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The MFP Approach to Increase Manufacturing Productivity

Over the past 10 years, the issue of stagnating production in the United Kingdom has grown to seem like it is unstoppable. Each report from the nation’s Office of National Statistics (ONS) offers few signs of hope , until the point where the ONS has no solution that is sufficient to address this overwhelming issue.

To help you understand the scale of the issue, UK productivity lags the other G7 countries by an average 16% – which is a staggering amount of six hours of work per week. Another way to put it is: by the time the business of Canada, France, Germany, Italy, Japan or the United States gets to 10am on Friday they have produced, on average, about the amount that the UK needs a full week.

This is particularly detrimental to polycarbonate injection molding manufacturers. In the opinion of the ONS, in the year up to December 2019 UK manufacturing firms were 1.6 percent less productive, dragging the overall productivity numbers back by 0.2%.

What’s the issue? And more to the point is how can a small low volume injection molding manufacturing company – whether in the UK or anywhere else – improve their own productivity performance?

The answer can be found through examining the way in which the UK calculates its multifactor productivity (MFP). Then, a four-part strategy to increase manufacturing productivity becomes clear.

What is the multifactor productivity process?

MFP analyses how efficiently an area, an economy or company is converting inputs (labour capital and resources) to results (sales). There are four elements which determine the method of calculating these inputs which manufacturers must pay attention to:


  1. Capital inputs
  2. Quality-adjusted labour input
  3. Intermediate inputs
  4. Gross value added

When you take a close look at each one of them, the task of lifting productivity becomes manageable.

Increase productivity by reducing the amount of capital inputs

Reducing capital inputs requires two steps: utilizing what’s already in place efficiently and reducing expenses with new technologies.

China injection molding manufacturers tend to be deeply invested in property, equipment and technology. Boosting MFP is about gaining as much profit as you can from this investment. For example, by making sure that stock levels are low to keep property costs down.

Eliminating IT expenses is a more efficient option. Many companies are spending way too much on keeping legacy systems running, or updating them to the most recent version. Unlike investment into hardware and equipment they are simple to reduce or remove according to research conducted done by Microsoft and Invensys found that cloud-based manufacturing tools could save 54% from IT budgets.

You can make smarter investments in your labour force

If it comes to how the ONS calculates MFP it takes into account quality-adjusted labour inputs, with this key being in the first two words”quality-adjusted’.

A lot of coverage of how productivity gaps are affecting manufacturing has focused on UK manufacturing’s skill shortage. But while this is undoubtedly an issue, hiring new highly skilled workers isn’t going to bring MFP growth. Why? Because they want more wages. And high-quality labour input takes costs into account.

The answer, then, is to work more with the existing workforce.

According to research by Gallup the Gallup Organization, a workforce that is engaged can be up to 17 percent more productive than a non-engaged one. So, try to find ways to empower workers by making their jobs easier.

Automation for many ABS injection molding manufacturers is often associated with modern equipment. However, investing more in hardware is just going to increase capital inputs , and decrease MFP. Software is a good alternative which is cost-effective and agile. Volcano Coffee Works, a London-based coffee roaster, provides a good example: it saved staff hours each week by automating the manual entry process with an application which made their employees instantly more productive (and happier at work too) with no increase in labour costs.

Look to your intermediate inputs for productivity gains

Many expenses fall under the “intermediate inputs’ category. But to transform MFP manufacturers, they only must focus on two aspects cost categories: production and purchasing.

Production and supply chains are more complex than ever. If there is no traceability of the supply chain businesses could easily lose money due to prices that are not competitive, freight costs or even lost stock. These costs can impact margins and eat up staff time — doubling up on productivity pain.

But, there are also quick solutions to these complex issues. For example, incorporating comprehensive tools for managing suppliers, or monitoring margins with exact cost of landing.

Simply simply, a ‘bought to an amount and sold at margins of X’ will not suffice. Manufacturers need 100% accuracy of margins and transparency across the entire supply chain. Achieving this with Excel or similar basic software isn’t easy but it is not impossible. However an upgrade to inventory management can greatly improve things.

Look to your Gross Value Added

But reducing costs is only the one half of the margin equation and inputs make up half of the multifactor methodology. Manufacturers can now take advantage of numerous customer-centric sales opportunities in both the B2B and B2C sectors. Focusing on mastering pricing, motivating customers to sell at a scale is the final step in our four-factor method.

Incorporating advanced pricing techniques is the natural next evolution once a business can see accurate margins. Selling each product at its most affordable price point — and giving customers price points based on their behavior is vital to growing MFP.

B2B Store B2B Store, meanwhile it allows wholesale customers to engage with wholesale customers on their terms. It puts an end to the days of forcing customers to call or send emails with orders. It also reduces the possibility of making mistakes, saving time and making life easier for everyone involved.

Selling on a larger scale is possible for businesses of all sizes. Implementing a multichannel approach to sales could assist in overcoming barriers like timezone, language or culture and can shift time-consuming tasks back onto customers, while also allowing possibilities in entirely new markets.

In short, a well-planned multichannel strategy can be used to increase sales with minimal inputs. This is the underlying principle of any effort to achieve MFP growth.

Putting the four-factor method in practice

Solving stagnating productivity may seem beyond the reach of an individual manufacturer. However, by making more with labour, capital and intermediate inputs and bringing value to outputs — businesses can reduce the issue to size.