How to Track and Improve Production Efficiency

A common goal of many manufacturing facilities is to find the right balance between reducing costs and providing a high-quality product for their customers. This is because delivering an excellent product is what will bring you loyal customers. One way to help find the right balance for your company is to track and improve your production efficiency.

Production efficiency can be defined by the effective use of existing resources to maximize production outcomes. If a production facility is working at maximum efficiency, this means that they can achieve the best output by using the resources they currently have.

To improve the production efficiency of your facility, you must start by tracking and measuring it. The formula for measuring production efficiency is:

Production Efficiency = [Actual Output Rate] / [Standard Output Rate] x 100%

The standard output rate is determined by averaging the total amount of work that your company can produce in a given time frame. This can be done by looking at a machine’s standard run rate or looking at how many units a trained worker should be able to produce within an hour.

The actual output rate is how productive your facility actually is. For example, if your machines can produce 100 units per hour but for one reason or another your actual output rate is closer to 75 units per hour, your production efficiency is 75%. The goal here is to improve processes to get as close to 100% production efficiency as possible. 

Some businesses choose to use overall equipment efficiency measures to calculate the production efficiency of their facilities. You can check out this blog on how to calculate OEE for your facility. 

With all this being said, you may be wondering how you can improve your production efficiency. Listed below are five areas and methods that can be used to improve the efficiency of your production to get your production facility closer to reaching maximum production efficiency. This will allow you to take your facility to the next level in terms of operational optimization and allow you to maintain a competitive advantage over other businesses in the industry. 

How to Track and Improve Production Efficiency

Some of the methods to track and improve production efficiency include:

• Measure Performance - As mentioned above, the first step in improving production efficiency is to track the performance and output of your resources. This will first allow you to determine which resources are not performing as well as they should so that you can direct your attention to those areas. As time goes on and effort is put into improving processes, the performance of your facility will improve. 
  
  
• Reduce Scrap and Rework - Another common way of measuring efficiency in a production facility is to calculate the overall equipment effectiveness. One of the variables that reduces OEE is the presence of defective items. Defects can include items that are scraps or those that can be reworked. Many things can cause defects, such as improper handling of the equipment or mistakes in setting up the machines. Standard production procedures can help reduce the number of defects that are produced.
  
  
• Improve Manufacturing Processes - For obvious reasons, improving the accuracy/speed of your manufacturing process will aid in improving production efficiency. It is also important to understand that being able to trace data across all production locations will push for greater collaboration and knowledge sharing - which boost efficiency tremendously through visibility.
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• Improve Inventory and Forecasting -  Understanding your inventory levels through supply chains makes inventory planning and management much easier and more efficient for your production center. Tracking and measuring inventory levels will ensure that you are able to maintain just enough materials to begin production and avoid holding excess inventory or experiencing shortages. Anticipating demand and having materials on hand will avoid delays in production that could affect your production efficiency.  

In order to improve processes, you must be able to track and measure them. This is impossible if you don’t have enough visibility within your production. A software that can easily aid in tracking and improving your production efficiency is PlanetTogehter’s Advanced Planning and Scheduling (APS) software.

Another PlanetTogether benefit is the ability to integrate preventative maintenance schedules with manufacturing schedules. Commitments cannot be met without maximizing overall equipment effectiveness (OEE), so having the freedom to block out time for preventative maintenance before the schedule is filled with orders increases our uptime and capacity.

GARY BISHOP, DIRECTOR OF MANUFACTURING OPERATIONS, SUMITOMO ELECTRIC LIGHTWAVE

 

PlanetTogether gives you the visibility you need to schedule and manipulate your production schedule. Resource performance reports and KPIs allow you to calculate and monitor the efficiency or your production schedule. What-If scenario functionality allows you to test out changes to the production facility and see the effect of changing the production schedule. Additionally, PlanetTogether APS will automatically generate an optimized production schedule based on what is important to you. This can be reducing the amount of setup time required or ensuring that your orders are completed on time. 

PlanetTogether APS has various features that will enable you to optimize your manufacturing process and enhance your operation through waste elimination, cost reduction, and profit increase.

Advanced Planning and Scheduling (APS) Software

Advanced Planning and Scheduling Software has become a must for modern-day manufacturing operations as customer demand for increased product assortment, fast delivery, and downward cost pressures become prevalent. These systems help planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans. APS Systems can be quickly integrated with an ERP/MRP software to fill the gaps where these systems lack planning and scheduling flexibility, accuracy, and efficiency.

With PlanetTogether APS you can:

• Create optimized schedules that balance production efficiency and delivery performance
• Maximize throughput on bottleneck resources to increase revenue
• Synchronize supply with demand to reduce inventories
• Provide company-wide visibility to resource capacity
• Enable scenario data-driven decision making

The implementation of an Advanced Planning and Scheduling (APS) Software will take your manufacturing operations to the next level of production efficiency by taking advantage of the operational data you already possess in your ERP system. APS is a step in the right direction of efficiency and lean manufacturing production enhancement.

Video: Using What-If Scenarios in PlanetTogether APS to Improve Production Efficiency

Key takeaways from this video:

• How to link production efficiency metrics to the schedule
• How what-if scenarios in APS help you compare multiple production plans
• How scenario KPIs highlight the impact on scrap, rework, and throughput
• How integrating maintenance into APS schedules increases uptime and capacity
• How APS turns ERP data into a continuously improving, efficiency-focused plan

 

Turn Production Efficiency Metrics into a Better Plan

Calculating production efficiency—and even OEE—is only the starting point. Real improvement happens when you use those numbers to change how you plan and schedule production. If your schedule still lives in spreadsheets or rough-cut logic, it is hard to see which changes will reduce scrap, rework, downtime, and late orders without creating new problems somewhere else.

Download our one-page “The Money Is in the Planning” infographic to see how better planning and scheduling can help you:

• Translate efficiency losses into concrete changes in sequencing, capacity loading, and maintenance windows
• Increase throughput on bottleneck resources without additional capital spend
• Reduce scrap, rework, and excess inventory by synchronizing supply with real demand and realistic capacity
• Use the operational data you already have in ERP/MRP and PlanetTogether APS to create optimized, data-driven schedules that push your production efficiency closer to 100%

Use it with your operations, planning, and CI teams as a quick checklist to connect production efficiency metrics with the planning and scheduling decisions that will actually move those metrics—and your profitability—in the right direction.