Managing Productivity

i. Conception and Misconception about Productivity

There are some misconceptions about the term productivity. Some feels that productivity is confined to factories and manufacturing processes only. As a matter of fact, productivity pervades all spheres of activities and as such the productivity concepts can be successfully applied to administration, storage, distribution, public service, education and training etc. Another misconception about productivity is somebody else, rather than me is responsible for productivity. Management considers workers to be responsible, workers blame management and both hold the government responsible for low productivity. As a matter of fact the productivity is everybody’s concern. It is a way of life. Other type of misconception is related to consideration of productivity as hard and fast human work. In real term it is for the ease of human work to reduce fatigue, errors, accidents and ill health.People do have fear psychology of retrenchment or redundancy from productivity.But in real term increased productivity makes availability of better quality products at cheaper prices to increase market demand and so generate employment opportunities.

Productivity is considered as prosperity, which means an outcome of desirable and favorable attributes. We know that organizations exist for carrying out required processes to fulfill objectives by the way of involving various kinds of resources.Similarly, milk organizations exist for procurement and / or processing and marketing of milk and milk products to enhance socio-economic condition of people or profits in commercial organization. The universal definition of productivity is the ratio between output and input; the higher the ratio, the better. It is a measurement of how efficiently inputs or resources are converted into useful outputs, products,

or results. Another way of looking at it is “ratio of result and resources”.

Mathematically, raising output, decreasing input, or both can increase this ratio.But in terms of operating or manufacturing decisions, what you really change is:1) the amount of input; and 2) the process that converts input to output. Inputs would be decreased in practice only by changing process in terms of equipments,technology and management. Only after the process is improved, the input requirement eventually reduced or out put increased. In this way, productivity calls for finding ways of doing things smarter and better. In conventional terms,productivity means maximized outcome by utilizing available resources; whereas in modern term, the productivity means getting the required output with minimum input. The modern term is inclined towards obtaining output of required level to satisfy market, whereas the conventional term talks of rather conversion efficiency.

ii. Factor Affecting Productivity

These factors could be broadly classified into two categories:

a) External factors and b) internal factors

External factors includes infrastructure, communication, government policies, social and economical condition etc; whereas internal factors are plant and equipments,raw materials, energy, products, technology, human resource, management practice,work methods, systems and procedures etc. Higher productivity and therefore, the efficiency of enterprise is primarily concerned with the internal factors.In achieving better productivity, two things are very important. One is doing right things and second is doing things rightly. First indicates planning and working to achieve meaningful organizational objectives, whereas later one adopting appropriate  means and methodology.

iii. Productivity Examples in Dairy Industry

Let us look at various examples of productivity in dairy industry. Some of these are given below.

a) Milk Procurement: Procurement of milk is one of the foremost & important work in dairy industry. The productivity in procurement work would be in terms of low procurement cost, maximized return to milk suppliers, low microbial count in milk, less time gap between milking and pouring, pouring and chilling and, chilling and final processing. Other productivity aspects are milk yield of animals, dry period of milch animals, quality of milk in terms of solids content,acidity of milk, salt balance and absence of any adulterant or hazardous substances etc In concise term, productivity of procurement could be measured as cost of milk procurement, quality of milk reaching to dairy, yield per collection center or per animal etc. Since raw milk cost is almost 80% of the total processing and manufacturing cost, hence, these factors has a great role in deciding the product quality and cost and so, the profit out of them and therefore, in cooperative organizations, overall reflection would be in the form of total payment to milk producers’ against the milk supplies.

b) Manufacturing and Production: Manufacturing or Production processes, inreality, convert or transform raw inputs into value added products. Therefore,improvement in the productivity would mean optimizing use of various resources or minimizing losses. In industry, main resources for production are manpower,money, machinery and materials i.e four “M’. Controlling losses optimizes milk and ingredients consumption, whereas resource like manpower is improved by better utilization of their capabilities and skills. Other areas of productivity that need serious consideration happen to be the quality of utilities (e.g. refrigeration,steam, water, electrical and air) at the least expense. The paramount importance of utilities has been because of dairy process operations need required quality of these utilities for achieving desired quality of milk and milk products. For example, productivity of refrigeration system would be its coefficient of performance, or TR utilized or temperatures of chilled water or cold spaces.For heating processes, the quality of steam and fuel economy may be considered important. Similarly, power failure, power factor and units (KWHr) consumed per liter milk will be productivity consideration in electricity supply system. Quality,pressure and volume or flow rate of water and air will be another examples of productivity.

c) Packing and Distribution: Packing and distribution has productivity in terms of reduced packing loss, less damage of packages, use of less packing material,satisfactory content and labeling, proper design of packs, timely supplies to consumers and reduction in transportation cost etc.

iv. Optimization of Resources

As discussed above, the productivity has its situation dependent criteria for measurement. However in all situations, there is a need of optimization for achieving good productivity. In dairy industry productivity is measured and monitored in the following two ways:

a) Operation Efficiency: One of the important parameter of monitoring resource utilization is by way of measuring efficiencies of operations where they are consumed. The efficiency is indeed the utilization of resource in percent. In this manner we can see that higher the utilization efficiency or recovery of input resource, the less will be losses and the better efficiency of the operation. For example raw milk of X quantity is passed through pasteurizer, which gives XX1 quantity of processed milk in the milk tank. Then (X-X1)* 100 divided by X will the milk recovery in this process. Similarly, pasteurizer has regeneration efficiency of heating and chilling. Extent of heat recovery from the hot milk will be the pasteurizer regeneration efficiency for heating, whereas extent of chilling of hot milk in percentage will be the regeneration efficiency of pasteurizer for chilling. In this category following efficiencies can be measured and monitored in dairy industry:

i) Handling loss in each unit process, each shift and in each plant

ii) Fuel economy of electricity generator, steam boilers, transport vehicles etc.

iii) Water, steam, electricity, air and refrigeration utilization in processes

iv) Yield of products in term of use of milk or ingredients,

v) Use of human resource per shift or per batch or per day production.

b) Utilization Efficiency of Equipments: This is normally measured in terms of capacity utilization or throughput from the equipments. Better the utilization in comparison to the rated capabilities of equipment; more quantum will be handled  in the same working time. The same hold true for procurement and transportation vehicle. Some times reduced capacity equipment becomes bottleneck in production process, hence proper care will increase the output.

v. Designing of Milk Procurement and Marketing Routes:

i) Some Basic Facts of Milk and Milk Shed Areas:

There are some basic issues in the milk business, which emphasis an care while selecting and designing milk procurement routes. These basic issues are:

a) Milk is available at ambient temperature in the milk-shed area, whereas temperature of market milk which is packed at 4 to 5 degree centigrate can rise due to high atmospheric temperature.

b) In very rare cases ambient temperature in our country is below 10 degree centigrade. For most of the period, it remains 30 degree centigrade or more.

c) Milk is very favorable medium for microbial growth. The growth rate is very high above the critical temperature of 100 C.

d) Fresh milk contains bacteria inhibitory chemicals, which remains for 3 hours and if milk is chilled within this period there is not much adverse effect on milk quality.

e) If milk is not chilled and stored at low temperature within 3 to 4 hours, the microbial growth produces high acidity, making milk sour.In Indian condition, the milk collection per center is very low because of poor yield and less number of animals. To get sufficient quantity of milk for justifying procurement vehicle capacity, the required route length is more. Therefore, looking

at the influencing factors like permissible route length, village side connectivity and road conditions and time required for unloading of empty cans / loading of filled cans, one can design an optimum route that permits procurement of milk from number of collection points within a safe periods without adversely affecting the initial milk quality.

ii) Economical Route Design and Some Barriers

The economical route design has a great impact on the progress of milk-shed and economy of procurement cost. The milk costs approximately 75 to 80% of the manufacturing cost. It consists of price of milk, commission to collection centers / agent, transportation cost and cost of quality loss. Therefore, increase in the cost of milk on account of quality deterioration or less capacity utilization of vehicle has effect on the total cost and so the marketability and financial viability of organization.

iii) Mode of Transport in Milk Collection

Following modes of transport are generally used for collection of raw milk from collection centers to processing plant.

Mode of Transport

iv) Route Design Methodology

Quantum of milk varies greatly from season to season. If right decision is not taken with respect to size or capacity of vehicle, then during lean procurement season, milk procurement cost shall go up. Therefore, let us look at various considerations and methodology for designing milk procurement and distribution route. Similar types of information are also required for designing market distribution routes. Following information need to be gathered for initiating milk route design:

i) Details of milk shed with respect to number of collection centers, milk collection of each center throughout the year. In case of distribution details on retails network is required.

ii) Geographical map of the milk shed or market area, indicating road, river, railways connectivity.

iii) Distance map of collection centers or retail point.

iv) Availability of type of transport vehicle with capacity in the nearby area.Considering above facts, optimized route design can be done manually or using computer programming for accurate and quick decision-making. Following such models are in use:

1) Special computer Algorithm for vehicle Scheduling model by Dentzjg and Ramsen(1959)

2) Traveling Salesman Model (1964)

3) Sequential programming Model by Schruber and Chiften (1968)

4) Simulation Technique by Neitzk (1974)

5) Vehicle Scheduling Model based on saving Concept by Kalra (1983)

6) Milk Route Optimization System by NDDB (1983)

These models optimize the route length of a vehicle subject to constraints on capacity of vehicle and total time taken from first pick up point to the final destination. Studies have shown reduction in the transportation cost from 6 to 40% by employing these models. Geographical Information System (GIS), which is fully computer based is used for timely capturing of all the relevant data using digital maps and be helpful in taking decision on route design.If computer and heuristics are not available or capability to optimally utilize linear programming is not feasible, then following simpler methods can be used to arrive at the optimal route;

Step-1 Consider a route with all possible collection point

Step-2 Find out capacity of vehicle

Step-3 Trace distance of collection point from processing /chilling plant to nearest collection point and then between two consecutive collection centers on the road side.

Step 4 Decide earliest lifting of milk from the first point.

Step-5 Consider total procurement time from the 1st lifting point to final destination between 3 to 4 hours.

Step-6 Provide enough time for unloading and loading of cans.

Step-7 Find out number of cans of each society.

Step-8 Find out various possibility that allows maximum vehicle capacity utilization in less than optimum desired time.