Productivity - What does that mean to you?

In the literature, productivity is often defined as a combination of efficiency and effectiveness (Mouzas, 2006, as cited in Tsarouhas, 2019). Organizations are effective when they reach customer requirements, pre-determined goals, and objectives (Asmild et al., 2007, as cited in Tsarouhas, 2019). Further, efficiency describes how well an organization performs benchmarked against best practices by utilizing the most economical resources. 

In a production or manufacturing environment, organizations need to pay close attention to both: effectiveness and efficiency. Businesses can only be successful when they manufacture the "right" product, fulfill a demand, and the customers' expectation (effectiveness).

However, just fulfilling demand is not sufficient in a global business setting. With worldwide competitors, organizations need to be efficient in their production. Through Lean Production, organizations strive to eliminate waste from the manufacturing process, getting more efficient. Another solution for improving manufacturing costs is setting up global manufacturing sites, benefitting from cheaper labor costs, raw material prices, and exchange rates. 

In our organization, we did both, focusing on the most efficient manufacturing processes and utilizing globalization. We ensure to stay close to the market (effective) through close contacts with our customers, R&D, trade shows, and close collaborations with universities and research centers. We measure our efficiency through multiple KPI's. From these KPI's, Overall Equipment Efficiency (OEE) is commonly used in a manufacturing setting (Daneshjo et al., 2019), as it considers availability, performance efficiency, and quality. 

References

Daneshjo, N., Malega, P., & Pajerská, E. D. (2019). Production Efficiency in Company with Small Series Production. TEM Journal, 8(4), 1118-1126.

Tsarouhas, P. (2019). Improving operation of the croissant production line through overall equipment effectiveness (OEE). International Journal of Productivity and Performance Management, 68(1), 88-108.