Productivity?ByRaymond D. Matkowsky
Every morning I scan and read new productivity articles that are published the day before. This way I feel I keep up with the latest developments and thinking in the sector. I am sorry to say that my belief is that many “experts” don’t even know what productivity is.
What Is Productivity?
In its purest form, the definition of productivity is the amount of value that an hour’s labor produces. In the case of a country, it is usually the amount of Gross Domestic Product (GDP) produced within an hour. With a business, it is the amount of cash flow and profit made within an hour.
If you could do something faster, it is not necessarily more productive just faster. Unfortunately, many feel that faster is more productive. It is like “hitting the ground running”, but do you know where you are running to? Faster does not produce value. Doing things faster does not necessarily make you more productive.
The productivity of each country, each industry, and companies within each industry will be different. They require different solutions to their productivity problems. The type of enterprises within a country will make a difference in its productivity. No two companies are identical. In other words there is no “one size fits all” when it comes to productivity advancements. Productivity improvements must be handled on an individual basis. It is necessary to start small and build from there when improving productivity.
Productivity = Profit
Some countries and industries are blessed with natural resources that are highly profitable. But, most likely your profit is locked in to what you produce. For example, an hour spent mining diamonds produces more value than mining coal even though the techniques are similar. However, these situations only set the economic baselines. You improve your productivity from these baselines. In simpler words, you improve your product’s value. The greater the improvement, the more you profit. Is there something that you could do to improve your productivity? Most likely the answer is yes. However, sometimes the answer is not obvious. You must look for it.
For example, many companies blend products in kettles that hold 1000 liters batches. But, can the kettle actually hold 1100 liters comfortably? Assuming it can and you run two shifts a day, five days a week that is an extra 1000 liters produced in a week. You have improved your productivity by 10% with minimum additional cost.
One technique I became familiar with is to add an active ingredient to a tanker load. The sloshing that occurs during the tanker’s travel mixes the ingredient thoroughly. Gasoline terminals have been using this technique to make specialized blends for ages. Can your operation expand on this? Can this technique be utilized with multiple ingredients saving on blending time?
I am not hawking any techniques, just pointing out there are many ways to improve productivity hiding in the open. Some of these techniques may be oddball. The question is do they work? You can only try.
No one knows your operation better than you. You are the only one that can provide an answer. You do not want to overlook the odd suggestions. By no means do you want to do anything that cheapens your product. If you think that no one will notice, think again.
Artificial Intelligence
There has been much talk about Artificial Intelligence (AI) improving everything under the sun including productivity. Let me state some facts. Many people feel, including some on Wall Street, that AI is on a bubble about to burst (remember the tech bubble). The Massachusetts Institute of Technology warned that the vast majority of AI investments are yielding zero return. Just 5% of a 150 business leaders and 350 employees surveyed have indicated that only a few are extracting any value at all while most have no measurable profit or loss impact.
In my opinion, AI has been over hyped. It is a technology that is nowhere ready for adoption. I am not anti-AI. I believe it will be boon to mankind when it is ready. It is not ready now. When will it be ready? Judging from past innovation timelines, I would say that in about twenty to thirty years from now. I would not count on it solving your productivity problems immediately.
Creating More Value
To advance your productivity, you need to create more value in your existing product line. You can do this by cutting labor costs (not cutting labor), cost of packaging, reduced shipping costs etc. The list is practically endless.
If you have any comments, let us know. Email me at rdm@datastats.com. We will try to print it in our next newsletter.
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