisor needs to increase
outputs, reduce inputs, or both.
Productivity can be improved by improving quality if the
improved quality is the result of reducing the amount of
rework or repair to the product or service.
 Improving productivity through improved quality means that
products and services must be right the first time without
increasing the input part of the equation.
COST CONTROL STRATIGIES
Productivity improves when
 the department or organization can do as much work at a
lower cost or
 when output rises without a cost increase.
When starting a cost improvement approach to
productivity, the supervisor must know what the costs are.
The most important source of such information is budget
reports.
 Budget reports reveal
 what the highest costs are and
 where the variance indicates more money is spent than budgeted.
COST CONTROL STRATIGIES
 The efforts can be aimed at those areas where the biggest improvements
are possible.
 In addition, the supervisor should spend time with workers, observing how
they use the department’s resources, including their time.
 The process of gathering information about costs and identifying needed
improvements is part of the supervisor’s control function.
 Cost-control strategies include such things as
 increasing output,
 improving methods,
 reducing overhead,
 minimizing waste,
 regulating or leveling work flow,
 upgrading to modernize equipment, and
 minimizing tardiness, absenteeism, and turnover.
COST CONTROL STRATIGIES
Before trying anything drastic, be sure to determine which
of these strategies will and will not appeal to higher
management.
 For example, leveling work load may be inconsistent with upper
management philosophy or it may violate union contract work
rules.
 Also, supervisors may only be able to suggest upgrading
equipment to upper management.
 They will probably not be able to purchase new equipment without upper
management approval.
Supervisors should not focus on strategies that are not under
their control, but instead should use those that are available to
them.
COST CONTROL STRATIGIES
Another important resource to cost reduction are
employee suggestions, whether or not there is a formal
suggestion program.
Employees have a close-up view of how things are done.
This enables them to see the shortcomings of the way
the organization does things.
They have personal experience with what works and
what doesn’t.
INCREASE OUTPUT
Be sure employees are working up to their potential.
 Usually employees don’t go around asking for more work.
 Supervisors need to be aware of the work that needs to be
done and see to it that employees are working up to speed.
 When employees are asked to do more they may become
unhappy.
 Setting goals for higher production rates should be made with
targets that are reasonable and perhaps include employees in the
decision-making process.
 The supervisor must also communicate the new goals carefully.
IMPROVE METHODS
A less stressful way to do more with a given amount of
resources is to improve methods.
Major improvements result from finding a better way to
do the job.
 Supervisors should constantly look for ways to improve
methods.
 Employees see the problems of their jobs and often have
excellent ideas on how to improve them.
 Therefore, supervisors should keep lines of communication

open and actively seek new ideas.


REDUCE OVERHEAD
 Overhead includes such things as
 rent,
 utilites,
 staff support,
 company cafeteria,
 janitorial services, and
 other indirect expenses
 expenses not directly related to producing goods and services.

 Staff departments in particular can be guilty of contributing too


much to the cost of overhead by generating unnecessary paperwork
 Supervisors and their employees who produce or handle reports and
forms should evaluate this paperwork to make sure it is needed.
MINIMIZE WASTE
Waste occurs in all kinds of operations.
 For example. a factory may create a lot of waste through
poor manufacturing processes and poor material handling.
 An office may make too many photocopies or needlessly
long proposals, contributing more to landfills than to the
company’s profits.
Another costly waste is downtime or idle time.
 For example, in a factory idle time occurs while a machine
is shut down for repairs or workers are waiting for parts.
 In an office, idle time occurs when employees are waiting
for instructions.
MINIMIZE WASTE
Another form of wasted time results from detour
behavior, or tactics for postponing or avoiding work.
Time is wasted when supervisors and employees stop to
talk or go get a cup of coffee at times other than when
breaks are scheduled
REGULATE OR LEVEL THE
WORK FLOW
An uneven flow of work can be costly.
At low times, employees are idle.
When demand is up employees have to work extra hours
to keep up resulting in the need to pay overtime.
Steps a supervisor can take to regulate the work flow
in his or her department:
(1) Make sure that he or she is doing an adequate job of
planning for the work that is required.
(2)Work with your boss and peers in other departments
or form teams of employees to examine and solve the
problems with work flow.
REGULATE OR LEVEL THE
WORK FLOW
 If the work flow must remain uneven, the supervisor
may find it best to use temporary employees during peak
periods.
 This approach can work if the temporary employees have
enough training in the needed skills.
INSTALL MODERN
EQUIPMENTS
Work may be slowed because employees are using worn or
outdated equipment.
 If that is the case, the supervisor may find it worthwhile to replace it
with modern equipment.
A supervisor needs to determine whether the expense of
buying new equipment, or recommending its purchase, is
worthwhile.
 One way to do this is to figure out how much money per year the
new equipment will save.
 Consider such things as lower repair costs, less down time, and more goods
produced.
 Then compute the number of years it will take before the savings will offset the
cost of buying the equipment.
 This is known as the payback period.
TRAINED AND MOTIVATE
EMPLOYEE
For employees to work efficiently, they need a good
understanding of how to do their jobs.
Training alone does not lead to superior performance;
employees also must be motivated to do good work.
MINIMIZE TARDINESS, ABSENTEESM
AND TURNOVER
Lack of motivation often is the problem underlying time lost to
tardiness and absenteeism.
Low morale is another reason.
Employees who do not find their jobs rewarding personally are
more likely to find excuses not to show up.
The extra costs are paid for someone who is not working.
 Even if wages are not paid, the organization still must pay the
employees’ benefits.
 Other employees may not be able to work efficiently when other
employees are not there.
 Obviously, this means that customers may not be served adequately in a
timely manner.
 The cost of disappointing a customer is unknown and unmeasurable.
MINIMIZE TARDINESS, ABSENTEEISM
AND TURNOVER
The rate at which employees leave an organization
is known as turnover.
Any turnover adds costs because the organization must
spend a lot of money to recruit and train new employees.
 Of course, the costs go up when the rate of turnover goes up.
 The company also absorbs other costs such as lower productivity
of employees while they are gaining knowledge and skills
associated with the job.
 The risk of failing to meet organizational objectives is also
increased.
DOWN TIME OR IDLE TIME
Time during which employees or machines are not
producing goods or services.
Down time of machinery, both scheduled and
unscheduled, is likely to be recorded.
 Idle time for employees is often unknown.
 During employee idle time a special effort may be made to

look busy and stay out of the way of observing management.


QUANTITATIVE
MEASUREMENTS
Productivity is based upon the equation:
Productivity = Outputs/Inputs
 which states that productivity is the amount of output
produced with the inputs used.
This formula can be used to evaluate or compare the
productivity of individuals, departments or work
units, organizations, and countries.
END

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