Productivity analysis refers to the process of differentiating the actual data over the estimated data of output and input measurement and presentation.
In economics, productivity is the ratio of the output production per unit of input. It may also refer to the technical efficiency of production relative to the allocation of resources of enterprises.
If the goal is to increase productivity, enterprises must produce more with the same level of input. The goal can also be done by maintaining the same level of output using fewer inputs. The drive to increase productivity can be caused by various factors, but perhaps the most apparent is the aspiration of an enterprise to increase profitability.
There are certain factors affecting the productivity of entities. General categories of the factors concerning productivity include the labor force, product, quality, process, capacity, and external influences. Resources are also important to consider in assessment of productivity of an entity.
Measuring the production level of an entity may take certain processes that include data acquisition, data summary, and comparison. In obtaining data, documenting the activities of an entity helps in creating tangible reports of certain group transactions. Documents and files can be extremely valuable, particularly during the performance evaluation.
Productivity analysis may be seen as an evaluative activity of the performance of an entity. The purpose of it being employed is to provide the appropriate solution to a problem that hinders the attainment of production goals in the present and future of the company. The findings from productivity analysis being undertaken are indeed of great help in providing an entity the necessary changes to be implemented for the realization of its production goals.
How can productivity analysis be executed?
The process of productivity analysis involves conducting detailed comparisons on production reports and the checking of each source used in the creation of the report. In other words, the process does not only occur from distinguishing the items found on the report, but also determining the data and documents which are relative to the items and elements of production report.
Budgeted and actual time sheets, materials requisition forms, purchase orders, and material withdrawal slips are some of the documents that may have certain values in productivity analysis.
Reports may not be adequate in the provision of findings and recommendations in analysing the productivity of an entity. Random examination of the workplace can also be undertaken as part of the analytic process.
How important is productivity analysis?
An entity that is aiming for increased profitability should focus on the improvement of the aspect of productivity. Productivity analysis can be an important tool to employ to determine the things that need changes or improvement.
Who executes the productivity analysis?
Productivity analysis may be a part of performance evaluation exercise of an entity. It may be conducted after the production report is made and finalized. This activity may be undertaken by someone from the management level or an expert production analyst.
A third party analyst may also be hired to conduct productivity analysis. Expert analysts independent from the entity could provide professional findings and effective recommendations using the proven formula.
The Significance of Productivity Analysis
Productivity is very important in any existing company or organization today. This is precisely why the concept of productivity analysis is something that all companies and organizations have to be very familiar with. In its very basic form, productivity analysis is just a comparison between the estimated and the actual when it comes to manpower expenses.
To determine this comparison, there are actually two items that the company would need. A detailed estimate and accurate time sheets. To get this detailed estimate, research is inevitably needed to avoid any semblance of subjectivity in the matter. Each and every aspect pertaining to manpower expenditures should be considered to get this detailed estimate. As for the time sheets, they should contain all aspects related to work, whether they be coded or indexed. These should then be placed against the correct work order.
A popular misconception regarding productivity analysis is that spot checking is effective. Spot checking is indeed effective to some extent. But the results of spot checking can be misleading at times. This is why trends have to be determined so that the levels of productivity can then be measured more accurately. One way of determining such trends is to develop a chart, so that the results and figures can be seen clearly.
The chart should then contain the scheduled tasks an ordinary work day would entail. These figures should then be placed against the actual manpower that is needed to finish off the daily workload. This way, the comparison would be fitting enough to show you the trends that exist in the performance of the employees and their rate of productivity.
In productivity analysis, it is actually important to notice ongoing trends early on. This is to give way to implement corrective measures, should they be needed. The usual corrective measures companies undertake include adding work schedules and increasing or decreasing the workforce for a particular work schedule.
It is also important to recognize the fact that the productivity of your workforce is not something that you can observe in the visual sense. Visual observation would just give way for subjectivity to arise, and this is something companies have to avoid for the purpose of productivity analysis here would just be defeated. There would be inevitable times when employees would appear idle at the job. Now, some employees are indeed being idle here. However, there are some who are actually working, although they seem to be not. An employee could just be waiting on an order to be signed, for instance. The employee cannot do anything but just stand around while the order is being signed, thus, appearing idle for a few minutes. This is why visual observation is not really reliable when it comes to productivity analysis.
But why the need for productivity analysis? This is primarily because once the figures are determined, there would then be an avenue for needed changes to be implemented right away. With these changes implemented, then the company's rate of productivity would then improve significantly. And this is indeed the ultimate goal any existing company has on top of their list of priorities.