Productivity is the ratio of output to input. The basic equation is:
Productivity = Output / Input
When the output is high relative to the inputs, the process is thought of as productive.
While there are some standard productivity metrics, such as parts per labor hour, the choice is really yours. The key is just to make sure that both outputs and inputs are measurable and that they make sense.
For example, in posting definitions for this Lean dictionary, I could measure my productivity. Let’s use the number of terms as my output. It is easy to count the number of terms in the dictionary, and it makes sense—readers want answers to their questions, so they want to see a broad range of topics covered. Total word count, for example, would not be important.
For the inputs, I could use ‘per day’ or ‘per labor hour’. Both have merit. Per day is relevant if I want to keep the pace going. Per labor hour matters if I want to conserve my limited time. In both cases, though, I can measure the input easily.
Productivity is a key part of Lean. It is the ‘C’ (for cost) in the acronym QDC (Quality, Delivery, Cost). Making productivity gains keeps companies viable. Competitors are constantly improving their productivity, and suppliers are constantly raising prices. Plus, with the exception of recessionary times, wages are always rising.