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A Plant Productivity Measure for High-Tech Manufacturing

By
Paul S. Adler

Downloaded from http://www-bcf.usc.edu/~padler/

A Plant Productivity Measure

for "High-Tech"

Manufacturing
PAULS. ADLER Industrial Engineering and Engineering
Management

Department

Stanford University
Stanford, California 94305-4024

A total productivity
action

research

measure

wasdeveloped

analysis

productivity

project

as part of an
for a manufac

turer of computer peripheral devices. The productivity meas
ure had to be appropriate for a broad range of automation
levels, yet resolve the long-standing methodological
problems
of

index

in a manner

construction

to management.

intuitive

to institutionalize
in attempting
The difficultiesencountered
the measure point to the need for a compromise with cost
accounting.
research
Our

velop

ductivity
criteria:
the use
meet

objective

a measure

which

of

was
total

we

to de
plant

pro

three

would
satisfy
that it express
the efficiency
of
of all key plant resources;
that it
for ri
requirements
that the manager
find it simple,
in a varietyof set
and useful

the academic's

gor; and
practical,

tings,
including
The methodology

ones.
highly automated
used was action re

the project was a collaborative
ef
fort of a university
and a major US-based
manufacturer
whom
computer
systems
search:

Copyright ? 1987,The Institute of Management Sciences
0091-2102/87/1706/0075$01.25
This paper was refereed.

17:INTERFACES 6 November-December

shall call "Hi-Tech."

measures
(of which
productivity
labor productivity
is the most
common)
are powerful
at spe
directed
tools when
Partial

cific problems
[M?ndel 1983], but are
often misleading
when
used to assess
in auto
overall efficiency ?
especially
mated
[Eilon, Gold, and Soesan
settings

1976].
The

effort

to establishmeasures

ductivity
[1955] made
forts

overall plant pro
not new. Davis
is

one of the first systematic

to popularize

company

?
INDUSTRIES ELECTRIC/ELECTRONIC
AUTOMATEDMANUFACTURING

1987 (pp. 75-85)

productivity

ef

ADLER
and Kendrick

measures,

been

technol
by its product
and its marketing
ogy leadership
sophisti
in the
turbulence
cation, butincreasing

and Creamer's

[1965] still serves as a useful guide.
use of
for the managerial
Frameworks

work

overall

have

measurement
productivity
a
reached
high level of synthesis
[Hayes 1982].
the research
But while
at a plant

measures

use of overall

sys
(see the survey in
tematically
explored
Sumanth
[1984]), their practical use has
and
Indeed, Sumanth
barelyprogressed.
Einspruch
or "total"

that "total

was

the stability
threatening
and Japanese
relationships,
were closing the
technological

marketplace
of its client

level has been

[1980] found

guaranteed

factor"

were
measures
productivity
four of the 73 manufactur
by only
and operations
functions
ing
they
in 90 large companies.
surveyed

competitors
oftheir market.
gap in broad segments
In response, Hi-Tech
elevated manufac
to
and productivity
turing competence
In the past, manufacturing
top priority.
had not been
most

considered

of the resources

to meet

for
responsible
it used;
its task was
and reduce

schedules

production

used

reason

The

for the slow diffusion

these measures

seems

Partialproductivity
are

of

to be that they are
and therefore vulner

(1) too sophisticated
able to subversion
by threatened man
agers, (2) too simple and therefore
unreliable

in the presence

of such

were

com

but analytically
complex phenomena
or (3) too diffi
product mix changes,
cult to implement
for lack of available

as

The

the proper

balance

between

a...