This document discusses different concepts of productivity including technical, social, economic, management, and integrated concepts. It defines productivity as the ratio of output to input from a technical perspective, but notes problems with only considering this definition. The social concept views productivity as continually improving quality of life. Economically, productivity refers to creating more value for customers. From a management perspective, productivity is achieving efficiency and effectiveness. Overall, an integrated concept aims to improve quality of life through technical means, with a long-term strategy of productivity-driven economic growth. Approaches to improving productivity discussed include reducing waste, improving flow, eliminating bottlenecks, and implementing the "5M+Q+S" approach.

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Productivity
Concept &
Principles

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Five Concepts of Productivity
• Technical concept
• Social concept
• Economic concept
• Management concept
• Integrated concept
Credit: ezinearticles.com

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What is Productivity (Technical
Concept)?
• The term productivity is a broad concept which
involves two major aspects.
• Output refers to the product of an operation, or
result of special interest.
• Input refers to the resources consumed in the
production or delivery of output.
Output
Input
PRODUCTIVITY =

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What is Productivity (Technical
Concept)?
• Problems with the technical concept:
 Increase in productivity with poor quality of output.
 Increase labor productivity due to labor reduction may
lead to labor-management conflict.
• To overcome this problem, the concept of
productivity as a broad social concept has been
introduced.

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What is Productivity (Social Concept)?
“Productivity is, above all, an attitude of mind. It seeks
to continually improve what already exists. It is based
on the belief that one can do things better today than
yesterday and better tomorrow than today.”
- Asian Productivity Organization
• An innate wish of everyone to make tomorrow
better than today.
• Aims to achieve a better quality of life for all.

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What is Productivity (Economic
Concept)?
• Refers to one’s ability to create more value for
customers.
• For most business organizations, the economic
goal and basis for existence is value creation.
• Economic gains is measured in terms of value
added - increases in inputs or improvements in
productivity.

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What is Productivity (Economic
Concept)?
• In most cases, increases in value added are
attained through expansion in capital and labor.
• However, a productivity driven growth model
focuses on resource efficiency and output
superiority to create higher value to customers.
• Hence, a long-term sustainable growth in the
economy cannot depend on expansion strategy
alone.

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What is Productivity (Management
Concept)?
• Productivity is doing the right things right
• This concept of productivity provides a working
definition to manage and improve productivity at
micro or organization levels.
Efficiency
+
Effectiveness
PRODUCTIVITY =

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What is Productivity?
As an integrated concept:
• As an objective  Social concept
• As a means  Technical concept
• Need to adopt a long term strategy of
productivity-driven economic growth
 Improve the quality of labor and capital
Output
Input
PRODUCTIVITY =

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Productivity Principles
• Principle of Increase in Employment
 Improved productivity increases employment
• Principle of Labor-Management Cooperation
 In improving productivity, labor and management
must cooperate in discussing the measures
• Principle of Fair Distribution
 The fruits of productivity improvement must be
distributed fairly among key stakeholders

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Multi-Factor Productivity (MFP)
Output
No. of Employees (No. of
hours worked)
Labor productivity =
Output (value or unit or value added)
Raw materials used
Raw materials
productivity
=

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Approaches to Improving Productivity
1. Reducing the 3 MU’s – Muda (waste), Mura
(variability) and Muri (overburden)
2. Implementing the 5M + Quality + Safety
3. Improving the flow of goods and services
4. Reducing system inflexibility (bottlenecks)
5. Eliminating the eight types of waste

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Activities that do
not add value
Workload that
is uneven
Work that creates burden for the
team members or processes
Reducing the Three MUs
Approaches to Improving Productivity

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Implementing 5M + Q + S
Man
The waste of:
• Walking
• Waiting
• Searching
• Unnecessary movement
• Not easily recognizable waste
Machine
The waste of:
• Large machines
• General purpose machines
• Conveyors
• Machines with wasteful
movements
• Breakdowns
• Machine handling
Material
The waste of:
• Parts
• Bolts
• Welds
• Functions
• Storage and handling
Management
The waste of:
• Materials
• Meetings
• Management Control
• communications
Safety
The waste of:
• Disaster prevention methods
• Fixing defects
(“Safety first” really requires
removing all waste that can lead
to accidents and/or injuries
Quality
The waste of:
• Making defective goods
• Fixing defects
• Errors
• Inspection
• Quality control
Method
The waste of:
• Large lot production
• Inventory
• transportation
• Retention
• Non-standardization
• Picking up and setting down
work pieces
Approaches to Improving Productivity

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Improving the Flow of Goods
1. Materials are procured
• Materials are retained in the
warehouse
• Materials are conveyed to
processes on the production line
• Materials are retained at the
process equipment (WIP)
• Materials are picked up for
processing
2. Materials are processed
• Processed goods are set down
and retained on the other side of
the processing machine (WIP)
• Goods are conveyed to an
inspection point
• Goods are retained until inspected
• Goods are set down and retained
on the other side of of the
inspection process
• Inspected goods are conveyed to
the finished goods warehouse
• Finished goods are retained until
prior to shipment
3. Finished goods are
delivered to customer
Four key activities can be observed
from the flow of goods:
1. Retention (Non-value-add)
2. transportation (Non-value-add)
3. Processing (Value-add)
4. Inspection (Non-value-add)
Approaches to Improving Productivity

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Reducing System Inflexibility
Custom and practice
Capability
Configuration
Capacity
Changeover
• Inability of people and
the organization to adapt
to customer needs
• Inability of product,
process, or IT systems to
meet customer demand
• Inability to provide the
product or service the
customer needs
• Inability of product,
process, or network to
meet customer demand
• Inability to change
processes to meet
customer demand
Inflexibility
adds cost, but
does not
increase the
value added
Approaches to Improving Productivity

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Eliminating the Eight Types of Waste
Overproduction
Producing more than what
the customer needs
Inventory
Building and storing extra
services/products the
customer has not ordered
Transportation
Moving from one
place to another
Defects
Reprocessing, or
correcting work
Over-processing
Adding excess value
when the customer
does not require it
Motion
Extra physical/mental
motion that doesn’t add
value
Intellect
Not using employees full
intellectual contribution
Waiting
Employees waiting for
another process or
information
Waste
Approaches to Improving Productivity

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To learn more about how to discover
and eliminate waste, please view our
presentation below (click the image)

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END OF PRESENTATION
For find out more about productivity
improvement, please visit:
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