Improving Productivity in a Factory

The following points highlight the two main bases of improving productivity in a factory. The bases are: 1. Human Aspect 2. Technological Aspect.

Improving Productivity: Base # 1. Human Aspect:

Of these, the first is relatively complicated because it is based on human nature and the success of this depends upon the willing cooperation between the two wings of production i.e., capital and labour.


The higher the cooperation between capital and labour, the greater the productivity. So every effort should be made to have the willing cooperation between these two wings of production so that improvement in productivity may be made.

Some of the important points of cooperation are listed below:

a. Mutual trust and co-operation between capital and labour.

b. Worker’s participation in management to give them the feeling that they have a voice in the administration of the concern.

c. Introducing rationalisation and automation by taking the workers into confidence and giving them the assurance that they will not be retrenched due to rationalisation and automation.

d. Adopting two way communication service whereby information to and from workers would reach both ends unhampered. Prof. Whitehead has rightly said, “What is feared of senior management is not its lack of good intentions, but its distance.”


e. Giving various incentives to workers for greater productivity by adopting balanced wage structure, an adequate system of recruitment, training, placement and promotion and a comprehensive labour welfare scheme.

f. Adopting suggestion box scheme by the concern and making this scheme open to all employees for making suggestions on work simplification, improvement of working conditions, or any other matter affecting the efficiency of the concern.

Improving Productivity: Base # 2. Technological Aspect:

The various technological aspects to which attention should be given for improving productivity are listed as follows:

(A) Location and Layout of the Factory:


(i) Location of the factory at a place where the total transportation costs, both of finished goods and of raw materials, should be minimum.

(ii) Tailoring the layout of shops and machine tools to suit the flow of operations of processes so that difficulties may not be experienced in the movement of material and labour.

(B) Design:

(i) Ensuring correct production designs so that faulty designs may be discontinued.


(ii) Making research a regular feature to modify the existing minimum cost and optimum quality.

(C) Management:

(i) Defining centralisation, decentralisation and delegation of authority clearly.

(ii) Defining line and staff relationship clearly.

(iii) Simplification and standardisation of products.

(iv) Ensuring the application of techniques of production control.

(v) Applying work study techniques.

(vi) Application of better quality control.

(vii) Application of an efficient system of budgetary control and standard costing.

(viii) Application of the principle of management by exception.

(ix) Ensuring co-ordination among various functions and at various levels of management.

(D) Labour Productivity:

(i) Making job analysis to know the characteristics of a job and fixing a suitable rate keeping in view the characteristics of the job concerned.

(ii) Selecting right man at right time and placing him at the right job following the policy of round peg in round hole and square peg in square hole.

(iii) Arranging training programmes from time to time for giving training to the workers in new methods of production.

(iv) Simplification and standardisation of products and methods of production.

(v) Applying promotion policy and incentive schemes in such a way that an employee gets reward for efficiency and quality’.

(vi) Taking preventive steps (good working conditions and provisions of medical, housing, recreational and educational facilities) to reduce labour turnover.

(E) Material Productivity:

(i) Purchasing right type of materials at right price.

(ii) Fixing minimum and ordering quantity for each material to avoid shortage of material.

(iii) Fixing maximum quantity for each kind of material to avoid overstocking of material

(iv) Introducing various scientific techniques of material control like perpetual inventory system, economic order quantity, ABC analysis, inventory turnover ratio, etc.

(v) Taking steps to reduce the wastage of material.

(vi) Trying for substitute materials if it leads to the improvement in quality of product but at the same time keeps the cost at a reasonable limit.

(F) Machine Productivity:

(i) Ensuring that plant operates at maximum possible capacity.

(ii) Making satisfactory arrangement for repairs and maintenance of machine and tools.

(iii) Introduction of new technology.

(G) Finance:

(i) Adopting capital budgeting to have control on capital expenditure.

(ii) Efficient management of working capital, particularly laying emphasis on management of inventory and receivables.

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