Production and Productivity

Golam Kibria
 Production
Production along with marketing, merchandising, operations,
and finance is one of the essential functions in apparel
manufacturing. Production is any progress or procedure
developed to transform a set of input elements like men,
machinery, capital, information and energy into a set of
output elements like finished products and services in proper
quality and quantity, thus achieving the objectives of an
enterprise (Buffa and Sarin, 2009).
 Definition of Production

Production function is that part of an organization, which

is concerned with the transformation of a range of inputs
into the required outputs (products) having the requisite
quality level.
Production is defined as “the step-by-step conversion of
one form of material into another form through chemical
or mechanical process to create or enhance the utility of
the product to the user.” Thus production is a value
addition process. At each stage of processing, there will be
value addition.
Objectives of production system:
 Systematic planning of production activities to achieve the highest
efficiency in production of goods/services.
 To organize the production facilities like machines, men, etc., to achieve
stated production objectives with respect to quantity and quality time
and cost.
 Optimum scheduling of resources.
 Coordinate with other departments relating to production to achieve
regular balanced and uninterrupted production flow.
 To conform to delivery commitments.
 Materials planning and control.
 To be able to make adjustments due to changes in demand and rush
orders.
Classification of Production System
 Production systems can be classified as Job Shop, Batch, Mass and Continuous
Production systems.
 JOB SHOP PRODUCTION
Job shop production are characterised by manufacturing of one or few quantity of products
designed and produced as per the specification of customers within prefixed time and cost.
The distinguishing feature of this is low volume and high variety of products.A job shop
comprises of general purpose machines arranged into different departments.Each job
demands unique technological requirements, demands processing on machines in a certain
sequence.
 Characteristics: The Job-shop production system is followed when there is:
1. High variety of products and low volume.
2. Use of general purpose machines and facilities.
3. Highly skilled operators who can take up each job as a challenge because of
uniqueness.
4. Large inventory of materials, tools, parts.
5. Detailed planning is essential for sequencing the requirements of each
product, capacities for each work centre and order priorities.
Advantages:
Following are the advantages of job shop production:
 1. Because of general purpose machines and facilities variety of products can be
produced.
 2. Operators will become more skilled and competent, as each job gives them
learning opportunities.
 3. Full potential of operators can be utilized.
 4. Opportunity exists for creative methods and innovative ideas.
Limitations
Following are the limitations of job shop production:
 1. Higher cost due to frequent set up changes.
 2. Higher level of inventory at all levels and hence higher inventory cost.
 3. Production planning is complicated.
 4. Larger space requirements.
 BATCH PRODUCTION
Batch production is defined by American Production and Inventory Control Society
(APICS) “as a form of manufacturing in which the job passes through the functional
departments in lots or batches and each lot may have a different routing.” It is
characterized by the manufacture of limited number of products produced at regular
intervals and stocked awaiting sales.

 Characteristics: Batch production system is used under the following

circumstances:
1. When there is shorter production runs.
2. When plant and machinery are flexible.
3. When plant and machinery set up is used for the production of item in a batch and
change of set up is required for processing the next batch.
4. When manufacturing lead time and cost are lower as compared to job order
production.
 Advantages
Following are the advantages of batch production:
 1. Better utilisation of plant and machinery.
 2. Promotes functional specialisation.
 3. Cost per unit is lower as compared to job order production.
 4. Lower investment in plant and machinery.
 5. Flexibility to accommodate and process number of products.
 6. Job satisfaction exists for operators.
 Limitations
Following are the limitations of batch production:
 1. Material handling is complex because of irregular and longer flows.
 2. Production planning and control is complex.
 3. Work in process inventory is higher compared to continuous production.
 4. Higher set up costs due to frequent changes in set up.
 MASS PRODUCTION
Manufacture of discrete parts or assemblies using a continuous process are called mass
production. This production system is justified by very large volume of production. The
machines are arranged in a line or product layout. Product and process standardization exists and
all outputs follow the same path.
 Characteristics
Mass production is used under the following circumstances:
 1. Standardization of product and process sequence.
 2. Dedicated special purpose machines having higher production capacities and output rates.
 3. Large volume of products.
 4. Shorter cycle time of production.
 5. Lower in process inventory.
 6. Perfectly balanced production lines.
 7. Flow of materials, components and parts is continuous and without any back tracking.
 8. Production planning and control is easy.
 9. Material handling can be completely automatic.
 Advantages
Following are the advantages of mass production:
 1. Higher rate of production with reduced cycle time.
 2. Higher capacity utilisation due to line balancing.
 3. Less skilled operators are required.
 4. Low process inventory.
 5. Manufacturing cost per unit is low.
 Limitations
Following are the limitations of mass production:
 1. Breakdown of one machine will stop an entire production line.
 2. Line layout needs major change with the changes in the product design.
 3. High investment in production facilities.
 4. The cycle time is determined by the slowest operation.
 CONTINUOUS PRODUCTION
 Production facilities are arranged as per the sequence of production operations
from the first operations to the finished product. The items are made to flow
through the sequence of operations through material handling devices such as
conveyors, transfer devices, etc.
 Characteristics
Continuous production is used under the following circumstances:
 1. Dedicated plant and equipment with zero flexibility.
 2. Material handling is fully automated.
 3. Process follows a predetermined sequence of operations.
 4. Component materials cannot be readily identified with final product.
 5. Planning and scheduling is a routine action.
 Advantages
Following are the advantages of continuous production:
 1. Standardization of product and process sequence.
 2. Higher rate of production with reduced cycle time.
 3. Higher capacity utilization due to line balancing.
 4. Manpower is not required for material handling as it is completely automatic.
 5. Person with limited skills can be used on the production line.
 6. Unit cost is lower due to high volume of production.
 Limitations
Following are the limitations of continuous production:
 1. Flexibility to accommodate and process number of products does not exist.
 2. Very high investment for setting flow lines.
 3. Product differentiation is limited.
 PRODUCTION MANAGEMENT
Production management is a process of planning, organizing, directing
and controlling the activities of the production function. It combines
and transforms various resources used in the production subsystem of
the organization into value added product in a controlled manner as
per the policies of the organization.
E.S. Buffa defines production management as, “Production
management deals with decision making related to production
processes so that the resulting goods or services are produced
according to specifications, in the amount and by the schedule
demanded and out of minimum cost.”
 Objectives of Production Management
The objective of the production management is ‘to produce goods services of
right quality and quantity at the right time and right manufacturing cost’.
 1. RIGHT QUALITY
The quality of product is established based upon the customers needs. The
right quality is not necessarily best quality. It is determined by the cost of the
product and the technical characteristics as suited to the specific requirements.
 2. RIGHT QUANTITY
The manufacturing organization should produce the products in right number.
If they are produced in excess of demand the capital will block up in the form
of inventory and if the quantity is produced in short of demand, leads to
shortage of products.
 3. RIGHT TIME
Timeliness of delivery is one of the important parameter to judge the
effectiveness of production department. So, the production department has
to make the optimal utilization of input resources to achieve its objective.

 4. RIGHT MANUFACTURING COST

Manufacturing costs are established before the product is actually
manufactured. Hence, all attempts should be made to produce the products
at pre-established cost, so as to reduce the variation between actual and the
standard (pre-established) cost.
 Productivity
Productivity of a production system is analogous to the efficiency of a
machine.
 Productivity may be defined as the ratio between output of wealth
and input of resources of production. Output means the quantity
produced and inputs are the various resources employed, e.g., land,
building, machinery, materials and labor.
Benefits from increased productivity
Higher productivity results in higher volume of production and hence increased
sales, lower cost and higher profit. It is beneficial to all concerns as stated
below:
(a) Benefits to the management:
 1. More profit.
 2. Higher productivity ensures stability of the organization.
 3. Higher productivity and higher volume of sales provide opportunity
 for expansion of the concern and wide spread market.
 4. It provides overall prosperity and reputation of the organization.
(b) Benefits to workers:
 1. Higher wages.
 2. More wages permits better standard of living of workers.
 3. Better working conditions.
 4. Job security and satisfaction.
(c) Benefits to the consumers:
 1. More productivity ensures better quality of product.
 2. It also enables reduction in prices.
 3. More satisfaction to consumers.
(d) Benefits to nation:
 1. It provides greater national wealth.
 2. It increases per capita income.
 3. It helps expansion of international market with the help of standardizes
 and good quality products.
 4. It improves standard of living.
 5. It helps better utilization of resources of the nation.
Illustration 1.1:
A company produces 160 kg of single jersey fabrics by consuming 200 kg of yarn for a particular
period. For the next period, the output is doubled (320 kg) by consuming 420 kg of yarn and for
the third period, the output is increased to 400 kg by consuming 430 kg of yarn. Comment based
on productivity.

Comment:
From the above illustration, it is clear that, for second period, though production has doubled,
productivity has decreased from 80% to 76%. For the third period, production is increased by
200% and correspondingly productivity increased from 80% to 93%.
 Productivity measures
 Labor productivity
The resource inputs are aggregated in terms of labor hours. Hence this index is relatively free
of changes caused by wage rates and labor mix. By improving methods of work (eliminating
unnecessary movement, etc.) the output of a worker can be increased.
A. In terms of hours:

B. In terms of money:

The productivity of labor can be increased by increasing efficiency of labor, reducing idle
time.

For example, let us take a turner who was producing 20 pieces an hour and the same turner,
by the improved methods of doing work is able to produce 25 pieces an hour. Then
productivity has increased by [(25 − 20)/20] × 100 = 25%.
  Machine productivity
By use of sophisticated modern machines, better method of manufacture and reducing idle
time of machines, the number of pieces (items) produced by a machine per hour can be
increased.

For example, let us assume a machine was producing only 100 pieces per working day of 8
hours. The machine tool has fitted with a better tool that permitted more depth of cut and
higher cutting speed. As a result the output from the machine increased to 130 pieces in a
day of 8 hours. In this case, the productivity has increased by [(130 − 100)/100] × 100 =
30%. Machines and equipment's necessary for the operational activities of the enterprise,
including those intended for transport and handling, heating or air conditioning, office
equipment, computer and the like.
 Material productivity
Materials that can be converted into products to be sold, both as raw materials or auxiliary
materials such as solvents or other chemicals and paints needed in the process of
manufacturing and packaging material. By product design and by use of skilled workmen,
material wastage can be greatly reduced. Thus from a given quantity of material more
number of pieces can be produced.

For example, a worker may cut 10 metal discs from a given length of metal plate per hour.
A skilled worker by improving the method can cut 12 pieces in one hour. Then in this case,
the productivity of material has increased by [(12 − 10)/10] × 100 = 20%.
 Capital productivity
Several formulations are possible for this measure. In one, the resource inputs may change
during the period of depreciation, in another, the input may be the book value of capital
investment.
 Energy productivity
The resource input is the amount of energy consumed in kilowatts.
 Land productivity
For example, let us assume that the yield from one acre of land cultivated is 15 bags of paddy.
One can cultivate two acres of land and get yield of 30 bags of paddy. In this case, only
production is increased, productivity remains the same. But by using better seeds, better methods
of cultivation, if the yield from the same one acre of land is increased from 15 bags to 20 bags of
paddy, then in this case the productivity is increased by [(20 − 15)/15] × 100 = 33%. On
industrial side, the productivity of land and buildings is said to have increased if the output of
goods and services within that area is increased.
 Overall productivity
It is the ratio of total output to the sum of all input factors. Thus a total productivity reflects the
joint impact of all the inputs in producing the output (Khanna, 2003).
 Illustration
There are two manufacturing units of shirts. The standard time per piece is 22 min. The output of
the two industries is 800 and 600 respectively per shift of 8 hours. Number of operators working
are 40.
(a) What is the productivity of each per shift of 8 hours?
(b) What is the production of each per week (6 days) on the basis of double shift?
 Factors affecting productivity
(a) Factors affecting national productivity
1. Human resources
2. Technology and capital investment
3. Government regulation
(b) Factors affecting productivity in manufacturing and services
1. Product or system design
2. Machinery and equipment
3. The skill and effectiveness of the worker
4. Production volume