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Md.

Razu Ahammed
Research Officer
National Productivity Organisation
Trends in the Global Economy
 Globalization of markets
 Globalization of value chains
 Globalization of knowledge
 Innovation and skill an increasing share of value added
 Services an increasing share of value added

 Competitiveness depends on productivity


 The bar for competitiveness is rising
 Competitiveness in the global economy is a positive-sum game

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PROFIT =
Selling Price - Cost of Production

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e.g.
Cost of Production = Rs. 100
Profit = 10 %
Selling Price = 100 + 10 = 110
After one year
Cost of Production = Rs. 120
Profit = 10 %
Selling Price = 120 + 12 = 132
Conclusion
Higher the inefficiency higher the PROFIT
Why to bother ?
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Razu, NPO
SICK AND DYING COMPANIES
Closure of industrial Units
Reduction in Employment
VSR Scheme
No Recruitments

Events which earlier had little or no impact on business enterprises are


now increasingly threatening their survival

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Solution
Improve Quality
Reduce Cost
Reduce Cycle Time

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In short
Conserve Resources
(Money, Time, People )

Improve PRODUCTIVITY

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Why is productivity important?
“Over long periods of time, small differences in rates of productivity growth compound,
like interest in a bank account, and can make an enormous difference to a society's
prosperity.

Nothing contributes more to reduction of poverty, to increases in leisure, and to the


country's ability to finance education, public health, environment and the arts.”

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Why is productivity important?
“Productivity is the prime determinant of a nation’s long run
standard Of living, it is the root cause of national per capita
income”

By
i) Through enterprise level higher resource utilization

i) Through competitive enterprises

ii) Through higher degree of integrations (Socio-economic institutions)

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Razu, NPO
Razu, NPO
REDUCTION OF ALL KINDS OF
WASTAGES

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Vision of Productivity
&
Relation with Development

Higher
Standard
of Living

Sustained
TFP
Growth

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Productivity has 3 distinct economic effects :

1. It increases wages, so demand goes up


2. It reduces prices, so sales go up even more
3. It improves profits, so investments are
made again.

No other strategy accomplishes all


those objectives at the same time.
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The Basic Concept
Output
Productivity =
Input

Labor Capital

M/C Mtls Energy

Productivity 1 Output Output and input


3
change: together
2 Input
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Productivity in Simple Terms
Output
Productivity =
Input

= Doing Things Right + Doing the Right Things


(Efficiency) (Effectiveness)

= Doing the Right Things Right


What is productivity?
Productivity is the efficient and effective use
of resources – labor, capital, land, materials,
time, information, etc.- in the production and
distribution of goods and services that meet
users’ need and requirements.
What is productivity ?
PRODUCTIVITY is more than a science,
technology or technique. It is also a
philosophy and an attitude of mind that rest
on the motivation of people to constantly
strive towards quality and competition
Break Even Concepts

Revenue

Profit
Variable Cost
Rs.

(V.C)

Loss

Fixed Cost
(F.C)

PRODUCTION CAPACITY

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Break Even Concepts

Revenue

Variable Cost
Rs.

(V.C)

Fixed Cost
(F.C)

PRODUCTION CAPACITY

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Break Even Concepts

Revenue

Variable Cost
Rs.

(V.C)

(V.C)

Fixed Cost
(F.C)

PRODUCTION CAPACITY

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Manufacturing Process?
Activity that transforms input into output

Input Activity Output

Resources: Results:
Waste:
People Products
Facilities/Equipment scrap Services
Material Rework Performance
Methods Delays
Energy Etc……..
Time
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5 ways to Improve Productivity
Reduced Cost Output
Input
Manage Growth Output
Input
Work Smarter Output
Input
Pare down Output Output
Input
Work Effectively Output
Input
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Productivity in Simple Terms
Output
Productivity =
Input

= Doing Things Right + Doing the Right Things


(Efficiency) (Effectiveness)

= Doing the Right Things Right

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Quality, Innovation and Productivity
Productivity in the New Economy
Output
=
Input

= Doing Things Right + Doing the Right Things


(Efficiency) (Effectiveness)

= Doing the Right Things Right

= Quality + Innovation
= Positive state of mind
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Productivity–Changing Perspective
 Attitude of Mind

 Continuous Effort – To apply new techniques, new


methods

 Faith in Human Progress

 Will to improve on the present situation, no matter how


good it may seem to be and it may really be

 End Result Orientation


Customer Satisfaction

Cost – Quality – Variability

Utility – Reliability – Service


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CHANGING NATURE OF WORK

Conventional Today’s Production


Production Factors Factors
 Knowledge
 Man
 Skills
 Material  Information
 Plant & Machines  Know how
 Capital  Intangible assets IPRs

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FACTORS AFFECTING PRODUCTIVITY

 ORGANISATIONAL FACTORS

 HUMAN FACTORS

 TECHNOLOGY FACTORS

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SIX SIGNIFICANT FACTORS EFFECTING PRODUCTIVITY

1) WORKERS : ATTITUDES & ABILITIES

2) MANAGEMENT : PLANNING & COMPETENCES

3) TECHNOLOGY : PROCESS & PRODUCTS

4) GOVERNMENT : REGULATIONS & SUPPORT

5) ENVIRONMENT : MATERIAL & ENERGY, CLIMATE

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PRODUCTIVITY IS ……

STOP WASTAGE
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THANK YOU

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