Development of a plant-wide productivity management system in an integrated steel strip plant

The purposes of this research were to:- • develop an integrated, conceptual model of the productivity process, • apply a simplified version of it to selected aspects of an Australian integrated steel strip manufacturing plant, and • develop recommendations for controlling and improving the productivity of the plant. Following an extensive literature search, a full theoretical model of productivity was developed, involving the following key concepts and theories:- • Total Factor Productivity, • Activity Factor, • Systems Approach, • Action Research, • Total Quality Management, • Change Theory, • Human Performance, and • Multiple Regression Analysis. A simplified model of productivity was then developed and tested for both managerial acceptance and perceived usefulness, in the selected manufacturing plant. The research has developed a conceptual framework for activity based analysis which was critical to productivity measurement. This framework was based on the "activity factor" concept — originally proposed by Cooper and Kaplan (1988). This concept stresses that it is not products, but "activities" which cause cost, and it is products which consume activities. An "activity factor" approach has been rarely included and documented in the productivity measurement literature. This study documents the gaps in our knowledge about this important issue related to productivity. Hence, the research question proposed is as follows: Does an integrated "total factor" productivity management system incorporating the "activity factor" concept enhance productivity in an integrated steel strip manufacturing plant ? The overall research design was based on an action research approach during which the researcher worked with management groups within the selected integrated steel strip manufacturing plant. This experience provided insights that helped to identify key management control variables and formulate research hypotheses. A regression analysis was then used to explore the relationships of the key variables to an independent measure of productivity determine sensitivity coefficients. The regression analysis explained approximately 66% of variance of the productivity variable. Thus the study provided evidence that the activity based approach can successfully identify key management control variables for productivity. The data also supported a "total quality" approach to improving productivity, namely improvement comes from small, continuous steps over a wide range of relevant factors. The large manufacturing organization studied has many characteristics in common with other industrial organizations. Thus, the findings and conclusions of this study may be pertinent not only to similar firms, but also to other manufacturing industries. The particular contributions of this research are considered to be:- • a further development in productivity modelling, • new knowledge concerning the improvement of productivity in the Australian manufacturing environment.