In the fast-paced world of hardware manufacturing, the race to market is won by those who master the art of efficiency.
But in such a dynamic industry, what does this mean? Production efficiency is often used as a buzzword rather than a benchmark of success. Only by truly understanding manufacturing efficiency can you empower innovation.
This blog post is for those who always strive to be better – who seek to refine their processes, reduce waste, and accelerate their path to market. Join us as we explore actionable strategies that can dramatically improve your production efficiency to gain a competitive edge.
Understanding Production Efficiency
Production efficiency in manufacturing, also known as productive efficiency, is achieved when a process cannot be further optimized to produce more units without creating bottlenecks or hindering the production of other items.
In other terms, productive efficiency refers to the optimal amount of labor and capital needed to produce goods and services at the lowest cost possible. This can help factories determine the maximum capacity they can achieve with their current assets – essentially empowering them to optimize their resources and identify areas for improvement.
Calculating productive efficiency also has a host of other benefits, from eliminating production waste to lowering production costs.
How to Calculate the Efficiency of Production
Measuring efficiency is a fairly straightforward process. The experts at Investopedia explain that analysts often measure efficiency by dividing output over a standard output rate and multiplying by 100 to get a percentage. The formula is as follows:
This formula is best suited for analyzing the efficiency of an employee, group of employees, or section of an economy at large. It’s important to note that while a precise calculation is critical, so is understanding your production.
For hardware manufacturers working with tens of thousands to upwards of a million different parts, there also needs to be a deep understanding of the heartbeat of your production, from the raw materials to the finished product. Only with this deep understanding can you accurately understand your manufacturing efficiency and work to improve it.
Manufacturing Efficiency vs Productivity
On the topic of efficiency, it’s important to highlight the distinction between efficiency and productivity. We have discussed manufacturing efficiency in detail , but the key point to remember is that efficiency is often about optimizing resources to create high-quality outputs at the lowest costs. Productivity, however, is focused on doing more with the same number of resources.
Both are important for modern factories, but manufacturing efficiency is often prioritized as it helps you do the same with less – less time, resources, etc. – to streamline your path to market.
Improving Your Production Efficiency
So, you’ve crunched the numbers and your productive efficiency isn’t where you want it to be. You’ve also seen it for yourself in the small inefficiencies that are snowballing and holding your team back. Luckily, there are sound strategies to help you improve your production efficiency.
Integration of Advanced Technologies
When production efficiency is lagging, one of the first places to look is your tech stack. Legacy systems can hold your factory back especially when they are not integrated. These are called technology silos, and they can result in inaccurate data, and introduce risk. Integrating modern technologies such as software, robotics, artificial intelligence, and the Internet of Things (IoT) can significantly reduce manual labor, minimize errors, and speed up production times.
Like any other tech stack, a factory tech stack is made up of essential systems that connect to one another, sending data back and forth through syncing and logic-based workflows.
Choosing technologies that are designed to integrate through APIs is a first step toward building a factory tech stack. A dedicated factory operating system is an ideal cornerstone to develop your factory tech stack around because it allows you to leverage a range of functionality and integrate software when needed rather than attempting to upgrade all processes at once.
Advanced technologies, while helpful, aren’t a silver bullet. A focused, incremental improvement to your production efficiency is a more sustainable approach.
Lean Manufacturing Principles
Lean production is aimed at reducing waste in manufacturing processes while simultaneously enhancing productivity. Utilizing manufacturing management software based on lean or agile methodology is designed to provide complete visibility into operations, highlighting a path to minimal waste without sacrificing quality.
Reducing waste not only streamlines production but also offers financial benefits that give a manufacturer a substantial edge in the market.
Quality Management
Quality assurance should be baked into your production process, not something that happens at the end of the process. Incorporating preventative measures during assembly helps reduce product failures and nonconformities. A new crop of modern MES solutions enables ongoing quality management throughout the production process, incorporating preventative measures to identify potential quality issues before they occur. Minimizing the likelihood of reworks, defective products, and product recalls contributes to more efficient production.
Inventory Management
Inventory blind spots are often the culprit behind production delays or downtime. Without visibility, your team doesn’t know when something is arriving that they need — or that it has already arrived in the warehouse. This creates bottlenecks and disruptions that cause production to come to a grinding halt.
Here's where better inventory management comes in. By providing real-time information on what parts are needed and what's readily available, it’s possible to eliminate these blind spots and keep production flowing smoothly.
This transparency empowers manufacturers to plan their schedules based on when inventory will be available. Integrating your modern MES with your ERP, you can get even more data to help you understand supply chain delays, manage chronically late vendors, and more to streamline your production process further.
Workforce Training and Engagement
Perhaps the most challenging part of realizing higher production efficiency? The people.
The future of a smart factory is where technology, engineers, and technicians work together seamlessly. Manufacturers must consider the existing skill sets of current and potential team members and the capacity for growth and adaptation in the swiftly evolving landscape. Besides hiring for more tech savvy skill sets, fostering employees' ongoing skill development through consistent training initiatives is paramount, especially in this era of rapid technological advancements.
Ready to drastically improve your factory’s production efficiency? First Resonance provides manufacturing management software to visionary companies where efficiency and productivity are critical for success. Learn more about our ION Operating System (OS) today.