PRODUCTIVITY Productivity OutputsInputs Productivity is the relationship between

PRODUCTIVITY

� Productivity = Outputs/Inputs ◦ Productivity is the relationship between the quantity produced (output) and the quantity of resources used (input) in the course of production ◦ It is the ratio between the output of goods and services and the input of resources consumed in the production ◦ productivity measures the efficiency of the system

Importance of productivity v It combats inflation v It improves standard of living v It reduces unemployment v It brings in economic power

Factors influencing productivity � Technological factors � Size and capacity of plant � Product design and standardization � Timely support of materials and fuel � Repairs and maintenannce � PPC � PLANT LAYOUT AND LOCATION � INSPECTION AND QUALITY CONTROL � Inventory control � R&D

HUMAN FACTORS 1. 2. ABILITY TO WORK WILLINGNESS TO WORK

TECHNIQUES FOR PRODUCTIVITY IMPROVEMENT � WORKSTUDY � R&D � INCENTIVE � PPC � WORKERS SCHEMES PARTICIPATION IN MANAGEMENT � AUTOMATION � MANAGEMENT BY OBJECTIVES � JOB ENRICHMENT � QUALITY CIRCLES

MEASUREMENT OF PRODUCTIVITY Single factor productivity Labor productivity = output/ labor Machine productivity = output/ machine Capital productivity = output/ capital Energy productivity = output/ energy Land productivity = output/ land Material productivity = output/ raw material All factor productivity(AFP) = output/all inputs

EXAMPLE � If an company produces 10, 000 Units and sells for Rs 10/unit. The number of labor hours used is 500 and labor rate is Rs 9/hr. Calculate labor productivity � 10, 000 units / 500 hrs = 20 units/hr �(10, 000 � 10, 000 units / (500 hrs * 9/hr) = 2. 2 unit/Rs �(10, 000 � The units * 10/unit) / 500 hrs = Rs 200/hr units * Rs 10/unit) / (500 hrs * Rs 9/hr) = 22. 22 last one is unit-less

ALL FACTOR PRODUCTIVITY AFP = Output/(labor+ materials+ overhead) � If we produce only one product, the numerator can be either the total units of product or total Rs value of the product. � If we produce several products, the numerator is the total Rs value of all products. � Usually, the numerator is the total Rs value of all outputs. The denominator is total Rs value of all inputs.

Productivity inputs Production system Transfo rmation process outputs

Examples of input � � � Labour force or man hrs Area of land Volume of material or fluid Units of power Tme etc Examples of output accomplishment of task distance travelled number of pieces produced time taken to carry out a job no of customers served

Misconceptions about productivity � Higher productivity means higher work load higher efforts, more profits to owners and unemployment and threat to job security etc. � Misconception like � Productivity = production � Productivity means only labour productivity � Productivity is relevant only in manufacturing not relevant elsewhere � It is only for commercial enterprize and not for public.

Misconceptions about productivity � Productivity can be increased by getting people to work harder � Productivity can be increased by cutting costs across the company � Productivity is directly related to profits in other words a profitable organization is always productive

� Productivity is a relative term indicating the relation between total output and the total inputs. Production refers to the volume of output and it is absolute concept. The volume of production may increase but productivity may decline due to ineffective use of resources. Production denotes absolute outcome of the production system whereas productivity reflects its efficiency