Productivity for Labour Cost

 21/03/2019
By Dr. Shigeyasu Sakamoto
Real Story: Accelerating Profit Growth by Lowering Man*Hour/Product

The CEO of this company contacted a consulting firm in order to get professional consulting support. A MDC consultant looked around the factory and a brief presentation was made concerning productivity improvement. The presentation left a very good impression to board members, but nothing happened to start the consultant support activity for six months.

The CEO contacted the consultant later and asked to start professional support. The reason why he waited for 6 months was that the CEO did not want to make any misunderstanding regarding rationalization for recovering the company’s situation in red and productivity improvement. The CEO took those months for firing employees in order to rebalance company performance. There was no misunderstanding after MDC project started among labour union, employees, middle management.

The project activities lasted for more than five years. As a result of firing employees, the total input man-hours for production decreased by 30 percent. Then after the project was completed, the project activities contributed to man-hours decreasing nearly of 50 percent more. On the other hand, production in money increased more than two times without any additional employee increasing. This result was the effect of MDC project activities, the total productivity reached 562 percent level. The man-hours input decreased and the results absorbing production and sales volume increased.

The CEO proposed to labour union that the company pay special bonus to all employees.

So, What Do You Think?

Top management, labour union and employees are always together for real productivity growth? Are their goals always congruent?

References

1. Manufacturing Cost Policy Deployment(MCPD) and Methods Design Concept(MDC), The Path to Competitiveness,  Alin Posteuca and Shigeyasu Sakamoto, CRC Press, USA, 2017.

2. Beyond World-Class Productivity, Industrial Engineering Practice and Theory, Shigeyasu Sakamoto, Springer, UK, 2010.

3. Design concept for methods engineering in Maynard Industrial Engineering Handbook, the Fourth ed. Hodson, Shigeyasu Sakamoto, McGraw Hill, 1992.

Dr. Shigeyasu Sakamoto is a management consultant in productivity and profitability improvement and president of Productivity Partner Incorporation - Japan. Before his current appointment, Sakamoto was vice president of Maynard MEC AB (Sweden) and vice president of JMAC (Japan).

Dr. Sakamoto is a Fellow at the World Academy of Productivity Science. He received his doctorate degree of policy science from the Graduate School of Doshisha University in Japan and is certified as a P.E. by the Japanese government. He is also certified as: industrial engineer from the European Institute of Industrial Engineers, international MTM, method-time measurement instructor from International MTM Directorate (IMD), a MOST instructor from Maynard Management Institute and Work-Factor and Mento Factor instructor from WOFAC Corporation. He worked for the IMD as the technical coordinator responsible for developing a new system of MTM. Sakamoto is a senior member of the Institute of Industrial Engineers in USA.

Dr. Sakamoto has more than 50 years of management consultant experience and he has very good feedback from his clients - top management - especially regarding the direct contribution to corporate performance with his own developed methodology of MDC, method design concept and work measurement rather than introducing a lot of fashionable topics. Basic industrial engineering technologies are not hackneyed. Effective results come when industrial engineers know how to use the technologies and demonstrate their abilities. This includes going back to the basics.

Dr. Sakamoto insists that the fundamentals for a higher level of Syakaku is only possible to reach through a higher level of profitability based on a higher level of productivity. There are so many arguments and targets for improving productivity for the purpose of competitiveness in the world market. However, poor levels of productivity and profitability only compromise higher corporate dignity, which is Syakaku.