The Productivity Puzzle
The Productivity Puzzle
Since the 2008 financial crisis, UK productivity has virtually flatlined with worker productivity falling to its lowest in two years. According to the Office of National Statistics (ONS), the UK’s productivity growth is still below the pre-crisis rate of 2%, which suggests our ‘Productivity Puzzle’ is far from solved.
Productivity is a measure of the products and services the UK produces, compared to the resources used to produce them. Productivity has a significant impact on a country’s wealth, so it’s alarming to realise ours has been static.
Essentially, there are two ways for the country to produce more, the first being simple; increase the number of hours worked. From data analysis, this appears to be what the UK has been doing, employment has grown to record levels, with the unemployment rate the lowest since the mid-1970s. But we cannot do this forever. Eventually, there will not be enough people or hours in the day. The alternative is to work smarter, not harder. To grow productivity, we must figure out how to produce more with the same labour. As Nobel price-winner economist, Paul Krugman, once said: “Productivity isn’t everything, but in the long run it is almost everything.”
Calculating Takt Time
An excellent way of tracking and boosting productivity is to calculate the Takt Time of your processes. Within any process, Takt Time is the rate of customer demand stated in time and can be thought of as a ‘drum-beat’ to complete your processes to.
The rate at which an end product or service must be produced and delivered in order to satisfy a defined customer demand within a given period of time.
A simple scenario can be considered to explain the concept of Takt Time. If a company manufactures ‘Product A’ and the average demand for that product is 8 every day. With one shift operation, working for 8 hours a day, every hour the company must produce a finished Product A in order to meet the customer demand.
This is obviously a simplistic breakdown of the concept; however, the fundamental calculations remain the same. Takt Time is a vital piece of knowledge for every process and can help to identify bottlenecks that constrain the system. Without it, a company is simply guessing at the amount of resources required to reach the customer demand rate.
The challenge of improving a company’s productivity occurred when Fluere worked closely alongside a leading stairlift manufacturer. Their demand was rapidly growing, and with limited factory space, the company needed to increase productivity to ensure products were always available. After completing a detailed assessment and mapping of the existing product lines, identifying and quantifying wasteful activities, we set about designing a new product flow line. Using our Takt Time calculations for the company’s leading product, Fluere was able to create a continuous, standardised product line to meet customer demand. Changes to the supply of goods and a breakdown of the production steps helped to smooth production and create uninterrupted flow. Focusing on the Takt Time, of just under 17 minutes, we re-allocated the number of operators at specific stations to distribute the work load and create a balanced production line throughout the factory. These changes to the layout and flow resulted in substantial improvements for the stairlift manufacturer. Fluere's solutions generated an outcome of 33% productivity increase in the same factory space, with a 10% reduction in labour. This resulted in an increase of £350,000 earnings before income tax. Overall, our client received a 6:1 return on investment in year one.
Contact us to find out more!
If you want to know more about increasing productivity, as well as improving efficiency, check out our blog on our website! To find out what our team can do for you, and the impact we can have on your business’s productivity, get in touch through our website www.fluere.co.uk or contact us directly on 0113 250 6768
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