Modelling of Input Resources in Manufacturing Industries for Productivity Improvement

Mbulu, D. O. and Engr. (Dr.) Remy Uche

Federal University of Technology, Owerri Imo State. Nigeria.

Mechanical Engineering Department (IPE OPTION). Owerri Imo State. Nigeria.

*Corresponding Author Email: desmondmbulu@yahoo.com

ABSTRACT:

This work examines the input resources of every unit in the company as an index of partial productivity. The model developed evaluates the departmental input in relation to the total output of the company per month with specific interest on Nigerian manufacturing industries. The model was validated with data obtained from some selected manufacturing industries. In each company, five critical departments were studied. Relevant data were taken from the respective industries to test the model. This research work will serve as a guide in improving productivity of manufacturing industries visa-vie the recommendation given.

KEYWORDS:

INTRODUCTION:

Modelling of input resources in manufacturing industries for productivity improvement is a new concept in productivity study. This approach considers quantitative relationship between what is being produced by the company and the input from respective departments. In other words, it is the total output resources of a company in relation to the departmental input resources.

From the foregoing, the new index of productivity can be defined as the ratio of total output to the input which is termed as departmental productivity. Therefore, the departmental productivity is the ratio of (the real value of) output to the input of every department in the company.

Though some authors have shown that productivity is a complex study, others have developed policies which have tremendously improved manufacturing performance in industries. The economic miracles experienced especially among the newly industrializing countries (NICs) of East and South-east Asia in the last half century tremendously benefited from policies that actively promoted the efficiency of manufacturing enterprises. (Chen and Tang, 1987; Mathew and Cho, 2000; Lall and Urata, 2003; Amsden and Chu, 2004). Sustained improvement in firm performance was a major tool in achieving the objectives of the strategy of export orientation as an economic policy that greatly transformed the NICs. While most countries in sub-Saharan Africa did not go for export orientation early enough, the import substitution industrialization strategy is believed to have resulted in inefficient firms that aggravated de-industrialization especially in the decades of the 1980s and 1990s (Jalilian et al, 2000). Though industrial production in Nigeria stalled for many years with the annual average capacity utilization of manufacturing firms not exceeding 50%, it is noteworthy that there is a renewed interest in promoting industrial development. Increasing the pace of industrialization is the core of Nigeria’s current economic vision of making Nigeria one of the 20 largest economies by the year 2020. The vision emphasizes the importance of growing the private sector not only for the purpose of satisfying local demand but also to make the economy internationally competitive. The Nigerian manufacturing sector is a major part of the private sector, and as a first step to realizing the economic vision’s objectives, there should be a clear understanding of the current state of the manufacturing firms and the determinants of their efficiencies.

Productivity improvement is an extremely complex and vital. Productivity must include a quality dimension, for if a firm increases quantity at the cost of lower quality, it gains little, if any, overall productivity. To improve the quantity and quality dimensions of productivity, each organization will most likely have to merge many tools, techniques, and methods forming a unique improvement program of its own. Evaluating the productivity improvement program and ensuring its eventual success depends upon the ability to measure both productivity and quality in service as well as manufacturing functions. Thus, measurement is a basis, a prerequisite for improvement.

Perhaps cognizant of the President Goodluck Jonathan ongoing reform, several policy articulations in Nigeria before now have placed productivity concerns at their centre. However, except for the setting up of institutions like the National Productivity Centre, efforts in this regard have usually not exceeded the level of rhetoric. Indeed, at some point, official verbalizations have tended to accord attention to the mobilization of resources in preference to the efficient use of the available local materials. Nevertheless, productivity issues have received greater emphasis since the adoption of the economic reform programme with the move towards a greater market economy.

These reform efforts explicitly emphasize the need to improve the competitive performance of industries. As a corollary, adjustment at the enterprise or industry level can be conceptualized as the process of reallocating resources in accordance with changing conditions and improving cost competition through an efficient productivity model.

RESULTS AND DISCUSSION

In this chapter we will present and analyse the result obtained from the questionnaire sent out to various companies and oral conversation had with various authorities of the companies.

Table 1: KORAMA CLOVER IND. LTD MONTHLY PRODUCTION FOR YEAR 2010

Input/Output per month	Jan.	Feb.	Mar.	Apr.	May	June
Qty of production	36	50	45	60	55	42
Cost of raw materials	6M	6.1M	6M	6.2M	6.1M	6M
Cost of inventory	5000	5000	5000	5000	5000	5000
Administration cost (advertising, marketing, stationeries etc).	60,000	61,000	60,000	60,000	55,000	55,000
Labour cost (salaries/ wages)	1.2M	1.2M	1.2M	1.2M	1.2M	1.2M
Maintenance cost Equipment and vehicle)	340,000	500,000	500,000	550,000	300,000	250,000
Transportation or Distribution cost	150,000	150,000	150,000	200,000	160,000	158,000
Miscellaneous cost (benefits, welfare etc.)	90,000	50,000	60,000	70,000	30,000	20,000
Energy consumption (fuel, electricity, etc.)	1.5M	1.2M	1.3M	1.5M	1.5M	1.5M
Product cost (Output)	10.08M	10150,000	10,100,000	10,900,000	10,280,000	10,120,000

Table 1 Continued

Input/Output per month	July	Aug.	Sept.	Oct.	Nov.	Dec.
Qty of production	38	50	40	90	80	100
Cost of raw materials	6M	6.1M	6M	9M	8M	10M
Cost of inventory	5000	5000	5000	5000	5000	5000
Administration cost (advertising, marketing, stationeries etc).	50,000	50,000	55,000	60,000	60,000	60,000
Labour cost (salaries/ wages)	1.2M	1.2M	1.2M	1.2M	1.2M	1.2M
Maintenance cost Equipment and vehicle)	300,000	200,000	540,000	500,000	550,000	600,000
Transportation or Distribution cost	150,000	150,000	150,000	300,000	300,000	300,000
Miscellaneous cost (benefits, welfare etc.)	30,000	35,000	20,000	30,000	20,000	200,000
Energy consumption (fuel, electricity, etc.)	1.5M	1.5M	1.5M	1.6M	1.7M	1.8M
Product cost (Output)	10,100,000	10,150,000	10,200,000	23,000,000	20,000,000	25,000,000

M = Million

Table 2: DEPARTMENTAL INPUTS (PER MONTH)

	1	2	3	4	5	6
Names of Dept.	Prod.	Engrg.	Accounts	Admin.	Marketing
No of skilled workers	5	5	6	8	5
No of unskilled workers	40	-	-	1	-
Salaries/wages per month	416,000	150,000	204,000	280,000	150,000
Total expenses per month excluding salaries	120,000	300,000	30,000	100,000	100,000

CALCULATION BASE ON PROPOSED MODEL

CONCLUSION AND RECOMMENDATION:

Although a good productivity scheme might be in place in an enterprise, without the necessary wherewithal and a good government, not much can be achieved. Some steps are necessary to enable business enterprises enhance their productivity level and thus increase the general standard of living of Nigerians as a whole. Government should legislate that business enterprises should make their annual productivity reports published along with their financial report (accounts). This will discourage profiteering through unreasonable profit margins. It will also force businesses to be productivity conscious, and also have no option but to in stall effective productivity schemes. Example; (i) creating awareness about productivity, (ii) productivity measurement ie input and output measures, (iii) productivity evaluation, (iv) productivity planning, (v) productivity improvement, (vi) productivity control reporting; etc.

Government should also study the effects of its polices before implementation. Many policies militate against the very basic objectives of government. This is why it not unusual for government to reverse itself with respect to a particular policy three or four times within a year or two. This creates instability and encourages speculations. It also discourages foreign investments which are badly needed to salvage the economy. It is also important that government should categorise businesses and install tariff and tax structures that will aid the rapid development of the priority sectors (categories).

Government should also review the area of interest rates to enable businesses have more access to finance. The present interest rate is too steep and it discourages investments in the productive areas of the economy which are required for development.

Presently, there is an acute shortage of appropriate technical and management manpower to service the many industries in the country. The educational curriculum of primary, secondary and tertiary institutions need further review. Emphases must be placed on science-related subjects. Even though the new educational system at the lower levels encourage the development of a science culture, more need to be done in the areas of implementation, as equipment required by many of the secondary schools remain uninstalled. Also inadequate supply of well trained teachers is a problem. We must bear in mind that only a literate workforce can make giant productivity increase possible.

There is a need for a change in the thinking of management personnel. What matters is not profit at all cost but profit through productivity. There is need to emphasize the systematic approach to the problems resolution and also encourage long range planning. Many businesses have been caught unaware because they are satisfied with their present performance, forgetting about planning for the future.

Management must carry their workforce along with them. There is value in using the experience, skills and abilities of workers to achieve higher productivities. This is the experience of countries such as Japan, Korea, etc. Nigerians case should not be different. Entrepreneurs need to invest more in the training of their workers, as this is the best way of achieving better results.

Some research surveys show that many of Nigerians leading companies are not necessarily reaping profits through management competence but through large profit margins. This trend should rather be reversed and productivity accorded the priority it deserves if an improved living condition of the citizenry is to be enhanced.

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Received on 09.03.2015 Accepted on 28.04.2015

Int. J. Tech. 5(1): Jan.-June 2015; Page 30-40