PRODUCTI

VITy
 PRODUCTI
VITy
• A measure of how efficiently inputs are being converted
into outputs.
• Productivity is the value of outputs (services and
products) produced divided by the values of input
resources (wages, cost of equipment, and so on) used.
The more efficiently a company uses its resources, the
more productive it is:
Productivity = output
input
 Measures of
Productivity
1. Single-factor productivity - (Partial productivity) -
Productivity computed as a ratio of output to only one
input (e.g., labor, materials, machines).
 Following are two examples of the calculation of partial productivity:
a. A bakery oven produces 345 pastries in 4 hours. What is its
Productivity per hour?

Machine productivity = number of pastries/oven time

= 345 pastries / 4 hours
= 86.25 pastries/hour

b. Two workers paint tables in a furniture shop. If the workers paint 30

tables in 7 hours, what is their productivity?

Labor productivity = 30 tables / 2 workers’ / 7 hours

= 2.14 tables/hour
 Measures of
Productivity
2. Multifactor productivity relates output to a combination
of inputs, such as (labor + capital) or (labor + capital +
energy + materials).
• is an index of the output provided by more than one of
the resources used in production; it may be the value of
the output divided by the sum of labor, materials, and
overhead costs.
For example, let’s say that output is worth $382 and labor
and materials costs are $168 and $98, respectively. A
multifactor productivity measure of our use of labor and
materials would be:
Multifactor productivity = output / labor + materials
= 382 / 168 + 98
= 1.436 output per dollar
 Measures of
Productivity
3. Total factor productivity compares the total quantity of
goods and services produced with all the inputs used to
produce them.
• Productivity computed as a ratio of output to all
organizational inputs.
For example, let’s say that the weekly dollar value of a
company’s output, such as finished goods and work in
progress, is $10,200 and that the value of its inputs, such
as labor, materials, and capital, is $8600. The company’s
total weekly productivity would be computed as follows:

Total productivity = output / input

= $10,200 / $8600
= $ 1.186
Examples of Productivity Measures
Interpreting Productivity Measures
For example, if one worker at a pizza shop produces 17
pizzas in two hours, the productivity of that worker is 8.5
pizzas per hour.
This number by itself does not tell us very much.
However, if we compare it to the productivity of two other
workers, one who produces 7.2 pizzas per hour and
another 6.8 pizzas per hour, it is much more meaningful.
We can see that the first worker is much more productive
than the other two workers.
 Productivity and
Competitiveness
Productivity is essentially a
scorecard of how efficiently
resources are used and a measure of competitiveness.

Productivity can be measured for individuals,

departments, or organizations.

Competitiveness - the degree to which a nation can

produce goods and services that meet the test of
international markets.
Competition within Industries
Increases when:
Measures of Competitiveness
(among different nations)
Competitive Capabilities - are the cost, quality, time, and
flexibility dimensions that a process or supply chain
actually possesses and is able to deliver.

nine broad competitive priorities that fall into the four

capability groups:
• Low-cost Operations
• Consistent Quality
• Delivery Speed
• Volume Flexibility
Definitions, process considerations, and examples of competitive
priorities;
Definitions, process considerations, and examples of competitive
priorities;
Definitions, process considerations, and examples of competitive
priorities;
Productivity and the Service Sector
Service sector companies have a unique
challenge when trying to measure productivity.

Services primarily produce intangible products, such

as ideas and information, making it difficult to evaluate
quality.

Consequently, accurately measuring productivity

improvements can be difficult.
End of the Slide

Thank you and God Bless