What the heck does "Productivity" mean?

I'm often asked to define productivity and its algorithm. Also, I often hear productivity, production, and capacity used interchangeable. For some reason this drives me nuts because they all have different meanings.
I hope my write up below helps you understand what productivity means.

What is productivity?
Productivity is the ratio of outputs (goods and services) divided by one or more inputs (labor hours, FTEs, capital, expenses).



Improvements in productivity can be achieved by either increasing output without increasing the inputs, decreasing inputs without decreasing output, or increasing output and decreasing inputs.

Output implies production (quantity) of goods and services while input means land, labor, capital, management etc. Productivity measures the efficiency of the production system. Higher productivity means producing more from a given amount of input or producing a given amount with minimum level of inputs.
In other words, the more the output from one worker, one machine, or a piece of equipment per day per shift, the higher is the productivity (producing more output with the same resources).

In strategic operations management, productivity and production are two different terms. Productivity is the ratio between total output and the total inputs used in the production process. Production is an absolute; it refers to the volume (quantity) of output. Production volume may increase but productivity may decline as a result of inefficient use of resources. More efficient use of inputs may increase productivity but the volume of production may not increase. Production refers to the end result of production system whereas productivity reflects its efficiency.

Some of the potential benefits derived from higher productivity are as follows:
1. It helps to cut down cost per unit and thereby improve the profits.
2. Gains from productivity can be transferred to the consumers in from of lower priced products or better quality products.
3. These gains can also be shared with workers or employees by paying them at higher rate.

Reduce your transactional backlogs and transactional cycle times by 50% each in 45 days! Step 2

Get a list of all open backlogged (open transactions).
For each transaction calculate its age.
Sort the transactions in descending calculated age order.
Find someone, anyone, who can help you get this report everyday, if not, in real time.

More to come!
What do you think the next step is?

Read this article on Little's law.

Reduce your transactional backlogs and transactional cycle times by 50% each in 45 days! Step 1

Ok, you want to want to be a Lean Six Sigma Rock Star. This is the first step in reducing your transactional backlogs and transactional cycle times by 50% each in 45 days.
Have your employees who resolve your customer issues, cases, complaints, bugs or whatever, document all the tasks they do in a month and how much time is spent doing each task. To make it easy, create a spreadsheet for them to populate.
Examples of tasks are; answering email, training, meetings, special projects and so on.
After they have done so, review the document to understand how much time they spend doing other things rather than the primary activities and tasks they were hired to do.
What are thoughts? What have you learned? What percentage of their total time is doing things they weren't hired to do?

So you want to be a Lean Six Sigma Rock Star

I will be publishing some steps you can to take to reduce your transactional backlogs and transactional cycle times by 50% each in 45 days. I know this can be done my team team has done it many, many times. Believe it or not, you don't need a lot of fancy tools or training to do so.


But first, you have to be believe.

Second, do you have the courage to face and address the bias in your facts.

Stayed tuned for more.