Production is the manufacturing process itself of products, goods and services. Until the end of the process it is necessary to combine several factors, some of them of great complexity. Production can be measured in physical units or in their monetary value (value terms).
Productivity is the relationship between what is obtained after a production process and the factors of production used. It can also be measured in physical units (x kg of wheat per hectare) or in terms of value. To measure the productivity of the total factor , ie the sum of the productivity of the set of all factors, it is necessary to use terms of value.
The differences of both concepts
The main difference between production and productivity is that the latter concept takes into account issues such as profitability and economic benefits , as well as the valuation of the resources used: raw materials, human equipment, technological equipment, infrastructure, etc.
During the production process a series of factors are used on which it is necessary to act to achieve an objective, which would be the production of a certain product or startup of a service.
When we talk about productivity , what is done is to evaluate, through a series of indicators such as the productivity index , both the necessary elements and the work processes to achieve to produce under two important parameters :
- Using logical and proportionate resources .
- Achieving an economic profitability .
We could say that productivity is a higher, or at least more nuanced, step in the production process. Since it is not a matter of producing by producing , but of doing so in the light of available resources and the costs that we can afford in factors such as:
- Human team: labor.
- Materials and raw materials.
- Power sources.
- Necessary infrastructure.
- Technological means.
- Processes and work circuits.
In addition to the economic profitability and the material resources used, a differential factor between production and productivity is the time spent in the manufacture of the various products and services . In productivity, being subject to production rates that are the most appropriate and profitable possible, plays a key role in the time dedicated to the manufacture of products or start-up services. Something that does not happen with the raw production .
In this sense, productivity increases as the time required to manufacture a product decreases.
Factors of production and productivity
In any type of production, as we have seen, certain factors intervene. For example, to get an agricultural product requires the application of a series of techniques by the farmers, the use of appropriate machinery or fertilizers.
All these elements configure the factors of production and to increase productivity it is necessary to combine them properly . For example, we must analyze how many workers are needed and which fertilizers or machinery are the most suitable to achieve the highest level of agricultural products that we are able to sell, so as not to create surplus.
Productivity is, in short, the relationship between the resources used and the associated costs for the production of a necessary good for consumers who, directly or through taxes or social cover, will pay for it, thus generating a profitability for the company.