Monday, May 14, 2018

Technology and Productivity - Role of Industrial Engineering


Organisation of Markets
Authors: Jan De Loecker (Princeton), Allan Collard-Wexler (Duke University)

The productivity impact of new technology: evidence from the US steel industry

The introduction of new production processes can have dramatic effects on aggregate productivity within an industry.

When we evaluate the impact of a drastic technological change on aggregate productivity growth, we control for other potential drivers of productivity growth, including international competition, geography, and firm-level factors such as organization and management.


By Steven Globerman
Western Washington University
Occasional Paper Number 23
 May 2000$file/op23e.pdf


The Effect Of Technology Use On Productivity Growth

Robert H. Mcguckin , Mary L. Streitwieser  & Mark Doms
Journal - Economics of Innovation and New Technology
Volume 7, 1998 - Issue 1
Pages 1-26

We find that establishments that use advanced technologies exhibit higher productivity. This relationship is observed in both 1988 and 1993 even after accounting for other important factors associated with productivity: size, age, capital intensity, labor skill mix, and other controls for plant characteristics such as industry and region.

The Impact Of Technology Adoption On Firm Productivity
Myung Joong Kwon  & Paul Stoneman
Economics of Innovation and New Technology
Volume 3, 1995 - Issue 3-4, Pages 219-234

Three versions of the model relating productivity and technology adoption with varying degrees of endogeneity are developed and then tested upon a data set relating to the adoption of five different process technologies by 217 firms in the UK engineering industry over the period 1981–1990. All the results indicate that technology adoption has a positive impact on output and productivity.


Tweeddale J.W - Technology and Productivity

Tweeddale J.W. (1982) Productivity Enhancement: An Approach to Managing Beneficial Change in a Military-Industrial Work Setting. In: Mensch G., Niehaus R.J. (eds) Work, Organizations, and Technological Change. NATO Conference Series (II Systems Science), vol 11. Springer, Boston, MA  Page 259

Created in 1978, as a reflection of growing management concern,
The Navy's Productivity Program was created in 1978 as management identified productivity enhancement as a key performance area, The program establishes the framework for improvement.
A network of productivity principals has been established in higher echelon Navy and Marine Corps commands with a Director of Productivity Management located in the Navy Secretariat.

The Navy Productivity Program, as presently structured, explores three major areas of opportunity. These are technological advancement, organizational development and process management.


Productivity improvements derive from changes in production methods, materials and machinery which "in turn stem from the accumulation of scientific and technological knowledge. The technology factor has been credited with at least 40 percent of the growth in productivity over the past five decades of domestic industrial experience.

The thoughtful integration of  productivity-beneficial technology to the Navy's industrial base represents a critical dimension of the Productivity Enhancement Program. This process requires enhancement of the capacity of the organization to accommodate innovation and to handle uncertainty.

To create a climate which encourages technological venture and innovation, a number of funding mechanisms have been introduced.

Cost of Ownership Reduction Investment (COORI) Program

Established as a part of the Navy's FY-82 budget planning, this program creates a funding base to support high payback capital investment opportunities. Candidate projects are placed in competition
by operating managers during budget planning (approximately two years before budget approval).

Fast Payback Program

The Fast Payback Program is designed to create a funding mechanism through which managers can fund high payback projects with short lead time provided the projects satisfy the following criteria:
1. The project costs less than $300,000 ($100,000 non-NIF).
2. The project has a payback of less than three years (two years non-NIF).

Funds are made available to support the Fast Payback Program through two funding mechanisms. These are:

Naval Industrial Fund NIF. Naval Shipyards, Air Rework
Facilities NARFs, Public Works Centers (PWCs) are among many of the Navy's industrial organizations which are NIF funded. Under this funding concept, "earnings" are credited to an industrially funded activity by charging fleet customers for goods and services

Procurement Funds - A productivity fund is created in procurement funds to take care of non-NIF activities.

Manufacturing Technology Program

This program explores the application of emerging technology (1) to reduce procurement and life cycle costs and (2) to increase productivity of existing assets.

Office of the Secreatary of Defense (OSD) Sponsored Productivity Enhancing Capital Investment (PECI) Program

1. Min investment $1 million.
2. At least 50 percent of the ROI has to come from Labor savings.
3. Payback period - max 4 years.
4. IRR - min 10%

The above is a good description of project schemes for encouraging project that promise productivity improvement.

Updated  15 May 2018, 28 November 2017

No comments:

Post a Comment