What is the importance of productivity and how to improve it
Creating goods and services in different areas requires that certain
resources be transformed into these (raw materials, supplies, labor,
etc.). The more efficiently the mentioned transformation happens, the
more productive it will be.
In its most basic form, productivity can be understood as the
proportion of outputs (goods and services) among the inputs
(resources such as raw materials, inputs, labor, capital, etc.).
Improving productivity it is of vital importance for any company.
Improving the ratio of outputs and inputs (productivity) will be one
of the most important tasks (if not the most important) that
industrial engineering and in general the directors of operations or
production face in their daily work.
How to improve productivity?
Productivity improvement can be achieved in the following ways:
either by reducing the inputs while the outputs are kept constant, by
increasing the outputs while the inputs are kept constant, or by
increasing the outputs and reducing the inputs at the same time. This
implies an increase in productivity.
From the economic perspective, the inputs can be identified as land,
labor, capital and management. These inputs are combined in a
production system. Through management, the conversion of inputs into
outputs can be achieved. The better the management the greater the
productivity that can be achieved in a given production system.
The outputs resulting from a production process can be goods or
services of various kinds (for example computers, calculators, cell
phones, soft drinks, education, hotels, etc.). Production then can be
viewed as all the goods and services produced. The fact of having a
high production may originate from an increasing number of people
working (which can lead to an increase in employment levels), however
this situation does not necessarily imply that there is a high
productivity.
Measuring productivity is a good way to assess a country's ability to
provide and improve the living standards of its inhabitants. The
increase in productivity is closely linked with the improvement in
productive capacity and therefore, in a macro context, it can lead to
an improvement in the standard of living.
Without an increase in productivity, the increase in the benefits
generated by the factors of production (labor, capital, land,
technology, management) implies an increase in prices. Conversely,
when productivity increases, prices tend to decrease since more is
produced with the same amount of resources.
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