(1) Measure: As a verb, it’s to check the amount or level of something. As a noun, it’s a way of checking.
The measure of our success will be if we can break $200,000 in sales in the first quarter.
(2) Partial Productivity Measure: Comparing output with just one of many inputs
The total productivity measure is useless. The markets are too different. Find a partial measure that uses things that are constant between industries.
(3) Multifactor Measure: Comparing output with several inputs added together
Our factory uses multifactor measures comparing output with labor hours and capital expenses.
1. Why might it be a bad idea to compare total productivity of two factories?
a. You won’t judge the factory on it’s own but only compared to competitors
b. Labor might work more in different countries
c. One input, such as a labor, might influence the results too much
2. Why are multifactor productivity measures used?
a. To compare the total effect of more than one thing
b. To compare the multiple effects of one thing
c. To remove labor from the measure
3. What might the output be for retail stores?
c. Output / (sales + labor)
By Jeremy Schaar
In the last Supply Chain English lesson, you learned the basic definition of productivity. Today, we’ll go a little further. You’ll learn how companies actually use productivity and compare productivity measures in different industries.
A total measure of productivity should use all the inputs and outputs. But this isn’t always the most useful, so partial measures also exist. For instance, let’s say you have one factory in California and another in Mexico. The factory in Mexico appears much more productive, but you think this is due to labor being cheaper. You might check a partial productivity measure of Output / Labor.
A multifactor measure checks output over several things. For example, let’s say you want to check the productivity of each factory, but without labor. You might run Output / (Capital + Materials).
Depending on the industry, you might see a wide variety of productivity measures. Here are some:
Bar: Drinks served per labor hour
Car Factory: Cars per raw materials
Retail Store: Sales per square meter
Hotel: Rooms rented per rooms available
Television: Sales of commercials per program
Web Design: Online sales per time on site
These are just some ideas. How about your industry? How do you measure productivity? What partial measures do you use? What multifactor measures do you use?