Review of THE CONCEPT AND IMPORTANCE OF PRODUCTIVITY

Review of "THE CONCEPT AND IMPORTANCE OF PRODUCTIVITY"

The chapter by Kenneth E. Smith, H. B. Maynard and Company, Inc. Pittsburgh, Pennsylvania

in Maynard's Handbook of Industrial Engineering 5th Edition

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Productivity is generally considered to be the ratio of output to input.The concept is simple, yet there were difficulties in measurement. Historically, it has been the variety of input that has given measurement difficulties. Today, even the output side is giving measurment difficulty. The production has to meet customer needs, quality expecations and time of delivery.

PRODUCTIVITY DEFINED

Total Productivity expresses the relationship between the quantity of goods and services produced (output) and the quantity of labor, capital, land, energy, and other resources to produce it (input). But more popularly, productivity is measured between output and a single measure of input, such as labor or capital.

 

There is  a growing realization that simply producing large quantities of a standard product does not necessarily mean one is productive. Organizations must produce what the marketplace needs, when it needs it, and at a competitive price.The ideal of meeting customer needs and expectations without error or waste has now entered the vocabulary. This suggests that anything produced that the market does not want cannot be considered an output when calculating productivity. So now the output side of the calculation is more complex now.

 

Labor Productivity

Industrial engineers have their primary focus on the labor productivity. When considering labor productivity, the input is simply the quantity of labor expended. In a more sophisticated analysis, the industrial engineer will also consider things such as how effective the labor is by measuring performance, utilization, and method levels.

The industrial engineer typically only considers the value of the parts produced or the total standard hours produced as the output. Smith criticizes the role of IE by writing "The parts produced might sit in inventory, be sold at a discount, or may never be sold. Unless more attention is given to the output, making sure what is produced is meeting a customer demand, the industrial engineer will only be helping to improve the production of waste." Is Smith right in making this statement. Smith is confusing between industrial engineer's work of improving the potential of an operator to produce more on a given task and the production plan which is the responsibility of production manager. Improvement in technique does not mean that waste will be produced.

 

 

THE INDUSTRIAL ENGINEER’S PERSPECTIVE ON PRODUCTIVITY

 

In the past, the mission of industrial engineers has generally been to increase the output of all of the available resources, machines, materials, men etc.   The assumption was that increased output meant increased productivity.

The shift from mass production concepts to lean production refocuses the industrial engineer’s role. Many of the tools remain the same, but the context in which they are applied has changed. Rather than simply improving operations to produce more effectively, industrial engineers have to consider the customer’s demands also develop their productivity improvement programs. The industrial engineer must assess the entire value stream, from order taking to shipment to collection of receipts, and then help to facilitate
improvements that will enhance the flow of value to the customer and the organization.

 

Smith wrote 'The industrial engineer’s perspective on productivity has been somewhat narrow, often
focused on increasing output by improving labor productivity on the shop floor... Now the industrial engineer must serve as productivity engineer. It is imperative that the industrial engineer understand the definition of productivity as it applies to the organization being served and diligently use the skills and talents he or she possesses to make improvements. Furthermore, the industrial engineer must become the champion of productivity improvement, helping others to understand the definition, the importance of making improvements, and how those improvements can be made."  The need to differentiate between industrial engineering department and individual industrial engineer is important. Industrial engineering department needs to have individual industrial engineers who focus on human resource and improve its potential productivity on various tasks undertaken by the company. Similarly, the department also needs IEs who can improve the productivity other resources. In addition it needs attention to plan for total productivity on definition chosen by the organization. I personal now advocate at least three section in IE departments to focus on human effort, system efficiency and system design and improvement management activities.

 

Productivity analysis is the regular review of the organization’s definition of productivity and an assessment of progress. If a reporting mechanism is in place, then it should be reviewed regularly. If there is not a reporting system, then industrial engineering should be given the task of  conducting meaningful assessments on a regular basis.As a result of productivity analysis, productivity improvement opportunities have to be outlined. The level of management attention to productivity will be dictated by the organization circumstances. But top management has to ensure that productivity is part of the annual as well as long range plans.

 

 

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