Shift from Human Productivity to Resource Productivity

Published by MBA Skool Team, Published on February 01, 2017

Earlier human resources were the sole biggest factor for companies. But with changing times, companies are shifting focus from human productivity to resource productivity. Ethical Manufacturing deals with the Social and environmental issues in production system. It is considered as a subset to Resource productivity. The Resource Productivity directly leads to Lean manufacturing and is correlated to Green Manufacturing, and is considered to be one step ahead of human productivity.

Image: pixabay

The major areas that ethical manufacturing deals with can be clubbed together under the following heads:

• New Production techniques

• Sustainability

• Renewable substitutes

• Government policies

• Environment degradation

• Labor training and its proper employment

• Quality up- gradation and

• Continuous approach towards Green and Lean manufacturing system

The Detailed explanation follows:

New Production techniques: The old practices are being modernized by using automated fully mechanized processes such as CNC machines and automated handling of materials flow that saves use of electricity saving burning of solid fuel. It also provides ease and comfort to operator. Since it is a pre-set programmed process the quality of the product is uniform and the waste is reduced to a bare minimum level. The perfection helps in maintaining a perfect interchangeability as well. The most suited example is the use of “MUDA” and “MURI” by Toyota’s automobile manufacturing termed as Toyota System. Today auto manufacturing firms are advertising that “Our cars are Robot-assembled” and the customers are also giving preference to such products. These statements are indication of major changes in the manufacturing system.


Sustainability: This refers to the production system that is sustainable and should continue for a longer period of time with reliability and easy to operate the system. Unless the process is sustainable it cannot succeed in terms of quality and productivity. The human productivity factor is important to be followed and here the process should be sustainable in respect of using three-Ms (Man, Machine and Material).


Renewable substitutes: The non-renewable materials are creating a danger to the society by way of dumping of waste that harms the society by way of polluting our environment. It may be water, earth and air pollution. The waste if renewed and used for some productive purpose helps in storage of waste Also the harmful waste if treated and discharged shall avoid adding poison in the environment. The world has to see that more and more renewable materials and even energy is used to save this earth.


Government policies: To implement the green/ lean production system the most important agency is the government of each country and if necessary a global policy needs to be framed. Stricter law should be framed and only framing law is not the end of the problem rather its implementation is most important. Each country has to follow it to save this Earth and keep all the natural resources available for perfect living for our coming generation. Think what you have and what you are leaving after your death to your next generation in terms of air, water and temperature of the earth/atmosphere.


Environment degradation: It is a concern for future. The rate at which the environment is being degraded, unless we act for the enrichment of environment the future will turn difficult to live. Each one has to act on a continuing basis and it should be our individual responsibility to keep the environment better than present.

The government should plan to keep the water, Earth and space clean and acceptable to men who live on it but each citizen must adhere to it by following good green habits. The slogan should be “Follow up-gradation not degradation”


Labor training and its proper employment: The system of production process is fast changing and the inputs are different today. To handle the fast changes in the system of manufacturing and to get right men for the right jobs it is more important to train the man power suitable for the changing system. The simplest example is that in earlier days (80’s and 90’s) there were typing machines and today the typist word has been replaces by computer operators. The space technology is the outcome of training at each level and similar is the case in other stages of manufacturing and services. The training is the only way to bridge the gap between what we have and what the future should have and to ensures maximum output from human productivity based activities.


Quality up-gradation: The quality up-gradation refers to better quality improvement. In Japanese term it is “KAIZEN” that means an on-going improvement. For this they started with Quality Circle where workers of the firm in a group were involved for trouble shooting. Quality also helps in reliability of the product in relation to lower power consumption, higher productivity and durability in use. Today there is a race to adopt six-sigma that is latest level of quality to maintain highest level of success and minimum failures.


Continuous approach towards Green and Lean manufacturing system: This is not a onetime approach and needs to be followed closely. It is a continuous process and is the responsibility of each citizen of the globe. The country which is emitting more waste and carbon and others are controlling it will not do. Try to follow a process and habits that leads to green production. Research and innovations are needed each day of working to achieve the better green production system. Here it is important to educate each citizen of each nation.


Ethical Manufacturing

The main idea behind Ethical Manufacturing is derived from the statement “Resource is Limited but individuals are increasing”, hence there is a need to shift from human productivity to Resource productivity. Example: Ford President in 1977 said safety doesn’t sell and in 2016 ford aspire had a tagline “we want you to feel protected”. This shows a shift from traditional thinking of non-ethical practices to ethics in corporates i.e. safety and green materials.

The concept of ethical manufacturing should be deployed at all levels of production starting from operational strategy to process to Product to demand to Corporate Social Responsibility. Hence, this can focused upon by gradually moving from human productivity and towards resource productivity.

Ethical management includes smaller or local issues along with wider or global issues. The local issues are related to specifications, working conditions, Regional Beliefs, etc. Mark and Spencer have implemented green supply chain to focus on ethical manufacturing. They follow single standard throughout the globe. Japan do not allow formaldehyde on children’s clothes (aged below 6yrs.) which occur naturally through the process they operate. As a result of which Mark and Spencer doesn’t trade in Japan.

The concept of ethical manufacturing had been in use from around 1968. Garrett James Hardin an American ecologist in 1968 stated “we should counteract the thought of technical solution always” and also warned of the danger of overpopulation thus reflecting a shift from human productivity to resources productivity. Similarly, Robert Axelrod an American political scientist in 1984 used tit for tat program in his iterated prisoner’s dilemma which deals with creating cooperative solution i.e. setting up partnership and share responsibility. Richards Dawkins an English ethologist in 1989 said “if one wins other must loose” which gave a direction to the concept of ethical manufacturing.

Therefore, all the decision taken in either upstream or downstream supply chain affects the manufacturing process and this is why manufacturing is not isolated to environmental and social impacts. Manufacturing alone cannot cure all the social ills and hence need support from all other departments. The concept of Ethical manufacturing affects sustainability and thus making the world a better living place.

In Operations Management, first step is to decide on competitiveness and thus ethical manufacturing takes shape from this step itself. Few of the competitiveness and their contribution towards Ethical management can be seen as under:

1. Pricing: The various unethical practices that can be carried out are through monopoly gauging, price skimming, price discrimination, bid rigging, price fining.

2. Purchase: The chartered institute of Purchasing and supply(CIPS) include declaration of interest, confidentiality, accuracy of information, involving stakeholders as being ethical decisions to purchase. A new concept of Ethical investment fund has been coined to encourage corporate social responsibility it suggests that the fund should be through ethical sources or ethical sourcing. The Department for International development supports financially for ethical trading initiatives.

3. Business to Business: The practices of being transparency, avoiding use of power and corruption, unbiasedness, rejecting business gifts, payments to suppliers, avoiding reciprocal trading and forced labor have been considered as good ethical practices by CIPS.

E.g. Naja, Fairtrade winds, 3M, Cisco, Cummins, Ford, General Electrics, Timken, Deere&co., Dell, Eastman Chemical.


Inputs in a production system include human resource, Capital, material, land, energy, information, customer. Whereas the outputs are Goods and/or services and wastes. Quality is looked down for effectiveness of cost which induces slight error in quality but the danger that may be associated increases exponentially. Production sub functions:

1. Production and planning

2. Purchase

3. Stores

4. Design and Technology support

5. Works department


Factors in Ethical decision making:

• Magnitude of consequence

• Probability of effect

• Social agreement

• Time interval

• Proximity

• Concentration of effect


Operational activities involved in manufacturing

• Facility

• Quality control

• Process analysis

• Inventory control

• Supply Chain Management

• Design

• Safety

• Research & Development

• Industrial Engineering


Ethical Practices for manufactures include three different theories which deals with the duties of a manufacturer to lead to resource productivity:

• Contractual Theory/ The Contract View Theory

• The due care Theory

• Social cost view Theory


An organization differs in their decision-making philosophy on ethical grounds. The firm is divided into two segments on the concept of either Ethical relativism or Ethical absolutism.

Ethical Relativism: People from this segment consider that there is no single moral code and therefore there is no difference between thinking and truth.

Ethical Absolutism: People in this segment argue that there exists a single moral standard and it doesn’t change with time and location or situation.


Cloud Manufacturing is basically extension of cloud computing to manufacturing. The benefits include customization, optimization on a global level, cost reduction, facility utilization, increase in performance. It includes three subsets namely Cloud Manufacturing Services, Manufacturing capabilities and manufacturing resources.


Detailed Explanation of Manufacturing Capabilities and Manufacturing Resources

The manufacturing capability of any firm is its installed capacity to produce but the resources available with a firm is limited. The scarcest commodity available is finance and the firms must plan within their financial capability. Where ever a firm tried to cross the limit of its financial capability they were ruined. The burning example is of housing construction segment where the firms spread beyond their financial limit and most of the projects are held up and the customers are facing the problem. Similar is the cases of Government’s five year-plans where hardly 5% of projects get completed in time. The delays in the project causes increase in project cost. Today more than Rupees 100,000 crore is blocked in projects that are incomplete. This all happened due to wrong budgeting and not using resources at right time in right proportion. Other inputs are technology, quality materials, competitive process, power and fuel and right man for right job. Any short coming in the inputs create a problem in achieving the goal of capacity utilization. The burning case for India was development of Kryzonic engine used in our space technology. It was great achievement in R&D we could get it successfully developed. This was a challenging example of use of resources and achieving the goal.

Green production relates to lesser use of process resulting in to higher emission of Co2 / carbon monoxide, poisonous gasses, disposal of industrial refuse without treatment affecting the environment of the Earth and society. Profit was the motto of industrialist forgetting its effect on the environment. Today it has become more important to control inputs and release the out-put of waste in a safer way that should not harm the society. To generalize ‘Green habits’ needs to be followed by each one of us. In case it was meticulously followed the position of our rivers could have been different today.

The latest way to achieve better environment is the process of lean production that refers to waste reduction starting from the stage of designing to production. The process should be such that scrap generation is lowest and this needs enrichment of all inputs including training of manpower and use of economical machines and processes. Here better utilization of all inputs is important. The use of right man, machine, materials and other inputs like power, fuel, water, steam etc. are important. This needs a sound R&D system. The industrialists care for maximization of profit forgetting for adequate provision of funds for R&D/ Innovation. The thinking has to be changed at higher level of management who provide fund and without their acceptance it will be impossible to achieve the mission.


This article has been authored by Satyaketu Saurav & Pallavi Sharma from IMI Delhi







• Roy Chandra kumar, Roy Prabhat kumar. Business Ethics, 2014

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