Productivity and Efficiency

11 Key excerpts on "Productivity and Efficiency"

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  Succeed with Productivity and Quality

  How to Do Better with Less

  • Imre Bernolak(Author)
  • 2009(Publication Date)
  • ASQ Quality Press

    (Publisher)

  We work in order to produce the goods and services that we want. Productivity is the relationship between what is produced and the resources used in its production. Productivity is output per input, such as x number of chairs pro- duced per y number of labor hours. Productivity = Output Input There are, however, many ways of looking at productivity. The produc- tivity of a worker may differ due to many factors such as his or her abil- ity and effort, the tools available, the organization of the work, and so on. Productivity is like health. It has many determinants and must be viewed from many angles to understand it and be able to improve it. When we do not feel well, the doctor will look at the symptoms, take our temperature, order tests and X-rays, ultrasounds, or MRIs, and so on, and from all these findings he or she can choose the medication needed to make us better. It is the same with productivity, our economic health. It is necessary to look at what resources are used and how they are combined to produce the results we want. Productivity, therefore, consists of a family of concepts and measures. One measure of productivity shows how much a person can produce in a certain time period with the available machines and tools. For instance, Chapter 1: What Is Productivity? 5 a worker can produce a certain number of chairs per day. Another produc- tivity measure shows how much can be produced from the materials used, for example, how many chairs can be made from a certain amount of wood. A third productivity measure shows how many products can be manufac- tured with a kilowatt-hour of energy. The better we combine and use the resources, the higher our productivity will be and the better off we will be. The result of productivity is the “pie.” The only way we are going to get a bigger “pie” for the work we do for ourselves, our families, or the organ- izations that provide our jobs is by increasing the pie.

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  Operations and Production Systems with Multiple Objectives

  • Behnam Malakooti(Author)
  • 2013(Publication Date)
  • Wiley-Interscience

    (Publisher)

  A linear programming formulation approach based on data envelopment analysis (DEA) is used to compare the productiv-ity and efficiency of similar operational systems with multi-inputs and multioutputs. The multiple-objective optimization of Productivity and Efficiency is also developed. Produc-tivity is discussed in Sections 10.2 and 10.3. Efficiency is discussed in Sections 10.4–10.6. Productivity of a network of processors is discussed in Section 10.7. In this chapter, first we define a simple productivity index consisting of one input and one output. Then, we measure productivity growth when there are multiple inputs and multiple outputs. 10.2 BASIC PRODUCTIVITY INDEXES Productivity is defined as the amount of output per one unit of input per period for production and service processes. Productivity is commonly measured in terms of output per unit worker per unit hour, which is known as the labor productivity. Productivity growth is a rate comparing the productivity of a given period to a base period. Generally, higher productivity is associated with higher standard of living in a country. Productivity in the United States has been increasing steadily since 1890, which has contributed to the growth of the economy and the increase in the standard of living in the United States. In the United States in the 1910s, productivity grew significantly after the assembly line was developed in the auto industry. The use of assembly lines enabled the auto industry to produce a high number of cars in a short period of time by utilizing resources effectively, which resulted in a lower cost of production and increased profit. Productivity is defined as the ratio of output to input. A higher ratio is associated with higher productivity: Productivity = output input (10.1) Therefore, productivity is not a measure of profitability or cost. By increasing productivity, however, profitability may increase. In measuring productivity, the key question is the

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  The Economics of Firm Productivity

  Concepts, Tools and Evidence

  • Carlo Altomonte, Filippo di Mauro(Authors)
  • 2022(Publication Date)
  • Cambridge University Press

    (Publisher)

  2 Basic Concepts 2.1 Productivity In recent decades, the topic of firm productivity has increasingly gained attention from academics and in the policy debate. Macro- economists find that productivity growth is the source of almost all per capita income differences across countries, and so a new strand of research has emerged, dedicated to understanding the drivers of this growth (Syverson, 2011). Trade economists identify firm productivity as the most important determinant of export activity (Melitz, 2003) and foreign direct investment of multinational enterprises (Helpman et al., 2004). Labour economists are exploring the impact of workers’ human capital on productivity differences (Bloom and Van Reenen, 2007). Micro-economists are developing new methods to correctly measure productivity to improve our understanding of firm behaviour and market efficiency. In this chapter, we try to explain what productivity is and how it can be estimated. We will also provide some practical examples and computing codes. Let’s start with one definition (of the many possible definitions) of productivity. Productivity is the effectiveness of productive effort, especially in industry, as measured in terms of the rate of output per unit of input. (Oxford Dictionary) In other words, productivity measures how efficiently production inputs such as intermediates, energy, labour or capital are bundled together to produce an output. A typical (economic) measure of this efficiency is the ability of the production process to generate value added, that is, the increase in value in the final output of production compared to the value of the materials used in the production process by a firm. 8 2.2 Factor Productivity 9 In this sense, it is necessary to distinguish the productivity of a single production factor such as labour (this is what we call “factor productivity”) from the ability of a firm to combine the bundle of inputs at its disposal to create new value.

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  Integrating Productivity and Quality Management

  • Johnson Edosomwan(Author)
  • 1995(Publication Date)
  • CRC Press

    (Publisher)

  For consumers who are concerned with the quality or “fitness for use” of the goods and services offered, therefore, productivity and quality management constitute the major driving force for survival. 1.2 BASIC DEFINITIONS OF PRODUCTIVITY AND QUALITY 1.2.1 Productivity Productivity was mentioned for the first time in an article by Quesnay in 1776, and since then most authors have defined it in different ways. Table 1.1 presents a chronological classification of productivity definitions and measures that have been offered by both researchers and practitioners. A careful examination of these definitions reveals that some authors have defined productivity in a vague manner and others, precisely. One major 1.2 Basic Definitions of Productivity and Quality 3 Figure 1.2 The impact of poor quality in any economic unit. similarity that could be inferred from these various definitions of produc­ tivity is that most authors viewed productivity as a “measure” of output, to one input, two inputs, or total input. The measure also pertains to how well resources are utilized. Three different forms of productivity have been accepted universally by most researchers and practitioners. For the purpose of this text, the three forms of productivity are presented as follows (Kendrick and Creamer, 1965; Edosomwan, 1985b): 1. Total productivity is “the ratio of total output to all input factors.” 2. Total factor productivity is “the ratio of total output to the sum of associated labor and capital (factor) inputs. 3. Partial productivity is the “ratio of total output to one class of input.” 1.2.2 Quality Crosby (1979) defines quality as “conformance to requirements.” This definition requires detailed clarification of all relevant quality characteris­ tics and total evaluation and understanding of the entity involved. Quality

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  Company Success in Manufacturing Organizations

  A Holistic Systems Approach

  • Ana M. Ferreras, Lesia L. Crumpton-Young(Authors)
  • 2017(Publication Date)
  • CRC Press

    (Publisher)

  Productivity is an overall measure of the ability to produce a good or service. It is the measure of how specified resources are managed to accomplish timely objectives as stated in terms of quantity. Productivity may also be defined as an index that measures output (goods and services) relative to the input (labor, materials, energy, etc., used to produce the output). Productivity is useful as a relative measure of actual output of production compared to the actual input of resources. As output increases for a level of input, or as the amount of input decreases for a constant level of output, an increase in productivity occurs. In other words, productivity as a measure describes how well the resources of an organization are being used to produce a good. There are two major ways to increase productivity: by increasing the numerator (output) or decreasing the denominator (input). A similar effect would be seen if both input and output increased, but output increased faster than input; or if input and output decreased, but input decreased faster than output.

  Company leaders and operations managers have many areas to measure productivity, such as labor productivity, machine productivity, capital productivity, energy productivity, and so on. A productivity ratio can be computed for a department, a facility, an organization, or even an entire country. For example, the United States Bureau of Labor Statistics produces national productivity statistics and related cost measures that are designed for use in economic analysis. It forecasts and analyzes changes in prices, wages, and technology. There are two primary types of productivity statistics BLS focuses on: (a) labor productivity measures output per hour of labor and (b) multifactor productivity measures output per unit of combined inputs, which consist of labor and capital, and, in some cases, intermediate inputs such as fuel (BLS 2016).

  Since productivity is a relative measure, it is meaningful or useful to compare it to something. For example, businesses can compare their productivity values to that of similar firms or other departments within the same firm, or against past productivity data for the same firm or department (or even one machine). This approach allows firms to measure productivity improvement over time and/or the impact of certain decisions, such as new processes, equipment, and so on. Productivity is a required tool in evaluating and monitoring the performance of an organization, especially a manufacturing business. When directed at specific issues and problems, productivity measures can be very powerful. In essence, productivity measures are the yardsticks of effective resource use.

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  Production Management

  • (Author)
  • 2014(Publication Date)
  • Orange Apple

    (Publisher)

  ____________________ WORLD TECHNOLOGIES ____________________ Chapter- 6 Productivity Productivity is a measure of output from a production process, per unit of input. For example, labor productivity is typically measured as a ratio of output per labor-hour, an input. Productivity may be conceived of as a metric of the technical or engineering efficiency of production. As such, the emphasis is on quantitative metrics of input, and sometimes output. Productivity is distinct from metrics of allocative efficiency, which take into account both the monetary value (price) of what is produced and the cost of inputs used, and also distinct from metrics of profitability, which address the difference between the revenues obtained from output and the expense associated with consumption of inputs. Comparison of average total productivity levels between the OECD member states. Productivity is measured as GDP per hour worked. Blue bars = higher than OECD-average productivity. Yellow bars = lower than average. ____________________ WORLD TECHNOLOGIES ____________________ Economic growth and productivity Components of economic growth (Saari 2006) Production is a process of combining various material inputs (stuff) and immaterial inputs (plans, know-how) in order to make something for consumption (the output). The methods of combining the inputs of production in the process of making output are called technology. Technology can be depicted mathematically by the production function which describes the relation between input and output. The production function can be used as a measure of relative performance when comparing technologies. The production function is a simple description of the mechanism of economic growth. Economic growth is defined as any production increase of a business or nation (whatever you are measuring). It is usually expressed as an annual growth percentage depicting growth of the company output (per entity) or the national product (per nation).

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  Product Lifecycle and Production Management

  • (Author)
  • 2014(Publication Date)
  • College Publishing House

    (Publisher)

  ____________________ WORLD TECHNOLOGIES ____________________ Chapter- 15 Productivity Productivity is a measure of output from a production process, per unit of input. For example, labor productivity is typically measured as a ratio of output per labor-hour, an input. Productivity may be conceived of as a metric of the technical or engineering efficiency of production. As such, the emphasis is on quantitative metrics of input, and sometimes output. Productivity is distinct from metrics of allocative efficiency, which take into account both the monetary value (price) of what is produced and the cost of inputs used, and also distinct from metrics of profitability, which address the difference between the revenues obtained from output and the expense associated with consumption of inputs. Comparison of average total productivity levels between the OECD member states. Productivity is measured as GDP per hour worked. Blue bars = higher than OECD-average productivity. Yellow bars = lower than average. ____________________ WORLD TECHNOLOGIES ____________________ Economic growth and productivity Components of economic growth (Saari 2006) Production is a process of combining various material inputs (stuff) and immaterial inputs (plans, know-how) in order to make something for consumption (the output). The methods of combining the inputs of production in the process of making output are called technology. Technology can be depicted mathematically by the production function which describes the relation between input and output. The production function can be used as a measure of relative performance when comparing technologies. The production function is a simple description of the mechanism of economic growth. Economic growth is defined as any production increase of a business or nation (whatever you are measuring). It is usually expressed as an annual growth percentage depicting growth of the company output (per entity) or the national product (per nation).

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  Service Management and Marketing

  Managing the Service Profit Logic

  • Christian Gronroos(Author)
  • 2016(Publication Date)
  • Wiley

    (Publisher)

  However, suggestions for how to think and in which direction to go will be made. 26 In traditional manufacturing the constant-quality assumption makes it relatively easy to measure pro- ductivity. A measure of output is compared with a measure of input. If the ratio grows following alterations in the resources or resource structure used in production, productivity improves. Parts of the total service production process can be measured in a similar way. For example, the number of delivery trucks loaded in a warehouse per day, the number of phone calls that a call centre can handle in an hour or the percentage of seats in a restaurant occupied at any given point in time are examples 256 MANAGING PRODUCTIVITY IN SERVICE ORGANIZATIONS of such partial productivity measures. They give management an idea of how efficiently these processes function from an internal perspective, which may sometimes be a useful piece of information. How- ever, such measures must never be used to judge the overall productivity of these processes. Instead, measures of, for example, the number of calls received must always be accompanied by measures of the time spent with customers and the quality of the outcome of the call. 27 In service, produc- tivity measurements must always include a measure of how a given input in the form of resources and resource structures affects perceived service quality and the revenue-generating capability of the organization. In addition, considerations of how well capacity is utilized must also be taken into account. Because service productivity includes both cost efficiency and revenue effectiveness, the develop- ment of a global or total productivity measure has to incorporate both phenomena. A concept which includes both revenues and costs is, of course, profit. When capacity efficiency is included we get close to the profitability of the service operations.

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  The Industrial Study of Economic Progress

  • Hiram Simmons Davis(Author)
  • 2016(Publication Date)
  • University of Pennsylvania Press Anniversary Collection

    (Publisher)

  I . RELATION TO PROFITS AND MONEY COSTS At this point one might be tempted to resort to the measure of efficiency which is used by business, namely profits. Put in the form of an output/input ratio, it is the relation of money income to money expenditure, or revenue received per dollar expended. Certainly such a measure has many advantages—it is not only complete in that all input factors can be accounted for in one total but it is a measure which is readily available and widely used. Still the rate of profits is not a measure of productive efficiency, as an illustration will remind us. Suppose that, by some rearrangement of the flow of work such as the introduction of straight-line system in clothing manu-facture, the output of a shirt factory per week was appreciably increased without any increase in hours of operation, number of workers on payroll, or productive equipment. Obviously such an increase would be an increase in productive efficiency. Yet the profit rate might remain unchanged because the price of materials went up, labor bargained successfully for a wage increase, com-petition forced a reduction in selling price, or for other reasons. In other words, profits, money costs, and the like shift our con-sideration from the question of how much output is secured for a given consumption of input factors to the question of how M E A S U R E M E N T O F E F F I C I E N C Y 23 much has to be paid for these factors in order to consume them. Perhaps there is a kind of efficiency in the degree of success with which a plant or industry bargains for its labor, materials, machinery, or other input items. But efficiency in this economic sense is so different from the productive sense of quantity of output obtained per quantity of input that it appears to be in the interest of clear thinking to reserve the efficiency label for the physical ratio.

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  Practical Operating Theatre Management

  Measuring and Improving Performance and Patient Experience

  • Jaideep J. Pandit(Author)
  • 2018(Publication Date)
  • Cambridge University Press

    (Publisher)

  Chapter 3 Defining ‘Productivity’ Jaideep J. Pandit Introduction In this chapter, we discuss the concept of surgical list ‘productivity’ as distinct from ‘efficiency’, which we discussed in Chapter 2. In broad conceptual terms, efficiency rests on the notion of an input–output rela- tionship. We put something in (e.g., effort or invest- ment), and we get something out (e.g., use of time or resources or completed operations); efficiency is when we get the most out of what we put in. Productivity is, more simply, the crude or total amount we produce. This is rather like the gross domestic product (GDP) of a country, which can be very high, for larger, active economies, regardless of whether their economies are efficient or not at using investments. As a word of warning, however, this chapter is not for the fainthearted. It is possible to skip this chapter without it affecting the reading of the remaining book. As our ideas of measuring theatre list performance develop, so too do our analyses become more sophis- ticated. As in the preceding paragraph, our definitions and distinctions become more subtle and therefore ever further removed from what we might regard as instinctive. Such is the case with ‘productivity’. Moreover, as we shall later discuss, it is not strictly necessary to measure productivity in every case faced by a theatre manager. We will see that a sine qua non for productivity is efficiency, and where there is a problem with a list or series of lists, it almost always lies with efficiency and rarely with productivity. So it is the content of the previous chapter that is really essential. It is rare in practise for a theatre manager to be challenged by a list that is already efficient. Nevertheless, the ideas discussed in this chapter are important for a deeper understanding of how theatre lists work and how best to manage them.

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  Economic Growth

  International Edition

  • David Weil(Author)
  • 2016(Publication Date)
  • Routledge

    (Publisher)

  Part of our approach to studying efficiency will be mathematical and data driven. But we will also study efficiency in a more qualitative fashion, looking for “narrative” evidence of differences in efficiency among countries. One thing that will become clearer in this effort is that it is often easiest to study efficiency by looking at its absence. Just as doctors can best define what “healthy” means only with reference to sickness, it is easiest to understand what it means for an economy to be efficient by looking at examples of inefficiency.

  10.1

  DECOMPOSING PRODUCTIVITY INTO TECHNOLOGY AND EFFICIENCY

  Productivity, as we have seen, is itself determined by two things: technology , which represents the knowledge about how factors of production can be combined to produce output, and efficiency , which measures how effectively given technology and factors of production are actually used. A natural way to think about this relationship in mathematical terms is that technology and efficiency are multiplied to determine productivity:

  A = T × E ,

  (10.1)

  where A is a measure of productivity, T is a measure of technology, and E is a measure of efficiency.

  We can motivate this formulation with the following example. Suppose that we are comparing the output of two farmers. The two farmers employ similar quantities of land, labor, and capital—in other words, there are no differences in the quantities of factors of production they use. There are two differences between the farmers, however. First, Farmer A uses a better variety of seed than Farmer B; indeed, each acre planted with the seed that Farmer A uses produces twice as much grain as each acre planted by Farmer B. The second difference is that the laborers who work for Farmer A insist that out of every two bushels of grain harvested, one bushel should be thrown away. Thus, in the end, the two farmers have the same level of output.

  The difference in the seeds used by Farmer A and Farmer B captures the idea of technology. The difference stemming from Farmer A’s workers throwing away part of the harvest illustrates the idea of efficiency. The technology of Farmer A is twice as good as that of Farmer B, but his production process is only half as efficient. As a result, the two farmers have the same level of productivity.

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