KPIs & data

Manufacturing Efficiency: How To Measure and Improve Production

 It doesn’t matter what industry you work in or what types of finished products or goods you produce: you always want to maximize your efficiency in a manufacturing setting. But finding the areas that can help you increase your efficiency isn’t always easy, especially if you think you’re already working at your highest level of efficiency.

The truth is that there is room for improvement in every factory. This article will help you understand everything you need to know about improving manufacturing efficiency. We'll discuss why it matters, the formulas you need to calculate your efficiency, and the seven steps you can take today to improve your manufacturing process and meet your output goals.

What Is Manufacturing Efficiency?

Manufacturing efficiency is when you can produce goods at the least possible cost by reducing time, materials, and energy. While you might think that manufacturing efficiency is the same as manufacturing productivity, there is a difference. Productivity focuses on increasing the number of products you produce, while efficiency focuses on the quality and effectiveness of your production process.

For example, let's say that your manufacturing company produces 100 goods a day, but 15% of those goods don’t meet your quality control check. You can improve the efficiency of your operation by examining each step of your production process to find what areas can be optimized to reduce the percentage of unusable goods.

The Importance of Manufacturing Efficiency in Factories and Shops

Some people might think that manufacturing efficiency isn’t that important in a factory setting since productivity is the metric that tracks input and output numbers. However, it has incredible value in a shop floor setting by focusing on the bigger picture and helping you see your organization and production process as a whole. It also allows you to granularly examine the individual steps in the production line and find what areas can be improved to boost efficiency.

When your resources, labor, equipment, and machinery aren’t working as efficiently as possible, your manufacturing and operational efficiency decrease — giving your competitors the advantage over your brand. By focusing on continuous improvement and working to find new areas of optimization within your organization, you can take control of your manufacturing efficiency and find the right balance between productivity and efficiency.

Formulas for Calculating Manufacturing Efficiency

Manufacturing efficiency is represented as a percentage using the following formula:

Manufacturing Efficiency = Standard Output / Actual Output

By taking the time to calculate your manufacturing efficiency accurately, you can determine what your current level of efficiency is and see how far away you are from a perfect 100%. This can help you determine how much work you need to put in to improve your efficiency and see results.

Example of Actual Output

When calculating your manufacturing efficiency, the first thing you need to consider is your actual output, which you can calculate with this formula:

Actual Output = Total Input / Total Output

For example, if you created 50 pairs of sandals for $100 total, then using the above calculation, we can see that each pair of sandals costs you $2. This gives you the actual output that you can make each day.

Example of Standard Output

The standard output can be found using historical data and comparing your output to an industry standard or competitor. Using those two numbers, you can see how well you stack up to others in the industry by seeing how far behind (or ahead) you fall. The formula for standard output is:

Standard Output = Your Actual Output / Industry or Competitor Actual Output

For example, if we used the above actual output of $2 per product and then found that the industry standard was $1.50 per product, then your standard output would be 1.33.

How To Improve Manufacturing Efficiency in 7 Steps

Now that you know how to calculate your manufacturing efficiency score, let’s talk about how you can improve your factory's efficiency. This will help you run your floor more effectively and determine what areas of your business aren’t working at an optimal level.

1) Invest in Technology and Automation

Factories that depend on outdated technology and automation tools won’t be able to operate at the optimal efficiency level. Investing in the right equipment, technology platforms, and tools that can help you reduce time-consuming manual tasks is the key to maximizing efficiency.

It’s also important to take care of your equipment with preventative maintenance (to avoid breakdowns) and software for machine monitoring that can help you learn more about your equipment and its performance. Learn more about Amper’s machine monitoring solutions for manufacturers.

2) Reduce the Volume of Materials You’re Wasting

One common area of inefficiency is the waste of raw materials. While you can’t avoid all material waste, you can take steps to reduce the amount of waste you have. Looking at where the wasted material in your factory comes from can help you identify issues and take action in key areas.

You can also see if there is a way to reuse or recycle the material from waste and rework it back into your production lines or any other areas within your production process. This helps reduce the amount of new material you have to purchase and reduces material waste.

3) Consider Implementing Lean Manufacturing Techniques

While material waste is the most common form of waste in a factory setting, there are also many other waste areas in a production facility. These could include wasted hours, energy, time, and more. Lean manufacturing is a manufacturing mindset that works to reduce all forms of waste and create more effective, efficient production environments — and improve your bottom line in the process.

To learn more about key lean manufacturing principles that you can implement in your organization to reduce waste, check out our blog on the principles of lean manufacturing. The article will walk you through why lean manufacturing matters and help you create a waste-free environment at your factory.

4) Provide Quality Training to Team Members

Even though automation, AI, and machine learning are becoming more popular in manufacturing settings, many core functions of your business are run by human employees. When you don’t use your labor force effectively, you will likely see an increase in downtime, employee turnover, and no-shows.

You should encourage your employees to learn new things by giving them high-quality training that ignites their passion for work and helps them build their value within the company. When employees feel empowered and happy at work, they are more likely to work harder for your business and help you improve. It also builds the skills of your workforce and helps your entire organization grow.

5) Organize Your Manufacturing Factory Workspace

Another way to improve your manufacturing efficiency is to look at the organization of the physical workspace within your facility. Improving the production line efficiency of your factory helps you avoid inefficiencies and clutter while keeping your line organized and accessible to your team.

Monitor your production process closely and see how long it takes for each piece of equipment to do its part. This can help you see if there is time waste: time gaps between machines, periods when the product sits on the floor waiting to go to the next step in the production process, etc. It might be time to update equipment or invest in new machines if you don’t have the floor organized the right way.

6) Standardize Even Simple Tasks

Standardization can help lead to maximum efficiency in the workplace. While you might think it saves time to do some small tasks manually rather than relying on technology and equipment, the opposite is often more accurate. The time spent on manual tasks done in different ways adds up over the week and can lead to major time-wasting within your organization.

When you standardize small tasks, you know that everyone is doing the same thing, and you don’t have to worry about errors or missed steps that cause slowdowns and bottlenecks. It also reduces downtime in your workforce and helps you keep your team accountable for their actions.

7) Motivate and Engage Your Team Members

While training is vital to help your team members feel appreciated at work, there is much more you can do to motivate and encourage your employees. Employees like to feel appreciated and recognized by management. If they don’t feel as though their higher-ups respect or value them, they tend to leave — which can mean stations being left unmanned and additional costs in hiring and training new team members.

Examining your management styles and taking steps to improve your approach to running a production facility can help your employees understand how much they mean to the business, boosting their productivity levels. It also means that things run more efficiently, and you don’t have to worry as much about unscheduled downtime, workflow problems, or labor issues.

Maximize Production Efficiency With Amper

Manufacturing and production efficiency are essential to the longevity and success of a manufacturing plant in any industry. To maximize your efficiency, you must know how to calculate your current efficiency accurately. Then you can work on implementing actionable steps that can help you achieve your output goals and work at maximum efficiency.

To improve your production efficiency and run your manufacturing plant at an optimal level, you need the right tools at your side. Amper is a non-invasive solution that can help you measure your success accurately and track the metrics you need to measure your efficiency. Schedule a demo with us to see what Amper can do for your organization.

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