Methods of Improving Productivity - Term Paper Example

? Business Table of Contents Table of Contents 2 Introduction 3 Methods of Improving Productivity 3 Discussion 5 Conclusion 6 References 8 Introduction Productivity can be defined as the measure of the efficiency of production (Hansen and Mowen, 2010). In other words, productivity can be also described as the ratio of the total production output and the quantity of resources required for producing the output. The measure of productivity is therefore stated as the total output for one unit of resource (Rojas, 2008). The resources or the inputs required are mainly capital and labour. The productivity of a company largely depends upon the factors such as talent, motivation, working environment, quality of environment, time management and also assistance from the subordinates. In the context of an automobile industry, higher productivity is one of the key drivers of this industry. The automobile industry is one of the largest industries of the world. In Europe, it accounts for around 7 % of the total manufacturing output. According to several author’s, the reason behind the colossal growth of automobile industry is the increasing productivity (Heneric, Licht and Sofka, 2005). Companies nowadays employ different techniques and methods to improve the overall productivity of the company. This report will shed light on the methods of improving productivity in automobile industry and will also discuss about how growing car market is the necessary precondition for achieving superior productivity. In addition, it will also provide examples of how the conveyor belt production technique affects and help a company with the growing market. Methods of Improving Productivity There are several methods by which the productivity of an automobile company can be increased. Some of the techniques are discussed below: - Value Engineering: - Value engineering can be defined as a process by which the value of a product is improved at every phase of the product life cycle. In the development stage, value engineering improves product value by diminishing the total cost and maintaining the quality. In the maturity stage of the product, value engineering reduces the overall cost by substituting the costly constituents by inexpensive components. With the help of this process, companies try to provide maximum value at a lower rate. Hence value engineering improves the productivity by increasing the value of the products. Operations Research: - The operations research method employs scientific and mathematical methods, to resolve issues pertaining to management. In addition, it also solves problems related to productivity. A company develops several alternatives to improve its productivity, but the productivity actually increases if the most appropriate course of action has been selected. Now to increase the productivity companies use scientific methodologies which help them to select the best alternative course of action. Some of the common techniques used are game theory and linear programming among others. Quality Circles: - The concept of quality circles was developed in Japan in the year 1960. Quality circles in general are small group of employees who meet regularly to enhance identify and solve management issues. Apart from that, this group also recommends strategies to improve the operations and productivity of the company. There are also some general ways by which the productivity of a company can be increased. Although they are not scientific methods, but general ways by employing which the companies can gain higher productivity levels. Accountability: - All the employees of an organization need to be aware of the fact that he or she is responsible for the decisions and actions taken. Follow up: - In many cases it has been found that employers set the target and feels that the job is done. However in reality, it is important that managers follow up with the progress of work. This will ensure higher productivity. Manage the work force but avoid micromanagement: - It is a well established fact that employees have to be guided, managed as well as assisted. In a similar way, employees should be given freedom and should be allowed to operate according to their style. This will satisfy the employees and improve the productivity of the workers. Encourage, motivate, reward and recognize: - It is important to encourage the employees and motivate them, to ensure they remain active all the time. In addition, to recognize and acclaim their contribution and skills, the company should reward the employees. Team Work and ensuring people enjoy working: - It is imperative to encourage team working within the organization. Several authors reveal that the productivity of a company increases if a company practices team work. Hence, companies should foster team work and ensure that employees enjoy the working condition (Neiljones, 2010). Discussion Superior productivity is often regarded as the outcome of technological advancement made by the companies. Similarly due to the implementation of conveyor belt production line technique, Ford has been able to increase their productivity levels largely. However, apart from the technological advancement, the market in which the company operates also plays a major role. The operating market is important because of the fact that it determines the type of resources a company possesses (Rickman, 1995). In a competitive industry such as automobile, most of the companies try to achieve superior productivity, however in less competitive industry productivity may not be a cause of concern. Now to understand the fact whether growing car market is the necessary precondition for achieving superior productivity in the automobile industry, it is important to identify the total cost associated increased productivity. The fundamental costs associated are labour resources and capital resources. In the automobile industry, labour plays the most important role in the production process. Now to count the labour input and productivity, it is not necessary to compute the total number of workers, but it is imperative to count total number of working hours. The productivity can be calculated by using the total output and the total working hours. In order to increase the productivity it is important to reduce the total working hours keeping the output intact. In addition, to ensure labour force works efficiently, technology is needs to be implemented. Hence from this finding it can be stated that, productivity cannot be improved without investment on labours training and technology. In automobile industry, the importance of capital input cannot be denied. The productivity in this context is measured on the basis of resources used and total quantity produced (Cooper and Edgett, 2008). Although technological advancement has improved the productive capacity but it came as a result of hiring expensive resources and equipments. There is a common perception of people that more investments in resources will lead to higher productivity, but in reality productivity depends upon the quality of resources. In order to cite an example the conveyor belt production system of Ford has been used. Ford Motor Company adopted the production line like a conveyor belt. This system of production was installed by the company in the year 1913. The implication if conveyor belt production offered some advantage as well as some disadvantage to the firm. For example the workers felt monotonous as they were carrying out repetitive task. The cost of production also increased greatly, which reduced the profit margins of Ford. One of the biggest disadvantages of conveyor belt production is that labours only work on manufacturing specific part of the car, and often they remain unaware of the entire production system. However the production time got reduced significantly. With the implementation of assembly line strategy, the company was able to manufacture car in 93 minutes. This allowed the company to manufacture large number of cars and gain more profits. On a whole, the new production strategy for the company paid off substantially. It not only helped the owners but also helped the employees. Within a short span of time, i.e. in the year 1914, the employees of the company became the highest paid. In a growing market, the demand remains high and Ford was able to meet those demands by implementing assembly line production. Apart from that this production system also helped Ford to remain environment friendly as the emission rate in this technique is low. Conclusion From the above findings it can be stated that the total cost associated with improving productivity can be irresistible to an organization, but in most cases the cost is justified by the benefits. In the context of automobiles, a growing car market can only offer the incentives and profits for encouraging companies to increase their productivity levels (Love, 2001). On the other hand if the market did not provide the required profit, companies will look for either product differentiation or cost reduction to gain profit. Hence it can be concluded that car market is the necessary precondition for achieving higher productivity. Apart from that, it is also a fact that profitability and productivity share a dynamic relationship and therefore a company needs to maintain quantity and quality of goods and ensure less capital and labour cost. References Cooper, R. G., and Edgett, S, J., 2008. Maximizing Productivity in Product Innovation. Research- Technology Management, 51 (2), pp. 1-15. Hansen, D. R., and Mowen, M. M., 2010. Cornerstones of Cost Accounting. Connecticut: Cengage Learning. Heneric, O., Licht, G., and Sofka, W., 2005. Europe's Automotive Industry on the Move: Competitiveness in a Changing World. Berlin: Springer. Love, P., 2001. Driving Productivity in Product Innovation. Management Services, 45 (1), pp. 8-13. Neiljones, 2010. 12 Ways to Improve Productivity at the Workplace. [online] Available at: < http://tweakyourbiz.com/growth/2010/10/07/12-ways-to-improve-productivity-at-the-workplace/> [Accessed 28 December 2012]. Rickman, D., 1995. Differences in State Unemployment Rates: The Role of Labour and Product Market Structural Shifts. Southern Economic Journal, 62 (11), pp. 1- 15. Rojas, E. M., 2008. Construction Productivity: A Practical Guide for Building and Electrical Contractors. Florida: J. Ross Publishing. Read More