Either of these two measures is good or bad by itself.
Labor utilization is more a measure of line belts.
However, we might have a perfectly balanced line of very expensive workers,
so a process could be very unproductive, but have a perfect labor utilization.
The cost of direct labor is capturing another angle of that productivity.
It captures the wages that we have, as well as the productivity of the employees
in terms of how many units of output that they can create, relative to their wages.
We've also seen how firms can hide labor from their books by relying
more on their suppliers by outsourcing ultimately, the labor.
If you think about Apple and FoxCon, Apple might only have 60 or
70,000 employees, but FoxCon as their main supplier has over a million.
So just seeing that, based on the financials of Apple,
we don't see a lot of manufacturing labor there, and
this manufacturing labor is not important for Apple Computers is really misleading.
Labor productivity on your books, on your suppliers' books,
is absolutely critical in operations.
For this reason, we'll revisit many aspects of labor productivity,
as we talk about the productivity module in a week from now.