Improving Productivity

 

Lean Nation,

Building off of last months blog on productivity,  I though it would be beneficial to expand on that topic.  You can review the initial blog here.  

https://breakthroughhorizonsltd.blogspot.com/2023/11/what-happened-to-improving-productivity.html 

Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an output to an input, typically over a specified period of time.  In more practical terms, I prefer to measure productivity in a unit of time divided by the input.  In production, a very common definition of productivity is labor hours per unit produced.  In the service industry, a common definition is labor hours per unit of service completed. 

Using lean thinking we are in pursuit of three objectives:  improving quality, reducing lead-times, and improving the cost of goods and services through the elimination of wasted time and activity.  Improving productivity is one way to measure if we are improving the cost of our goods and services.  By reducing wasted time and activity, we should be allocating fewer resources per unit.  Since lean is a time based improvement approach, it makes sense to look evaluate of there is an opportunity to address productivity within each improvement project.  

The time saved by generating output with fewer inputs can be used for two things.  We can use the created capacity to generate more output with the same resources, or we can free up resources and use less resources to create the same output.  The freed up resources can be deployed to other areas of  value added activity. The approach you take will be based on you customer demand. 

Lean organizations use a concept known as takt time to provide insights if the organization is meeting customer demand.  This theoretical calculation is determined by diving the time available to do work by the demand of work to be completed.

    Here is an example of a takt time calculation:

        Time available to do work = 8 hours

        Customer demand or volume of work to be done =  16 units

            Takt time =  8 hours / 16 units =  .5 hours per unit (30 minutes)

If we are producing or delivering 16 units each day within 8 available hours, we are meeting customer demand.  We can also evaluate if we are running faster or slower than customer requirements. 

Next we need to know how long it takes to actually do the work.  This is know as manual cycle time.  If we are ultimately interested in productivity,  we need to understand our people power allocation to this work. 

As an example, let's assume each unit of work requires 40 minutes of labor to complete.  A lean organization would get this information using direct observation and documenting the work on a time observation form.  For those not familiar, this tool is similar to a time study showing the work breakdown by task. 

From here, we can calculate our labor requirements.  The math to determine labor required is to take the manual cycle time and divide it by the takt time. In our example, the minimum staffing requirements would be 40 minutes (manual cycle time) divided by the takt time, 30 minutes.  Minimum staffing = 40 min / 30 min = 1.33 people.

Our current productivity measurement is .667 hours (40 minutes of manual cycle time) per unit.

By eliminating wasted time and activity, we can reduce the manual cycle time required to complete a unit of work.  Let's assume we improve our manual cycle time by 25%.  25% of 40 minutes = 10 minute reduction in labor needed per unit produced.  Going back to our minimum staffing calculation, we now require 30 minutes of manual cycle time(MCT) divided by a 30 minute takt time (Tt).  

        Minimum staffing = 30 min (MCT)/30 min (Tt) = 1 person. 

        We have freed up .33 of a person for  other work!  Lean organizations regularly, pursue,                 achieve, and celebrate these productivity improvement successes.

In summary, we have a few tools in our lean tool kit to help evaluate and improve productivity.  We have our outcome measure of productivity, we have our takt time calculation, we have our manual cycle time, and we have our minimum staffing calculation.  ****Before my chat room blows up, I know that there are subtleties to takt time calculation such as breaks and lunch carveouts and the manual cycle time is rarely a super clean 40 minutes.  I needed to keep the example simple for training and illustration purposes. 

My question for you lean nation, is are you using these tools regularly as part of your continuous improvement work?  If not, what's holding you back?

Lean Blessings,

Ron

Ron Bercaw,  President and Sensei

Breakthrough Horizons

www.breakthroughhorizons.com 

LinkedIN: https://www.linkedin.com/in/ron-bercaw-882a0a8/