Operation Management

Why Productivity Matters

Measuring productivity is a pivotal operation at both micro as well as macroeconomic level. In terms of national level, the measurements of productivity indicate the sustainability of the population's living standards. To better understand, an economic growth based on production represents a model of sustained economic growth and this is measured in terms of productivity. If the country's economy is however based on services, rather than manufacturing, its productivity levels are low, and so are the population's living standards.

The explanation as to the reduced productivity rates of the service industry as opposed to the higher productivity rates of the manufacturing industry is simple: the service industry does not produce a real and material output, but simply customer satisfaction as a result of the delivered services.

Finally, productivity is also a powerful tool in the battle against the competition. High productivity rates imply large output and reduced costs, and in other words, increased operational efficiency. This generates high profits and more resources in beating the competition (capital, technology and human resource).

2. M&L Manufacturing

Forecasting methods are employed by economic agents, especially manufacturers, due to the benefits they generate. In this order of ideas, a formalized forecasting technique will properly assess the necessity for manufactured items and by this, will reduce the under and overstocking. The right quantities of goods will generate the trust of all categories of stakeholders, mostly distributors and customers. Also, it will lead to a superior and more efficient process of resource allocation.

An estimative for the following four weeks of the quantities to be manufactured of product 1 and product 2 is given below. The numbers for the second product are more stable, whereas those for the first are gradually increasing. In both cases, they are based on the registered demand.

Product 1

Product 2

Week 1

Week 2

Week 3

Week 4

Reference:

Productivity and M&L Manufacturing Case Studies