Productivity Basics

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Amity Institute of Telecom

Technology & Management

Programme - MBA(Telecom), Semester III

Course Productivity & Performance Management

Name of Faculty Rajeev Pathak


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Productivity Basic Concepts


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Concept of Productivity

Efficiency and Effectiveness

Interface between Quality & Productivity


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Productivity measure of quantity of

output per unit of input

Ratio between output and input Earlier focus on labour productivity

Output relevance of different measures

depending on the situation (example)


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Output Year 2007-08 2008-09

No. of product produced 16000 20000

Life of a product (eghrs/days/kms)

20000 15000

Price of a product in

Rupees

2000 1600


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If monetary angle is less relevant than

capturing a sizeable market share

Life of a product customer satisfaction


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Improvements in productivity can be caused byfive different relationships:

Output and input increases, but the increase in

input is proportionally less than the increase inoutput.

Output increases while input stays the same.

Output increases while input is reduced.

Output stays the same while input decreases. Output decreases while input decreases even

more.


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Single Factor Productivity

Multifactor productivity

Total Factor Productivity


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Effectiveness is usually described as doing the

right things,

Efficiency means doing things right

It is the combination of high values of both

efficiency and effectiveness in the transformation

process that leads to high productivity


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Concept of productivity should be

distinguished from four other similar terms:

profitability, performance, efficiency and

effectiveness

Profitability can change for reasons that

have little to do with Productivity, such as

inflation and other external conditions(example)


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Productivitys relation to profitability

The term profitability

clearly has aproductivity component

and can be

distinguished by the

price recovery issue


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Performance is a term which includes almost anyobjective of competition and manufacturingexcellence such as cost, flexibility, speed,

dependability and quality Various performance objectives can have a

large effect on the productivity in an operation:

High-quality operations do not waste time or

efforthaving to re-do things, nor are theirinternal customers inconvenienced by flawedservice.


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Fast operations reduce the level of in-processinventory between micro operations, as well asreducing administrative overhead.

Dependable operations can be relied on to

deliverexactly as planned.T

his eliminateswasteful disruption and allows the other microoperations to operate efficiently.

Flexible operations adapt to changingcircumstances quickly and without disrupting the

rest of the operation. Flexible micro operationscan also change over between tasks quickly andwithout wasting time and capacity.


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Triple-P model

Productivity is central

Performance is the umbrella term of

manufacturing excellence

Effectiveness is a term to be used when the

output of the manufacturing transformation

process is focused

Efficiency represents how well the input of

the transformation process (i.e. resources) isutilised


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Productivity & Process

An important consideration is the impact of the process

and approaches used in improving productivity. It is not

just the end results that count but so are the meansused to achieve the results.

An intangible output of the operations of the enterprise

is the experience of employees during the process ofproducing and distributing the goods and services.

These experiences influence the employees attitude

towards the organization and the job, which in turn

affects productivity.


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It is imperative for an organization to identify

what type of productivity is essential or critical to

meeting its strategic goals. An organization may

choose between three strategic options:

Customer intimacy the best total solution for

the customer

Operational excellence the best total costs

Product leadership the best product.


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The objectives of productivity measurementinclude:

Technology. A frequently stated objective ofmeasuring productivity growth is to tracetechnical change. The link is not straightforward.

Efficiency. Technical efficiency gains are thus amovement towards best practice, or theelimination of technical and organisational

inefficiencies.Real cost savings.

Benchmarking production processes.


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There are many different productivity

measures. The choice between them

depends on the purpose and on the

availability of data.

They can be single factor productivity

measures or multifactor productivity

measures.

Documents

Productivity Basics