If you gathered 100 manufacturers in the same room and asked them whether efficiency matters, you’d likely get a unanimous “yes”. Efficiency is a top priority across the industry—but what does that actually look like in practice? What does efficiency look like in a manufacturing context? And how can manufacturers go about achieving it?
It’s important for manufacturers to understand the concept of production efficiency and what it means to their operations. In simple terms, production efficiency is achieving maximum output with minimal input while also maintaining consistently high quality. Many of the most important trends shaping the industry today are focused on production efficiency, from lean manufacturing to Industry 4.0 to operational excellence. Manufacturers who want to bring more production efficiency to their operations need to understand it on a deeper level; from the measurement methods it uses, to the factors that influence its success and specific strategies for improvement.
Production efficiency vs. productivity
To understand what production efficiency is, it’s necessary to start by defining what it is not. For example, some might confuse being more efficient with being more productive, but this is not the case. Productivity is a measurement of a manufacturer’s output per worker or unit of time. A plant may be able to increase its output without necessarily becoming more efficient.
This is because manufacturing efficiency is defined as the process of eliminating wasted effort, resources and time from production processes. For example, preventing equipment downtime through predictive maintenance means less time is wasted waiting for machinery to be brought back online. Stronger quality assurance protocols prevent defects that lead to products being returned. Installing energy-efficient equipment and infrastructure means fewer resources are consumed.
While productivity plays a key role in a manufacturer’s success, it shouldn’t be mistaken for production efficiency. Two plants may produce the same number of units every day, but the one that uses fewer raw materials and energy is far better positioned for long-term success.
Why production efficiency matters
It’s not difficult to see how improving production efficiency can be a solid pathway to success. Plants that commit to such an initiative reduce their overhead by cutting waste out of their operations. Any resources they would have wasted can instead be re-invested in innovation, which means they can gain ground on their competitors or even separate from the pack. Production efficiency also helps create stronger customer loyalty by delivering more-consistent quality and delivery of products. Production efficiency is more than a lofty goal—it should be a high priority for manufacturers of all kinds.
How to measure production efficiency
Manufacturers can use a specific formula to determine their current rate of production efficiency. This is expressed as:
Actual Output / Standard Output = Production Efficiency%
The standard output rate is defined as the plant’s production goal. For example, a factory that expects to produce 100 widgets an hour but only produces 85 can be said to have a production efficiency rate of 85%. This means the plant is wasting 15% of its production efforts through equipment downtime, sub-optimal processes, excessive defects or a range of other issues.
Other key performance indicators that influence production efficiency efforts include:
- Overall equipment effectiveness, which quantifies a machine’s availability, performance and the quality of what it produces.
- First pass yield, a measurement of how many units coming off the production line are in spec and don’t require any reworking or scrapping.
- Cycle time vs takt time, which determines how long it takes to produce one unit versus how well that time meets customer demand.
- Scrap/rework rates, a metric that measures how many products need to be either reworked or scrapped.
- Labor utilization, a measure of how effectively manufacturing labor is used, comparing productive time to idle time or time spent on non-critical tasks.
Whichever metrics or KPIs a manufacturer chooses to follow to determine production efficiency, it’s critical to establish baseline data for benchmarking. Once they do so, modern digital tools and IIoT sensors make it possible to monitor production efficiency in real-time.
Factors that influence production efficiency
Some of the most influential factors that come into play regarding production efficiency include:
- Workforce training and skills
- Equipment reliability and preventive maintenance programs
- Process design and workflow layout
- Quality management systems
- Data collection and analytics
- Supply chain stability
Strategies to improve production efficiency
Manufacturers can achieve success with regard to production efficiency in a number of ways. Some examples of proven strategies include:
- Adopting lean manufacturing principles such as 5S, Kaizen and waste elimination
- Implementing preventive and predictive maintenance programs to improve uptime
- Standardizing work instructions to minimize variability
- Using automation to streamline repetitive tasks
- Following digital transformation practices such as real-time monitoring, IIoT and AI-driven insights
- Cross-training employees to improve overall flexibility
Common challenges in achieving efficiency
The road to production efficiency is not an easy one, and manufacturers are almost certain to run into obstacles along the way. Poor communication between departments that slow progress, or resistance to change from those who don’t see the value in new processes or technology are common challenges manufacturers face. There also may be concerns about short-term costs that prevent teams from taking the plunge on long-term improvement programs.
Lean on expert support for production efficiency
As leaders in improving manufacturing efficiency through proven maintenance strategies, ATS can help manufacturers overcome their roadblocks and become stronger organizations. Our skilled technicians deliver preventive and predicative maintenance strategies and solutions aimed at reducing downtime and extending asset life. We also provide data-driven insights that can inform KPIs. No matter what we’re called to do, our partnering approach ensures we align our strategies with our clients’ long-term goals.
If you want to learn more about what makes ATS the go-to partner for achieving production efficiency success, reach out and speak with a member of our team today.
