Beruflich Dokumente
Kultur Dokumente
Saweni Campus
SCHOOL OF BUSINESS AND ECONOMICS
Group Assignment:
Productivity improvement through
process improvements
Course Coordinator & Lecturer: Mr. Amar Singh
Assignment Members: Nitin Chandra
Sharneel Kumar
INTRODUCTION
Background
Today the global readymade garment exports have experienced a high rate of growth, along
with the continuity with new suppliers. When Fijis economy opened itself to the world
in 1988, the clothing industry began to establish due to the Tax Exemption, and in 2002
produced a record value of about $150 million. In 1996, there were at least 68 garment
manufacturing factories operating in tax-free zones, earning $141 million. About a dozen
factories were closed in 2001, with a loss of 5000 to 6000 jobs, but other operations were
expanding. Garment industry exports, at $143 million for 2001, were down, however, due to
disruptions in relations with customers from trade sanctions.
Overall, the value of merchandise trade declined about 9% in 2001, and is not expected to
surpass the $557 million of 1997 or even the $532 million of 1999 until 2003. Tourism
receipts were $228.9 million in 2001, an improvement on 2000, but still constrained by postcoup political uncertainties. Expensive power, lack of trained labour, and the limited local
market have also inhibited industrial production. Overall, the value of manufacturing in Fiji,
which had declined 6.2% in 2000, increased an estimated 11.5% in 2001, but is projected, by
the IMF, to have increased only 1.5% in 2002, with non-sugar manufacturing down .9% in
value.
Problem statement
Unnecessary and long production process cause low productivity and loss of profits
Objective of the study
The objectives of this study are as follows,
Investigate the style changing process.
To identify the relation between productivity and the manufacturing process.
To establish effective and easier process for change new style.
To Increase productivity.
Signification of study
A study will be carried to analyze how to improve productivity through process
improvement. If an organization applies long production process to change new style. The
organization has to invest additional investments for the process of manufacture. Through
this research study can identify the unnecessary operations and can be suggesting to
eliminated or replaced by another effective operation. As a result can decrease the lead time
when using process improved production and it will help to increase the customer
satisfaction. The good satisfaction of the customers will be a reason to attract more and more
orders. To the industry will reach higher profit margins. It will be a great support for the
industry to survive in the world market.
Methodology
The following methodology will be adopted to carry out this research and achieve the
research objectives.
For an effective result adopt Quantitative methods in data collection in Nagsun Apparel (Fiji)
Ltd. Firstly collect data by using past records. Study total garment manufacturing process in
the factory. After that finds unnecessary operations of new style changing process and way
of eliminating unnecessary operations of new style changing process. The data will be
analyzed of the cutting department, production, work-study, technical, finishing & Human
Resources departments. When considering the data include 2 months past data as well as 2
months of future data. Then all data will be analyzed to understand the relation between
productivity and manufacturing process. As the final step the Recommendation will be done
after considering on the results derived from the study
Scope and Limitations
The Data will be collected from a well-known garment manufacturing factory in Fiji. This
study will be carryout only within the new style changing process. This study does not focus
fabric type and garment type. Focus only on garments Standard minute value and standard
allocated hours only. Necessary data will be collected only from past 2 months as well as 2
months of future data.
LITERATURE REVIEW
Introduction
Literature review is a critical look at the existing researches or publications that is significant
to the research subject. Information can be collected through various sources like internet,
journals, books, research papers, magazinesetc.
In the literature survey, referencing should be done as its required to acknowledge the
sources of information have been taken. Referencing is an information source used in an
academic work means to employ a standard method of acknowledgement of that source. In
this research APA style is used for referencing.
Related literature
Related literature about Productivity
The term productivity means different things to different persons. As a phenomenon, it
ranges from efficiency to effectiveness, to rates of turnover and absenteeism, to output
measures, to measure of client or consumer satisfaction, to intangibles such as disruption in
workflow and to further intangibles such as morale, loyalty and job satisfaction. To put it
bluntly, the definition of productivity is complex and this is because it is both a technical and
managerial concept. Productivity is a matter of concern to government bodies, trade unions
and other social institutions not minding the disagreements over its conceptualization by
different groups and individuals.
Hence, discussing productivity at all levels is common because of the direct relationship
between productivity and the standard of living of a people. It is perceived that the more
different are the goals of the different individuals, institutions and bodies that have a stake in
productivity as a problem, the more different their definitions of productivity will be [2].
Krugman [3] intended to assert that defining or measuring productivity is a Herculean task
when he asserted that productivity isnt everything, but in the long run it is almost
everything. The least controversial definition of productivity is that it is a quantitative
relationship between output and input [4, 5]. In the OECD (Organisation for economic cooperation and development) manual productivity is commonly defined as a ratio of a volume
measure of output to a volume measure of input use [6]. While there is no disagreement on
this general notion, a look at the productivity literature and its various applications reveals
very quickly that there is neither a unique purpose for, nor a single measure of, productivity.
The objectives of productivity measurement include: Technology, efficiency, real cost saving
procedure, bench marking process, standard of living. Tangen [7] summarized a number of
variations in the definition of productivity found in different literatures. Eatwell and Newman
[8] defined productivity as a ratio of some measure of output to some index of input use
which means that productivity is nothing more than the arithmetic ratio between the amount
produced and the amount of any resources used in the course of production. This conception
of productivity goes to imply that it can indeed be perceived as the output per unit input or
the efficiency with which resources are utilized [9]. The basic content seems to be the same
in many definitions of productivity. However, within the similar definitions, there are three
broad categorizations: i) the technological concept: the relationship between ratios of output
to the inputs used in its production; ii) the engineering concept: the relationship between the
actual and the potential output of a process; and iii) the economist concept: the efficiency of
resource allocation [10]. According to Sink [11], the overall performance of a company is
comprised of at least seven criteria: effectiveness, efficiency, quality, productivity, quality of
work life, innovations, and profitability. Productivity is thus a key success factor for all
companies. Hannula [12] has stated that organizations must be able to continuously increase
their productivity in order to stay profitable. Therefore, productivity should also be managed.
Productivity measurement is one traditional and practical tool for managing productivity.
Ideally, total productivity would be measured. Total productivity is the total output divided
by the sum of all inputs. As a concept, total productivity is fairly simple. However, the
measurement of total productivity is very difficult in practice. The main problem is that
different outputs (products and services) and inputs (e.g. labour, material, energy) cannot be
summed up. An obvious solution would be to use monetary values but then it would be about
profitability measurement. There are several more practical methods available for
productivity measurement. Perhaps the most common of them is to use partial productivity
measures. Partial productivity ratios can be calculated by dividing total output by some input
factor. For example, labour productivity is the ratio between total output and labour input. If
partial productivity ratios cannot be calculated because the total output cannot be determined,
even more simple method is to use physical productivity measures. They are obtained by
dividing some typical output (e.g. number of serviced customers or production amount of
main product) by an essential input (e.g. machine hours or labour hours). Productivity
combines the concepts of effectiveness and efficiency, where effectiveness is the degree to
which end results are achieved to the required standard [13]. Growth is a function of total
factor productivity (TFP), which is the aggregation of partial productivities [14].
Many papers evaluate critically the roles of investment and physical capital accumulation in
economic growth and development. The differences in physical capital accumulated between
countries seem not sufficient to explain the development gap in the world repartition of
wealth. Growth and development accounting provide a powerful and simple tool to study
these enormous cross-country differences in income per worker level and growth. Growth
accounting provides a breakdown of observed economic growth into components associated
with changes in factor inputs and a residual that reflects technological progress and other
elements. The basics of growth accounting were presented in [15, 16, and 17]. According to
Kaydos [18] productivity and subsequently performance measurement has been regarded as a
prerequisite for continuous improvement. When focusing on the industries, national, and
international levels, many approaches have been designed by economists such as the total
factor productivity (TFP), or Bureau of Labor Statistics (BLS) multifactor productivity
techniques [19, 20]. Craig and Harris [21] provided a total productivity model at the firm
level comprising output and four inputs. Mike Hannula [12] devised a method of expressing
total factor productivity as a function of partial productivity. Houseman [22] noticed the
effect of outsourcing and off shoring in the productivity statistics of the U.S. manufacturing
industry. Diewart [23] discussed the problems whenever there is a need to measure
productivity growth. Sumanth [24] considers the impact of all input factors on the output in a
tangible sense. Total productivity [25], total productivity in firm [26] and total productivity of
products [27] are defined as mentioned below,
Total productivity = (Total tangible output) (Total tangible input)
Total productivity in a firm = (Total output of the firm) (Total input of the firm)
Total productivity of product I = (Total output of product I) (Total input for product I)
Rogers [28] discussed various methods to analyse productivity and stated that productivity
changes can be caused either movements in the best best practice production technology or
a change in the level of efficiency. Berndt [29] surveyed and interpreted several of the most
important aspects underlying relationships technical progress, productivity growth and
energy use viewed from the vintage of an economist. He concluded that the common theme
of embodiment, diffusion and learning are critical to understand the forces linking energy
usage, technical progress and productivity growth.
Main types of productivity measure
Broadly speaking, productivity is the ratio of output to input in a specific production
situation. There are many different productivity measures. The choice between them depends
on the purpose of productivity measurement and, in many instances, on the availability of
data. Broadly, productivity measures can be classified as single factor productivity measures
or partial productivity measures (relating a measure of output to a single measure of input)
and multifactor productivity (MFP) measures (relating a measure of output to a bundle of
inputs). When multifactor productivity measures takes into account all the inputs of
production it is termed as Total factor productivity (TFP) Another distinction, of particular
relevance at the industry or firm level is between productivity measures that relate some
measure of gross output to one or several inputs and those which use a value-added concept
to capture movements of output. When the intermediate inputs or the endogenous inputs are
deducted from the gross output it results in value added.
Table-1 depicts these criteria to enumerate the main productivity measures. The list is
incomplete in so far as single or partial productivity measures can also be defined over
intermediate inputs (energy, material and services) and labour-capital multifactor productivity
can, in principle, be evaluated on the basis of gross output [6]. However, in the interest of
simplicity, Table-1 is depicted with the most frequently used productivity measures. These
are measures of partial productivities of labour and capital, and multifactor productivity
measures (MFP), either in the form of capital-labour MFP, based on a value-added concept of
output, or in the form of capital-labour-energy-materials MFP (KLEMS), based on a concept
of gross output. Among those measures, value-added based labour productivity is the single
most frequently computed productivity statistic, followed by capital-labour MFP and
KLEMS MFP [7].
Conceptually, output embodies both quality and quantity and this creates sometimes
confusion that the productivity measure is unfounded in the sense that they do not take
quality into consideration. Such arguments may be true in case of very simple productivity
ratios. In those ratios, the quality of the output or input is often ignored. But, when the output
is measured in deflated net sales, for example, the quality of the products or services is
included in the function. However, quantifying quality changes in productivity measurement
is always a measurement problem, not a conceptual problem. At the conceptual level quality
of the output and the input are very much included in the productivity ratio.
Table-1. Overview of main productivity measures.
Type of output
measure
Gross output
Value added
Capital-labour MFP
(based on gross
Multifactor productivity (MFP)
measure
or material productivity index can be calculated as; partial productivity = (Output in base
period price) / (Any one input in base period price).
b) Craig-Harris model -The next most impartment study using the index approach at the
company level is of Craig and Harris (1972-75). They define total productivity measure.
Pt =Qt / (L+C+R+Q)
Where Pt = total productivity, L = labour input, C = capital input, R = raw material input and
Q = miscellaneous input and Qt = total output.
c) American productivity center model
American Productivity center has measured that productivity relates profitability and price
factor.
The measure is given by Profitability =Sales / cost
= [(output quantity) (price)] [(Input quantity) (unit cost)]
= [(output quantity) (Input quantity)] [(price) (unit cost)]
= (Productivity) (Price recovery factor)
Where productivity = Output / Input
Price recovery factor = A factor which captures the effect of inflation.
d) Productivity accounting model
H. S. Davis introduced this model. If fulfills almost all the requirements of accounting for
productivity.
This model takes into account all possible outputs and inputs used, keep out external factors
such as price rise etc. Here productivity means total productivity and partial productivity.
This can be calculated as below.
Table-2 shows the benefits and limitation of the various productivity models. From the table
it is observed that the productivity accounting model is best suited for the computation of
productivity since it avoids the aggregation problem of dissimilar and heterogeneous inputs
and outputs by considering the monetary equivalent of output and each input. Although by its
very nature the model yields economic productivity and not physical productivity, but the
growth profile of economic productivity would follow a similar growth pattern of physical
productivity because of the proportional relationship between the monetary equivalent of
output and the physical quantity of output, the constant of proportionality being the price
index. Due to this maneuverability inherent to the model, it is chosen for the computation of
productivity for a garment manufacturing industry.
Table-2. Various productivity model and their benefits and limitation.
Name of the
productivity model
Kendrick-Creamer
model
Definition
Benefits
Limitation
Total Productivity
Index for given
period = (Measured
period output in base
period price) /
(Measured period
input in base period
Suitable for
computing
productivity indexes
at the company level
American
Productivity Centre
model
Productivity
accounting model
such as energy,
business services etc.
Pt = Qt
(L+C+R+Q)
Where; Pt = total
productivity, L =
labour input, C =
capital input, R = raw
material input and Q
= Other
miscellaneous goods
and services input,
Ot=out put.
Profitability = Sales /
Cost = (Output
quantity) (Price) /
(input quantity) (unit
cost) = (Productivity)
(Price recovery
factor) Where;
productivity = output
/ inputs Price
recovery factors = a
factor which captures
the effect of inflation
Suitable the
computation of
productivity for firm
level and service
sector and yields
physical productivity
Suitable for
accounting
productivity at the
business level and
easy to compute
productivity with the
managerial data like
profitability and
price recovery factor.
Not suitable
industrial use, since
productivity measure
in relation to an
industry considers
physical quantity of
goods produced
which may not be
properly represented
by profitability which
depends on the
demand of the goods
produced.
Total productivity =
(Monetary value of
production)
(Monetary value of
all inputs required for
production)
Partial productivity =
(Monetary value of
production)
(Monetary value of
sector and
manufacturing and
service sector
Cutting Section
In cutting section fabric rolls are inspected as per work order. These inspected rolls are
segregated on two sides as the quality pass and fail. The pass rolls are taken into the next
operation whereas the fail rolls returned to store with red tags on them. After this, depending
upon the order, size and quantity ratio; the spreader spreads the fabric for cutting. Once
cutting is done, bundles of approx 20 to 30 pieces are made and fusing is done
simultaneously. After fusing, all the parts are collected and put in the cutting audit. The
bundles which pass the cutting audit are forwarded to the sewing section (i.e. preparatory
section) whereas the fail bundles were re-worked for correction.
Preparatory Section
In preparatory section individual parts are made for assembly purpose. It consists of four sub
sections Cuff, Collar, Front and Sleeve. Each of these sections includes the series of different
operations to complete that part. These final parts are checked (or audited) so that defective
parts should not go to the assembly operations; the flow of operations for the preparatory
section is shown in Figure 5.
Assembly Section
This section consists of ten operations to make one full garment. The machines are kept in
single straight line according to the operation sequence. The final garment from last
operation is fully checked and corrected immediately for any defects. WIP movement inside
the assembly is made by the help of work aids attached with each machine. The operator,
after completing his (her) operation forwards the semi finished garments to the next machine
with the help of work aids attached to each machine. This process continues to the end of
assembly line for each operation. At the same time the required parts from preparatory are
carried up to the assembly section manually. The flow chart for the assembly operation is
shown below.
Finishing Section
Finishing section consists of three major operations: buttoning and thread cleaning, ironing
and final packing. But in some garment washing is needed, in this case washing should be
done before buttoning to minimize damages in garments for longer washing cycles. In the
case company after buttoning there is thread cleaning section followed by ironing, finishing
and packing. The operation sequence for finishing section is shown below.
Style Communication
Style communication between different staffs and operators is critical part of garment
manufacturing to minimize style related confusion during production. Because the fashion
changes so frequently that there may be the need of producing new styles every day, so in
this situation if the floor people didn't get accurate information for the garment being
produced chances of mistakes are high. To minimize difficulties of this kind, there is preproduction meeting between factory floor supervisors, machine technicians and operators.
The purpose of this meeting is to communicate about the various requirements of the
upcoming style, for example critical operations on the garment, type of machine and machine
accessories required, garment specifications, type of seams, target production per day, total
order quantity, size ratio etc. In some industries trial production is done for every new style,
this helps to minimize the confusion and rejection during bulk production.
Existing Production Layout Framework
Existing layout of the sewing section (preparatory and assembly) is given in below. In this
layout, the individual parts are made in preparatory sections and these parts are then
transported manually to the assembly section. In the assembly section, these parts are
assembled to shape a final garment. There is quality check at the end of each section to avoid
defective parts to the next step. WIP movement in preparatory section is made with the help
of the long table along with machines, whereas work aids attached with each machine serves
this purpose in the assembly section.
Calculation
Nagsun Appreal Fiji Ltd garment workers made 700 bula shirts in one day, which is valued
by its standard cost of $12 each (before markup for other expenses and profit). The cost
accountant reported that for this as follows:
Input
Direct Material
2 Interlining
FAB-Ambassador
Blue
FAB-Ambassador
Green
INT-White TF603
150gsm
3 Label
LAB-Biz Collec - ML
1 Fabric
5 Poly Bag
6 Carton
PB-006
CTN-Large P80055X35X30
7 Security Seal
Security Seal
991.6
7 $
991.6 $
7 2.32
$
87.50 2.67
700.0 $
0 0.14
700.0 $
0 0.03
9917. $
00 0.02
5250. $
00 0.02
700.0 $
0 0.18
$
58.00 1.94
116.0 $
0 0.05
2.34
2,318.12
2,300.67
233.91
98.00
21.00
170.57
101.85
124.81
112.52
5.80
$
5,487.25
5 Staffs
Packing Hours
10 Staffs
38 Staffs
9
Hours
9
Hours
9
Hours
Rate
Total Direct Labor Cost
45.00
Hours
342.00
Hours
90.00
477.00
Hours
Hours
$
2.62
$
1,249.74
$
812.33
$
7,549.32
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