COMPETITIVENESS
THROUGH
PRODUCTIVITY
QC Services
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COMPETITIVE ENVIRONMENT
 Globalization
and Liberalization has
created substantial new opportunities.
A.
Substantial growth in market
B.
Export potential
C.
Import of technology, new product
designs, import of modern machines
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The changing scene of Indian economy

With Liberalization, there is Competition from
 Indian companies
 Free imports
 New companies with foreign collaborations
 Multinationals starting factories in India
Threat of competition is real
 Need is to improve competitiveness
 Improving competitiveness means
improvement in Customer Satisfaction

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Customer satisfaction

Customers expectations
 Quality
 Cost
 Delivery
 Service
The need for substantial increase in
quality, productivity and Cost reduction is
immediate for every Indian company.
 This is a complete change from the past.

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Competitive Position and Market Share
– An example

Product X
Factor
Market
Delivery
Share %
Cost
Quality
A
High
Medium
Medium
to Low
20
B
Medium
High
Good
75
Other
(3 companies)
Low
Low
Good
5 (Total)
Company
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Competitive Position and Market Share
– An example

Product Y
Factor
Market
Delivery
Share %
Cost
Quality
A
High
High
Low
60
B
Medium
Medium
Good
20
Other
(4 companies)
Low
Low
Good
20 (Total)
Company
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Competitive Position and Market Share
– An example

Product Z
Factor
Market
Delivery
Share %
Cost
Quality
A
High
High
Low
Over 60
C
Medium
(65%)
Medium
Good
20
Other
(3 companies)
Low
(40%)
Good
20 or less
(Total)
Company
Low
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ANALYSIS OF COMPETITIVE POSITION
The example shows that the best quality product
commands high market share, in spite of high price.
 However there are threats for this company also
 Foreign companies starting production in India better products.
 Indian competitors taking up technical
collaboration & improving quality.
 Import of better products.
 Indian competitors improving quality with
marginal price increase.
These are not only threats but opportunities also.

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ANALYSIS OF COMPETITIVE POSITION

This opportunity is
A. Substantial growth in market
B. Export potential
C. Import of technology, new product designs,
import of modern machines
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ANALYSIS OF COMPETITIVE POSITION

Strategy for avoiding the threat and taking
benefit of opportunity, to achieve customer
satisfaction is toto* Improve quality
* Improve productivity
* Reduce costs
i.e. become competitive
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HURDLES FOR
BECOMING COMPETITIVE
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
All employees can easily understand that quality
improvement and cost reduction are not harmful to
their interest. Thus it is not difficult to develop
cooperation on these issues.

However, almost all employees, union
representatives, many social workers, even
operating management and others believe that
productivity is against the interest of the working
class.
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HURDLES FOR
BECOMING COMPETITIVE
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
They believe that if by some means output
per person is doubled, half the employees
will be thrown out of work.

Or if the demand is doubled and same
employees carry out the work, many
people who would have obtained
employment will miss the opportunity of
employment.
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Objections to Higher Productivity

Unemployment

More efforts for increasing output
– Extra efforts will create health problems
– Putting extra efforts is not possible in old age.
– Is there any limit for extra efforts?
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Objections to Higher Productivity

Fear of no benefits or loss of current benefits
such as overtime

Productivity benefits only the rich and loss for
the poor

Quality may deteriorate

Unsafe operations

Damage to machinery
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A case of substantial increase in
productivity leading to substantial
increase in employment
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Example – Cotton Industry, Manchester
1840
Handlooms
1910
Powerlooms
Output per person
X
10X
No. of Weavers
5000
2,65,000
Total Output
5000X
26,50,000X
530 times more output of cotton
 53 times increase in employment

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% SHARE IN
TOTAL WORLD PRODUCTION
China
India
England
USA
33
25
0.25X /L
1.9
0.019X / L
0.1
6
1.5
0.25X / L
18
3X / L
3
1.5
1.5X / L
4
4X / L
Japan
World
Productio
n
Populatio
n
3.8
X
L
10
1.67X
/L
2.5
0.42X
/L
100X
6L
22
22X /
L
15
15X / L
3000X
30L
1750
% Share
Per Head
Production
1900
% Share
Per Head
Production
1980
% Share
Per Head
Production
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GRAPHICAL PRESENTATION OF
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RISE IN PRODUCTIVITY LEADS TO RISE IN EMPLOYMENT
3000X
1750
1980
Working
Hours
Fixed, known,
around 12 hours
8 hours
Nature of
work
Laborious
Use of
machines
Wages
In kinds like food
grains,
insufficient
In cash,
quite
sufficient
Other
benefits
No leave,
allowances
Leave and
allowances
30X
100X
30 L
6X
X = WORLD PRODUCTION
L = WORLD POPULATION
6L
X
L
0000
1750
1900
YEAR
1980 18
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Comparison
ITEM
PRICE in Rs.
WAGES in Rs.
1974197475
1994199495
X
2004200405
Bicycle
350
1000
3.5
1200
1.2
250 1.2
3000 0.33
8000
0.15
Fridge
4000
8000
2
8000
1
250 16
3000 2.67
8000
1
Mixer
600
1100
1.8
2000
1.8
250 2.4
3000 0.37
8000
0.25
Pressure
cooker
350
700
2
1500
2.2
250 1.4
3000 0.23
8000
0.2
Ball pen
Re.1
Re.1
0
2
2
5 / Mtr
20 /
Mtr
4
60
3
Scooter
4000
22000
5.5
32000
1.5
250
16
3000
7
8000
4
Car
24000
190000
8.5
250000
1.4
250
96
3000
63
8000
31
Jeep
27000
240000
9
300000
1.2
250
108
3000
80
8000
37
Tractor
28000
180000
6
225000
1.2
250
112
3000
60
8000
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Index
100
537
Cloth
1974- Month
197475 Sal
2004-1994- Month 2004
1994Sal
05
95
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Workers
Production
Per head
production
Rise
Fridge
1974--75
1974
1994--95
1994
250
700
11000
241000
44
344
200000
8 times 2200000
Jeep
1974--75
1974
1994--95
1994
4000
11000
11000
45000
2.75
4.10
11000
75000
1.6
Total
Sale
1974--75
1974
19941994-95
Rise
Fridge
4000
32000
8 times
Assuming increase in
Productivity only 2 times
Car
25000
60000
2.5 times
300
4000
12 times
Assuming increase in
Productivity 8 times
Salary
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Per head
production
Rise
Production
Workers
Fridge
1974-75
1994-95
44
88
2 times
11,000
45,000
250
500
Jeep
1974-75
1994-95
3
21
7 times
11,000
2,41,000
4,000
11,500
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Productivity benefits
mostly the working class
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Basic Economic Facts
If wealth is produced, it is always used by
society.
 Productivity leads to creation of wealth,
meaning goods and services which are
useful to society.
 Restriction of output leads to obstruction
to wealth creation and thus leads to
unemployment.

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Basic Economic Facts
95% of wealth of the world (cloth, buses, fans,
lamps, roads, electricity, railways, house hold
products etc.) is used by common men or working
people.
 By obstructing creation of wealth (resistance to
productivity improvement) we are actually robbing
the poor and not the rich.


In fact, wealth is irrelevant for the rich people !
It greatly improves the life of common man !!
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Examples of increase in wealth by
better productivity –

Japan, Korea, Thailand, Malaysia,
Indonesia etc. are societies which
promoted productivity

Small scale sector in India
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Examples where productivity stagnated
and employment also stagnated or
declined

Nationalized banks

Large private and public sector

Cotton textile mills
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A case of substantial increase in
productivity without increase in
physical efforts
With application of science to work
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Example – Improvement of Brick
Laying Work by Gilbreth

Old method –
18 motions / brick (including difficult motions of stretching,
bending, squatting, etc.)

Output per Hour –
For Govt. jobs
For Private jobs
UK
35 per hour
47 per hour
USA
80 per hour
120 per hour
Payment – 5$ per day
 Efforts –

At 80 bricks / hour, no. of motions = 80 x 18 = 1440
At 120 bricks / hour, no. of motions = 120 x 18 = 2160
(including difficult motions)
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Bricklaying, through late Nineteenth Century
The brick weighs about five pounds (2.3 kg). How much
is the worker actually raising and lowering every time
he bends over for another brick?
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Bricklaying, through late Nineteenth Century
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The brick
weighs about
five pounds
(2.3 kg). How
much is the
worker actually
raising and
lowering every
time he bends
over for
another brick?
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Top: "The usual method
of providing the
bricklayer with material"
(Gilbreth, Motion Study,
1911. The photo is dated
9/5/1906, believed to be
in the public domain).
"Non-stooping
 Bottom: "Nonscaffold designed so that
uprights are out of the
bricklayer's way
whenever reaching for
brick and mortar at the
same time"

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Example – Improvement of Brick
Laying Work by Gilbreth

Gilbreth’s method –
5 motions / brick (All simple motionsmotions- no bending, squatting,
stretching etc.)

Output per Hour –
375 bricks

Payment –
6.5$ per day

Efforts –
At 375 bricks / hour, no. of motions = 375 x 5 = 1875
(all easy motions)
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Bricklaying, after Frank Gilbreth
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Lesson: waste can, by long habit ("living with it," "working
around it") gets built into a job.
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Example – Improvement of Brick
Laying Work by Gilbreth

With application of science to work
– Increase in output is possible without increase
in efforts

Productivity improvement does not mean
excessive efforts
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Impact of higher productivity on costs
Example - Cost of Laying 1,00,000 Bricks
Old Method
Output
80 bricks / hour
Payment $5 per day
Time
= 1,00,000 / 80
= 1250 hours
= 156 manman-days
Gilbreth’s Method
375 bricks / hour
$6.5 per day
= 1,00,000 / 375
= 266 hours
= 33.3 manman-days
At $ 5 per day
At $ 6.5 per day
Cost
156 x 5 = $ 780
33.3 x 6.5 = $ 216.45
Increase in wages does not mean increase in costs.
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FACTS ABOUT PRODUCTIVITY
IMPROVEMENT
The analysis shows that higher productivity,
1. Leads to higher employment.
2. Does not mean increase in efforts.
3. Leads to higher benefits for the working
class.
4. Benefits mostly the poor and is irrelevant
for the rich people.
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Analysis of Management Systems
Whole hearted cooperation +
Science
As per agreement +
Some flexibility + Science
As per agreement +
No flexibility + Science
As per agreement or less +
Science
Science
As per agreement or less +
No Science
Cooperation
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Analysis of Management Systems

Promotion of joint cooperation for higher
productivity requires
• Education
• Practice
• Conviction out of experience for both
management and employees
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Analysis of Management Systems

This can be achieved by undertaking joint
projects for improving quality and productivity

The most fruitful joint projects are in the area of
– Elimination of wastages using value adding
management
– Several activities are carried out in the
factory.
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