Insights
The Productivity Challenge
Written for Whattheythink.com, April 2007
Today’s global economy places strong emphasis on productivity improvement, especially in the manufacturing sector. In a print-related environment, productivity improvement amounts to a streamlining of processes and activities that are ultimately measured by increased profitability.
In itself, productivity is a calculation that features prominently in strategic planning, since it enables management to formulate performance comparisons and decide on corresponding control action. It is a measure of how well an organization converts resources (things like labor, capital, equipment, materials, and so on) into products or services. Typically productivity is calculated either as output per worker (labor productivity) or else Total Factor Productivity, succinctly defined as the quality of output divided by the cost of all inputs.
Components of Productivity
Major contributors to Total Factor Productivity include technology growth and efficiency. For printing and graphic communications companies, these factors translate into manufacturing aids, as well as MIS, ERP, and CRM systems that drive the print production process and measure efficiencies from job inception to completion, including the capacity for real-time tracking. Lean manufacturing initiatives are also reaping profound positive results for many companies by enabling them to calculate a benchmark level, then monitor incremental improvements in productivity.
In a print-related environment, productivity improvement amounts to a streamlining of processes and activities that are ultimately measured by increased profitability.But in all cases it is the human capital component of productivity that drives the bus. Productivity of your labor force leverages all other assets. Hence it is essential to analyze and hire for the skills you need in order to fulfill customer requirements at a profit to your business. Realizing this goal requires that you first define what levels of staffing your company requires to execute your corporate strategy in senior, intermediate, and entry roles, and how many people you require at each level. Then recruit and hire the best and the brightest at each of those levels to create your “A Team”.
It is equally essential to meet the challenges of updating and training your workforce by periodically reviewing and adjusting job descriptions and implementing training programs to fit your company’s evolving requirements. Another growing challenge is staff replenishment. This year’s business press has seen a lot of talk about the propensity for employees to change jobs for various reasons. One drastic article stated that over 75% of employees are now looking for new jobs, and that companies are already reeling from a demonstrated loss of personnel in 2007. To maintain high levels of productivity, businesses can’t afford to wait long to replace departing employees, and the resources expended to recruit and quantify relevant skills can be extensive. So relying on outside expertise to assist with recruitment and hiring will maximize search efficiencies and minimize productivity interruptions. Because we provide this kind of vital support, PrintLink’s staffing services constitute yet another chief component of productivity for printing companies.
The People Productivity Dilemma
Where staffing is concerned, a productivity dilemma arises from the fact that companies face two fundamentally opposing challenges: one is their immediate need to boost productivity – an initiative that requires constantly streamlining their staff count. The other is succession planning – an initiative broadly defined as ensuring that they have the resources and people to carry out a vision into the future. (For more information on succession planning, please see our January 25, 2007 article in WhatTheyThink’s Expert Row.)
And although both activities are essential to the success of every business, their goals can be diametrically opposed. For instance, although the pending labor shortage makes it critical for a business to groom people to take over from Baby Boomers who are nearing retirement, it also costs that business many man-hours to mentor and train those successors.
Where staffing is concerned, a productivity dilemma arises from the fact that companies face two fundamentally opposing challenges: one is their immediate need to boost productivity...the other is succession planning...The trick lies in balancing both imperatives appropriately. It helps, for instance, if companies take full advantage of various productivity-boosting types of staffing, such as central purchasing roles that demonstrate instant payback in efficiency and cost savings for the salaries paid to purchasing agents. Similarly, a seasoned scheduler can yield instant and measurable payback by maximizing production efficiencies besides meeting customer requirements. And instead of severing ties with key staff members who retire, businesses can reap considerable value by keeping them on retainer to help effect successful staffing transitions.
The Tool Productivity Dilemma
In addition to people, tools are yet another prime factor in productivity. Vendors to the printing industry have made huge demonstrable strides in fulfilling their mandate to provide their customers with “faster, better, cheaper.” But this scenario also creates a further productivity dilemma for companies: while there is a strong case for investing in technology, equipment, and tools to streamline their operations, there is also a considerable cost up front. So even though payback from productivity-enhancing tools may be an undisputed fact, not all companies can afford or rationalize their purchase.
Moreover, while tools of automation undeniably facilitate a profitable workflow, it is people who ultimately deliver the benefit. Consider, for instance, all the current gadgets that make it easy to reduce your staff count—such as robotics, Web-enabled delivery, e-mail, voice mail, and automated phone answering. Before trying to replace staff with these appliances completely, companies would do well to remember that human intervention is still a critical component of every operation these devices were designed to expedite. They are just boxes without people behind them to interface both with customers and one another--to ensure the right tools are researched and purchased, then utilized to yield the most profitable customer experience.
Companies need discerning staff to differentiate among the almost overwhelming selection of MIS, ERP, and CRM tools on the marketSimilarly, companies need discerning staff to differentiate among the almost overwhelming selection of MIS, ERP, and CRM tools on the market that enhance productivity by capturing and integrating information on jobs, materials, and customers. You still need the expertise of your “A Team” to select the right IT system for your operations, implement it, and maximize the benefits of its statistical reports. And—no matter whether your company prints offset, digital, flexo, gravure, or screen--automation may well have streamlined your set-up, workflow, and waste reduction at all stages of pre-press, press, and finishing. But you still need people to make the decisions to trade up to automation, then utilize it to the fullest.
Three Universal Steps to Increase Productivity
Based on research studies, the Conference Board of Canada has identified a measurable productivity gap in both the U.S. and in Canada--or more appropriately stated, a series of productivity gaps afflicting all industries and geographic areas. More constructively, the Board has also identified three key directions that will enable companies in all sectors to improve their productivity performance:
- Addressing competitive pressures. As we have noted above, in a graphic communications and print environment this means creating a unified resource consisting of business tools and people.
- Improving the level and quality of capital intensity. This step refers to the level of machinery and equipment per worker. At PrintLink we continue to emphasize the importance of the balance.
- Supporting and fostering organizational and managerial innovation. To quote the Conference Board of Canada: “Increased capital investment cannot, in and of itself, increase productivity – it creates only the capacity to increase productivity. Such investments must be accompanied by complementary organizational and managerial innovation.”
