Convenience

Improving Productivity
How does a business or industry improve its productivity? Numerous specific sugges-
tions made by experts generally fall into two broad categories: improving operations
and increasing employee involvement.
Improving Operations
One way that firms can improve operations is by spending
more on research and development (R&D). R&D spending helps identify new products,
new uses for existing products, and new methods for making products. Each of these
contributes to productivity. For example, Bausch & Lomb almost missed the boat on
extended-wear contact lenses because the company had neglected R&D. When it became
150
160
170
1970
1975
1980
Year
1985
1990
1995
2000
2005
2010
140
130
120
110
70
0
100
90
80
Productivity Growth*
Total
Service
Manufacturing
* Nonfarm
Index: 1982 = 100
F I G U R E 1 5 . 4
Manufacturing and Service Productivity Growth Trends
Both manufacturing productivity and service productivity in the United States
continue to grow, although manufacturing productivity is growing at a faster pace.
Total productivity, therefore, also continues to grow.
Source: U.S. Bureau of Labor Statistics.
Chapter 15:
Managing Operations, Quality, and Productivity
4 8 1
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apparent that its major competitors were almost a year ahead of Bausch & Lomb in
developing the new lenses, management made R&D a top-priority concern. As a result,
the company made several scientific breakthroughs, shortened the time needed to intro-
duce new products, and greatly enhanced both total sales and profits—and all with a
smaller workforce than the company used to employ. Even though other countries are
greatly increasing their R&D spending, the United States continues to be the world
leader in this area.
Another way that firms can boost productivity through operations is by reassessing
and revamping their transformation facilities. We noted earlier how one of GE’s mod-
ernized plants does a better job than six antiquated ones. Just building a new factory is
no guarantee of success, but Ford, Caterpillar, Whirlpool, and many other businesses
have achieved dramatic productivity gains by revamping their production facilities. Facil-
ities refinements are not limited to manufacturers. Most McDonald’s restaurants now
have drive-through windows, and many have moved soft-drink dispensers out to the res-
taurant floor so that customers can get their own drinks. Each of these moves is an
attempt to increase the speed with which customers can be served, and thus to increase
productivity.