Productivity is commonly defined as a ratio between the volume of output and the volume of inputs. In other words, it measures how efficiently production inputs, such as labour and capital, are being used in an economy to produce a given level of output. Productivity is considered a key source of economic growth and competitiveness. Ever since the industrial revolution, people have been working to use the smallest effort to produce the largest output, so that resources, including human, are utilized more efficiently. Similarly, service companies aim to increase the number of customers served by one employee in a unit of time.
This will also motivate employees and gives them more job opportunities as the company grows. Maximizing the use of all of the company’s resources such as land, equipment’s/machineries, factory, workers, and etc. When the productivity of a company improves, the business will gain many benefits. To have motivated employees means increased productivity at work. If employees are rewarded, they will see their hard work paying off in tangible way i.e. productivity.
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Furthermore, scheduling allows managers to forecast how much will be produced by the end of the day, week, or month. If a firm does not meet its production schedule, it will not be able to accommodate customer orders in a timely fashion and will lose some of its customers. Scheduling is the act of setting time periods for each task in the production process. A production schedule is a plan for the timing and volume of production tasks.
It improves the exports and foreign exchange reserves of a country. Economic Factors like Size of the market, banking and credit facilities, transport and communication systems, etc. is important factors influencing productivity. Ability to work is governed by education, training, experience and aptitude of the employees. Productivity of an organization depends upon the competence and caliber of its people (both workers and managers).
Social customs, traditions and institutions influence attitudes towards work and job. The competence and attitudes of managers have an important bearing on productivity. In many organizations, productivity is low despite latest technology and trained manpower. Competent and dedicated managers can obtain extraordinary results from ordinary people.
Acts as a good diagnostic measure to identify areas of improvement by evaluating inputs separately across the output. A quality circle programme is based on the philosophy that quality and output can be improved through the participation of employees in solving work problems. A quality circle is a small group of workers which regularly meets to discuss problems, investigate causes, recommend solutions and if authorized, to take corrective action.
In what parts of the economy is productivity measured?
These are human, material, capital, energy and other expenses. This model can be applied in any manufacturing or service organization. The Total Factor Productivity model developed by John W. Kendrick in 1951, he has taken only labour and capital as only two input factors. In an effort to improve productivity of labour, company may install more machinery and then productivity of labour will go up bringing down the capital productivity. The purpose of a quality circle programme is to improve motivation, productivity and product quality.
The Commonly Used Hand Operated Material Handling Equipment
Once a site for a manufacturing plant or office is chosen, the design and layout must be determined. The design indicates the size and structure of the plant or office. The layout is the arrangement of the machinery and equipment within the factory or office.
The best thing about internal factors is that you can control many of them. External factors are all those things that are beyond your control. To deal with all these factors we need different people and variety of techniques and methods. Increasing the output to a maximum extent with a smaller increase in input. Tutorials Point is a leading Ed Tech company striving to provide the best learning material on technical and non-technical subjects.
- Continuing research and development (R & D) leads to the discovery of better techniques of production and improvements in existing machinery, equipment, etc.
- Productivity aims at the maximum utilization of resources for yielding as many goods and services as possible, desired by consumers at lowest possible cost.
- Productivity is a measure of the rate at which output of goods and services are produced per unit of input (labour, capital, raw materials, etc.).
- When a firm is highly productive it becomes successful eventually, and because of this, incentives are bound to be made available to the employees.
The ‘labour cost’ of goods has fallen dramatically
Productivity can be improved by improving product design, by improving the quality of parts of product. This included use of advanced and updated technology to increase productivity. It consist CAD/CAM/CIMS, Robotics, Laser technology, Modern maintenance technology, Energy technology, Flexible manufacturing system (FMS). (b) Work Measurement is an application of technique designed to establish and time required by qualified worker to carry out specified tasks at defined level of performance. Most industries do not have proper records of the inputs of land, labor, capital and machines. Even if what is the ratio of output to input such records are available, it is very difficult to calculate the exact number of man hours worked i.e. the input of labor.
The ABS provides estimates for two ‘market sectors’ — the 12 and 16 industry market sectors — the latter distinguished by the fact that less historical data are available. Quoting just the increase in GDP per capita fails to capture the enormous change in lifestyle of everyday Australians, including the most disadvantaged members of society, since Federation. For example, the price of individual goods, in terms of hours a person needs to work in order to buy them, has fallen dramatically (see table below). The bicycle provides a more dramatic example as in 1901 it would have required several months of work to afford, but now requires less than a day of work (for a basic model). Factorial productivity means to calculate the productivity of different factors of production separately. Some management experts say that a single factor of production cannot produce anything by itself.
Capital was deliberately left out as it is most difficult to estimate how much capital is being consumed per unit/ time. “Productivity is an aggregate measure of the efficiency of production; it is the ratio of output to inputs i.e. capital, labor, land, energy and materials”. Usually, the growth in labour productivity exceeds the growth in multifactor productivity. The additional contribution comes from ‘capital deepening’. That is, the accumulation of more and better capital equipment over time helps to make people more productive. Productivity is a measure of the rate at which output of goods and services are produced per unit of input (labour, capital, raw materials, etc.).
