Productivity and Methods Improvement Learning Outcomes Explain the three major components of organizational productivity Describe the supervisor’s role in a work-methods improvement program Discuss the benefits of work-methods improvement Describe the Kaizen philosophy for improvement

Ensuring High Quality and Productivity The amount of results (output) an organization gets for a given amount of inputs

Productivity and Methods Improvement Productivity: The units of output per employee hour. Increasing productivity is a key to competing at the local, national, and international levels, Therefore both management and labour leaders publicly urge high productivity in the workforce (its not to plea to work harder). Real Meaning of Productivity: “to produce more with the same amount of human effort Management Effectiveness Efficiency of Technology Productivity (output per worker-machine hour) Efficiency of labour Determinants of Productivity

Dimensions of Quality

Consequences of Poor Quality Limited resources When the quality of an organization’s goods or services is poor, the whole organization suffers. The organization has more difficulty attracting other important resources. See Learning Objective 1: Describe the consequences suffered by organizations as a result of poor quality work. See text pages: 32-33

Consequences of Poor Quality Higher costs Businesses spend billions of dollars each year on inspections, errors, rework, repairs, customer refunds, and other costs to find and correct mistakes. Attracting new customers costs several times more per customer than keeping existing customers satisfied. See Learning Objective 1: Describe the consequences suffered by organizations as a result of poor quality work. See text pages: 32-33

Types of Quality Control An organization’s efforts to prevent or correct defects in its goods or services or to improve them in some way

Methods for Improving Quality

Chart Used for Statistical Process Control

Total Quality Management Philip Crosby believed an organization should be “injected” with Integrity Systems that measure quality Communications about progress and achievements Operations that educate suppliers and employees in delivering quality and Policies supporting the organization’s commitment to quality.

Total Quality Management Edward Deming to achieve product quality, the organization must continually improve not only the product’s design but also the process of producing it. Joseph Juran management should seek to maintain and improve quality through efforts on two levels: the organization as a whole and individual departments in the organization.

Quality Standards Malcolm Baldrige National Quality Award an annual award administered by the U.S. Commerce Department’s National Institute of Standards and Technology (NIST) and given to the organization that shows the highest quality performance as measured by seven categories

Quality Standards 1. Leadership 2. Strategic planning 3. Customer and market focus 4. Measurement, analysis, and knowledge management 5. Human resource focus 6. Process management 7. Results

Quality Standards ISO 9000 Benchmarking a series of standards adopted by the International Organization for Standardization to spell out acceptable criteria for quality systems Benchmarking Identifying the top performer of a process, then learning and carrying out the top performer’s practices

Constraints on Productivity Management limitations Employee attitudes and skills Government regulations Union rules See Learning Objective 5: Identify constraints on productivity. See text pages: 45-47

Measuring Productivity The basic way to measure productivity is to divide outputs by inputs. To increase productivity, a supervisor needs to increase outputs, reduce inputs, or both. Quantity without quality does not boost productivity. See Learning Objective 6: Describe how productivity and productivity improvements are measured. See text pages: 47-49

Improving Productivity Do equal work at a lower cost, and increase output without a cost increase. Improve process quality so that employees work more efficiently and do not have to spend time correcting mistakes or defects. Use their specific knowledge of the tasks and processes their teams perform to find unique ways to contribute to productivity. Encourage and use employees’ ideas for saving money. See Learning Objective 7: Identify ways productivity may be improved. See text pages: 50-51

Improving Productivity Use budgets Review budget reports Observe employee use of resources Increase output Increase output without boosting costs Ensure the new output goals are reasonable Communicate new goals carefully Electronic monitoring See Learning Objective 7: Identify ways productivity may be improved. See text page: 51

Improving Productivity Improve methods Reengineering Process control techniques Give employees more control over the way they work Design jobs to be interesting Reduce overhead Monitor work areas Eliminate unnecessary paperwork See Learning Objective 7: Identify ways productivity may be improved. See text pages: 51-53

Improving Productivity Minimize waste Reduce downtime Reduce detour behavior Use e-mail filtering software Set a good example See Learning Objective 7: Identify ways productivity may be improved. See text pages: 53-54

Improving Productivity Regulate or level the work flow Ensure adequate planning for the required work Work with others to examine and solve work-flow problems Use temporary employees during peak periods See Learning Objective 7: Identify ways productivity may be improved. See text pages: 53-54

Improving Productivity Minimize waste Reduce downtime Reduce detour behavior Use e-mail filtering software Set a good example Regulate or level the work flow Ensure adequate planning for the required work Work with others to examine and solve work-flow problems Use temporary employees during peak periods See Learning Objective 7: Identify ways productivity may be improved. See text pages: 53-54

FIGURE 2.11 The Costs of Uneven Work Flow

Improving Productivity Install modern equipment Compute the payback period Find the average rate of return (ARR) Payback period = Cost of new equipment Savings per year See Learning Objective 7: Identify ways productivity may be improved. See text page: 55 Average rate of return = Average annual earnings or savings Amount invested (cost)

Improving Productivity Train and motivate employees Minimize tardiness, absenteeism, and turnover Employees tend to arrive late or not at all if they dislike their jobs or find them boring Absenteeism may be the first step to leaving the company High turnover is expensive, because the organization must recruit and train new employees See Learning Objective 7: Identify ways productivity may be improved. See text pages: 55-56

Employee Fears About Productivity Improvement Many employees believe that cost reductions can lead to less overtime pay, more difficult work, and even layoffs Supervisors must respond to employee fears Be prepared with information Present the information to the employees Allow employees to ask questions See Learning Objective 8: Explain why employees have fears about productivity improvement and how supervisors can address those fears. See text page: 57

Methods Improvement and the Supervisor Best method for performing a task is a combination; - of how the human body is used - the arrangement of the workplace and - the design of the tools and equipment Work-methods improvement; - find the most efficient way to accomplish a given task - Other terms used, methods engineering or work simplification Involves eliminating unnecessary work but not to mean that scope of the task or job should be restructured The objective is not to make the task or job as simple as possible, but to increase efficiency by eliminating unnecessary work and optimal structure necessary work

Methods Improvement and the Supervisor Methods improvement program Task of supervisors Supervisors Attention to affected employees More afford same pay Resistance to change Negative attitude towards methods improvement program

Methods Improvement and the Supervisor Encouraging methods 1. Employees must be given tools and know-how for simpliflying work - Actively listen and follow-up on employees suggestion - Rewarding employees - Set example - Concentrate on areas with graetest potential for payoff - Supervisors actively participate - Encourage employees attend method improvement training programs Task of supervisors should be encouraging 2. Employees must be motivated to make improvement

Benefits of Methods Improvement Management Increased productivity Lower costs Increased profits Supervisor Increased productivity Lower costs Fewer accidents Employees Improved job satisfaction Fewer accidents Methods Improvement Consumers Lower prices More goods and services Owners Increased profits Society Lower prices More goods and services

Kaizen Philosophy for Improvement Originated in Japan Kaizen comes from two Japanese words; - Kai, meaning change - zen, meaning good In today context – describe as a process of continuous and relentless refining of existing processes. Kaizen basically a system of taking small steps to improve the workplace. The system should be customers driven and involve all employees through systematic and open communication. Employees are organization’s most valued asset. Practice through teamwork and extensive employee participation. Does not focus on obtaining new faster machine but on improving the methods and procedures used in the existing situation Good Change

What is Kaizen Management Syistem ? KMS is... ... a system of continuous improvement in quality, technology, processes, company culture, productivity, safety and leadership. Toyota company

What is Kaizen Management System ? Kaizen is a Japanese philosophy that focuses on continuous improvement throughout all aspects of life. When applied to the workplace,as a Kaizen Management System Kaizen activities continually improve all functions of a business, from manufacturing to management. By improving standardized activities and processes, Kaizen aims to eliminate waste.

Benefits Kaizen Management Sistem empowers employees, enriches the work experience and brings out the best in every person. Serves as a barometer of leadership. Kaizen helps eliminate or reduce wastes and improves quality, safety, cost structures, delivery, environments, product and customer service.