Factors affecting productivity and capacity expansion strategies
Materials need to be readily available in sufficient quantity to supply your production line. Your supplier’s turnaround time on additional orders is also important. With long lead times, you must either schedule ordering or maintain sufficient quantities on hand. The quality of raw materials may be an issue that affects production capacity. One reject per 10,000 parts may not affect production, but one reject per 100 parts may slow down the line as bad parts are removed.
When machinery is used for processes and fabrication, the speed and throughput of the equipment are limiting factors for production capacity. Equipment reliability impacts capacity, as does the effectiveness of your maintenance department. A small business may not have the resources to afford backup machinery, so decisions about spare parts and ordering procedures affect production capacity. Anything that affects the way equipment performs must be factored into capacity decisions. Electrical grid brownouts, for example, may affect work done on desktop computers.
Staffing may be the most effective variable in short-term production capacity management. Adding or reducing staff varies output of a production line. If a machine is capable of 1,000 units per shift, adding staff to run three shifts per day increases capacity to 3,000 units per day. In retail, adding a person to handle only a single function during rush periods, perhaps re-stocking shelves, improves the capacity of the main staff to handle the increased flow of customers.
Warehousing affects capacity both inbound and outbound. Raw materials must be warehoused and similar considerations affect finished goods. Shelf life may also affect capacity. If a product cannot be stored indefinitely, it cannot be produced without considering losses to spoilage. An ideal sales condition would be that production output is sold prior to manufacture, so that shipping occurs for every unit as it is produced, relieving the need for finished goods storage.
An incredible variety of factors affect productivity and the good news is, even small improvements in the process flow can make a big difference. For businesses starting out on this journey, a good entry point is to look at the things that are killing productivity in your organization, and then finding strategies to help eradicate the specific problems you are facing.
Here are some common productivity killers:
- Noise and distraction by emails, phone calls or colleagues
- Constant accessibility
- Unnecessary meetings
- Unstructured and inefficient workflows
- Unclear or unachievable goals
- Lack of automation for routine tasks
- Slow and outdated technology
- Too much workload, with an inability to delegate
- Inadequate breaks or vacation time
For employees, what these productivity killers boil down to is stress. According to the American Institute of Stress, four out of every 10 U.S. workers believe that their job is very or extremely stressful, and almost 30 percent of workers feel burned out as a result. Stress reduces your ability to focus, which in turn reduces productivity. Addressing the factors that cause stress would be a good approach here as a preventive measure.
Now you know the potential causes of low productivity, let’s look at some of the factors that increase productivity, whatever the size of the business.
Train and Upskill Employees
Imagine you are a manufacturing company, thinking of investing in new production equipment. The first thing you would do is conduct a cost-benefit analysis to see if the equipment would give a positive return on investment, or ROI. ROI in this context is typically measured in terms of:
- A reduced cost per unit of output
- Reduced personnel costs through automation
- Fewer stoppages and wastage
- An increased speed of production so you can make more products in less time.
The same principle applies when deciding whether to invest in employee training programs. Every employee has areas of strength and areas of weakness. If you consider the employee who is struggling with a core competency, and therefore has to spend too much time on that aspect of his job, then it’s easy to see how that one area of weakness decreases this employee’s overall productivity, even if he over-delivers in other areas. The solution? Train the employee in his weak area.
Benefits of Employee Training
For managers, discovering the talents and shortcoming of the team offers three key benefits. First, you can make sure that everyone is placed in a role that maximizes his strengths and minimizes his weaknesses. This is the backbone of creating a productive team since everyone is playing to his own strengths.
Second, you can train and upskill workers to reduce the areas of weakness. Wherever skills are gained, there almost inevitably is an increase in employee productivity, because a trained workforce becomes far more efficient at what they do. To use the production analogy, you’ll get more output in less time with fewer stoppages and wastage.
Third, and crucially, investing in training ensures you have a broad base of skills and can continue operating if a key employee departs. This keeps productivity levels high both now and in the future.
Invest in Collaboration Tools
Equipping your team with the right collaboration tools means the work becomes easier, with less duplication of effort, and can be completed in less time. Technology options are as long as they are broad, but tools to consider include:
These apps show how employees are spending their time, where the blockages are and where effort is being wasted. These apps allow you to schedule tasks and allocate them to specific team members so everyone knows what she is responsible for. This ensures that work is not missed or duplicated.
Collaboration and project-management tools
Collaboration apps bring teams together in real time so no one is sitting around waiting for someone else’s input on a project. They can also improve file storage, access and retrieval, which means less time is spent looking for the right files and paperwork.
Emails are invaluable in every workplace, but instant messaging apps such as Slack are faster than email and phone calls, and make it easy for everyone to post a memo or bounce ideas around regardless of where they are located.
Use Technology to Streamline Your Operations
For small businesses in particular, industry-specific technologies can dramatically improve how you run your business. For instance, e-purchasing systems can open up the field of potential suppliers and offer more competitive pricing, as you are no longer restricted to using local merchants. Smart inventory control systems can help you reduce inventory levels and stock-holding costs. It can also speed up customer response time, reducing the time spent resolving customer service problems.
Different businesses will require different types of technology, so it pays to keep abreast of developments in your industry. Attending trade shows is a good way to network, as software suppliers often make their products available to attendees. You could also find out what systems your competitors are using to narrow your search for industry-specific solutions.
Get Out of the Way of Workplace Improvement
It sounds counterproductive, but one of the best ways to increase productivity in the workplace is by backing off and encouraging employees to manage their own time and resources. On the whole, people are self-correcting in their work behaviors. Give them freedom over how, where and even when they work, and you may be surprised by the results.
Research backs up the premise that people are motivated more by autonomy than financial rewards. In 2016, office furniture company Steelcase surveyed more than more than 12,000 office workers in 17 countries about the type of environment they worked in versus their engagement with the job. The results showed a clear relationship between the quality of the workplace environment and the efficiency and productivity of the team.
Specifically, Steelcase found that employees who had more choice and control over their work experience were the most productive. When people are given latitude as a right and not a privilege, they tend to be more committed, perform better and have greater productivity. This is especially the case in job roles where the work is complex or requires creativity.
Review Your Existing Setup
When you are invested in a particular way of doing things, it can be hard to see the problems that are right in front of you. One solution is to look at your workflows from the point of view of a potential investor, by drawing up an accurate map of your production process and information flow. Diagramming the tasks, stages and people involved in your work flows is known as process mapping.
By creating a process map, you can:
- Quickly identify the dependencies between work tasks
- Spot bottlenecks
- Establish boundaries and accountability
- Eliminate waste such as repetition and delays
- Improve communication between people and departments that work on the same process
- Identify where you need more or less labor resources
- Analyze how a process could be improved
- Address problem areas in order of importance.
Process mapping sounds hard but you can take advantage of online tools that can simplify the diagramming process. Some are free forever; others offer a free trial period that’s helpful for small business users. Look for non-coding options with a drag-and-drop interface if you don’t have skills in this area.
Boost Resources Through Outsourcing
At some stage in your growth cycle, you will reach a point where there is more work than your team can comfortably handle, but not enough that you can afford to hire additional permanent members of staff. Outsourcing can be a cost-effective way to make productivity gains in this situation.
Before you get started, analyze what areas are driving costs in your company – is it payroll, accounting, marketing, logistics, IT, something else? You need to know which functions are taking up too much time and increasing your expenses. Start by outsourcing these areas, and you can free up time to focus on core business areas that generate revenue.
Many small business owners don’t tap into outsourcing opportunities because they are worried about losing control of the business, and the expense. These concerns are easily managed by carefully negotiating the scope of work and choosing a partner that is well established in its industry.
Create a Culture of Continuous Improvement
Improving productivity is a continuous process, which means you have to commit to it. Some organizations are notorious for starting an initiative and then abandoning it when it does not yield transformative results. This is a waste of money for all businesses, and especially for small businesses that may not have money to throw at the next big management technique or organizational design trend.
Here are some suggestions for setting up an ongoing feedback plan:
- Continually analyze the competition and the best practices in your industry. This is known as benchmarking. The data you uncover can help you see what competitors are doing better than you (and vice versa), which should form the basis for your productivity improvement strategy.
- Assess your business strengths and weaknesses. You need an objective baseline from which you can redesign processes to improve productivity.
- Create a list of priorities. Taking a step-by-step approach is less disruptive than tackling everything at once.
- Involve employees in the process. Your people will not become more productive if they do not know why they were unproductive in the first place!
- Measure your results. Ideally, this should be done against objective performance indicators so you can see how far you have come.