productivity concept, measurement and improvement

Productivity Concept, Measurement and ImprovementWhat is Productivity?ILO defines Productivity as the ratio between “Output of Work” and “Input of Resources.Productivity= Output Input

ProcessInput Output

Waste

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•This definition applies to an enterprise, an industry or an economy as a whole.

•Productivity is simply the ratio between the amount produced and amount of resources used in the course of production.

•These resources can be: (Unit of resources is in brackets.)

1.Land (Hectares)2.Material (Metric Tonne)3.Plant and Machinery (Machine Hours)4.People (Man Hour)5.Capital (Rupees)

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Productivity ImprovementTo enhance productivity ,reduce cost,

eliminate waste …… Deals with man machine systems……

Consists of : –selection of tools and techniques.- development of time standards- installation of wage incentives- value engineering,value analysis- project feasibility studies

•Fedrick Taylor – father of industrial engineering

•Henry .L.Gantt - measurement of results – Gantt chart, incentive plans.

Productivity

• Productivity is

Output (within a defined time and good quality)Input

Factors influencing productivityI.Controllable or Internal factorsII.Non controllable or external factors.

Partial productivity

Partial productivity is defined as the ratio of output to any one class of input i.e either material, capital, labour or energy

Labour productivity = OutputLabour hours

Total productivity

•Total productivity is defined as the ratio of total output to the sum of all input factors.

•= Total output Total input

Total input = Labour+ Material + Capital + Energy + Other expenses

Converted to a common measurable factor

Controllable or Internal factors

• Product – extent to which it meets requirements.

• Plant and equipment – availability and reduction of idle time.

• Technology – automation.• Material and Energy - reduce material and

energy consumption.• Human factors – motivation and training.• Work methods – improvement in the way of

doing things.• Management style – communication, policy

and procedures.

Non controllable or external factors.

•Natural resources – manpower, land and raw materials

•Government and infrastructure – government policies ,transport, power, fiscal policies.

Is Productivity different from Performance?•Productivity takes into account output in

relation to input.•Performance takes into account output only.•Productivity =Output÷ Input•In performance, we consider only the output

and not the input.•A performance index becomes comparison

of actual output with some standard or expected output.

•Performance Index = Actual work done÷ Ideal or standard expected work.

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Example:It takes 3 Mtrs. cloth to make a coat. In a day a person is expected to make 50

coats. He makes 40 coats from 111 Mtrs. Of cloth.•What is his Performance ? - 40 coats•Performance Index ?- {40 ÷ 50} x100= 80%•What is his cloth productivity index?

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- Normally he should have used 120 Mtrs. cloth. However he managed to make 40 coats in 111 Mtrs.

- Cloth Productivity Index = {120÷ 111} x 100= 108%

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Improving Productivity•Needs to be organisation’s focus area:

▫Need a vision, mission and periodic goals for measurement and improvement of productivity

•Customer Orientation – strategy to provide same quality of service at lower cost or better service at same cost

•Empowerment of workers and staff•Encourage creativity•Right people for right jobs•Use of right techniques

•In the areas of product and process improvement: Value Analysis helps in eliminating non-value adding function i.e. functions resulting in low performance at high costs from products and processes.

•On the technology front, extremely precise and accurate high-speed machines and systems like ERP, CAD, CAM, CIM etc have drastically reduced the processing time.

•On the human front, incentive plans, job enrichment, fringe benefits etc are used to encourage value-adding inputs from people.

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Improving Productivity

•Inventory control, material handling systems etc. reduce the time, space, effort and money involved in making material available for its time and place utility.

•Techniques like work-study, ergonomics, etc eliminate motions that are non-productive or make them easy to perform are included in the human factor.

•Today, Lean Production System approach is a holistic one, which covers all areas of productivity improvement.

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Few other techniques like JIT, TPM, TQC, KAIZEN, Quality Circles can be applied simultaneously.

SummaryA. Technology Based- CAD, CAM, Integrated CAM, Robotics,

Laser Beam Technology, Energy Technology, Group Technology, Computer Graphics, Simulation, Maintenance Management, Rebuilding Old Machinery, Energy Conservation.

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Employee Based- Financial Incentives, Group Incentives,

Fringe Benefits, Promotions, Job Enrichment, Job Enlargement, Job Rotation, Worker Participation, MBO, Skill Enhancement, Learning Curve, Working Condition Improvement, Communication, Zero Defects, Punishment, Recognition, Quality Circles, Training, Education, Role Perception, Supervision Quality.

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Where to Begin

•Benchmarking – internal and external

Strategic KPIs

Top Management

Tactical KPIs

Country Management and Departmental Heads

Operational KPIs

Operational Managers

M&S LgsM&S / Fin

M&S Lgs

KPIs – Monitoring and Control Process

Strategic and Operations KPI’s for OpCo’s

Commercial Indicators on following slides

Source Dimensions Business Questions Report Contents Focus

Market /Risks

1.- Market DescriptionTo understand market development stage

GDP – GDP Construction

¨Import Export

Market Size / Capacity

MIC Integration

2.- Market StructureIs market structure changing?Is it a threat? From whom?

Product Split

Prices

Integration

Concentration

3.- OpCo’s Market PositionIs our future position as a supplier at risk? From whom?

Channel Mgmt

MIC Supply

Clinker Factor

OpCo 4.- Commercial Performance How are we profiting from our market opportunities?

Commercial Margin

Branding

Distribution Cost

Distribution Service

5.- EfficiencyHow productive are we?

Expenses

Personnel

Branding

Credit Management

ST

RA

TE

GIC

M

AR

KE

TD

ES

CR

IPT

ION

CO

MM

ER

CIA

L

OP

ER

AT

ION

SC

orp

ora

te

Op

Co

% Increase in Gross Margin

through Improvement

Initiatives

%increase in volume

committed through

contracts per quarter

(Transformational Sales)

Ratio of sales through

transformational channels to sales through transactional

channels

No. of FTEs in Out Bound

Logistics per 1,000 Tons

No. of FTE in Sales per 1,000

Tons

Total Delivered Cost per Ton

Customer Satisfaction

Index

Cement Dispatched per

Day in Tons

Strategic KPIs

2

3

4

56

7

8

9 EBIDTA %

1

Strategic KPIs

Return on Investment

for installing silos at

customer siteMarketin

g & Sales

% volume committed

through contract

(Transformational Sales)

Time required to

convert enquiry to contract

Percentage of prospects

converted as customers (Hit Ratio)

Number of prospects lost

to competitors per quarter

% Variance of Annual Sales

Plan

1

2

3

4

5

6

Tactical KPIs – Marketing & Sales (1/2)

O2C Final Presentation

Additional cost incurred due to swap

sales

% Success of sales strategy

Marketing &

Sales

Cement Dispatched per day in

Tons

Marketing and Sales

Expenses in % of net sales

(%)

% Improvement in CSI index

% Increase in market share

due to customer service events

7

8

9

10

12

13

12

% Increase in market share

due to customer service events

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Tactical KPIs – Marketing & Sales (2/2)


Operating Profit Margin

(%)

Reduction in number of cases for overdue

payments in a quarter

Marketing

& Sales / Finance

No of cases rejected in

credit check in a quarter

% Deviations in complying

to credit assessment

guidelines in a year

Days sales outstanding

Aging Analysis of Accounts

Receivables

2

3

4

6EBIDTA (%)

1

5

Tactical KPIs Marketing & Sales / Finance


Distribution Costs per Ton

Logistics

Order Management

Costs

Order Fulfillment Cycle

Time

Performance related to On Time Delivery

for Export Orders

(Performance measured from committed date

to loading of Ship)

% compliance of 3PL against

SLAs% Success rate with 3PL

Prospects per year (% Logistics

Contractors graduated to level of 3PL)

1

2

3

4

5

7

% Forecast accuracy of

annual dispatch plan

at disaggregate

d level

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Tactical KPIs – Logistics (1/2)


% Variance of volumes from

budget

Logistics

% Improvement in On Time

Delivery per Year

% Reduction in Total Logistics Cost per year

% Variance of logistics costs from budget

% Capacity Utilization of

logistics infrastructure

Total Cost saved due to Cross-Docking in a

year

8

9

10

11

12

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Tactical KPIs – Logistics (2/2)


No. of orders handled with exceptions

Marketing & Sales

% Compliance to process

enquiries on time

Time required to process the

enquiry: Time from the receipt of enquires to submission of

quotation

Receive, enter & validate order

cycle time

No. of Credit / Debit Notes issued per

month

% increase in number of

transformational customers

1

2

3

4

5

6

Operational KPIs – Marketing & Sales (1/3)


% customer needs

represented in list of customer service events

Marketing & Sales

Average time required to

capture customer order

through customer care

centre

Average Cost to Receive, Enter & Validate Order

Number of cases where payment

dishonoured in a quarter

% orders captured through

webSALES in a year

Average time required to

create / amend Customer

related masters

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8

9

10

11

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Promotional Expenses per Region/ Sales

Unit per Quarter

Marketing & Sales

No. of changes done to

Customer Service

Calendar per year

No of innovative customer service events identified

per year

Number of orders

swapped/diverted per Quarter

Average Time required from

receipt to resolution of

Customer Complaints

% Reduction in number of

complaints per 1,000 tons

13

14

16

17

18

19

Number of enquiries

received per quarter per Key account

manager

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Average time taken for

loading 1,000 tons for Exports

from plant to ship

Logistics

% Fill Rate: The percentage of

ship-from-stock orders shipped within 24 hours of order receipt

Average time required for

arranging the vehicle for delivery of

Customer Order

Loading Cycle Time: Average tonnage loaded per hour of a

product

% compliance to Stock Transfer

Plan

Average Gate In to Gate Out Cycle time

1

2

3

4

5

6

Operational KPIs – Logistics (1/3)


Demurrage / Wharfrage paid per Quarter for domestic and

exports

Logistics

Average total inventory

tonnage per month of cement at various stock

points

Average Waiting time in lorry

yard per lorry

Total Time required for

preparation and completion of

Annual Dispatch Plan

Cost to Package

Average time taken for un-

loading the ships / barge/ trucks in case of Stock

Transfers

7

8

9

10

11

12



% Tonnage utilised for

backhauling operations (ratio of dispatches to

a region/ backhauling)

Logistics

## Cost to Invoice

Average time between product

delivery and receipt of POD at the point of

dispatch

% orders fulfilled on the committed date

Number of stock outs per stock point per

quarter

13

14

1516

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## This KPI ownership varies from company to company


Partial ProductivityDefinition•Ratio of output to one class of input.•At a given time it considers only one input

and ignores all other inputs.•Its significance lies in its focus on

utilization of one resource.•For instance, labour productivity is

measured using utilization of labour hours; whereas capital productivity is measured in Rupees.

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Case:- As a part of new assignment, Manager of Pop-Corn

Products was asked to identify areas for productivity improvements. He collected data on all inputs and outputs of previous year’s operations being transferred into equivalent of money units. The table below gives details with all figures in lakh of rupees.

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OUTPUT 1000

INPUT

Human 300

Material 200

Capital 300

Energy 100

Other Expenses 50

Parag plans to calculate values of partial productivity to aid in his study. Pleasehelp him in his endevour.

Solution:- Partial productivity of various inputs is as

follows:•Human productivity= 1000÷300= 3.3•Material Productivity= 1000÷200=5.0•Capital Productivity= 1000÷ 300 =3.3•Energy Productivity= 1000÷ 100= 10.0•Productivity of other expenses=

1000÷50=20.0

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Advantages Disadvantages

Easy to understand Misleading if used alone.

Easy to obtain data Cannot explain overall cost increase

Diagnostic tool to pinpoint areas of improvement

Profit control is not precise

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Total Factor Productivity•In an effort to improve productivity of

labour, company may install more machinery.

•Then productivity of labour will go up bringing down the capital productivity.

•Partial productivity that typically uses only one resource at a time fails to grasp this paradox.

•Historically labour and capital were considered to be the most significant in contribution in the process of production.

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Total Factor Productivity model developed by John W. Kendrick in 1951, has taken only labour and capital as only two input factors.

→ For instance, Products worth Rs 100 lakhs were manufactured and sold in a month. It consumed Rs 20 lakhs worth labour hours and Rs 55 lakhs worth capital.

- The Factor Productivity = 100÷ (20+55)= 1.33

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Advantage Disadvantage

Data is easy to obtain Does not consider impact of material and energy inputs, though material typically forms 60% of the product cost.

Appealing from the viewpoint of the corporate and the National economist.

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Multi-factor Model of Productivity •Developed by Scott D. Sink Multi-factor

Productivity Measurement Model considered Labour, Material and Energy as major inputs.

•Capital was deliberately left out as it is most difficult to estimate how much capital is being consumed per unit/ time.

•The concept of depreciation used by accountants make it further difficult to estimate actual capital being consumed.

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Total Productivity Model

•Total Productivity Model developed by David J. Sumanth in 1979 considered 5 items as inputs.

•These are Men, Material, Money (Capital), Energy and other expenses.

•This model can be applied in any manufacturing or service organization.

•Total Productivity= Total Tangible Output÷ Total Tangible Input.

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Advantages Disadvantages

All quantifiable inputs are considered.

Data is difficult to compute.

Sensitivity analysis can be done. Does not consider intangible factors of input and output.

Provides both firm level and operational unit level productivity.

American Productivity Centre (APC) Model•American Productivity Centre has been

advocating a productivity measure that relates profitability with productivity and price recovery factor.

•Profitability= Sales Costs•{Output Quantities x Prices} {Input

Quantities x Unit Costs}•Productivity x Price Recovery Factor.•The APC model is different from other

models in its treatment, by inclusion of Price Recovery Factor.

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What is price recovery factor?•It is a factor that captures the effect of

inflation.•The changes in this factor over time

indicate whether changes in input costs are absorbed, passed on, or overcompensated for, in the price of the firm’s output.

•Thus inclusion of this factor will show whether gains or losses of a firm are due to changes in productivity or it merely indicates the fluctuations in the prices of material consumed and sold.

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ILO Approach to Productivity Improvement

•The classic ILO approach is Task Based.•It breaks manufacturing time into basic

work content, added work content, and ineffective time.

•The main focus is on reducing inefficient time in the total work content.

A.The Basic Work Content- The amount of work “contained” in a given

product or process measured in man-hours or machine hours.

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- The basic work content is the irreducible minimum time theoretically required to produce one unit of output.

B. Added Work Content(1)Work content added by defects in the

design or specification of the product. It may be due to lack of standardization and/or incorrect quality standards.

- This additional work content is the time taken over and above the time of the basic work content due to features inherent in the product which could be eliminated.

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(2) Work content added by inefficient methods of production or operation.

- This is the time taken over and above the basic work content plus (1), due to inefficiencies inherent in the process or method of manufacture or operation.

- This includes wrong machine used, processes operated in bad conditions, wrong tools used, bad layout, operator’s bad working methods etc.

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C. Ineffective time- All interruptions which cause the worker

or machine or both to cease producing or carrying out the operations on which they are supposed to be engaged.

- Irrespective of the cause, these must be regarded as ineffective time because no work towards completing the operation in hand is being done during the period of the interruption.

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(1) Ineffective time due to shortcomings on the part of the management.

- Time during which man or machine or both are idle because management failed to plan, direct, coordinate or control efficiently.

(2) Ineffective time within the control of the worker.

- Time during which man or machine or both are idle for the reasons within the control of the worker himself.

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Focus on reducing added work content & inefficient time in the total work content•Following are the methods by which added

work content & inefficient time can be reduced.

→By reducing 1.Poor design and frequent design changes2.Waste of materials3.Incorrect quality standards4.Poor layout and poor utilization of space5.Inadequate material handling

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•Frequent stoppage in production•Ineffective method of work•Poor planning of work•Frequent breakdowns•Absenteeism & late coming•Poor workmanship•Accidents and occupational hazards.

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Quality Circles•Quality Circles were the logical

consequence of the various waste elimination programmes that were run in many Japanese corporations in early fifties.

•It provided a platform for the workers to get together and use techniques for their quest for continuous self-development and organizational improvement.

•In 1980, the first Quality Circle was launched in Hyderabad plant of Bharat Heavy Electricals Limited.

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Definition and Meaning•Quality Circle is a small group of employees

in the same work area or doing a similar type of work who voluntarily meet regularly for about an hour every week to identify, analyze and resolve work related problems, leading to improvement in their total performance ad enrichment of their work life.

•This definition is quite comprehensive and most commonly accepted.

•Every part of the definition is significant.

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→ Why small group of employees?- Experience indicates that the optimum

number of a Q.C. is about eight to ten.- If a circle is formed with less than five

members, one can imagine the strength of the group when absenteeism is high.

- Interaction and participation becomes more pronounced when group members are more than say, six.

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→ Why in the same work area or doing similar type of work?

- This ensures Q.C. to be a homogeneous and cohesive group

- The discussion that takes place remains interesting to everyone only if members are from the same background.

- It also helps the members to understand the intricacies of the problem.

- Also the application of QC tools that are recommended require the expertise in the field.

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→ Why is participation voluntary?- ‘Voluntary’ in the Japanese context has a

different interpretation as compared to what is normally understood in the Indian context.

- To the Japanese , the very word ‘voluntary’ implies 100% participation.

- Hence, when a company in Japan decides to implement Quality Circle, every body has to enroll as a member.

- Japanese have refrained from using from using the word ‘compulsory’ as it indicates not just 100% participation but achievement of targets as well.

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•Quality circle requires some amount of creativity that is not under control, therefore, the word voluntary is used to indicate that achieving targets is not mandatory, but participation is compulsory.

•In India the term ‘voluntary’ has been used to circumvent the possible opposition from the trade unions.

→ Why to meet regularly for an hour every week?

•Meeting regularly is absolutely essential for the success of Q.C.

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•If the meetings are kept at longer intervals then cancellation of one or two meetings will further lengthen the interval leading to complete stoppage of work.

→ Why to analyze and resolve work related problems?

•As employees know more about their own work area than any body else, they are in a better position to solve problems occurring there.

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Structure of Quality Circle

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Steering Committee/

Departmental Committee

Top Management

TMSteering Committee

FacilitatorLeader/Deputy

LeaderMember

Non Member

Coordinating centre

Role of Each ElementNon-Members- Initially, all the employees in a particular work area may

not volunteer in joining QC activity.- Some others may not be interested in activity but prefer

not to get directly into it.- QC members must understand that solutions they find

cannot be implemented without the cooperation of these non-members.

- Members must encourage non-members to participate in activities so that they change their attitudes and form circle on their own.

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Members- Members must be restricted to grass root

level persons.- If membership is kept open only to officers

and executive, the very purpose of QC gets defeated.

- Members actively participate in selecting problems of their concern, analyzing it, finding solution to it and finally making presentation to the management.

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Leader/Dy. Leader- In Japan, first line supervisors are

nominated as leaders.- However, in India, it is advisable to make

members choose their own leader.- Earlier there used to be only one person as

leader.- But considering heavy absenteeism that

prevails in our country, there can be one deputy leader who will take charge in absence of leader.

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The leader or the deputy leader’s endeavour is

- To maintain cohesiveness of the team.- To plan agenda for meetings.- To ensure participation from every member

by assigning them work.- To encourage consensus decision making

process.

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Facilitator- Facilitator is the senior officer of the

department where QC is working and is nominated by management.

•The facilitator - Can facilitate more than one QC.- Is responsible for success of QC’s

operating in his area.- Ensures necessary facilities are available

to the team for operation.- Joins Steering Committee meetings and

gives results of activities of QC.

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Steering Committee- The committee comprises of heads of major

functions as members and chief executive as the chairman.

- The committee makes top management’s support visible.

• Steering committee- Meets regularly once in two months.- Takes overview of QC activity in entire

organization.- Gives policy guidelines fr the propagation

of movement

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Coordinating Agency- The job of coordinating agency is similar to

facilitator but on a large scale.- It coordinates QC activities throughout the

organization.- Steering committee decides the composition of

coordinating agency.• Coordinating agency- Organizes a training programme for members when

QC is formed.- Evolves norms to assess performance of different

QCs.- Prepares budget for QC activity.- Miscellaneous work eg. Inviting Guest Speaker or making library

facilities available

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Top Management- Top Management does not fall within the formal

structure of QC.- Its main job is to•Convey its commitment to all employees•Extend necessary support by attending conventions and

sanctioning funds.•Form quality council and establish a conducive

atmosphere.

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Quality Control Tools

•Quality circles use certain basic tools to identify, analyze, and resolve their problems, called QC tools.

A.Stratification•Stratification refers to segregation of problem area into

smaller units so that each can be taken more effectively.

•What appears to be a single problem may actually consist of a set of problems, each with a different root cause.

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•For instance, the problem of ‘Low output during the day’ may have different set of causes during the first and second shift.

•There is no way of knowing the correct way of stratifying the problem but when faced with a problem, one needs to use his skills and expertise to be able to do good stratification.

•The underlying principle is that when you find a problem, break into sub problems and find out the root cause of each.

•This procedure becomes faster and simpler.

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Examples of StratificationOperation Wise

Skill, Experience, Years in job, Gender, individual, Union, Educational qualification.

Machinery Type of machine, Machine number, order new, structure, functions, moulds, jigs etc.

Material Wise Maker, lot, date of arrival, date of use, Type, constituents, storage period, storage place, production place.

Method Wise Operation method, place of operation, Temperature, Humidity, Pressure, No. of revolutions, speed, sampling etc.

Time Wise Day, day and night, shift (in case of shifts), days of the week, month, normal day and the day after holiday, immediately after commencement, right before end, hour, around machine adjustment.

Product Wise Lot, vendor, New & old products, standards, special products. Etc.

Inspection, calibration

Inspector, Testing machine, Gauge, person in charge of calibration, place of calibration.

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B. Check Sheet or Tally Table•A data-recording tool where the frequencies of each

type are marked against it.•The frequencies against each will indicate its relative

importance and subsequently help in drawing pareto diagramme.

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Sr. No.

Cause Tally Marks Frequency Remarks

1. Broken Pin //// // 7 -

2 Broken Link /// 3 -

3 Loose contact

//// //// // 12 -

4 No Power // 2 Known Before

C. Pareto Analysis•This technique was developed by Italian economist

Pareto which showed that 20% population of a country controls 80% wealth and vice versa.

•This is applicable in most cases and is called 80-20 principle.

•Along these lines, Pareto diagramme can be drawn by finding out which 20% causes create 80% problems.

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Pareto’s Analysis- A Case Study- Cause of decline in production in Rubber component manufacturing company.

Code Item Causes Time (Min) Time (Min)/Case

A Rubber Recovering

16 145 9.1

B Repair Delays 3 255 85.0

C Repairs 5 344 68.8

D Adjustments 12 206 17.2

E Preparations 48 232 4.8

F Component Search 5 137 27.4

G Component Replacement

9 110 12.2

H Raw Material Delay

2 780 390

I Miscellaneous 17 303 17.8

Total 117 2512 21.5

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• It can be seen problem H consumes most of the time.• If we take care of this problem then there will be a

dramatic increase in productivity as compared to taking other problems in the beginning.

•Thus the important problems need to be tackled on top priority.

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D. Histogram•Histogram is also called frequency distribution chart

and represents the condition of variance through the chart .

• It is a visual presentation of the spread on distribution of data to monitor a process and determine its consistency in meeting customers’ requirements.

•The population in the data is classified on the basis of their similarity into different groups or classes.

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•Each class or group is classified on the basis of their similarity into different groups or classes.

•Each class or group is represented by a rectangle or a bar.

•The class interval or causes of the problem or defects are placed on x-axis and frequencies or the number of defects is placed on the y-axis.

•The height of each bar is proportional to the number of frequency of its class interval and each bar should be of same width.

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Uses of Histogram•The shape of the diagram reveals the mean value

variance. •By frequency distribution chart the standard deviation

and mean deviation can be calculated.•By comparing with rated value, the process efficiency

and rate of defective goods could be calculated.•By visualizing variances, abnormalities come to light.

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E. Ishikawa or Fish Bone Diagram (Cause and Effect Diagram)

• Investigative tool developed by Dr. Ishikawa of Japan.•This diagramme is arrangement of all possible causes,

which give rise to the effect or problem in hand.•Prior to plotting this diagramme, it is necessary to list

down all possible causes by brain storming, so that no important cause is missed.

•They are segmented broadly into four ‘M’s viz Men, Machine, Method, and Material.

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Final Effect

MachinesMen

MaterialsMethod

Sub cause

Sub cause

Sub cause

Sub cause

F. Control Charts•Control charts are used to investigate whether the

manufacturing process is in stable condition or not and is used to maintain the manufacturing process in stable condition.

•Central line (CL), upper control line (UCL), and lower control limit (LCL) are the main three lines which constitute a control chart.

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CL

U C L

LCL

→X (bar) Charts•Central Line =Grand Mean•UCL= Grand Mean + A2 x Mean Range•LCL= Grand Mean - A2 x Mean Range

→R (bar) Charts•Central Line= Mean Range•UCL= D3 x Mean Range•LCL= D4 x Mean Range

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Creativity Based Techniques• Innovators have known since long that the process of

generating ideas is not logical or analytical process; it is a creative process.

•Some of the commonly used creativity techniques are:(1)Brainstorming- Brainstorming is defined as a means of getting large

number of ideas from a group of people in a short time by following certain rules.

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•The definition focuses on three aspects:(a)Large number of ideas- Brainstorming is a tool to generate a large number of

ideas.- There is no guarantee that the ideas will be practicable.- There is no guarantee that the ideas will be best.- The hypothesis underlying the efficacy of

brainstorming is that the quantity leads to quality.

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- Often good ideas are under the bad ones in the brain and unless the bad ideas are permitted to exit, the good ones do not surface.

(b) A group of people- Brainstorming is a group process.- The optimum size of a group is about twelve; but it can

vary between six to twenty.- Ideally the group should be heterogeneous, with as

much diversity in gender, age, qualifications and experience, as possible.

- Such heterogeneity permits observation of problem from different view points, which is the crux of the brainstorming process.

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(c) In a short time- This refers to the rate of flow of ideas.- This rate can be as high as one hundred ideas in a

period of ten minutes.- Once again, the emphasis is on quantity.→ The success of Brainstorming- Following four basic guidelines can ensure the success

of a brainstorming process.(a)Suspend judgment- Just listen and list the ideas.- Do not try to judge or evaluate any idea till you finish

the session

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(b) Encourage free-wheeling of ideas- Permit wild ideas; encourage dreaming, and thinking

around the problem.(c)Quantity- Go for quantity i.e. number of ideas.- Do not examine quality or feasibility of idea at this

stage.(d) Cross fertilization of ideas- Encourage members of the brainstorming group to

hitch hike on each other’s ideas.- Show no interest in identification of ownership of each

idea.

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The Stages of BrainstormingThe process of brainstorming consists of six stages(1)Stating the problem- All the participants of brainstorming sessions must

know some details of the problem.- Therefore, in the first stage, we need to state the

problem and try to provide some information about it.(2) Re-stating the problem

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- Ask the participants to look at the problem in a different ways and identify as many facets of it as they can.

- Participants restate the same problem depending on the way they look at it.

- If the problem is looked at from many angles, it becomes easy to generate a large number of solutions.

(3) Select a basic re-statement- After listing down all the re-statements, select one or

two of these as a lead to brainstorming session.

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- This selection is done by the leader alone.- This stage must be closed with a clear definition of the

objective of the brainstorming session i.e. expected outcome.

- If this is not done, the session could easily turn into a ‘gossip’ session.

(4) Warm up- In this stage participants do free-wheeling for the

purpose of actual generation of ideas.- Some participants observe silence for a few minutes.

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- Silent meditation can be a great tool for use in this stage.

(5) Idea generation- Generally participants sit in circle.- The leader displays the selected statement and invites

ideas.- People are encouraged to speak out the moment they

get an idea.- The leader notes down each and every idea, without

evaluation or judgment.- The process goes on till the ideation dries up.

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(6) Wildest idea- In this final stage, the group takes up the wildest of

the ideas and attempts to turn into something useful for further brainstorming.

- After this, the session is ended.→Dos and Don'ts of Brainstorming

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Do’s Don'ts

Suspend judgment Spend too long on initial discussion

Allow wild and silly ideas Allow observers

Have a warm up session Tape record the proceedings

Encourage noise and laughter Accept interruptions

Take more than one statement of the problem

Drag a session that has dried up.

(2) Nominal Group Technique- In the Nominal Group Technique, a group of qualified

individuals come together to present their ideas and then vote for the most favoured one.

- This idea is taken up as the decision of the group.- The group is referred to as ‘nominal’ since the group

members do not directly interact with each other.- Every member works on the solution independently.

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Steps of Nominal Group Technique1. A small group gathers around a table, receives

instructions, and identifies the problem.2. Participants silently write down ideas about problem

solving.3. Each participant presents ideas one at a time; leader

writes them on the chart.4. Group discusses, clarifies and finally evaluates each

idea.5. Participants privately rank ideas in order of their

preference.6. The highest ranking idea is taken as group decision.

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Advantages & Disadvantages

• It allows formation of an informed opinion.•Ranking of ideas by the group members is facilitated by

supplying information held by each member to all other members.

•Fairly rapid process, permitting objective exchange of ideas.

•Requires a trained facilitator to run the session.→ As it is important to remove the element of personal

bias and prejudices, it is advisable to record the ideas without mentioning the name of the person giving it.

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Latyeral Thinking - Definition and Meaning•Lateral Thinking is defined as a thinking process in

which we make deliberate attempts to generate new ideas by introducing a discontinuity in our thought process.

•Lateral thinking implies considering a problem from fresh perspective, a point o view which is different from the norm, the obvious.

•The change in perspective can be relaxing as well as productive.

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•Some examples are:(a)Visualizing the extreme opposite of the situation or

reversing the objective.- Suppose you want to bring down your high inventory

levels, try thinking “what can be done to increase inventory?”

- This might bring to light some inherent weaknesses in the system.

- Even if you don’t strike the solution, you will at least know what Not to do.

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(b) Looking at the surroundings of the problem rather than the problem itself.

- Suppose you have a machine that breaks down frequently.

- Is it a machine designed for air-conditioned room but kept at room temperature.

(c) Challenging the assumption- Believe that your information is wrong.- Try something that goes against the assumption.- It may turn out that that some of the old ways can be

improved or replaced.

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The Principles of Lateral Thinking (a) Background- The need for Lateral Thinking arises from the fact that

dominance of an idea or concept suppresses other useful and efficient ideas stopping the progress.

- Dominance blocks the way to explore continuously more and more useful and efficient ideas stopping the progress.

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(b) Escape- This principle suggests recognition of the dominant idea

and deliberate search for alternate ways of doing things.- The search has to be for alternate ways and not for the

best way.(c) Provocation- This assumes that it may be necessary to be wrong at

some stage in order to reach the final right solution.- Therefore, we use one idea to provoke or generate

another set of ideas, rather than checking its individual correctness.

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Difference Between Conventional Thinking and Lateral ThinkingConventional (Vertical) Thinking

Lateral Thinking

Conventionally we think to chose and prove something.

Here we think to generate and explore ideas.

It is in search of answers. It is in search of questions.

Uses information in its meaning. Uses information for its effect.

Seeks continuity i.e. expects one thing to follow another.

Seeks discontinuity.

Concentrates only on relevant facts eliminating irrelevant facts.

Doesn’t consider anything as irrelevant.

It is a close ended procedure aimed at result.

It is an open ended process giving maximum results, but makes no promise.

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Examples of your Hemispherical Dominance→ How would you go about solving a problem?•Would you follow an organized approach like defining

the problem and breaking into parts, conducting research and recording possible solutions, eliminating the non-viable solutions and then selecting the best of the rest?

• If yes, then you are probably a left dominant.•A right dominant person would try to see the picture as

a whole, get a feel of what will work and place his trust in hunches or gut feeling.

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Delphi Technique in Creativity

•A method of pooling a large number of expert judgments through a series of increasingly refined questionnaires i.e. gathering the judgments of experts for use in decision making.

•Used for complex, unstructured problems, to develop the strong pros and cons for alternative solutions.

•Based on generation of suggestions and arguments and clustering on most favoured and least favoured alternatives.

→ The stages are:(1)Generation of individual opinions on the nature of

problem and possible solutions.(2) Tabulate results and show them to the group,

preserving anonymity.(3)The most and least favoured opinions must be

restated, preserving anonymity.(4) The group members read the list of opinions and,

individually, re-state their opinions.(5)Results are re-tabulated and shown to the group.

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•Track suggested solutions.•Vote on alternatives, their desirability.•Vote on arguments, their importance and validity.→ Delphi is based on anonymity of the group members.→ Oriented towards avoiding any direct confrontation.→ Decisions with Delphi express opinions rather than

facts which require group members to be experts.→ Delphi does not require physical presence.

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Work Study

•Work study is a generic term for those techniques, method study and work measurement which are used in the examination of human work in all its contexts and which lead systematically to the investigation of all the factors which affect the efficiency and economy of the situation being in order to effect improvement.

I

A

B

C

D Ineffective time - workersIneffective time - workers

Work content added by inefficient methods of Manufacture

Ineffective time - management

Work content added due to defects in design or specification of products.

Basic work content of product or operation

Total WorkContent

Total ineffective time

Total time of operation

Steps in a Work/ Method study •Select •Record•Examine •Develop•Define•Install•Maintain

BOTTLENECK Work Centre/ Operation (Lesser speed’ than other operations)

FREQUENT REJECTION

HIGH REWORK/RECTIFICATION

FREQUENT FAILURE

HIGH CONGESTION

SELECTION OF JOB - TECHNICAL CONSIDERATIONS

FREQUENT COMPLAINTS

KEY PERSON’S WISH

POOR WORKING CONDITIONS (Reported by WORKERS/UNIONS)

SELECTION OF JOB - HUMAN CONSIDERATIONS

A. COMMONLY USED CHARTS/DIAGRAMS

CHARTS INDICATING PROCESS SEQUENCE

- OUTLINE PROCESS CHART -FLOW PROCESS CHART Man Type“ “ “ “ Mat’l Type“ “ “ “ M/c Type

CHARTS USING A TIME SCALE-MULTIPLE ACTIVITY CHART-SIMO CHART

DIAGRAMS INDICATING MOVEMENT-FLOW DIAGRAM-STRING DIAGRAM-CYCLEGRAPH/CRONO CYCLEGRAPH-TRAVEL CHART

RECORD

B .PROCESS CHART SYMBOLS

OPERATION DELAY

INSPECTION

TRANSPORTATION

STORAGE

COMBINED

* WHAT is actually achieved? ELIMINATE * What else* WHY is activity necessary at all? Unnecessary part of

job* What should

PLACE

* WHERE is it being done ? COMBINE * Where else* WHY is it done there only ? Wherever possible * Where should

TIME / SEQUENCE

* WHEN is it done at that time only REARRANGE When else the sequence of operation for more effective results

* When else

* When should

PERSON

* WHO is doing it ? * Who else

* WHY is it done by that person only ? * Who should

MEANS/METHOD

* HOW is it being done ? SIMPLIFY * How else

* WHY is it being done in that way only ? Operations * How should

CRITICAL EXAMINATION

DEFINE

INSTALL

MAINTAIN

Motion study•Rules of motion economy

•Rules concerning:▫Human body▫Workplace layout and material handling▫Time conservation▫Tools and equipment design

TIME STUDY : SELECTING/ TIMING THE JOB

Select Job•New•Improved process (MAT’L ; Method)•Bottlenecks•Disputes•Incentives•Low output/ High cost•Comparing alternatives

SELECT WORKER•Qualified vs Representative•Fast vs Union•One vs Several

SOME CAUTIONS

Understand correct method and problems.Develop credentials/confidenceNo hidingStand and StudyTake care of interest of workers and organisation

TIME STUDY : THE EQUIPMENT

Time Study is a work measurement technique for recording times and rates of working for the elements of a specified job carried out under specified conditions, and for analysing the data so as to obtain the time necessary for carrying out job at a defined level of performance.Basic time study equipment: Stop watch a study board time study form small calculator clock with seconds hand measuring instruments such as a tape measure, steel rule, spring balance, tacho meter.

An element is a distinct part of a specified job selected for convenience of observation, measurement and analysis.

A Work cycle is the sequence of elements which are required to perform a job yield a unit of production. Sequence may some times include occasional elements.

Timing Each Element•Cumulative timings•Fly back timings.

A detailed breakdown is necessary ( element level)•Productive work to be separated from unproductive .•To rate work more accurately•To enable the different type of elements to be separated for differential treatment.•To enable the element with high degree of fatigue.•To facilitate details of methods.•To enable a detailed work specification.

Types of element•Repetitive•Occasional (adjustment of Tension)•Constant element (Switch on M/c )•Variable element•Manual element•M/C element•Governing element (Longest element)•Foreign element

RATING

Rating is the assessment of worker’s rate of working relative to the observer’s concept of rate corresponding to standard pace.

Standard performance is the rate of output which qualified workers will naturally achieve without over-exertion as an average over the working day or shift provided that they know and adhere to the specified method or provided that they are motivated to apply them selves to their work.

The performance is denoted as 100 on the standard rating and performance scale.

Rating converts observed time into normal time

Normal time = observed time X performance rating

Standard Time :

The standard time may be defined as the amount of time required to complete a unit of work Under existing working conditions Using a specified method and machinery By an operator able to work in a proper manner at a standard pace.Standard time = Normal time +

Allowances.

RELAXATION ALLOWANCES (REFA)SEVERITY L.M.H.

•PHYSICAL STRAIN (Nature of work)•Average Force Exerted (Wt)•POSTURE (Sit, walk, stand, climb, add)•SHORT CYCLE (A-7 Centi Min.)•RESTRICTIVE CLOTHINGS (Gloves, boots..)

MENTAL STRAIN (nature of work)

CONCENTRATION (Cross check, driving, pc)MONOTONY (no interaction)EYE STRAIN (Arc welding, engraving)NOISE (Press, drill)

•PHYSICAL/MENTAL STRAIN (Working conditions)

•TEMPERATURE (arc-furnace)Low humidityMed. “High “

•VENTILATION•FUMES (Paint, steam,)•DUST (ash, weed, cement, ....)•DIRT (duplicator cycle, minors,....)•WET (Steam, laundry....)

CONTINGENCY ALLOWANCES•Unavoidable delays

POLICY ALLOWANCES

•Incentive earnings•Negotiations

SPECIAL ALLOWANCES

•Start -up •Closing•M/C Cleaning•Set-up allowances•Learning allowances

WORK SAMPLINGWork sampling is a method of finding the % occurrence of certain activity by statistical sampling and random observation

•Continuous study VS. Random instantaneous

•OBSERVATION•Advantages Less time /less expensive Group of men/machine together More representative of situation (spread over period-same input)

•Disadvantages Accuracy Bias Rating

Working Take dictation Filling Typing Retrieving info. Using phone Misc.

Non -Working No work No paper/carbon Personal Misc. Application s :Work measurement Methods improvement Manpower/Capacity planningEstimating allowance

Group Timing Technique (GTT)

Techniques :Fixed period observationUseful for Gang work - load/utilisation Fabrication Civil construction Work standards/ Production normsAllowanceVerify old standards quickly% Delay determination

BUSINESS PROCESS REENGINEERING/ OPTIMIZATION

•Load Optimization

•Load Balancing/sharing

•Resource Optimization

BUSINESS CHALLANGES• Lack of process visibility can manifest in a

variety of business problems for an organization, including:

▫Little understanding of the impacts of a rapidly-changing business environment to the business operations.

▫Declining productivity with equal and skill-set alignment.

▫Poor enforcement of new industry regulations and compliance requirements, increasing an organization’s risk of litigation and punitive actions.

▫Spiraling costs without equivalent level of new business.

▫ Increased cycle times to process work and make critical decisions – negatively impacting customer service and loyalty

PROCESS OPTIMIZATION CYCLE

PROCESS OPTIMIZATION CYCLE & SIX SIGMA

PROCESS ANALYSIS – AWARENESS, INSIGHT AND INTELLIGENCE

Process Analyzer Configuration

PROCESS ANALYSIS – AWARENESS, INSIGHT AND INTELLIGENCE

Information:•System configuration information•Process definitions•Process event dataOLAP Data:•Work in Progress (Real Time)•Work Item Cycle Time•Workflow Cycle Time•Queue Load•Work Load

Contd…

Breakdown of Mortgages In-Process

Process Analyzer Chart with Real-Time Mortgage Data

QUANTITATIVE COST-BASED ANALYSIS

Process Analyzer Chart with Operational Cost Data

QUANTITATIVE PERFORMANCE ASSESSMENT

Process Analyzer Chart with Process Cycle Times, based on Loan Type

RESOURCE PLANNING

•Queue Load – the amount of work residing in work queue.

•Incoming – the amount of work arriving for processing

•Outgoing – the amount of work leaving the queue after being completed.

STRATEGIC BUSINESS PLANNING

Process Analyzer Chart with Workload Components based on Loan Type

Best Practices – Auto OEMs (Contd..)

PracticesPractices % of % of RespondentsRespondents

Preventive MaintenancePreventive Maintenance 81.881.8

Product LayoutProduct Layout 72.772.7

Set-up Time ReductionSet-up Time Reduction 63.663.6

Group TechnologyGroup Technology 45.545.5

Lean ManufacturingLean Manufacturing 36.436.4

Manufacturing

82% practice Preventive Maintenance and 73% use

Product Layout, while only 36% follow Lean

Manufacturing concept



Quality Improvement ToolsQuality Improvement Tools 81.881.8

Total Quality ManagementTotal Quality Management 72.772.7

IS/QS/TS CertificationIS/QS/TS Certification 72.772.7

Statistical Quality ControlStatistical Quality Control 63.663.6

Self Certification of ProductsSelf Certification of Products 54.554.5

Quality Improvement of VendorsQuality Improvement of Vendors 54.554.5

Failure Mode Effects AnalysisFailure Mode Effects Analysis 45.545.5

Quality Function DeploymentQuality Function Deployment 36.436.4

Six Sigma QualitySix Sigma Quality 27.327.3

KaizenKaizen 27.327.3

Quality

82% use Quality Improvement Tools while only 27% use

Six-Sigma or Kaizen concepts



Inventory & ControlInventory & Control 90.990.9

Outsourcing LogisticsOutsourcing Logistics 81.881.8

Traffic & TransportationTraffic & Transportation 72.772.7

Warehousing & StorageWarehousing & Storage 72.772.7

Tracking and Tracing SystemsTracking and Tracing Systems 54.554.5

Global LogisticsGlobal Logistics 54.554.5

E- LogisticsE- Logistics 36.436.4

Reverse LogisticsReverse Logistics 36.436.4

Distribution Resource planning Distribution Resource planning SystemsSystems

18.218.2

Milk Run CollectionsMilk Run Collections 18.218.2

Logistics

91% practice Inventory Control and 82% outsource Logistics

while only 18% adopt Milk Run Collections



ERP SystemsERP Systems 81.881.8

CAD / CAMCAD / CAM 63.663.6

Web TechnologyWeb Technology 54.554.5

Electronic Data Exchange / Fund Electronic Data Exchange / Fund Transfer Transfer

36.436.4

SCM SoftwareSCM Software 27.327.3

Bar- CodingBar- Coding 27.327.3

CRM SoftwareCRM Software 18.218.2

Global Positioning SystemGlobal Positioning System 18.218.2

Warehouse Management SystemWarehouse Management System 9.19.1

Information Technology

ERP systems being used by 82% while new technologies

like RFID and WMS are yet to be used

productivity concept, measurement and improvement

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