Difference Between Production And Productivity
Dstinguish between 'productivity' and 'production'.
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Production is “the act of producing, making, or creating something.” Productivity is “the state of being productive.” In other words, production is when you actually make something, and productivity is the state or measurement of how much you are making.
In a business sense, production can be defined by four factors: land, labor, capital, and entrepreneurship.
- Land - Resources that are available for production—the raw goods necessary to make something.
- Labor - Human input into the production process—workers who convert the raw goods into products.
- Capital - Goods used in the supply of products—infrastructure, factories, buildings, machinery, and anything that aids labor.
- Entrepreneurship - Individuals who bring the finished products to market—entrepreneurs invest their own capital and take the risk that the whole process will be profitable.
All of these are necessary for production to take place. Entrepreneurs must put forth the money, time, effort, and risk to employ labor and capital and enable them to turn land or raw goods into the products or services they wish to sell.
Productivity, as a business term, is the measure of output per unit of input. An input could be any of the four factors of production, while the output could be revenue or inventory. The overall goal of an efficient, productive company is to maximize output per input. Land, labor, and capital can be limited and scarce, so a highly productive company will be able to make the absolute most out of the resources or inputs it has.
Regardless of what one is producing there are specific resources necessary for production to take place. The four factors of production are land, labor, capital, and entrepreneurship. Productivity measures the efficiency of those factors of production, how much output verses how much input. For example, take the farming industry today one farmer can produce more vegetables than he could have 100 years ago thus feeding more people. Why? productivity in the farming industry has become more efficient due to technological advances, better fertilizers and control over mother nature. All businesses seek to increase their profits and measuring the levels of productivity with regard to costs, revenues, and profits allows businesses to gauge the efficiency of any or all the factors of production. The more efficient and streamlined costs and revenues are monitored the greater the profit margin will be.
Productivity of an organization is defined as the ratio of outputs produced by the organization and the resources consumed in the process. Thus we can describe productivity mathematically as:
Productivity = Output / Inputs
Here the output refers to the quantity of and services produced by the company, and inputs refers to the quantities of resources such as labor, material, physical facilities, and energy consumed for producing the same.
Production is the total output produced by an organization in a given period. These outputs consist of the goods and services that are supplied by a company to its customers.
Productivity is concerned with the inputs used in the process. Thus productivity represents only the numerator in the above equation for productivity.
Productivity is used to assess the extent to which certain outputs can be extracted from a given input. We can measure productivity for a single input resource such as manpower used, or for multiple resources. There can be many different types of productivity measurement depending on the type of resources considered. Some of the most common types of productivity measurements include labor productivity, machine or capital productivity, material productivity, and land productivity. Here the term ‘land’ is used to denote all natural resources rather than just land.
Managers also need to pay attention to the total production to make sure that a company is meeting the requirements of products and services required by the customers.
Managers also need to pay attention to production for production planning and scheduling.
Similarly, long term planning of sales volumes and production capacities also requires focusing on production.
1]Productivity is a concept,whereas production is a fact
2]Production is achieved by means of resources,productivity is measured through means of maximum manpower,machinery.financial support.
3]Production is a variable,dependent on many factors such as labour availability, motive power,etc. whereas productivity is the optimum measure of what or how much can be achieved or realized.