Survey shows increased productivity in five countries

The majority of manufacturers in each of five western manufacturing nations reported productivity gains in 2003, with 51.7 percent of U.S. companies polled reporting improvement, according to TBM Consulting Group's 2004 Manufacturing Survey.

The rise in productivity is consistent with the numbers released by the U.S. government and current media coverage from global business reporters.

The TBM survey received more than 1,000 responses from executives of mid- to large-sized manufacturing firms in the U.S., U.K., Germany, Brazil and Mexico.

Technology's impact on productivity gains
In this year’s survey, companies in all five countries report the increased use of technology and human capital to drive productivity improvements.

Of all productivity improvement methodologies, lean manufacturing continues to be the leader in companies surveyed (averaging 40 percent).

Going forward, a majority of companies expect to increase use of lean principles and technology to drive productivity. An average of 63.8 percent of companies expected to focus on human capital to drive improvements, while 59.7 percent expected technology will be used more in the next year to generate productivity.

This implies that more companies are using people-driven improvement processes, such as lean, in conjunction with technology. This trend supports the thesis that innovation in manufacturing processes, as well as product design, will further stimulate competitiveness and growth in the year ahead.

While the level of industrialization varies in all five countries, the data suggests all are committed to a technology-friendly approach in order to expand productivity regardless of commercial sophistication.

This inclination to increase technology hand-in-hand with human capital improvement efforts suggests the manufacturing community understands the synergy that comes from combining creative process simplification with IT technology.

This approach allows companies to eliminate wasteful non-value added steps in manufacturing and business processes while simultaneously automating where appropriate to improve productivity.

Regarding the integration of technology as a productivity tool, it is generally agreed that technology:
• should mirror physical flow and product transactions in plants and support waste elimination and process simplification efforts;
• improves responsiveness, assuring the agility manufacturers require to successfully service their global customers with reduced lead times;
• allows for the flexibility to adapt to customers’ needs so production can meet demand and product can move through the value chain quickly;
• can support efforts to reduce product development time to market for new products and services.

The one-two punch of technology and lean
When asked to specify the productivity/quality improvement program they are currently using, lean received a resounding endorsement in the U.S. and U.K. (71.2 percent), with Brazil coming in at 64.3 percent, Mexico at 62.7 percent, and Germany at 38.2 percent.

The data suggests that lean is driving productivity improvements in each country surveyed, where manufacturers are leveraging it for growth and innovation. As a result of removing waste from their systems, lean companies have become more flexible, closer to their customers and consumer demands, and better prepared to take advantage of the next upturn.

The definitions of productivity
The survey also suggests that despite strong increases in productivity globally, significant differences continue in how companies measure productivity.

 In the U.S., U.K. and Mexico, nearly one-half of all respondents cited “units per man-hour” as the delineation of productivity.

In Germany and Brazil, nearly 60 percent and 70 percent, respectively, favored “value added per employee.”

In last year’s survey, the U.K. participants selected “value added per employee” as the defining trait by almost the same percentage as their alternative 2004 selection.

Companies typically measure productivity in different ways within manufacturing and office process vs. globally across the enterprise.

Units per man-hour tends to be an excellent process measure at ground level. However, companies trying to improve overall organizational productivity tend to use sales/employee or value added per employee as a global measure of productivity.

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