Productivity
| Author | Sharon O'Neil, John Hansen |
| Pages | 612-614 |
Page 612
Productivity is the result or the sum of all effort that it takes to deliver a product or service. Productivity is frequently referred to as output and, to some degree, can be measured. The output generated by a person, organization, or other entity is measured in terms of (the number of) units or items produced and services performed within a specified time frame. Thus, productivity is the economic value of goods and services. It becomes the value or result of the price of a product or service minus all costs (supplies, materials, human labor, etc., which frequently are monetary) that go into the effort.
Productivity is a performance measure that indicates how effectively an organization converts its resources into its desired products or services. It is a relative measure in that it is used to compare the effectiveness of a country, organization, department, workstation, or individual to itself over time for the same operation, or to other countries, organizations, departments, workstations, or individuals. From a systems perspective, productivity indicates how well an organization transforms its inputs into outputs. In manufacturing, productivity is generally stated as a ratio of output to input. Productivity may be expressed as partial measures, multifactor measures, and total measures. Partial productivity measures are used to analyze activities in terms of a single input (e.g., units produced per worker, units produced per plant, units produced per hour, or units produced per quantity of material). Multifactor productivity measures take into account the utilization of multiple inputs (e.g., units of output per the sum of labor, capital, and energy or units of output per the sum of labor and materials). A total measure of productivity expresses the ratio of all outputs produced to all resources used.
An important point in seeking productivity improvements in a subsystem of an organization is to link the subsystem improvements to the total system productivity. Optimization of a subsystem operation that does not affect the overall productivity of the organization is a waste of resources. For example, a manufacturer might improve the productivity of its machining operations, as measured by number of units produced per dollar. But if these units cannot be sold and are warehoused, the productivity of the organization has not increased, since the goal of the manufacturer is to generate revenue through the sale of its products. Activities intended to improve productivity must be carefully selected, and the appropriate measures must be developed to ensure that the organization's efforts result in the improvement of its overall productivity.
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