How to Improve Production Efficiency in 8 Steps

August 17, 2019 in Standard Operating Procedures



How to Improve Production Efficiency in 8 Steps

Managers are always looking for ways to improve production efficiency with their teams. Before jumping straight into ways to improve efficiency, let’s examine what we mean by production efficiency first.

Even within corporate environments, most manufacturing plants run their operations differently than similar plants in their industry. Often times, plants aren’t run with standard processes within the same company! Each company needs to define what production efficiency means to them based on their unique needs and goals.

What is Production Efficiency?

Let’s start with a high-level assessment first.

According to Investopedia, it’s all about the economics of production.

Your organization reaches the apex level of production efficiency when your economics dictate you cannot produce any more of one good without lowering the production level of another.

You’ve also reached maximum production efficiency when you are producing as much as possible without wasting any of your resources, whether that is time, money, or any other type of finite resource.

While the steps to attain this level of efficiency may be similar across the board, each operations leader will need to assess their own unique needs and adjust the tips accordingly.

The 8 steps below are designed to provoke an internal conversation. Obviously, these aren’t the only 8 steps necessary to reach your efficiency goals, but they can be the first steps towards turning your organization into a leaner, meaner machine.

Key takeaways:

  1. The needs of each company will be unique, but the following steps can still be used as a guideline and provoke internal dialogue.
  2. You’ve reached peak production efficiency when you can’t produce more of something without reducing the production of something else.
  3. Optimal production efficiency is fully realized when your organization has minimized waste of valuable resources.
8 Steps to Production Efficiency    
ImproveYourBusinessProcesses
EvaluateYourProductionLine
UpdateTechnology
IdentifyProductionBottlenecks
FindandEliminateWastefulness
ConsiderRecycling
Organize, Organize, Organize
ImproveYourTrainingProcesses

Step 1: Improve Your Business Processes

Whether your organization is a small, family-run team or a global manufacturing powerhouse, humans tend to fall victim to their own habits.

I’m sure you’ve heard,
“But this is the way we’ve always done it!”

And that may be
true.

Perhaps at one time the system that bosses and employees are still blindly following was sensible and efficient.

But chances are they’ve become inefficient over time due to lack of intelligent re-evaluation or lack of new technological innovations being integrated.

Far too often, organizations will upgrade production equipment to the latest and greatest technology and reap immediate gains in output and pat themselves on the back without evaluating the technology resources that support the core production equipment.

If your team is using super modern production equipment but your team is still shuffling paper to run quality control inspections, you are wasting the maximum efficiency potential your equipment offers you.

It’s crucial for all organizations to take the time to review all current business processes and look for areas that can be improved, redefined, or reorganized.

Once you’ve taken steps to eliminate out-of-date or redundant practices, you’ll immediately be in a better position than before.

Key takeaways:

  1. Challenge the status quo.
  2. Old systems and processes are likely inefficient.
  3. Review technology used across your entire operation.

Step 2: Evaluate Your Production Line

One of the key
processes you should review and evaluate is your production line.

When doing so,
make sure you measure throughput. This metric measures the average numbers of units
your company will produce in a given time period and will highlight any issues
with specific machines.

Another thing you
can review and track is your capacity utilization.

This is where you
calculate the capacity of your total manufacturing output per factory at any
given moment. This will allow you to see which production lines are operating
at their highest possible output.

When you combine your output capacity with your throughput, you now have two ways in which you can track the efficiency of your production lines.

One oft-overlooked reason to measure your throughput and capacity is that it can help you understand how valuable your equipment downtime is. If your production line produces $500,000 worth of product an hour, the difference between a technician taking 15 minutes to repair it versus 30 minutes suddenly seems a lot more critical – an extra 15 minutes can cost your organization $125,000!

Key takeaways:

  1. Measure throughput—the average number of units you can produce.
  2. Track capacity utilization.
  3. Understand and measure the cost of your equipment downtime – those ‘extra 15 minutes’ to repair equipment might be costing your organization serious money.

Step 3: Update Technology

Understand what technology is used across your organization, both on the hardware side and the software side. Technology debt is an unpleasant fact of life for businesses today. If you don’t provide your team with the tools they need to be efficient, you’ll find yourself losing more customers to more efficient competitors.

Granted, this can sometimes require hefty upfront investments, but new technologies can help you get ahead and/or stay ahead of your competition. If your office computers take 5 minutes to load, that’s at least 5 minutes later for any new information to reach your production line – or at least 22 hours of delay per year on that machine and employee alone! The same argument can be made with any production dependent equipment in your operation.

Your willingness to make these types of changes not only improves operating efficiency but can dramatically boost employee morale and retention. Nobody looks forward to going into an archaic workplace filled with paper-based procedures and 15-year-old computers. Your customers will also take note and be more inclined to take a call from a more modern competitor.

The best operations are usually run like clockwork, management is fully aware of what will be happening and when it will happen. When things go wrong, the appropriate team members can immediately be notified and address the issue.

By using a team collaboration tool like MaintainX, any team can improve communication and manage workflows on-the-go within days. Management can receive real-time insights across facilities, lines, and sites to know exactly what they need to make informed business decisions.

Key takeaways:

  1. Understand the state of your internal technology and assess how any inefficiencies may be causing bottlenecks in your operation.
  2. Modern technology attracts the best talent and the best customers.
  3. Consider MaintainX to help keep your team on the same page and streamline operations.

Step 4: Identify Production Bottlenecks

Production bottlenecks occur where there is a breakdown somewhere in your production line and need to be discovered during your self-evaluation.

Many people incorrectly assume bottlenecks are driven by machine or equipment related deficiencies. Most organizations have the most costly bottlenecks in their ‘human’ components of their processes.

Even some machine-driven bottlenecks are incorrectly categorized as machine errors. The reality is that your preventative maintenance program is far behind and the breakdown could be prevented. Or your technician response time is dramatically impacting your ability to get things back on track.

Some bottlenecks are purely administrative. Are you always waiting for sign-off approval on something before you can proceed? Do part replacements require approval that eats into your downtime?

Whatever is causing your bottleneck, identify it and find workarounds in order to improve your production efficiency. Even if you can’t fix every bottleneck at once, it is helpful to bring them to light and chip away at them over time.

Key takeaways:

  1. Take care to think outside the box when evaluating your processes to look beyond the obvious bottlenecks.
  2. Bottlenecks can be caused by machines, people, or processes.
  3. Identify and present bottlenecks to your management to initiate problem-solving steps.

Step 5: Find and Eliminate Wastefulness

Some of this you can do on your own, but if you’re checking for energy consumption waste, you may need third-party help.

A third-party can bring objectivity to the
table that you may not have.

Some inefficiencies may not be obvious, for example, issues like poor ventilation and ineffective heating/cooling may not be visible to the naked eye. Addressing these issues will reduce energy reliance and costs while improving efficiency.

Waste may also be in the form of wasted labor efforts and mismanagement. Both of those can have a dramatic impact on overall efficiency.

Addressing wasted human physical energy can positively impact production efficiency. Does your team follow standard operating procedures that can be measured and improved? If everyone on your team takes a different approach to the same task, you could be wasting hundreds, if not thousands of work hours each year on workflow inefficiencies alone.

Key takeaways:

  1. Wastefulness is not always obvious to day-to-day operators
  2. Standard operating procedures can help measure efficiency across your team and identify areas to improve.
  3. Human energy waste can cost staggering amounts of capital each year when aggregated across your workforce.

Step 6: Consider Recycling

Reuse of your
manufacturing materials is one of the best ways to cut costs.

If you have a well-equipped
facility, you can easily sort waste for recycling and reuse.

Anything you can put back into the production process, whether leftovers or scraps should be used.

Key takeaways:

  1. Set up a system that allows
    you to sort waste.
  2. Put whatever you can back
    into the production process.

Step 7: Organize, Organize, Organize

An unorganized team is going to be inefficient. There is no escaping that.

Organize and standardize your processes across the board. From the way your tools are handled on the shop floor to the way your team collaborates, everything that can be run with a repeatable process can be optimized over time.

Make it your goal to quantify and organize every process your company puts into practice—and not just those on the shop floor. How does your front office receive production updates from the floor? How does your warehouse team know when things are ready to ship? How is all of this communicated?

Does your team have to check their email inbox, text messages, phone calls, walkie-talkies, and office paper inbox to be fully in the loop? Streamlining and organizing your internal communications have compounding benefits that begin immediately.

Key takeaways:

  1. If your processes aren’t standardized, they are disorganized.
  2. Organize your processes so that you can measure results and work to improve them.
  3. Successful organizations streamline communication across as few channels as possible.

Step 8: Improve Your Training Processes

If your employees are inefficient, it’s not their fault. When they were hired and on-boarded they were taught to adhere to a company standard. Their peers and continuous training exercises have re-inforced negative behaviors that exist.

How do you achieve optimal employee performance? You train them and standardize your training processes. These training processes should help them understand how to work with standard operating procedures that they will perform throughout their duties in their given roles.

Make sure you have standardized operating procedures in place—after you’ve done things like identifying and eliminating all forms of wastefulness—before you create your training programs.

Ideally, you can eliminate onboarding training hurdles using modern software that can reinforce and apply standard operating procedures to everything they do. The benefits of incorporating these processes into a software solution are that any relevant process can be at your team’s fingertips wherever they are.

Key takeaways:

  1. Standardize your training so you can measure and improve processes.
  2. Provide accessible training resources for your employees to reference.
  3. Use a modern software solution like MaintainX to help build a knowledge base for your employees to reference on the go.

Most importantly, allow your employees to add their own ideas on how to improve efficiency. If they do the job every day, they will have insights that no consultant or executive will have.

Best of luck!

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