An efficient assembly line guarantees that orders ship on time. And on-time deliveries lead to happy customers, a competitive advantage, and higher demand.
To keep up with that demand, your manufacturing productivity needs to scale with operations. Adding team members or automation needs to speed up production, not create new bottlenecks or slowdowns.
Keep reading to learn about a few key strategies — like effective inventory management and streamlined processes — to enhance manufacturing productivity, no matter the size of your operation. Or, if you’re short on time, scroll right to the last section to discover how Fishbowl helps manufacturers succeed.
Productivity in manufacturing: The essentials
Manufacturing productivity, or industrial productivity, measures how many ready-to-sell goods your business produces over a certain period. For example, a business selling auto parts might track how many parts it manufactures weekly. Alternatively, it could break down and track manufacturing productivity by specific parts, individual production lines, or facilities for a detailed view of operations.
Manufacturing productivity takes into account all inputs involved in the production process, including:
- Human capital (labor): The people employed in the manufacturing process and their time
- Physical capital (materials and equipment): The machines, tools, and other objects needed to produce goods
- Natural resources: Any renewable and nonrenewable resources sourced from nature for manufacturing, like oil and water
- Technological knowledge: The expertise and innovations that drive manufacturing, which can be public (known by everyone in the industry) or proprietary (known only by your company) — for example, how you use machinery
Manufacturing productivity versus manufacturing efficiency
While manufacturing productivity measures the number of units you produce in a given timeframe, manufacturing efficiency focuses on how well you use your resources during production. As we’ll discuss later, increasing manufacturing productivity often means becoming more efficient by cutting waste and optimizing inputs.
How to calculate manufacturing productivity
Since manufacturing requires several inputs — including human capital (or labor), physical capital, natural resources, and technological knowledge — you may need to use different formulas to assess productivity for each input, then add them together.
But to measure productivity as a basic output, combine various manufacturing productivity metrics like this:
Manufacturing productivity = Output / Input
Keep in mind that some inputs are harder to calculate because they’re less tangible. For example, to understand how technological knowledge impacts manufacturing productivity, you may need a complex formula that includes metrics like machine utilization and efficiency.
Calculating specific manufacturing productivity metrics
Let’s say you want to measure some specific inputs. For labor productivity (the amount of human capital required to produce a number of units), you’d use this formula:
Labor productivity = Units of output / Hours worked or dollars spent on labor
Use the same approach to measure multifactor productivity — the relationship between the total output and multiple combined inputs. For example, if you need labor, capital (in the form of money available), and materials to produce a good, calculate multifactor productivity like this:
Multifactor productivity = Output units / (Units of labor + Units of capital + Units of materials)
Multifactor productivity metrics give better insight into manufacturing processes since changes to one input, like available funds, may result in changes to another, like labor.
The benefits of measuring manufacturing productivity
Tracking manufacturing productivity provides several valuable benefits, including:
- Enhanced revenue prediction: Knowing how many goods you produce in a timeframe makes it easier to determine what’s achievable. This information helps set realistic revenue goals and adjust outputs to match financial targets.
- Easier expense tracking: Monitoring productivity allows you to better track manufacturing expenses by providing clear data on how production levels impact costs. For example, if you produce 500 auto parts a week, analyze how this production volume affects materials and labor costs. You might find that the overtime you’re paying to make an extra 50 units is equal to the extra revenue, meaning you’re not profiting. You’d be better off slowing production to 450 units each week to stay profitable.
- Improved production planning: Measuring production inputs and outputs gives you insights that track efficiency, quality, and other key metrics. Use these metrics to make better production planning decisions. For example, if you know how many people it takes to manufacture 100 units, you can better allocate labor and adjust employee schedules.
- Better market performance: Keeping tabs on manufacturing productivity helps you understand whether you’re overproducing, underproducing, or creating just enough goods. With this knowledge, you can optimize your manufacturing process to meet market demand and boost your company’s performance without spending on generating excess stock.
How to improve productivity in manufacturing
Once you understand your baseline efficiency, you can take steps to increase it. Here are six ways to improve manufacturing productivity and efficiency:
1. Try lean manufacturing
Lean manufacturing is a business strategy that aims to minimize waste and maximize value. By streamlining processes and eliminating unnecessary steps, lean manufacturing practices improve efficiency, reduce costs, and enhance product quality.
One key lean manufacturing practice is adaptability, which lets you harness advancements or new procedures for greater efficiency. Innovations in manufacturing technology and techniques reduce waste and improve productivity upon implementation. This lets you respond effectively to fluctuating market demand and supply chain disruptions.
2. Embrace automation
Automation is a powerful problem-solver. Replacing human labor with programmable systems and tools enhances productivity, reduces errors, improves safety, and increases efficiency throughout the manufacturing process. Many companies use automation to improve manufacturing processes and overcome their industries’ biggest challenges.
For example, say you manufacture furniture. Embracing automation might mean using robotic systems to cut, assemble, and apply finish accurately and consistently. This speeds up production, removing unnecessary steps without sacrificing quality. Plus, having employees monitor machines instead of cutting furniture could lower the number of safety incidents on the floor.
3. Optimize inventory management
Optimizing your inventory ensures the right raw materials are on hand for each production stage without understocking or overstocking. You can also monitor the number of finished goods in stock and use that information to guide manufacturing decisions, like adjusting production schedules to avoid dead stock and stockouts.
Most businesses use inventory management software to streamline these processes. This software helps track stock in real time, which makes it easier to adapt to fluctuations in stock levels that occur as items are produced and sales are made.
The best inventory solutions, like Fishbowl, feature customizable user access so certain team members can view information without permission to edit it. This makes it possible for employees to see the status of orders without jeopardizing data integrity — which maintains an optimal flow of production, boosting manufacturing productivity.
4. Enhance workforce training
A skilled workforce is a productive workforce, so invest in employee training to transform your manufacturing productivity. Adequate workforce training empowers employees to work more efficiently, use technology safely and effectively, and meet production goals — and together, these improvements lead to greater company success.
Workforce training becomes especially important when operations scale. As you grow, you bring on new people. Teaching them how tools work sets them up for success from the beginning, avoiding costly mistakes or production delays. To help employees succeed, make sure the training program covers everything from company culture to performance metrics and beyond.
5. Adopt predictive maintenance
When machines malfunction or go down unexpectedly, production suffers — there can be costly delays and major reductions in output. With predictive maintenance software, AI can continuously monitor equipment performance and flag potential failures before they occur. This allows you to schedule repairs proactively, reducing downtime and keeping production rolling.
Predictive maintenance also helps you extend the lifespan of your equipment by preventing severe wear and tear, sustaining manufacturing productivity in the long term.
6. Improve communication and collaboration
Everyone involved in the manufacturing process needs to be on the same page about goals, expectations, processes, and challenges to work effectively. If one person on your assembly line is out of step with the rest of the team, it could lead to errors, delays, and inefficiencies.
One way to improve communication and collaboration at your business is to ensure that everyone uses the same vocabulary, limiting confusion about instructions.
Boost your manufacturing productivity with Fishbowl
Want to watch your manufacturing productivity soar? Fishbowl is here to help.
Fishbowl’s powerful inventory management software can provide real-time updates on inventory, from the depletion of raw materials to newly finished goods. Plus, you’ll gain full visibility of the manufacturing process to find opportunities to optimize resource usage. And with Fishbowl’s analytics, you can generate reports on dozens of metrics to forecast future demand and adjust production schedules.
Even better, Fishbowl seamlessly integrates with QuickBooks so you can see financial data and streamline accounting.
Don’t let inefficiencies hold you back — discover how Fishbowl can transform your manufacturing process today.