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Efficiency Is Not Productivity

Inaccurate efficiency measurements can sometimes mask improvement opportunities

Mark R. Hamel
Tue, 04/02/2013 - 16:19
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Many folks use the terms “efficiency” and “productivity” interchangeably. They are not interchangeable. They are not equivalent. Heck, they’re not even synonyms—even though Thesaurus.com thinks so.

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Technically, productivity is a ratio of (good) outputs to inputs; efficiency is the ratio of actual output to standard output. Lean practitioners are typically, and more appropriately, concerned about productivity. As the famous Art Byrne, former CEO of Wiremold, said, “Productivity = Wealth.”

However, in this article, we are talking about efficiency, and it’s important to understand the basic math around efficiency.

Efficiency is the ratio, typically reflected as a percentage, of actual output to the standard expected output. The measurement therefore provides insight into how well a resource is performing relative to a standard.

 …

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Submitted by umberto mario tunesi on Mon, 04/08/2013 - 21:57

Respectfully

If I may, Efficiency measures what's obtained against what's spent. Productivity measures the number of any widgets - or documents or information - coming out of a given system in a given time. I would not confuse the two definitions, therefore. Productivity is an evidently much easier measure: one goes down to the shop floor and counts the bolts and nuts coming out of the machine, whether good or bad, it doesn't matter. But how efficient that process is, requires a much more sophisticated and - please allow me - educated thinking. Thank you.

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