Productivity is the state or quality of being productive. The goal of every individual or business is to be productive. Now, I am going to explain productivity related to manufacturing plants or an organization. This article contains productivity definition, the purpose of improving productivity, and factors affecting productivity.
What you are going to learn?
What is Productivity?
The productivity of a production system is similar to the efficiency of the production system. Productivity may be defined as the ratio of the output of the system to its input. Output means the number of finished products or services, and inputs are land, building, equipment, material, machinery, labor, etc.
Purpose of improving productivity:
1. For Management:
Since the improvement of productivity allows producing more products or services, hence profit will be more. It will help to clear the debts or loans taken from different sources. Increases in productivity allow management to sell products at a lower price than the competition and to stand better in the competitive market.
2. For workers:
Higher productivity implies more profit for the organization and that helps the worker to get more wages, better working conditions, and the standard of living will be higher. Workers are able to increase productivity that reflects their skillfulness, so job security and job satisfaction will be there.
3. For customers:
The increase in productivity means the consumer will able to buy more amounts of goods at a lower price. it will improve their living standard. Products can be distributed to more areas so that more people can access the products.
How to calculate productivity? Productivity Formula
Measuring productivity in an organization is helps to measure the productivity of the processes of an organization. Generally, we measure productivity by the ratio of the output of the production system to its input. Here output means finished product or services, and inputs are man, material, machine, etc.
Productivity can be measure by two approach, single-factor approach to measurement productivity and all-factor measurement approach.
In single factor approach to measure productivity, we measure productivity of capital, materials, direct labor, overhead separately.
- For Capital, productivity is the number of products produced Divided by asset value.
- For Materials – Number of products produced Divided by dollars spent on materials.
- Direct Labor – Number of products produced Divided by direct labour-hours.
- Overhead – Number of products produced Divided by dollars spent on overhead.
In All-factor measurement approach, we calculates the ratio of total output to total number of total inputs.
In a production unit 500 labor hour is needed to produce 10,000 units of product. In this case, productivity of labor is 10,000 units / 500 hr = 20unit / hr.
Factors Affecting productivity:
Selection of the right man for a specific work is very important, it impacts a lot on the productivity of any organization. Every company should have an effective training programme so that new employees can learn about their job role properly. The general level of education is important for workers. To operate a computer and other electronic equipment, educated employees are needed. Employees need to be motivated to be productive.
They need to have good, and safe working condition to perform better, only pay is not enough. The government can help by sponsoring more education, skill training, etc.
Through better product design, the unnecessary parts can be eliminated, by this way uses of material can be reduced, with that cost of labour, equipment, etc are also reduced. This will allow lowering the price of the product and make it more affordable for the customers. The design of the parts should be simple so that manufacturing can be completed in a shorter time and less worker.
The role of research and development is vital for effective product design. Standardization of product and the uses of group technology and other design factors that make it possible to improve productivity.
3. Technology and Capital Investment:
One of the major factors in continuing productivity improvement is the technology and capital investment. Adoption of new and better technologies make the process easier and faster than old, conventional methods. New technology depends on the Research and development department. To apply new technology, investment in the latest machinery and equipment is very important.
The government should promote Research and Development Industries, encourage personal savings, and reduce taxes on profits so people can invest in facilities. Directly encourage new investment through a change in investment tax credits.
4. Machinery and Equipment:
The proper layout of the plant and machinery is very important to increase productivity, it reduces the material handling cost, reduce the rest time thus improve productivity.
The equipment used, machines, conveyors, robots, all are important factor in productivity. Computer-aided design(CAD) and CNC have become an essential ingredient in productivity improvement. It helps to make complicated parts very easily.
5. Skill and Effectiveness of the Worker:
A trained worker can do the same job in a much shorter time, so every company should have a proper training program for new workers. Experienced workers also need to be trained, whenever new machines and equipment arrive.
Every employee should work in their specialized department, where they can work effectively. However, even well-trained employees must be motivated to be productive.
6. Production Volume:
If the volume of output to be increased, the number of direct workers and few indirect workers need to be increased. But there would probably not be needed for more number of engineers, research scientists, headquarters staff people. So the increase in production volume increases productivity.
7. Government Regulation:
The government can eliminate unneeded regulations and make a cost-benefit analysis to determine necessary regulation such as health and safety. More rules and regulations make the process complicated, its effects on productivity.