Top ten productivity tips
There are many ways to increase productivity, which is shorthand for increasing profit. Different actions are designed for different problems, but check out the following list and choose what fits best for you.
1 and 1 a. For me there are two pre-eminent concepts that seem always to work well. Nothing is more important than either, so we’ll put them at the top: Pareto’s principle (also known as ABC priority, or the 80/20 rule), and get the waste out. You will also find these two concepts woven through many of the other terrific ideas below,
Pareto Principle Vilfredo Pareto, a 19th century, Neo-Classical economist mathematically described the unequal distribution of wealth that he observed in the world around him. His observation, known as Pareto’s principle, has been profitably extended into other fields of inquiry: in business Pareto’s principle tells us that a few of the inventory items will constitute most of the value; a few processes will give most of the trouble; a few line items will generate most of the cost; a few constraints will control the entire pace of operations; a few misdirected efforts will create the most issues. Also known as ABC priority, and the 80/20 rule.
Expressed most simply, productivity focuses on those few items that influence the largest result; Show me the money.
Get the Waste Out
What is waste? A March 2009 “Business Week” article presents this test:
Will a customer pay for this activity?
Will my service fail without this activity?
Will I go to jail if I eliminate this activity?
Answer “no” to all three, and the activity can essentially be defined as waste.
Sounds good to me. Apply the test to all aspects of the organization’s overhead, especially the major cost factors using Pareto; find and cut out waste.
Removing waste is a big part of the Toyota Production System, but years ago it was equally central to Value Analysis and Value Engineering.
Other high quality tools and techniques follow, in alphabetical order. Choose what applies even if your problems are not in alphabetical order.
Activity Based Costing. ABC. ABC is designed to relate individual line items of overhead cost directly to a given product, instead of allocating costs less accurately or even smearing overhead cost across dissimilar operations. An ABC model will assign more costs previously classified as indirect (overhead) into direct costs, compared to conventional costing models.
Overhead is often considered “fixed” when nothing could be further from the truth. But unless defined by a mechanism such as ABC, overhead items may be poorly differentiated, hard to understand and manage. ABC may require more time and effort, but much more of the cost structure can be directly related to cause and effect.
Economic order quantity; EOQ. An EOQ is the level of inventory that minimizes total inventory holding costs. It is one of the oldest classical production scheduling models. It applies accurately and simply to purchases and manufacturing batch sizes, and the math relates current costs to all the factors that vary with batch size. Rather than rigidly choosing a batch size or Just In Time delivery, optimize considering the total real costs throughout the system.
Expectations Create expectations, because everyone wants to know what they are expected to do. That is true of you and me and all the people in your organization. How specifically should expectations be expressed? Ah, that is a tricky question. I would suggest that a good estimate is better than no statement at all, and that it is possible to over-define the detail. Performance standards, quality specs, delivery schedules, standard costs, project management will be topics that a Pareto analysis says are important.
Stockholders and customers want to know what to expect from an organization, as well. The answer to them will be more accurate when internal expectations are established and met.
Flow chart. “Flow chart” may be the mechanism of graphically showing the steps of an operation or process, or it may refer to the diagram itself. For many including me the first step to understanding an operation is to flow chart it. Value chain mapping is a later term.
There are only five things that can occur during a step in a process; an operation, a move, a delay, an inspection, a storage. Note that four of these possibilities do not add value. Work of any type can be flow charted; products, paperwork, electronic documents.
Line balance, in the broad sense of balancing all the resources involved. The objective is to assign members of a working group so that production flows smoothly without constraint. The members may be equipment, or people working alone or in crews or teams. Note that optimum workloads are not necessarily equal; load the bottleneck or the primary cost / income producer, at the expense of secondary ones.
Performance reporting. Expectations such as standards or quotas are useless without objective reporting of actual performance against the expectations, and the communication of the reports to those concerned. Is it possible to assign accountability without accurate, timely reporting? No.
Product pruning is the concept that reviews each product or output periodically to determine whether it should remain in the catalog. The judgment can relate to profitability or to a subjective measure, and absolutely requires accurate standard costing and overhead allocation. Sales may complain that customers love a product being pruned; why would they not love it if they get it below cost?
Pull system. A manufacturing planning system that loads production based on communication of actual real-time needs from downstream operations and customers, ultimately sales demand; as opposed to a push system which schedules upstream operations according to theoretical sales volumes. Don’t stop forecasting, but do set up your process to recognize real demand and react quickly.
Short Interval Scheduling; SIS. A system invented by Alexander Proudfoot to improve work assignment. First applied in warehousing, it is effective there and for management of other short interval jobs. Short interval scheduling is self-explanatory and I learned if from my wife. Take out the trash, honey, when you are done in about two minutes; then come back and I’ll give you the next chore.
This level of control may look like micromanagement, but in many circumstances it can mprove productivity and throughput. Both boss and worker get positive reinforcement from each task completed, and both know that a task is done so we can move to the next step. The actual time taken then can be entered to update the data base.
Total Productivity is the understanding that productivity is not just for the production floor, but can generate improvement throughout an organization. Indeed, following Pareto’s principle, the majority of costs will be elsewhere than on the production floor. Total productivity is near the bottom of the alphabet, but in actual practice you had better move it up the list.
Toyota Production System; TPS, often known as Just in Time, or JIT, or Lean Manufacturing, or Lean. The source of all of these was the post-war Toyota Motor Company of Japan, developed by Sakichi Toyoda and his son Kiichiro. Taiichi Ohno is widely credited with making TPS a reality. Consultant Shigeo Shingo was an important contributor as were Eiji Toyoda and Saito Naichi. Ohno said, “The most important objective of the Toyota System has been to increase production efficiency by consistently and thoroughly eliminating waste. This concept and the equally important respect for humanity … are the foundations of the Toyota production system.” Please don’t overlook the latter objective.
Search out excellent current authors on lean and TPS; Bill Waddell at Evolving Excellence; Dr. Bob Emiliani, at The Center for Lean Business Management, and Michael Baudin.
Oops, that is more than ten tips, but I am reluctant to remove any. Detail on these, and many more improvement techniques, are in the Industrial Engineering : Theory, Practice & Application book, found on http://jacksonproductivity.com.
Good luck, Jack Greene