Indicator to determine productivity ratio you want to monitor will play important role of your success. This is the most difficult step of improvement program we want to applied in our organization. For instance, we might take unit per labor as our productivity ratio. It would be okay when the operation hour keep stabil, meaning no over time and high turn over. When the turn over of your organization quite high, or over time fluctuate during your operation, then the indicator will mislead you. The best indicator would be unit per manhour paid that cover the over time and fluctuated turn over.
However, condition above would be not acurate anymore when the process required different lead time, i.e. every item has different lead time in its process. For instance, to produce item A you might require 10 manhour, but item B require 50 manhour or 5 times of item A. In this situation, the indicator of unit per manhour paid would be inadequate.
In that case above, I will recommend you to use earned hour per work hour paid as your productivity ratio instead of unit per manhour paid. Another alternative is using sales per manhour paid. I myself use those 2 indicators for difference purposes. First indicator indicate the speed of the process. The second one indicate the labor cost.
Why I did this?
Earned hour per manhour paid will help me monitor the speed of my production lead time but it can not show me how labor cost would be. No matter how fast it is, every year the labor wages increase and the sales order fluctuate. Quite often the market or buyer push us to keep the price for next year still as same as current year.
Understand your goals, then your process, will help you find the right indicator for your productivity ratio.
In that case above, I will recommend you to use earned hour per work hour paid as your productivity ratio instead of unit per manhour paid. Another alternative is using sales per manhour paid. I myself use those 2 indicators for difference purposes. First indicator indicate the speed of the process. The second one indicate the labor cost.
Why I did this?
Earned hour per manhour paid will help me monitor the speed of my production lead time but it can not show me how labor cost would be. No matter how fast it is, every year the labor wages increase and the sales order fluctuate. Quite often the market or buyer push us to keep the price for next year still as same as current year.
Understand your goals, then your process, will help you find the right indicator for your productivity ratio.