LEARNING OBJECTIVES To understand and explore different areas of Productivity Techniques and their applications in operations with the help of real life.

LEARNING OBJECTIVES To understand and explore different areas of Productivity Techniques and their applications in operations with the help of real life cases studies Through the Industrial Visit and regular practice given to evolve solutions for case studies, the classroom knowledge will be put to application and at the same time their understanding will be put to evaluation The students will acquire a new way of looking at the manufacturing sector in the entire supply chain journey

REFERENCE TEXTS Sr. No Reference Text 1
The Chronicles of a Quality Detective Dr. Shrinivas Gondhalekar and Payal Sheth 2 Toyota Production System Taiichi Ohno 3 SMED- A Revolution in Manufacturing Shigeo Shingo 4 Gemba Kaizen Masaaki Imai 5 The Toyota Way Jeffrey Liker 6 Operations Management and Productivity Techniques PN Mukherjee and T T Kachwala 7 Lean Thinking James Womack and Daniel Jones 8 Out of the Crisis Edward Deming 9 TPM for Process Industry Tokutaro Suzuki 10 The New Rational Manager Charles Kepner and Benjamin Tregoe 11 The Six Sigma Way Peter S. Pande, Robert P. Neuman, Roland R. Cavanagh 12 Theory of Contraints Eliyahu Goldratt 13 YouTube Go to the Channel: Shrinivas Gondhalekar

What is difference between Manufacturing and Service ?
Factory (converter) Finished Goods (Material) Raw Material IN OUT Office (converter) Information Processed Data Data Raw Information IN OUT Restaurant (converter) Satisfied Guest Filled Stomach Hungry Guest Empty Stomach IN OUT Desiring Guest Empty Bag Retail Shop (converter) Satisfied Guest Filled Bag IN OUT

What is Productivity ? PROCESS Productivity = Output Input I/P O/P
Muda (waste) Productivity = Output Input Productivity is the ratio between “Output of work” and “Input of Resources” used in the process of creating wealth –ILO Definition

Productivity People Material Machine Land Resources Productivity
A worker produces 100 pieces is now able to produce 130 pieces after undergoing training session People The productivity of worker has increased by 30% 1 ton of hot rolled steel would yield 800 kg of cold rolled steel; the rest being scrap.Factory manager changed the process parameters that enabled 900 kg of cold rolled steel to be generated from same amount of hot rolled steel Material The productivity of hot rolled steel that was 80% has gone upto 90% Machine Output of the machine shop was 100 pieces per shift. Prashant introduced few technical changes in the machine These change increased the output to 120 units per shift This implies 20% improvement in machine productivity Land A farmer used natural fertilizer for his land ,after which the yield of rice increased from 200 quintals/hectare to 300 quintals/hectare Productivity of land has increased by 50%

Result The 4 Ms Needs brains, not money Machine Method Man Material
© Dr G 2008~

Other Definitions of Productivity
1950 1962 1965 1976 1979 1987 1955 OECD1 Davis Fabricant Kendrick and Creamer Siegal Sumanth Goldratt is the quotient obtained by dividing output by one of factors of production Always a ratio of output to input Family of ratios of output to input Is minimizing the use of resources required to produce an output desired by the customer Change in product obtained for the resources expanded Functional definition for Partial, Total factor and Total Productivity Functional definition for Partial, Total factor and Total Productivity Note: 1 Organisation for Economomic Cooperation and Development

Is Productivity different from Performance?
Productivity -Performance Is Productivity different from Performance?

CASELET It takes 3 meters of cloth to make a suit .In a day Suraj is expected to make 50 suits. He makes 40 suits from 111 meters of cloth -What is Suraj’s performance ? -What is Suraj’s performance index? What is Suraj’s cloth productivity index? What is productivity of cloth?

CASELET -ANSWER Suraj’s Performance – 40 suits Performance Index – 40 X 100 = 80% 50 Cloth Productivity Index = 120 X100 = 108% 111 Cloth Productivity = 40 X100 = 0.36 suits/meter 111

Production-Productivity
Is Production same as Productivity?

Productivity –Example
Arr Engineering –an automobile component manufacturer is producing connecting rods for an OEM MONTH INPUT (Machine Hours) OUTPUT (No. of units) PRODUCTIVITY NOVEMBER 90,000 99,000 DECEMBER 100,000 JANUARY 150,000 135,000 REPORT The reports clearly show that there has been an increase in production with a simultaneous increase in machine hour consumption

Partial Productivity Definition : Ratio of output to one class of input At a given time it considers only one input and ignores all other inputs It is important as it focuses utilization of one resource Labour productivity is measured using utilization of labour-hours, whereas capital productivity is measured in Rupees

Partial Productivity –Example
As a part of new assignment , a trainee engineer of Icecream Products was asked to identify areas of productivity improvements. He collected data on all inputs and outputs of previous years operations being transformed into equivalent of money units. The table below gives details with all figures in lakh rupees ‘00000 Output 1000 Input Human 300 Material 200 Capital Energy 100 REPORT Advantage :Easy to understand Easy to obtain Diagnostic tool to pin point an area of improvement Disadvantage:Misleading if used alone Cannot explain overall cost increase Profit control is not precise The trainee engineer plans to calculate the values of partial productivity to aid in his study. Please help him in his endeavour

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 contributors in the process of production John Kendrick in 1951 emphasised labour and capital as only two input factors Disadvantage of considering total productivity factors is that it does not consider impact of material and energy inputs (material typically forms 60% of the product cost

Multi-Factor Model of Productivity
Total Factor productivity model was further developed by Scott D Sink as Multi Factor Productivity Measurement Model in which he considered Labour, Material and Energy as major inputs Capital was not considered in this model as it is the most difficult part to estimate how much of a capital is being consumed in a unit of time Depreciation applied by accountants makes it further difficult to estimate actual capital being consumed

Total Productivity Model
Total Productivity Model developed by David J Sumanth in 1979 Sumanth considered five items as inputs ,those were Human,Material,Capital,Energy and Other Expenses The model is applicable in manufacturing and service organization Total Productivity = Total Tangible Output/Total Tangible Input

…Total Productivity = Total Tangible Output/Total Tangible Input Total Tangible Output =Value of finished units produced + dividends from securities+ interests from bonds + other incomes Total Tangible Inputs = Value of human inputs + capital inputs+ materials purchased+energy inputs+other expenses (taxes,transport,office etc.)

All quantifiable inputs are considered Sensitivity Analysis can be done Provides both firm level and operational unit level

Caselet ULever manufactures the product face wash, liquid handwash, premium soaps, and shampoos. The input for each of this product are classified as : Human (H), Capital (C), Material (M), Energy (E) and other expenses (X) Product Amount of input (Rs crores) I/p o/p H C M E X Soaps 2 4 14 5 6 31 50 1.61 Face wash 2.5 10 8 35.5 55 1.5 Handwash 36 45 1.2 Gel 3 13 39 40 1.1 Total Input 9.5 37 47 19 29 141.5 190 1.34 Unit Head wants to know productivity of each of its product line.He also wants to know how productive his production line is as a whole.

American Productivity Centre (APC) Model
American Productivity Centre has been advocating a productivity measure that relates profitability with productivity and price recovery factor Profit= Revenue-Expenses Profitability = Sales/Costs = Output Quantities X Prices Input Quantities X Unit Costs Captures the effect of inflation.Changes in this factor over time indicate whether changes in input costs are absorbed,passed on,or overcompensated for, in the price of the firms output Inclusion of this factor helps whether gains or losses of a firm are due to changes in productivity or its merely indicates the fluctuations in the prices Of the material consumed and sold Productivity x Price Recovery Factor The APC model is different from other models in its treatement, by inclusion of Price Recovery Factor

Relation between Traditional management and Modern Management

TQM, TPM, TOC, Lean and Six Sigma – Evolution of
manufacturing methodologies Diversified Buyer’s Market Market Evolution Sellers Market Buyer’s Market Industrialisation Wealth & Credits New Markets (IT) Knowledge Availability Historic Development IT Technology Mass production Market saturation Social Networks Mass consumption Scarcity of raw material Efficiency Development of needs/driver Quality Customization Product Life Cycle Sustainability Competition Variants Prize Integration Product Development Cycles Speed Flexibility Evolution of Paradigms Toyotism Fordism/Sloanism Taylorism TOC Lean Production Six Sigma Evolution of Methodolgies JIT/JIDOKA TPS TPM TQM SPK TOC SPC Time line with milestones QC 1911 Taylor 1924 Shewart 1929 Saturation of US market 1960s 1970s Nippondenso 1980s 1988 Womack 2010 1950 Deming 1978 Ohno 1984 Goldratt 1986 Motorola 1926 Ford Historical Development of Manufacturing methodologies and its drivers and needs Source:TQM, TPM, TOC, Lean and Six Sigma – Evolution of manufacturing methodologies under the paradigm shift from Taylorism/Fordism to Toyotism?

Deliverables of Ops Management and Productivity Technique

Quality Management

MUDA, MURI and MURA Muda or Waste: Any activity or process step that does not change the product’s form, size, shape, colour or characteristic in the direction specified by the customer is called Muda The primary focus is to identify and eliminate all such Muda in order to: Increase the throughput i.e. velocity of material flow through the system – thereby reducing WIP and associated costs of storage, handling etc Increase productivity as non value adding resources come down which can be redeployed in value adding operations Muri or Physical Strain : Strenuous working conditions not only reduce the productivity of manual operations but also lead to dissatisfaction of the workmen As the shift progresses, production rate will automatically drop. Identifying and taking action to reduce the strain for workmen will help improve productivity as well as make the workmen amenable to achieving the production targets as they realize that their overall effort has reduced Mura or Inconsistency: Variations in the process generally lead to defects generation.

Productivity Morale Safety
DELIVERABLES IN OPERATIONS MANAGEMENT… Delivery Cost Quality Productivity Morale Safety

Measuring delivery or timeliness allows organizations…
Terms Definition Lead Time The manufacturing lead time is the time period between the placement of an order and the shipment of the completed order to the customer For make-to-order products, it is the time taken from release of an order to production and shipment For make-to-stock products, it is the time taken from the release of an order to production and receipt into finished goods inventory Throughput time Throughput time is a measure of the time required for a material, part or sub-assembly to pass through a manufacturing process following the release of an order to the manufacturing floor Throughput time or manufacturing cycle time consists of process time, inspection time, move time and queue time Process time is the time period during which work is performed on the product itself Inspection time is the time during which the quality of the product is confirmed Move time is the time during which materials or works-in-process are moved from one workstation to another Queue time is the period of time during which the product awaits transfer to a workstation, undergoes further inspection and subsequent manufacturing processes

…to review the overall effectiveness of their (or their suppliers) processes
Terms Definition Manufacturing Velocity MV=PROCESS TIME/ WAIT TIME +INSPECTION TIME+MOVE TIME+QUEUE TIME TAKT TIME The rate at which the customer requires your company to manufacture products. Takt time is the number of work minutes per day divided by the number of orders per day

Quality can be best defined as measuring the errors or failures within a process or activity
Terms Definition Measuring Quality Measuring Quality is often referred to as measuring Not Right First Time (or NRFT) – referring to where the product delivered fails to meet the required specification Monitoring the number of goods inwards rejections your organization records (expressed as a measure against total receipts Measure the quantity of returns made by your customer

Quality Circles

History of Quality Circle Movement
Quality Circles were the logical consequence of the various waste elimination programs that were run in many Japanese corporations in early 50’s QC provided a platform for the workers to get together and use techniques for their quest for continuous self development and organizational improvement Prof Ishikawa launched the 1st QC in Japan in May 1962 S.R.Udpa – GM Operations BHEL launched first QC in Hyderabad plant of BHEL in 1980 The success of QC prompted Mr Udpa any many other liked minded people to form the Quality Circle Forum of India, a non-profit organization with HQ in Hyderabad

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 indentify and analyze and resolve work related problems, leading to improvement in their total performance and enrichment of their work life Why small group of employees? Experience indicates that the optimim number of a QC is about eight to ten. If a circle is formed with less than five members, then you can imaging what will happen if absenteeism is high.Having worked for presentations in groups,we all know that how many of us really interact or participate well when group members are more than say six. Why in same work area or doing similar type of work? This condition ensure QC to be a homogeneous and cohesive group.Discussion interests people and it helps people to understand the intricacies of the problem Why is participation voluntarily? In Japan voluntarily is 100%. Participation.Compulsory includes having targets as well,hence voluntarily is 100% participation but without targets Why to meet regularly one hour every week? Meeting regularly is absolutely essential for the success of QC.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

Structure of Quality Circle

Cause and Effect Diagram Check Sheet Control Chart Pareto Chart
7 QC Tools Cause and Effect Diagram Check Sheet Control Chart Pareto Chart Flow Charts Histogram Scatter Diagram The seven basic QC tools of Quality is a designation given to a fixed set of graphical techniques identified as being most helpful in troubleshooting issues related to quality They are called basic because they are suitable for people with little formal training in statistics and because they can be used to solve the vast majority of quality related issues

Cause and Effect Diagram
Purpose: Graphical representation of the trail leading to the root cause of a problem How is it done? Decide which quality characteristic, outcome or effect you want to examine (may use Pareto chart) Backbone –draw straight line Ribs – categories Medium size bones –secondary causes Small bones – root causes

Benefits: Breaks problems down into bite-size pieces to find root cause Fosters team work Common understanding of factors causing the problem Road map to verify picture of the process Follows brainstorming relationship

Materials Manpower Typos Source info incorrect Wrong source info Didn’t follow proc. Dyslexic Transposition Wrong purchase order Poor training Incorrect shipping documents Glare on display Temp. Corrupt data No training Environment No procedure Keyboard sticks No communications Software problem Methods Machine

Purpose: Benefits: Check Sheets
Tool for collecting and organizing measured or counted data Data collected can be used as input data for other quality tools Benefits: Collect data in a systematic and organized manner To determine source of problem To facilitate classification of data (stratification)

Control Charts Statistical Process Control (SPC) Sample
Monitoring production processes to detect and prevent poor quality Sample subset of items produced to use for inspections Control Charts process to measure statistical control limits

How is it done? Purpose: Pareto Analysis Prioritize problems.
Pareto diagram can be drawn by finding out which 20% causes 80% problems How is it done? Create a preliminary list of problem classifications. Tally the occurrences in each problem classification. Arrange each classification in order from highest to lowest Construct the bar chart

Flow Charts Top Down Benefits Simplest of all flowcharts
Used for planning new processes or examining existing one Keep people focused on the whole process How is it done? List major steps Write them across top of the chart List sub-steps under each in order they occur

Benefits Toolbox How is it done? Flow Charts Linear
Show what actually happens at each step in the process Show what happens when non-standard events occur Graphically display processes to identify redundancies and other wasted effort How is it done? Write the process step inside each symbol Connect the Symbols with arrows showing the direction of flow Linear Toolbox

Airline ticket booking via Agent
Sample Linear Flow Airline ticket booking via Agent

Histograms Purpose: How is it done?:
To determine the spread or variation of a set of data points in a graphical form How is it done?: Collect data, data point Determine the range of the data Calculate the size of the class interval Divide data points into classes Determine the class boundary Count # of data points in each class Draw the histogram Stable process, exhibiting a bell shape

Purpose: Scatter Diagrams
To identify the correlations that might exist between a quality characteristic and a factor that might be driving it A scatter diagram shows the correlation between two variables in a process such as height and weight These variables could be a Critical To Quality (CTQ) characteristic and a factor affecting it two factors affecting a CTQ or two related quality characteristics. Dots representing data points are scattered on the diagram. The extent to which the dots cluster together in a line across the diagram shows the strength with which the two factors are related.

Scatter Diagrams How is it done?:
Decide which paired factors you want to examine. Both factors must be measurable on some incremental linear scale. Collect 30 to 100 paired data points. Find the highest and lowest value for both variables. Draw the vertical (y) and horizontal (x) axes of a graph. Plot the data Title the diagram The shape that the cluster of dots takes will tell you something about the relationship between the two variables that you tested.

QUALITY Model SITUATION COMPANY FOCUS ACTION TOOLS Rework Replacement
Many Defects Many Complaints Defects leave the Company LEVEL 0 Operations Errors Defects Auto Quality Matrix I Strengthen Autonomous Control Don't Pass Defects to the Next Process Defects do not leave the Process LEVEL 3 Improvement Inspection STD´s Non defective Products Strengthen Inspection Eliminate Complaints Defects do not leave the Company LEVEL 1 Standards and SDCA Processes Don't Make Defects, Focus on Improvement Decrease defects LEVEL 2 Structured Problem Solving 6 Sigma Projects Matrix II Strengthen Autonomation (Jidhoka) Prevent Errors From Becoming Defects Zero Defects LEVEL 4 Design For 6 Sigma Reduced external failures Reduce cost on internal failure Invest in appraisal Invest in prevention Cost Of Quality is reduced ! Very high cost of external failure

Value Analysis and Value Engineering

Value is a function of ‘Desired Performance’ and ‘Cost’
What is ‘Value’? Value is a function of ‘Desired Performance’ and ‘Cost’ Value = Desired Performance (P) Overall Costs (C) Desired performance is expressed by the term worth which is defined as the lowest cost to achieve the Use (work) function and Aesthetic (sell) function

An Introduction to Value Analysis and Value Engineeringc
In 1961,Lawrence D Miles in his book ‘Techniques of Value Analysis Engineering’ defined Value Analysis VA is a step by step approach to identify the functions of a product, process, system or service; to establish a monetary value for that function and then provide the desired function at an overall minimum cost without affecting any of the existing parameters like Quality, Maintainability, Productivity, Safety and other Performance Characteristics In the year 1954 ,US Navy Bureau of ships adopted same technique in their effort ‘cost avoidance’ during the design stage and saved millions of dollars and named it as Value Engineering Value Engineering is where the value of all the components used in the construction of a product from design to final delivery stage are completely analyzed and pursued

Concept of Value Value is of two types Use Value Esteem Value
The Product Quality is fundamentally defined as ‘fitness for use’ Use value is the basic or primary value of the product Use value is the usefulness of the product or the service in fulfillment of a stated, implied or the latent need at the least cost for the required expectation of the performance standard or the quality level The enhanced value associated with a brand or a product created by the marketers Esteem value is a notional value for which the consumer is ready to pay higher EV is the secondary value associated with the product EV of a product or service is more related to the consumer’s social positioning in the society at a relatively higher echelon Use Function: trek-purchase shoes that will protect feet-therefore opt for Hunter Shoes/Trek shoes To protect feet –Use function of the shoes Aesthetic Function: Wearing tie and leather shoes for interview-good appearance-aesthetic function of shoes Primary Function-pull up the case on dairies

Case on Functions AR Dairies is a Mumbai based milk and dairy product company. They used to supply milk (cow and buffalo) in 500 ml glass bottles. Later,they introduced flavoured Milk in 200 ml bottles ,which become instant success. While flavoured milk is supplied throughout the day, other type of milk (cow and buffalo) is supplied only in the morning While going through the Audit report, the general manager found that there is a transit loss of 3% due to breakage of bottles. To overcome that the general manager introduced polyethylene bags in place of 500 ml bottles. However, flavoured milk is sold in glass/plastic bottles. Why did the general manager not introduce polyethylene bags for masala milk?

Answer to Case Primary Function of bottle is to hold the liquid and Secondary Function is to facilitate drinking In the case the shape of the bottle facilitates drinking ,however when primary function is achieved by polyethylene bag then secondary function ceases to exist As a consumer drinks ,Flavoured Milk on the spot,secondary function of facilitation of drinking is very important whereas cow/buffalo milk is never drunk without heating it Therefore the general manager could sacrifice secondary function in case of milk but not in case of Flavoured Milk not introduce polyethylene bags for masala milk?

Higher order (Primary) and Lower Order (Secondary) Functions
The basic function of a Torch is ‘To give light’

WHY? HOW? Give Light Facilitate Viewing Light the Bulb HOW? HOW? Supply Current Insert Battery

When we ask question ‘Why’ to the basic function; the answer we get is called as ‘Higher Order Function’ and when we put question ‘How’ to the Higher Order Function we get Lower Order Function’ Thus, ‘Facilitate Viewing’ is Higher Order Function and the Light Bulb is a lower order function

What is the meaning of overall costs?
Overall costs means different to different people Producer Consumer Overall cost is the summation of all the elements of the cost required to produce a product or service such as labour, material, overhead,etc Overall cost is the monetary sum (price)for which the product or services are purchased in the market

Four Methods for increasing the value of a function…
Decrease the cost while ensuring the same level of performance V= P C Smart mobile phones were sold at ~20,000 Rs and above in 2005 ,But Indian/China based companies flooded the market with smart phones available at prices between 5000 Rs to 20,000 Rs

Enhance the performance at same cost V= P C A Mumbai local newspaper introduced a special supplement on metro thrice a week without changing the price

Decrease the cost and enhance the performance V= P C 5th Generation Intel Core processor is cheaper and has more processing power than earlier chips

Increase both performance and cost ensuring that performance increases more than increment in the cost V= P C All soft drink companies have increased quantity of drink from 500 ml to 600 ml (20% more) but increased price just by 10%

LEARNING OBJECTIVES To understand and explore different areas of Productivity Techniques and their applications in operations with the help of real life.

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LEARNING OBJECTIVES To understand and explore different areas of Productivity Techniques and their applications in operations with the help of real life.

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Presentation on theme: "LEARNING OBJECTIVES To understand and explore different areas of Productivity Techniques and their applications in operations with the help of real life."— Presentation transcript:

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