Overview of Manufacturing Efficiency: How You Can Boost OEE, Reduce Downtime, and Save Money

What is manufacturing efficiency?

Manufacturing efficiency – the ability to produce goods at the minimal overall cost – does more than just increase productivity. When organizations streamline their operations using innovative technology, they can stay ahead of global market challenges and supply chain forces. Put another way, it serves as your release valve to deal with unforeseen market pressures. By focusing on speed and scalability, manufacturers can deliver more while keeping costs (as well as materials, time, and energy consumption) low.

What is the goal of manufacturing efficiency?

A highly efficient manufacturing team can help organizations work purposefully and correctly – not just productively. Ensuring your processes optimize energy, costs, and labor can help you to:

• Empower your technicians: Increasing manufacturing efficiency goes hand-in-hand with a better first-time fix rate, fewer truck rolls, and eliminated blind dispatches by streamlining call planning, improving access to remote data, and heightening support in the field.

• Improve your asset efficiency: By reducing excess inventory, manufacturers can experience quicker changeovers, less unplanned downtime, and better capacity utilization – meaning they’re getting the most from their factories and equipment.

• Streamline your product design: When manufacturers can remove features that aren’t used and simulate real-world conditions, they can design products to be more reliable – and at a lower cost. This closes the loop between engineering and manufacturing by ensuring the shop floor has the most up-to-date work instructions to efficiently build the products and then funnel the feedback to the engineering team for more efficient designs.

• Reduce your lost time incidents: When real-time monitoring and augmented work instructions are used to guide technicians safely through their work, the frequency and duration of incidents will decrease.

Why is efficiency important for manufacturers?

Streamlining manufacturing operations by using innovative technology allows organizations to do more with less – and helps them stay ahead of global market challenges. Whether organizations achieve manufacturing efficiency by cutting factory downtime or enabling technicians to deliver services faster, it can bring about:

• Up to 60% increase in operator productivity

• Up to 92% first-time fix rate

• Up to 30% decrease in unscheduled downtime

• Up to 50% boost in OEE

Productivity vs. efficiency in manufacturing

Productivity measures how much a manufacturer can produce – meaning it directly affects costs and profitability. In simple terms, manufacturing productivity is the ratio of input to output, focusing mainly on throughput and quantity.

Efficiency, on the other hand, is more concerned with the quality of what is produced – and how well the manufacturing organization uses its resources to create it. This means that products are being manufactured at the lowest possible cost (or in the least amount of time). Think of it as making the most of the resources and time you have.

What are the five stages for improving manufacturing cycle efficiency?

1. Concept and development

Many people don’t consider efficiency to be important during the innovation stage of product development. In fact, teams might assume that the more time – and therefore, more effort and teamwork – contributed to innovation and development will produce a more insightful product. While this might sometimes be true, it’s important to be cognizant of duplicate efforts and other instances of waste throughout the process.

2. Ordering process

An efficient ordering process helps organizations keep track of important elements of the manufacturing process, such as current stock, volume of sales, and future trends.

3. Production scheduling

Manufacturing decision makers have the power to schedule production in a way that makes the best use of facilities, equipment, time, and labor. Particularly when dealing with multiple manufacturing sites, small scheduling changes can yield substantial efficiency gains.

4. Manufacturing

Organizations with high levels of manufacturing efficiency make use of machine monitoring software to get real-time data. Remote condition monitoring helps prevent downtime, increase customer satisfaction, reduce dispatches, and maximize first-time fix rates by harnessing Industrial Internet of Things (IIoT) and augmented reality (AR) technologies to connect equipment at remote locations. This allows manufacturing teams to attain real-time data, combine it with other relevant information, and analyze it to garner useful and actionable insights.

5. Supply chain

Better manufacturing efficiency can be achieved through supply chain visibility, which reduces inventory levels and warehousing costs. Supply chains can help ensure suppliers are able to deliver necessary parts to warehouses and other manufacturing facilities to avoid expensive production shutdowns.

What are ways to improve manufacturing efficiency?

Identify bottlenecks

To identify a bottleneck, manufacturers need to look at their entire process and keep an eye on changeovers and other transitory stages. It’s also important to pay special attention to areas in the production process they might not have hard data on, such as labor and training. PTC’s bottleneck analysis tool automates the bottleneck identification process – saving manufacturers a significant amount of time and manual effort. By focusing the analysis on a single, universal unit of measurement – in this instance, time – the insights can be communicated and understood across the organization.

Reduce and eliminate waste

Waste – actions that don’t add value to the customer – can include inefficiencies such as overproduction, excess inventory, defects, overprocessing, and excess transportation. By reducing scrap, eliminating rework, and embracing lean manufacturing processes, organizations can find long-term solutions in order to reduce inefficiencies.

Audit processes

Taking a closer look at your production processes is a good place to start when it comes to evaluating efficiency. Value stream mapping, a key component of lean manufacturing, is the practice of making a visual guide of all the information and materials necessary to complete the manufacturing process. This process can help eliminate bottlenecks and waste and pave the way for continuous improvement (CI) by focusing on future advancements.

Train employees frequently and consistently

Ensuring consistent and standard training procedures across the whole team is key to achieving a streamlined system. Educating workers on key topics such as quality control, digital transformation, and machine operation are all ways to ensure worker skill levels are not an efficiency drain on your manufacturing process. IIoT and AR offer powerful tools to support skills development for workers of all experience levels.

Improve maintenance

Through a combination of real-time data collected through the IIoT, predictive maintenance continuously analyzes equipment conditions during normal operations to reduce the likelihood of unexpected machine failure. Predictive maintenance plans built around workers’ schedules, rather than the calendar, bringing about:

• Up to 83% faster time to resolution

• Reduced downtime

• Greater asset utilization

Use real-time data

Real-time visibility is one of the core capabilities of highly efficient organizations. By sharing up-to-date information across the manufacturing floor and beyond, manufacturers can understand how products are being used and how they’re performing. Enabling your team to make decisions based on real-time data can lead to an increase in safety and machine performance, as well as:

• Up to 75% less time on-site

• Up to 30% less unscheduled downtime

• Up to 50% improvement in OEE

How to calculate manufacturing efficiency?

There are two main components to calculating manufacturing efficiency: actual output and standard output. Once you have these two values, you can calculate manufacturing efficiency by simply dividing your standard output by your actual output.

How to calculate your actual output
Actual output – your current level of production – can be calculated by dividing your unit of time by the number of products made.

How to calculate your standard output
Standard output – your organization’s potential output – is found by dividing the average amount of products a worker can produce by the unit of time.

Manufacturing efficiency frequently asked questions

How do you measure manufacturing efficiency results?

To find your manufacturing efficiency, divide standard output, which can be determined by looking through your organization’s historical data or industry benchmarks, by actual output. Once you complete the equation, it’s important to express the outcome as a percentage.

Why is efficiency important in manufacturing?

Today, supply chain struggles and global market pressures can challenge manufacturing organizations. Focusing on efficiency gives manufacturers a zoomed-out view of their operations – allowing them to understand how several aspects of their processes affect one another. By taking a closer look at bottlenecks, waste, training processes, and more, manufacturers can better understand what changes they should make to operate at maximum efficiency.

What is the key to manufacturing efficiency success?

Doing more with less – with speed and scalability – is crucial to success. Operating at peak efficiency can give your organization a competitive advantage, however, it doesn’t stop there. Viewing efficiency as part of your continuous improvement (CI) initiatives is the key to driving revenue growth and improvements in OEE, first-time fix rate, and on-site service.

What are the benefits of efficient manufacturing?

Highly efficient manufacturing processes can unlock many benefits, including:

• Higher product quality: Improved efficiency gives employees the opportunity to spend more time on product innovation and quality control.

• Improved lead times: When lost time is viewed as waste, manufacturers are motivated to develop more streamlined processes that accelerate production.

• Sustainability: Reduced waste and a more agile business model can greatly affect an organization’s environmental impact.

• Increased profits: Doing more with less allows manufacturers to operate with wider profit margins.

What is the future of manufacturing efficiency in industry?

The trends currently taking place can shed light on how manufacturers will work towards efficiency in the future. A move toward artificial intelligence (AI) is already underway with practices such as predictive maintenance and machine learning. Further, the concept of a digital twin means industrial companies can represent, understand, and predict physical products, persons, or places in the virtual world, spanning the full product lifestyle with various manufacturing and service use cases.

It can be difficult to understand how to improve your organization’s manufacturing efficiency. Learn more about how other companies are implementing PTC’s IIoT solutions to improve manufacturing efficiency – boosting OEE, reducing downtime, and saving money in the process.