Productivity

1
Introduction

2
 Introduction

What is productivity, how it is measured and

why it is important? These questions are a
useful starting point from which we can
define and explain the range of
productivity
 The Economic System
Transforms Inputs to Outputs
Inputs Process Outputs

Land, Labor, The economic system Goods

Capital, transforms inputs to and
Management outputs at about an Services
annual 2.5% increase in
productivity

Feedback loop
2-4
 Introduction

Definition of productivity
The ability to produce outputs, such as goods or
services, taking into consideration the amount of
inputs, such as raw materials, capital and labour,
used to produce them. High productivity means
producing as much output as possible using as
little input as possible.
 Introduction
Definition of productivity

Productivity is a common measure of how well

resources are being used or a measure of the
effective use of resources usually expressed as the
ratio of output to input

Output
Productivity =
Input
2-6
 Introduction

Productivity measures that use one or more

inputs or factors, but not all factors, are
called partial productivities. Examples are
labor productivity, material productivity,
energy productivity…etc.
 Introduction

Labor productivity

It is the value of goods and services produced

in a period of time, divided by the hours of
labor used to produce them. In other words
labor productivity measures output
produced per unit of labor.
 Introduction

Productivity growth

Productivity growth occurs through improved

efficiency, such as using fewer inputs to
produce the same outputs, or through
inputs being used more effectively to
produce outputs of greater value.
 Introduction

Productivity growth

Current productivity - Previous productivity

Productivity Growth = 100%
Previous productivity
 Introduction

Sources of productivity growth

Certain factors are critical for determining

productivity growth. The Office for National
Statistics (UK) identifies five drivers that
interact to underlie long-term productivity
performance: investment, innovation,
skills, enterprise, and competition.
 Introduction

Sources of productivity growth

Investment in physical capital —

machinery, equipment and buildings. The
more capital workers have at their
workplace, generally the better they are
able to do their jobs, producing more and
better quality output.
 Introduction

Sources of productivity growth

Innovation is the successful exploitation of

new ideas. New ideas can take the form of
new technologies, new products or new
corporate structures and ways of working.
Such innovations can boost productivity,
 Introduction

Sources of productivity growth

Skills are defined as the quantity and quality

of labor of different types available in an
economy. Skills complement physical
capital, and are needed to take advantage
of investment in new technologies and
organizational structures
 Introduction

Sources of productivity growth

Enterprise is defined as the seizing of new

business opportunities by both start-ups
and existing firms. New enterprises
compete by new ideas and technologies.
forcing competitors to adapt or exit the
market.
 Introduction
Sources of productivity growth

Competition improves productivity by

creating incentives to innovate and ensures
that resources are allocated efficiently.
 Introduction

Importance of productivity

• Tracking an operating unit’s performance

over time

• Judging the performance of an entire

industry or country

• High productivity is linked to higher standards

of living
 Introduction

Importance of productivity

• Higher productivity leads to competitive

advantage in the marketplace (pricing and
profit effects )

• As productivity improves, costs decrease

and wages increase
 Introduction

What improves productivity?

If productivity is the ratio of outputs to inputs,

there are five general approaches to boost
productivity:

Action one: Increase output without increasing

input

Productivity = Output / Input

 Introduction
What improves productivity?

Action two : Decrease input without

decreasing output

Productivity = Output / Input

Action three : Increase output and decrease

input

Productivity = Output / Input

 Introduction
What improves productivity?

Action four : Increase input that increases

output by higher rate

Productivity = Output / Input

Action five : Decrease output that decreases

input by higher rate

Productivity = Output / Input

 Introduction
What improves productivity?

Many people suppose that raising productivity

means increasing output. It isn’t necessarily
so. Higher output is only a gain if customers
buy it. So output needs defining carefully.

Making more products or providing more

services than are required is ‘overproduction’,
leading to (wasted) inventory
Relation between Quality and
Productivity

23
 Relation between Quality and
Productivity
In today’s competitive environment the success
and survival of any enterprise whether it is a
small scale unit or large scale enterprise
depends upon the achievement and
maintenance of a satisfactory level of quality,
productivity, and at the same time at reasonable
price with the optimum use of the all factors of
production , not just one of them
 Relation between Quality and
Productivity
The concept of quality existed much before
the concept of productivity. There existed
a belief till the first half of the 20th century
that productivity and quality are not related
to each other, they can not progress
together.
 Relation between Quality and
Productivity
It was believed that higher quality goods
take more time and labor and higher
quality raw material to produce, so a drive
to greater productivity almost always
means diminishing of quality. But during
the second half of 20th century and after, it
was clear that quality and productivity are
related to each other.
 Relation between Quality and
Productivity
Quality directly or indirectly affects productivity and
cost of the product.

Better quality leads to less defects due to which

the cost of poor quality will be minimum and if
the poor quality is minimum , then the
unproductive or unexpected product (like scrap)

will be minimum which means minimum total cost

of production, so we get the higher productivity
 Relation between Quality and
Productivity
in the production system.

Example is when you have a high quality

raw material ( which is more expensive),
you may have a low defect/reject. This
may lead you to have more output and
high productivity.
 Relation between Quality and
Productivity

quality and productivity should go together,

and neither one should be sacrificed. Such
simultaneous efforts can produce all the
desired results: better quality, less rework,
greater productivity, lower unit cost, price
elasticity, improved customer satisfaction,
larger profits and more jobs.
 Relation between Quality and
Productivity

After all, customers get high quality at a low

price, vendors get predictable long-term
sources of business, and investors get
profits, a “win-win” situation for everyone
 Profitability and Productivity

Organisations commonly regard profits as a

key measure of their success. Using
profits as a measure may seem to imply
that the organisation will benefit more if
costs such as salaries and capital
reinvestment are reduced, or unit price of
product or service is increased.
 Profitability and Productivity

However, lowering salaries to increase

profits tends to conflicts in the relationship
between employees and management.
Minimising capital investment often has a
negative impact on the efficiency of
operations, and eventually affects profits.
 Profitability and Productivity

Also, increasing unit price of product or

service may lead to less sales which
means less profit.

Therefore, increasing profits by reducing

such expenses is only a short-term
measure.
 Profitability and Productivity

The only way to increase profits in a

sustainable manner is to increase the
economic value added through higher
productivity. This can be done with better
cooperation from employees, higher
investment in capital, and optimal use of
capital.
 Profitability and Productivity

In return for employees’ efforts, the

organisation should share the additional
wealth generated in the form of higher wages
and improved benefits. This will reinforce and
encourage them to further improve their
performance.
To sum up, productivity is key to sustaining
profits in the long run.
Productivity problems in Egypt

36
 Productivity problems in Egypt
Several problems are encountered in productivity
in Egypt. These problems can be classified into
four main categories:

1- The national level

2- The enterprise level

3- The management level

4- The employee level

 1- The national level
1.1 Lack of capital and foreign exchange

It is difficult for industries to attain the advanced

technology, machinery, and high quality raw
materials that necessary for high productivity.

1.2 Poor educational and training policy

The system of education in universities and

schools does not enable the graduates to create
the spirit of thinking, inventing, developing
 1- The national level
, and problem solving. Moreover, vocational
training necessary for creating skilled workers is
limited. Also the educational policy is not
properly tied to the employment requirements.

This lack of suitable education and training affects

negatively the skill of labors and employees,
which reflect in decreasing productivity
 1- The national level
1.3 Problems due to legislation

Such as labor laws, investment laws, taxes, and

customs laws. These laws should be revised for
the purpose of deleting all items that causes
decrease of productivity of all activities.
 2- The enterprise level
2.1 Bad conditions of machinery and
maintenance systems
This problem arises due to:
- Absence of machinery replacement and
renewing plans
- Absence of protective maintenance plans
- Inadequate equipment exploitation
- Improper use of tools and equipment
This leads to more scrap, rework, and setup time
which means low productivity.
 2- The enterprise level
2.2 Poor quality management system

Leads to poor quality of products and services and

low productivity

2.3 Improper working conditions

Such as lighting, ventilation, temperature, noise,

housekeeping…etc. This causes less labor
productivity
 2- The enterprise level
2.4 Poor utilization of advanced technology
Such as CAD/CAM, and CIM technologies,
robotics, laser technology, information
technology, Nanotechnology, …etc. These
technologies have a great effect of increasing
productivity.
2.5 Ineffective inventory control system
Many companies neglect the following areas:
- Development of demand forecast
- Selection of inventory models
 2- The enterprise level
- Measurement of inventory costs.

- Methods for record and account for items.

- Methods for receipt, handling, storage, and

issue of items
 2- The enterprise level
Inventory cost

Three basic costs are associated with inventory: Holding (carrying),

ordering (transaction), and shortage costs.

a) Holding costs

- related to physically holding items in storage.

- Include insurance, depreciation, obsolescence, deterioration,

spoilage, breakage, warehousing cost ( heat , light, rent,
security )

45
 2- The enterprise level
Inventory cost

b) Ordering costs

Associated with ordering and receiving inventory

c) Shortage costs
They result when demand exceeds the supply of inventory on hand.
Difficult to measure.
Ex. Lost sales, lost production, lateness charges

46
 2- The enterprise level
Inventory cost
Minimum total cost and economic order quantity (EOQ) .

Cost
[LE]

Q
Economic order quantity

47
 3- The Management level
These problems include:

1- Less or no commitment of top management

to productivity

Management emphasis is directed to quantitative

production, short-term success, and maximum
profit regardless to quality and company
reputation which leads to low productivity.
 3- The Management level
2- The weak level of administration and control

This causes bad performance and more failures

that lead to less productivity.

3- Neglecting the human resources

Managers should work hard at training , educating,

challenging, reinforcing, listening to, and
rewarding their employees
 3- The Management level
The effective use of human resources is an
important tool for increasing productivity

4- Poor study of market

Customer needs are not carefully identified, and

no quick respond to changing customer
preferences which leads to decreased sales,
increased market expenses and low productivity.
 3- The Management level
5- Inefficient purchasing decision

- Failure to purchase the optimum lot sizes of

materials leads to increasing inventory cost ( in case
of over lot size ) or late production (in case of less
lot size) , and the result is low productivity

- Neglecting the evaluation of suppliers may leads to

choosing low quality one which leads to discrepancy
in production and decreases productivity
 3- The Management level
6- Neglecting after-sales services

- A feedback system regarding performance in use is

not available, and customer complaints are not
enough indicator to measure customer satisfaction.
This increases the probability of customer
dissatisfaction which leads to decreased sales and
low productivity.
 4- The Employee level
1- Poor skill of workers

- Leads to increase in rejects and production time

which leads to lower productivity

2- Cultural resistance to change

Workers want to stay as they are. They are not willing

to change their habits easily. Efforts to increase
productivity are resisted by workers unless they are
convinced of the need for the change.
 4- The Employee level
3- Emigration of skilled workers

- Leads to bad performance and low productivity

4- Workers are not shared with the gains

Workers want to know the results of their efforts of

increasing productivity and share the increase of
profit so that they may continue giving more efforts.
 4- The Employee level
5- Company and employee goals do not coincide

If productivity goals are positively oriented towards

personal goals, productivity will be easily increased.

6- Inadequate communication

Communication between employees across

organization levels is slow and sometimes
 4- The Employee level
inaccurate, and this affect the ability to solve
problems, avoid new ones and implement change
leading to low productivity.

7- Inadequate teamwork approach

People are not trained to work together toward

common goals. There is no environment where
employees and managers are able to participate in
 4- The Employee level
Problem solving, decision making, and process
changes. This hinders the efforts of increasing
productivity.
Factors Affecting Productivity

58
 Factors Affecting Productivity
Main factors

 Capital

 Quality

 Methods

 Technology,

 Management

59
 Factors Affecting Productivity
Secondary factors

 Standardizing processes and procedures (+)

 Workers (shortage or non experienced workers) (–)

 High labor turnover (–)

 Design of the work place

 Incentive plans

 Shortage of material and parts. (–)

 Equipment breakdown (–)

 Safety

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 Key Steps for Improving Productivity
Develop productivity measures for all operations
Determine critical (bottleneck) operations
Develop methods for productivity improvements
Establish reasonable goals
Get management support (make it clear that
management supports and encourages productivity
improvements.)
Measure and publicize improvements
Invest on labor force by training and education
2-61
Measurement of Productivity

62
 Measurement of Productivity
PRODUCTIVITY = OUTPUT / INPUT

Essentially, productivity measurement is the

identification and estimation of the appropriate
output and input measures.
 Measures of Productivity

Partial Output Output Output Output

measures Labor Machine Capital Energy

Multifactor Output Output

measures Labor + Machine Labor + Capital + Energy

Total Output
measure All inputs used to produce them
 Measurement of Productivity
Measures of Output

Output could be in the form of goods produced or

services provided. Output may be expressed in:
Physical quantity or Financial value

Physical Quantity

At the operational level, where products or services

are homogeneous, output can be measured in
physical units (e.g. number of customers served,
 Measurement of Productivity

Measures of Output

number of books printed). Such measures reflect the

physical effectiveness and efficiency of a process,
and are not affected by price fluctuations.
 Measurement of Productivity

Measures of Output

Financial Value

At the organisation level, output is seldom uniform. It

is usually measured in financial value, such as
Sales .
 Measurement of Productivity
Measures of Input

Input comprises the resources used to produce

output. The most common forms of input are labour
and capital.

Labour

Labour refers to all categories of employees in an

organisation. It includes working directors,
proprietors ‫أصحاب العمل‬, partners, and part-time
workers.
 Measurement of Productivity
Measures of Input

Labour can be measured in three ways:

1- Number of hours worked

This measure reflects the actual amount of input

used. It excludes hours paid but not worked (e.g.
holidays, paid leave).

2- Number of workers engaged

This measure is more commonly used, as data on

 Measurement of Productivity
Measures of Input

hours worked may not be readily available. Part-

timers are converted into their full-time equivalent.
An average figure for a period is used, as the
number of workers may fluctuate over time.

3- Cost of labour

Labour costs include salaries, bonuses, allowances

and benefits paid to employees
 Measurement of Productivity
Measures of Input

Capital

Capital refers to physical assets such as machinery

and equipment, land and buildings, and
inventories that are used by the organisation in
the production of goods or provision of services.

Capital can be measured in physical quantity (e.g.

number of machine hours) or in financial value.
 Measurement of Productivity
Measures of Input

Intermediate Input

Major categories of intermediate input include

materials, energy and business services. Such
input can be measured in physical units (e.g.
kilogrammes, kilowatt per hour) or financial units
(e.g. cost of energy and materials purchased).
 Measures of Productivity
Example 1
5,500 Units Produced
Sold for $35/unit
500 labor hours are used
Cost of labor: $25/hr
Cost of raw material: $5,000
Cost of overhead: 2 x labor cost
What is the labor productivity?
2-73
What is the multifactor productivity?
 Measures of Productivity

Solution :

Labor Productivity = Total output / labor input

= (5,500 x35)/(500 x 25)

=15.4

2-74
 Measures of Productivity

MFP = Output
Labor + Materials + Overhead

MFP = (5,500 x 35)

(500 x 25 + 5000 + 2 x 500 x 25)

MFP = 4.52

2-75
 Productivity Growth

Current productivity - Previous productivity

Productivity Growth = 100%
Previous productivity

Productivity Growth is a key factor in a contry’s rate of

inflation and the standard of living of its people

2-76
 Productivity Growth

Example 2
Labor productivity on the ABC assembly line was
25 units per hour in 2006. In 2007, labor
productivity was 23 units per hour. What was the
productivity growth from 2006 to 2007?
23 - 25
Productivity Growth =  100%  8%
25
2-77
 Measurement of Productivity
Example 3

A company that processes fruits and vegetables is able to

produce 400 cases of canned peaches in one half hour
with four workers. What is the labor productivity?
 Measurement of Productivity
Example 3

Solution:

Labor productivity = Quality Produced / Labors Hours

= 400 cases / (4 workers x 1/2 hours )

= 200 cases per labor hour

 Measurement of Productivity
Example 4

A paper company produced 2,000 rolls of paper one day.

Standard price is $ 1/roll. Labor cost was $ 160,
material cost was $ 50, and overhead was

$ 320. Determine the multifactor productivity.

 Measurement of Productivity
Example 4

Solution:

Multifactor productivity = Quality produced at standard

price/(Labor cost + Material cost + Overhead)

= 2,000 rolls x $ 1/ ($160+ $ 50 + $320) = 3.77

 Measurement of Productivity
Example 5
Calculate the productivity for the following operations:

a) Three employees processed 600 insurance policies last

week. They work 8 hours per day, 5 days per week.

b) A team of workers made 400 units of product, which is

valued by its standard price of LE10 each. The accounting
department reported that for this job the actual cost were
LE 400 per labor, LE1000 for materials and LE 300 for
overhead
 Measurement of Productivity
Example 5
Solution

a) Labor productivity = Policies processed / Employee, hours

= 600 policies / 3 (40)

= 5 policies per hours

b) Multifactor productivity = Quantity at standard cost / (Labor

+ Materials + Overheads)

= 400units (10) / (400 + 1000 + 300) = 4000 /1700 =2.35

 Measurement of Productivity
Example 6
A carpenter makes wooden boxes in which to ship
motorcycles. He and his 3 workers invest 40 hours per day
making 120 boxes. The carpenter redesigned the process
of making the boxes so that he may make 140 boxes per
day without any increase in resources .

What is the productivity growth?

 Measurement of Productivity
Example 6
Solution

Previous Productivity = 120 boxes/ 40 Hours

= 3 boxes /hour

Current Productivity = 140 boxes/ 40 Hours

= 3.5 boxes / hour

 Measurement of Productivity
Example 6
Solution

Current productivity - Previous productivity

Productivity Growth = 100%
Previous productivity

3.5 - 3
=  100%
3
= 16.667 %
 Measurement of Productivity
Example 7

Determine the total productivity for a company

producing 150 units of washing machines per month

(25 working days) using the following resources per day:

Labor: LE 500, Materials: LE 6000, Energy: LE 200,

fixed capital: LE 1500, and other expenses: LE 1200.
Keep in mind that the unit price of the washing machines
is LE 6000.
 Measurement of Productivity
Example 7
Solution
Total Productivity = total output / total input

= 150 x 6000 / (500+ 6000+ 200+1500+1200) (25)

= 150 x 60 / (5+60+2+15+12) (25)
= 360 / 94 = 3.83
 Measurement of Productivity
Example 8
An Appliances factory produces 50,000 electric fan
each week. The equipment costs LE 5,000 and will
remain productive for three years. The annual labor
cost is LE 8,000.

a) What is the productivity as measured in units of

output per LE of input over a 3 year period?

89
 Measurement of Productivity
Example 8
b) Management has the option of LE10,000 equipment, with
an operating life of five years. It would reduce labor costs to
LE 4,000 per year. Should management purchase this
equipment (using productivity arguments alone)?

90
 Measurement of Productivity
Example 8

Solution
a) productivity = (total fans produced) / (LE labor+LE equipment)

=(50,000*52*3) / (8000*3+5000)

= 269 fans / LE input

b) for new machine project:

Productivity = (50,000*52*5) / (4000*5+10,000)

= 433 fans / LE input

This is a good project from a productivity perspective. Although the

proposed equipment is expensive, 5 year life and lower labor costs make
new machine attractive
91
Example 9 .
A team of workers made 800 units of product, which
is valued by its standard price of LE10 each. The
accounting department reported that for this job the
actual material cost was LE 4000. A quality
improvement team succeeded to replace the
material by a better type which increased the
production by 15% and the material cost by 5%.
Determine the material productivity before and after
improvement, then calculate the productivity growth.
92
Example 10

93
.

94
.

95
 .

We will suggest the company that they must go for this particular
software so that it is able to improve the productivity of labour as well
as the number of loans processed per dollar.

96
.

97
 Management Role in
Productivity Improvement

98
 How Managers improve Employee
Productivity?
There are many factors that can help manager to improve
the employee productivity at the workplace :
1. Accountability
Every employee needs to be well aware that he is
accountable for his actions and decisions.
This will help him work more accurate , take cautious
rather than reckless ‫ متهورة‬decisions, and not take
advantage of his place, position or relationship with his
superiors.
 How Managers improve Employee
Productivity?
2. Follow up
Managers often set targets and feel their job is done.
No, every target or milestone set needs to be followed up
as well, to see if the progress is sufficient and if not,
whether any interim measures can be taken before it is
too late to salvage ‫ إنقاذ‬a situation.
It also keeps the employee on track, ensuring there is
consistent effort throughout the lifetime of the project
 How Managers improve Employee
Productivity?
3. Manage the work force but avoid
micromanagement
It is well known that a large pool of employees
does need to be managed, provided direction
and given assistance. But with this they must
also be trusted, given freedom to operate in their
style and adopt measures which they think are
the best to deliver results.
 How Managers improve Employee
Productivity?
3. Manage the work force but avoid
micromanagement
This freedom to act helps to keep them encouraged,
motivated and happy in the belief that they are trusted.
Employees need to think for themselves, analyze the
consequences of every decision or action to be able to
give their best to their jobs. And the employers must
make it possible for their workers to do so.
 How Managers improve Employee
Productivity?
4. Encourage, motivate, reward and recognize
The employer must ensure that on his part he
always has words of encouragement for his staff.
Encouraging them helps them move forward and
do even better, and makes the worker feel happy.
Innovative ways of motivating them.
 How Managers improve Employee
Productivity?
4. Encourage, motivate, reward and recognize
Rewarding the hard work put in by employees
makes them continue to work in the same
fashion, and if the employee feels that his work is
not appreciated in words or in material terms, he
may gradually stop doing so, since he may feel
that others working less are given the same too,
so he need not work more.
 How Managers improve Employee
Productivity?
4. Encourage, motivate, reward and recognize
Rewards, and other ways of keeping employees
happy makes them feel that their effort is being
recognized and that they are needed by the
company. Without these, they may soon start
looking for greener pastures and new jobs.
 How Managers improve Employee
Productivity?
5. Reach out to employees by seeking them
out
Every employee loves to feel he has the ears of
the management who will recognize him and
listen to what he says.
A bit of effort to reach out helps them all do
better.
If this extends beyond the work place it may
prove to be even more encouraging to increase
employee productivity.
 How Managers improve Employee
Productivity?
6. Demand realistic targets
Employers need to set realistic goals that are
within the limits of achievement. While an
aggressive employer may want his people to
outstretch themselves to achieve farfetched ‫بعيدة‬
‫ المنال‬goals, it may also burn them out.
 How Managers improve Employee
Productivity?
7.Team work
Team work always helps in increasing workplace
productivity since there is more input in the form
of more ideas and minds at work. Successful
team building and working together is bound to
bring out the best out of the employees who may
also then compete with each other ensuring the
business is the winner.
 How Managers improve Employee
Productivity?
8. Ensure that people enjoy their work
The best performing employee is the happy
employee, and the employer has to find ways of
making his people happy. Besides working
conditions and the work culture implemented, he
has to devise ways of making the work seem
challenging and interesting rather than boring.
 How Managers improve Employee
Productivity?
9. Break the monotony and rotate
While employers assign tasks according to an
employee’s core competence, even the task they
are best at, can make an employee bored and
his work seem monotonous. This monotony can
be broken with rotation and giving people new
tasks and exposure to other divisions.
This adds their learning and helps them get a
holistic view of the business.
 How Managers improve Employee
Productivity?
10. Courses and improvement options
Employees are delighted when they can enhance
their skills and get additional learning
opportunities sponsored by the employer. This
helps them learn, feel indebted for the money
being spent on them, which also adds to their
resume, and are obliged to perform better by
applying all the knowledge gained in these
courses.
 How Managers improve Employee
Productivity?
11. Spend less time on meetings and more on
action
The current trend to have more meetings and
discussion rather than spending more time
working to achieve results, leads to time loss.
Meetings for reviews and sharing of ideas can be
limited and kept short.
Employees should have more time to show
results.
 How Managers improve Employee
Productivity?
12. Tools and equipment to raise productivity
Finally, the workplace must have the best
machinery, devices and equipment that yield
error free results in the minimum possible time.
Efficient electronic equipment with no
connectivity issues and breakdowns will help to
save time. They should take the place of paper
work, and yield fast results. Some of these
include:
 How Managers improve Employee
Productivity?
12. Tools and equipment to raise productivity
• Smart phones,
• Laptops,
• Tablet computers
• Latest applications and software that offers
quick connectivity and access
 How Managers improve Employee
Productivity?
12. Tools and equipment to raise productivity
Thus the idea is to have devices that enhance
efficiency and subsequently productivity at the
work place. The devices help to reduce the
response time, improve customer service and
cutting costs, all imperative for workplace
productivity.
 How Managers improve their Productivity?
5 Ways to Improve Your Productivity in the Office
It is possible to find extra time in your day simply by
reorganizing the way in which you approach the tasks
that fall within your responsibility. Take a look at each
of the following areas of your working life and see
where you can make improvements which will allow
you to put more time into the things you really need to
focus your attention on.
 How Managers improve their Productivity?
1. Communication
When you are communicating with staff and clients,
make sure that all your instructions and information
is understood the way you intend it to be.
With communication, clarity is the number one
objective. By keeping the language you use simple,
you increase your chances of having your message
understood.
 How Managers improve their Productivity?
1. Communication
Just by speaking clearly, concisely and checking that
the person you are communicating with has
understood what you have said, you can save time
by getting what you need first time.
 How Managers improve their Productivity?
2. Planning
This is something that is needed for both repeat
projects and larger projects.
Keep a yearly planner on your desk that you record
repeat projects (annual/monthly/etc) on so that you
can see at a glance when you need to start collecting
information for them.
 How Managers improve their Productivity?
2. Planning
With larger projects, plan the entire project at the
beginning. Break it down into smaller steps and assign
a date by which each step should be completed.
Delegate any of the project that can be done by
someone else, but keep it closely supervised as to
who is doing what and when you need it completed by.
 How Managers improve their Productivity?
3. Prioritizing
Jumping around from one project to another, not
feeling as if you have accomplished anything each day
or constantly rushing to finish on deadlines is a sign
that you need to reorganize how you approach your
task scheduling and work prioritizing strategy.
Each morning go through your in box and prioritize its
contents.
 How Managers improve their Productivity?
3. Prioritizing
Once you know what has to be done, how urgently it is
needed, and how long it is likely to take to complete,
add the tasks in order of importance to your work
schedule for the day. When new tasks come in,
prioritize any items that need attention, and then add
these to your work schedule.
 How Managers improve their Productivity?
3. Prioritizing
At the end of each month take a look at the projects
that are known for the month ahead and start to
provisionally schedule when you might start working
on these so that you start the month already thinking
about what needs to be done.
 How Managers improve their Productivity?
4. Eliminate Procrastination ‫التسويف‬
• Time thief
• Identify the tasks you don’t want to do them.
• Consider why you don’t want to do them.
Perhaps they are too large, too boring, or just seem
like a waste of your time.
 How Managers improve their Productivity?
4. Eliminate Procrastination ‫التسويف‬
• Find solutions, such as :
- breaking larger projects down into smaller pieces
- scheduling the boring tasks for first thing in the
morning
- delegating any tasks that are so routine
 How Managers improve their Productivity?
5. Delegation
If you have staff employed to help you, delegate some
of your routine tasks which you can quickly instruct
someone else to take responsibility of. Remember to
communicate the instructions clearly and ensure they
are understood before leaving the task in the
employees care. Once you delegate something, just a
quick review to ensure it’s done correctly and on time
is all that you should need to do.
 Productivity improvement techniques
Productivity improvement techniques can be
applied effectively in enterprises of any size, from
one-person companies to corporations with
thousands of staff.

They were mostly pioneered in the Toyota

production system. Some of these techniques
are explained below.
 Productivity improvement techniques
1- JIDOKA

Jidoka is a Toyota concept aimed at describing the

man-machine interface such that people remain free to
exercise judgement while machines serve their
purpose.

Machine jidoka incorporates fail-safe devices on

machinery to prevent mulfunction.

Human jidoka allows operators to stop the process in

the event of a problem.
 Productivity improvement techniques
1- JIDOKA

Workers have the ability to stop the line if:

• equipment malfunctions;

• defects are found;

• work delays occur; or

• materials or parts shortages occur.

 Productivity improvement techniques
1- JIDOKA

The following three principles are central to the jidoka

way of working.

• Do not make defects.

• Do not pass on defects.

• Do not accept defects.

 Productivity improvement techniques
1- JIDOKA

Jidoka has two separate meanings – automation and

autonomation.

Automation refers to changing from a manual process

to a mechanised process. The problem with this is that
there is often no device for stopping the process if a
malfunction occurs.
 Productivity improvement techniques
1- JIDOKA

Autonomation’, a term coined by Toyota, refers to

automation that automatically controls defects. Jidoka
is often referred to as ‘automation with a human mind’.
Autonomation technically refers to a technique for
detecting and correcting production defects that
combines a mechanism for detecting defects with
another for stopping the line or machine when defects
occur.
 Productivity improvement techniques
1- JIDOKA

This defect detection system automatically or manually

stops the production operation or equipment whenever
an abnormal or defective condition arises. Any
necessary improvements can then be made by directing
attention to the stopped equipment and the worker who
stopped the operation. The jidoka system shows faith
in the worker as a thinker and allows all workers the
right to stop the line on which they are working.
 Productivity improvement techniques
2- HEIJUNKA

Heijunka (hi-JUNE-kuh) is a Japanese word for

production leveling ( smoothing). It is part of the lean
methodology of process improvement that helps
organizations match unpredictable customer demand
patterns and eliminate manufacturing waste by leveling
the type and quantity of production output over a fixed
period of time.
 Productivity improvement techniques
How Does Heijunka Work?

It may be easier to understand Heijunka and how it can

improve the production process by contrasting it with the
traditional production method of batching.

Batching produces large lots of products without taking

into account the fluctuation of customer demand. The
output that is not immediately purchased by the customer
is placed in inventory.
 Productivity improvement techniques
How Does Heijunka Work?
The traditional method of batching has several drawbacks:

• Customer demand is rarely predictable. When customers follow

an unanticipated buying pattern, the manufacturer may
experience confusion and disorder.

• The demand on upstream processes is erratic.

• The cost of unsold goods held in inventory decreases

profitability.
 Productivity improvement techniques
How Does Heijunka Work?

Heijunka requires adjusting production to mirror customer

demand as closely as possible. When the company makes
all product types and maintains a small inventory buffer
throughout a year, there is greater flexibility to meet
changing customer demand patterns. The buffer inventory
will be liquidated during the year and production will be
able to meet periods of peak demand and erratic customer
purchasing.
 Productivity improvement techniques
How Does Heijunka Work?

Organizations that implement a Heijunka leveling schedule

in their manufacturing processes can create a number of
advantages

• Flexibility to produce what the customer wants when

they want it.

• Reduced inventory of unsold goods.

• Balanced use of labor and machines.

 Productivity improvement techniques
How Does Heijunka Work?

Heijunka also has the capability of reducing lead times

by minimizing time losses due to changeovers.
Multiple products are assembled simultaneously
instead of first dedicating the line to one product then
changing the entire line to produce another.
 Productivity improvement techniques
3- JUST-IN-TIME

The American Production and Inventory Control

Society (APICS) defines just-in-time (JIT) as:

“A philosophy of manufacturing based on planned

elimination of all waste and continuous improvement
of productivity”.
 Productivity improvement techniques
3- JUST-IN-TIME

It is a methodology aimed primarily at reducing flow

times within production system as well as response
times from suppliers and to customers.

Just in Time (JIT), as the name suggests, is a

management philosophy that calls for the production
of what the customer wants, when they want it, in the
quantities requested, where they want it, without it
being delayed in inventory.
 Productivity improvement techniques
3- JUST-IN-TIME

So instead of building large stocks of what you think

the customer might want you only make exactly what
the customer actually asks for when they ask for it.
This allows you to concentrate your resources on only
fulfilling what you are going to be paid for rather than
building for stock.
 Productivity improvement techniques
3- JUST-IN-TIME

Within a Just in Time manufacturing system, each

process will only produce what the next process in
sequence is calling for.
 Productivity improvement techniques
3- JUST-IN-TIME

In traditional manufacturing we try to predict what the

customer will want and we will create a forecast (or
guess) against which we will produce our products.
We will also try to produce those products in large
batches as the belief is that will make machines and
processes more efficient, especially if those machines
require a long time to setup.
 Productivity improvement techniques
3- JUST-IN-TIME

This will typically result in long lead times through our

processes, huge amounts of Work In Process (WIP)
stocks and also large quantities of finished goods
stocks that have not yet been ordered by our
customers.
 Productivity improvement techniques
3- JUST-IN-TIME

A Just in Time system on the other hand will seek to

use simple visual tools known as Kanbans to pull
production through the processes according to what the
customer actually takes. It massively reduces the
amount of stock held and will reduce lead times by a
significant amount, often from weeks to just a few
hours or days
 Productivity improvement techniques
3- JUST-IN-TIME

The basic aim of JIT in a factory is to:

• reduce lead times

• minimise inventory

• reduce the defect rate to zero and

• accomplish all of the above at minimum cost

 Productivity improvement techniques
3- JUST-IN-TIME

The benefits of a JIT system

The following are some of the many benefits that you

could gain through the implementation of just in time:

1. Reduction in the order to payment timeline

2. Reduction in Inventory costs;

3. Reduction in space required

4. Reduction in handling equipment and other costs;

 Productivity improvement techniques
3- JUST-IN-TIME

The benefits of a JIT system

5. Lead time reductions

6. Reduced planning complexity

7. Improved Quality

8. Increased productivity

9. Problems are highlighted quicker

10. Employee empowerment;

 Productivity improvement techniques
4- KAIZEN

Kaizen is a Japanese word meaning gradual never-

ending improvement in all aspects of life. It represents
a Japanese approach to improvement and can be
interpreted as continuous improvement in all areas.
Kaizen is at the heart of quality improvements in
Japanese companies
 Productivity improvement techniques
4- KAIZEN

Kaizen relies on an investment in people. It is a

continuous series of small improvements made on
existing equipment or systems by the people who
actually work in that area. It does not rely on specialist
involvement but can be used to support those directly
involved in making the improvement.
 Productivity improvement techniques
4- KAIZEN

Important aspects of kaizen are the standardisation and

maintenance of the improvement, which are as crucial
to the process as the improvement itself. Improvements
must become standardised and maintained until further
improvements are made.
 Productivity improvement techniques
4- KAIZEN

There is a structured approach to kaizen-based

improvements and each step must be followed to
ensure lasting improvement. The approach proceeds in
the following steps.

1. Identify an opportunity

2. Analyze the process

.
 Productivity improvement techniques
4- KAIZEN

3. Develop an optimal solution

4. Implement the solution

5. Study the results

6. Standardize the solution

7. Plan for the future

 Productivity improvement techniques
4- KAIZEN

Kaizen generates small improvements as a result of

coordinated continuous efforts by all employees.
Kaizen events bring together a group of process
owners and managers to map out an existing process
and identify improvements that are within the scope of
the participants.
 Productivity improvement techniques
5- THE 5 Ss

The five S’s stand for five Japanese words;

• seiri (Sort - proper arrangement)

• seiton (Set in order )

• seiso (Shine - cleanliness)

• seiketsu (standardising)

• shitsuke (Sustain)
 Productivity improvement techniques
5- THE 5 Ss

The concept was developed by Osada in the early

1980s and is used to establish and maintain all aspects
of quality in an organisation. The 5 S’s are explained
in more detail below.
 Productivity improvement techniques
5- THE 5 Ss
1- Seiri (proper arrangement, sorting out)
- Make work easier by eliminating obstacles.
- Evaluate necessary items with regard to cost or other
factors.
- Remove all parts or tools that are not in use.
- Segregate unwanted material from the workplace.
- Define Red-Tag area to place unnecessary items that
cannot immediately be disposed of. Dispose of these
items when possible.
 Productivity improvement techniques
5- THE 5 Ss

2- Seiton (Set in order)

- Arrange all necessary items so that they can be easily

selected for use.

- Prevent loss and waste of time by arranging work

station in such a way that all tooling / equipment is in
close proximity.

- Make it easy to find and pick up necessary items.

 Productivity improvement techniques
5- THE 5 Ss

2- Seiton (Set in order)

- Ensure first-in-first-out FIFO basis.

- Make workflow smooth and easy.

- Place components according to their uses, with the

frequently used components being nearest to the work
place.
 Productivity improvement techniques
5- THE 5 Ss

3- Seiso (Shine - cleanliness)

• Shine equipment, tools and the whole workplace.

• Eliminate dirt, dust, oil, scrap and other foreign matter to

make the workplace clean.

• Adopt cleaning as a form of inspection. Cleaning exposes

abnormal conditions and corrects pre-failure conditions.

• Integrate cleaning into everyday maintenance tasks by all staff

 Productivity improvement techniques
5- THE 5 Ss

4- Seiketsu (standardising)

- Establish procedures and schedules to ensure the

consistency of implementing the first three ‘S’ practices.

- Develop a work structure that will support the new

practices and make it part of the daily routine.

- Ensure everyone knows their responsibilities of

performing the sorting, organizing and cleaning.
 Productivity improvement techniques
5- THE 5 Ss

4- Seiketsu (standardising)

- Use photos and visual controls to help keep everything

as it should be.

- Review the status of 5S implementation regularly using

audit checklists.

- Ensure standardizing color codes for usable items.

 Productivity improvement techniques
5- THE 5 Ss

5- Shitsuke (Sustain - discipline)

Also translates as "do without being told".

- Perform regular audits.

- Training and discipline.

- Self-discipline

- Follow the process, but also be open to improvement

 Productivity improvement techniques
5- THE 5 Ss

The 5S procedure is a process of defining the normal

to see the abnormal. Strong 5S programes can lead to
improved behavior because the abnormal becomes
much more obvious (or visual) on the shop floor. All
five of the five S’s can be accomplished with little or
no capital investment whilst the financial returns from
the resulting productivity improvements can be quickly
realized.
 Productivity improvement techniques
6- WASTE REDUCTION

The reduction of waste is a key area in the application

of low-cost productivity improvement ideas. Taiichi
Ohno originally developed the seven categories of
waste concept within a manufacturing organisation.
 Productivity improvement techniques
6- WASTE REDUCTION

The following list should be considered a complete

collection rather than a list of individual categories
of waste. Any waste minimization program should
aim to tackle all of the following rather than any one
in isolation.
 Productivity improvement techniques
6- WASTE REDUCTION

1- Overproduction

The aim of any manufacturing operation should be to

produce what the customer requires at the right time
and at the right level of quality. Producing more
than is required leads to undesirable stock levels.
 Productivity improvement techniques
6- WASTE REDUCTION

1- Overproduction

Some bonus systems that reward performance based

on targets exceeding what is actually required will
naturally encourage overproduction. In both cases
high stock levels and thus waste may result.
 Productivity improvement techniques
6- WASTE REDUCTION

2- Waiting Waste

It is categorised as waiting occurs in situations such as

the following:

• when raw materials wait before processing if they

are not delivered when required;

• when products wait internally between operations

because the flow of production is not smooth or
 Productivity improvement techniques
6- WASTE REDUCTION

2- Waiting Waste

balanced and operators are left waiting for work (and

so are not contributing or ‘adding value’ to the
product).

• when products wait for longer than necessary as

finished goods to be shipped to the customer if
delivery schedules are not optimised.
 Productivity improvement techniques
6- WASTE REDUCTION

3- Transportation Waste

Product movement within the manufacturing operation

is often unavoidable, but adds no value to the
finished item and so should be minimised wherever
possible. Transporting the product not only wastes
time and effort but can also result in damage during
transit. Transport waste is visible and can be easily
identified through product-flow studies.
 Productivity improvement techniques
6- WASTE REDUCTION

3- Transportation Waste

Drawing a physical diagram of the production flow

and clearly marking product movement is one
method of revealing transport waste. Often, re-
location of key operations can yield large savings in
transportation wastes.
 Productivity improvement techniques
6- WASTE REDUCTION

4- Processing Waste

It is wasteful to use tools and machinery that are not

the most appropriate – for instance, CNC machinery,
with its vast capability and flexibility, for producing
a simple component. This type of waste can also be
related to machines or processes that do not have the
capability to produce the required level of quality.
 Productivity improvement techniques
6- WASTE REDUCTION

5- Inventory Waste

The ‘evils’ of stock are well documented, and include:

• unnecessary storage

• unnecessary transportation

• interruption to the smooth flow of goods

• deterioration of stock.

• Stock losses
 Productivity improvement techniques
6- WASTE REDUCTION

6- Motion Waste

Motion does not refer to transport of product but more to

the easy aspects of work to be carried out. As well as
placing undue effort on the individual carrying out the
operation, poor workplace design can lead to inefficient
methods of working. As with transport waste, areas for
potential improvement can be identified through time-
and-motion studies of particular operations.
 Productivity improvement techniques
6- WASTE REDUCTION

7- Defects

The production of non-conforming product is a

fundamental waste as the output will have to be either
reworked or scrapped. Both of these options carry their
associated costs and may be affected by any of the
above waste categories.
 Productivity improvement techniques
6- WASTE REDUCTION

And a few more types of waste...

8- Confusion — missing or misinformation. Confusing

goals & metrics.

9- Unsafe work conditions

10- Underutilized human potential — skills, talents, and

creativity
 Productivity improvement techniques
7- VISUAL MANAGEMENT

Visual control is an essential part of a lean manufacturing

environment. It can be applied to all levels and all
departments within an organisation and requires the
commitment and involvement of everyone. Everyone
involved should be able to see and understand the
status of the system.
 Productivity improvement techniques
7- VISUAL MANAGEMENT

What is Visual Management ?

• “Management by eyes”

• Highlighting the abnormal condition

• Clarity and Transparency

 Productivity improvement techniques
7- VISUAL MANAGEMENT

Aim of a visual system

Make the abnormal obvious so that action can be targeted

to correct any irregular situations.

Key areas of information displayed in a visual factory

1. Safety 4. Cost

2. Quality 5. People

3. Production
 Productivity improvement techniques
7- VISUAL MANAGEMENT

1. Safety

• number of lost-time accidents

• number of near misses

• details of recent risk assessments

• personal protective equipment (PPE) stored in a labeled

storage area
 Productivity improvement techniques
7- VISUAL MANAGEMENT

2. Quality

• defect rate (by shift, by area, by department, for

example)

• details of recent root cause analysis

• recent quality issues

 Productivity improvement techniques
7- VISUAL MANAGEMENT

3. Production

• target production levels

• actual production levels

• recent production issues

 Productivity improvement techniques
7- VISUAL MANAGEMENT

4. Cost

• key consumables, both direct and indirect

• utility consumption

• overtime worked

• rework and scrap

 Productivity improvement techniques
7- VISUAL MANAGEMENT

5. People

• team members

• training records

• team or personal achievements

 Productivity improvement techniques
7- VISUAL MANAGEMENT

Implementing Visual Management

1- Make the work visible and obvious

2- Make the current performance against customer

requirements visible

3- Make Waste jump out at you

 Productivity improvement techniques
7- VISUAL MANAGEMENT

Implementing Visual Management

1- Make the work visible and obvious

Make the work visible, organised and easy to see! Avoid

hiding the work in different locations.
 Productivity improvement techniques
7- VISUAL MANAGEMENT

2- Make the current performance against customer

requirements visible

• Do we have a target and how are we collectively doing

against that target?

• If you go to a sports match there is generally some sort

of scoreboard to tell you how each team is doing and
what the score is.
 Productivity improvement techniques
7- VISUAL MANAGEMENT

3- Make Waste jump out at you

• By having a place for everything and everything in its

place, abnormality becomes easy to see.

• For instance, if we size our storage to take only the

items we require, and there is excess, then there is no
place to store the excess.
 Productivity improvement techniques
7- VISUAL MANAGEMENT

3- Make Waste jump out at you

• What equipment do we use and is it clear where it is

stored and where it should go back to once finished
with?
 Productivity improvement techniques
7- VISUAL MANAGEMENT

Visual Management Techniques

1. Andons
2. Cooler Coding
3. Signage

4. Floor Marking
5. Shadow Boards
 Productivity improvement techniques
7- VISUAL MANAGEMENT

Visual Management Techniques

1. Andons
An andon is a device to indicate that the

process has stopped for some reason.

This can be as simple as a coloured block that
you place on top of your workstation , or a flashing
light that is connected to a central support resource.
 Productivity improvement techniques
7- VISUAL MANAGEMENT

2. ColourCoding
Creating a colour code that everyone

understands can have great visual impact.

3. Signage
Professional signage can be a great
way to create visual control.
 Productivity improvement techniques
7- VISUAL MANAGEMENT

4. Floor Marking
Indicate what should go where.

5. Shadow Boards

By creating a shadow around an

item then it is easy to see where

the item should be returned.

 Productivity improvement techniques
7- VISUAL MANAGEMENT

What You need to do Now?

• If you want to take action about Visual Management,

here is what you have to do

• Have a walk through your workplace.

• Stand for a moment and look over your area.

 Productivity improvement techniques
7- VISUAL MANAGEMENT

• Is it obvious what is going on?

• If you were a stranger, could you work out what is

happening, and how well things are going?

• Is there little useful up to date information displayed in

an eye catching interesting, memorable way.
 Productivity improvement techniques
7- VISUAL MANAGEMENT

• Is there good signage. Is it obvious where things should

go?

• If you cannot answer "yes" to all of these questions

then it is time to get started in creating a visual
workplace