Module 3: Productivity and Operations Management PDF

Operations Management Module 3 PRODUCTIVITY and OPERATIONS MANAGEMENT ENGR. AURA MARIE B. NOVESTERAS, PIE, ASEAN ENGR. Learning Outcomes At the end of this module, you should be able to: 1. Apply the concept of productivity in operations management 2. Understand the differen...

Operations Management Module 3 PRODUCTIVITY and OPERATIONS MANAGEMENT ENGR. AURA MARIE B. NOVESTERAS, PIE, ASEAN ENGR. Learning Outcomes At the end of this module, you should be able to: 1. Apply the concept of productivity in operations management 2. Understand the different concepts of productivity 3. Identify the controllable and uncontrollable factors of productivity 4. Compute the single-factor and multi-factor productivity Productivity Productivity relates to output over input in a system where some value addition is performed in some input resources Concept of Productivity 1. Technical Concepts 2. Social Concepts 3. Economic Concepts 4. Management Concepts  Technical Concept The efficiency of Processes directly impacts productivity. When processes are optimized to reduce waste and increase output, productivity improves. The adoption of new technologies and innovations can lead to significant productivity gains by automating tasks, improving accuracy, and speeding up production. Drawbacks of Technical Concept 1. Focusing too much on maximizing output can lead to a reduction in product or service quality. 2. Burnout and Stress due to excessive pressure on employees which decreased job satisfaction. 3. Loss of job security due to labor reduction may lead to labor-management conflict Can you give other examples of technical drawback Drawbacks of Technical Concept 4. Difficult to adapt to changes in market conditions, customer demands, or technological advancements. 5. Resistance to Change. 6. Loss of Human Touch ex. automated answering machine Social Concept In a social context, productivity extends beyond the mere measurement of output. It involves the well-being, motivation, and overall engagement of the workforce. A productive environment is not solely defined by economic gains but also by the satisfaction and fulfillment of employees. This concept recognizes that happy, motivated individuals are more likely to contribute effectively and creatively to their organizations. Social Concept Can you give an example of Social Concept 1. Employee Motivation and Engagement 2. A positive workplace culture 3. Employee Well-being 4. Leadership and Management Style 5. Social Relationships with other employees 6. Balanced Work-Life Social Concept Aims to achieve a better quality of life....... The standard of living is a measure of wealth, comfort, and material goods for purchase by a person, family, group, or nation. Economic Concept Economic productivity measures how efficiently resources, like labor and capital, are used to create goods and services. It's a crucial factor in economic growth, as more efficient production leads to higher output and lower costs. This increased productivity can boost a country's competitiveness in the global market and improve the overall standard of living for its citizens. Economic Economic Concept Concept Economic Management Concept Concept Efficiency Productivity Effectiveness Doing the Right Things Right In this concept, Management need to provide a working definition to manage and improve productivity at micro or organizational level Economic Concept Efficiency and Effectiveness Efficiency - getting the maximum out with minimum input - doing things consistently - focus on the process Effectiveness - measures if actual output meets the desired output -innovative ways of working -focus on the results Economic Key Aspects Concept of Management Concept 1. Management often focuses on optimizing processes to eliminate waste, increase efficiency, and improve productivity. Techniques like Lean Management, Six Sigma, and Total Quality Management (TQM) are commonly used to streamline operations and achieve these goals. ex. Management may apply Lean principles to identify and eliminate backlogs and idle time in the production line, leading to faster production at lower costs without sacrificing quality. 2. Management's function encompasses building a positive work environment among the employees Ex. offering benefits and incentives offers promotion and provides opportunities for professional growth. Economic Key Aspects Concept of Management Concept 3. Establishing objectives and performance appraisal ex. Setting goals reviewing the performance and setting SMART goals (Specific, Measurable, Achievable, Relevant, Time-bound) 4. Budget allocation 5. Technology Integration Controllable Factors CONTROLLABLE FOR INTERNAL FACTORS 1. Product factor the extent to which the product meets output requirements product is judged by its usefulness. the ability of a system to grow to meet a company's business needs The product itself is simple enough to understand and use The product is simple enough to explain The product solves the problem and works better than the existing one Controllable Factors 2. Plant and equipment: The increased availability of the plant through proper maintenance and reduction of idle time increases productivity. ✓ Plant maintenance is done to keep your plant and machinery in good working condition ✓ Avoid downtime and ensure the safety of workers. ✓ Maintenance is carried out on the plant to prevent any possible problems from arising, fix any existing problems, and ensure that all the equipment is working correctly and efficiently. Controllable Factors 3. Technology Innovative and latest technology improves productivity to a greater extent. Automation and information technology help to achieve improvements in material handling, storage, communication system, and quality control. ✓ Size and capacity of the plant, ✓ Timely supply and quality of inputs, ✓ Production planning and control, ✓ Repairs and maintenance, ✓ Waste reduction, and ✓ Efficient material handling system. Controllable Factors 3. Technology Innovative and latest technology improves productivity to a greater extent. Automation and information technology help to achieve improvements in material handling, storage, communication system, and quality control. i. Size and capacity of the plant, ii. Timely supply and quality of inputs, iii. Production planning and control, iv. Repairs and maintenance, v. Waste reduction, and Efficient material handling system. Controllable Factors 4. Materials and energy Efforts to reduce materials and energy consumption bring about considerable improvement in productivity. ✓ Selection of quality material and the right material. ✓ Control of wastage and scrap (SOP, QA, Methods) ✓ Effective stock control. (Kanban, ERP) ✓ Development of sources of supply. Local parts supplier (Uratex-dual seat) ✓ Optimum energy utilization and energy savings. Controllable Factors 5. Human factors The goal of human factors is to reduce human error, increase productivity, and enhance safety and comfort with a specific focus on the interaction between a human and the thing of interest that motivates employees. Controllable Factors 6. Work methods Improving the ways in which the work is done (methods) improves productivity, work-study and industrial engineering techniques and training are the areas which improve the work methods, which in term enhance the productivity 7. Management style This influence the organizational design, communication in the organization, policy, and procedures. A flexible and dynamic management style is a better approach to achieve higher productivity. Uncontrollable Factors (External) 2. Natural resources - Land and raw materials are vital to the productivity improvement ✓ Climatic conditions ✓ Geographic location ✓ Depletion of natural resources ✓ Over consumption of natural resources Uncontrollable Factors (External) 3. Government and infrastructure: Government policies and programs are significant to productivity practices of government agencies, transport and communication power, and fiscal policies (interest rates, taxes) influence productivity to a greater extent. Uncontrollable Factors (External) 3. Government and infrastructure: R.A. No. 7718 Subway Skyway Rail transit Roads Bridges Productivity Improvement Techniques 1. Computer-Aided Design (CAD), Computer Aided Manufacturing (CAM) ✓ Speed of evaluation of alternative designs, ✓ Minimization of risk of functioning, and ✓ Error reduction Productivity Improvement Techniques 2. Computer integrated manufacturing: Computer-integrated manufacturing is characterized by automatic line balancing, machine loading (scheduling and sequencing), automatic inventory control, and inspection. ✓ Robotics- Some manufacturers use robotics to automate repetitive, menial tasks such as material handling and assembly. Productivity Improvement Techniques 2. Computer integrated manufacturing: ✓ Laser technology – modify the shape and appearance of metal ex cutting metal sheet Productivity Improvement Techniques 2. Computer integrated manufacturing: ✓ Energy technology - provide technologies to enable intelligent power & energy management to enhance operational effectiveness ✓ Solar Energy. ✓ Waste to Energy. ✓ Hydrogen energy. Economic Concept Measuring productivity 1. Single Factor Productivity. Productivity is measured using the single-factor productivity (SFP) method, which compares the result to a single input. This method evaluates the effectiveness of a single input type—labor, capital, or materials—in producing output by isolating it. The productivity formula for a single factor is: 𝑂𝑢𝑡𝑝𝑢𝑡 𝑆𝑖𝑛𝑔𝑙𝑒 𝐹𝑎𝑐𝑡𝑜𝑟 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 = 𝑆𝑖𝑛𝑔𝑙𝑒 𝐼𝑛𝑝𝑢𝑡 Economic Concept Measuring productivity Example: An electronics manufacturing company produces 1,000 units of a product in a given period. During this period, the company uses a total of 250 labor hours. Calculate the labor productivity of the company. 𝑂𝑢𝑡𝑝𝑢𝑡 𝐿𝑎𝑏𝑜𝑟 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 = 𝐿𝑎𝑏𝑜𝑟 𝐻𝑜𝑢𝑟𝑠 𝑈𝑠𝑒𝑑 Economic Concept Measuring productivity 1. Multi-Factor Productivity. Multifactor productivity (MFP), also known as total factor productivity (TFP), gives a thorough measure of productivity by counting multiple inputs—such as capital, labor, materials, and energy—at the same time. It calculates the productivity of all these inputs in yielding outputs, delivering a wider view of productivity than single-factor measures. 𝑀𝑢𝑙𝑡𝑖 − 𝐹𝑎𝑐𝑡𝑜𝑟 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝑂𝑢𝑡𝑝𝑢𝑡 𝑀𝐹𝑃 = 𝐿𝑎𝑏𝑜𝑟 + 𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙 + 𝐸𝑛𝑒𝑟𝑔𝑦 + 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 + 𝑀𝑖𝑠𝑐𝑒𝑙𝑙𝑎𝑛𝑒𝑜𝑢𝑠 Economic Concept Measuring productivity Sunlife Insurance Company wants to evaluate its labor and multifactor productivity with a new computerized system for insurance applications. The company has a staff of four, each working 8 hours per day (for a payroll cost of ₱640/day) and overhead expenses of ₱400 per day. Sunlife Insurance Company processes and closes on 8 applications each day. The new computerized system will allow the processing of 14 applications per day. Although the staff, their work hours, and pay are the same, the overhead expenses are now ₱650 per day. Compute the following: 1. Labor Productivity of old and new system 2. Multi-Factor Productivity of the old and new system 3. Percent Increase in Labor Productivity 4. Percent Increase in Multi-Factor Productivity Economic Concept Measuring productivity 1. Labor Productivity of old system Economic Concept Measuring productivity 2. Labor Productivity new system Economic Concept Measuring productivity 3. Percent Increase in Labor Productivity Economic Concept Measuring productivity 5. Multi factor Productivity of old system Economic Concept Measuring productivity 6. Multi Factor Productivity of New System Economic Concept Measuring productivity 6. % increase in Multi Factor Productivity Economic Concept Productivity Problems 2. Jade makes wooden boxes for motorcycle shipments. Amber and his 3 employees invest a total of 40 hours/day in making 120 wooden boxes. a. What is the labor productivity? b. Jade and his employees have discussed redesigning the process to improve efficiency if they can increase the rate to 125 wooden boxes per day. What will be their new productivity? c. What will be the unit increase in terms of wooden boxes per hour? d. What will be the percent increase in productivity? Solution: 𝑂 120 𝑤𝑜𝑜𝑑𝑒𝑛 𝑏𝑜𝑥𝑒𝑠 1. Labor-Factor Productivity = = = 3 wooden boxes/hour 𝐼 40 ℎ𝑜𝑢𝑟𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘 Economic Concept Productivity Problems 𝑂 125 𝑤𝑜𝑜𝑑𝑒𝑛 𝑏𝑜𝑥𝑒𝑠 b. Labor-Factor Productivity(new) = = = 3.125 wooden boxes/hour 𝐼 40 ℎ𝑜𝑢𝑟𝑠 𝑝𝑒𝑟 𝑤𝑒𝑒𝑘 c. Unit increase = LP(n) – LP (o) = 3.125 – 3 = 0.125 wooden boxes/hour LP n −LP(o) d. % increase = x 100 LP (o) 3.125−3 = x 100 3 = 4% Economic Concept Productivity Problems 4. Mina cleans 650 rags for 20 days by consuming the following resources: Labor: 520 hours at ₱13 per hour Solvent: 100 gallons at ₱5 per gallon Machine rental: 20 days at ₱50 per day a. Compute the labor productivity in terms of rags per pesos. b. Compute the multi-factor productivity Solution: 𝑂 650 𝑟𝑎𝑔𝑠 a. Labor-Factor Productivity = = ₱13 = 1.625 rags/₱ 𝐼 𝑥 520 𝑑𝑎𝑦 Economic Concept Productivity Problems 𝑂 b. Multi-Factor Productivity = 𝐼 650 𝑟𝑎𝑔𝑠 = ₱13 ₱5 ₱50 ℎ𝑜𝑢𝑟 𝑥 520 ℎ𝑜𝑢𝑟𝑠 + 𝑔𝑎𝑙𝑥 100 𝑔𝑎𝑙 + 𝑑𝑎𝑦𝑥 20 𝑑𝑎𝑦𝑠 = 0.079 𝑟𝑎𝑔𝑠/𝑝𝑒𝑠𝑜𝑠 Activity No.3 Productivity and OM 1. Improving productivity is directly linked to raising the standard of living of an individual, community or country. Provide at least 5 recommendations on productivity techniques to solve the following problems and explain the impacts of each 1. Food Shortage 2. Decline Locally manufactured clothes and apparel 3. Lack of Housing Facilities 4. Stressful work in BPO Company 5. Poor Health Services 6. Lack of Quality Education 7. Poor Transportation 8. Poor Connectivity 9. Lack of Security for Seniors 10. Ineffective Medicine Activity No.3 Productivity and OM Social media is valuable to people and businesses. It doesn’t sell its tangible product, but people and other organizations keep on using it because of its unique ability to connect and share with the people you care about at the same time. From the given product factors, specify the strong points of Lazada or Shopee and why it met the required output of the users. Habit Generation Scalability Simplicity Explainability Usefulness Economic Concept Productivity Problems 3. Ace metal casting produces cast bronze valves on a 10-person assembly line in one day. 160 valves were produced during an 8-hour shift. a. Calculate the labor productivity of the line b. The manager of Ace metal casting changed the lay-out and was able to increase production to 180 valves per 8-hour shift. What is the new labor productivity? c. What is the percent increase in labor productivity? Activity No.3 Productivity and OM Thank you!