The basics of how to compute Productivity in a company

[goallout - 2009]

Hi

I know is a bit silly to ask ... but I am just as curious to know whether I am missing anything. Would like to hear from others how to their company compute Productivity.
The often used basics is : resources (manpower used), manpower-time required and the output being produced.
Is there others using different computation ?

Thks

 

[Jen Kirley]

It is absolutely not a silly question because so few companies understand all that is involved with productivity.

So, they will measure it in ways they understand how to count costs for. Cost of scrap, cycle time, and the "stuff in, stuff out" method you cited are used.

I shrink from these methods because they tempt the manager to say "There, all done!" when producing this measure, which actually tells very little about what is actually happening.

If managers really wanted to improve productivity they would break down the measurements into smaller, process oriented chunks, they could better understand why the final numbers are come out as they do. They could direct their resources to fixing that portion, such as an inspection bottleneck or a streamlined change approval process, and measure those outcomes as contributions to productivity. Without such an approach managers are probably guessing what they should do, or just exerting force on people to do more work in the allotted time.

 

[reynald]

Hi

I know is a bit silly to ask ...

Well first i agree with Jennifer that its not silly to ask...
For me it's the wise thing to do
some manager's i know dont have an idea what productivity means.

Hi
Would like to hear from others how to their company compute Productivity.
The often used basics is : resources (manpower used), manpower-time required and the output being produced.
Thks

OK. the basic of course is Productivity = Output/Input. But there are variations being used. Two major classifications are:
1.)Total Productivity = Revenue/(Direct+Overhead Expense). This is often used by our Top Management in thier Year-end Presentation.
2.)Partial Productivity = Specific Output (in terms of units or $, etc)/Specific Input. This is ussualy used by middle management for presentations to Top management. Example:
Machine Productivity = Units produced / Machine Hrs.
Labor Productivity = Units produced/ Manhours rendered
Note: Partial productivity of course can be misleading in a way that you assume that increase in Output is directly attributable to an specific input. But this is exactly the reason why most middle managers love to present it.

Hope that helps somehow.

 

[DannyK]

I agree with Reynolds. I would add to each equation

( minus cost of non quality).


Danny

 

[goallout - 2009]

Hi

I like the way Jennifer define productivity. I think most of us like to narrow our way measuring Productivity. Some years back, I was told measure Productivity ... and when that done (using the basic formula .. output/input), I have got my boss beating me what does the data means.

Thks

 

[antoine.dias]

Quote :
I know is a bit silly to ask ... but I am just as curious to know whether I am missing anything. Would like to hear from others how to their company compute Productivity.
The often used basics is : resources (manpower used), manpower-time required and the output being produced.
Is there others using different computation ?
Unquote

Not at all silly to ask.
IMO the O.E.E. indicators ( Overall Equipment Effectiveness ) give a good view of what is happening in the workshop.
In this method you have the combination of :

- Availability ( machine up-time )
- Performance ( real capacity against the calculated )
- Quality rate ( first time right )

If you follow O.E.E. per machine or per process you will have a good overview of where the bottlenecks are. You can calculate an " overall O.E.E. " as well.

Best regards,

Antoine

 

[harry]

Quote :
IMO the O.E.E. indicators ( Overall Equipment Effectiveness ) give a good view of what is happening in the workshop.
In this method you have the combination of :

- Availability ( machine up-time )
- Performance ( real capacity against the calculated )
- Quality rate ( first time right )

If you follow O.E.E. per machine or per process you will have a good overview of where the bottlenecks are. You can calculate an " overall O.E.E. " as well.

Best regards,

Antoine

Agreed. I like this method also. We have some good materials here - just do a search.

 

[Kissha]

This is very informative