RE: Productivity Improvements

["Prevette, Steven S" <Steven_S_Prevette@rl.gov>]

Dirk van Putten stated:

I have been involved in Lean Manufacturing
since 1992. We were always told that productivity improvements in a defined
system would result in freed resources that can be applied to expanding a
market, gaining market share, or to paying for other costs.

We were always told that productivity improvements would benefit all within
a defined system. 

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I think this gets back to the elusiveness of "productivity" and what does it
mean.  Directly, productivity is output divided by input.  Ratios as a
measure of success can be very dangerous, as you can chose to try to affect
either the numerator or the denominator.  Most management views cost (input)
cutting easier than increasing output.  Companies are still finding that
they can cut inputs and still keep up some level of output.  Thus the 6%
productivity increase.  And if a company cuts too far, and goes out of
business, well, both the input and output drop to zero, and national
"productivity" is not impacted.  Of course, that is all the more job cuts.

I think the discussions of what to do with "excess capacity" in "The Goal"
are worthwhile to ponder.  It takes work, leadership, and vision to apply
excess capacity to something other than layoffs.  You have to be able to
sell the extra products that have been made with the excess capacity.
Laying off the excess capacity is much easier, and has proven to have good
short-term gains, especially on the stock prices.  With such a system and
culture in place, who would have expected all to benefit?


Steve Prevette
Site Technical Authority for Statistical Trending
Safety and Health
Fluor Hanford, A Fluor Global Services Company
ASQ Certified Quality Engineer
steven_s_prevette@rl.gov
509-373-9371