Chapter 2
Productivity and Competitive
advantages 2/1 Introduction:
Productivity is one of the important issues that affect not only the organization's competitive capabilities, but also
the competitive capabili-ties of countries, and the well-being of individuals and society.
Therefore, developed countries focus on issues of productivity and competitive advantages. Improving productivity
achieves several ad-vantages, including: increasing employment rates, decreasing unemploy-ment rates at the
national level, increasing the company’s competitive ca-pabilities, which is positively reflected on its effectiveness
and profits, im-proving the income level of employees and their job stability, and achiev-ing sustainability benefits.
It is the preservation of resources, because im-proving productivity means avoiding waste and wasteful use of
resources to achieve the required outputs.
Production and Operations Management is capable of either “make or die” any organization. Not only because the
operations function is large and, in most companies, represents most of its assets and includes most employees, but
because the operations function achieves competitiveness by providing the ability to respond to customers and
developing capabili-ties that enables the organization to gain a competitive advantage that gives it priority over
competitors. This chapter includes different concepts and methods related to productivity and competitive
advantages.
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2/2 Productivity 2/2/1 The concept of productivity
Productivity is an accurate measure of the efficiency of production and operations management, and productivity is
defined as a measure of the relationship between outputs (products of goods and services) and in-puts (raw
materials - parts - components - labor - capital - management - services) during a certain period. Or it is: the ability
to construct results using specific production elements. Thus, productivity reflects the man-agement's efficiency in
exploiting the available resources to get the best possible production.
The volume, quantity and value of production cannot be used alone to judge the efficiency of the organization, for
example: If the production of factory (x) of cement was 200 thousand tons in the past year, while the volume of
production increased to 250 thousand tons in the following year, does this mean Increased or improved plant
efficiency (x)? Certainly, this cannot be judged based on the volume of production. Production may in-crease in the
form of the number of units produced or in their value, but this is offset by waste of raw materials and inputs to the
production process, or lost efforts, or an increase in labor and energy costs, or a high percentage of wastage or
defective units in output. Therefore, judging the efficiency of the production system requires a measure that
attributes the outputs of the system to its inputs, which is a measure of productivity.
Productivity is measured as follows: 𝑷𝒓𝒐𝒅𝒖𝒄𝒕𝒊𝒗𝒊𝒕𝒚= 𝐎𝐮𝐭𝐩𝐮𝐭𝐈𝐧𝐩𝐮𝐭
The higher the result of this ratio, the higher the efficiency of the production system or the efficiency of production
and operations