productivity engineering and management

PRODUCTIVITY ENGINEERING

AND MANAGEMENT

Productivity Measurement, Evaluation, Planning, and Improvement in

Manufacturing and Service Organizations

David J. Sumanth, PH.D. Associate Professor and

Director, Productivity Research Group Department of Industrial Engineering

University of Miami

McGraw-Hill Book Company New York St. Louis San Francisco Auckland Bogota Hamburg

Johannesburg London Madrid Mexico Montreal New Delhi Panama Paris Sao Paulo Singapore Sydney Tokyo Toronto

CONTENTS

Preface xv

Part 1 Definitions and Basic Concepts of Productivity

1 Introduction 3 1.1 Origin of the Word "Productivity** 3 1.2 Common Misuse of the Term 4 1.3 Basic Definitions of Productivity 7

Questions 10 References 11

2 Importance of and Factors Affecting Productivity 12 2.1 Productivity vs. Inflation '3 2.2 Productivity vs. the Standard of Living and Employment 16 2.3 Productivity vs. Political Power 22 2.4 Productivity vs. Economic Power 23 2.5 Factors Affecting Productivity 25 2.6 Productivity Awareness in the United States 37 2.7 Productivity Efforts: Private and Government 38 2.8 Productivity Benefit Model ^ '

Questions ^^ References ^^

• • VII

vfi rn

3 Productivity Engineering and Management 47 3J The Productivity Cycle 47 3.2 Dcfifutions and Scope of Productivity Engineering and

Management 49 3.3 Educational Efforts in Productivity Engineering and Management 52


Part 2 Productivity Measurement at International, National, and Industrial Levels

M Productivity Measurement at the International Level 5?

4 I Measurement Approaches 5g 4.2 International Comparisons 61 4.3 Problems of Productivity Measurement at the International Level 61


5 Productivity Measurement at the National Level 63

5.1 Benefits of Productivity Measurement at the National Level 63 5.2 Definition*; nf National Output 64 5.3 Productivity-Measurement Approaches at the National Level 65 5 4 Problems in Productivity Measurement at the National Level 70 5.5 Sectoral Comparisons 72


*6 Productivity Measurement at the Industrial Level 76 6.1 Benefits of Productivity Measurement at the Industrial Level 76 6.2 Productivity-Measurement Approaches at the Industrial Level 77 6.3 Problems m Productivity Measurement at the Industrial Level 88 6.4 I imitations of Present Labor-Productivity Measures for Industry 88 6.5 iniermdustry Comparisons 91


Part 3 Productivity Measurement in Companies/ Organizations

7 The Need for Productivity Measurement in Companies/Organizations 97

"̂ ? Benefits of Higher Productivity in Organizations 97 7.2 Benefits of Productivity Measurement in Organizations 98

(ONTFNrs ix

•T ^ Productivity^Measurcment Approaches at the Company Level 98 7.4 Diversity of Productivity Concepts at the

Company Organization Level 121 7 5 Survey Results from United States Companies j22

Questions j^- . References I^Q

8 The Total Productivity Model i5i 8.1 Limitations of Partial Measures of Productivity 151 8.2 The (Basic) Total Productivity Model (TPM) 152

•8.3 Versions of the Basic Total Productivity Model 163 •8.4 Relationships between Total and Partial Productivities 164 •8.5 Profit vs. Total Productivity: The Break-Even Point Concept 179 8.6 Computations m the Application of the Total Productivity Model 190 8.7 Computer Program and User's Manual for the Total Productivity

Model and the Operational Total Producuvity Model 211 8.8 Productivity Measurement Strategy Using the

Total ProductiMty Model 211 8.9 Steps in Implementing the Total Productivity Model 215

Questions 228 Problems 228 References 230

Part 4 Productivity Evaluation and Planning in Companies and Organizations

*9 Productivity Evaluation in Companies and Organizations 233

9.1 Expression for Total Productivity Change 234 9.2 The Productivity Evaluation Tree (PET) 237 9.3 Evaluation of Total Productivity between Successive Time Periods 239 9.4 Evaluation of Total Productivity within a Given Time Period 243 9.5 Evaluation Methodology 247

Questions ^̂ ^ Problems ^̂ ^ Reference* ^̂ ^

*10 Productivity Planning in Companies and Organizations 253

10.1 Importance of Productivity Planning 254 10.2 Short-Term versus Long-Term Productivity Planning 255 10.3 Responsibility for Productivity Planning

Questions References

257 259 259

•11 Short-Term Productivity Planning Models 111 Weighted Partial Productivity Model 112 Productivity Evaluation Tree (PET) Model

260

260

I COWTENfTS

11.3 Linear Trend Model Using Exponential Smoothing (DES) 265 11.4 Comparative Productivity Evaluation Tree Model 266 11.5 Seasonal Variation Model Using Winters* Method 269


•12 Long-Term Productivity Planning Models 275 12.1 Total Productivity-Maximization Model 276 12.2 Total Productivity-Profit Model 290


Part 5 Productivity Improvement in Companies and Organizations

*13 Productivity Improvement Concepts 303 13.1 Causes of Productivity Decline in Companies 303 13.2 Productivity Improvement Surveys 304 13.3 Some Existing Approaches to Productivity Improvement 306 13.4 A New Perspective on Productivity Improvement 318 13.5 Analytical Productivity Improvement Model (APIM) 320 13.6 Principles of Productivity Improvement 329


14 Technology-Based Productivity Improvement Techniques 340

14.1 Computer-Aided Design (CAD) 341 14.2 Computer-Aided Manufacturing (CAM) 344 14.3 Computer-Integrated Manufacturing (CIM) * 347 14.4 Robotics 348 14.5 Laser Technology 355 14.6 Energy Technology 356 14.7 Group Technology 357 14.8 Computer Graphics 358 14.9 Maintenance Management 361

14.10 Rebuilding Old Machinery 363 14.11 Energy-Conservation Technology (ECT) 364


380 383

CONTEN" Xi

15 Materials-Based Productivity Improvement Techniques -̂

13.1 Inventory Control ^^. 15.2 Material Requirement Planning (MRP) 37g 15.3 Materials Management 15.4 Qtiality Control 15.5 Matcrial-Handling-Systems Improvement 3gg 15.6 Material Reuse and Recycling 390


16 Employee-Based Productivity Improvement Techniques 394

16.1 Financial Incentives (Individual) 394 16.2 Financial Incentives (Group) 400 16.3 Fringe Benefits 408 16.4 Employee Promotion 408 16.5 Job Enrichment 409 16.6 Job Enlargement 410 16.7 Job Rotation 410 16.8 Worker Participation 411 16.9 Skill Enhancement 411

16.10 Management by Objectives 412 16.11 Learning Curve ^}l 16.12 Communication 16.13 Working Condition Improvement 16.14 Training 16.15 Education 16.16 Role Perception 16.17 Quality of Supervision 16.18 Recognition 16.19 Punishment ^2i 16.20 Quality Circles ^2i 16.21 PQ Teams 424 16.22 Zero Defects 425 16.23 Time Management 426 16.24 Flextime 428 16.25 Compressed Workweek 423 16.26 Harmonization 429

Questions 43O Problems 43I References

17 Product-Based Productivity Improvement ^̂ ^

Techniques 433 17.1 Value Analysis/Value Engineering 435 17 2 Product Diversification

416 417 417 418 419 420 420 420

\n CONTEBiTS

17.3 17.4 17.5 17.6 17.7 17.8

Product Simplification Product Standardization Research and Development Reliability Improvement Emulation Advertising and Promotion Questions Problems References

437 438 439 441 446 447 448 448 449

18 Task-Based Productivity Improvement Techniques 450 18.1 Methods Engineering Work Simplification 18.2 Work Measurement 18.3 Job Design 18.4 Job Evaluation 18.5 Job Safety Design 18.6 Human Factors Engineering (Ergonomics) 18.7 Production Scheduling

Questions Problems References

451 456 464 464 470 472 473 475 475 476

19 Setting Up a Formal Productivity Improvement Program

19.1 Formal Productivity Improvement 19.2 Organizational Structures for Productivity Program 19.3 Planning Aspects 19.4 Human Aspects 19.5 Implementation Schedule 19.6 Evaluation of the Effectiveness of a Formal Productivity Program 19.7 Common Problems Encountered and Ways to Counter Them

Questions •Case Study Questions

References

477

477

479

479

481

482

483

483

486

487

488

•"20 Productivity Improvement in Selected Manufacturing Companies

20.1 Aircraft Company 20.2 Pharmaceutical Company 20.3 Television and Microwave Oven Company 20.4 Textile Company 20.5 Machine Tool Company


489

489 490 491 493 493 494 495

CONTENTS Xili

•21 Productivity Improvement in Selected Service Organizations

21.1 Airline Organization 21.2 Utilities Firms 21.3 Insurance Company


2̂2 Productivity Improvement Strategies around the World

22.1 Productivity Strategies in Australia 22.2 Productivity Strategies in Asia 22.3 Productivity Strategies in Europe 22.4 Productivity Strategies in Africa 22.5 Productivity Strategies in North America 22.6 Productivity Strategies in South and Central America


Appendixes A Selected Productivity and Innovation Centers in the United

States and Overseas B Paasche and Laspeyres Forms of Indices C Glossary of Terms

Bibliography

Index

496

496 497 499 500 500

502

502 504 507 508 508 509 510 510

512

512 515 518

525

541

•Optional topics for undergraduate students

productivity engineering and management

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