Examples of Productivity
Unlike defunct web grocers, Netgrocer does not own several warehouses and a fleet of moving vans. It shipped nearly all of its products from a single 120,000 square foot warehouse via Federal Express. (
Year 2002 – SIC 5411)
Explanation: This Company consolidates all its shipments in a single warehouse in order to spread its fixed warehousing costs over as many deliveries as possible. The warehouse is a Capital Input. The Company is able to deliver all customer orders, the Output, with a single Input.
Toyota is probably the most flexible automaker in North America. Five of its seven North American assembly lines build more than one vehicle. The robotic arms in the plants can be quickly programmed to weld in spots needed for different vehicles. (
Year 2003 – SIC 3711)
Explanation: Toyota keeps the utilization rate on its plants high by building more than one vehicle at the plant. This spreads the fixed costs of the plant over more vehicles. Each plant is an asset requiring the Input Capital. The Company achieves high productivity by keeping the number of plants low relative to total customer orders.
From the moment a plane arrives at the gate, each Southwest employee knows the role he has to play to ensure that the plane leaves the gate within the allotted time. (
Year 2004 – SIC 4512)
Explanation: Southwest has invested in substantial employee training to ensure each employee’s job is done efficiently. This enables the Company to achieve higher utilization rates on both its people and its airliners. The Company improves Productivity by reducing the Inputs required for each Output.
Iomega redesigned its product to get rid of 27 parts. (
Year 1996 – SIC 3572)
Explanation: By getting rid of these 27 parts, Iomega eliminated cost Inputs in the product Output and increased its Productivity.
Developers are increasingly using Java. This software allows the developers to write their own software once instead of creating many versions for different types of computers. This saves them time and money while expanding their market. (
Year 1997 – SIC 7372)
Explanation: The developers are reducing the Inputs in their work by using Java to cover multiple platforms. The use of Java enables the developer to write code just once and have it apply to many customer orders, the Output.
Chrysler cut costs on one of its automobiles by eliminating many of the car’s options. The Company standardized a larger engine, cloth seats and a rear window defroster. (
Year 1986 – SIC 3711)
Explanation: Chrysler increased its Productivity and reduced its cost by eliminating People Inputs required to manage options.
Jefferson Pilot Financial placed linked processes near one another. The Company put all steps in the value steam next to one another. This move reduced the silo effect and gave employees more acute awareness that they were part of an integrated whole. (
Year 2003 – SIC 6311)
Explanation: By placing the value-added cells closer together, the Company reduced Inputs by eliminating the inactive people time. The Productivity ratio, Inputs/Outputs, improved.
One retailer saved costs by halving the number of inventory counts taken each week. (
Year 2002 – SIC 5411)
Explanation: This retailer reduced Inputs by reducing the number of inventory counts, increasing its Productivity by reducing the ratio of Inputs/Outputs.
Chrysler saved $100M in annual costs by using recyclable shipping containers. (
Year 1999 – SIC 3711)
Explanation: The Company used the same container over more customer shipments, increasing its Productivity of the Input, purchased containers, used in the Output.
To cut costs, Alaska Airlines got rid of its inefficient 727’s, reducing its fleet to just two types of planes. By doing this, it gained big savings in maintenance, training and parts inventories. (
Year 1997 – SIC 4512)
Explanation: This move enabled Alaska to reduce its Inputs by reducing training time, enabling employees to be doing productive work a greater proportion of the time, and by using its planes more intensively. Productivity improved.