Productivity is defined as the ratio of output to input

Productivity =

Output Input


value if goods/services cost of resources consumed

Resources/Inputs Materials, Capital, Labour/Manpower Technology information Performance

Productivity Index

Output = Input

Performance Achievement = Resources Consumed

Effectiveness 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

Input variables Payroll Costs Employment Costs No. of Manpower No. of Hours Worked Time taken….

Output variables Units produced Products sold Tasks completed Revenue obtained Value added Standard reached…

Output Ratios
Profit per Employee = Trading Profit Number of Employees

Sales per Employee Sales per = Employee

= =

Sales Number of Employees

Output Employee

= Units Produced or Processed 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 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

•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…..


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