Sources of Low Productivity
by David J. Finneren and Robert A. Jacobson

There is a growing recognition that the performance of a country’s economic system is closely associated with the total productivity of its resources and efforts expended to enhance productivity can have a major positive impact on overall national wealth and poverty levels. From MNC subsidiaries and national business groups to the small, medium and micro-enterprise sectors, including SOEs and the public institutional network, there exists in Indonesia tremendous scope to improve productivity and efficiency. Industry knowledge and experience indicates that some of the greatest gains are achieved from changes in the work environment, encouraging initiative and ingenuity as well as rewarding the workers, supervisors and management.

There are firms which specialize in work with all sorts of different organizations to generate cost-savings and productivity improvements. Many of the company beneficiaries have similar challenges, as can be seen in a recent program developed and delivered during a brief productivity partnership with a typical manufacturing operation – in this case a beverage and bottling plant. A first priority was to conduct an assessment with top management on how their goals were being met and if they felt there was adequate room for improvement. It was learned from the company President and Board members that they felt ‘costs were out of control’ and there was a need for better planning and company-wide training.

With a focus on developing cost-savings by carefully analyzing every activity in each area of the business operation, special teams were provided to re-train and motivate supervisors and plant personnel. Distinct emphasis was also centered on job responsibility, operator skill levels and the number of people required to perform specific tasks.

Upon completion of the analysis, it was clear that the bottling plant was an ideal environment for the installation of a work-management system and close monitoring by a productivity engineering team. After top management made a commitment to change with a focus on productivity improvement, a team set about the task of working closely with supervisors and managers in each area of the plant on major opportunities identified in scheduling, planning and effective utilization of people power on the factory floor.

At the beginning of the productivity improvement project many significant reasons for low productivity were discovered:

• Poorly trained personnel

• Machine breakdown and downtime

• No established standards of performance

• Assignments not planned in advance or communicated clearly

• Lack of individual motivation

• High incidence of production interruption caused by changing priorities

• Poor layout of the work area

• Improper equipment or tools

• Poor work atmosphere and environment

• Pacing – persons or groups doing exactly the assigned amount of work with the last hour or two paced to fill-out the day

• Supervision allowing workers to set their own pace

• Assumption that specialization is desirable thus under estimating and under utilizing flexibility in the workforce

• Uncontrolled use of overtime

• Failure of supervision to get into area specific details of the operation

• Inadequate communication at many levels

• Poor follow-up by upper management

• Supervision not identifying with the goals of the company management

• Inflexibility or lack of creative thought by middle management

• Fear – usually a conflict between the need to be ‘boss’ and a desire to be ‘liked’

What is significant about the above list is how many of these problems are endemic to most manufacturing environments. Several of the areas of concern are most often seen clearly in assembly line configurations where there is a constant need to match incoming inventory with in-process and outgoing production.

During the project, it became possible to develop and install cost-savings and productivity enhancements after the first few weeks of the working partnership through close cooperation with supervisors, the work force and plant management. By identifying bottlenecks and designing solutions together, systems were created and implemented with a guarantee to deliver results. It became feasible to bridge the gaps between low productivity output and the high expectations of top management. In this case, the entire program required only eight months to complete, but the measurable results were perpetually in-place to continuously generate savings and increased productivity benefits.

In many cases there is an even more significant result than bottom-line savings: a heightened sense of urgency on the part of executives and company supervisors to proactively identify and solve problems that are costing time and money.

This is a reflection of the emphasis on teamwork and the added-value from attitude and behavior change that help establish a culture of success and enable improved communication on reporting problems and sharing information.

Imagine for a moment….a proven approach and methodology for productivity improvement being applied across an industry, the entire business community, public sector enterprises, governing institutions….triggering real cost reductions in products and services while lifting income levels and living standards….This is no longer a fantasy as companies and countries realize the necessity to address their unique productivity factors in order to survive in a more globally competitiveness marketplace.

Robert Jacobson is a Senior Vice President at Integrated Control Systems, Inc. (IMPAC). David Finneren is Senior Advisor to the Board. IMPAC is a leading global specialist in productivity and efficiency solutions with performance guarantees and sound investment returns for private and public enterprises (www.impac-systems.com). Mr. Finneren focuses on corporate sustainability initiatives that impact company and national competitiveness
and productivity. He can be reached at finnindo@cbn.net.id

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