Productivity VS Efficiency

Six Sigma – iSixSigma Forums Old Forums General Productivity VS Efficiency

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    How we can differentiate between Assembly line Productivity & Efficiency. Is their a method to Corelate both.



    What is your organization’s current definition of efficiency? Productivity? What metrics do you have in place to quantify and validate those definitions?

     Consider throughput as an important part of your definition(s) and measurements. Good Luck! OLD



    Productivity is output per hour (or some similar measure like labor hour).  Efficiency is the ratio of stuff in to stuff out.  If you put both into dollars or tme, they are implicitly correlated.
    I am a fan of The Goal measurements when looking at improvement.  In term of $ efficiency and productivity reporting, I really like Goldratt’s take on what an hour actually costs.  If you are calculating either of these measurements on a bottleneck, then the cost/hour is not only the cost of the machine and its labor to produce a part, but also the inability to produce a finished/sold good for every part not made.  You may calculate the cost per hour for a part at $10 at that machine.  But if it is down and is a bottleneck, then you can’t sell that one part, which may be $30 (or if a subcomponent, it could be $1000’s).
    This approach really frustrates accounting by the way.  It is a nice way to see for yourself how much you are actually losing/making when investigating processes.  ccounting will still want the traditional measurements, more than likely.

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