What is productivity?
Productivity is the relationship between output and input. It should be viewed as value adding in addition to optimizing. It is a total concept that addresses the key elements of competition, i.e. innovation, cost, quality and delivery.
Therefore, an increase in productivity can be achieved by enhancing the value-added content of products/services, or by decreasing the unit cost of production, or a combination of both.
A focus on productivity as essentially a value-adding process is important because it puts a focus on wealth creation.
The common ground for all businesses is the need to be effective and efficient in the way they manage output.
Operational efficiency and effectiveness will be optimised if:
· There is a maximum UTILISATION of people, machinery and the space resources
· There is a maximum EFFICIENCY in the use of these resources (when they are being utilised)
· QUALITY standards are met completely
· WASTAGE of materials and components is minimised
Within this context, the aim of Resource Productivity Consulting Services activities is to help its clients to create more wealth and raise the standard of living for all their employees.
Why is Productivity Important?
"The single greatest challenge facing managers in the developed countries of the world is to raise the productivity of knowledge and service workers. This challenge, which will dominate the management agenda for the next several decades, will ultimately determine the competitive performance of companies. Even more important, it will determine the very fabric of society and the quality of life in every industrialized nation."
Peter Drucker, World Renowned Management Expert
The productivity concept is best illustrated by the following diagram:
Productivity is the true source of competitive advantage and the key to long term economic viability. A company (or an economy) can only increase its competitiveness through enhancing its productivity by raising the value-added content of its products/services faster than its competitors. If a company fails to increase the value-added content of its activities:
1. it cannot increase the pay for its employees and hence cannot retain good people
2. it cannot increase its re-investment without borrowing
3. it cannot effectively raise fund from the finance market for further investment because it cannot pay good dividends to its shareholders
4. it cannot create better value to its customers
It is clear that productivity is directly linked to the standard of living. No worker can for long be paid more than the value he adds to a product or service without his employer going out of his business. Higher productivity will expand our business, attract more investment, leading to more employment opportunities and a higher standard of living.
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