Difference Between Production and Productivity

Edited by Diffzy | Updated on: July 02, 2023


Difference Between Production and Productivity

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Two terms are often used in the economics and business world: Productivity and Productivity. Although similar, they have different meanings and play an important role in measuring and improving operational efficiency. The purpose of this article is to examine the main differences between production and productivity and highlight the importance and contribution of each to the overall success of an organization.

Production vs Productivity

Production is the process of producing goods and services. It includes transforming inputs such as raw materials, labour and capital into final products or services that can be consumed or sold. Production is carried out in several sectors, e.g. manufacturing, agriculture and services. The focus is on the production and delivery of results. On the other hand, productivity is an indicator of effectiveness or output per unit of input. The efficiency at which resources are used in the production process is indicated. Productivity is expressed as a ratio comparing the output produced to the input required. The more productive you are, the more product you produce with the same or fewer resources. It is a measure of how efficiently resources are used to produce goods and services.

Production is a fundamental economic concept about transforming inputs into outputs and creating goods and services that satisfy human needs and desires. The purpose of this article is to delve into the concept of production and consider its definition, calculation methods, different production techniques, and the factors that affect its efficiency.

Difference Between Production and Productivity in Tabular Form

Parameter of ComparisonProductionProductivity
DefinitonThe process of transforming inputs into outputs to produce goods and services.A measure of efficiency and effectiveness in using resources to produce output.
ObjectiveGenerate output.Resource utilization and efficiency
CalculationQuantify the number of goods produced or services provided.Output per resource or input unit
Based onOutput basedOutput or value added per unit
ScopeNarrow perspectiveBroader view

What is Production?

Production is the process of integrating different inputs including labour, capital, technology, and raw materials to create goods and services. It involves converting these inputs into final products or services that may be instantly consumed or sold. Manufacturing has a significant role in economic growth and development and improves society as a whole.

Production Calculation

The method you use to calculate production volume relies on the circumstances and sector you are in. However, the two approaches listed below are frequently used to estimate productivity.

Output-Based Measurements

This approach counts the number of items or services produced to calculate the output. For instance, the total number of units produced for a given period may be determined by calculating production volumes in manufacturing.

Measurement of Added Value

This approach aims at adding value throughout each stage of production. Tells us how to distinguish between output and input value in the production process. Value added is a comprehensive measure that captures the economic contribution of various stages of production.

Manufacturing Method

There are three main production methods:

Custom Production

Custom manufacturing is the creation of a unique bespoke product or service customized to a specific customer's requirements. Enabling customization often requires skilled workers and flexible production processes.

Serial Production

Batch production is the production of goods in batches or groups. It is portrayed by the creation of restricted amounts of something similar or comparative item before changing to another part. Because it allows for the use of specialized equipment and economies of scale, this method enables higher levels of efficiency than contract manufacturing.

Mass Production

Using automation and assembly lines, mass production is the mass production of standardized goods. It is the continuous production of large quantities of the same product at a lower cost per unit due to economies of scale?

Factors Affecting Production Efficiency

Several factors affect the efficiency of the production process and affect overall performance. These factors include:

Technology and Innovation

Technological progress plays an important role in improving production efficiency. Using advanced machinery, automation and digital technology can streamline processes, reduce errors and increase productivity.

Job Skills and Education

Employee abilities and skills altogether affect creation productivity. Employees with the right qualifications and training can do their jobs better, make fewer mistakes, and increase productivity overall.

Input Availability and Quality

The availability and quality of inputs such as raw materials, energy and equipment directly affect production efficiency. Reliable, high-quality input contributes to smoother production processes and better production.

Organization and Operation

Effective Organizational structures and management practices improve production efficiency.

External Factors

Government policies, regulations and market conditions have a greater impact on production efficiency.

There are different types of production methods, each suitable for specific industries, production needs and customer needs. The main product types are:

Custom Production

On the other hand, custom production deals with small quantities of a product to satisfy its customer's particular needs. Different needs exist for customers who buy finished products. The customer may be searching for a tailored solution if the mass-produced product does not meet his or her needs. Manufacturers are using input from customers for the production of custom products.

Batch Production

The production of batches is similar to the manufacturing of masses. However, these products can be produced in batches. It also means that product size, colour, shape and other factors can be used to determine the division of production.

Mass Production

Mass production is the manufacture of a wide variety of standardised products, normally using assembly lines or automation technologies. A large number of similar products can be produced efficiently through mass production. Mass production shall also be referred to as flow and series production or batch production. Mechanisation is used to achieve very high volumes, detailed organization of material flows, strict control of quality standards and distribution of workers in mass production.

Continued Production

Continuous production is a flow production method used to manufacture, produce, or process materials without interruption. Because these materials, either dried bulk or fluid which is being hydrated are constantly in motion and undergo chemical reactions or subjected to mechanical or heating treatment, they must be called constant production or uninterrupted flow processes. Continuous processing is a contrast to batch production.

Cell Production

The goal of manufacturing cells is to move them as quickly as possible, making several similar products at the same time and minimising waste. In the manufacture of cells, there are multiple "cells" used in a production line. Each of these cells consists of one or more other machines that are carrying out some kind of task. The product is moved from one cell to the next, and each station completes part of the manufacturing process.

Flow Production

It is also known as the continuous production of flow. This allows the product to be created over a series of steps on an assembly line. The continuous movement of items through the production process is what defines it. In this production process, a large number of the same goods are produced at regular intervals. On a flow production assembly line, there is frequently an opportunity for high levels of automation. For mass-market products, flow production shall be used.

Just-in-time Production (JIT)

The just-in-time (JIT) inventory system is a management strategy that aligns raw-material orders from suppliers directly with production schedules. These inventory strategies are used by firms to increase efficiency and reduce waste when they receive goods, only for their manufacturing process which leads to reduced inventory costs. Producers are required to make accurate forecasts of demand under this method. For JIT manufacturing to succeed, companies must have steady production and high-quality workmanship.

Lean Production

A systematic production method that is used for the elimination of waste within a production system is lean manufacturing. To increase value and lower costs, it considers waste produced by unequal workload and overload as well as reducing them. Reducing waste, not only material waste but also labour and time waste generated by certain processes is at the heart of lean production. Only then can it be said that the system is truly lean when all of these wastes are removed from the system?

Job Production

Job production means that the product is manufactured in a limited quantity and can be tailored to customers' preferences. Production of jobs is low scale and before the completion of a task such as production of goods or products, it is necessary to undertake other tasks.

What is Productivity ?

 Productivity, in economics, is a measure of output per input units such as labour, capital or any other source. As a ratio of GDP, it is frequently calculated for the economy. Productivity measures the efficiency of a company's manufacturing process, as measured by the number of units produced compared with employees' work hours or by comparing net sales to workers' working time.

Productivity Calculation

Productivity can be calculated using different methods depending on the situation and industry. Below are two commonly used approaches.

Labor Productivity

Productivity measures the production of a country's economy in terms of output per hour. In particular, it examines the level of actual GDP generated by an hour's work. Three factors are central to productivity growth: saving and investing in material assets, new technologies; and human capital.

Total Factor Productivity

A total productivity factor is a number that shows the productivity of a company by determining how much it produces and how much it needs to spend to achieve this result. In simpler terms, it's calculated by dividing the total production output by the average costs of inputs. To determine the level of performance and efficiency of a company, the total productivity factor shall be used.

Factors Affecting Productivity

Several factors affect productivity levels within an organization. The main factors that affect productivity are:


With advanced technology and automation systems, productivity is greatly improved. Automation reduces manual work, streamlines processes, minimizes errors, and increases production speed, resulting in more output per unit of time.

Staff Qualifications and Training

Employee skills, knowledge and training have a direct impact on productivity levels. Investing in employee training programs, ongoing skills development, and fostering a culture of learning will make your employees more efficient, less error-prone, and more productive.

Management Practices

Productivity management is an organisational structure or framework that contributes to the improvement of productivity between individuals and teams. Productivity is a measure of how efficiently an organisation or its staff convert input, e.g. labour and capital, to output, e.g. outputs such as goods or services. To enhance the performance of employees and help them achieve higher productivity, managers use goals, incentives, development and communication strategies.

Work Environment

Ensure that your staff feels supported, valued and safe at work by creating an atmosphere based on company values. Be honest and cooperative with your employees, and remember to reward them if they deserve it. Provide your staff with access to a suitable environment where they can work together, compete and be emphasized by their colleagues.

Improving productivity is an ongoing effort and requires a strategic approach. Here are some effective strategies companies can implement to improve productivity.

Set Clear Goals and Priorities

Clearly define your organization's goals and communicate them to all employees. Set priorities and make sure everyone understands the main goals. This allows you to coordinate your efforts and focus your resources on the areas that matter, increasing your overall productivity. 2. Optimize the process.

Invest in Employee Training and Development

To help staff develop their skills and expertise, we often provide training programmes. Encourage cross-training to increase adaptability and help staff members multitask successfully. This guarantees that workers have the abilities necessary to carry out their tasks efficiently.

Encourage A Positive Workplace Culture

Establish a cooperative and stimulating workplace that encourages cooperation, honest communication, and teamwork. Encourage input from and involvement in decision-making from employees

Promote Work-life Balance

We recognize the importance of work-life balance and promote policies that enable employees to effectively manage their personal and work commitments. Balancing work demands with personal well-being leads to less stress, better focus, and increased productivity.

Implement A Performance Measurement And Feedback System

Set clear key performance indicators and give employees regular feedback. Measuring performance allows individuals to track their progress and identify opportunities for improvement. Constructive feedback can help align employee efforts and improve productivity.

Encourage Effective Communication

Make sure your communication channels are open, transparent and efficient. Encourage regular communication between team members, departments and management. Clear and timely communication minimizes errors, resolves issues promptly, and fosters collaboration.

Leverage Technology And Automation

Leverage technology solutions and automation tools to streamline processes, minimize manual work, and reduce errors. Automation improves efficiency, accuracy and speed, freeing up employees to focus on more important tasks.

Optimize Resource Allocation

Conduct regular resource utilization assessments to identify areas of inefficiency. Allocate resources effectively by matching the right skills and competencies to specific tasks. Avoid overloading your workforce or underutilizing available resources.

Main Difference Between Production and Productivity in Points

  • Production primarily refers to the manufacture and provision of goods and services. However, productivity focuses on the efficiency and effectiveness of the production process. It measures how well resources are being used to achieve a certain level of production.
  • Production is a value-addition process, in which certain quantities are added to the product at each level. Productivity is a measure of effectiveness, on the other hand.
  • Production shows the number of units produced by the company over a specified period. As against, productivity highlights the ratio of output to input consumed.
  • The production is always expressed in absolute terms, i.e. the volume of output produced. In contrast, productivity is given relative value meaning that it determines a quantitative correlation between the output generated and the resources consumed.
  • Productivity determines how well a firm is using resources to produce outputs, while production ascertains the value of output produced.


A business must have both of them. For a country and its people to become autonomous, production and productivity are crucial building blocks of the economy. Both of them are assisting the business in achieving both its shorter and longer-term objectives. Therefore, a substantial part of the business is production and productivity.




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"Difference Between Production and Productivity." Diffzy.com, 2024. Sun. 03 Mar. 2024. <https://www.diffzy.com/article/difference-between-production-and-productivity>.

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