Industrial Insight

Improving productivity…. | August 19, 2011

http://www.bloomberg.com/news/2011-08-18/secret-to-productivity-found-at-busy-auto-plant-syverson-levitt-list.html

Secret to Productivity Found at Busy Auto Plant: Syverson, Levitt & List

By Chad Syverson, Steven Levitt and John List Aug 18, 2011 6:54 PM CT

We found clear evidence of learning by doing at the plant: average defects per car fell more than 80 percent during the production year. (The next time you buy a car, consider in which part of the production year it was made.) This pattern is consistent with earlier research documenting big productivity gains from learning.

What’s more interesting is how learning happened. For example, this quality improvement didn’t come from addressing just the most defect-prone processes, even though the most troublesome 20 percent of processes accounted for 90 percent of all defects. Instead, such rates fell about equally across the board.

One of the clearest patterns in the data was that that most “know-how capital” brought by learning wasn’t not bottled up in the plant’s individual workers, but rather incorporated into its physical or organizational capital. Two key pieces of evidence point to this. When the plant’s second shift started several weeks after the first one had begun, the second-shift defect rates were no higher than those being experienced on the first shift, even though most second-shift workers hadn’t yet been on the line that year.

Similarly, while worker absences slightly raised defect rates, their impact was, practically speaking, very small. Something bigger than each worker’s experience was at play. Broader changes, such as altering the layout of tools at the workstations and regrouping the sequence of operations, made the difference. Individual workers” suggestions quickly turned into new institutional practices. Total factor productivity rose as the plant adopted fresh ways of doing things.

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I'm the executive vice president for a steel casting trade association, the Steel Founders' Society of America. I've got a crazy wife, five crazy children, three crazy people that married into the family, and two crazy fun little grandsons.

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