What is meant by productivity? Write a brief note on capital productivity. - MBA Assignment Notes

What is meant by productivity? Write a brief note on capital productivity. - MBA Assignment Notes

Answer:

Productivity is a measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it (inputs). The measure of productivity is defined as a total output per one unit of a total input.

Production Management encompasses all activities which go into conversion of a set of inputs into outputs which are useful to meet human needs.

It involves the identification of the requisite materials, knowledge of the processes, and installation of equipment necessary to convert or transform the materials to products. The quantities to be produced have to be ascertained, processes established, specifications detailed out, quality maintained and products delivered in time to meet the demands.

Capital Productivity

Capital deployed in plant, machinery, buildings and the distribution system as well as working capital is components of the cost of manufacture and need to be productive. Demand fluctuations, uncertainties of production owing to

breakdowns and inventories being created drag the productivity down. Therefore, strategies are needed to maximize the utilization of the funds allotted towards capital. Adapting to new technologies

1. Outsourcing Strategies

When capacity requirements are determined it will be easy to determine whether some goods or services can be outsourced so that the capital and manpower requirements can be reduced and the available capacities are used to augment core competencies thus reducing the cost of the product or service to the customer. However, the following factors may restrict outsourcing-

(a) Lack of expertise – the outsourced firm may not have the requisite expertise to do the job required

(b) Quality considerations Loss of control over operations may result in lower quality. This is a risk that the firm gets exposed to.

(c) Nature of demand – When the load is uniform and steady, it may not be worthwhile to outsourcing. Absence of spervisaion and control may be a hindrance to meet any urgent requirements of the customer. This affects the business especially if no production facilities are built in the organization

(d) Cost when the fixed costs that goes along with making the product does not get reduced considerably

2. Methods Improvement

Methods Improvement starts with Methods analysis focus of this process is how a job is done breaking it down to elemental tasks so that they are amenable for analysis.. This is done for both running jobs and new jobs. For a new job, the description becomes the input for analysis. For current jobs, the analyst depends on observations, records and suggestions of the persons involved in the job. When improved methods are suggested, they are implemented and records created for assessing the consequences of the methods improvement procedures. The analyst should involve all concerned persons in the process so that acceptance becomes possible and opportunities open up for further improvements. Moreover, the people actually involved would be interested in improving their productivity and will help the analyst in the process.

3 Balancing of Workstations

Assembly lines necessitate out stringing together workstations which carry out operations in a sequence so that the product gets completed in stages. Since the workflow has to be uniform and operations may require different periods for completion the necessity of Line Balancing is felt.

Capacities at workstations and the workforce to man are so adjusted that a product in the process of assembly almost approximately the same amount of time.

4. Rationalization of Packaging Methods

With logistics becoming an important function of the supply chain and outsourcing becoming the norm, packaging has become an important aspect, packaging has become important . Space is at a premium and therefore stacking and storing have to more scientific. Movements inside the premises from one location to another location are being done with automated systems and they need that the packaging systems are designed for safe transit, continuous monitoring – both for quantities and operations. In case of outsourced products the materials used and their design should facilitate reuse of the same which brings in economy.

5 Quality Circles

Kaoru Ishikawa is generally considered to have promoted the concept of Quality Circles. It is well known that he is the originator of fishbone diagrams to identify the root cause of any problem. The causes for the existence of a problem are classified as pertaining to the material, processes or method or any factor that goes into production. The matter is further investigated and pursued till the exact cause is determined. Quality circles use these principles in solving problems. The teams select projects selected on the above basis and implement actions to achieve improvement in the processes with a view to improve quality. Since these activities are carried out without affecting the regular day to day work and involve little involvement of the managers, team work gets reinforced and results in continuous improvement in methods and quality. The capital deployed is minimal, if at all, and therefore productivity is enhanced.