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.

Has anyone completed Step 1?

Come on! Someone has to send me an email or a post about what they learned in step 1. After I hear from someone, I will post Step 2.

Sustaining the Gain

At a recent ASQ meeting we were brainstorming training programs to offer during the coming year. We got your typical training ides; Lean, Six Sigma Yellow Belt, Six Sigma Green Belt, and other standard ASQ certification primer classes. I was hoping for newer and more exciting programs.

I then asked the group this question, what issues are our members and their businesses facing? From meetings with other members and local organizations, I believed that many organizations were having difficulty sustaining the results from the projects that had been completed. I believed that we should be offering classes around sustaining gains.

I asked the team to brainstorm ideas on why some project results were not sustained. We then affinitized the results into 3 themes; Leadership commitment, Culture, and lack of process / operations acumen. No surprises here.
In the coming weeks, I will dissect each of these themes into further actionable themes.

However, at a high level, I believe leadership commitment is a result of a couple things, the leadership merry go round (leaders are in their current assignments for short periods of time and are not considering the long term implications of their short term draconian policies. The next leadership issue, is the lack of strategic planning and communication of the plan. How many of you can name the top 3 strategic imperatives for your organization and the metrics being used to monitor the progress towards the strategic imperatives.

Culture is the organizations coping mechanism to the constant change in leadership
and lack of a clear organization strategy.

Lack of process / operations acumen, I believe that they're many people in the roles of process / operations managers or leaders who don't have formal training in managing their process or operations, I believe this to be especially true in transactional functions.

What are you thoughts?