Productivity: Faster, Better, and Cheaper
Productivity is a much used word these days. The media has recently highlighted that our output per hour in the UK is over 30% lower than in the US, Germany and France. Over time new technology and better skills tends to improve productivity, but since 2007 this gap between us and our principle foreign competitors has widened. Now countries like Spain and Italy have not only caught us up but now show better productivity.
I like good simple statements and Lord Jim O’Neill the new commercial secretary at the UK Treasury said “for a country to grow its output it must either improve its productivity, or increase its labour force”.
I have thought about this and he is totally correct! I will leave the thorny issue of immigration to another day and concentrate on productivity.
So what can we as small business managers do to improve productivity in the operation of our businesses? Please remember we must improve against a background of the new “working wage” as set out in the July 2015 budget that looks to increase the minimum wage by over 10% in year 1 and then by 6% in year 2 and a further 6% in year 3. I could go into detail about training, automation and throughput, but productivity is also derived from the culture of a company
My modus operandi to address this issue is three part:
- Establish what is routine, and then do it excellently
- Allow and encourage operators the time and opportunity to self improve
- Allow and encourage business managers the time and opportunity to think strategically about the business.
We at Westaways have made good use of the Manufacturing Advisory Service (now part of the Business Growth Service). MAS is a government-backed service offering support to businesses with potential to improve and grow. They helped set up ways we could monitor and then plan to improve our productivity. Our reference is kg of sausages per man hour.
Productivity can be measured in many ways, it can be Gross Profit per line hour, it might be annual sales turnover per employee. Whatever your choice I would urge that the first step is to measure and chart performance with a realistic target for improvement, if you do not do this then someone somewhere else will compete for your market share and in doing so exert pressure on your business.
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