Ways of Increasing Productivity

Productivity can be increased in a number of ways. It can be increased either by reducing the input for the same level of output or by increasing the output with the level of input or by combination of both. This can be achieved by elimination of waste , by using improved technology , better production design and management efforts there can be increase in productivity by reducing down time of maintenance , reduction in material inputs , better quality of goods , improved utilization of resources , reduction in working capital requirements , reduction in inventory size , improvement in man power skills through training etc . Output can be increased by better leadership management. When employees are better motivated output can be increased.

Decision making is a key factor which effects productivity. Better decisions obtained through educate and timely information system will improve effectiveness and efficiencies of the organization.

Techniques to Improve Productivity

Productivity can be considerably improved by improving the performance of various factors affecting productivity. The measures to improve productivity can be;

• Better planning and training of employees, improved jobs and communication and effective management through CPM/PERT methods.
• Use of time and motion studies to study and improve work performance. It enables to assess the quantum of work which can be used for planning and control.
• Better transportation and material handling systems.
• By providing work incentives and other benefits to workers.
• Workers involvement in decision making and working of organizations.
• Improvement in technology of production process and nature of raw material and the quality.
• Simplification, standardization and specialization techniques.
• Better and efficient utilization of resources at the disposal of the enterprise.
• Use of linear programming and other quantitative techniques for better decision making.
• ABC analysis to identify more important items and then apply inventory control to reduce capital investment.
• Value engineering to reduce material content by good design.

Measurement of Productivity

There are a number of ways to measure productivity. The main criterion of measuring productivity is:

• In term of input performance by calculating changes in output per unit of input.
• On the basis of output performance by calculating changes in input per unit in output.

Following are some of the measures in common use.

Amount of output = Labor Productivity / Amount of Labor

Where output can be measured in total quantity produced and labor can be measured in total manpower required to produce that output. Output and labor can also be measured in terms of their value in money units.

Capital Productivity = Turn / Capital employed

Profit Productivity = Profit / Investment

Energy Productivity = Output / Quantity of energy used

A general measure of productivity can be defined as;

Productivity = Output / Labor + Capital +Other inputs

Each kind of measure needs some specific kind of information. The appropriate measure can be selected on the basis of information available and the objective of investigation. In fact the measure of productivity indicates the performance of inputs namely labor and capital in an enterprise. Increase in output is not an indication of increase in productivity. Production is an absolute measure and productivity is a relative measure.

Productivity and Input Output Analysis: Input-output analysis is a method to study the interdependence of input and output factors of production system. It tries to locate the equilibrium between input and output factors. If Y denotes the final demand of an industry and A is the matrix of inputs then the outputs for each industry can be determined by the relation;

X= (1-A)

Where I is the identity matrix and X is the matrix of estimated output. (1-A) is known as Technology matrix. Input-Output analysis can be used to study the productivity of an enterprise. The index of productivity can be defined as:

Qi (1-Ai) Po / Qo (1-Ao) Po

Where Po Qo is the value of output in the base year and QiPo value in the current year based on base year, (1-Ai) is technology matrix in current year and (1-Ao) is technology matrix in base year.


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