Productivity in practice

Productivity is one of the main concerns of business management and engineering. Practically all companies have established procedures for collecting, analyzing and reporting the necessary data. In the main, improvements in productivity result from technological innovations in manufacturing processes and from economies of scale.

Input data and reporting

At the plant level, in addition to being kept in monetary units, input statistics are commonly kept as weights or volumes of raw or semi-finished materials, kilowatt hours of power, worker hours, etc. As such it is tracked as sets of partial productivity, such as kilowatt-hours per ton or yield (weight of output divided by weight of input), both of which are used in the chemical, refining, wood pulp and other process industries. Quality statistics such as defect rates are similarly tracked. Typically the accounting department has overall responsibility for collecting and organizing and storing the data, but some data normally originates in the various departments. Summary reports are routinely issued to various departments and the department managers are held accountable for managing inputs in their respective areas.

Before widespread use of computer networks, partial productivity was tracked in tabular form and with hand-drawn graphs. Tabulating machines for data processing began being widely used in the 1920s and 1930s and remained in use until mainframe computers became widespread in the late 1960s through the 1970s. By the late 1970s inexpensive computers allowed industrial operations to perform process control and track productivity. Today data collection is largely computerized and almost any variable can be viewed graphically in real time or retrieved for selected time periods.

Approaches to improvement

Many companies have formal programs for continuously improving productivity, such as a production assurance program. Whether they have a formal program or not, companies are constantly looking for ways to improve quality, reduce downtime and inputs of labor, materials, energy and purchased services. Often simple changes to operating methods or processes increase productivity, but the biggest gains are normally from adopting new technologies, which may require capital expenditures for new equipment, computers or software.

Although almost all new manufacturing facilities are computerized, most of the productivity gains from new facilities are the result of using state of the art manufacturing processes, techniques and equipment and economies of scale. Maintenance is also reduced because the facilities are new and because they use more reliable equipment. Before computers, manufacturing plants were automated with analog controls, which did an adequate job. Computers were an improvement, but not a revolutionary one.

Technological maturity

In the diffusion of innovations, the starting point is a discovery or invention. Research and development transforms the invention into an innovation and commercial introduction. Continued innovation improves the product and the processes by which it is produced. Typically the biggest productivity gains in production occur in the early stages. A famous example is the assembly line and the process of mass production that appeared in the decade following commercial introduction of the automobile.^[1] These processes dramatically reduced the labor in producing parts for and assembling the automobile, but after their widespread adaption productivity gains in automobile production were much lower. A similar pattern was observed with electrification, which saw the highest productivity gains in the early decades after introduction. Many other industries show similar patterns. The pattern was again followed by the computer, information and communications industries in the late 1990s when much of the national productivity gains occurred in these industries.^[2]

The efficiency of the steam engine increased from 0.5% for the first model in 1712 to 48% for the best steam thermal power stations today, a factor of over 100. The theoretical maximum conversion efficiency for steam power is 62%, making the theoretical remaining factor 1.3 times today's efficiency.

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