Productivity or System Productivity
Productivity examines or measures the effective management of specified resources in order to obtain timely goals that are laid down in the form of quantity and quality of goods and services. It refers to an index to measure outcomes in relation to incoming elements (input). This relationship is in quantitative terms between the final product and the resources used for that production. High productivity can be achieved through enhancing output from input’s each unit.
The management guru, Peter Drucker has defined Productivity as a balance between different elements of production, and through this; the maximum output will be obtained with the minimum effort.
According to the International Labor Organization (I.L.O), Productivity is a ratio between an output’s volume that is measured by the production index and the subsequent volume of labor input that is measured by the employment index.
In this, the output indicates total production in terms of revenue or units produced. Wherein, input includes land, capital, labor, equipment, etc. The efficiency of the whole production management system is determined through productivity.
Higher and Lower Productivity
In the operational efficiency of a manufacturing unit, productivity is viewed as a good indicator. The productivity of an organization is defined as higher productivity if its production is more than the given inputs. In other words, higher productivity is obtained if the available resources of an organization are utilized properly.
On the other hand, lower productivity replicates the excessive use or wastage of both time and available resources.
Types of Productivity
Productivity is mainly of two types i.e. Partial factor productivity and Multifactor (Total productivity).
A) Partial Factor Productivity
This is considered a ratio of outcome (output) to partial or single input which is consumed in the production. Each unit’s productivity is measured by partial productivity as the significance of each input factor is determined in the production of output. Partial factor productivity measurement is as mentioned below:
Partial input is categorized as Capital, Labor, Material, Machinery, etc.
This productivity is mostly used by production managers due to easy availability and access to data. Moreover, one can easily relate the equations of partial factor productivity to particular processes as generally, it deals with a single input.
Types of Partial Factor Productivity
Partial factor productivity is further categorized into below categories:
a) Labor Productivity
In simple terms, per person output ratio or actual financial yield based on per hour of work is termed as labor productivity. It is used to measure a worker’s efficiency in producing a higher value product.
In other words, one can measure labor productivity by determining the total number of products produced (total output) per hour.
There are two methods to measure the time which is required to do any task i.e. Work measurement and Motion study methods.
Work measurement method: This includes utilizing the correct observation and recording of work in order to examine the time that a qualified worker will take to finish a particular job at a certain performance level.
Motion study method: This includes analyzing a particular job in order to find the most appropriate and effective method as per effort and time.
Ways to Enhance Labor Productivity
There are three main steps through which labor productivity can be increased i.e.:
-Creating a Balance in Assembly Line Operations
Moving products through different operations until the finishing stage without any blockage or hold back results in productivity enhancement. The major concern is to balance different operations and to address this; machines are designed and allocated at different workstations. To facilitate the workflow, a strategy of deploying extra manpower is considered where obstructions are identified or anticipated. Apart from this, other methods are used to increase labor productivity i.e. adoption of new methods, redesigning, etc. Still, reallocation of labor is required as per the need of job requirements to transfer the skills for handling their jobs efficiently. Job rotation is there to provide more workers exposure to many jobs. Ultimately, the main focus remains at maintaining a balance in the time devoted at all stages of the manufacturing process in order to ensure the flow of products without much delay.
Workers should be allocated at the starting of operations and the allocation should be considered based on the skill set of workers, their job description, and needs according to machining centers. To remove bottlenecks, it is required to equalize the production rate at different work stations. This can be achieved through the allocation of additional labor or worker and by the addition of another machine. A skilled worker can be a substitute for a worker having fewer skills. Moreover, the skilled worker may be reallocated at a more suitable work station.
-Laying Productivity Norms and Evaluating Production Operations
Different methods of motion studies and time are used for productivity norms.
A complex task is better performed by time and motion study methods because these methods help in determining the best possible way to do such a complex task by dividing the task into small subtasks. It also measures the time invested in doing each subtask. By doing this, performance standards can be defined and these standards are useful in planning and controlling production activities, estimating delivery time and cost, and planning incentive schemes.
Lots of research and documentation is done for setting above performance standards. Different norms are defined for different jobs as per their requirement of time and basic motions. The efficiency of the system is also considered at the time of determining productivity norms. Time and quantity requirements are considered as a base to measure or evaluate production operations. Estimation of both is required to ensure delivery.
b) Capital Productivity
This is the relation between total output in terms of goods or services and the input in terms of physical capital. Different assets of an organization such as machines, building, land, tools, manpower, etc. are essential in a production set-up, and to meet these, capital is required. So, capital productivity can be calculated through the below formula:
The effective use of the above assets determines capital productivity. If an organization improves physical capital, then usually, it increases output. Capital productivity is useful for both the national economy and organizations as it is utilized in plans related to capital consumptions and financial examination.
c) Material Productivity
This consists of the ratio between total output and total material input. The material under input includes both direct and indirect raw material which is used to produce the final product. The technique of material productivity is utilized in measuring the productivity in form of material cost.
In other words, material productivity refers to the output produced (in numbers or amount) based on the per-unit cost of materials used as input.
Material Productivity= Total output/ Material input
Material Productivity= Total units produced/ Total Material cost
Material productivity has an important role to play in the cost of production. It depends on the effective and efficient use of raw materials to convert them into finished goods.
d) Machine Productivity
This is the relation between total output and total machine hours that are used. Using this technique, the productivity of machines in manufacturing units can be measured. In other words, machine productivity measures the proficiency of a machine in transforming raw material into finished goods or services.
How to calculate machine productivity
To calculate machine productivity in a manufacturing unit, some sort of data is required on a mandatory basis. The below data needs to be considered at the time of machine productivity calculation:
- To count total machines placed in the production line
- To count line output (finished products) at the end of the day
- To note down shift timings (in hours) and total working hours in the manufacturing unit
e) Personnel Productivity
The term personnel is used for employees who don’t work directly on machines and support in operations by performing other tasks related to operations and production.
This includes people who are responsible for coordinating different operations and identifying different jobs that need to be executed, facilitating the operations, inspecting the allocating machines, checking the setups, etc.
These employees have different skills to manage and solve various day-to-day issues. It’s a challenging task to measure their performance as it is not possible to measure their productivity in a direct way. Recognition and evaluation of the tasks or functions of these employees are required for imparting any training needs to them. There is the dependability on their performance for communication, information, and implementation of activities related to the production enhancement. These workforce or personnel are the ones who are responsible for motivating the workers during various activities such as methods improvement, change programs, etc. As mentioned above, their productivity can’t be judge directly; so, indirect measures are considered through the productivity aligned to the workforce and the productivity in their functions.
B) Multifactor or Total Productivity
As discussed above that partial factor productivity includes one single input i.e. labor or capital or material or machine, wherein, the multifactor productivity includes the relation of total output with total inputs such as labor, capital, material, etc.
In other words, Multifactor productivity is defined as the ratio among total output and total input used to produce the total output units.
The total productivity indicates the combined effect of all the inputs in generating output.
Productivity and Training
An organization’s productivity is directly related to workforce training as a well-trained workforce is more productive. Training is the process through which any shortfall of a worker’s technical skill, knowledge level, and interpersonal skills can be eliminated. The main aim of the training is to improve the overall performance in order to achieve the desired productivity level.
In training, the need for training is assessed, any training gaps are determined, and the suitable actions are drafted and executed. Moreover, new techniques, methods, and equipment to enhance productivity demand training. Through training programs, motivation is increased and this is considered as an important element of a productive worker.