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Productivity
A measure of the effective use of resources, usually expressed as the
ratio of output to input.
Productivity Output
Input
Productivity measures can be computed for a single operation, a
department, an organization, or even an entire country.
Productivity measures are useful for tracking performance over time
(they tell whether performance is improving or not)
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Output
Machine
Output
Capital
Output
Energy
Labor Productivity
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Output
Labor Capital Energy
Labor
Capital
Technology
Energy
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7,040
Output
2 units/inpu t$
Labor Material Overhead 1,000 520 2,000
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Output
Labor + Material + Overhead
$150,000
$42 ,500
= 3.5294
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Productivity Improvements
Productivity improvements are necessary to remain competitive. One of
the production managers responsibilities is to seek out productivity
improvements on a routine basis. Productivity improvements can result
when organizations
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.
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Productivity Improvements
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Productivity Improvements
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Productivity Decline =
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100% 8%
25
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Bottleneck
Operation
Operation
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efficiency
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Competitiveness
Competitiveness is a measure of how well an organization performs
relative to others who offer similar goods/services.
Measures of Competitiveness
. Market Share
. Profitability
. Growth
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Competitiveness
Businesses compete on many fronts
. Price
. Quality
. Product differentiation
. Flexibility & service
. Delivery speed
. Delivery reliability
. Ability to cope with changes in demand
. New product introduction
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Strategic Planning
Mission
Strategy
Tactics
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Goals
Organizational strategy
Functional strategies
Finance
Marketing
Operations
Tactics
Tactics
Tactics
Finance
operations
Marketing
operations
Operations
operations
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Internal
. economic conditions
. human resources
. political conditions
. legal environment
. financial resources
. technology
. customers
. competition
. products/services
. markets
. technology
. other
. suppliers
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Operations Strategy
Marketplace
Corporate Strategy
Finance Strategy
Operations Strategy
Marketing Strategy
Operations Management
People
Inputs
Plants
Parts
Processes
Outputs
Operations Strategies
Quality-based strategies
Focus on quality at the source in all
phases of an organization
Time-based strategies
Focus on reduction of time
needed to accomplish tasks
Production-based strategies
Focus on processes, flow,
machinery, automation
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FEB
MAR
APR
MAY
JUN
Planning
Designing
Processing
Changeover
On time!
Delivery
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Production Strategies
Focus the transformation process
. Craft production highly skilled workers use simple flexible
tools to produce small quantities of customized goods
. Mass production lower skilled workers use specialized
machinery to produce high volumes of standardized products
. Lean production uses minimal amounts of resources to
produce high volume of high quality goods
. Just in-time production concentrates on getting the right
part to the right place at the right time
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Monitor results
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Homework
Read and understand all material in the chapter.
Discussion and Review Questions
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