CHAPTER -1 PRODUCTION AND PRODUCTIVITY LEARNING OUTCOMES : At the end of this course, students will be able to: Apply the principles of costing in product costing Prepare budgets based on the level of activity and to use concept for production cost control Apply the principle and techniques in production planning and control of a production system Control quality by using different levels of inspection techniques of various stages of production 1. Definition of Production The processes and methods used to transform tangible inputs (raw materials, semi-finished goods, subassemblies) and intangible inputs (ideas, information, knowledge) into goods or services. Resources are used in this process to create an output that is suitable for use or has exchange value. Or Production can be defined as the systematic activity of gradually transforming one form of material into another while maintaining the requisite quality and are capable of satisfying human wants. It tends to combine, tangible inputs, i.e. raw materials, and intangible inputs, i.e. ideas, information, etc. to turn it into finished products for sale, through a mechanical or chemical process. 1. Definition of Productivity Productivity is a measure that gauges the efficiency of the production process, i.e. in transforming inputs such as raw material, labour, capital, etc. into the output of finished goods. It can be expressed in terms of the ratio of outputs produced to inputs consumed, in the given period. Productivity tends to determine the overall production performance of the firms by ascertaining how efficiently the firm utilized its resources in the production of goods and services, with minimum wastage. It can be enhanced by controlling factors of production, improving process and technology. 2. Key Differences Between Production and Productivity The difference between production and productivity can be drawn clearly on the following premises: 1 PRODUCTION ENGINEERING CHAPTER -1 PRODUCTION AND PRODUCTIVITY 1. Production is an organized activity, wherein step by step conversion of raw materials into useful output takes place. On the contrary, Productivity is an indicator of efficiency in the production in terms of optimum utilization of firm’s resources in the creation of desired output. 2. Production is a process of value addition, wherein at each level, some value is added to the product. Conversely, productivity is a measure of efficiency. 3. Production exhibits the number of units produced by the firm in a given period. As against, productivity highlights the ratio of output to input consumed. 4. Production is always expressed in absolute terms, i.e. the volume of output produced. On the other hand, productivity is denoted in relative terms, meaning that it determines the quantitative relationship between output generated and resources consumed. 5. While production ascertains the value of output generated, productivity determines the how well the resources are utilized by the firm in the generation of output. Conclusion By and large, production and productivity are not contradicting terms, but these are closely connected one. Production is a conversion process, in which the firm is engaged, whereas productivity is all about how efficiently the company allocates its factors to produce the output, with least amount of wastage and essential quality. In short, the efficiency in production is the firm’s productivity. 3. Comparison of Production and Productivity Basis for Comparison Production Productivity 2 PRODUCTION ENGINEERING CHAPTER -1 PRODUCTION AND PRODUCTIVITY Meaning Productivity is a measure of Production is a function of an how efficiently resources are organization which is combined and utilized in the associated with the conversion firm, for achieving the desired of range of inputs into desired outcome. output. Measure What is it? Process Ratio of output to input Numbers of units actually Represents produced. Relative terms Expression Absolute terms 5. Factors Affecting Productivity in an Organization 5.1 Selection i.e. selection of right man for a specific job Applying well known saying division of labour. Training i.e. consideration of training requirements whether to be imparted training in the plant itself or to be sent for training outside the unit to other plants within the country or abroad or training institutes. Number of personnel required i.e. man power requirement planning in each of the departments of required skill. 5.2. Equipment and Machines: The number of machine tools, their capacity and accessories required, replacement policy of the organization and maintenance schedules etc. 5.3. Input Materials: i. Appropriate quality of materials ii. Material requirement planning (M.R.P.) iii. Substitute of materials being used iv. Inspection of input materials at various points 3 PRODUCTION ENGINEERING CHAPTER -1 PRODUCTION AND PRODUCTIVITY v. Cost of materials procurement and handling up to stores. 5.4. Time: Time is significant for the following reasons: i. Inspection of input materials i.e. raw material and semi finished or finished items required for assembly. ii. Time for inspection of finished products. iii. Production time (total time of manufacturing). iv. Time for repair and maintenance of machines and equipment. 5.5. Floor Area or Space: i. Total area covered by the administrative block, production shop and inspection & quality control departments etc. ii. Location of different departments and shops etc. iii. Other space covered by plant layout. 5.6. Power or Energy: i. Maintenance of equipment for saving energy ii. Use of renewable energy devices iii. Use of biogas, photovoltaic cells, solar energy and other non conventional techniques. 5.7. Finance: Finance is required to maintain all the above requirements. The management should be for minimum rather optimum finance. 5.8. Movement of Man and Materials: i. The required motion of manpower within the plant ii. The motion of raw material semi finished and finished products/items within the plant. 4 PRODUCTION ENGINEERING CHAPTER -1 PRODUCTION AND PRODUCTIVITY 6 Measurements of productivity Strategy 1: The Simple Productivity Output Formula Strategy Strategy 2: The 360 Degree Feedback Strategy Strategy 3: Time Tracking & Project Management Software Strategy 4: The Monitor Social Media Strategy Strategy 4: The Monitor Social Media Strategy Strategy 5: The Profit = Productivity Strategy Strategy 6: The Daily Check-In Strategy 7 Causes of decrease in productivity Lack of skill: If employees are not skilled they can’t produce more. Lack of cooperation among employees: If one employee cooperates with other, productivity may be increased. On the other hand, if one doesn’t cooperate with others, productivity decreased. Lack of technology: If technology is not modern productivity may be affected. Lack of employee training: Training helps an employee to increase his productivity. Lack of training is one of the causes of poor productivity A relationship between employee & employer: If relationships between employee and employer are good productivity of the employee may be increased. Lack of commitment: If employees are not committed to their organization and his work then productivity may not be up to the mark. The physical condition of the employee: Generally employees’ physical condition has a positive relationship with productivity. Otherwise, it may be hampered. Lack of concentration: If the concentration of the employee is not good for his work then productivity decreases. Lack of cooperation between employee & employer: If employer cooperates with an employee they are willing to do better. On the other hand, if the employer doesn’t cooperate with the employee’s productivity decreases. Lack of favorable environmental condition: If the environmental condition of the organization is not good, then the productivity level may be less. 5 PRODUCTION ENGINEERING CHAPTER -1 PRODUCTION AND PRODUCTIVITY 8. TYPES of Production System Production systems can be classified as Job Shop, Batch, Mass and Continuous Production systems. Types of Production Job-Shop Production : A production process, in which few products are created according to the demand of the customer, in the stipulated time and cost. In job-shop production, product volume is low, and variety is high. Batch Production : Batch production is one wherein product passes through various stages over a series of functional departments, and a number of batches are produced. Mass Production : It is a manufacturing technique in which discrete parts are produced with the help of continuous process. Continuous Production : The process of production in which the production facilities are sequenced as per the production operations chronologically. Classification of production systems 6 PRODUCTION ENGINEERING CHAPTER -1 PRODUCTION AND PRODUCTIVITY 8.1 JOB SHOP PRODUCTION Job shop production are characterized by manufacturing of one or few quantity of products designed and produced as per the specification of customers within prefixed time and cost. The distinguishing feature of this is low volume and high variety of products. A job shop comprises of general purpose machines arranged into different departments. Each job demands unique technological requirements, demands processing on machines in a certain sequence. Characteristics The Job-shop production system is followed when there is: 1. High variety of products and low volume. 2. Use of general purpose machines and facilities. 3. Highly skilled operators who can take up each job