Operations and Supply Chain Management The Core

STRATEGIC CAPACITY MANAGEMENT chapter 4 121
Managerial Considerations in Using Learning Curves Managers should be aware of
the following factors when using and interpreting learning curves.
1. Individual learning and incentives. Extensive research indicates a rather obvious
fact: To enhance worker learning, there must be adequate incentives for the worker
and the organization. (It should be noted, however, that the concept of incentives
may be broadened to include any of the positive or negative administrative options
available to managers.)
2. Learning on new jobs versus old jobs. The newer the job, the greater will be the
improvement in labor hours and cost. Conversely, when production has been under
way for a long time, improvement will be less discernible. For example, for an
80 percent learning curve situation, the improvement between the first and second
units will be 20 percent. However, if the product has been manufactured for
50 years, it will take another 50 years to reduce labor hours by 20 percent.
3. Improvement comes from working smarter, not harder. While incentives must
be included to motivate the individual worker, most improvement in output comes
from better methods and effective support systems rather than simply increased
worker effort, assuming that yearly production volume remains the same.
4. Built-in production bias through suggesting any learning rate. If a manager
expects an 80 percent improvement factor, he or she may treat this percentage as
a goal rather than as an unbiased measure of actual learning. In short, it may be
a “self-fulfilling prophecy.” This, however, is not necessarily undesirable. What
is wrong with setting a target improvement factor and then attempting to control
production to achieve it?
5. Preproduction versus postproduction adjustments. The amount of learning
shown by the learning curve depends on both the initial unit(s) of output and the
learning percentage. If there is much preproduction planning, experimentation, and
adjustment, the early units will be produced more rapidly than if improvements are
made after the first few units—other things being equal. In the first case, therefore,
the apparent learning will be less than in the second case, even though subsequent
“actual” learning may be the same in each instance.
6. Changes in indirect labor and supervision. Learning curves represent direct
labor output, but if the mix of indirect labor and supervision changes, it is likely
that the productivity of direct labor will be altered. We expect, for example, that
more supervisors, repairpersons, and material handlers would speed up production,
whereas a reduction in their numbers would slow it down.
7. Changes in purchasing practices, methods, and organization structure.
Obviously, significant adjustments in any of these factors will affect the production
rate and, hence, the learning curve. Likewise, the institution of preventive maintenance
programs, zero-defect programs, and other schemes designed to improve
efficiency or product quality generally would have some impact on the learning
phenomenon.
8. Contract phase-out. Though not relevant to all contract situations, the point
should be made that the learning curve may begin to turn upward as a contract
nears completion. This may result from transferring trained workers to other projects,
nonreplacement of worn tooling, and reduced attention to efficiency on the
part of management.