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Increasing Productivity
Recent OECD comparative studies have implied New Zealander’s are performing poorly in increasing our productivity.
What does this mean? Are others working harder than we are, are we lazier than they are? If so, why is Australia ahead of us!
For an SME, productivity is easiest to understand by seeing it as a measure of valuable output, produced over time, by people.
Therefore to increase productivity we need to use our people time more effectively.
How can we do this? Well the easiest way is to replace people time with machine time.
A machine is anything that does work currently being carried out by people. So machines include using technology such as computer programs and systemisation of processes as well as using plant and equipment.
Put simply in mathematical terms, if we can produce double the output of a person every hour we have increased productivity by 100%. If we do this by increasing costs by less than the value of the extra output, we will increase profits.
Make the effort to find ways of increasing productivity. It is easy enough to do when you think of it as replacing people time with machine time.
We are able to help, especially in understanding the true cost of a machine verses the true cost of people time.
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