Total productivity management: Analysis of and discussion on the nature of inputs and outputs

There has always been the need to assess productivity at the organizational level; companies want to know how effectively and efficiently they are utilizing their resources. The challenge however has consistently been in finding a balance between accuracy of the measurement metric and its simplicity/ease of use. The concept of Total Productivity (TP), which is the sum of all tangible outputs divided by the sum of all tangible inputs, has the potential to address this need. However, before TP modeling can be applied, a discussion on the nature of inputs and outputs is in order, especially when considering that these variables will be sourced from company financial statements. As it stands, since the time the concept of Total Productivity Management was proposed, the nature of a typical organization has undergone a significant change and so have the methods of conversion of inputs into outputs. Given this scenario, only clear, well-demarcated definitions of the various input and output variables can ensure that no overlap exists, thus allowing for the computation of TP that is more accurately descriptive of the actual productivity scenario. Therefore, this work reviews the theoretical underpinnings of the major variables that constitute TP and attempts to adapt them to better reflect the nature of today's organization.