Productivity is commonly defined as a ratio of a volume measure of output to a

measure of input use. Among other productivity measures such as multi-factor

productivity or capital productivity, labor productivity is particularly important in the
economic and statistical analysis of a country. Labor productivity is a revealing
indicator of several economic indicators as it offers a dynamic measure of
economic growth, competitiveness, and living standards within an economy. It is
the measure of labour productivity (and all that this measure takes into account)
which helps explain the principal economic foundations that are necessary for both
economic growth and social development.
Labour productivity = volume measure of output / measure of input use
Characteristics of KPIs:
Quantitative: They can be presented in form of numbers.
Practical: They integrate well with present company processes.
Directional: They help to determine if a company is getting better.
Actionable: They can be put into practice to effect desired change.
Some of the most typical reference as KPIs are the following:
Cost of Goods Sold (COGS) is an income statement figure which reflects the cost
of obtaining raw materials and producing finished goods that are sold to
consumers. It can be evaluated from
Beginning Inventory + Net Purchases - End Inventory
Average Inventory Cost per month is the cost average per month of your
Inventory over that past 12 months. It can be evaluated from
(Beginning Inventory + End Inventory)/(2 * 12)
Inventory Turns is a ratio showing how many times a company's inventory is sold
and replaced over a period. This is calculated from
Cost of Goods Sold during the past 12 months / (Average Inventory Cost per
Month * 12 )
Gross Profit Margin (GM) reveals how much a company earns taking into
consideration the costs incurred for producing products and/or services, and is
expressed as a percentage. Gross margin is a good indication of how profitable
your company is at the most fundamental level. Higher gross margins results in

having more money left over to spend on other business operations, such as
research and development or marketing. You can calculate this from
(Sales Revenue Cost Of Goods Sold) / Sales Revenue
Days Sales Outstanding (DSO). You should attempt to shorten your cash
conversion cycle by measuring DSO. It measures the average number of days
taken to collect revenue after a sale has been made. A low DSO number means
that it takes fewer days to collect accounts receivable. A high DSO number shows
that you are selling your products to customers on credit and taking longer to
collect money. Therefore a decrease in DSO represents an improvement whereas
an increase indicates deterioration.
Account Receivable / (Net Sales / 365)

Example in Agriculture.
KPIs for agriculture track feed usage, evaluate production, and monitor costs.
Three most important impacts KPIs have on agriculture and its productivity:
1. Increase productivity and profit
2. Save time on your agriculture program
3. Make more informed business decisions
Productivity

Increase in production.
Estimated production potential.
Fertilizers per output.
Chemicals per output.
Water per output.
Yield of crops.

Administrarion

Plantation age structure.

Plants per hectare.
Total plant number.
Field utilization rate.
People efficiency.
Mechanization utilization.

Finance

Return to shareholders.
Profitability.
Cash Flow.
Investment evaluation.
Fixed and variable costs.

Inventory

Average useage.
Sales per period.
Monthly stock usage.
Percentage of waste.
Inventory in lower items.