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productivity and efficiency

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  • #40823

    elis
    Participant

    Can anyone explains the difference between productivity and efficiency. Thanks!

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    #127486

    Gooseneck
    Participant

    Im looking for a better understanding myself. What others are saying is :
    Per Goldratt
    Productivity : All the things that bring a company closer to its goals .
    Per Others:
    = Output / Input.
    Efficiency : Actual Output / Standard Output.
    OR Efficiency : Output / Total Input
     

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    #127521

    Ritz
    Member

    I’ve seen several definitions, and most have been adapted to the business need.  I do not know if there is a “standard” out there — what we used at Ford matches Gooseneck’s post though.  Below is an example that may help illustrate one way of defining the two — Ford used the following definitions in understanding service technician productivity and efficiency:
    Productivity: Hours Worked / Hours Available.  If a technician worked 6 hours in an 8 hour day (time off for breaks, lunch, waiting for parts, etc.), they would be 75% productive.
    Efficiency: Hours Produced / Hours Worked.  If a technician completed an engine repair in 4 hours and standard repair procedure would take 6, he was said to be 150% efficient. 
    You could never be more than 100% Productive, but you could be more than 100% Efficient. 
    Ford also looked at a repeat-repair as a measure of quality and compared results — you don’t want to assume that high productivity and high efficiency are the best mix.  I can be very productive working all 8 hours on a 4 hour repair, but my efficiency would tank.  Ford also looked at the P/E ratio as a measurement of individual and total shop effectiveness.
    Hope this helps.
    Ritz
     

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    #127522

    CT
    Participant

    Elis,
    Most companies report just as Ritz has stated. To clearify just a little further: Standard cost is the fixed standard by which productivity is measured. for example if a machine can produce 620 pcs per hr gross, it’s standard cost is based on normal operational downtime (ie, breaks, normal tool changes, changeovers, ect) which may only be 560 pcs per hr. We would call this 100% efficient but only 90.3% productivity (560/620*100). A lot goes into standard labor hours, and extensive time studies are done to get the best labor cost available. Anytime you see consistant standard labor efficiencies higher than 105% a new time study should be done, this will help show a lower labor standard. Be prepared for production to push back as they would rather have some cushion to run to.
    CT

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