Page 24 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes do more value-added work. The technology that is adopted is an economic choice, taken
upon both economic and technological reasons. However, reversibility of the choice is
often low because of high switching costs. Business process redesign is another aspect of
technology. Technology to improve physical productivity focuses on understanding the
diffusion of technology in use and redesigning of processes that exist within and between
companies. The rate of technological change varies between industries and the need
increases as the clock-speed of the industry increases. Innovative changes in business
processes that allow the customer to obtain better value, increases productivity of the
organization. Using numerically controlled machine tools can increase productivity and
reduce manpower. Similar technologies have been available for decades, but are constantly
finding new applications. These reflect exercises in automation as the focus is to substitute
capital for labour. It is different from technological innovation because existing automation
is merely applied to a new situation.
2. Learning and Experience: The learning and experience curve concepts have been discussed
earlier in detail. This was first observed in the aircraft industry and was found to enhance
productivity and reduce costs substantially. The productivity is greatly improved by a
distinct form of specialization. As workers learn, they get better trained in the techniques
required to do the job. Learning and experience enable firms to achieve productivity
improvements because the workforce gains knowledge about the product and work
processes. From this knowledge workers find better ways to organize work.
3. Job Design, Work Analysis and Motivation: All these techniques enable firms to examine
work at the level of the individual worker, the interface between a worker and a machine,
or the interface between a worker and the firm. The job design and work analysis approach
investigates and improves individual movement to improve productivity. It makes
possible productivity improvements through scientific redesign of the work content. Job
design and work measurements also provide benchmarks that can be powerful motivators.
Motivation is a powerful tool that can be used to increase productivity in any job that is
labour intensive.
Firms can also provide incentives to increase workers' productivity through a stimulating
environment and the removal of obstacles to their effective work. The classical Hawthorne
Studies by Elton Mayo showed that if labour is motivated to do more work, productivity can
increase without additional investments or cost increases.

Example: When the lighting levels in the Hawthorne works were improved, there was
increased productivity with no additional costs.

1.7.3 Productivity in Manufacturing versus Service Firms

Productivity applies equally to the blue-collar workforce as to people doing intellectual work.
In many developed countries, blue-collar workers represent a small and declining portion of
the workforce and the dominant workforce is represented by intellectual work in service
organizations. This change is explained by a change from a manufacturing to service-based
economy in these countries. The problem presented by this shift is that productivity gains in the
service sector have lagged behind gains in the manufacturing sector.
Nobel Prize-winning economist Robert Solow has said that we see computers everywhere
except in the productivity statistics. That productivity measures do not seem to show any impact
from new computer and information technologies has been labelled the "productivity paradox".
Several explanations have been advanced to explain this lag, including ineffective measures for
services sector productivity and macroeconomic factors, such as the low savings rate while on
the other hand fear of job loss by manufacturing workers, which motivates them to work harder
and smarter.

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