Productivity, as an economic indicator, describes the relationship between output and input, i.e. between goods or services produced and the products and production factors used to produce them. Quantities are related.
In contrast, profitability compares the value of costs or expenses with the income or revenue.
Rational economic activity today requires resource conservation and is productive when scarce resources are used optimally and the ratio to the production result is lower or equal.
Productivity has increased if the production result is greater for the same quantity of production factors or if the quantity of production factors used is smaller for the same production result.
A distinction is made between:
- Labor productivity (output compared to hours worked)
- Machine productivity (output in relation to machine hours used)
- Material productivity (output quantity in relation to material input quantity)
Efficient systems and processes, as Industry 4.0 strives for or specifies, also increase productivity.