Productivity

PRODUCTIVITY NOTES

A production process can be thought of as a black box with purchased inputs taken in on one side and outputs sold out the other. Measures of productivity assess how well theblack box is doing at turning quantities of inputs into quantities of outputs. Different productivity measures standardize for and provide a basis for different types of comparisons.

Productivity isthe relationship between the Outputs generated from a system and the Inputs that are used to create those outputs.

Mathematically P = O / I

Productivity Improvement (PI) is the result ofmanaging and intervening in work processes.

PI will occur if:

|+ OUTPUTS |= OUTPUTS |+ OUTPUTS ||---------------- |---------------- |---------------- |
|= INPUTS |- INPUTS|- INPUTS |

Productivity measurement
▪ Dynamic measures:
t(1)=O(1)/I(1); t(2)=O(2)/I(2);
then t(2)/t(1)yields a dimensionless index that reflects change in productivity between periods and ((t(2)-t(1))/t(1))*100 yields the percentage change between periods.
▪ Static Measures: P=O/I in a givenperiod of time (t). Useful for cross-sectional purposes.

Barriers to Improving Productivity
▪ Flawed measurements
▪ Flawed reward and promotion systems
▪ Contracting procedures▪ Inertia
▪ Resistance to change
▪ Managers have not developed or fail to communicate P.I. strategy.

Approaches to increase productivity
▪ Technology Innovation
▪ Automation▪ Economies of Scale
▪ Business Process Redesign
▪ Learning and Experience
▪ Human Resources
▪ Job Design and Work Measurement

DIFFERENT TYPES OF PRODUCTIVITY MEASURES
THIS...