Following points differentiates production from productivity.
- Production is step by step transformation process of inputs into outputs having desired utility
and quality whereas productivity is defined as human effort to produce more and more with
less and less inputs of resources.
- Production refers to absolute output whereas productivity is a relative term where the output
is always expressed in terms of inputs.
- Production is value addition process while productivity is efficiency of production system.
- The production may rise without the corresponding rise in productivity and vice versa i.e.
increase in production may or may not be an indicator of increase in productivity and vice
versa.
Example:
- Let us assume that a scooter manufacturing company was producing 500 vehicles
per day.
- Its output is increased to 600 vehicles per day. Then the production of the company
is increased. But this is not assured that the productivity is increased.
- This is because the productivity takes into account the increase in inputs to achieve this increase in output.
In the above example the productivity will be increased if increase in no.of vehicles (from
500 to 600 vehicles per day) is achieved without increasing the inputs or with little increase in
inputs.
- If the output rises at slower rate than the input, there will be fall in the productivity
even though there is rise in production.