The Productivity Exigency

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The Productivity Exigency Emerging Trends
V.Suresh Chandra
Indian Business Academy Bangalore
sureshvutha@gmail.com










The Productivity Exigency

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As developed and developing countries clamor for more wealth creation, the strategy required
is to improve productivity, producing more with lesser inputs. Organizations constantly try to
improve productivity and governments draw up policies to encourage productivity .But in the
global competitive scenario, success crowns those who do so with a sense of urgency or
exigency.
Purpose:
The paper examines with the support of examples from various sectors, whether Indian
companies are getting smarter and creating the right business models for higher productivity.
Based on the success stories of such organizations, emerging trends will be identified and
approaches will be listed for productivity improvement. As competitive forces continue to
reshape the economy repeatedly, organizations need to learn how to harness people, technology
and information to gain productivity.
Introduction
Raising productivity leads to sustainable economic growth. Nobel laureate Edward Prescott and
Stephen Parente in Barriers to Riches emphasize that massive income differences between
developed and developing nations are explained by the differences in total factor productivity.
Economic progress depends on increasing productivity. Post 1990, regulations which were
restrictive and lowered efficiency levels were diluted to a large extent. Foreign technologies and
productive, efficient practices began to come in and competition increased the drive towards
better productivity .Withdrawal of government protection and global competition forced Indian
industries to improve productivity levels.
A study in this aspect would be provided by the Indian automobile sector .Three decades ago two
manufacturers held the market .The arrival of Maruti Suzuki and later, other foreign automakers
created a competitive field with serious repercussions for the major two. Fifteen times more cars
than twenty years ago are being produced now .Indian cars are now being exported and prices
are being brought down. Productivity levels are rising and better supply chain practices are
creating capable component suppliers .The key is productivity .Only productive companies can
create a healthy economy.
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To take these productivity initiatives forward, Indian companies are embarking on many
improvement initiatives realizing the exigency and urgency .Notable amongst such companies
are the following.

Maruti Suzuki now rolls out 700,000 cars a year from Gurgaon and 300,000 from
Manesar. By 2012, production at Manesar will increase by almost 100%. Due to the frequent
changes in market demands and customer needs, the company follows a system of Advanced
Model Mix Management which balances plant utilization and customer needs. Core practices of
multi skilling of operators helps the companys requirements as well as growth needs of the large
work force. Set up times are minimized and shop floor is controlled by dynamic and real time
production systems. Companywide Kaizens are encouraged and last year the company received
70,000 Kaizensimplemenation of some of which yielded considerable productivity
improvements. Company extensively uses automation and robotics, adding consistency and
robustness to the manufacturing practices. Implementation of 5S methodology aids productivity,
aesthetic housekeeping and waste reduction.

Escorts Agri Group group achieved productivity improvements by forming large scale
interactive groups within workers and executives of various plants .This encourages team
approach .Continuous Cost Reduction is enabled by eliminating waste and wasteful practices.
SGA (Small group activities) initiatives to reward people for major improvements sustain a
culture of improvement.
Adoption of MOST (Maynard Operating Sequence Technique) which is a method of measuring
and improving cycle times has added to 30% productivity improvement in the last two years

The engagement of foreign technology and foreign productivity experts has been bringing in
breakthroughs and improvements in various other organizations.

Samsung brings experts from Korea to combine with and train Indian operators. The company
does not believe that changing market dynamics should always result in capacity addition
Efficiency is the buzzword across the organization. Superior manufacturing practices are
required to churn out almost a million mobile phones every month .Empowering Operators helps
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in the people process alignment required to increase productivity .Efficient Supply Chain
Management and outsourcing helps the operations .Samsung emphasizes on maintaining
minimum inventory in the pipeline thro Kanban dependent systems .A high sense of ownership
is driven thro the 3M principle of ownership-whereby an operator owns the method, material and
machine .Star operators (high performers) and butterfly (multi skilled) operators are rewarded
.Cellular Manufacturing Processes ensure lesser inventories and faster responsiveness.

Hero Honda at Gurgaon produces a bike every 19 seconds which makes up its 5.4 million units
every year .Productivity excellence is achieved through a thorough planning of the infrastructure
.Extensive use of robotics avoids quality compromise even to miniscule levels .Outsourcing is
constantly reviewed and lean management is an obsession .The organization encourages home
grown innovations by rewards and training programs in all areas including the most specialized
technical areas include customer orientation .Total productive maintenance ensures highest
effective levels unsurpassed by competitors .

Nokia follows innovative methods in manufacturing to strive towards excellence.
The Sriperumbudur area near Chennai where Nokia and other companies are located is today
aptly called as the Shenzhen of India where many world class automobile ancillaries and vendors
are located.

Efficient Supply Chain Management and Kaizen philosophy are the tenets at Nokia. Over 8000
Kaizens were recorded last year; some suggestions have been picked up by other global shop
floors of Nokia. Hierarchy is cut down ensuring camaraderie between the most senior executives
and operators .Waste Minimization is constantly explored and operations drive commitments
across the organization towards zero customer complaints.

Brakes India has successfully developed into a zero waste foundry. This industry is considered
to be the most polluting industry .They have been successful in redesigning the shop floor for
higher productivity ,developing higher flexibility using visual mapping processes, saving
inventory and storage space .
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Several other Indian companies like Sona Koyo, Bosch India and Mahle have achieved
significant reductions in through put times, labor hours and set up times.

Suppliers are being considered as partners .Relationships is being patterned on win win
philosophy. Stable supply schedules are provided to enhance supplier performance thereby
yielding higher returns mutually for the partners. CEOs are directly supervising the productivity
improvement drives.Management styles are not imitations of Japanese or Korean styles but a
blend of these styles with Indian requirements.Senior management brings a total perspective
essential to bring in improvements.

Common to all these organizations is the different mindset being acquired by Indian managers
,of thinking beyond production .They are able to find the customer needs and align operations
and manufacturing processes suitably.Such initiatives aid breakthroughs in new products like the
mini refrigerator from Godrej which works without a compressor .Shoji Shiba of Japan
saysOnly companies which think beyond the shop floor will survive .He has worked
successfully with several Indian companies .

Large and younger workforce in India can push the country towards rapid growth, if productivity
is improved continuously .This will also generate lasting employment gains .Fostering policies
that ensure improvements is a requisite.

The productivity challenge is an exigency or urgency because the need is so compelling .While
manufacturing is just one area, the need is imminent across all sectors like, agriculture,
education, healthcare etc.

To add complexity to the issue ,is the problem of talent mismatch .Jobs now being created need
not just factory workers but knowledge workers .Corporations across the globe are battling
continuously with the problems of talent search, development and retention. Knowledge skills
which even factory workers require are ,analyzing information, problem solving, judgment and
creative thinking .

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The real game changer is breakthrough innovations created by company .Having larger work
forces or increasing the number of working hours might just add a few points of growth. A
majority of productivity growth, more than two thirds comes from product and process
innovation. Technological giants are realizing that enhancing IT productivity has a cascading
effect on the overall operations. Typically companies spend 5% or near of their revenues on their
IT systems.

To increase productivity dramatically, companies need to aggressively go about increasing pace
of talent development, to deploy the talent for the best value realization, and improve worker
engagement. Organizations need to reinvent work. They should create results only work
environments which gives workers bigger targets but lets them meet targets the way they see
suitable. This approach has proven to increase productivity dramatically .

Improving process flows will unlock new kinds of productivity. Social networks, video
conferencing, cloud computing will generate larger access to knowledge reach which will help in
boosting productivity. Already Indian companies are cutting down travel budgets using video
conferencing, and linking designers and suppliers across global supply chains and improving
productivity.

Companies as mentioned earlier, should get more innovative at sourcing talent, tapping labor
beyond regions, and getting more from older workers.

A final productivity driver will be information. Over the next five years, volume of data is
expected to increase fivefold .However information so created should be meaningfully organized
and used.

Business analytics software is being used by foreign companies to eliminate waste, align
operations to customers and identify new opportunities. Such analysis helps in prediction of
outcomes as well as risks. Indian companies can take the cue from such organizations.

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Web 3.0 technologies enable creation of smart data that can be combined intelligently with other
data, reducing human involvement but improving productivity.

Organizations which create a learning atmosphere and, deploy technology successfully can drive
substantial productivity gains.

References:

Business Standard Newspaper

Carson,Iain ,Meet the global factory ,The Economist (June 20 ,1998)

Gates,Bill.Business @ the Speed of thought

Hall,Sidney.Strategic Sourcing: Getting your hands around Direct Materials
Procurement,Manufacturing Systems,J anuary 2001.

Mandel Michael, Rich Miller,Productivity the real story,Business Week 2001