Productivity Techniques

Introduction:
Current economic realities (liberalized and dynamic markets, constantly changing
customer preferences, new structure of production and work etc.) are leading to a
rethinking of the concept of productivity. Traditionally productivity was considered to
be an efciency concept (amount of output in relation to eorts or resources used),
whereas now it is being increasingly viewed as an efciency and eectiveness
concept (how enterprise meets the dynamic needs and e!pectations of the
customer).
The increased competitiveness, internationalization and sophistication of markets,
globalization of manufacturing and the increased concern about social and
ecological issues make productivity improvement more important. "uch broader
conception of productivity calls for a wider set of indicators to catch and re#ect the
new elements and parameters involved. The broader conception of productivity is
incorporating wider de$nitions of what the outputs and inputs are of the production
process.
To be relevant in the dynamic and changing environment, productivity improvement
eort must focus on %knowing what to produce and distribute& and %knowing how to
produce&
'nowing what to produce( by continuously reviewing and identifying changing
customer and societal needs and e!pectations and developing and designing
products and services to satisfy the needs.
'nowing how to produce( by constantly improving production and distribution
processes to produce and deliver the goods and services in the most efcient way.
)roductivity improvement must focus on value creation rather than minimization of
inputs.
*reen productivity and sustainable development is another important role that
productivity improvement can play in the preservation, rehabilitation and
enhancement of the environment. There should be a focus on productivity
improvement through better supply chain management.
Concept of Productivity
+arly ,-
th
century productivity obtained a precise meaning as a relationship between
output and the means employed to produce that output.
.n /01- 2rganization for +uropean +conomic Cooperation oered a more formal
de$nition of productivity( .t is the 3uotient obtained by dividing output by one of the
factors of production. 4ence we can obtain productivity of capital, investment or raw
materials.
)roductivity is all about efciently utilizing resources (inputs) in producing goods and
services (output).
The concept of productivity is widely accepted and is recognized as an indispensable
factor for rapid economic development. The promotion of productivity and efciency
are regarded as key elements in the process of achieving high rate of growth. 2ne of
the prime causes of low level of development or under development of certain
countries is due to low productivity. 4ence, the need today is to increase
productivity in all sectors of the national economy with a view to accelerating
economic growth, providing opportunities for more employment and improving the
standards of living of people.
.52 de$nes productivity as the ratio of output of work to input of resources used in
the process of creating wealth.

)roductivity 6 2utput 6 7alue of goods 8services
.nput Cost of resources consumed
)roductivity is commonly interpreted as output in terms of physical volume per
employee or per man9hour (productivity of labor)
The term output includes all goods produced and services rendered. :esources used
are in the form of land, raw material, plant, machinery, man power, capital,
technology, etc. )roductivity is the measure of how well these resources are brought
together in organizations and utilized for obtaining goods and services. )roductivity
is reaching the highest level of performance with the least e!penditure of resources.
.ncreasing productivity indicates one or more of the following three courses of
action(
.ncrease volume over a given period.
)roduce the same volume over a lesser period.
)roduce the same volume for lesser input in a given time.
)erformance .nde! 6 ;ctual <ork done
"tandard e!pected work
)roductivity is often confused with the term production. 4igher production does not
mean higher productivity. )roduction is the activity of producing goods and 8 or
services. .t is the 3uantity of output produced while productivity is the ratio of the
outputs produced to the inputs used.
Partial productivity:
)artial productivity is the ratio of output to one class of input. ;t a given time it
considers only one input and ignores all other inputs. The various partial productivity
measures are(
5abour productivity( .t is the ratio of output to labour input (labour hours)
Capital productivity( .t is the ratio of output to capital input (rupees)
=aterial productivity( :atio of output to material input
Total Factor Productivity Model:
>eveloped by ?ohn <. 'endrick (/01/)
5abour and capital are considered to be the most signi$cant contributors in the
process of production. Therefore in the Total @actor )roductivity =odel labour and
capital are the only two input factors taken into consideration.
Multi-factor Productivity Model:
>eveloped by "cott >. "ink
.n =ulti9factor )roductivity =easurement =odel the maAor input factors considered
are labour, material and energy. Capital has not been included as an input factor, as
it is the most difcult to estimate how much of capital is being consumed at any
point of time.
Total Productivity Model: (TPM)
>eveloped by >avid ?. "umanth (/0B0)
Total productivity is the ratio of total output to the sum of all input factors. .t re#ects
the Aoint impact of all the inputs in producing the output. "umanth considered 1
items as inputs namely human, material, capital, energy and other e!penses.
Total )roductivity 6 Total Tangible 2utput
Total Tangible .nput
Total tangible output 6 7alue of $nished units produced C partial units produced C
>ividends from securities C .nterests from bonds C other incomes
Total tangible inputs 6 7alue of human inputs C capital inputs C materials
purchased C energy inputs C other e!penses.
Dy tangible we mean directly measurable. @or e!ample the number of devices
assembled, the tons of steel produced are all tangible outputs. The amount of
goodwill generated by an organization is another e!ample of an output element that
is not tangible.
The intangible output and input elements are relatively small in comparison with the
total tangible output and input and they maybe ignored for practical purposes
2utput here refers to all the output produced and input refers to all the resources
consumed or e!pended to produce this output.
4uman and energy input may be e!pressed in man9hours and kilowatt hours. 2utput
could be in tones, numbers
Doth the output and the input have to be e!pressed in value terms (monetary terms)
because all the output and input elements are not in the same units.
etc.
Productivity Improvement
Sumanths Five Proned Model:
(>eveloped by "umanth and 2machanu, /0E,)
They have classi$ed $fty four dierent techni3ues of productivity improvement into
1 basic types( technology9based, employee9based, product9based, process9based
and material based. These categories cover techni3ues based on traditional
industrial engineering, marketing, systems control, operations research, computer
engineering, management, psychology, behavioral science and many other
disciplines. .mproving total productivity ensures the reduction of total cost8unit, and
this should be the primary goal in any productivity management process. The model
for productivity improvement is based on a scienti$c selection of a set of techni3ues
for a given time period to achieve a given level of total productivity.
)roductivity .mprovement Techni3ues
/) Technology9based techni3ues
a) Computer9aided design (C;>)
b) Computer9aided manufacturing (C;=)
c) .ntegrated C;=
d) :obotics
e) 5aser beam technology
f) +nergy technology
g) *roup technology
h) Computer graphics
i) +mulation
A) =aintenance =anagement
k) :ebuilding old machinery
l) +nergy conservation
,) +mployee9based techni3ues
a) @inancial .ncentives (individual)
b) @inancial .ncentives (group)
c) @ringe bene$ts
d) +mployee promotions
e) ?ob enrichment
f) ?ob enlargement
g) ?ob rotation
h) <orker )articipation
i) "kill enhancement
A) =anagement by obAectives (=D2)
k) 5earning Curve
l) Communication
m) <orking condition improvement
n) Training
o) +ducation
p) :ole perception
3) "upervision 3uality
r) :ecognition
s) )unishment
t) Fuality circles
u) Gero defects
H) )roduct9based techni3ues
a) 7alue +ngineering
b) )roduct diversi$cation
c) )roduct simpli$cation
d) :esearch and development
e) )roduct standardization
f) )roduct reliability improvement
g) ;dvertising and promotion
I) Task9based techni3ues
a) =ethods engineering
b) <ork measurement
c) ?ob design
d) ?ob evaluation
e) ?ob safety design
f) 4uman factors engineering (+rgonomics)
g) )roduction scheduling
h) Computer9aided data processing
1) =aterial9based techni3ues
a) .nventory control
b) =aterials re3uirement planning (=:))
c) =aterials management
d) Fuality control
e) =aterial handling systems improvement
f) =aterial reuse and recycling
Computer-aided desin (C!") refers to the design of products, processes pr
systems with the help of a computer. C;> replaces the manual design on drafting
boards with interactive design at the C:T terminal of a computer. .n this case the
designer can view the design in three dimensions if necessary.
Computer-aided manufacturin (C!M) involves the use of a computer to
design and control the manufacturing process. .t replaces many manual design
and control functions in manufacturing.
Computer-interated manufacturin (CIM) is a fully integrated C;>8C;=
system that provides computer assistance from marketing to product shipment.
#o$otics is a technology that makes use of robots. ;n industrial robot is a
reprogrammable multifunctional manipulator designed to move material, parts,
tools or specialized devices, through variable programmed motion to accomplish
a variety of tasks.
%aser technoloy involves the use of a laser (5ight ;mpli$cation by "timulated
+mission of :adiation) beam to generate heat energy that may be used in diverse
ways. (cutting metals, drilling, welding, etc.)
&nery technoloy is the use of new sources of energy eg.( use of chemical
energy, solar energy, geothermal energy and hydrogen energy.
'roup Technoloy e!amines products, parts and assemblies. .t then groups
production parts into batches that have some similarity in geometry and
processing se3uence to simplify design, manufacturing, purchasing and other
business processes.
Computer raphics involves the use of computers to generate graphics of
obAects on a C:T screen. These graphics can be displayed in three dimensions.
&mulation refers to the copying of the best ideas from other companies within
the same industry. Dest ideas may include ideas on products, processes,
materials, technology, and management policies.
Maintenance Manaement is maintaining the currently available machinery
and e3uipment to help them function according to the maintainability and
reliability characteristics.
#e$uildin old machinery is modifying and remodeling e!isting machinery and
their tooling.
&nery Conservation Technoloy (&CT) is also referred to as energy
management. The basic obAective is to minimize the consumption of energy in all
forms without lowering the 3uantity or 3uality of output.
Inventory control has two aspects( when to place the order and how much to
order, to ensure that sufcient goods and materials are available at all times.
Material #e(uirement Plannin (M#P) is a management planning and control
techni3ue of manufacturing operations. .ts function is to work backward from
planned 3uantities and completion dates for end items on a master production
schedule to determine what and when individual parts should be ordered.
Materials Manaement is concerned with controlling the kind, amount,
location, movement and timing of the various commodities used and produced by
the industrial enterprise.
)uality Control is concerned with the design, measurement and control of the
3uality of raw materials, component parts, sub9assemblies and $nished products
or services.
Material handlin systems improvement * =aterial handling systems deals
with movement of raw materials, purchased parts, own9manufactured
components, sub9assemblies and $nished products to the right location at the
right time is the primary obAective of an efcient material handling system.
Material #euse and #ecyclin is used to reduce the material input.
Financial Incentives (Individual and 'roup) plans have been used in
companies to increase labour productivity.
Frine $ene+ts are means of rewarding, encouraging and motivating
management employees. @ringe bene$ts include the following(
=edical .nsurance
:elocation e!penses
"ubsidies for buying or
renting a home
@ree airfares for family
@ree company car,
telephone
@ree educational trips
abroad
@ree or subsidized higher
education
>isability .nsurance
+ntertainment e!penses
&mployee promotions are both a $nancial and non$nancial form of
motivation to enhance human productivity. .t involves the upgrading of an
employeeJs status and is a natural way of recognizing an employeeJs
skills, knowledge, pro$ciency and eort at his 8her present Aob.
,o$ enrichment is a non$nancial motivation techni3ue that provides
variety in assigned tasks and employee autonomy and discretion in
performing tasks.
,o$ enlarement involves the enlargement of responsibilities associated
with a Aob.
,o$ rotation involves the rotation of workers into dierent Aobs for short
periods of time. This method can provide all9rounders in a companyJs
operations because the workers are given an opportunity to learn and
perform tasks and operations that they were not originally hired for.
-or.er participation is an approach to overcome resistance to change
through employee involvement in planning and implementing the change.
.t is the mental and emotional involvement in a group situation that
encourages the person to contribute to group goals and to share
responsibility in them.
S.ill enhancement is a formalized techni3ue to increase the skills
needed to perform a Aob. This techni3ue may yield productivity
improvement more on a long9term than a shortKterm basis.
Manaement $y o$/ectives (M01) is a process of motivating all
participants by having superior and subordinate managers Aointly identify
common goals, carefully de$ne them and together monitor progress
toward achieving results.
%earnin Curve phenomenon is that whenever the total 3uantity of units
produced doubles the time per unit to produce the unit decreases by a
constant rate known as the learning rate. This takes place because people
gain pro$ciency with repetition of the same task or proAect.

+ective communication is necessary to achieve mutual understanding
between the employees and management and to establish social
conditions that will motivate the employee to improve productivity.
-or.in condition improvement is another employee9based
productivity techni3ue.
Trainin is important to achieve improved human productivity by
increasing the ability levels of the workforce.
&ducation * ; company can increase an employeeJs level of education
by providing programs in the form of evening courses in local high schools
and colleges. ; worker who has ac3uired good and sufcient education is
able to apply it and is able to eect a positive change in productivity.
#ole perception refers to the manner in which an individual de$nes his
or her AobL the type of eort the employee believes is essential for
eective Aob performance.
)uality of supervision K "upervision is concerned with the work of
creating and maintaining an environment in which people can accomplish
goals efciently and eectively. To improve the 3uality of supervision the
supervisor must be trained in interpersonal skills, human management,
group dynamics and other behavioral tools.
#econition is a process by which management shows
acknowledgement of an employeeJs outstanding performance.
Punishment can be eectively used to eliminate or suppress certain
types of behavior that may not be conducive to a healthy and productive
environment.
)uality circles are groups of employees who voluntarily cooperate to
solve problems related to production, 3uality, work environment,
maintenance, scheduling etc.
2ero defects programs attempt to improve 3uality by changing workers
attitudes. .t stresses on error free performance K %doing things right the
$rst time&.
3alue enineerin is concerned with the development of a new design
for a product or service with emphasis on the cost of manufacturing and
the ease of use.
Product diversi+cation involves the addition of new product types or
models to the e!isting ones.
Product simpli+cation involves the elimination of e!traneous or
marginal lines, types and models of products. .t includes a reduction in
the range of materials and component parts used and a reduction in the
comple!ity of methods and processes of manufacture.
Product standardi4ation is a systematic eort on the part of design
engineers, industrial engineers and marketing managers to create a
product mi! that minimizes manufacturing, distribution, selling and
maintenance costs.
#esearch and "evelopment takes two forms( basic and applied. Dasic
research tends to focus on the development of fundamental knowledge,
while applied research attempts to e!plore the potential applications for
the fundamental knowledge so developed.
Product relia$ility improvement * :eliability refers to the probability
of a product, component, or system functioning successfully over a period
of time. ; product should be designed with builtKin reliability so that it
performs without failure for a longer time.
!dvertisin and promotion is an eective techni3ue to improve the
total productivity for a product or service.
Methods enineerin is a systematic procedure to eliminate combine or
reduce the work content of tasks. The main obAective of methods
engineering is to reduce the time taken to perform a task.
-or. measurement involves the measurement of work by placing a
time value on it. .t determines the time re3uired to perform an operation
by a speci$ed method under speci$c conditions of the workplace.
,o$ desin involves the creation of a complete piece of work with as
much decision making and control as possible.
,o$ evaluation is the establishment of the relative worth of various Aobs
in an organization.
?ob safety design is a techni3ue for improving the safety aspects of a Aob.
; safe workplace for an operator is an important factor in maintaining a
positive attitude towards work.
4uman factors engineering (+rgonomics) is concerned with a
multidisciplinary activity of designing human e3uipment interface to
match the human capacities with his physical work environment. The
main obAective of this techni3ue is to properly balance task and machine
re3uirements against an operatorJs anatomical, physiological, perceptual
and information processing capabilities.
)roduction scheduling is planning for se3uencing and timing the work. The
main obAective of production scheduling is to have the right materials,
parts, documents and any other necessary items at the right place at the
right time.
ILO Approach to Productivity Improvement
.52 approach of productivity improvement focuses on the work content of
any task. The total manufacturing time is divided into(
a) Dasic work content
b) ;dded work content
c) .neective time
a) Basic work content (BWC): This is the minimum irreducible time
re3uired to produce one unit of output under ideal condition.
b) Added work content
; M <ork content added by the defects in the design or
speci$cation of the product8service
D M <ork content added by inefcient method of manufacturing or
operation.
c) Ineective time: ;ll interruptions which cause the worker or machine
or both to stop the operations that they are to be engaged in.
C M .neective time due to short comings of the management.
> M .neective time within the control of the worker.
Total <ork Content (T<C) 6 D<C C ; C D
Total ineective time 6 C C >
Total time of operation 6 T<C C Total ineective time
! comprises of:
; /( Dad design of product prevents use of most economic processes
; ,( 5ack of standardization prevents use of high volume processes
; H( .ncorrect 3uality standards cause unnecessary work
; I( >esign demands removal of e!cess material
0 comprises of:
D /( <rong machines used
D ,( )rocess not operated correctly or in bad condition
D H( <rong tools used
D I( Dad plant layout causing wasted movement worker
D 1( 2peratorJs bad working methods
C comprises of:
C /( +!cess product variety adds idle time due to short production runs
C,( 5ack of standardization adds idle time due to short runs
C H( >esign changes add ineective time due to stoppages and rework
C I( Dad planning of work and orders adds idle time of manpower and
machines
C 1( 5ack of raw materials due to bad planning adds idle time of
manpower and machines.
C N( )lant breakdowns adds idle time of manpower and machines
C B( )lant in bad condition adds ineective time due to scrap and
rework
C E( Dad working conditions add ineective time by forcing workers to
rest
C 0( ;ccidents add ineective time through stoppages and enforced
absence
" comprises of:
> /( ;bsence, lateness and idleness add ineective time
> ,( Careless workmanship adds ineective time due to scrap and
rework
> H( ;ccidents add ineective time through stoppages and enforced
absence

Causes for e5cess 6or. and the remedial measures possi$le
Sr7
8o7
Causes Corrective Measures
/. >efective design or wrong
speci$cation. 5ack of standards,
incorrect 3uality speci$cations
)roduct research and
development, =arket survey,
7ariety reduction,
"tandardization
,. <rong method or process )rocess development, method
study, variety reduction.
H. "hortcomings on the part of
=anagement
<ork measurement, improving
working conditions, safety
precautions, inventory control,
preventive maintenance
I. "hortcomings on the part of the
workers
.ncentive schemes, sound
personnel policy, social welfare
measures.
9M !pproach to Productivity Improvement
H= stands for =ura, =uri and =uda. These are ?apanese words which are
associated with pain areas.
.t is also called as the H = system. .t helps us to identify, reduce, eliminate
and avoid the waste of resources occurring in the system. +limination of
wastages will improve the efciency and productivity of the system.
Mura: =ura is a ?apanese term for unevenness. =ura can be avoided
through elimination of all defects, inconsistencies and non9uniformities in
product, process material or in any resource.
Muri: .t can be avoided by elimination of all non9value adding strains.
"trenuous activity can be reduced or made easy by use of arrangements
like the chain pulley mechanism etc.
Muda( ;ny wasteful activity which does not add value to the product is
called as =uda.
<aste elimination is one of the most eective ways to increase
pro$tability in manufacturing and distribution businesses. .n order to
eliminate waste, it is important to understand e!actly what waste is and
where it e!ists in the factory or warehouse. ;fter years of work to
eliminate waste, Toyota, the ?apanese automobile manufacturer, identi$ed
the following seven deadly wastes (=uda)(
:7 -aste arisin from overproduction( .t is created by producing
more products than are re3uired by the market. <hen the market is
strong, this waste may not be very noticeable. 4owever, when demand
slackens, the overproduction creates a very serious problem with
unsold inventory and all the by9products associated with it. This
situation re3uires additional material handling, storage space and
interest paid on money used to carry the inventory.
;7 -aste arisin from time on hand (6aitin): <aiting due to
delays, hold ups etc. for materials, repairs leads to workers remaining
idle which adds to the cost of the company.
97 -aste arisin from transportin and unnecessary motion:
The transportation and double or triple handling of raw and $nished
goods are commonly observed wastes in many factories. 2ften the
culprit of this type of waste is a poorly conceived layout of the factory
#oor and storage facilities, which can mean long distance
transportation and over9handling of materials and manpower.
<7 -aste arisin from processin: The processing method may be
another source of waste.
=7 -aste arisin from unnecessary stoc. on hand: <aste arising
due to unnecessary and e!cess stock of raw materials, work in
progress or $nished goods leads to e!cess inventory storage cost,
spoilage, pilferage and possibility of obsolescence.
>7 -aste arisin from producin defective ood: "efective
goods call for inspection and rework. .f rework is not possible then it
has to be discarded as scrap
?7 -aste arisin due to time spent in chane over of set-up
between production runs and batches cause idle manpower, resources
etc.
3alue !nalysis and 3alue &nineerin
7alue +ngineering was $rst developed and perfected by 5awrence >. =iles , a
purchase e!ecutive in *eneral +lectric Company (*+C), O"; during world
war ..L thanks to the material shortage (due to rationing and reservation) in
the armament industry prevailing at that time. Onder trying conditions, 5arry
=iles was asked to $nd out alternatives with reduced cost which he did
without altering the 3uality of product. 4e called this as 7alue ;nalysis. 5ater
this techni3ue was adopted by the O" navy9Dureau of ships in /01I and it
was directed at cost avoidance (during the design stage) of millions of
dollars. .t has been since then known as 7alue +ngineering (7+). T;T; .ron
and "teel Co. is a pioneer in .ndia in adopting this techni3ue since the late
E-Js. Though the value methodology was introduced by one man working for
one company, it has grown in the late ,-th century so that it is now used
worldwide and is currently applied to all kinds of intellectual and physical
eorts in business and industry. 7+ has consistently yielded a large return on
investment while maintaining necessary 3uality and performance
re3uirements of the product, process or facility studied.
7alue +ngineering is embraced by a wide spectrum of businesses and
industries, from automobile manufacturers to chemical processors, from
aircraft companies to electronics $rms, from appliance manufacturers to
pharmaceutical companies. Dene$ts realized by companies who use 7+ far
e!ceed the cost of implementing 7+ programs. "avings in time and cost
contribute to improving an organizationJs competitive position in the
marketplace and to increasing its pro$tability for stockholders.
7+ has been traditionally applied to reduce unnecessary costs while
improving performance. 7alue +ngineering has proven to be a team9oriented,
creative, systematic, function9oriented approach that enhances decision
making, improves products, processes and facilities, and increases customer
satisfaction.
.n this competitive market companies today falter for a variety of reasons
paramount of these is the issue of cost eectiveness. Companies unaware of
these simple concept can not survive long. Customers want products those
are reliable, do what they are supposed to do and aordable at agreed price.
The premier tool for matching the customers needs with the right product at
the right place is 7alue +ngineering.
7.+. emerged as an essential tool for appropriate 3uality of product with
appropriate cost. 7.+. can yield considerable pro$ts in industrial enterprises.
.n a society where trade, commerce and industry are the engine of progress
and perhaps very foundation for prosperity, savings in monetary terms
assumes primary importance. 7.+ can play an e!cellent role in all those areas
as this can bring spectacular result right from the design stage to each stage
of production by suitably replacing material, changing methods, process etc.
The liberalization and globalization of the .ndian +conomy has presented
many challenges and opportunities. This in turn has imposed many heavy
responsibilities on engineers and managers who are to play pivotal role in
steering their organizations through stormy and turbulent path by achieving
cost reduction, technology up gradation, improved competitiveness, 3uality
diversi$cation, import substitution and above all efcient working and higher
productivity of the organization.
;s we are moving past relentlessly towards the future the success in
business is gradually and critically on the value attached to the product. This
concept provides any enterprise with a result driven frame work for
delivering better products and services at the lowest possible cost. 7.+. is a
systematic and organized procedure, decision making process which is
designed to ensure the ma!imum value for the client and consumer.
Concept and de+nition of 3alue:
7alue is a personal perspective of your willingness to pay for the
performance delivered by a product, process or proAect. .t is the estimated or
assessed worth of a thing. .t is difcult to specify value because value
change from person to person
7alue is a function of desired performance ()) and cost (C).
7alue 6 >esired )erformance ())
2verall Costs (C)
7alue can be of the following types(
Ose or utility value( ;ttributes of a product which accomplish a
use.
+steem value( =akes ownership of the obAect very desirable
+!change value( 7alue obtained from resale of the product
7alue of a function can be increased by I methods(
:educing costs while ensuring the same level of performance
.mprove performance at the same cost
+nhance performance by a disproportionately low increase in
costs
Combination of cost reduction and improvement in performance
7alue 6 @unction
Cost
+very need manifests itself as a function that the product satis$es. @unction
identi$es the characteristics which make the product or device work or sell.
.n 7; and 7+ functions are categorized and cost bene$t analysis is done.
Classi+cation of functions:
@se function A !esthetic function:
Ose function performs some action whereas aesthetic function pleases the
customer. @or e!ample a pair of trekking shoes will perform the function of
protecting the feet while on a trek whereas a pair of leather shoes will add an
aesthetic value to the user who is attending a function.
Primary functionB secondary function and tertiary function(
)rimary functions are the basic functions for which a product e!ists. They are
the most essential functions. "econdary functions arise out of speci$c design
chosen to ful$ll the primary function. "econdary functions if deleted will not
prevent the device from performing the primary function. Tertiary functions
are related to the esteem value.
@or e!ample the primary function of painting a bus is to prevent it from
rusting and corrosion. The secondary function is to identify the company to
which the bus belongs. The tertiary function of function of painting the bus
would be to give it a brilliant appearance.
Ciher order and lo6er order function:
<hen the 3uestion P<hyQJ is asked to the basic function the answer is the
higher order function. <hen the 3uestion P4owQJ is asked to the higher order
function we get the lower order function. ;s we continue asking the 3uestion
P4owQJ we will get functions still lower in order.
3alue !nalysis and 3alue &nineerin: "e+nitions
@ollowing are some of the de$nitions of 7alue ;nalysis(
7alue analysis is a step by step approach to identify the functions of a
product, process, system or serviceL to establish a monetary value for that
function and then provide the desired function at an overall minimum cost
without aecting any of the e!isting parameters like Fuality, maintainability,
productivity, safety and other performance characteristics.
7alue analysis can be de$ned as an organized procedure for efcient
identi$cation of unnecessary cost.
7alue ;nalysis is the study of the relationship of design, function and cost of
any product, material or service with the obAect of reducing its cost
through modi$cation of design or material speci$cation manufactured
by a more efcient process, change in source of supply (e!ternal or
internal), or possible elimination or incorporation in a related item.
The primary obAective of value analysis is to eliminate everything that is non
value adding.
3alue &nineerin: .n value engineering the value of all the components
used in the construction of a product from design to $nal delivery stage
are completely analyzed.
7alue engineering proAects are selected based on the following criteria( 4igh
cost areas, )roducts facing sti competition, systems and designs which are
old and have not been revamped or redesigned because they give low yield
products under e!isting conditions.
7; and 7+ in both cases the primary obAective is to design for functional
value. Two basic features in any 7; 8 7+ process is component elimination
and material substitution.
!im of 3alue enineerin:
To simplify the product
Ose efcient methods and processes
Ose cheaper materials
.mprove product design
.ncrease pro$ts by reducing costs
Phases of a 3alue !nalysis or 3alue &nineerin ,o$ Plan:
/) 2rientation )hase or *eneral )hase
,) .nformation )hase
H) @unction )hase
I) Creation )hase
1) +valuation )hase
N) :ecommendation )hase
B) .mplementation )hase
E) ;udit and @ollow Op )hase
:) 1rientation Phase: The orientation phase comprises of H steps9
a. Training( the supervisory and managerial sta should be given
training on 7; and 7+ and the awareness regarding various
productivity improvement techni3ues must be created in this
session.
b. "election of proAect( The proAect selected should have potential
for increment in the value. The proAect should be selected on the
basis of )areto analysis of all the costs. The )areto law of E-9,-
means ,-R items account for E-R of the costs. 4ence 7; and 7+
in such areas would help in reduction of costs to a greater e!tent.
c. "election of team( The team should comprise of heads of various
functions like design, marketing, production etc. team work is of
utmost importance in value engineering.
;) Information Phase: The team collects all relevant data pertaining to
the selected proAect. Contribution of team members from the dierent
functions8departments is essential. >ata related to technical
speci$cations, engineering drawings, production, cost data, work
speci$cations, customer preferences and perceptions should be
collected.
9) Function Phase: The function phase $nds an answer to three
3uestions(
a. <hat does it doQ
b. <hat does it costQ
c. <hat is its worthQ
Dy answering the $rst 3uestion we de$ne the function that the product or
service should give for satisfying the customer re3uirements and determine
the level of the function (primary, secondary, tertiary). Then a function Kcost
analysis is done and the relative worth of each function is established. .f the
value of the product has to be improved then necessary changes have to be
incorporated in the product.
@;"T (@unction ;nalysis "ystem techni3ue) diagram is prepared in this
phase. .t provides the graphic display of interrelationships of the functions.
<) Creation Phase: .n this phase an attempt is made by the team to
generate alternative method to answer %what else could do the same
function at a lesser costQ& ; brain storming session is re3uired at this
stage to generate multiplicity of ideas. The team should have a
positive approach with an in3uiring mind so that ma!imum number of
innovative ideas can be generated.
=) &valuation Phase: .n this phase the ideas that have been generated
in the previous phase are evaluated with respect to cost, savings and
functions. The alternatives are re3uired to be evaluated for their
workability, practicability, reliability and 3uality. The alternatives and
their estimated costs are compared to determine which one will
provide the greatest value increase.
>) #ecommendation Phase: The 7+ team then develops and re$nes
the best suggestion. ; proposal should be submitted to the
management. The proposal for change should comprise the reasons for
change, new investments and annual savings. The proposal should be
well substantiated with $nancial and operational details. @inally a
presentation has to be made to the management.
?) Implementation phase: .t is the most crucial phase of the 7;87+ Aob
plan. The ideas about the improvement in product design and the
ultimate choice recommended for adding value to the function of the
product must be implemented as per the recommendations. ;ll the
activities to be undertaken, the time re3uired for each activity should
be obtained. )+:T chart can be made use of to obtain the total time for
all the activities. Trial production run must be initiated and progress
must be monitored.
D) !udit and follo6 up phase: .n the audit phase the actual results
(savings) is compared to the e!pected results (as proAected by the 7+
team in the proposal). This step has to be carried out by the
management.
"iEerence $et6een cost reduction and value enineerin:
Cost reduction 3alue &nineerin
Component or product oriented @unction oriented
:upees oriented 7alue oriented
.ndividual activity *roup activity
Case by case eort for shorter period )erpetual eort as a
continuous process of
improvement
3alue enineerin pro/ects are selected on the $asis of the follo6in
criteria:
4igh cost areas where scope of cost reduction and value improvement
is high
)roducts that are facing sti competition
)roducts that are in the maturity stage of the product life cycle
>esigns which are very old and need to be revitalized, revamped and
reconstructed
2n the basis of cost and return trade o. The return should be more
than /- times the cost or investment.
#eason for poor value ettin attached to the product:
5ack of information leading to unknown re3uirements of customers
4abitual thinking which makes people assume that %what worked last
time should be continued further&
Thinking and doing things in the traditional way is a fre3uent cause of
poor value
Segative attitude of employees resulting in reluctance to change.
+mployees think that cost is synonymous with high 3uality and
therefore the very thought of reducing costs upsets them.
"hortage of time resulting in not so cost aective solutions
:eluctance to seek advice on specialization and newer trends in
business
;s technology is changing rapidly, the products processes and systems
tend to get obsolete 3uickly in favor of new economical and more
efcient ones. "uch changes if ignored lead to sub9optimal
performance.
5ack of good communication in the organization.
)uality Circles
)eople are the greatest assets of an organization, because, through people
all other resources are converted into utilities. 4owever, management of
P)eople :esourcesJ has always been a ve!ed problem ever since the
beginning of organized human activities. )articipative methods in the
workplace are one way to improve both the work environment for
employees and productivity and 3uality for the company.
Fuality Circle is one of the employee participation methods. .t implies the
development of skills, capabilities, con$dence and creativity of the people
through cumulative process of education, training, work e!perience and
participation. .t also implies the creation of facilitative conditions and
environment of work, which creates and sustains their motivation and
commitment towards work e!cellence. Fuality Circles have emerged as a
mechanism to develop and utilize the tremendous potential of people for
improvement in product 3uality and productivity.
"&FI8ITI18
Fuality Circle is a small group of N to /, employees doing similar work who
voluntarily meet on a regular basis to identify improvements in their
respective work areas using proven techni3ues for analyzing and solving
work related problems coming in the way of achieving and sustaining
e!cellence leading to mutual upliftment of employees as well as the
organization. .t is a way of capturing the creative and innovative power that
lies within the work force.
They are based on two ideas( that employees can often make better
suggestions for improving work processes than managementL and that
employees are motivated by their participation in making such
improvements.
P#1C&SS 1F 1P&#!TI18
The operation of 3uality circles involves a set of se3uential steps as under(
Step:: Pro$lem identi+cation: .dentify a number of problems.
Step ; Pro$lem selection: >ecide the priority and select the problem to be
taken up $rst.
Step 9 Pro$lem !nalysis: )roblem is clari$ed and analyzed by basic
problem solving methods.
Step < 'enerate alternative solutions: .dentify and evaluate causes and
generate number of possible alternative solutions.
Step = Select the most appropriate solution: >iscuss and evaluate the
alternative solutions by comparison in terms of investment and return from
the investment. This enables to select the most appropriate solution.
Step > Prepare plan of action: )repare plan of action for converting the
solution into reality which includes the considerations Twho, what, when,
where, why and howT of solving problems.
Step ? Present solutions to Manaement: )resent solution to
management for approval.
Step D Implementation of solution: The management evaluates the
recommended solution. Then it is tested and if successful, implemented on a
full scale.
'ains of )uality circles
Tangible gains
Detter 3uality
)roductivity improvement
4igher safety
*reater cost eectiveness
Detter housekeeping
.ncreased pro$tability
<aste reduction
:educed absenteeism
:educed grievances
.ntangible gains
+nriched 3uality of life
;ttitudinal change
4armony, mutual trust
+ective team work
Detter human relations
)articipative culture
)romotion of Aob knowledge
*reater sense of belonging
The )uality Circles Facilitators and Team %eader Trainin
proramme should include:
;ppropriate training for dierent sections of employees needs to be
imparted. <ithout a proper understanding of the real concept of Fuality
Circles, both the workers and management might look at this philosophy with
suspicion. +ach group should know beforehand the commitments and
implications involved as well as the bene$t that can be obtained from Fuality
Circles. "uch training comprises of (
Drief orientation programme for top management.
)rogramme for middle level e!ecutives.
Training of facilitators.
Training for Circle leaders and members.
Drief history of FCs, its success stories and advantages.
>evelop and reinforce 3uality leadersJ skills.
:oles and :esponsibilities of FC Coordinators 8 @acilitators to make a
FC a success.
The role of top management and establishment of the "teering
Committee.
"trengthening and promoting a participative culture.
.dentifying problems and pitfalls regarding a FC proAect and guard
against them.
Training and development of FC =embers.
Onderstanding the leadership role.
*roup techni3ues K enhancing group dynamics and human relations.
)resentation and Communications skills.
>ata gathering and analysis techni3ues.
)roblem solving techni3ues.
+ective conduct of meetings.
@se of statistical methods and )C tools includin:
Drainstorming.
)areto analysis.
Cause and eect analysis.
Control charts
4istograms
Check sheets and graphs.
)uality Control Tools
Check sheet
)areto analysis
4istograms
Cause K eect diagrams
@lowchart
"catter diagrams
Control charts
CC&CFSC&&T
"imple means of data collection and analyzing
>ata is presented in a tabular format
Can be used for checking the occurrence of particular types of events8
defects
2bservations are recorded as they happen
=ethodology
>e$ne obAectives of data collection
)repare format for data collection
Collect and record data directly on the check sheet by using tally
marks
Total the no. of occurrences for each type of category
+g.( Checksheet for( #easons for machine not 6or.in leadin to
$elo6 desira$le output
#easons for machine not 6or.in
@rom date( -/8-08,--B To date( /18-08,--B :eadings
taken by( =r.UVG
"r.
:eason Tally Total
/ =aterial not available 8888 88 B
, 2perator absent 8 /
H 2perator away from machine 888 H
I =achine under repair 8888 I
1 Tool under repair 8888 888 E
N =iscellaneous 888 H
Total ,N
Pareto !nalysis
)areto analysis is a techni3ue based on the )areto principle of %the
vital few and the trivial many&. .t is also called the E-9,- principle i.e.
appro!imately ,-R of a group of items, people, inventory, causes and
the like accounts for appro!imately E-R of the work, eort, problems
and the like. .t helps in focusing attention on the areas that really
matter by highlighting most fre3uent issues. <hile solving the problem
the team should attack ,-R of reasons and solve E-R problems.
Methodoloy
>e$ne problem area
Choose several causes of problems
*ather data
;rrange the results in descending order of magnitude
5ist the categories on U a!is and the units of measurement on V
a!is
>raw bar chart for each cause
>raw a cumulative line from bar to bar
"r.
:easons for machine not
working
Total )ercentage
; =aterial not available IE I/
D 2perator absent H, ,E
C 2perator away from machine ,I ,/
> =achine under repair E B
+ Tool under repair I H
Total //N /--
.t can be seen that )roblem ; (=aterial not available) is the main reason
for the machine not working leading to below desirable output. .f this
problem is taken care of then there will be a great improvement in output.
4ence a solution to this problem should be taken up $rst.
Cistoram
4istogram gives a visual summary of large amount of data. 4istogram
reveals
<hether process is centered around a target value (Central
tendency)
>egree of variation in data K >ispersion
<hether data meets speci$cations
4istogram helps in identifying process capability relative to customer
re3uirements. <here relevant, you should display speci$cation limits on
your histograms. The speci$cations include a target value, an upper
limit and a lower limit. <hen you overlay speci$cation limits on a
histogram, you can estimate how many items are being produced which
do not meet speci$cations. This gives you an idea of batch performance,
that is, of how the process performed during the period that you
collected data. <hen you have added target, upper and lower limit
lines, you can e!amine your histogram to see how your process is
performing. .f the histogram shows that your process is wider than the
speci$cation limits, then it is not presently capable of meeting your
speci$cations. This means the variation of the process should be
reduced.
Center of a "istri$ution
)rocesses have a target value, the value that the process should be
producing, where most output of the process should fall. The center of the
distribution in a histogram should, in most cases, fall on or near this target
value. .f it does not, the process will often need to be adAusted so that the
center will hit the target value.
Spread of a "istri$ution
The spread or width of a process is the distance between the minimum and
ma!imum measured values. .f the spread of the distribution is narrower than
the speci$cation limits, it is an indication of small variability in the process.
This is almost always the goal, since consistency is important in most
processes. .f the distribution is wider than the speci$cation limits the process
has too much variability. The process is generating products that do not
conform to speci$cations, i.e. Aunk.
Shape: S.e6ness
; TnormalT distribution of variation results in a speci$c bell9shaped curve,
with the highest point in the middle and smoothly curving symmetrical
slopes on both sides of center. <here skewness is present, attention should
usually be focused on the tail, which could e!tend beyond the process
speci$cation limits, and where much of the potential for improvement
generally lies.
Flo6 chart
@lowcharts are maps or graphical representations of a process. "teps in a
process are shown with symbolic shapes, and the #ow of the process is
indicated with arrows connecting the symbols. .t is developed by people
involved in the process. .t helps to determine how a process works. .t
clearly de$nes the inter9relationships between stages of a process. .t
enables one to pinpoint the obvious problems in the process and can be
used to identify areas of productivity improvement, bottlenecks and
inefciencies. +limination of non value adding steps can be done.
@lowcharts are particularly useful for displaying how a process currently
functions or could ideally function. @lowcharting a process often brings
to light redundancies, delays, dead ends, and indirect paths that would
otherwise remain unnoticed or ignored.
The trouble spots in a process usually begin to appear as a team constructs
a detailed #owchart. There are many symbols that can be used in
#owcharts to represent dierent kinds of steps.
2peration
Transport
.nspection 8 =easurement
>ecision
"torage
>elay
Structure of )uality Circle
; Fuality Circle has an appropriate organisational structure for its eective and efcient
performance. .t varies from industry to industry, organisation to organisation. Dut it is useful
to have a basic framework as a model. The structure of a Fuality Circle consists of the
following elements.
i. ; steering committee( This is at the top of the structure. .t is headed by a
senior e!ecutive and includes representatives from the top management
personnel and human resources development people. .t establishes policy,
plans and directs the program and meets usually once in a month.
ii. Co9ordinator( 4e may be a )ersonnel or ;dministrative ofcer who co9
ordinates and supervises the work of the facilitators and administers the
programme.
iii. @acilitator( 4e may be a senior supervisory ofcer. 4e co9ordiates the works of
several 3uality circles through the Circle leaders.
iv. Circle leader( 5eaders may be from lowest level workers or "upervisors. ;
Circle leader organises and conducts Circle activities.
v. Circle members ( They may be sta workers. <ithout circle members the
porgramme cannot e!ist. They are the lifeblood of 3uality circles. They should
attend all meetings as far as possible, oer suggestions and ideas, participate
actively in group process, take training seriously with a receptive attitude.The
roles of "teering Committee, Co9-rdinator, @acilitator, Circle leader and Circle
members are well de$ned.
C.E.O
Top Mgmt.
STEERIN
COMMITTEE
!.C
"#ci$it#tor "#ci$it#tor "#ci$it#tor
Coordin#ting
Centre
%e#ders & !y.$
Mem'ers
%e#ders & !y.$
Mem'ers
%e#ders & !y.$
Mem'ers
%e#ders & !y.$
Mem'ers
%e#ders & !y.$
Mem'ers
%e#ders & !y.$
Mem'ers
Non(Mem'ers
Top =anagement commitment and support to F.C movement but not a part
of formal F.C structure.
2peration of Fuality Circles
The :epublic of "outh ;frica is a country located at the southern tip of
!fricaB =odern humans have inha$ited Southern !frica for more
than /--,--- years. ;t the time of +uropean contact, the indigenous
peoples re#ected migrations from other parts of ;frica, where new tribes
"orm#tion o)
*.C
Tr#ining )or
Mem'ers
Pro'$em
identi)ic#tion +
Se$ection
Pro'$em
,n#$ysis
Recommend#tion
Present#tion to
Mgmt.
In too$s )or *.C 'y
)#ci$it#tors + $e#ders
-y non(mem'ers. mem'ers.
Mgmt. /-r#instorming0
o) so$utions
-y 'r#instorming.
p#reto ch#rts etc
had become dominant. Two maAor groups were Ghosa and 2ulu
peoples.
;rea (Total : ;;: H9? .m
;
(;=
th
)
IB/ IIH s( mi 9 -ater (I) Segligible
Population 9 ,--0 I0,H,-,---
.n ,--E, "outh ;frica placed 1th out of IE sub9"aharan ;frican countries on
the I$rahim Inde5 of !frican 'overnance. "outh ;frica scored well in
the categories of :ule of 5aw, Transparency W Corruption and
)articipation W 4uman :ights, but was let down by its relatively poor
performance in "afety W "ecurity
Social ris.
"outh ;frican organisations are not only faced with social risks but also
have to address issues relating to national governmentsX sociopolitical
imperatives, all of which have an impact on organisationsX risk pro$les.
These risks relate not only to issues such as 4.78;.>", poverty and
unemployment but also to sociopolitical drivers such as black economic
empowerment (D++) and afrmative action. These topics have already
been categorised by some local organisations as potential sources of risk.
Categorising D++ as a potential risk to an organisation operating in ";
recently led to serious debate between regulators, politicians, civil society
and captains of industry.