Basic Productivity Improvement Techniques

In a comprehensive survey of the literature, more than 50 different techniques of productivity

improvement were catalogued.
1-Technology-based techniques
A
B
C
D
E
F
G
H
I
J
K
L

Computer-aided design (CAD)

Computer-aided manufacturing (CAM)
Integrated CAM
Robotics
Laser beam technology
Energy technology
Group technology
Computer graphics
Emulation
Maintenance management
Rebuilding old machinery
Energy conservation

2- Employee-based techniques
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U

Financial incentives (individual)

Financial incentives (group)
Fringe benefits
Employee promotions
Job enrichment
Job enlargement
Job rotation
Worker participation
Skill enhancement
Management by objectives (MBO)
Learning curve
Communication
Working condition improvement
Training
Education
Role perception
Supervision quality
Recognition
Punishment
Quality circles
Zero defects

3- Product-based techniques
A
B
C
D
E

Value engineering
Product diversification
Product simplification
Research and development
Product standardization

F Product reliability improvement

G Advertising and promotion
4- Task-based techniques
A
B
C
D
E
F
G
H

Method engineering
Work measurement
Job design
Job evaluation
Job safety design
Human factors engineering (Ergonomics)
Production scheduling
Computer-aided data processing

5- Material based techniques

A
B
C
D
E
F

Inventory control
Material requirement planning (MRP)
Materials management
Quality control
Material handling system improvement
Material reuse and recycling

Data collection

Computation of total
productivity changes and

construction of data files

Regression analysis to
determine productivity
improvement coefficient
No

Yes

Productivity improvement
coefficient>0

Investigation of
the
effectiveness
techniques with
negative
coefficient

Selection of
candidate techniques
for productivity
improvement

Integer
programming
formulation

Sensitivity
analysis

Final technique
selection
Implementation

Data collection. A two page survey questionnaire is used to collect two type of information from an
organization:
1-Total sales and total expenses for several time periods in the past (the time period can be months,
quarters, half-years, years, etc ).These are used as estimates of total output and total input, respectively.

2-Productivity improvement techniques used in the corresponding time periods (the 54 techniques
listed above are used as a guideline).
The first type of information comes readily from the financial statements, while the second type
of information is available from industrial engineering of operations departments.
Computation of productivity changes and data file compilation. The next step is to calculate the
percentage change in total productivity between consecutive time periods t and t-1:

Pct =

TP tTPt 1
100
TPt 1
Pct =Percent changetotal productivity between t1t

Where

TPt =

(total output )t
(total input )t

TP t1=

( total output ) t1
( total input ) t1

The total output and total input are expressed in constant dollars with respect to a base
period.
A data file structure is then prepared, showing the percent change in total productivity
improvement and the technique of productivity improvement used in the various time periods. We
denote the kth technique by

T k , where k=1,2.......,K (K=54 according to our classification).

Determination of productivity improvement coefficients. Assuming that there is a linear

relationship between the change in total productivity and the usage of the productivity improvement
techniques in a given period

PC t as follows.

PC t =A 0 t + A 1t T 1 t + A2 t T 2t + + A kt T kt + + A 54 t

T kt = 1 if technique k is used period t

0 otherwise
A kt =Productivity improvement coefficient for technique k period t
Evaluation of the productivity improvement coefficients and technique usage. Those techniques
that are associated with negative productivity improvement coefficients may be noted in order to
determine the reasons for their not contributing to the organizations total productivity.

A frequency distribution of the usage of the techniques for different periods is also prepared in
order to indicate the consistency with which some of these techniques yielding positive productivity
changes.
The techniques that are associated with positive coefficients are selected as a preliminary set; we
shall call these the candidate techniques.

Final selection of the productivity improvement techniques. A final selection of the

techniques for productivity improvement is made by formulating an integer programming model for a
given time period.
Maximize
r

Ak T k
k=1

Subject to
r

f k Tk F
k=1

bk T k B for k =1,2, .., r

mk T k M for k=1,2, .. ,r
r

sk T k S
k=1

T k =0,1

Where

T k = 1 if technique k is selected
0 otherwise

A k = productivity improvement coefficient for technique k

f k =fund requirement for technique k
F = Maximum available funds

B k =Payback period for technique k

B = Maximum allowable payback period as per organizational policy

mk =time required install technique k

M = Maximum allowable installation time

s k =saving using technique k

r = Number of candidate techniques
S = Minimum acceptable total saving
Implementation of selected techniques. The techniques selected in step 5 above are the ones to
implemented for maximum possible improvement in total productivity level of the organization. A
plan of action must be drawn up for such an implementation.
Of course the implementation is done, the result of the anticipated productivity improvement
will be known by measuring the total productivity level again. This then leads us back into the next
round of the productivity process.
Example-To illustrate the proposed methodology for a formula approach to productivity
improvement, we consider a mythical corporation, ABC, which is assumed to comprise 10 companies.
2 companies manufacturing

Electronic computing machine

companies manufacturing

Automotive parts

companies manufacturing

Steel foundry items

companies manufacturing

Aircraft

companies manufacturing

Knitwear

companies manufacturing

Food items

Data Collection-The data for total sales and total expenses, and the usage of various techniques of
productivity improvement, were collected from a two-page questionnaire sent to the 10 companies.
Computation of Productivity Changes and Data File Compilation: The total productivity value
were computed for 10 six-month periods. The percent change in total productivity from one period to
the next was then calculated and a data structure was established.
Determination of productivity improvement coefficients. A multiple regression analysis was
performed using the multiple regression subroutine of the SPSS program on UNIVAC 1100/8 system.

Productivity improvement coefficient based on data from 10 companies for 10 six month
period

Technique No

Technique name

productivity improvement
Coefficient (%)

T24

communication

+98.16

T12

energy conservation

+48.51

T46

production scheduling

+22.78

T43

job evaluation

T13

+13.39

individual financial incentive

+6.42

T16

employee promotions

T51

quality control

-34.97

T48

inventory control

-49.58

T26

-1.72

training

T47

-54.04

advertising and promotions

-60.04

Constant term

12.1956

Frequency distribution for the usage of the 54 techniques

Technique
T1
T2
T3
T4
T5
T6
T7
T8
T9
T10
T11
T12
T13
T14
T15
T16
T17
T18

CAD
CAM
Integrate CAM
Robotics
Laser-beam technique
Energy technique
Group technique
Computer graphics
Emulation
Maintenance management
Rebuilding old machinery
Energy conservation
Individual financial incentives
Group financial incentives
Fringe benefits
Employee promotions
Job enrichment
Job enlargement

Time periods (each 6 months long)

1
2
3
4
5
6
1
1
1
2
2
2
3
3
3
3
3
3
1
1
1
1
1
1
1
1
1
1
1
1
0
0
0
0
1
1
2
2
2
2
2
2
1
1
1
1
2
2
2
2
2
2
2
2
2
2
2
2
2
2
4
4
4
4
4
4
4
4
4
4
5
5
3
3
3
3
3
3
2
2
2
2
2
2
0
0
0
0
0
0
5
5
5
5
5
5
5
5
5
5
6
6
2
2
2
2
1
1
2
2
2
2
1
1

7
2
3
1
2
1
2
2
2
2
5
5
5
2
0
6
6
2
1

8
2
3
1
2
1
2
2
2
2
5
5
6
2
0
6
6
2
1

9
4
4
2
2
2
3
2
3
2
6
5
7
3
0
6
7
2
1

10
4
5
2
2
2
3
2
3
2
6
5
7
3
0
6
7
2
1

T19
T20
T21
T22
T23
T24
T25
T26
T27
T28
T29
T30
T31
T32
T33
T34
T35
T36
T37
T38
T39
T40
T41
T42
T43
T44
T45
T46
T47
T48
T49
T50
T51
T52
T53
T54

Job rotation
Worker participation
Increasing worker skills
Management by objectives
Learning curves
Communication
Better working condition
Training
Education
Role perception
Quality of supervision
Recognition
Quality circle
Punishment
Zero defects
Value engineering
Product diversification
Product simplification
R&D
Product standardization
Product reliability improvement
Method engineering
Work measurement
Job design
Job evaluation
Job safety design
Human factors engineering
Production scheduling
Advertising and promotions
Inventory control
Material requirement
Planning(MRP)
Materials management
Quality control
Quality handling system
Design
Recycling materials
Computer-aided data
Processing

1
2
3
2
4
5
3
5
3
0
3
3
0
4
2
3
3
3
5
3
3
3
3
2
4
3
2
6
4
4

1
2
3
2
4
5
3
5
3
0
3
4
1
4
1
3
3
3
5
3
3
3
3
2
4
3
2
6
4
4

1
2
3
3
3
5
4
5
3
0
3
4
1
4
1
3
3
3
5
3
4
3
3
2
4
3
2
6
4
4

2
2
4
4
3
5
4
5
3
0
3
4
4
4
1
3
3
3
5
3
4
3
3
2
4
3
3
6
4
4

1
2
4
4
3
5
4
5
3
0
4
4
1
4
2
3
2
3
5
3
4
3
3
2
5
3
3
6
4
4

2
2
5
5
3
5
4
6
4
0
4
4
1
4
2
3
3
4
5
3
4
3
3
2
5
4
3
6
4
5

3
3
6
5
3
5
5
7
5
0
5
4
2
4
1
4
3
4
5
4
5
4
4
2
6
4
4
7
4
6

3
3
5
5
3
5
5
7
5
0
5
4
3
4
1
4
3
4
5
4
5
4
4
2
6
4
4
7
4
6

3
4
6
6
5
6
6
8
5
0
5
5
3
4
1
4
4
4
5
6
6
5
5
2
7
4
5
8
4
6

3
4
6
6
5
6
6
8
5
1
5
5
5
4
1
4
4
4
5
6
6
5
5
2
7
4
5
8
5
6

1
1
7

1
1
7

2
1
7

2
1
7

2
1
7

2
1
7

3
2
7

3
2
8

3
4
9

5
4
9

2
3

2
3

2
3

2
3

3
3

3
3

4
3

4
3

4
3

4
3

Final selection of the productivity improvement technique. For each of the candidate techniques
identified in the previous step, let us suppose that the director of productivity management in the
corporate headquarters has his or her people compile the information based on the questionnaire filled
out by each of the ten companies.

Data for the candidate techniques

Improvement
Coefficient
Technique
T1
T2
T3
T4
T5

Production scheduling
Communication
Job evaluation
Energy conservation
Individual financial
Incentives

Average
installation
time(Mos)

Average
payback
period

Average annual
savings attributable
the technique

(Mos)

(Millions

22.79
98.16
13.39
48.51

6
12
1
12

6
12
3
6

0.30
0.35
0.05
1.50

6.42

12

1.00

$ )

It is not realistic to expect each of the companies to employ all the 54 techniques of productivity
improvement; therefore, what we have done here is to come up with a set of techniques that have been
proved successful in one or more of the ten companies.
The formulation for final selection of the productivity improvement techniques from among the
candidate techniques is given by the following:
Maximize:
Subject to:

22.79 T 1 +98.16 T 2+13.39 T 3+ 48.51 T 4 + 6.42T 5

0.30 T 1 +0.35 T 2+ 0.05T 3 +1.50 T 4 + 1.00T 5 >1.6
0.15 T 1 +0.35 T 2+ 0.0125T 3 +0.75 T 4 + 0.083T 5 1.2
T k =0, 1

for k =1,2,3,4,5

This model was solved by using the Mixed Integer Programming (MIP) subroutine of the
FMPS program on the UNIVAC 1100/8 computer.
The CPU time was 0.016 minutes, and the solution obtained was

T 1 =0 T 2=1 T 3=1T 4 =1T 5=1

Objective function = 166.48

Principles of productivity improvement

The following principle should be considered for
productivity
improvement;

1-microprocessor principle
Whenever and wherever possible design products and
processes with microprocessor control .The use of
microprocessor creates built-in productivity and quality
that may not be ordinary achieved unless formal effort are
made once the product or process are designed

By using this principle in product and process the number

of components in the traditionally large logical circuit can
be reduced
Reliability can be increased
Flexibility can be enhanced
It drastically reduce mechanical ,electrical and electronics
components

2-Global market principle

By using this principle a company will strive to produce
the most competitive product in the domestic and
international market.
It is one thing for companies to think that their products
are best

3-learning curve principle

Whenever possible plan productivity levels and product
costs on a learning curve
Learning curve is a curve drown between time per unit
and quantit produced
whenever the time needed to do a task reduces by a
constant proportion for every doubling of output
quantity we have a learning curve
Aircraft manufacturing companies use the learning
curve to quote the price of aircraft
Quantity produced
100

200

400

50

3.00

Time per unit,min

2.5oo

2.00 1.600 1.280

Time per unit, min
2.00

1.00
0 100

200 300 400

Quantity produced, units

4-Secrecy principle
Productivity improvement strategies that are novel when
compare to the competitor must be kept secret
European and asian companies tend to be more
conscious of the secrecy principle than are united states
companies
Nondefense organization do not have to give away their
importance to productivity improvement strategy simply
because they do not produce any product that are
classified top secret

5-product mix principle

Develop a product mix that consistently shows the
largest gain in total productivity and market share
The productivity mix principle enables the
management of a company to add one more dimension
to the product strategy decisions namely the gains in
total productivity
It provides a moderate increase in market share and
rather good gain in total productivity

6-Emulation principle

 Take the best of at least three competitors

technologies in product design ,development and
production
By using emulation approach eventually the problem
can be solved
When the gap in technologies between the company
emulating and the company emulated is substantial
then emulation is necessary
Emulation is not an easy thing to many companies
particularly in figuring out the manufacturing
process used to produce a particular product

7-productivity gain sharing principle

Always share the gain in productivity improvements with
every one directly or indirectly responsible for it particularly
employees and customers
This principle is one of the most important tool for
productivity improvement
Companies that have had successful productivity programs
have not only operated at price increase less than those in
industry but have done so at increased wages and salary to
their employees true productivity improvement must be
manifest in this way and must be shared with those who are
responsible for it
If a hospital for example improve the productivity of its
outpatient services, it ought to pass on some of the saving to
the employee who have been responsible for it .Also it ought
to reduce the charges to customers receiving the outpatient
services
Many managers assures the employees that their job will not
be taken away as a result of productivity gain .However
when the reality of situation warrants a reduction in the
workforce ,these assurance and promise are never kept .

8-Leading competitor principle

Be the leading competitor for as many products/services
as possible

 An organization that is a leading competitor in many

products or services has a greater safety cushion in the
market place than those that do not
Companies that produce their products right the first time
and offer the best quality product at the most competitive
price have a much better chance of being leading
competitors

9-Harmony principle
Seek harmony in human relations at all level of
management from the topmost executive down to the
productions/operations level employee
It is the most effective one for short and long term
productivity improvement principle, it is also very difficult
principle to practice. internal politics in an organization
result from a lack in harmony between the goals and
objectives of the management ,the employee and the
union.
Whenever a union exists in an organization sincere effort
must be made to work with it
Harmony can not be taught through few training session
,seminars and workshops .it can be learned simply by
reading about human relations

10-international outlook principle

Keep an perspective in activities related to planning
,research and development ,marketing ,
operations/production and technology transfer
An organization need not wait to practice this principle
until it has become a multinational operation
Have a small group of people at the corporate level to
gather information from various part of their competitive
environment on products, processes ,market shares and
technological development.
Apply game theory to determine long term strategies for
productivity improvement .

 Make vital information available to the various divisions

and plants or operations centres in the corporation.

11-cooperative research principle

Works closely with universities and generic research
establishments to bring in ideas for productivity
improvements .
Universities can offer many opportunities for cooperative
research. Students interns at the senior undergraduate
and graduate levels are a source of fresh thinking and
new ideas ,that may otherwise have to be purchased
through consultant services.
The principle ,if practiced ,can be a very effective tool for
rapid increase in productivity.

12-productivity process principle

Productivity improvement must be an on going day to day
process and not a one time program or project .
Productivity improvement must continue regardless of the
amount of publicity the term productivity receives
In any organization whether profit making or not ,there is
always the need to offer the best product or service at the
lowest possible cost of manufacture or the lowest possible
cost of delivery of the service .only consistent honest
effort at productivity improvement can be ensure this
result .
The productivity process must be as much a routine in an
organization as the manufacturing ,selling and accounting
functions