productivity

Productivity is defined as the ratio of output to input

Productivity = Output =
value if goods/services
Input cost of resources consumed

Resources/Inputs

Materials,
Capital, Performance
Labour/Manpower
Technology
information
 Productivity Index

Output = Performance Achievement = Effectiveness

Input Resources Consumed Efficiency

Productivity is the ratio of output of wealth

Produced to the inputs of resources
Increase in productivity could indicates:

Increase in Production Volume over a given Period

Produce the same volume in lesser time

Produce the same volume with lesser input in a given time

 Productivity ----misconceptions

Not a measure of Volume of Production

(Relationship of input-output)

Not a measure of Profitability

(Reflect lower cost and high profit)

Not an anti inflationary measure

(Increase in inputs not matched by outputs)

Not a technique to make worker to work Harder

(Approach that encourages workers to work shorter)
 Productivity- measurement

Output variables
Input variables

Units produced
Payroll Costs
Products sold
Employment Costs
Tasks completed
No. of Manpower
Revenue obtained
No. of Hours Worked
Value added
Time taken….
Standard reached…
 Output Ratios

Profit per = Trading Profit

Employee Number of Employees

Sales per = Sales

Employee Number of Employees
Sales
= per =
Employee

Output = Units Produced or Processed

Employee Number of Employees
Cost Ratios

Wages Cost
Units Produced

Sales Turnover
Employment Cost
Sales
= per =
Employee

Actual Labour Cost per standard Hour

Target Cost Per standard hour
Performance Ratios

St. Hours for Production

Actual Hrs Worked

= =
Actual Performance
Target Performance
 Total Productivity Index

Products+ Services
TPI = Labour+ Materials+ Energy+ Capital
 Productivity of Labour

LP is defined as total out put divided by

number of man hours Worked by all employees
Measuring Labour Productivity

Quantitative Statements

Historical Costs

Variance Statements under Budgetary Control

Variance Statements under Standard Costing

 Influencing Labour Productivity

Where labour has no control

•Material Supplies
•Reliability of Design
•Production Methods
•Product Variety
•Reliability of
• plant
• electricity
• water
• other services
•New Labour…
 Influencing Labour Productivity

Where labour has full control

Starting time
Stoppage time
Lunch breaks
Scraps due to
Carelessness
•Accidents due to…
•Absenteeism
Productivity of Materials

Higher yield
Low Cost
Higher Value
Low Waste
Low Scraps
Low rejections
Substitution of Materials
 Manpower & Productivity

Recruitment Policy
Skill Level
Knowledge Level
Behaviour
Training
Motivation
Technology
Change Management
 Productivity & Profitability

Productivity means the Rate

of production measured in
terms labour, materials or
machines

Profitability means the rate of

profit earned measured in terms
Capital employed
 Productivity & Quality

"Fitness for use“

Fitness is defined by the customer.

"Conformance to requirements".

Productivity & Quality go hand in hand

a Quality defect can neutralize
productivity
 Productivity &Cost Effectiveness

Reducing the value of input through eliminating waste

Increasing quantity or quality or both of the output
Modifying system to get large ratio between input/output
Efficient utilization of men, materials and technology
Energy Conservation
Using techniques like
Value Engineering
Six Sigma
Kaizen
Operation Research
Network analysis…..
?