What Is Productivity?
Productivity is a word that is tossed around by all of us at some time or another, but not always with the same definition or intent. In its simplest—and probably its most important definition—productivity is a measurement of the total output of an organization against the total cost accumulated to achieve that output.
How Do You Improve Productivity in Manufacturing?
The total output of an organization sounds intimidating. (That’s not to say that individual operations shouldn’t be assessed for their ratio of output to input. That’s important too, but you cannot be successful if one area improves and all others do not.) I’m sure you’re asking yourself, “How can I improve all areas at once?” Well, you can’t. You may in fact need to approach them one at a time. However, never lose sight of your final goal: total organizational productivity improvement OR how to get the most done with the least effort in the least amount of time, resulting in the least cost.
Let’s Make Some Money!
One of the goals of productivity improvement is to reduce the cost ratio of input to output. For instance, if it costs you $10 to ship $20 worth of product, the ratio is 2:1. This means that for every dollar you spend, you get two dollars in revenue. Now, if you can reduce the cost of that input to $5 and still ship $20 worth of product, the ratio is 4:1 and you would be getting $4 for every dollar of cost. So, if this is true, why couldn’t you get the same results by simply adding $5 to the price of your product or service?
Let’s take a look. You do the math. If you’re spending $10 to get out $25 of value, your ratio is now 5:2. This means that for every dollar you spend, you only get two and a half dollars. Not so good, right? Raising prices doesn’t always get you what you want in the long run. It’s better to decrease your costs while increasing your margins, keeping competitive and staying in business.
Make It Easier, Not More Complicated
Kaizen is a Japanese word meaning “the continuous drive to improve both quality and productivity.” The concept is that as you improve productivity, you must also focus on improving quality. If you improve productivity without simultaneously improving quality, those productivity improvements will be wasted. Why? Because even though you have improved performance in one area, you have now caused problems for subsequent operations that will have to re-work all of the poor quality from upstream operations. Any gain in cost will be lost. The old adage still holds true, that “the job should get easier as it gets closer to the shipping door, not more complicated.”
No Quality Problems? Watch Out!
Do you have quality problems with your products after they’re in the hands of your customers? Do you ask yourself, “Why?” Do you track what kinds of warranty problems you’re having? Do you understand what the sources of those problems are? If not, how come? Too often, manufacturers focus on productivity improvements and lose sight of quality. In doing this, they’re “robbing Peter to pay Paul.”
Just Fix the Problems in the Factory!
Productivity improvements frequently become the responsibility of the plant manager or shop foreman, and these efforts are focused on process improvements only. You can only improve how you drive a screw to a small degree. A saw blade can only legally spin at a certain rate. So where can you look for productivity improvements?
Make sure that you involve all functional areas of the business when aiming to improve productivity. Include designers, engineers, sales teams, buyers, managers, shipping supervisors, owners, vendors, distributors, installers, accountants, customers, you name it. These people often see areas that can be improved that those on the shop floor may not see.
For instance, a vendor who has been making an expensive part for your product may see how he could reduce the cost, improve the function, and make it easier to install. An installer may point out an item that he has always had a problem with, for which you may be able to find immediate improvement. A designer or engineer may be able to change product specifications, thus improving manufacturability and quality.
By taking a holistic approach, you create a collaborative effort. This type of synergy results when 2 + 2 does not equal 4, but equals 6 or 7. By bringing others into your improvement process, you’ll be able to achieve far more than you ever thought possible.
By: Erland Russell
Enjoyed this article and want to get more? Visit the TigerStop blog to see productivity in manufacturing in action.