What Is Productivity?
Productivity is a key management concept. It is basically the efficiency of total production of services or products expressed by any measure. Measurements of productivity can be expressed as the ratio of an overall output to an individual input or an individual output, usually over a given period of time. The concept of productivity can be measured with respect to various criteria, which include productivity as a function of hours worked, productivity as a function of cost and productivity as a function of profitability. There are many productivity concepts that have been discussed and researched over the years, most of them are still under research.
Some of the most commonly measured productivity measures are the productivity of an individual product or service, the productivity of the processes involved in the production of that product or service, and the productivity of an enterprise as a whole. Productivity also can be measured in terms of overall allocation of resources across the enterprise. The allocation of resources across processes is typically measured by the productivity of those processes. One common method of measuring productivity is to measure output per employee during a specific production day or period of time and to compare this output per employee against expectations of what an employee would have produced based on the input of that person to the particular enterprise. In other words, the measure of productivity of an individual may be per work hour or per job-hour, while the measure of productivity of the enterprise may be expressed as the value of each completed job, or period of time that an enterprise employed to produce a product or service and compares that value against what it would cost to produce that product or service if that product or service were produced at the same level of productivity if it were operated at the level of productivity that is experienced on the production site.
An understanding of what productivity measures are important can help managers and businesses reduce costs and increase profits. The first step in understanding productivity is an understanding of the concepts and methods used to measure productivity. The three basic productivity concepts that managers should at least be familiar with are the extent of workers' involvement, the extent of business time, and the extent of customers' involvement and satisfaction. Managerial time is spent dealing with employees, customers, and suppliers. Productivity in this area is measured by the extent of interaction between employees and suppliers. Business time is measured by the amount of time that an enterprise takes to deliver orders to customers and to process orders for them.
Measurement of productivity involves defining four categories of productivity: short-term total productivity, long-term total productivity, short-term productivity per job hour, and long-term productivity per job. Short-term productivity is measured on the production floor, on finished goods in inventory, or on raw materials sold or purchased. Long-term productivity is measured over one or more seasons. Raw materials included in the calculation of long-term productivity include inventory, plant materials used to produce finished goods, and supplies such as labor, equipment, supplies, and buildings used to support the operation of an enterprise's production.
Productivity growth is also dependent on how well an enterprise distributes its inputs among its products. An enterprise can increase productivity through better use of existing resources and the adoption of new technology. It can also increase productivity through innovations, research, and technology. Higher can also be promoted through the adoption of improved productivity structures, enhanced incentives for workers, and the adoption of better productivity control processes, thereby allowing for greater reductions in costs and increased levels of output.
Measuring is therefore an important part of the planning process of any enterprise. Without a properly measured productivity level, it is impossible to evaluate an enterprise's actual output. To ensure productivity is measured properly, enterprises must conduct an analysis of their activities. By properly identifying the sources of overhead, including space needed to hold, train, and use the supplies necessary for the production of output, businesses can make the best use of their productive assets and reduce costs.