9 Ways to Enhance Productivity in Manufacturing
Ask any manufacturer what some of their primary goals are and, along with the usual responses of “increase on-time delivery” and “grow revenue,” you’ll likely hear some variation of “improve productivity.”
And it’s easy to understand why: Poor execution on the shop floor can mean higher costs, lower customer satisfaction, and less profitability, all of which pose a financial threat to the business. Conversely, a high rate of productivity in manufacturing enables a manufacturer to consistently meet deadlines, satisfy customer commitments, remain competitive, boost its bottom line, and more.
To that end, manufacturers must continually seek to improve every aspect of production, especially productivity. This is often easier said than done: Manufacturing is the intersection of machines, people, and materials to deliver quality products that must be delivered on time; each of these moving parts and pieces must work together seamlessly in order to ensure a high rate of productivity. That’s why, in this blog post, we offer some tried-and-true best practices to help get all of your various work centers in sync, so you can enhance your shop floor’s productivity levels.
Table of Contents:
- Productivity vs. Efficiency: What’s the Difference?
- 9 Best Practices for Optimizing Production
- 6 KPIs to Track to Enhance Manufacturing Productivity & Efficiency
- Support Manufacturing Continuous Improvement with PFM
Productivity vs. Efficiency: What’s the Difference?
Before we get into it, an important point of clarification: Productivity is not to be confused with efficiency. Though these two terms are sometimes used interchangeably, they refer to two separate things.
Manufacturing productivity is the ratio of output to input in production, where the inputs can be any number of resources — people, parts, machinery, materials, and more — and the outputs are the goods produced. For this reason, productivity in manufacturing is considered a measure of quantity. Manufacturing efficiency, on the other hand, refers to the proportion of output that a facility is able to produce (with minimum waste) that works as intended. To that end, manufacturing efficiency is a measure of quality.
Manufacturing productivity and efficiency are intrinsically linked; in order to run a successful operation, you can’t have one without the other. Think of it this way: If you have a high rate of productivity but low efficiency, you’ll inevitably have to rework many of the goods you produce. And, conversely, if you have high efficiency but a low productivity rate, your goods may be high-quality, but you run the risk of missing deadlines on customer orders or consistently carrying low inventory.
It’s important to keep the relationship between productivity and efficiency in mind as we review these best practices, many of which are designed to help you strike a balance between the two.
9 Best Practices for Optimizing Production
To simultaneously increase productivity and maximize efficiency, try implementing these best practices on your shop floor:
- Make sure a job is truly ready to be manufactured. As tempting as it can be to start work immediately, it’s important to first ensure that you have the correct materials, drawings, customers specs, and skills to get the job done. Make sure your expectations are realistic and plan accordingly. By making sure that everything’s in its proper place and that your employees have everything they need to get started, you can prevent downstream issues that could hinder productivity or reduce efficiency.
- Release jobs to the shop floor at the right time. Doing so prevents jobs from sitting on the shop floor for longer than is necessary, thereby reducing lead times and allowing for optimal flow from one work center to the next. To that end, it’s important to base the release date of any job on the realistic elapsed time required to meet its due date; this elapsed time should factor in actual touch time, as well as a time buffer for variability.
- Prioritize your work to meet commitments. In an ideal world, you would have more than enough resources to get the job done on time, every time. The reality, though, is far different. Therefore, it’s critical that you prioritize work orders based on what we refer to as their threat level — that is, their risk of being late — in order to promote optimal flow and meet customer commitments. Once you’ve assigned a priority level for every incoming work order, be sure to make that information available to your employees so that they know which jobs to work on at what time.
- Take a good look at your production workflow. It’s important to reevaluate your existing workflow on a regular basis to ensure that it’s working as well as it can and should. Do you have the right people with the right skills in the right places? Are all of your machines in good working order? Where do you typically experience bottlenecks on your shop floor? Asking these and other questions can help you find opportunities to streamline production flows in order to support overall productivity and efficiency and increase throughput.
- Monitor key metrics and performance indicators. As the old adage goes, you can’t manage what you don’t measure. Determining which metrics are major drivers of business and monitoring them closely can help you identify potential problem areas within your production workflow. We’ll talk more about which metrics you should track in the next section of this article.
- Invest in employee training and continued education. Given the rate at which manufacturing technology evolves, employee training should never be a one-time thing but rather an ongoing process. Schedule regular training sessions on a wide variety of topics, from team dynamics and operational procedure to lean manufacturing techniques and other industry trends, to ensure that your employees are always up to speed and ready to deliver.
For best results, store all training curriculum and materials within a centralized location and make them readily available to your employees; this will make it easy for your employees to refer back any time they’re in need of a refresher.
- Increase supplier performance through supplier management. A materials shortage is a surefire way to bring production to a halt, so it’s imperative that you properly manage supplier relationships in order to maintain consistent inventory levels. Institute a program for suppliers that clearly defines expectations, including those around training and collaboration, to ensure that you and your suppliers are all on the same page.
- Be proactive about maintenance. Similar to a materials shortage, the breakdown of any key piece of equipment can throw a wrench in production. To avoid finding yourself in such a predicament, create a preventative maintenance program for all machines and tooling and schedule regular repairs. You can even take things a step further by leveraging predictive analytics to perform predictive maintenance — that is, determine when a machine is likely to break down based on the number of hours it runs and the mix running through it.
Invest in smart solutions. The Industrial Internet of Things has made it so that every component of the modern shop floor is connected via a network of wireless devices and sensors. These devices and sensors are able to aggregate data and apply descriptive and predictive analytics to generate actionable insights about how to optimize existing processes in order to support manufacturing productivity and efficiency.
6 KPIs to Track to Enhance Manufacturing Productivity & Efficiency
In the previous section of our article, we mentioned that monitoring key metrics and performance indicators supports productivity in manufacturing. Though there are a great many KPIs you could monitor, these six are the most important:
- On-time Delivery (OTD): Delivering products to customers when promised is essential to boosting customer satisfaction and building strong long-lasting customer relationships. In fact, some might even argue that it’s the most important factor of all. To that end, it’s vital that you closely monitor your on-time delivery rate. Your OTD rate is that ratio of goods or shipments delivered on time. The higher your OTD rate, the better. To determine your company’s OTD rate (which is expressed as a percentage), simply divide the total number of shipments delivered on time by the total number of shipments and multiply by 100.
- Operating Cycle Time (OCT): Operating cycle time (OCT) refers to the total amount of time it takes for a manufacturer to pay for raw materials, pay for labor and overhead costs to convert those raw materials into products, hold finished products in inventory, and collect payment from customers.One of the reasons releasing jobs to the shop floor at the right time is so important is that, in addition to reducing the volume of work sitting at each workstation, it enables you to determine when you truly need materials. Too often, manufacturers will order most or all of their materials at the earliest possible moment, well before the job is scheduled to hit the floor. You need to pay your suppliers 30 days from your receipt of materials, even if you don’t intend to actually put those materials into production for another 45 days. Add to that the payment terms you offer your customer, and you’re looking at a long OCT — and a long period before you actually see any return on investment. To figure out how long your OCT really is, add your total inventory period to your accounts receivable period.
- Lead Time: Reducing your production lead time — that is, the total amount of time it takes to deliver a finished product to a customer — enables you to quote faster delivery times and gain a significant competitive edge.To calculate lead time for a product, simply add up the amount of time it takes to pre-process, process, and post-process that item.
- Inventory Turnover: Inventory turnover — the ratio that measures how frequently inventory is sold in a given time period — is a critical KPI to monitor from an efficiency standpoint. The more frequently you turn over your inventory, the more efficiently you’re leveraging your inventory — and, consequently, your finances. You can determine your inventory turnover rate by dividing the cost of goods by your average inventory.
- Elapsed Time vs. Job Touch Time: To put this one into perspective, elapsed time and job touch time refer to two separate measurements which, when combined, provides a complete picture of manufacturing productivity and shop floor performance. To illustrate the difference between the two, think about how many days or weeks your average job spends on the production floor; this is your elapsed time. Now, think about how many days or week your employees actually spend working on that job; this is your job touch time. Oftentimes, manufacturing companies will quote a long elapsed time when the actual touch time is far shorter; this is because there are typically multiple jobs in the pipeline at any given moment, some of which may be ahead of the project in question. Elapsed time vs. job touch time is typically expressed as a ratio; for example, if a job had an elapsed time of 12 weeks and a touch time of 1 week, it would be a 12:1 ratio. By reducing your elapsed time so that it’s closer to your actual touch time, you can secure a better inventory turnover rate and your sales team can quote customers shorter lead times.
In addition to monitoring these KPIs, it’s imperative that you take every opportunity to improve them. Protected Flow Manufacturing — which we’ll discuss in greater detail in the next section — enables you to do everything from increase your OTD rate to reduce OCT using predictive analytics, real-time prioritization, and other next generation capabilities.
Support Manufacturing Continuous Improvement with PFM
Protected Flow Manufacturing (PFM) is a shop floor scheduling solution designed with manufacturing productivity and efficiency in mind.
Compared to other solutions on the market today, PFM leverages predictive analytics to provide manufacturers with visibility into the future. This foresight enables companies to see which jobs need to be worked on now, next, and later based on their threat level, as well as anticipate problems with late deliveries, so they can be corrected before a product is shipped late. PFM also uses predictive analytics to identify bottlenecks and other inefficiencies on your shop floor to support manufacturing continuous improvement.
Going beyond predictive analytics, PFM calculates and provides users with clear release dates, so that jobs are always released to the shop floor at exactly the right moment. PFM’s easy-to-understand prioritization methodology also ensures that employees work on the right job at the right time.
PFM comes backed by Synergy Resources’ 30+ years of manufacturing improvement experience, which we’ve acquired by working with over 800 customers across a wide spectrum of industries. We work closely with each customer to identify opportunities for improvement and deliver the resources they need to meet their business objectives.
To learn more about Protected Flow Manufacturing or Synergy Resources, contact us today.