The debate over productivity: Cracking the measurement problem

True measures of physical and real value productivity can provide factory management with a highly useful tool for operations analysis and for identifying specific areas to improve efficiency. At the plant level such measurement permits specific breakouts of the relative efficiency, and the costs of production and capital, labor, and energy, either for individual product lines, for processes, or departments, or for the establishment as a whole. Interplant comparisons can, of course, point the way to sounder management decisions based on greater informa tional input. Such plant‐level productivity measures should always be related directly to changes in the basic input‐output relationships such as plant size, production method, percent of capacity utilization, extent of technological innovation, or product diversification.