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The definition of PRODUCTIVITY is given as “OUPUT” compared to “INPUT”.
In the case of a factory, “output” can be taken as the number of products created in a given time frame, whilst “input” is the people, machinery and factory resources required to create those products within that time frame. Indeed, in an ideal situation, “input” should be controlled and minimised whilst “output” is maximised.
The key to cost effective increases in output – in productivity - is to ensure that the relationship between input and output is properly balanced. For example, there is little to be gained from an increase in output if it comes only as a result of a major increase in input.
The more a factory can produce in a given time frame the less overhead allocation per product, which in turn reduces the cost of each individual item and therefore improves the competitive edge and improves profits with higher productivity in the same time frame. Overhead recovery related to factory costs, such as electricity and fuel can be easily achieved.
The factory will run for less time, thereby reducing running costs – savings which will have a positive effect on overhead recovery and cost fast. Higher productivity will enable a manufacturer to produce the same number of products from the same number of people in less time, thereby reducing the number of working hours required to achieve production requirements.
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