PRODUCTIVITY Productivity refers to the physical relation between the quality produced (output) and the quantity of resource

used in the course of production (input) Productivity (P) =output (O)/input (I) Output implies production while input means land, labour, capital, management etc. Productivity measures the efficiency of the production system. Higher productivity means producing more from a given amount of input or producing a given amount with minimum level of inputs. In other words the more the output from one worker or one machine (or a piece of equipment) per day per shift, the higher is the productivity. Higher productivity is not to be taken in sense of higher workloads or faster machines alone but it is always elimination of waste of all type of labour (time and skill) machine time, capital, and material management etc. Productivity = Output per unit of input Productivity and production are two different terms. Productivity is a relative term indicating the ratio between total output and the total inputs used therein on the other hand production is an absolute concept, which refers to the volume of output. The volume of production may increase but productivity may decline due to inefficient use of resource. Efficient use of input may increase productivity but the volume of production may not increase. Production refers to the end result of production system whereas productivity reflects its efficiency. SIGNIFICANCE Benefits derived from higher productivity are as follows: 1. It helps to cut down cost per unit and thereby improve the profits. 2. Gains from productivity can be transferred to the consumers in form of lower priced products or better quality products. 3. These gains can also be shared with workers or employees by paying them at higher rate. 4. A more productive entrepreneur can have better chances to exploit export opportunities. 5. It would generate more employment opportunities. MEASUREMENT OF PRODUCTIVITY Productivity may be measured either on aggregate bases or on individual basis, which are called total and partial productivity respectively.

Partial productivity Indices, depending upon factors used, it measures the efficacy of individual factor of production. Following are productivity indices for individual inputs.

FACTORS INFLUENCING PRODUCTIVITY

Productivity is outcome of several interrelated factors, which may broadly be divided into two categories- human factors and technological factors. 1. Human Factors: Human nature and human behaviour are the most significant determinants of productivity. Human factors include both their ability as well as their willingness: (a) Ability to work: Productivity of an organization depends upon the competence and caliber of its people-both workers and managers Ability to work is governed by education, training, experience, aptitude, etc. of the employees. (b) Willingness to work: Motivation and morale of people are very important factors that determine productivity. These are affected by wage incentive schemes, labour participation in management, communication systems, informal group relations, promotion policy, union management relations, quality of leadership, working hours, sanitation, ventilation, subsidized canteen, company transport, etc.

2. Technological Factors: Technological factors exert significant influence on the level of productivity. These include the following: (a) Size and capacity of plant (b) Product design and standardization (c) Timely supply of materials and fuel (d) Rationalization and automation measures (e) Repairs and maintenance (f) Production planning and control (g) Plant layout and location (h) Materials handling system (i) Inspection and quality control (j) Machinery and equipment used (k) Research and development (l) Inventory control 3. Managerial factors: The competence and attitudes of managers have an important bearing on productivity. In many organizations, productivity is low despite latest technology and trained manpower. This is due to inefficient and indifferent management. Competent and dedicated managers can obtain extraordinary results from ordinary people. Job performance of employees depends on their ability and willingness to work. Management is the catalyst to create both. Advanced technology requires knowledgeable workers who in turn work productively under professionally qualified managers. No ideology can win a greater output with less effort. It is only through sound management that optimum utilization of human and technical resources can besecured. 4. Natural Factors: natural factors such as physical, geographical and climate conditions exert considerable influence on productivity, particularly in extreme climates (too cold or too hot) tends to be comparatively low. Natural resources like water, fuel and minerals influence productivity. 5. Sociological Factors: Social customs, traditions and institutions influence attitudes towards work and job. For instance, bias on the basis of caste, religion, etc., inhibited the growth of modern industry in some countries. The joint family system affected incentive to work hard in India. Close ties with land and native place hampered stability and discipline among industrial labour. 6. Political Factors: Law and order, stability of Government, harmony between States, etc. are essential for high productivity in industries Taxation policies of the Government influence willingness to work, capital formation, modernization and expansion of plants etc. Industrial policy affects the size, and capacity of plants. Tariff policies influence competition. Elimination of sick and inefficient units also helps to improve productivity. 7. Economic Factors: Size of the market, banking and credit facilities, transport and communication systems, etc. is important factors influencing productivity. Product Design

Product design is the mother of all operations processes in an organisation. The processes for manufacture, the planning of production, the processes and checks for quality depend upon the nature of the product. One may say that it all starts with the design of the product. Even the logistics or plain shipment of the product depends upon how or what the product has been designed for. Design gives the blueprint. A products design has tremendous impact on what materials and components would be used, which suppliers will be included, what machines or what type of processes will be used to manufacture it, where it will be stored, how it will be transported. The targets customers have also been of enormous importance while designing a product. For instance, a simple product like toothpaste which is also designed to act as a mouth freshener needs to be placed, advertised, promoted and priced differently. Thus, marketing is also impacted by product design. A product design reflects a companys overall strategy.

Generating New Product Ideas:

New product ideas may come from customers, dealers, in company sources including the market research group & external research organization. Customers problems are the most fertile ground for the generation of new product ideas. In a variety of product, ranging from shampoos to computers, company workforce, market research staff, R&D staff & salesmen are also sources of new product ideas. Market research group are a particularly useful sources. They conduct frequent studies on the consumers, products, competition etc. These studies often reveal product gaps- gaps between existing supplies of products. Gravity techniques like brainstorming are also used for product idea generation. In brainstorming, a small group of people is encouraged to come up with ideas on a specified problem. Sometimes new product ideas come out just as a matter of happening. Eg. Portable stereo cassette player of Sony of Japan. (2) Idea Screening: In this stage, various new products ideas are put under rigorous screening by evaluation committees. Answers are sought like: It there a felt need for the new product? It is an improvement over the new product? etc. (3) Concept Testing: Concept testing is different from market test / test marketing. What is tested at this stage is the product concept itself, whether the prospective customers understand the product ideas, whether they are receptive forwards the ideas; whether they actually need a product. This exercise helps the firm to thrash out much of the vagueness associated with the new product idea. Concept testing is of special importance when a totally new product in contrast to a mee too product is being planned for introduction. (4) Business / Market Analysis: This stage is of vital importance because several important decisions regarding the project are undertaken based on the analysis done at this stage.

This stage will decide whether from the financial & marketing point of view, the project is worth proceeding with. Investment analysis & profitability analysis of the project under difference assumptions are made at this stage. (5) Estimating the Demand for New Product: Firms usually take up estimating the demand for the new product as a part of business analysis / market analysis. There are 2 methods to estimate demand of new products :(a) Substitution method (b) End use method In substitution method, the demand for the existing product is forecasted using standard forecasting method. Based on that, an idea of the demand for the new product is gained. Analysis will show which products & market are open for substitution by the new product. The estimated demand for the existing product can serve as the maximum limit for the demand for the new product. In, end use method, products that have an altogether new end use do come to the marketer once in a while. The only way to assess the demand for such products is to define the end use of the new product & to locate the potential customers for it. The aggregate of potential customers in each use category is taken as the potential demand in that category. By adding the demand in the various use categories, one can get an indication of the total potential demand for the new product. This is to be taken as the upper limit of potential. In this method, the forecaster has to be particularly cautious in defining the end use for the product. (6) Actual Development of the Product : In this stage, the firm develops the product as such. In the actual development, production & marketing departments are actively involved besides R & D. (7) Market Test: Now, the new product has to be tried out in selected market segments. Market test is essentially a risk control tool. It is experimental marketing at minimum cost & risk. When firms decide on a full scale manufacturing & marketing of the product on the basis of the results of the experiment, it helps avoid costly business errors. (8) Test Marketing: In test marketing, the new product, with the support of the chosen marketing mix is actually launched & marketed in few selected cities / towns / territories. Test marketing needs careful handling. Care is required in the first place in selecting the test markets. Test marketing is also a time consuming process, it has to be carried out for a fairly long duration in order to obtain a reliable indications. Eg. HUL introduced organics, but failed. (9) Commercialization: At this stage, the company takes the decision to go in for large scale manufacturing & marketing of the product. At this stage the company fully commits itself to commercialize the new product with the required investment in manufacturing & marketing.

THE THREE SS
The three Ss refer to standardization, simplification and specializationthree related subjects that are at the root of any economic analysis of product design. The three Ss can be defined as follows:

Standardization is the process of defining and applying the conditions necessary to ensure that a given range of requirements can normally be met with a minimum of variety and in a reproducible and economic manner on the basis of the best current technique. Simplification is the process of reducing the number of types of products within a definite range. Specialization is the process whereby particular firms concentrate on the manufacture of a limited number of products or types of products. The three processes are usually linked together and develop as a logical sequence. From a wide range of requirements it is first necessary to sort out the essential features, define them, and then work out in a scientific manner, the minimum variety required to meet these essentials. This is a process of standardization, and it is mainly an engineering process. Within a given range, whether covered by standards or not, a process of simplification can be carried out with the view of reducing the variety of products or materials that are produced or purchased. This is both an economic and an engineering process, and specialization is one of its natural outcomes. STANDARDIZATION Standardization covers a wide field of activity, which may be described by the following main categories: Physical dimensions and tolerances of components within a defined range. Rating of machines or equipment (in units of energy, temperature, current, speed, etc.). Specification of physical and chemical properties of materials. Methods of testing characteristics or performance. Methods of installation to comply with minimum precautionary measures and convenience of use. The first three categories relate to limitation of the number of sizes or grades and some aspects of quality, one of the important aims being interchangeability of components or assemblies. Standardization and interchangeability impose certain limitations on the designer and demand higher skill and effort in planning. Another prerequisite of interchangeability is the precision required of the manufacturing process in order to obtain production within the specified tolerances. This implies that production control has to be tightened so that any deviations from the given standards will be immediately noticed and appropriate action can be taken to avoid the process getting out of control. Standardization has, however, many advantages, some of which may be briefly listed below: Reduction of material waste and obsolescence. Concentration of effort in manufacturing; hence, simplification and specialization. Reduction in inventories, both of materials, semifinished, and finished products. Reduction in bookkeeping and other paper work. Lowering the grades of skill required in manufacture and assembly. Reduction in price; hence expansion of the market. Reduction of repair and maintenance costs.

SIMPLIFICATION Simplification is a constant process of reducing the number of varieties and grades in product category. A production engineer prefers little variety; minimum set ups, and long runs. Simplification enables the production department to improve planning, achieve higher rates of production and machine utilization, and simplify control procedures. The salesman, on the other hand, strives to satisfy the customer by giving him a choice or by offering him the nearest to what he wants. The pros and cons simplification are given in the accompanying listing. SPECIALIZATION A key factor in making mass production possible is specialization, the dividing of work into its simplest components so workers can concentrate on performing each task. The father of this approach was Frederick W. Taylor, whose efforts in the late nineteenth and early twentieth centurys were devoted to achieving industrial efficiency by reducing and simplifying jobs. Firms conduct time-and-motion studies to increase worker productivity. The studies help determine the rate at which a job should be done and the most efficient sequence and number of motions needed to accomplish a specific task.