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Productiviy Improve and TH Effect PDF
Productiviy Improve and TH Effect PDF
Masters Program in Real Estate Development and Financial Services Master of Science 30 credits
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Author: Supervisor:
Stockholm 2012
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Master of Science thesis
Title: Productivity measurement and
improvement
Author: Yana Myronenko
Field of study: Management
Master Thesis number: 149
Supervisor: Carl-Axel Engdahl
Keywords: Productivity, labor productivity, the
new productivity paradigm,
increasing productivity.
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Abstract
Recommendations for the use of this work. Since this work was written with
the use of different methods and examples, not all of them before writing the work
was known to me, I want to present a certain part to improve the productivity of
some companies in my country.
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Table of contents
1. Introduction...5
1.1. Background.............5
1.2. Problem area and research question5
1.3. Approach.6
2. Productivity...7
2.1. Productivity in genera.....7
2.2. Production function.....8
2.3. Measures of productivity and their uses..9
2.3.1. Measuring and interpreting partial productivity.....11
2.4. The new productivity paradigm..12
2.5. Methods of increasing productivity..14
2.5.1. Quality improvement programs......14
2.5.2. Lean production methods...16
2.5.3. Supply chain management......16
2.5.4. Automation and information technology.......17
2.5.5. Professional development of the workforce....19
3. Labor productivity..20
3.1. Measurement of labor productivity.20
3.1.1. Production function....20
3.2. Factors of increasing labor productivity.23
3.2.1. Capital deepening...23
3.2.2. Increases in skills....24
3.2.3. Implementation of new system..25
4. Conclusions.25
References
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1. Introduction
1.1. Background
An important role for the analysis of labor productivity is definition and use
of reserves to improve production efficiency. It contributes to the economic use of
labor resources, identifying and implementing best practices, organization of work,
new equipment and technology, to prevent waste, etc.
At the same time one of the key performance indicators of the enterprise
is labor productivity, which characterizes the fraction of output or services
produced per unit of labor input, the ratio of the results to the labor costs incurred.
The aim is to analyze staff productivity and enterprise development proposals for
planning to increase its productivity.
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1.3. Approach
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2. Productivity
There are two components which can increase output: first, the growth of
increasing in production input and the growth of increasing productivity.
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This formula showed, which changes in input and output must to be
measured inclusive of both quantitative changes and qualitative changes.
(Jorgenson, D. W. & Griliches, Z. 1967)
There are many quantitative and qualitative changes which take place when
relative and quantities prices of different output and input factors alter. If you want
to accentuate qualitative changes in input and output, the formula of total
productivity represented as follows:
Total productivity = Output quantity and quality / Input quantity and quality.
(Saari, S. 2006)
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Table 2.1 Overview of the main productivity measures
In real life, one is more likely to get only access to figures on the total values
rather than quantities of inputs and outputs. If compare levels of productivity
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across space, measuring of value must to be corrected for differences in relative
prices. This revision can be made by using purchasing power parities (PPPs),
which can specify the ratio of the price for a service or good. (Bart van Ark and
Marcel Timmer, 2006).
1. Single-factor productivity
2. Value-added productivity
4. Efficiency ratios
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added as output. That's why, measuring of productivity in this case is called
Value-added productivity. Also, productivity may be examined in cost accounting
using unit costs. After that, hist is mostly a reason of exploiting data from standard
cost accounting for measurements of productivity. Efficiency ratios tells something
about the ratio between the sacrifices and the value produced made for it, are
available in big numbers Managerial control ratio systems are included single
measures which are interpreted the same with other measures related to the subject.
Ratios can be connected to any factors of success of the area of responsibility, such
as quality, profitability, position on the market. Ratios can be combined to form
one whole using simple hence, rules, creating a key figure system. (Saari, S. (2006)
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the era of mss consumptn began. Th onl w to further rse productivit was
to incrse automatn, and, with the advnt of cmputers and informatn
technlogy, appl more IT as wll. This apprch mpletely overlked the
contributn that mangers uld make by improving presses and work methods,
which in mny frms where automatn is difficult (e.g. many servces) is the only
practcal methd to increase productvity. The contributn of automation to
productivity improvment, in particular the application f IT, is not to be
imprtant, but it is nt the only wy to increase productvity. Lean productn and
TQM/Six Sigma provde an alternatve model. This New Prductivity Pardigm
model of modrn productn systems will be explned in this section (Robert N.
Mefford, 2009). Modern productin thry has developed on two fairly
indepndent paths, the roductivity track and the qulity track. Frms pursued one
or the ther paths, but rarly bth, likely as a rsult of the cmmon view that
quality and prductivity wre tradeoffs.
Many had sucss with the path chsen. Howver, the synrgies betwn
lean productn and quality imprvement began to becme apparent as frms found
that, by pursung qulity improvment programs, they also expernced
imprvements in prductivity and vice vrsa (Breyfogle et al., 2001). The
fundamntal reson for this is the fcus in both apprches on process
imprvement. Lean productn and TQM/Six Sigma trd to improve procsses or
them (lean prduction) or to reduc defects (TQM/Six Sigma). But on of the
major causs of ineffiency is dfects (rework and scrap), and one of the majr
resns for defects is a prly crdinated and structured prcess. Mangers begn
to realize tht prcess imprvement was the key to imprving both qulity and
improvment, and thus ther inhernt complemntarity was recgnized.
Man firms hve trd the tols of qulity and productvity imprvement
(e.g. Quality Circles, control charts, etc.) but wth limted sucss in thr
organzations. Thy have obsrved hw these tls wrk but do nt understand
wh they wrk and thus are unble to cnstrut a cherent system fr
imprvement. (Inkpen, 2005).
Six Sigma qulity programs ar derived from the sttistical quality cntrol
methods frst developed by Walter Shewhart (1931) in the 1930s at Western
Electric Cmpany and popularized by W. Edwards Deming (1982), Joseph Juran
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(1979), Philip Crosby (1979), and othrs in the following decdes. These mthods
develped in the U.S. but first were appld in Japan. Th got usng in the U.S.
just after Amercan firms fced intense cmpetition frm Japanse firms.
Table 2.2 Traditional versus the New Productivity Paradigm (NPP) on key
dimensions.
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2.5.2. Lean production methods
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Responsibility (SR) that also must be ftored in; thse involve wrking
conditions in ovrseas plants and nvironmental issues. If the CSR ncerns are
not prperly addressed, th firm's brand imge and sales m suffer (Auger et al.,
2003).
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3. Labor productivity
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where - the actual output in units of this type of product, - the
actual cost of living labor in units of time.
where - the highest attainable in the current output in units of this type
of product (cash generation), - the minimum required in the current cost
of living labor in units of time (the complexity of cash).
Firms can use some different combination of capital and labor to produce
output. In some cases, in the production process you can use the labor the capital.
One of examples, when production of cars, employees use assembly line and tools
to produce a finished product. The workers are the machines and the labor are the
capital.
An example can help to imagine the basic way that growth of labor
productivity works through increases in the capital stock. Say there is a riveter
named Joe. Joe works in a factory that makes metal boxes that are riveted together.
He has a riveting tool that can rivet at a rate that allows Joe to finish 4 metal boxes
every hour. Joe's labor productivity is thus 4 boxes per hour. One day, Joe gets a
second riveting tool. With two tools, Joe can produce 8 metal boxes every hour.
Now Joe's labor productivity has increased from 4 boxes per hour to 8 boxes per
hour. The increase in the physical capital available to Joe, that is, a second tool,
allowed this increase in Joe's labor productivity. For every hour of work Joe puts
in, he can produce 100% more output due to an increase in the physical capital
available to him.
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Another example also can be using. Say there is a chef named Susan. Susan
can cook 10 hamburgers in an hour. One day, she decides to go to the Hamburger
Cooking School to learn how to cook hamburgers faster. When she returns to
work, she is able to cook 40 hamburgers per hour by utilizing the new tricks she
learned. By attending the cooking school, Susan increased her human capital and
thus increased her labor productivity.
It is so important to know that increases in capital can take the form of both
quality and quantity increases. After these two examples, it is clear that the just one
way to get labor productivity growth is to increase the amount of physical and/or
human, capital, available to workers. And in the end, the just one way for
increasing productivity is though increases in the capital used in production.
(sparknotes)
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sophisticated machine tools for employees in the manufacturing sector. A business
can add capital when it increases its workforce.
Farming provides a classic example of the benefits after using more and
better capital. In 1830, it took a farmer 250 to 300 hours of work to produce 100
bushels of wheat; in 1890, with the help of a horse-drawn machine, the time
dropped to between 40 and 50 hours; in 1975, with the use of large tractors and
combines, the 100 bushels could be produced in just 3 to 4 hours. While it is most
likely that farmers were more educated in 1975 than they were in the 1830s, the
change in the farmers skills alone could not be the source of this dramatic
efficiency gain; an important source is the use of better capital. Changing from a
hoe to the tractor would be categorized as capital deepening, and the resulting
increase in output is capital deepening's contribution to productivity growth.
(jourel.info)
Just as a employee who is working with a better machine may produce more
goods, a employee who learns a skill needed for production may produce more
output in less time. Example, employees who take a class about how to use a
computer increases the skill with which they use the computer; the computer is not
so faster, but the employees improved their skill and increased output per hour
worked and hence, it boosts their productivity. Employees increase their skills with
help of additional education, on-the-job experience, training and so on.
(jourel.info)
Development of methods for the analysis of several key aspects or key areas of its
activities.
Project T-50 suggests that each unit for which the defined strategic
goals, develop their own system of monitoring indicators that adequately reflect
the situation in various aspects of their activities.
As one of the features of this system was that employees who worked
at certain positions for a certain period of time changed the position of their
work. it helped them not so tired, do not monotonous work all day, and of course
it improves the performance of each employee.
ABB believes that T-50 model serves as a means to illustrate the role of
individual units within the overall structure of the company and their development
trends in the future.
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4. Conclusions
The company not only reduces the volume of production, but also loses the
necessary funds for production development.
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labor, buildings, facilities, raw materials, fuel and energy. Accordingly, the
distinction is made between the performance of an individual (living) and social
work.
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References
Auger, P., Burke, P., Devinney, T.M., Louviere, J.J., (2003) What will
consumers pay for social product features? Journal of Business Ethics 42, 281
304.
Baily, Martin N., (2004) Recent productivity growth: the role of information
technology and other innovations. FRBF Economic Review 2004, 3541
Bart van Ark and Marcel Timmer (2006) Productivity and Economic
Growth in Europe: A Comparative Industry Perspective
Baumol, William J., Litan, Robert E., Schramm, Carl J., 2007. Sustaining
entrepreneurial capitalism. Capitalism and Society 2 (2), 136.
Jorgenson, Dale, Stiroh, Kevin, (2000) Raising the speed limit: U.S.
economic growth in the information age. Brookings Papers on Economic Activity
125140.
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Juran, Joseph, 1979. Quality Control Handbook. McGraw-Hill, New York.
Liker, J.K., Choi, T.Y., (2004) Building deep supplier relationships. Harvard
Business Review 104113 December.
Nevins, Michael, (2002) The real source of the productivity boom. Harvard
Business Review 80 (3), 2324.
Spear, S., Bowen, H.K., (1999) Decoding the DNA of the Toyota Production
System. Harvard Business Review 77 (5), 97106.
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Stewart, T.A., Raman, A.P., (2007) Lessons from Toyotas long drive.
Harvard Business Review 85 (7/8), 7483.
Internet Resources:
http://jourel.info/factors.html
http://www.sparknotes.com/
http://ezinearticles.com/?How-to-Improve-Productivity-in-a-
Factory&id=7002690
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