Productivity management

Ernesto Mercado Ramírez is clear and forceful in stating that “the issue of productivity has become commonplace today in nations that strive to achieve development that improves the standard of living of their population, reduces their levels of inflation, clean up your internal and external finances, achieve levels of international competition to face commercial globalization, and boost your technological level. Being productive has become the master key for entrepreneurs to gain ground in the international market, increase their profits through competitiveness, reduce their production costs and increase their profitability ”.

Productivity is the relationship between certain production and certain inputs. Productivity is not a measure of production or of the quantity that has been manufactured. It is a measure of how well resources have been combined and used to achieve certain levels of production. The concept of productivity involves the interaction between different factors in the workplace. While output or results achieved may be related to many different inputs or resources, in the form of different productivity ratios, each of the different productivity ratios or indices is affected by a combined series of many important factors.

These important factors include the quality and availability of inputs, the scale of operations and the percentage of capacity utilization, the availability and production capacity of the main machinery, the attitude and level of capacity of the labor force, and the motivation and effectiveness of the administrators. How these factors relate to one another has a significant effect on the resulting productivity, measured by any of the many indices available.

Productivity is important in meeting national, business, and / or personal goals. The main benefits of further increased productivity are largely in the public domain: more can be produced in the future, using the same or fewer resources, and the standard of living can be raised. The future economic pie can be made bigger by improving productivity, so each of us will get a bigger chunk of it. Making the future economic pie bigger can help avoid confrontations between antagonistic groups fighting over smaller pieces of a smaller pie.

From a national point of view, raising productivity is the only way to increase authentic national wealth. More productive use of resources reduces waste and helps conserve scarce or more expensive resources. Without a balancing productivity increase, all increases in wages, other costs, and prices will only mean higher inflation. A constant increase in productivity is the only way that any country can solve such oppressive problems as inflation, unemployment, a deficit trade balance and an unstable monetary parity.

The importance of productivity to increase national welfare is now universally recognized. There is no human activity that does not benefit from better productivity. It is important because a larger share of the increase in gross national income occurs through improved efficiency and quality of labor, rather than through the use of more labor and capital. In other words, national income grows faster than input factors when productivity improves.

Therefore, the improvement in productivity produces direct increases in living standards when the distribution of productivity benefits is made according to the contribution.

Productivity also largely determines the degree of international competitiveness of a country's products. If labor productivity in one country is reduced relative to productivity in other countries that manufacture the same goods, a competitive imbalance is created. If the higher costs of production are transferred, the country's industries will lose sales, since customers will go to suppliers whose costs are lower.

However, if the increase in costs is absorbed by the companies, their profits will decrease. This means that they will have to reduce production or keep production costs stable by lowering real wages.

Some countries that fail to keep up with competitor productivity levels try to solve these problems by devaluing their national currencies. However, in this way the real income of these countries is reduced as the more expensive imported goods become and as the internal inflation increases.

Thus, low productivity produces inflation, a negative trade balance, a low rate of growth and unemployment. Therefore, it is clear that the vicious circle of poverty, unemployment and low productivity can only be broken by increasing productivity. Greater national productivity not only means optimal use of resources, but also contributes to creating a better balance between the economic, social and political structures of society.

From a personal point of view, increased productivity is essential to raise the real standard of living and to make optimal use of the resources available to improve the quality of life.

In business, increases in productivity lead to a service that shows more interest in customers, greater cash flow, better return on assets, and higher profits. More profits mean more capital to invest in expanding capacity and creating new jobs. The increase in productivity contributes to the competitiveness of a company in its markets, both domestic and foreign.

A company's profits can be increased by raising prices, reducing costs, or a combination of both. It is not uncommon for managers to focus on increasing sales volume and placing less emphasis on control, but on reducing costs. The sale of additional units is reflected in a lower fixed unit cost, which automatically increases profitability, as long as there is no increase in variable costs that counteracts this positive effect.

In some companies, especially those with strong capital and machinery needs, or those with very high fixed costs, profit per unit may increase with volume, despite significant increases in variable unit costs.

Administrators, like the general public, lean toward the most comfortable positions. Rather than face the problem of controlling costs, it generally seems more comfortable to seek increased demand.

For this reason, the importance it deserves has not been given to raising productivity, that is, to reducing unit costs, while maintaining, and preferably increasing, the volume of what is produced.

Unfortunately, as long as a decrease in demand for products or services is not affected, or a demand that grows at a slower rate than is customary, both productivity and cost control are subjects that occupy a second place compared to efforts to increase sales.

Cost control has a leveraging effect on profits that few managers have examined in detail. Due to a company's dependence on its profit margin, the positive effect of a reduction in a monetary unit on its costs is much greater than that of an increase of the same magnitude in sales.

In its broadest sense, productivity encompasses all resources and their costs, and as such represents the greatest opportunity to improve profits in any company for which profits are expected and to provide more services per monetary unit spent in institutions. non-profit.

cost	Round price	Profit margin
$ 100.00	$ 120.00	20.00%
$ 99.00	$ 120.00	21.21%
$ 100.00	$ 121.00	21.00%
$ 90.00	$ 120.00	33.33%
$ 100.00	$ 130.00	30.00%
$ 70.00	$ 120.00	71.43%
$ 100.00	$ 150.00	50.00%

Now, while Western entrepreneurs and managers think in these terms, from the Far East, Japanese entrepreneurs have challenged this way of conducting business by applying continuous improvement in terms of quality, cost, productivity and customer satisfaction. By setting cost reduction by following the "Experience Curve" as a primary objective, Japanese companies have put Western industry in serious trouble, even more so in some cases making it practically disappear.

Today, with the globalization of the economy and the fall of customs barriers, many companies are exposed to competition from foreign producers who follow the philosophy of continuous improvement set by the Japanese.

The more exposed a product is to international competition, the more necessary it is to carry out profound changes in productivity management. For companies less exposed to international competition, improving productivity levels will lead them to improve their competitive position in relation to their national or local rivals, with the consequent increase in their market share.

A more productive company always implies not only greater profitability, but also greater capacity for both liquidity and financial solvency, since it will be making better and more optimal use of its resources.

Measure of productivity

In some cases, productivity is measured immediately. For example, it can be measured as the hours of labor required to produce a specific ton of steel, or as the energy required to generate one kilowatt of electricity. Productivity is always measured per unit of time. This is summarized in the formula:

Using a single input resource to measure productivity, as shown above, is known as single-factor productivity. However, multi-factor productivity supposes a broader vision, which includes all inputs (labor, material, energy, capital). Multifactor productivity is also known as total factor productivity. Multifactor productivity is calculated by adding all the input units to form the denominator:

To make the multifactor productivity calculation feasible, the individual inputs (denominator) can be expressed in monetary units and added together.

Using productivity ratios helps managers determine how they are doing. Multifactor productivity ratios provide more complete information on the balance between factors, but fundamental measurement problems persist. Among these problems we have:

• The quality can vary although the quantity of inputs and outputs is the same. Compare a radio receiver from this era with one from the 1940s. They are both radio receivers, but few people will deny that the quality has improved. The unit of measurement (a radio receiver) is the same, but the quality has varied. External elements can produce increases or decreases in productivity for which the system under study is not directly responsible. For example, a more reliable electrical system can dramatically increase production and, therefore, productivity; This is thanks to the system that serves as the basis of production, and not due to the management decisions that may have been made. There may be a lack of precise units of measurement. Not all cars need the same inputs. Some cars are utilitarian,while others are Ferrari. These productivity measurement problems are particularly accentuated in the service sector, where the final product is difficult to define. For example, neither the quality of a haircut, nor the result of a judicial process, nor the service of a retail trade are taken into account in the economic data. In some cases adjustments can be made to the quality of the product sold, but not to the quality of the sale or to a broader range of products.nor is the service of a retail business taken into account in the economic data. In some cases adjustments can be made to the quality of the product sold, but not to the quality of the sale or to a broader range of products.nor is the service of a retail business taken into account in the economic data. In some cases adjustments can be made to the quality of the product sold, but not to the quality of the sale or to a broader range of products.

The way in which productivity measurement should be approached taking into consideration the aspects mentioned in the first three aspects is:

• Measuring productivity for a particular good, and under certain production conditions (process, methods, inputs, etc.) in order to be able to represent the variations in the productivity ratio in a Statistical Process Control chart, which will allow the company to know the productive capacity of a certain process, the variations that occur, and initiate actions aimed at improving it, measuring productivity for a good under certain production conditions, and determining the variation that is generated by changing certain factors of the process or components of the product (without altering its quality too much). As for the service sector, although its measurement is complex, especially for certain cases in particular, the measurement not only can but must be carried out.Clear examples of them are sectors such as: telephony, energy distribution, banks, insurance, education, health, among many others.

Productivity variables

Increases in productivity depend on three variables, good management of which is essential in order to improve productivity:

• Work Capital Management

The improvement in the contribution of work to productivity is a consequence of having a healthier, better educated and trained, and better fed workforce. Three key variables in improving labor productivity are:

1. Appropriate basic training for an effective workforce.

2. The feeding of labor.

3. The social expenses that enable access to work, such as transportation and health.

Regarding the importance of capital, we must bear in mind that human beings make use of tools. Capital investments provide these tools. The difference between total capital invested and depreciation is known as net investment. Inflation and taxes increase the cost of capital, making capital investments increasingly expensive.

When the capital invested per employee decreases, we can expect a drop in productivity. And we say that we can, and not that such a fall be generated, since better designs of work systems, greater training and better conformation of processes, among many other factors, can compensate with growing less net investment in capital goods.

Finally we have business management as a factor of production and an economic resource. She is responsible for achieving an optimal combination of human and material resources, leading and motivating staff in order to make the best use of resources. Their obligation is to ensure that technology, training and knowledge are used effectively.

Factors that affect the productivity of the company

They are divided into two fundamental factors, which are internal and external. Among the internal factors we have those that we can classify as hard, and others as soft. Among the hard factors we have:

• Product Plant and equipment Technology Materials and energy

And, among the so-called soft ones are:

• People Organization and systems Working methods Management styles

Classifying them as hard and soft depends on how easy it is to change them, but it could be altered if we think that it is easier to buy a new machine than to change a mindset, as it is well known that " there is nothing more difficult to open than a closed mind ”

Regarding external factors, we have:

Structural adjustments

• EconomicDemographic and social

Natural resources

• Labor Land Energy Raw materials

Public administration and infrastructure

• Institutional mechanisms Policies and strategy Infrastructure Public companies

Among the hard factors we have the plant and equipment. These elements play a central role in any productivity improvement program through: good maintenance; the operation of the plant and equipment in optimal conditions; increasing plant capacity by eliminating bottlenecks and taking corrective action; and, reducing downtime and increasing the effective use of available machines and plant capacities.

On the other hand, technological innovation constitutes an important source of increased productivity. It is possible to achieve a greater volume of goods and services, an improvement in quality, the introduction of new marketing methods, among others, through greater automation and information technology. Automation can also improve material handling, warehousing, communication systems, and quality control.

Regarding materials, significant increases in productivity can be achieved by:

a) The improvement in material performance: production of useful products or energy per unit of material used. Depending on the appropriate selection of the correct material, its quality, process control and control of rejected products.

b) Use and control of waste and leftovers.

c) Improvement of inventory management to avoid excessive reserves being kept.

d) Improvement of the inventory turnover rate to free up funds linked to inventories in order to allocate them to more productive uses.

e) Use of substitute materials.

f) Improvement of materials through Research & Development.

As for the soft factors, the correct management of the personnel takes special importance as a key resource in the competitive companies of the present and the future. Training, coaching, motivation and incentives, participation and quality of work life are essential. The continuity of the personnel, expressed in a lower turnover rate, makes a continuity in the learning curve feasible (contributing to the experience curve) and the formation of tacit knowledge, which they generate through optimal human resource management. a competitive advantage difficult to imitate on the part of the competitors.

The improvement of work systems, a better style of leadership (management), accompanied by information systems and highly efficient organizational structures allow high levels of performance.

Today the flexibility and versatility of workers, their ability to work in teams, their intellectual capital (knowledge + experiences + attitude) are an essential weapon to make higher levels of productivity feasible accompanied by better performances in terms of quality and customer satisfaction and / or consumer.

Regarding external factors, these must be taken into consideration for the purposes of analyzing the possibility of reducing their incidence through the action of the company as such, or above all other options, acting jointly through organizations or social organizations - political - professional and economic. In this way, changes in regulations, regulations, tariff protections, the execution of public works, among many others, may be requested.

Conditions for optimal productivity in any production process

Achieving the best level of productivity requires a systematic process that must be completed around:

• Adequate design of the product or service Selection of the most suitable technology Planning of the required quality Optimal use of resources:
• InstallationsMaterials and SuppliesPersonal
• And, the study for such purposes of methods and times, programming and coordination.

The first of the conditions, without which all the others would be useless, is that the product to be obtained has been designed in a way that ensures that, basically, it optimally fulfills the specific function that is proper to it, also allowing it to be obtained in optimal conditions.

Secondly, it is essential to ensure the contribution of new technologies through a continuous work of prospecting for the future, knowledge and use of existing technological information sources, protection of the technology itself and all the actions that allow technologies to be used at all times. They can lead to optimal productivity.

Another transcendental factor closely linked to product design and the technology used is that of the quality of the product obtained. The demands of the industrial world, the opening to new markets, the increasingly rigorous prescriptions regarding the homologation of products, have turned this factor into a key point for success.

Obtaining products of adequate design, using the most suitable technology, reaching the maximum in quality, is achieved through the effective and efficient use of facilities, materials and human resources, in order to achieve the highest level of productivity. This optimal use must be sought through the use of the most appropriate methods and a rigorous study of the times of the different operations that make up a process. To this end, planning, programming and coordination constitute the key that opens the doors to maximum efficiency.

Barriers to productivity

We must recognize which are the barriers that prevent higher levels of productivity in order to take due note of them, raise awareness and act accordingly.

Among the most common and entrenched barriers we have:

a) Obsessive bureaucracy. It is characterized by blind adherence to established norms, rules and practices without flexible consideration of intention or purpose, or the adequacy required by a special situation, and in any case rigor mortis in response to internal and external challenges.

b) Organ arteriosclerosis. The organic structure with too many hierarchical levels, the dissociation of the functions of each level and the lack of communication between directors, bosses and employees, as well as excess paperwork and superfluous, misleading and useless procedures are some of the causes that harden the arteries of communication and do not allow the flexibility they require to access changes in workload and situations that must open up to productivity.

c) Corporate feudalism. It occurs when the director of a division, or manager of a department, does not know or care about knowing the objectives, actions and problems of others. Nor is he interested in the total productivity of the business, he is only interested in his own profit. This is how each fief of the company works as an autonomous and independent entity and only tries to make its performance shine with its own results.

d) Excessive centralization of controls. This is supported by a strictly vertical control that goes from above to the bottom rung of the organization. This system therefore does not own the maximum use of human potential, being the opposite of modern ideas of empowerment.

e) Minds closed to change. In many organizations the possibility of improving systems and processes, and with it the levels of quality and productivity, is frustrated because their owners, managers and / or employees have their minds closed to any change or innovation. The reactions of people who put obstacles to any new idea are the following:

Resistance to change. Among the various explanations for such resistance, the following are only included:

1. Fear of the unknown, or inappropriate information.

2. Fear of not being able to learn new skills (or the embarrassment of being slow to learn.

3. Threats to experts or power.

4. Threats to payment and other benefits.

5. Reduction in social interaction.

6. Characteristics of the personality (example. Dogmatism)

7. Lack of participation in the change process.

8. Increased job responsibilities.

9. Decrease in job responsibilities.

10. Organizational environment

• Workshop blindness. Own the myopia that is created over time by having your eyes fixed on a single routine task without seeing beyond your surroundings. Conformity. It is classic of companies that have grown and generated and generate profits. It is there where managers think and say: "Why change what has given us and is giving results." Conformity causes the organization to stagnate and not keep pace with technological advances, nor adequately adapt to new market demands. Conformism is a very comfortable attitude for lazy minds, who prefer it to the mental effort that requires analysis and creative innovation. Fear of criticism. This fear is suffered by employees and workers who have the initiative and creativity to present good ideas, but the fear of ridicule before their bosses and colleagues and their shyness inhibits their courage to present them. Fear of criticizing. This obstacle is frequently found when a better system or work method is presented to a boss or some authority that designed what is being done. There is fear of offending a superior when he is shown that someone has thought of something better than what he did. Inadequate perspective. This is typical of the mental state of putting out fires on the part of its managers. In this way they spend more time solving the crises caused by the problems than preventing their appearance. Their procedure is therefore reactive rather than preventive and / or proactive.

Factors that restrict the increase in productivity

There are numerous factors that hinder the full development of the productive capacities of an organization, registering the following:

• Inability of leaders to set the tone and create the climate conducive to improving productivity. The negative effects on productivity have the obstacles imposed by state regulations. The negative effect on the increase of productivity has the size and the maturity of organizations The inability to effectively measure and evaluate the productivity of the workforce The design of production processes and the corresponding organization and distribution of machines and equipment, with the consequences this has on the ability to increase productivity levels.

These restrictions are not defining, and most of them can be worked on, except for point 2, through a work of revitalization and redesign of processes and structures in order to give the organization the ability to greatly increase its performance in the field of productivity.

The search and change of deficient paradigms is another modern and effective way of achieving, in the first place, behavioral changes tending to generate transformations in the development and evolution of production processes.

Techniques to improve productivity

It comprises a series of techniques, tools, methods and instruments intended to generate greater added value based on the inputs that have been used.

We have in the first place the techniques of industrial engineering and economic analysis, among which are:

• Work study Method study Work measurement Work simplification Pareto analysis Just in Time System Total Productive Maintenance Total Quality Management ABC / ABM Quality Cost Horizontal Accounting Analysis and application of learning and experience curves Administration by means of value analysis Cost-Allocation Budget Zero Assignment Costs Statistical Process Control

Among the techniques related to behavior we have:

• Organizational development Participation system Group activities Teamwork Suggestion system Force Field Analysis Nominal Group Technique

Methods and Systems based on the study of Organizational Behavior

Based on research and analysis work, Organizational Behavior science has generated a total of ten different types of interventions, which can be applied in combination or not.

On the one hand, based on the change in organizational characteristics, they propose:

• Incentive systems
• Piece payment systems Group plans to share profits
• Goal setting Objective management (APO) Personnel selection
• Evidence Personal history Realistic job planning
• Training and development Leadership / Participation Organizational structure / Decentralization

Regarding the methods that emphasize labor characteristics, we have:

• Performance feedback through objective indicators. Job design through job enrichment and / or work simplification. Optional work programs, made up of condensed work week systems and / or flexible work schedules.

Importance of Quality Management

Traditionally, quality and productivity have been considered as elements that must be made by mutual concessions. To achieve significant improvements in one, one must accept a deterioration in the other. Quality could only be improved at the expense of productivity, and vice versa. However, many companies today operate under the philosophy that improving quality generates higher levels of productivity.

It is largely a problem of definition. If quality is dealt with in an absolute sense it can be difficult to understand how to improve quality without a higher cost. On the other hand, if we see quality as conformance to specifications, the relationship with productivity is evident. If the product or service is produced with defects, then it must be repaired, reprocessed, or produced again. The result is that more resources - personnel, material, equipment - are required to produce a given quantity of products or services that meet the specifications.

This leads us to the concept of process quality, which has a clear and direct correlation with productivity. Although an organization's finished products (or services provided) may conform to specifications, the quality of the process that produced those products or services can vary widely and will have a decisive influence on the organization's productivity.

If substantial quantities of products need to be reprocessed or reprocessed, if raw materials are defective, if waste and material loss are excessive, if waste from discards is high, the organization cannot boast of high levels of quality or productivity.

Low performance in quality increases the resources required to produce a certain quantity of goods. Reworking increases the amount of labor required, and perhaps capital, and also energy resources. Waste and discard increases the material required for a given level of production. And low-quality performance increases the need for inspection and control, which requires additional resources.

With low quality, a substantial amount of an organization's resources should be devoted to correcting defects and handling waste rather than producing goods and services. As quality improves, the resources required to produce a given quantity of products decline, and that translates into better productivity.

Poor quality costs more than is traditionally recognized. The cost of quality is routinely calculated by various companies and in many cases exceeds twenty percent of revenue.

Today the argument that a certain level of flaws is inherent or acceptable must be totally rejected. Traditional concepts such as "acceptable levels of quality" which implies acceptance of a certain level of defects, and "economies of quality" which means that beyond a certain point, quality improvements are not justified by cost, have already disappeared of companies developing world-class manufacturing. Today the goal of companies that want and want excellence is to reach a level of 6 sigma, which implies having no more than 3.4 DPMO (defects per million opportunities).

Comparison Method between Companies and Business Clinics

The business to business clinic comparison method requires the services of an outside consultant. It uses cross-company comparison techniques to help participating directors and managers to identify problems in their respective organizations. These techniques are complemented by group discussions in which the accumulated experience and management techniques of all participants are mobilized to help solve individual problems.

The business-to-business comparison acts as a point of attack, when employers need to be convinced that the services of a management training center or consultant will really help solve current problems. When employers and managers receive a comparison report between companies, they almost always find that the operation of their company is unsatisfactory in one or several aspects.

The cross-company comparison is used to discover where organizations should focus their efforts to improve their performance. Without a cross-company comparison, a manager can only guess which parts of the organization are performing well or poorly and what priorities need to be set to improve performance. A set of figures showing the industry averages can immediately indicate whether the organization is performing better or worse than the average.

As for company clinics, they are discussion groups in which participants examine their own problems and their progress in solving them. They are run by a consultant or a management training institute. A peculiar feature of the business clinic method is that it emphasizes project-based learning.

This means that the participants, who are receiving training in this situation, carry out a task in a real company, usually theirs. The project must refer to a real problem, and the participant is responsible not only for analyzing the problem, but also for taking measures to solve it.

Project-based learning combines naturally with cross-company comparison. The entrepreneur uses the Comparison of Companies report to identify a sector of deficiencies and defines a problem that must be solved for the company to prosper. Thus project-based learning is a self-improvement technique. Its effectiveness can be greatly increased if it is carried out in the context of a group, and this is the basis of the business clinic concept.

The comparison between companies (CEE) and the company clinic (CE) are developed in three stages:

• Stage 1: Participants receive a report comparing the performance of their respective company with that of other similar companies Stage 2: The fields where improvements need to be made are indicated, thanks to the comparison and analysis of the reports and the performance of other companies. Stage 3: Complementary measures are taken in the form of company clinics.

One of the advantages of this method is that it is especially attractive to small and medium entrepreneurs. The method has a good chance of success, if the following conditions are met:

• The industry in question must be experiencing some degree of pressure on profits or productivity. There must be a "godfather" who is interested in the way things evolve, who perceives the need to increase professionalism in management as response to the threats you face and are willing to lend your support to the testing of this method. There must be a 'champion', an innovator who is interested in this method as a complement to your current set of techniques for training and advice.

Productivity Improvement Circles (CMP)

Productivity improvement circles start from the same foundations as quality control circles but cover the whole field of productivity improvement and not just quality.

A CMP is a small group of workers from the same workshop who are interested in autonomous and mutual improvement and problem-solving activities. The objective is to promote the productivity of the company. CMPs have seven fundamental characteristics:

1. It is voluntary. Each member has decided to participate in the activities of the CMP, because they provide the possibility to promote growth.

2. They are small, since they have between three and ten members.

3. Homogeneous composition. Members come from the same workshop, perform similar or related functions, and face similar or related problems.

4. Task and concrete objectives. The projects of the CMP usually correspond to the control of the circle and adjust to the objectives of the company.

5. Systematic and scientific approach. When studying the workshop problems, the circles follow a step-by-step sequence and use scientific instruments and techniques in the process.

6. Constant activity. Circle activities move from one project or activity to another.

7. Universal application. The concept can be applied in various sectors, organizations and their dependencies.

The CMPs pursue as objectives:

• Contribute to the productivity, stability and growth of the company.Improve the workshop as a workplace.Promote human potential to the maximum.Increase the competitiveness of the company thanks to the improvement of the product and the reduction of production costs.Improve capacity of leadership, practical knowledge and technical competence of front-line supervisors, through mutual instruction and practice. Giving workers opportunities to expand and enrich tasks, assume greater responsibility, have a greater sense of independence and certain Participation in decision-making. Promote an awareness of productivity, discipline and practical knowledge in management and workers through better communication.

Among the various types of problems submitted to CMPs we can list:

• Reducing waste and costs. Improving quality. Improving methods. Simplifying work. Improving preventive maintenance. Improving work morale.

Regarding the benefits resulting from the CMP programs, the following can be mentioned:

• Improving quality Increasing production Reducing costs Improving communication, cooperation and worker morale Better definition and a clearer understanding of supervisory functions Improving of workers' ability to solve problems. Improving productivity and quality awareness, establishing a better attitude towards work and workshop problems. Improving member morale of the circles.

Action Team Method to Promote Performance

This method is an effective variant of many teaming techniques aimed at improving productivity. It is a participatory and global management method applied from top to bottom and consisting of two main components:

• A strategic planning process that focuses on achieving consensus on development goals, objectives, and action programs within two to five years at all levels of management. A participatory and structural problem-solving process in the level of the primary working group.

Some of the important characteristics of this method are the following:

• It guides the budget process, it overlaps the formulation of strategies and policies, it supplies the data and results of each stage in a downward direction, it maintains action teams at all levels that are responsible for execution, it gives transparency to the entire process.

Finally, it should be noted that the method under study must meet two conditions:

• It must be effectively linked to a profit distribution system. It must be preceded by strategic planning with respect to efforts in favor of productivity.

Management through value analysis

This is a technique to significantly reduce waste or levels of waste.

Value analysis tends to achieve many savings or small improvements in efficiency that, points, will be important. Its usefulness has been demonstrated in the manufacturing sector and in many other sectors. Substantial cost reductions have been achieved in hospital administration, banking, construction and also in public services and public administration.

Value analysis is an organized and creative approach to determine and eliminate all unnecessary costs on a product or service. All the costs related to a product (or service) in its design, its materials, its manufacturing process, and particularly its specifications and requirements, are analyzed to discover the value that each of them contributes.

Thus, value analysis is a method of reducing cost that emphasizes function rather than method, exposing excessive and unnecessary costs; improves the value of the product or service; It provides identical or better performance at a lower cost, and does not reduce quality or reliability.

Three stages can be distinguished in the value analysis process:

• Preparation of special organization charts showing the occupation of each person on the payroll. In support of this, a workshop plan and site plan are required, showing the space occupied by each section and the type of equipment used in it. With respect to each point on the graph, four pieces of information are necessary:
• the function (actual task, location and cost); the quantification of the function (product, estimated time for each task and significant costs performed); the performance of the function; the contribution of the function.

• Compare the data related to the costs of each function with the criteria of "value" - the price, the degree of desirability and the usefulness - asking the following questions:
• Is the function essential to the business? Is the function properly positioned within the organization's structure? Is the method of fulfilling the function effective? Could the function be combined with another to reduce cost or to be more effective? Does the staffing level seem reasonable in relation to the tasks performed? Does the occupied space seem reasonable in relation to the function performed? Is the function physically in the best place? Is there any other method to perform the same function than Will it be less expensive and more effective?

These questions highlight the manifest anomalies and suggest multiple lines of investigation, all of which should be followed.

• After the value analysis is complete, a report should be prepared containing clear and practical recommendations. All major organizational changes must be made first, in full consultation with those affected. Small changes can then be made to functions where there is less chance of causing considerable disruption.

Just in Time Production System

The just-in-time system is the production (or delivery) of the necessary elements in the necessary quantity and at the necessary moment. The main objective of "Just in Time" is to reduce costs in the production process, thereby improving the total productivity of the organization. This system was conceived and implemented in Japan and is aimed at eliminating unnecessary stocks, minimizing inventory holding costs and increasing the rate of return on investment. However, more important than stock reduction is improved manufacturing that results from reduced stock exploitation.

The Just-in-Time system removes the safety margin from large stocks, thereby exposing operational problems.

Bibliography

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