Member asked: Do we have any productivity statistics?
Since the start of COVID-19 (2019), businesses have had trouble finding goods, workers, and distributors. The key goal was to maintain operations despite daily variations in costs and sales. Cost-controls and increased productivity were secondary concerns.

Is it time to start productivity initiatives?
There are numerous different methods for calculating business productivity or efficiency. Most definitions are only ambiguous ratios of inputs to outputs. Earnings-per-share may be great for investors but are usually only available 3 months after the end of the year.

Managers need productivity ratios that are easy to calculate, simple to understand and available on an ongoing basis.

What does it cost to make $100 of revenue?

 

Industry Canada (ISEDC) links below

Regardless of growing product costs and shifting volume, businesses with tight control over margins and operating costs will prosper.

For each industry, product category, and company, there are various contributing elements to net profitability. Here are a few examples. 

Note 1: The calculation of ratios differs from that of percentages, but they are comparable. In this instance, Revenue Canada obtained the basic data and Income Statements to calculate the ratios. The size of the company has little bearing because ratios are first computed and then averaged. Example: Wholesale 2018 – For every $100 dollars of revenue $23.50 is spent on Operating Expenses (indirect).

Note 2: Wholesale transportation costs from origin to local distribution centre are included in the Cost of Goods not operating expenses.

Between 2018 and 2021, management at both Wholesale and Retail, on average, responded quickly to price increases and kept operational costs in check.

From 2018 to 2021, productivity seemed to have increased as net profits rose, but was this due to strong management or to other factors?

  • Product was in short supply. 
  • Available product cost more. 
  • Employees were paid to stay home (by the government). 
  • Commercial rent was subsidized (by the government). 
  • Interest rates were historically low.

More details

Operating Expenses by Industry and product group

Wholesale 

(a) All Wholesale (Includes: Oils & Gas, Auto sector and natural resources)

Product groups

Personal and Household Goods spend significantly more on Advertising, Delivery and Other Expenses. Not a lot of money is spent on advertising wood and nails.

Retail 

 (b) Average of major retail groups excluding Auto, fuel and food. 

What does it cost you to make $100 of revenue?

For the foreseeable future, fluctuating demand and prices for goods will persist. Are you able to afford the increased operational costs and higher wage demands?

A simple calculation using month-end Profit and Loss statements will help set goals, evaluate options and monitor results.

Measure Productivity

Productivity targets are unique for each business based on their industry, products and strategies. 

Industry Canada (ISEDC) provides a starting point.

Links:                Description Data


Data sheets and recent articles are available on the website Resource Library.

If you have any questions or comments, please contact Bob Smith at rsmith@chpta.com