Sector Productivity

8/8/2019 Sector Productivity

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Operation Management

Operation management is defined as the

design, operation, and improvement of the

system that creates and delivers the firms

primary product and services.

Operation management is a functional field

of business with clear line responsibilitieslikewise finance and marketing.


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OM in Organization Chart

Operations

Plant

Manager

Operations

Manager

Director

Manufacturing, Production control,

Quality assurance, Engineering,

Purchasing, Maintenance, etc

Finance Marketing


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Operation Management decisions

Strategic decisions (long term):

Tactical decision (intermediate-term) :

Operational planning and control decision(short-term) :


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Factors contributing to increase

productivity in manufacturing industry

Just in time:

Total quality control:

ManufacturingS

trategy Paradigm:


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Continued

Service quality and Productivity:

Total Quality Management and QualityCertification:

Business Process Reengineering

Supply Chain Management:


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Transformation Process

A transformation process uses resources to coverinput into some desired output.

In general transformation processes can becategorized as follows:

Physical (as in manufacturing)

Location (as in transformation)

Exchange (as in retailing)

Storage (as in warehousing) Physiological (as in healthcare)

Informational (as in telecommunication)


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Input Transformation - Output Relationship

for typical System.Hospital Patients Doctor, nurses,

medical

supplies,

equipment

Healthcare

(physiological)

Healthy

individual

Restaurants Hungry

customer

Food, cook,

waiter,environment

Well prepared, well

served foods;agreeable

environment

(physical and

exchange)

Satisfied

customer

Automobile

factory

Sheet steel,

engine part

Tool ,

equipment,

workers

Fabrication and

assembly of cars

(physical)

High quality

car

Department

store

Shoppers Displays, stock

of goods, sales

clerks

Attract shoppers,

promote product, fill

orders (exchange)

Sales to

satisfied

customer


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Productivity in ManufacturingIndustry

Hardik Shah

313


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Productivity is usually expressed in one of three forms:

Partial factor productivity

Multifactor productivity

Total productivity.

Productivity is defined as the output per unit of input.

Productivity = Outputs

Inputs

Productivity


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Productivity Measurement:

KPIs should be structured to help managers predict the companys economic

performance & spot the need for changes in operations.

Financial measures such as cash on hand & operating income by unit are usedtogether with non-financial metrics such as lead time to fill customer orders &

percentage of sales from new products.

Overall equipment effectiveness.

Cycle Time Ratio. Utilization

Rejection rate


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Manufacturing industries have to develop core capabilities.Core capabilities are the skills that differentiate themanufacturing firm from its competitors

Segment the market according to the product group.

Identify the product requirements, demand patterns, andprofit margins for each group.

Determine the order winners & order qualifiers for eachgroup.

Convert order winners into specific performancerequirements

DEVELOPING A MANUFACTURING

STRATEGY


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Process-based capabilities:

Tend to provide competitive dimensions as low cost & high

quality.

Systems-based capabilities:Short lead times, customize on demand, fast new-product

development.

Organization-based capabilities:

Master new technologies, design new products.

DEVELOPING CAPABILITIES


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1. COST or PRICE: Make the product cheap.

2. QUALITY: Make a great product

3. DELIVERY SPEED: Make the product quickly.

4. DELIVERY RELIABILITY: Deliver it when promised.

5. COPING WITH CHANGES IN DEMAND: Changes its vloume.

6. FLEXIBILITY & NEW-PRODUCT INTRODUCTION SPEED: Change it.

7. OTHER MANUFACTURING PRODUCT-SPECIFIC CRITERIA: Support it.

a. Technical liaison.

b. Meeting a launch date.

c. Supply after-sale support.

d. Other dimensions: Size, weight or customization.

OPERATIONS COMPETITIVE DIMENSIONS IN

MANUFACTURING INDUSTRY


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Techniques

Work study. Management by objectives

Research & Development Production planning & control

Incentive schemes Automation

Workers participation in management Suggestion schemes

PRODUCTIVITY IMPROVEMENT


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Capital investments in production. Systems

Capital investments in technology Quality of productsCapital investments in equipment Quality of processes

Capital investments in facilities Quality of management

Economies of scale Legislative and regulatory environment

Workforce knowledge and skill resulting

from training and experience

General levels of education

Technological changes Social environment

Work methods Geographic factors

Procedures

FACTORS AFFECTING PRODUCTIVITY


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Prerna Shetty

315


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Overall EquipmentEfficiency

Monitors andimproves theefficiency of

manufacturingprocesses

OEE is used asa KPI

Can beapplied toWork Centers

orDepartments


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OEEFactors

Availability

Performance

Quality


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Calculating OEE

OEE = Availability x Performance x Quality

Availability = Operating Time

Planned Production Time

Performance = Ideal Cycle Time

(Operating Time / Total Pieces)

Quality = Good Pieces

Total Pieces


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Drawbacksof OEE

85% is anarbitrary

target.

Customer is

interested inOTIF, not

OEE

SometimesQuality

feedback isnot

immediate

Performance

standardcannot be

determined


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Change in Flow

Followed a batch and queue production system

Lead to complex flow & increased travel time

Required large work force with specialized skill & large and

complex equipment to meet changing volume of goods

Poor utilization of space

In continuous flow all equipments, resources and people

grouped in single cell

Productivity has increased by 39%


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Design for Manufacturability

Optimizes product design & helps in increasing productivity

Applied DFM to overhead storage bin arch

Reduced no. of components from 40 to 26

Arch is made from monolithic plate instead of numerous metal

sheet parts

Point of Use system for storing chemicals

Chemicals stored where required against central storage system

Eliminated machinist travel time, overuse & wastage

Redesigning led to 11.6% decrease in consumption


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Worker Participation

Uses Accelerated Improvement

Workshops (AIWs) wherein workers

participate

They reorganize the work in their

department and improve

productivity by reducing flow time

A

llows worker to develop significantchanges in flow of work, existing

procedures & the machines and

equipments used


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Value Chain

Represents sets of activities required to convert raw

materials into final product and deliver to customers

Value streaming helps in finding activities which do not

add value

Developed an ideal shipping process for floor beams &

seat tracks

It reduced 8 days of travel and 3 days of receiving &

inspection

Eliminated 50% of transportation


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Raw material & Energy Savings

Efforts to reduce inputs on raw materials by better utilization &

reducing damage and spoilage

Machine fabrication shop reduced spending on raw materials by

$22 million

Overall space utilized reduced from 6,50,000 to 4,50,000 sq.

feet

Eliminated 8,000 sq. feet of temperature controlled

environment

Energy saved on heating, cooling, lighting etc.


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Productivity Improvement in Service Sector

Sameer Tayal

132


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Life line for the social economic growth of a country

Subsectors IT, ITES, Retailing, Insurance

Productivity

Measurement - difficult

Service productivity = Quantity of output & quality of outputQuantity of input & quality of input

Introduction of Service Sector


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Service

Productivity

Quantity

Output

i)Servicevolume

Input

i)Labour

ii)Rawmaterial

iii)Capital

Quality

Outputi)Customerperceived

quality

Input

i)Tangibleelements

ii)Intangible elements

Two important

dimensions

in measurement of

productivity in

service

Sector

- Quantity

- Quality

Service Productivity


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Karl V. Baria

131


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Banking Sector

Tremendous Rise

Government to Private

New Innovations

WaitingTime

Promptness QoS

Influence

CustomerSatisfaction


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Techniques of Productivity

Improvement

Punctuality

Waiting Time

Interdepartmental

Communication

ProcessTransparency


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Hospitality Industry

Largest economic activities

Foreign Exchange

Factors

Resource

utilization

Customer

Satisfaction

Cost

Incurred

NetProfit


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Techniques of Productivity

Improvement

Integrated Management

Inventory Management

Online Booking

E-marketing


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Avnish Raheja

130


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Reduce software development costs, improve

software quality, and improve the rate at which

software is developed.

Increases software production productivity orquality.

Develop more valuable products for lower costs.

Rationalize higher capital-to-staff investments .

S

treamline or downsize software productionoperations .

Identify production bottlenecks or underutilizedresources.

Why measure software productivity?


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Who should measure software

productivity?

Programmer self-report

Project or team manager

Outside analysts or observers Automated performance monitors


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What to measure?

Software products

Software production processes and

structures

Software production setting


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How to improve software

productivity?

Get the best from well-managed people.

Make development steps more efficient andmore effective.

Simplify, collapse, or eliminate developmentsteps.

Eliminate rework.

Build simpler products or product families. Reuse proven products, processes, and

production settings.


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Shift to Service Sector

Ankur Gaur

129


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Globalization

Communication

Cost effectivenessMore time to

business

Automatedadministration ofentire systems in

organization.

Advantages


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Sector Productivity

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