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Operations Management

The document discusses managing productivity at work. It defines productivity and describes how to measure it at different levels. It then outlines various ways to improve resource productivity and lists key resources to review. Finally, it discusses factors affecting productivity in different industries and critical issues to consider in productivity improvement.

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Jay Baldelovar
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36 views33 pages

Operations Management

The document discusses managing productivity at work. It defines productivity and describes how to measure it at different levels. It then outlines various ways to improve resource productivity and lists key resources to review. Finally, it discusses factors affecting productivity in different industries and critical issues to consider in productivity improvement.

Uploaded by

Jay Baldelovar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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MANAGING

PRODUCTIVITY AT
WORK
GROUP 2
LEARNING OBJECTIVES:
 The relevance of productivity at work
 Defining productivity
 How to measure productivity in resources and
performance processes
 To control and improve the performance of
organizations in all sectors
 Steps in emphasizing global market
and international competition
Productivity at work
Productivity is defined in terms of utilization of resources, like material
and labour. In simple terms,productivity is the ratio of output to input.

Output in operation, it is the outcome achieved when operation resources


such as people, materials, equipment, etc., are put into work.

Productivity is expressed as a ratio of output produced against the input


used to achieve it.
To measure productivity:
Traditionally, productivity has been measured at national,
industry and organizational levels. These are usually assessed
as follows:

1. National productivity – This is where the productivity of


different nations is measured and compared. This is usually
expressed in terms of percentage of exports by each country
per annum.
2. Industry productivity – Is often expressed in terms of
output per employee per hour, is a useful way for individual
companies in particular sectors to compare their performance to
the industry average.
Traditionally, productivity has been measured at national,
industry and organizational levels. These are usually assessed
as follows:

3. Organizational productivity
- It is usually measured in monetary terms and
expressed as the ratio of the output sold to the costs of
inputs (e.g. labour, materials, equipment) used to produce
that output.
To calculate the Total factor of Productivity
you use the formula:
IMPROVING RESOURCE
PRODUCTIVITY

There are various ways that the productivity of a resource


or operation can be improved. These are:
 increasing the working speed by improving the output from the operation
whilst utilizing the same amount of input.
 improving the working methods by obtaining the same output from the
operation using less input.
 reducing cost and wastage by increasing output from the operation whilst
reducing the input to the operation.
Key resources to review for improving
productivity and reducing operating costs:

1.People
The efficiency, utilization and effectiveness of the
workforce can be improved with sound planning,
motivation, innovating new work methods and by raising
people awareness through effective training and
empowerment.
Key resources to review for improving
productivity and reducing operating costs:

2.Equipment
The utilization, efficiency and availability of equipment
and machines can be improved through effective capacity
planning and control, simplifying operations and efficient
management of maintenance activities.
Key resources to review for improving
productivity and reducing operating costs:

3. Materials
The availability and utilization of materials can be
improved through efficient planning and control of
materials and effective sourcing and management of the
supply chain.
Key resources to review for improving
productivity and reducing operating costs:

4. Space
Efficient use of available space can be made through
better layout design and organization of productive
resources.
Key resources to review for improving
productivity and reducing operating costs:

5. Money
The amount of working capital allocated to an
operation in the form of stock, consumable items and
services can be optimized through sound budgetary
planning and control, structural and improvement
decisions.
Key resources to review for improving
productivity and reducing operating costs:

6. Time
People lateness for work or absenteeism can be reduced
through listening to employees’ concerns, better
communication, motivation, development of their skills,
recognition and appropriate reward for their efforts and
outstanding contribution.
Productivity in manufacturing
organizations
Factors can be considered as primary causes of the poor
performance of manufacturing industries:
1. Inability to compete
2. Lack of graduate engineers
3. Fluctuations in interest rates
4. Strikes
Productivity in service industries

Output in service sectors can be such things as healthy patients,


educated students and satisfied passengers. Hence service
productivity depends on how efficiently management can utilize
resources at its disposal and how effectively service personnel can
achieve their operational goals.
This in turn means that results achieved by a service
organization can be significantly affected by: ​

• Efficiency of resource – the method by which resources are used​

• Utilization of resources – the actual use of resources to their


potential use

• Effectiveness of resources – the extent to which resources achieve


the corporate goals of the organization in what they do.
Strategic determinants of service productivity

In service industries the following elements are considered to be the strategic


determinants of productivity:

 Volume of demand
 Variety of services offered
 Variation in the volume and nature of demand over time.
The management of service productivity will be affected by each of
the above elements.

a. Volume effects – High volume allows efficient transformation


of resources and development of specialization and learning
effects. Furthermore, high volume can facilitate balanced
capacity especially if combined with low variety, resulting in
all the sub-systems operating at optimum level.
The management of service productivity will be affected by each of
the above elements.

b. Variety effects – According to Armistead et al. (1998), high


variety reduces volume per service line and demands a wide
range of skills, both of which increase input costs.
The management of service productivity will be affected by each of
the above elements.

c. Variation effects – The impact of variation over time in the


demand and the nature of ser vices provided requires that service
operations adopt a flexible approach to systems utilization.
The management of service productivity will be affected by each of
the above elements.

Two broad alternative strategies can be considered:


1. Chase demand planning is used in situations where resource
provision is flexible enough to reflect the fluctuation in
demand.
2. The alternative is the level capacity strategy, which is used in
ser vice operations with relatively low customer contacts.
Critical issues in productivity
improvement
 Change management – Change should be considered a way
of life and everyone in the organization should expect change.
 Empowerment – Senior managers should be able to release
the full potential of their employees through involvement,
training, recognition and effective communication.
Critical issues in productivity
improvement
 Customer orientation
- Organizations should make every effort to know their
immediate markets and clearly understand their customers’
requirements.
- This can be better achieved by companies through partnership
with their customers and suppliers and by listening to their views
through regular meetings.
Critical issues in productivity
improvement
 Innovation
- This can be achieved by constantly developing new products
and services.
- Companies should welcome the pressure put upon them by
demanding customers in terms of price reduction, flexibility,
delivery, design and quality improvements.
Critical issues in productivity
improvement
 Customer delight
- Customers should always be regarded as the ‘focal point’
whenever companies are considering any change or innovation in
their products, ser vices and processes.
 Productivity improvement techniques
Business process re-engineering
- involves radical redesign of the business processes with the
aim of producing dramatic improvement in performance.
Four types of business processes:
1. Core processes – These are central to business functioning and relate
directly to external customers.
2. Support processes – These are related to internal customers and are the
back-up or ‘back office’ for the core processes.
3. Business network processes – These are those processes which extend
beyond the boundaries of the organization into suppliers, customers and
partners.
4. Management processes – These are those processes by which
companies plan, organize and control resources.
Best practice Benchmarking
Benchmarking
- is an integral part of the improvement process
-it is a natural development of a firm’s desire to improve by comparing
itself with the best.
Four Types of Benchmarking

1. Internal benchmarking
– This involves making comparisons with other parts of the same
organization.
– It is a process in which a COMPANY OR AN ORGANIZATION
LOOKS WITHIN ITS own business to try and determine the best practice
or methodology for conducting a particular task.
Four Types of Benchmarking

2. Competitor benchmarking
– Measures where and how your organization stands against your
competitors.
3. Functional benchmarking (non-competitors)
– A type of performance comparison that involves identifying and
learning from the best practices to other organizations, regardless of their
industry or sector.
Four Types of Benchmarking

– This involves making a comparison with, typically, non-


competitor organizations which carry out the same functional activities,
such as procurement, warehousing, catering, etc. There are several
advantages to this type of benchmarking:
■ functional leaders are easy to identify
■ novel ideas may be discovered
■ confidentiality is not usually an issue
■ two-way partnerships can be developed
Four Types of Benchmarking

4. Generic Benchmarking
– A process of analyzing two companies in different industries and
comparing their general business functions.
"STOP TALKING.
START DOING"
- Walt Disney

ORA ET LABORA

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