What is productivity ?
• Productivity is a measure of the efficiency of
• Productivity is a ratio of what is produced to
what is required to produce it.
• Productivity is the determinant of the efficiency
of an enterprise to convert its variable resources
into useful finished goods and services.
• Productivity = output/input.
• Easiest to measure, there can be more than
one input factor but the output is one factor.
• It uses a single major input which plays an
important role to determine the productivity
• It is a systematic & quantitative approach .
• It was developed by “David .J. Sumanth”.
• It is customer oriented one integrating technical
and human resources situation during the
Reasons to improve Productivity
• Increase in income & profitability.
• Lowering running costs & operational costs.
• It important to improve productivity at all
levels by an organization to be more
• An organization is in problem when if its
human resource is not productive.
Methods to improve productivity
• Ineffective time in work content front.
• Product and process front.
• Labour front.
• Building trust to improve productivity.
• Incentives and bonus front.
• Use of electronics waste reduction front.
• Six sigma
Following are Factors Affecting Productivity in
Equipments Used by Employees-
Quality and Availability of Raw Diamonds.
Standard of Diamonds Produced by firms.
Comparison of Two Firms-
Company A Company B
Rate of Production 200 units per day 175 units per day
Polishing tangs Fully geared Semi geared
Diamond wheels Latest Latest
Automation Automation in all phases Automation in later phases
Wastage level Less More
Workload on work force Less More
No. of working days in a 28 28
No. of Employees 10 12
Employees Training Level same same
No. of labor hours per days 10 10
Analysis of Cost Pattern of Two Firms-
Cost per Unit Company A Company B
Labor Cost- Rs 70 Rs 80
Electricity Cost Rs 10 Rs 15
Capital Cost Rs 40 Rs 35
Packaging Cost Rs 05 Rs 05
Management Cost Rs 20 Rs 20
Other Cost Rs 05 Rs 05
Total Cost Per Unit Rs 150 Rs 160
Comparison of Two Firms-
Production cost Per 1000 units
145000 150000 155000 160000 165000
Cost of Production in Rs.
Comparison of Two Firms-
Productivity Ratios Company A Company B
Productivity= 200/30000=0.0067 175/32000=0.0056
Employee Productivity* 36000/10= Rs 3600 31500/12 = Rs 2625
Total Productivity*= 36000/30000= Rs 1.2 31500/28000= Rs1.125
Total Output/Total Input
*= Assuming selling price Rs 180 per unit
• Production involves the step by step conversion
of one form of material into another through
chemical or mechanical process with a view to
enhance the utility of the product or services.
• According to Elwood Butta “production is a
process by which goods or services are created”.
Characteristics of production system
• Production is an organized activity.
• The production system transforms the various
inputs into useful outputs.
• Production system does not operate in isolation
from the other organizational systems.
• There exists a feed back about the activities
which is essential to control and improve system
Types of production
• Job production
• Batch production
• Mass production
• Continuous production
Functions of production management
• Production planning
• Production control
• Factory building
• Provision of plant services
• Plant layout
• Physical Environment
• Method study
• Inventory control
• Quality control
• Product department
How is production different from
• Production is related to the activity of
producing goods or services. It is a process of
converting input into value-added output.
• Productivity is related to the efficient
utilization of input resource produced in the
form of value added goods or services.
For example :
• “A” spends 90rs, makes 10 products
So, productivity = 10/90 = 0.111
• “B” spends 280rs, makes 30 products
So, productivity = 30/280 = 0.107
• “C” spends 350rs, makes 40 products
So, productivity = 40/350 = 0.114
We have understood three things from the
• Production and productivity are two different
• Increase in production does not necessarily
mean increase in productivity.
• Productivity is always associated with the context
in which it is calculated.
– For example, in the above case, we have calculated
total productivity. While in another case, someone
may like to know about material productivity or
• Productivity is a concept, whereas production is a fact.
• Production is achieved by means of resources,
productivity is measured through means of maximum
manpower, machinery, financial support.
• Production is a variable, dependent on many factors such
as labour availability, motive power, etc. whereas
productivity is the optimum measure of what or how
much can be achieved or realized.
•Performance is the accomplishment of a given task
measured against preset known standard of accuracy,
completeness, cost and speed.
•Performance is usually related to a personal matter and in
a contract is deemed to be the fulfillment of obligation in a
manner that releases the performer from all liabilities
under the contract.
IMPORTANCE OF PERFORMANCE
•Wayne Eckerson of The Data Warehouse Institute
defines Performance Management as “a series of
organizational processes and applications designed to
optimize the execution of business strategy”
•Performance management is a quickly maturing business
discipline. Like its better known siblings—sales and
marketing, human resources, supply chain management,
and accounting and finance—performance management
has a key role to play in improving the overall value of an
SCOPE AND BENEFITS OF
•Business performance management involves consolidation
of data from various sources, querying, and analysis of the
data, and putting the results into practice
•A good performance management system works towards
the improvement of the overall organizational performance
by managing the performances of teams and individuals for
ensuring the achievement of the overall organizational
ambitions and goals.
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