What Is Manufacturing Throughput?

Maximizing manufacturing throughput is the foundation of delivering revenue growth. Your ability to meet demand and maintain a competitive edge starts with successfully delivering orders day in and day out. Conversely, if your manufacturing throughput is stymied by bottlenecks, they can drain on your bottom line. That’s why manufacturers across all industries are embracing digital manufacturing solutions like real-time asset health monitoring, predictive analytics, and digital and augmented work instructions. These capabilities enable manufacturing teams to anticipate problems before they occur and empower employees to quickly address issues when they arise. That can mean the difference between manufacturing throughput becoming your competitive differentiator—or remaining a pain point that keeps meaningful growth out of reach.

What is manufacturing throughput?

Throughput is the amount of a product a company can produce within a specific timeframe, beginning with raw materials and spanning all the way through finished product completion. The emergence of Industry 4.0 and digital transformation initiatives have allowed organizations to put throughput performance under a microscope, diagnose throughput problems, and boost throughput while lowering costs. By taking a closer look at current performance as well as bottlenecks (and their root causes), manufacturers can tackle low throughput head-on.

What is manufacturing throughput time?

Throughput time measures how long it takes for a product to be manufactured, from start to finish. Maintaining a high manufacturing throughput is integral to an organization’s efficiency, competitive advantage, and customer satisfaction. Along with quality metrics, it’s one of the best ways of verifying your manufacturing throughput is robust. But manufacturing isn’t an event; it’s often a complex process with a series of interdependent operations – and a bottleneck in one process can impact the others. So throughput time accounts for the following manufacturing activities.

Processing

Processing time encompasses all the time it takes to turn raw materials into finished products.

Manufacturing

This stage includes the processing stage but also accounts for the time it takes to schedule and coordinate related tasks, such as planning and quality control.

Move

Move time—the time spent moving materials in and out of the production area—can also include the time it takes to move from one stage of manufacturing to the next. A slow move time can have a significant impact on efficiency and manufacturing throughput.

Queue

Queue time includes all the time spent waiting in the manufacturing process. This can happen at any point of production, including ahead of the processing, manufacturing, and move stages, and is usually the symptom of a bottleneck.

Throughput time formula

To calculate throughput time, you can divide the system’s inventory by the time it takes for the inventory units to pass through the entire production process.

Throughput time vs. cycle time vs. lead time

Throughput time and cycle time are closely related—in fact, many people use the terms interchangeably. The main difference between the two concepts is the fact that throughput time breaks the process down into smaller components, while cycle time looks at the entire process altogether. Lead time takes a customer-centric approach to manufacturing efficiency and looks at the total time it takes for the customer to receive a product after they place an order. You can calculate lead time by simply adding the amount of time it takes for production to begin after an order is placed and the time it takes to deliver the final product to the cycle time.

What are the benefits of manufacturing throughput time?

Competitive advantage

A slow throughput time can cause you to lag behind your competitors. By improving throughput time, manufacturers can be confident they are putting as many of their products on the market as possible while still keeping costs down. Additionally, maintaining a faster throughput time can help reduce labor costs and is an indicator you’re likely creating less waste and scrap, which can boost overall profits compared to competitors. But if your throughput time is sluggish, you may wind up ceding market share to competitors who are optimizing their operations with lean manufacturing practices and digital transformation solutions.

Customer satisfaction

When throughput is efficient, manufacturers are moving more products off the production floor and onto shelves, which can help sustain the current market. This can cultivate positive brand association and provide an overall boost to customer satisfaction. On the other hand, hidden bottlenecks can weaken poor manufacturing throughput, resulting in back orders and longer wait times, which in turn can sour customer sentiment. And in a subscription, on-demand economy, it’s more critical than ever to make sure you keep your customers happy with on-time, under-budget delivery, or risk them taking their business elsewhere.

Improved efficiency

Improving throughput is an excellent way to boost efficiency on the manufacturing floor. Strong throughput times can give manufacturing teams the ability to boost production levels while reducing costs.

Assists with inventory maintenance

When manufacturers optimize their throughput time, they can monitor how production time affects inventory. By establishing an inventory benchmark, manufacturers can experiment to strike the ideal balance between minimizing product flaws and cutting excess production time. Put another way, throughput time is a key metric for understanding your cost of quality.

How can manufacturers improve throughput?

Increase manufacturing safety

Digital transformation initiatives can improve training and onboarding, further enabling organizations to keep up with the pace of competition and navigate the intricacies of today’s manufacturing environments. Augmented work instructions and continuous improvement efforts can stop safety hazards in their tracks by focusing on implementing healthy and secure processes on the manufacturing floor. Additionally, real-time condition monitoring can help manufacturers predict and resolve potential safety issues before they occur. Patterns in data can trigger alerts for defective equipment or unsafe conditions.

Decrease equipment downtime

Unplanned equipment downtime can pose serious threats to industrial profitability, from producing waste and interrupting supply chain networks to causing SLA compliance issues and equipment safety hazards. Service optimization solutions are used to minimize downtime by providing real-time data visibility into equipment performance and usage data so that you can fix problems before they interrupt operations. This can result in:

• Up to 30% of issues resolved remotely

• Up to 30% less unscheduled downtime

• Up to 50% faster service response time

Establish manufacturing automation techniques

Manufacturing and other industrial organizations increasingly are employing IoT-enabled industrial automation to streamline their processes, reduce costs, improve quality control, manage supply chains, and achieve energy efficiency by connecting, monitoring, and programming industrial assets. By using aggregated data and insights to reduce machine downtime, automation can help organizations eliminate errors and boost throughput.

Remove operational bottlenecks

Bottlenecks refer to imperfect operations that constrain a site’s ability to meet production demand within a planned schedule. Manufacturing bottlenecks can be difficult to identify, and while merely locating a constraint can bring about important insights regarding an organization’s production process, conducting a thorough bottleneck analysis has far-reaching implications that can lead to higher efficiency, lower costs, and reduced waste.

The People, Process, Technology (PPT) framework is a holistic approach that illustrates the interdependence between employees at any given organization, the technology available to them, and the processes they follow. The three elements below can point organizations in the right direction when it comes to understanding their bottlenecks and implementing lasting change.

• People: By hiring and training the best people, you can ensure that your workers will have the skills to leverage the best technology to tackle the task at hand. Communication – especially when it comes to expectations and training – is key to making sure employees have a thorough understanding of your organization’s manufacturing process and the bottleneck at hand. Digital tools for connecting and supporting workers with IoT and AR-enabled tools can further minimize workforce inefficiencies—even in the face of a skills gap challenge.

• Process: An organization’s process is closely related to how they communicate with their workers. The manufacturing process should be clearly defined to achieve your desired outcome: getting rid of the most critical bottlenecks in the most streamlined, simplified, and optimized way possible.

• Technology: In a manufacturing environment, one of the goals of technology is to help employees eliminate bottlenecks. Technology is most effective when people and processes are already on track to address bottleneck and throughput concerns.
  
  

Measuring the impact of digital transformation on manufacturing throughput

Manufacturers are dedicated to making improvements in throughput and efficiency, but if you aren’t looking at digital transformation tools, substantial improvements will likely remain out of reach. Rather than eking out marginal efficiencies, look to best-in-class manufacturing leaders like Tofaş who have harnessed digital solutions to drive results like a 15% reduction in maintenance costs, 23% less scrap, and a 12% boost to their OEE metrics. Or Sani-Matic, who experienced up to a 60% faster time-to-value, and a 40% drop in cost-ownership. Or Brembo, who cites upwards of $1.M in savings thanks to IoT connected operations.