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Capital book value (in Rs) (bee? Total indirect cost (in RS) Foreign exchange used Enorey ased (@ RS. 4 per watt) Rave material used (@ Rs. 1000 per ton) Services of consultant hired (RS) 100 200 000 3000 40,000 45.000 - 000 6000 vf Ma betatstoat) 20,000 25,000 ¢ 40,000 46000 5 4500 $100 500 kw 800 kw 10 ton 16 tons 10,000 15,000 Calculation Productivity Index (@ Labour productivity index i) Direct labour productivity index (iii) Capitat depreciation productivity index = iv) Capital book value productivity index = (v) Total indirect cost productivity index (vi) Foreign exchange productivity index (vii) Energy used productivity index (viii) Raw materia! productivity index (ix) Total factor productivity jak ap bank peu'e 20078000 x 100 = 125 7100/5000 200/45,000 7100v40,000 166.7 = 16 700720,000 200/46,000 pees x 100 = 174 700/40,000 200/100 x 100 = 9,000 7100/4500 200/(1800 * 4) 20011800 7 9) 1009955 To0 (500 * 4) 200/(16 * 1000) x » 100" 125 100(10 * 1000), Net output (Labor + Capital) Input “Tota output (material purchased + serviceshited) (Labour + Capital) Input : i : i sidan aiiProductivity Soden Example 3.3 31 200 x 50,000 ~ (16 » 1000 + 15000) (43,000 278) + 25,000 11,952 100 * 50,000 10 x 1000 + 10,000) (40,000 <4) + 20,000 20.987 156 wy as wee The price index for year 1998 and 1999 are given in table below for 100 being in 1997-as base year. ' Calculate different productivity measures for a factory whose financial statement is given below : Net Sales, Labour Material Services for price rise) Depreciation (alter compensated Solution 1998, Current Re, (in 0008) @ Price | Compensated Index| at 1997 (b) | (G2) + (ypx100 Current Re. (In 0005) © ‘Compensated at 1997 co + (@pa90 Productivity Rise | 1998 to 1999) Net Sales Labour Material Services Depreciation ‘Total Inputs 24H) Net output (8+) 1500 800 300 107 1402 108 tos 106 1692 (Conté..)32 Industrial Engineering & Managenient {Contd..) Productivity Current Compensated | Current Rs. Compensated | Rise Rs.(In 000s) at 1997 (in 000s) at 1997 1998 to @ Ida) + (by)100 © ce) + @pe100 | 1999 8. Labour Capital 215 475 Input= (2)+(5) 9, Labour produc- 193 148 tivity (+2) 16, Labour Capital pr 1.298 1.109 oduetivity=(7)-(8) 11. Total productivity 1.062 ae © 3.8 WAYS TO IMPROVE PRODUCTIVITY Productivity of any system can be improved either by proper use of resources or by effective wilization of system or processes. Some action plans are : 1. Machine Manual labour be replaced by machines Reliable machines Automation 2. Management Motivated workforce Better planning and coordinations Effective control of processes 3. Process Computerization of system Use of Management Information System (MIS) Improvement in scheduling Better material flo. Fast and accurate retrieval of parts 4, Work Design Improve job-desie: Better work method On-job training 3. Work Environment Better lighting and illumination Better ventilation Safe work-place Total Quality Management (TQM) Quality circle eiieiielele .emehoug 6. ProgramProductivity 3 Suggestion scheme Incentive schemes Revise pay or policy ecee 7. Technology ‘Acquire new technology such as electro-chemical machining (ECM), ete, ‘© Acquire automation in assembly, for example, surface mounting technology (SMT) for printed circuit board assembly unit. ¢ Acquite computer controlled machines, such as CNC or DNC. © Use automated guided vehicle (AGV) for material transportation 8. Manufacturing strategy : @ Change the manufacturing system from fuctional to cellular layout, if it is a batch production unit. © Adopt stock-less production strategy and Just-In-Time framework in the production unit. ‘© Keep work-piace clean and environment friendly (also termed as green-production system), © Go for total change in the process/product or strategy if the system is not working properly (also known as business process re-engi- neering or BPR). 9. Extemal Environment : © Better political stability ‘© Boosting economy and purchasing capacity of buyers. © Globalization and open market economy. able 3.2 Means to improve productivity for different planning horizons. Planning Horizon ‘Means to improve Productivity Effect on Reosit [ Cone term Improve basic process by proper research No limit to resus ‘and development (Use BPR = refer Chapter 36) = Heavy capital deployment TRONS TNININE Fr Fo FROVISE DETET PIAMT and equipment (Use TQM/Kaizan : refer Chapter 32) ‘= No major capital deployment Simplify the product, reduce and standardize the product range — May require some capital deployment Results are subjected to ‘Short term Improve existing methods of plant operation, effort and commitments. Improve work planning and use of manpower Increase effectiveness of all employer + May require little or no capital deployment | i