A Guide to Productivity Measurement - Spring

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Table 1 : 10 Key Management Indicators (Cont’d) 24 SPRING Singapore Indicator Unit Formula What It Measures Increase Output Per Unit Cost of Production 3 Value addedto-sales ratio % Value added Sales 4 Profit margin % Operating profit 5 Profit-to-value added ratio Optimise Use of Labour 6 Labour cost competitiveness 7 Labour cost per employee Sales % Operating profit Value added Times Value added Labour cost $ Labour costs Number of employees 1 Proportion of sales created by the organisation over and above purchased materials and services Proportion of sales left to the organisation after deducting all costs Operating profit allocated to the providers of capital as a proportion of value added Efficiency and effectiveness of the organisation in terms of its labour cost Average remuneration per employee Significance of a Lower Indicator Inefficiency in the use of purchases, unfavourable prices for products and purchases, or poor control of stocks Costs are too high and are eroding profits Low sales and/ or high costs, which need to be rectified. However, it may just reflect labourintensiveness. Low levels of efficiency and effectiveness, or high wage rates not matched by efficiency and effectiveness Low remuneration to individual employees Significance of a Higher Indicator Efficiency in use of purchases, favourable price differentials between products and purchases, or good control of stocks Ability to generate high returns from a given amount of sales Ability to generate high sales and/ or low costs. A favourable situation provided that employees are remunerated adequately High efficiency and effectiveness accompanied by reasonable wage rates High remuneration to individual employees Note 1 Employees refer to all categories of employees, including working directors / proprietors/ partners, unpaid family workers and part-time workers. Part-time workers should be converted to their full-time equivalent.
Table 1 : 10 Key Management Indicators (Cont’d) Indicator Unit Formula What It Measures Optimise Use of Capital 8 Sales per dollar of capital 9 Capital intensity 10 Capital productivity Times Sales Fixed assets 2 $ Fixed assets 2 Number of employees 1 Times Value added Fixed assets 2 Efficiency and effectiveness of fixed assets in the generation of sales Extent to which an organisation is capital-intensive Efficiency and effectiveness of fixed assets in the generation of value added ANNEX Common Productivity Indicators Significance of a Lower Indicator Inefficient use of capital or poor marketing Significance of a Higher Indicator Efficient capital utilisation or good marketing Labour-intensive Capital-intensive Inefficient asset utilisation or overinvestment in fixed assets Efficient utilisation of fixed assets Notes 1 Employees refer to all categories of employees, including working directors / proprietors/ partners, unpaid family workers and part-time workers. Part-time workers should be converted to their full-time equivalent. 2 Fixed assets should be stated at net book value, and exclude work-in-progress. A Guide to Productivity Measurement 25
Page 1 and 2: A Guide to Productivity Measurement
Page 3 and 4: CONTENTS 1. INTRODUCTION 2. WHY MEA
Page 5 and 6: 1 INTRODUCTION Integrated Managemen
Page 7 and 8: 3 HOW TO MEASURE Productivity is th
Page 9 and 10: 4 WHAT IS VALUE ADDED? Value added
Page 11 and 12: Value added = Sales - Cost of purch
Page 13 and 14: Value Added Statement Figure 4.2 sh
Page 15 and 16: 5 AN INTEGRATED APPROACH TO PRODUCT
Page 17 and 18: 5 An Integrated Approach To Product
Page 19 and 20: Reliability of data Data should be
Page 21 and 22: 6WHAT DO YOU DO WITH Conclusion PRO
Page 23 and 24: Use of Productivity Measures to Gui
Page 25: ANNEX Common Productivity Indicator
Page 29 and 30: Table 2: Common Indicators for the
Page 32: SPRING Singapore Solaris, 1 Fusiono

A Guide to Productivity Measurement - Spring

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