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 1.1 1.2 1.3

2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8

Introduction

3

Origin of the Word "Productivity** Common Misuse of the Term Basic Definitions of Productivity Questions References

3 4 7 10 11

Importance of and Factors Affecting Productivity

12

Productivity vs. Inflation Productivity vs. the Standard of Living and Employment Productivity vs. Political Power Productivity vs. Economic Power Factors Affecting Productivity Productivity Awareness in the United States Productivity Efforts: Private and Government Productivity Benefit Model Questions References

'3 16 22 23 25 37 38 ^' ^^ ^^ ••

VII

vfi rn

3 3J 3.2 3.3

Part 2 M

Productivity Engineering and Management

47

The Productivity Cycle Dcfifutions and Scope of Productivity Engineering and Management Educational Efforts in Productivity Engineering and Management Questions References

47 49 52 53 53

Productivity Measurement at International, National, and Industrial Levels Productivity Measurement at the International Level

5?

4 I 4.2 4.3

Measurement Approaches International Comparisons Problems of Productivity Measurement at the International Level Questions References

5g 61 61 52 62

5

Productivity Measurement at the National Level

63

5.1 5.2 5.3 54 5.5

Benefits of Productivity Measurement at the National Level Definition*; nf National Output Productivity-Measurement Approaches at the National Level Problems in Productivity Measurement at the National Level Sectoral Comparisons Questions References

63 64 65 70 72 74 74

*6

Productivity Measurement at the Industrial Level

76

6.1 6.2 6.3 6.4 6.5

Benefits of Productivity Measurement at the Industrial Level Productivity-Measurement Approaches at the Industrial Level Problems m Productivity Measurement at the Industrial Level I imitations of Present Labor-Productivity Measures for Industry iniermdustry Comparisons Questions References

76 77 88 88 91 91 92

Part 3 Productivity Measurement in Companies/ Organizations 7 "^ ? 7.2

The Need for Productivity Measurement in Companies/Organizations

97

Benefits of Higher Productivity in Organizations Benefits of Productivity Measurement in Organizations

97 98

(ONTFNrs

•T ^ 7.4 75

8 8.1 8.2 •8.3 •8.4 •8.5 8.6 8.7 8.8 8.9

Part 4 *9

ix

Productivity^Measurcment Approaches at the Company Level Diversity of Productivity Concepts at the Company Organization Level Survey Results from United States Companies Questions References

98 121 j22 j^-. I^Q

The Total Productivity Model

i5i

Limitations of Partial Measures of Productivity The (Basic) Total Productivity Model (TPM) Versions of the Basic Total Productivity Model Relationships between Total and Partial Productivities Profit vs. Total Productivity: The Break-Even Point Concept Computations m the Application of the Total Productivity Model Computer Program and User's Manual for the Total Productivity Model and the Operational Total Producuvity Model Productivity Measurement Strategy Using the Total ProductiMty Model Steps in Implementing the Total Productivity Model Questions Problems References

151 152 163 164 179 190 211 211 215 228 228 230

Productivity Evaluation and Planning in Companies and Organizations Productivity Evaluation in Companies and Organizations

233

Expression for Total Productivity Change The Productivity Evaluation Tree (PET) Evaluation of Total Productivity between Successive Time Periods Evaluation of Total Productivity within a Given Time Period Evaluation Methodology Questions Problems Reference*

234 237 239 243 247 ^^^ ^^^ ^^^

Productivity Planning in Companies and Organizations

253

10.1 10.2 10.3

Importance of Productivity Planning Short-Term versus Long-Term Productivity Planning Responsibility for Productivity Planning Questions References

254 255 257 259 259

•11

Short-Term Productivity Planning Models

260

Weighted Partial Productivity Model Productivity Evaluation Tree (PET) Model

260

9.1 9.2 9.3 9.4 9.5

*10

111 112

I

COWTENfTS

11.3 11.4 11.5

•12 12.1 12.2

Linear Trend Model Using Exponential Smoothing (DES) Comparative Productivity Evaluation Tree Model Seasonal Variation Model Using Winters* Method Questions Problems References

265 266 269 272 273 274

Long-Term Productivity Planning Models

275

Total Productivity-Maximization Model Total Productivity-Profit Model Questions Problems References

276 290 297 297 299

Part 5 Productivity Improvement in Companies and Organizations *13 13.1 13.2 13.3 13.4 13.5 13.6

14 14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8 14.9 14.10 14.11

Productivity Improvement Concepts

303

Causes of Productivity Decline in Companies Productivity Improvement Surveys Some Existing Approaches to Productivity Improvement A New Perspective on Productivity Improvement Analytical Productivity Improvement Model (APIM) Principles of Productivity Improvement Questions References

303 304 306 318 320 329 337 338

Technology-Based Productivity Improvement Techniques

340

Computer-Aided Design (CAD) Computer-Aided Manufacturing (CAM) Computer-Integrated Manufacturing (CIM) Robotics Laser Technology Energy Technology Group Technology Computer Graphics Maintenance Management Rebuilding Old Machinery Energy-Conservation Technology (ECT) Questions Problems References

341 344 347 348 355 356 357 358 361 363 364 367 368 369

*

CONTEN"

15 13.1 15.2 15.3 15.4 15.5 15.6

16 16.1 16.2 16.3 16.4 16.5 16.6 16.7 16.8 16.9 16.10 16.11 16.12 16.13 16.14 16.15 16.16 16.17 16.18 16.19 16.20 16.21 16.22 16.23 16.24 16.25 16.26

17 17.1 17 2

Materials-Based Productivity Improvement Techniques Inventory Control Material Requirement Planning (MRP) Materials Management Qtiality Control Matcrial-Handling-Systems Improvement Material Reuse and Recycling Questions Problems References

Employee-Based Productivity Improvement Techniques Financial Incentives (Individual) Financial Incentives (Group) Fringe Benefits Employee Promotion Job Enrichment Job Enlargement Job Rotation Worker Participation Skill Enhancement Management by Objectives Learning Curve Communication Working Condition Improvement Training Education Role Perception Quality of Supervision Recognition Punishment Quality Circles PQ Teams Zero Defects Time Management Flextime Compressed Workweek Harmonization Questions Problems References

Xi

^^^. 37g 380 383 3gg 390 391 391 393

394 394 400 408 408 409 410 410 411 411 412 ^}l 416 417 417 418 419 420 420 420 ^2i ^2i 424 425 426 428 423 429 43O 43I

Product-Based Productivity Improvement

^^^

Techniques

433

Value Analysis/Value Engineering Product Diversification

435

\n

CONTEBiTS

17.3 17.4 17.5 17.6 17.7 17.8

18 18.1 18.2 18.3 18.4 18.5 18.6 18.7

19 19.1 19.2 19.3 19.4 19.5 19.6 19.7

•"20 20.1 20.2 20.3 20.4 20.5

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

Task-Based Productivity Improvement Techniques

450

Methods Engineering Work Simplification Work Measurement Job Design Job Evaluation Job Safety Design Human Factors Engineering (Ergonomics) Production Scheduling Questions Problems References

451 456 464 464 470 472 473 475 475 476

Setting Up a Formal Productivity Improvement Program

477

Formal Productivity Improvement Organizational Structures for Productivity Program Planning Aspects Human Aspects Implementation Schedule Evaluation of the Effectiveness of a Formal Productivity Program Common Problems Encountered and Ways to Counter Them Questions •Case Study Questions References

477 479 479 481 482 483 483 486 487 488

Productivity Improvement in Selected Manufacturing Companies

489

Aircraft Company Pharmaceutical Company Television and Microwave Oven Company Textile Company Machine Tool Company Questions References

489 490 491 493 493 494 495

CONTENTS Xili

•21

Productivity Improvement in Selected Service Organizations

496

21.1 21.2 21.3

Airline Organization Utilities Firms Insurance Company Questions References

496 497 499 500 500

^22

Productivity Improvement Strategies around the World

502

Productivity Productivity Productivity Productivity Productivity Productivity Questions References

502 504 507 508 508 509 510 510

22.1 22.2 22.3 22.4 22.5 22.6

A B C

Strategies Strategies Strategies Strategies Strategies Strategies

in in in in in in

Australia Asia Europe Africa North America South and Central America

Appendixes

512

Selected Productivity and Innovation Centers in the United States and Overseas Paasche and Laspeyres Forms of Indices Glossary of Terms

512 515 518

Bibliography

525

Index

541

•Optional topics for undergraduate students