Productivity

Productivity is the ratio of output to input.

The basic equation is:

Productivity = Output / Input

When the output is high relative to the inputs, the process is thought of as productive.

While there are some standard productivity metrics, such as parts per labor hour, the choice is really yours. The key is just to make sure that both outputs and inputs are measurable and that they make sense.

For example, in posting definitions for this Lean dictionary, I might decide to measure my productivity. I would probably use the number of terms as my output. It is easy to count the number of terms in the dictionary, and it makes sense. Readers want answers to their questions, so they want to see a broad range of topics covered. Total word count, for example, would not be important.

Be careful about using misleading inputs. “Labor hours” is precise. If you use “per day” as a denominator, you are asking for trouble. It would not change regardless of how many people were working that day. There is some merit to using units per day as a metric, but just know that it is not a productivity metric.

Productivity is a key part of Lean. It is the ‘C’ (for cost) in the acronym QDC (Quality, Delivery, Cost). Improving productivity keeps companies viable. Competitors are constantly improving their productivity, and suppliers are constantly raising prices. Plus, with the exception of recessionary times, wages are always rising.