All manufacturing businesses strive to improve the production efficiency in their factories to gain and maintain an edge above their competitors. In order to do this, manufacturers must consider improving efficiency across both their supply chain as well as the factory floor.

One of the key ways businesses can achieve quick wins is by making the most of its available assets to maximize production and minimize waste.

Improving production efficiency results in sinking fewer resources into the manufacturing process, leading to increased profits, improved employee safety, and a satisfied customer base, among other benefits.

However, it’s prudent to note that production efficiency doesn’t mean that businesses should gut their factories to make them lean. Not only does this tamper with employee safety protocols, but it can also significantly damage product quality.

Such situations regularly arise when some manufacturers confuse productivity with efficiency.

The difference between productivity and efficiency in manufacturing

When it comes to manufacturing, productivity is about churning out as many goods as possible off the production line. So, it doesn’t matter whether the products are up to scratch or meet the requirements.

Similarly, efficiency also includes an increased volume of production. However, it goes further ahead to ensure that the products are made with quality in mind. Additionally, efficiency ensures that just the right amount of energy and materials are utilized to increase production volume without sacrificing quality.

As such, productivity is only one element of production efficiency.

How to calculate production efficiency

To zero in on your plant’s production efficiency, you need to compare the actual output rate on the floor with the standard output rate. Standard output rate refers to work done over a specific, standardized amount of time.

For instance, you might have designed the production line to churn out 200 finished products in a single day. Or 50 of a specific part per hour. This is the standard output rate.

However, the reality on the factory floor is almost always different. For example, the actual output rate might ultimately be just 120 finished products at the end of the day.

Production efficiency = (Actual output rate / standard output rate) x 100

In this case, (120/200) x 100 = 60. Therefore, the production efficiency of this hypothetical production line is 60 percent.

This is a critical metric for manufacturers to optimize if they look to reap the benefits of efficient production.

https://cdn.brandfolder.io/GDDASP4K/at/6t7b2887hx9qbpnxx6x9pzmv/Customer_Photo_-_Jabil_3.jpg

How to improve production efficiency in a manufacturing setting

In order to improve production efficiency—and profitability—some number crunching is needed to establish a baseline from which to build.

In the earlier example, obtaining the actual output rate is a way to gauge where the line’s daily efficiency stands. From here, the business can implement strategies to identify inefficiencies and improve their operations.

Below, we show the essential practical steps to bring this to reality.

Analyze workflow in the factory

Boosting efficiency in a manufacturing operation takes a bit of time, especially since various stations can impact the process. Therefore, manufacturers should examine the workflow to highlight bottlenecks and areas that diminish efficiency.

Some manufacturing solutions help to simplify production tracking and analysis, ensuring that businesses can monitor each stage of production adequately.

Subsequently, you should implement changes in practice and keep track of any improvements or declines in performance. This kind of analysis enables manufacturing businesses to identify what to keep and eliminate to ensure that manufacturing workflows are operating efficiently.

Invest in advanced technology

The advent of Industry 4.0 has made it possible to accomplish more on the factory floor, with much less input and overall expense down the line. As a result, more manufacturing outfits invest in and update their technology to be more competitive.

Implementing the right tools and machinery can be tremendously impactful for streamlining production. However, this doesn’t mean that the entire factory should be a human-input-free zone. In fact, acquiring machines that boost human productivity puts your business on the right path to increased efficiency.

Apart from the hardware, updates to newer technological solutions that improve the work on the floor and the overarching factory management.

This modernization also applies to your supply chain management. Automating processes in this department helps ensure that each stage of the manufacturing operation never lacks relevant, required materials.

Organize the factory floor layout

The manufacturing plant’s layout plays a significant role in increasing production efficiency. This is mainly because it streamlines the movement of raw materials, employees, products-in-progress and finished goods.

For example, tools should be easily accessible by employees on the floor. Also, finished products should be near the packaging area, which should also be near the warehousing or storage facility.

This logical placement of work areas and tools makes for an intuitive user experience for the employees, enhancing efficiency along the production line.

Upskill the workforce

Although improving production efficiency might hint at all-out lean manufacturing, it shouldn’t mean that businesses should replace employees with machines. Instead, the workforce can be given better training to work with technology.

Additionally, employees should receive training that surpasses only using the equipment. Train them to adhere to newer, safer and more effective practice policies across all stages of the manufacturing operation.

Therefore, as advised earlier, you should identify gaps and craft standard operating procedures that employees should follow to make them more productive and efficient.

Adopt preventive maintenance

Machine downtime significantly affects a production line’s efficiency. After all, if a machine isn’t up and running, it creates bottlenecks in the production line. Some areas of the line will be backed up, whereas others are starved of inputs to keep them productive.

As such, it’s prudent to carry out preventive maintenance so that the machines are always running when they need to be. Investing in software that updates relevant personnel on a given machine’s running condition makes this even easier.

Cut down on material waste

Several inefficient operations discard plenty of material waste originating from their manufacturing processes. Indirectly, this drives up the unit cost of producing goods since a significant portion of raw material is left unused, making the profit margin slimmer.

However, depending on the kind of goods manufactured, some of this waste can be recycled and introduced into the production line. Alternatively, these materials can also be used to make products different from the original source of the waste.

Watch Our On-Demand Webinar: Digitizing Lean—Empower Your Workers with Digital Tools to Make Lean Work →

Conclusion

Ultimately, production efficiency can be a critical metric that can be used to improve productivity while minimizing negative impacts associated with efficiency gains.

Taking advantage of solutions designed to help track and analyze each and every stage of production is a key first step in understanding where your business stands, and makes it increasingly easy to identify and fix bottlenecks across your operations.

Improve Your Production Tracking Capabilities With Tulip

Learn how you can gain real-time visibility with apps that connect the people, machines, and sensors across your operations.

Day in the life CTA illustration