Difference between efficiency, effectiveness and productivity

Difference between efficiency and productivity

Confusion exists as to whether OEE has indeed been an effectiveness or efficiency measure. The traditional vision of TMP referred to Overall Equipment Efficiency while now it is generally recognized as Overall Equipment Effectiveness.

The difference between efficiency and effectiveness is that effectiveness is the actual output over the reference output and efficiency is the actual input over the reference input.

The Equipment Efficiency refers thus to ability to perform well at the lowest overall cost. Equipment Efficiency is then unlinked from output and company goals. Hence the concept of Equipment Effectiveness relates to the ability of producing repeatedly what is intended producing, that is to say to produce value for the company (see Figure 2.1).

Productivity is defined as the actual output over the actual input (e.g. number of final products per employee), and both the effectiveness and the efficiency can influence it. Regarding to OEE, in a modern, customer-driven “lean” environment it is more useful to cope with effectiveness.

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