Productivity is the ratio of output to input. Output is the number of items produced and input consists of the total resources (i.e material, labor, machine, tools etc) used to produce these items. The increase in productivity results in decrease in production cost and hence increased profits without sacrificing the quality. Thus

Productivity = Output (Number of items produced) / Input (Total Resources used)

Productivity is increased if

  1. Increase in output without increase in input.
  2. Output remains same with decrease in input.
  3. Rate of increase in output is more than rate of increase in Input.

Methods to increase productivity:

  1. Simplification in product design.
  2. Less variety of products.
  3. Better machines, tools, jigs and fixture.
  4. Skilled labor.
  5. Improvement in production planning and production control techniques so that more items can be produced with existing resources.
  6. Improvement in process by process analysis.
  7. Application of work study technique to improve the method of working operations so that more items can be produced in lesser time.

Measurement of Productivity:

Following are the common methods to measure productivity

  1. Partial Productivity: It is the ratio of total output to individual output

i.e Partial productivity = Total output/Individual input

For Example: Capital productivity = Total Output / Capital Input

Material productivity = Total Output / Material Input

Labor Productivity = Total Output / Labor Input

It is measured to calculate the independent inputs so that improvement may be done in individual input.

2. Total Productivity: It is the ratio of total output to total input.

Total productivity = Total Output / Total Input

This represents the most accurate performance of an organization.

3. Total Factor Productivity (Multi Factor Productivity): It is the ratio of net output to the sum of Inputs of labor and capital.

Total Factor Productivity = Net Output / (Labor + Capital Inputs)