Productivity analysis refers to the process of differentiating the actual data over the estimated data of output and input measurement and presentation.

In economics, productivity is the ratio of the output production per unit of input. It may also refer to the technical efficiency of production relative to the allocation of resources of enterprises.

If the goal is to increase productivity, enterprises must produce more with the same level of input. The goal can also be done by maintaining the same level of output using fewer inputs. The drive to increase productivity can be caused by various factors, but perhaps the most apparent is the aspiration of an enterprise to increase profitability.

There are certain factors affecting the productivity of entities. General categories of the factors concerning productivity include the labor force, product, quality, process, capacity, and external influences. Resources are also important to consider in assessment of productivity of an entity.

Measuring the production level of an entity may take certain processes that include data acquisition, data summary, and comparison. In obtaining data, documenting the activities of an entity helps in creating tangible reports of certain group transactions. Documents and files can be extremely valuable, particularly during the performance evaluation.

Productivity analysis may be seen as an evaluative activity of the performance of an entity. The purpose of it being employed is to provide the appropriate solution to a problem that hinders the attainment of production goals in the present and future of the company. The findings from productivity analysis being undertaken are indeed of great help in providing an entity the necessary changes to be implemented for the realization of its production goals.

How can productivity analysis be executed?

The process of productivity analysis involves conducting detailed comparisons on production reports and the checking of each source used in the creation of the report. In other words, the process does not only occur from distinguishing the items found on the report, but also determining the data and documents which are relative to the items and elements of production report.

Budgeted and actual time sheets, materials requisition forms, purchase orders, and material withdrawal slips are some of the documents that may have certain values in productivity analysis.

Reports may not be adequate in the provision of findings and recommendations in analysing the productivity of an entity. Random examination of the workplace can also be undertaken as part of the analytic process.

How important is productivity analysis?

An entity that is aiming for increased profitability should focus on the improvement of the aspect of productivity. Productivity analysis can be an important tool to employ to determine the things that need changes or improvement.

Who executes the productivity analysis?

Productivity analysis may be a part of performance evaluation exercise of an entity. It may be conducted after the production report is made and finalized. This activity may be undertaken by someone from the management level or an expert production analyst.

A third party analyst may also be hired to conduct productivity analysis. Expert analysts independent from the entity could provide professional findings and effective recommendations using the proven formula.