Depending on the nature of the business and the overall goal of the organization, sometimes it is often necessary to make trade-offs in order to accomplish or improve overall productivity. For example, one of the most profound and far-reaching is when capital is traded for labor. It is important to understand the concept of labor which refers to workers and their tradable labor power or work needed to produce a certain amount of goods or services. The productivity of the labor can best be measured by an assessment of the output, which is based on the work that is produced and compared to some measure of labor inputs, such as the labor hours (Vonderembse, & White, 2013).
On the other hand, capital refers to financial, material or other materials of production. The capital productivity factor assesses the output such as units produced and compares it to inputs, such as machine hours or cost in dollars. Capital investments are often made in land, facilities, and equipment (Vonderembse, & White, 2013). Automation of activities in the workplace that was traditionally performed by people is a good illustration of this concept. For example, the hiring process has vastly changed based on the extensive use of automated systems that are used by many organizations for recruitment purposes. Automated hiring tools that are used by more than 81% of employers today can read through applications at amazing speeds to find keywords that match the employment needs. As a result, this significantly reduces the time to hire and cut the screening process time for the hiring managers which results in greater productivity.
Also, sometimes the material cost is traded for increases in labor productivity. For example, if an organization can achieve higher output rates from the labor force, then they may willingly increase the cost of tits incoming materials (Vonderembse, & White, 2013).
Vonderembse, M.A., & White, G.P. (2013). Operations Management [Electronic version].
Retrieved from https://content.ashford.edu/
The output is a measurement known as productivity, while efficiency measures the total amount of resources used and in comparison to goods produced, the surplus is developed and it pertains to how established an objective is achieved. Trade-offs are essential to upsurge productivity, and one of the most significant aspects to accomplish this task is efficiency. “Innovation and automation change the way work is done and provide important methods to increase productivity” (Vonderembse & White, 2013, 3.4). Effective production regulates if an economic level can proficiently generate goods without discarding resources. When the economy ceases to produce supplementary products devoid of decreasing the production level of another good it is identified as production efficiency.
The efficiency of production is a resourceful and difficult tradeoff to determine all stages of production. This significant assignment can only be achieved when a good is developed at the lowest regular total cost. On the other hand, if the economy stops producing more goods after the max level of production has been reached without dropping the manufacturer of another. One of the key importance of productivity is quality. Quality affects how customers participate in a brand. Positive engagement will reduce cost, higher productivity, and profitability. Establishing quality values devoid of affecting a portion of the process while simultaneously reducing waste from each phase of production is acceptable, and will be evaluated.
Companies must arrange a balance between the rate of production and the quality of the goods being produced plus the use of these resources. When it is not likely to enhance performance in one area deprived of damaging another, valid production competence can be achieved. Regretfully, it is not likely for the production of more goods without trading off surplus resources or possibly sacrificing product quality when the efficiency of production has been sustained.
An example would be the manufacturers of cigars. A cigar quality is determined by the environment in which the tobacco is grown and by the skills of the laborers. In order to increase production, companies place very little importance on the skills of the employee. The environment in which it is grown is shortened in order to begin production, thus affecting the taste and quality of this product. Making more cigars require the usage of leaves that normally would be discarded. Also, more costly fertilizers are used to enhance the quality of the leaves and many companies use lower grade fertilizers in order to mass-produce but at the expense of quality.
Vonderembse, M. A., & White, G. P. (2013). Operations management [Electronic version]. Retrieved from https://content.ashford.edu