Productivity Development

Productivity is the most essential KPI especially for the manufacturing wherein a relatively large number of people are employed and wherein the learning effect is almost continuous till the end of the product life cycle. Even after ramp-up the learning effect is significant resulting from quality improvements, machine downtime reduction, Kaizen activities, suggestion schemes, layout changes, make/buy decisions, etc. Therefore a payment/incentive model that supports continuous improvement in productivity is a must for sustained success. The choice of the correct measurement indicators (for example % increase in the ratio of "SVOP: Sales Value of Production" to the total input hours of all the employees could be one such indicator) is the key success factor. Linking this indicator to the payment incentive systems in a way that other inefficiencies (like inflexibility, limiting of output or abstaining to boost productivity, etc.) don't creep in is the true challenge. Apart from the manpower productivity, it is also essential to ensure increase in the overall business productivity (for example % increase in the ratio of SVOP to the total of operating expenses, difference between SVOP and material cost). Defining the key cost drivers to improve productivity and including them in the annual target deployment is necessary. Purpose: Maintain the health and agility of an organization.