How to Measure Manufacturing Efficiency

If you own a manufacturing business, one of the key rules to achieving sustained growth is ensuring your operations are efficient. Regardless of the items you are producing, you must track the entire production process to assure your workforce is diligent, your machinery works well, and your maintenance costs remain as low as possible. 

Successful tracking involves much more than inspecting your products to assure it is fault-free. If your product is not delivering on time or at the lowest possible manufacturing cost, your profitability suffers.  Success requires close monitoring of key manufacturing efficiency metrics. 

What are manufacturing metrics?

Manufacturing metrics are data points designed to track the efficiency of operational processes. They can be measured and analyzed using reporting software and analytics. If you’re wondering which manufacturing metrics you should be measuring, here are a few of the most helpful:

1. Production downtime

Downtime refers to valuable minutes wasted by faulty machines or unforeseen events that require production to be halted temporarily. It may also be scheduled for cleaning, maintenance, lunch breaks or holidays. Unsurprisingly, too much downtime can seriously impact your profits, so tracking and minimizing time spent unproductively is key to manufacturing success.

2. Production volume over time

It is a good idea to keep track of how many units of a given product your factories are creating in a shift, day, or week. Comparing week-on-week results will help you to spot any over-or under-production issues early on, thus ensuring that your business is satisfying demand without creating too much inventory.

3. Effectiveness of equipment

Measuring the quality and performance of your equipment will help you to avoid costly maintenance issues and ensure your output remains consistent. To measure this metric, you may wish to invest in performance tracking software that alerts you when any operational anomalies take place.

4. Production costs

Keeping track of the costs of materials, maintenance, labor, and other expenses will enable you to keep your spending relatively low and your profits high. If you notice that certain materials are becoming prohibitively expensive, for example, you may choose to find an alternative or switch supplier.

5. Defect density

Defect density refers to the number of faulty products created in relation to the overall product output. The aim of any profitable manufacturing company should be to keep defect density as low as possible. So, if you notice this metric start to climb you should investigate the root cause right away.

6. Return rates

This metric tells you the proportion of products that are sent back for reasons such as being quality issues, damaged, or incorrectly processed. As with defect density, you should aim to keep this figure as low as possible to save money and maintain a reliable brand image. As well as tracking return rates, you should investigate the reasons behind returns and use this information to hone your operations.

7. On-time delivery rates

You should aim to deliver products punctually 100% of the time as it will boost customer satisfaction rates. Indeed, keeping track of on-time delivery rates is very important for business success and will allow you to come up with a realistic production schedule that does not leave your customers disappointed. 

Ready to Increase Your Manufacturing Efficiency?

With Freedom’s Manufacturing Software, we give you the tools you need to improve efficiency from the shop floor to the top floor. With reports and analytics for optimization for machine health, process health, and OEE, we’ve designed our software by manufactures for manufactures.

Try out a 60-day free trial of our award-winning software, review out our packages, or check out our satisfied client testimonials.