Notes Chapter 2 Productivity Improvement Factors

1 Productivity ManagementNotes10 Self-Learning MaterialL E A R N I N G O U T C O M E SAfter reading this Chapter , you will be able to:LO Understand the internal Factors of enterprise Productivity Improvement LO Apply the concept of material handling systemLO Analyse the external Factors affecting enterprise Productivity improvementinTRODUCTiOnThe basic meaning of Productivity Improvement is doing the right things in a better way so that the results can be improved. The aim of this Chapter is to identify the different Factors which influence the Productivity significantly. The production process is a continuous and ongoing process everywhere, along with some adaptive and complex concerns. The interrelationship of capital, manpower and the business environment of the organisation is very important as it will balance and coordinate different procedures and combine those into a single integrated process.

2 Productivity Improvement depends significantly on different Factors of socio-production system. On the basis of this the Productivity Factors can be grouped in three categories which are related to job, resource and environment. According to the economic analysis of managerial Factors , the Factors which affect the Productivity management can be classified in two categories: External Factors or non-controllable Factors Internal Factors or controllable factorsAs suggested by the name, external Factors include all those Factors which are beyond the control of the business enterprise while the internal Factors include all those Factors which are within its control. Le a r n i n g Ou t c O m e 2 .1inTERnAl Factors OR COnTROllABlE FACTORSI nternal Factors include all those Factors which are within the control of business enterprise.

3 But the degree of control may be different for each internal factor. Some Factors are easy to change while others are difficult to change. So according to the degree of change we can classify the internal Factors in two categories: Hard Factors (not easily changed) Soft Factors (easily changed)C h a p t e r 2 Productivity Improvement 1011/19/2015 1:27:49 PMNotesProductivity Improvement Factors11 Self-Learning MaterialHARD FACTORST hese Factors are not easy to change and require strong financial and organisational interventions. The hard Factors include: Products Technology Plant and equipment Raw materials Material handling ProductsProduct factor is the most significant factor for Productivity management. The meaning of product factor Productivity is the extent to which the product meets output requirements.

4 The amount that the customer is ready to pay for a product of given quality is termed as use value. Use value can be improved by amendments, good design, new features and specifications. This is an era of globalisation and almost all the companies around the globe are competing for better marketable products with technical excellence. The integration of marketing, sales, and research is very crucial for the product factor Productivity . For example, leading electronics companies continually redesign products like television, cell phones, washing machines, etc. which are on the market. In the product factor Productivity the place value of product, time value of product and price value of product are also very significant as the availability of right product at the right place, right time and at a reasonable price is the basic concern for the customer retention.

5 The increased volume of production gives rise to economies of scale which can results in reduction of cost and in this way volume factor also plays an important role. TechnologyFrom the ancient time the technological innovation played an important role in attaining higher Productivity . Technological innovations can affect every sphere of business in terms of Productivity management and Improvement . The technological innovations can increase production volume of goods, helps to give better services, incorporating better quality in products and services, provides new methods of marketing, provides new methods of business processing, gives better tools to analyse the needs of customer, etc. Technology can also improve materials handling, storage, communication systems and quality control, logistics control, enterprise resource planning, etc.

6 During the past few years, technology has been proved as an important constituent of Productivity management and Improvement . Keeping this view in mind the major companies of the world are spending a major portion of the budget on the research and development. Plant and EquipmentPlants and equipments play an important role in Productivity management and Improvement . Through plant and equipment the Productivity can be improved if the plants and equipments are properly maintained. The higher Productivity can be achieved if the plant and equipments are operated in optimum process conditions reducing the bottlenecks, if any exist, and by taking proper corrective measures. If there is some idle time then by reducing it the Productivity can be increased with effective use of available plants and equipments.

7 By paying due attention to the instructions of use, utilisation time, modernisation, cost, investment, internally produced equipment, capacity maintenance and expansion, inventory control, production planning and control , the Productivity can definitely be increased. Raw MaterialsRaw materials constitute an important source of Productivity management and Improvement . This factor can bring remarkable major results with micro efforts. The raw material for any product and indirect materials like lubricants, chemicals used, packing material, etc. also plays a significant role in Productivity management. The material yield is most important aspect in material Productivity . It is the output of useful product per unit of material used.

8 Material yield depends on Check Your ProgressDiscuss the impact of hard Factors on Productivity with special reference to the Indian industrial 1111/19/2015 1:27:49 PMProductivity ManagementNotes12 Self-Learning Materialthe quality of material, process control and control of rejects. Some other aspects of material Productivity includes the use and control of wastage and scraping, upgrading of materials by initial processing so that the utilisation in the main process can be improved. The lower grade and cheap material must be avoided. The inventory management of raw material also affects the Productivity in general and financial aspects in particular and helps to avoid the excessive holding stock. Le a r n i n g Ou t cO m e 2.

9 2 MATERiAlS HAnDlingManufacturing system is a process conversion of raw materials into finish goods. One of the basic components of any manufacturing system is its material-handling systems. It involves all the effort for the movement of materials from raw materials stores to finished goods store. In a broad sense, materials handling includes all movement of materials, in a manufacturing plant. Material handling is the movement, storage, control and protection of materials, goods and products throughout the process of manufacturing, distribution, consumption, and disposal. Material handling improves efficiency by making the handling system respond quickly and effectively to plant and customer 1. American Society of Mechanical Engineers defines materials handling system as Materials handling is the art and science involving the moving, packing, and storing of substances in any form.

10 2. Material handling refers to activities, equipment, and procedures related to the moving, stor-ing, protecting and controlling of materials in a system. 3. Material handling means providing the right amount of the right material at the right place at the right time in the right position in the right sequence for the right cost. 4. Materials handling is also defines as the art and science involving the moving, packaging and storing of substances in any form. 5. Materials handling is the movement and storage of materials at the lowest possible cost through the use of proper methods and equipment. 6. Materials handling is the moving of materials or product by any means, including storage, and all movements except processing operations and inspection.