How to improve productivity in manufacturing (2023)

How to improve team productivity

Naturally, a company's people play a critical role in its overall performance, so improving their productivity is a key goal for managers. There are two ways in which it is useful to think about this.

The first, and perhaps the most obvious, is to think about how your team can be more productive on the tasks assigned to it. In the past, this was just to make people work faster. However, this approach has largely been superseded by the modern art and science of employee productivity, which looks at how the most effective employees are motivated to excel.

Meanwhile, a second, less obvious way to think about people and productivity is to take a step back and ask which tasks your people can add the most value to. Once again, there's an old way and a new way of looking at this. The old model seeks to reduce wage costs by replacing workers with machines. While a smarter answer is to automate non-value-adding tasks, like data entry or inventory counting, so your team is free for more value-added work. This is a critical way to increase manufacturing productivity.

Understand employee productivity

In simple terms, employee productivity is a metric that companies use to compare output to the amount of time required. Essentially, it's a measure of how efficiently employees work: for every hour they work, how much do they produce?

5 Ways to Improve Team Productivity

The business of increasing workforce productivity is an entire industry unto itself, with entire companies dedicated to worker incentives, psychology, and optimizing people practices and culture. So, without getting lost in the details, here are five top tips on how to keep employee productivity high.

1. Provide the right tools

The right tools help employees get their jobs done efficiently and on time. There is nothing more counterproductive (and painful) than being hampered by slow or outdated equipment. This is true of both physical machinery and computer hardware, andsoftware you use to track and planits physical processes.

2. Improve the work environment

Ensure that the work environment is focused on productivity. Cover the basics and make sure you have:

• good lighting
• A clean and safe environment
• An efficient layout that minimizes travel time to key work activities and avoids congestion
• Quiet spaces where possible
• Some vegetables!
• Healthy food options nearby

3. Spend time wisely

• Reduce unnecessary emails. Sending emails consumes a lot of time that could otherwise be spent productively. Encourage your team to set times for responding to emails and keep them accurate and to the point.
• Allow flexible hours. The traditional 9 to 5 hours may not be right for everyone. While your core production team may need to be on the shop floor at set times, consider who will best work flexibly. Many progressive companies now offer flexible hours and remote work
• minimize meetings. Hold only essential meetings and ensure only the right people are present so your team can spend their time more productively

4. Communicate effectively

• To promote teamwork. Great teamwork happens by design, so create opportunities for team members to get to know and trust each other.
• Find out which method of communication works best. How does each team best respond? It can be in person, instant messaging or via email.

5. Promote work culture

A strong team of people and culture does wonders for employee productivity. His role begins with hiring people with the right attributes and attitudes and extends to training and development, keeping team morale high. A company with dissatisfied employees will always have problems with productivity.

Labor productivity x employee productivity

Labor productivity, also known as labor productivity, should not be confused with employee productivity. Labor productivity measures the hourly output of a country's economy, while employee productivity measures the output of an individual worker. Labor productivity is defined as the real economic output per hour of work:

How to improve productivity by reducing manufacturing waste

For any business, waste hurts profitability. Waste can come in the form of time, resources, and labor; It manifests itself through poor process planning, an inventory imbalance, or poor warehouse design. Essentially, waste is any expense or effort that does not transform raw material into a finished product. By optimizing processes and eliminating waste, companies can add value to every stage of production.

To fully understand manufacturing waste, you must first understand lean methodology, which focuses on identifying and eliminating waste in a manufacturing process.

Lean Manufacturing and Waste Reduction

The concept of lean was documented in the early 1900s, but it wasn't until Toyota founder Sakichi Toyoda, his son Kiichiro Toyoda, and chief engineer Taiichi Ohno created the Toyota Production System (TPS) in 1930 that manufacturing began. read really took off. You'll also find people refer to lean manufacturing by other names: lean manufacturing, just-in-time manufacturing, lean company, and more.

The main objectives of lean manufacturing are to minimize waste and costs, maximize productivity and quality, and ensure continuous improvement.

See more information

• How Just-In-Time systems work when the supply chain is under pressure
• Five Elements of a Lean Business
• 3 Successful Companies That Practice Just-in-Time Systems

8 types of industrial waste

The main goal of TPS is to remove muta, that's wasteful in Japanese. The lean manufacturing model has eight types of waste:

1. Overproduction. Producing more products than necessary is expensive, and depending on the products, overproduction can have serious environmental consequences: using too many raw materials, unsafe disposal, worker safety, and more.
2. Inventory. This refers to raw inventory waste in the form of storage, fixed capital, transportation, and more.
3. Movement. This refers to anything from a warehouse worker picking something up to additional wear and tear on machines. This results in non-value-added time and increases cost.
4. Defects. This means lack of proper documentation, large inventory variances, poor design, and more. Affects time, money, resources and customer satisfaction
5. excess processing. This refers to any part of the manufacturing process that is unnecessary, such as production out of scope, miscommunication, duplicate data, overlapping authority, and more.
6. Wait. This refers to the time lost by people, materials or machinery due to production slowing down or stopping. May affect direct labor costs and overhead costs
7. Transport. This involves moving materials from one place to another. Companies want to minimize this waste because the transportation of materials does not directly add value to the product itself.
8. unused talent. This is the only residue that is not specific to manufacturing. It occurs when companies do not make the most of the potential talent of their employees.

Despite selling different products, many product-based companies will find their waste to be similar and benefit from a lean perspective. Lean manufacturing techniques focus on reducing costs and increasing turnover through the systematic and continuous elimination of activities that do not add value.

5 Strategies to Reduce Manufacturing Waste

Now that we know what types of waste to look for, here are five practical strategies you can implement to reduce manufacturing waste:

1. Implement efficient inventory management

Stop manually recording inventory levels and manufacturing information. This often results in inaccurate and out-of-date data and leads to uninformed decision making. A good inventory management system keeps product quality levels high, reduces shrinkage and inventory waste.

Consider implementing a just-in-time manufacturing process to keep production and inventory lean.

Know more:

• 5 Causes of Inventory Waste That Are Costing Your Business and How to Avoid Them

2. Rethink your packaging materials

How can product packaging be redesigned to use the minimum amount of materials? try to usereusable or recyclable packaging materialsor even buy in bulk to reduce the amount of trash going in.

3. Establish a maintenance schedule

Don't wait for a machine to break down to fix it. Schedule regular maintenance for your machines, especially high-use machines. As an extra step, create a backup plan in case your machines fail, and make sure relevant employees understand the plans.

4. Organize your warehouse for efficiency

Reconfigure warehouse floor plan and layout to improve order fulfillment. Efficient warehouses store frequently picked items closer to shipping areas to minimize pick times, improve productivity, and minimize travel time between pick locations.

Some key areas to consider when arranging your floor plan are:

• Make room for internal goods. If your team doesn't have enough space to work, this creates more opportunities for inventory errors at the front desk.
• smart storage. Fast-moving items should be stowed between waist and shoulder height for faster pickup
• Area Assignment. Make sure your warehouse has dedicated areas for product and storage of damaged inventory items.

Product supply and demand are continually changing, so floor plans should be reviewed periodically to accommodate seasonal changes.

5. Label everything

Make it easy for your staff to navigate the warehouse and pickers to choose the right stock and reduce fulfillment errors. Have clear and concise shelf labels, box labels, and warehouse signage.

How to improve operational efficiency

Operational efficiency is about delivering good quality products to the right customers in the most cost-effective and timely manner. There are four factors that contribute to operational efficiency:

• resource utilization
• Production
• Distribution
• inventory management

Measurement of operational efficiency

There are some financial ratios that business owners use to measure their operational efficiency. The simplest way to calculate operating efficiency is:

A lower result indicates higher efficiency. This ratio can be used to assess the business as a whole or for individual areas of operations if you can identify and limit revenue and costs to that department.

You need to measure operational efficiency over time to determine how your efforts are paying off and to identify patterns and inefficiencies.

traps to avoid

There are a few things that can hinder your ability to measure operational efficiency:

• having too many measurements and metrics. It becomes difficult to separate results from the metrics that influence them. Results can be confusing and actionable information may be lost
• Trust in dubious data. Don't make data-driven decisions using poor-quality data. Spend time and effort establishing reliable measurement systems to obtain accurate and reliable data
• Use of data from multiple sources. Extracting data from multiple sources can be tricky: it takes time to reformat the data, process the data, and there is an increased risk of human error.

Seven strategies to improve operational efficiency

Here are seven strategies you can use to help improve operational efficiency.

1. Test and define workflows

It's a good idea to review your workflows. Take a scientific approach: formulate hypotheses before experimenting, change certain parameters, measure the results, and compare the results with your previous assumptions and workflows. This gives you a better idea of ​​what changes you need to make.

2. Streamline the materials ordering process

You always want to have the correct raw materials in the correct quantities on hand so as not to interfere with production. Be sure to forecast demand accurately so you know when to order and in what quantities.

Learn more about buying

3. Identify manufacturing bottlenecks

Once you identify what's slowing down your manufacturing operations, it's easier to come up with strategies to remove bottlenecks and improve performance.

4. Train your employees

Invest in your people, as they play an important role in making production efficient and maintaining product quality.

5. Adopt automated systems

Simplify the manufacturing process with automation to save time, make the best use of resources, ensure consistent product quality, and more. Before investing in an automated system,make sure it suits your businessneeds and has flexible integration capabilities.

6. Create a safe work environment

Manufacturing operations often involve heavy machinery and equipment. If someone is injured on the factory floor, the entire process must be stopped immediately. Along with the initial trauma and injury, you may also need to delay production and miss customer deadlines. Accidents at work can also increase insurance costs, damage production equipment, and much more. Prioritize workplace safety so your people can work at their best without worrying about their health and safety.

7. Maintain machinery

Equipment failure can throw off production, causing delays and serious problems down the road. In addition to causing frustration, machinery downtime is costly - the averagecost of unplanned equipment downtimeIt costs $260,000 per hour and lasts about four hours on average! Take a proactive approach and schedule regular maintenance for high-use equipment so you can maintain efficiency.

How to improve productivity through supply chain efficiency

If you manage your supply chain well, you can benefit from greater bargaining power and get the best rates and products in the shortest possible time. This, in turn, reduces inventory costs and improves production efficiency.

The supply chain and the production process.

Depending on the size, type, and products they make, supply chains can be complex and difficult to manage. Make sure you know how supply chain management affects manufacturers:

Tickets arriving on time

How well you manage your supply chain affects the timeliness of raw materials arriving at your production site. Poorly managed supply chains can disrupt production: Late raw materials delay production schedules, leaving employees idle and the company unable to fulfill urgent orders.

Costs of distribution

Good supply chain management reduces transportation costs. Manufacturers with profitable supply chains have lower direct selling and overhead costs.

Balance between own distribution systems and contracted services

Manufacturers want a balance between wholly owned distribution systems and outsourced services. Internal distribution systems are expensive, but manufacturers have full control over the process. Relying on contracts may be more affordable, but manufacturers risk giving up control.

Interact with suppliers and customers.

Staying competitive in the global marketplace means maximizing supply chain efficiency. Manufacturers who choose continuous quality improvement programs like Six Sigma will experience a different dynamic in the supply chain: they will need to collaborate more with customers and suppliers than usual. Just-In-Time manufacturers, or serving customers using JIT, need to digitally integrate with their upstream and downstream contacts, which will minimize interactions.

How to improve supply chain efficiency

Supply chain efficiency is a measure of how well a company's processes make the best use of its resources, be they financial, human, technological, or physical. Be sure not to confuse it withsupply chain efficiency.

An effective supply chain has knock-on effects in all areas of the business. Here are five proven strategies to improve supply chain efficiency:

Communicate efficiently

Commit to scheduling regular meetings to give your team a chance to address looming logistical issues early. Face-to-face meetings are another great way to avoid miscommunication and clear up misunderstandings.

improve visibility

Greater supply chain transparency improves the efficiency of your business and brings more benefits to your workforce and customers. See how you can do this:

• Ditch the spreadsheets. They are slow and unreliable when it comes to sharing up-to-date information.
• Keep your staff and customers up to date. Choose the most suitable platform for your team and clients to share current information
• Allow providers to track resources. They will have a better idea of ​​how you are doing and will be able to meet your demands.

Switch to automation

Review your process to see where you can use automation to increase efficiency. Talk to your team and senior management, taking into account your business needs, current goals and future ambitions.

Train your workforce

Your workforce can be a significant component of your operating cost, so make sure your team has the opportunity to improve. If training is aligned with business strategies, training and development will help employees become more in sync with the overall business goals of the company, which will ensure higher productivity.

measure and analyze

Improving supply chain efficiency is an ongoing process. To make sure you're on the right track, measure the changes, analyze the effects, and adjust what doesn't work.

How to reduce production costs in manufacturing

One way to improve productivity is to reduce production costs. Production costs are the costs incurred in manufacturing a product or providing a service. This can include expenses such as raw materials, labor, vendors, and overhead. Production costs may also include government taxes and royalties.

Types of production costs.

There are four major types of production costs: variable costs, direct costs, indirect costs, and labor costs.

Variable costs

Variable costs increase or decrease depending on the volume of production of a company. As production increases, so do these costs; as it goes down, so do variable costs. Packaging costs are a good example of variable cost: the more products made, the more packaging is needed.

direct costs

Direct costs are expenses that a business can easily tie to a specific product, department, or project. This includes items such as software, equipment, and raw materials.

Indirect costs

Overhead costs are costs associated with multiple activities and cannot be assigned to specific cost objects. Examples of overhead costs include bookkeeping, rent, and utility expenses.

Work expenses

Labor costs are the costs an employer incurs to pay staff. These are generally measured in hours worked and broken down into direct and indirect labor costs. Direct costs include the salaries of employees who produce a product, such as those on a production line. Indirect costs are associated with support labor, such as machine maintenance personnel.

6 strategies to reduce production costs

1. Track your costs

For starters, you need to make sure you track your costs – you can't change what you don't measure. And with the rise of cloud technologies, you won't even need an accountant to do this. accounting software likeXerooQBOwill track your costs across your business.

2. Eliminate bottlenecks and redundancies

Analyze each step of your production process: is each activity necessary? Does it add value? You should also consult with the relevant employees to find out which process steps do not add value, are redundant, or disrupt the workflow. Eliminate activities that do not add value to reduce unnecessary costs.

3. Strengthen your inventory control

Optimal inventory control means you keep the right amount of stock so you're not stuck with excess inventory that costs money to store, maintain, and could go to waste; but he is also not surprised by the lack of stock.

Read our guide on inventory control best practices to learn more.

4. Improve employee engagement

Engaged employees mean lower staff turnover, which in turn leads to lower labor costs. Engaged employees are also more effective and productive. This means that you must:

• Hire the right people
• provide training
• Offer appropriate incentives
• Share clear production goals

5. Embrace automation

Automated solutions may require an upfront cost, but lower your operating costs in the long run. Other solutions, such as subscription-based software, can break even immediately.

Start by automating yourInventory management with the right software. This will make your inventory control processes more efficient. You'll be able to better manage purchases, track available inventory, manage vendors and customers, and much more.

6. Negotiate with suppliers

Do you already have a good relationship with your supplier? You will be in a better position to negotiate discounted prices. Consider:

• Sign a long-term contract with your main suppliers
• Offer cash payment in exchange for discounts
• Apply for a billing discount at the end of a tax year if you have contributed significantly to your business.

See more information:

• Why you need to invest in supplier relationship management

We have listed just six ways to reduce production costs; there are many more. Take the time to see which technique or combination of techniques works best for your business.

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