When looking at manufacturing Key Performance Indicators (KPI), few measurements are as important as the company’s productivity rate. Eliminating downtime and lowering cycle times are essential when increasing production throughput. However, to be successful means the company must first determine its existing productivity rate. Afterwards, it can enact strategies to reduce downtime. So, how does a company calculate their rate in individual work cells?
Determining Your Manufacturing Productivity Rate
For those of you who’ve visited this blog before, you may have already read several articles on how to determine your manufacturing productivity rate. However, for those of you who are new to this site, my approach to determining this manufacturing KPI might be a little different from what you're used to. I advocate an approach based on calculating the productivity rate within individual production work cells and work stations.
The idea is to determine the rate at a given work station, and then compare rates across multiple work stations on the production floor. I start with determining the individual rate, while at the same time capturing down times and isolating high cycle times. Next, I enact strategies to reduce downtime, thereby increasing productivity. So, what’s the first step to using this key performance indicator?
1. Determine and Convert Available Work Time in Minutes
Your company may pay a production employee for 8 hours of work, but you know they can’t possibly work a full 8 hours. For instance, there’s lunch & breaks. Deduct this time from the amount of available work time. In our example, we’ll assume it is 1 hour for lunch and two 15 minute breaks in the morning and afternoon. This leaves us with 6.5 hours of available work time, or 390 minutes. Now, does the employee work a full 390 minutes? Of course not, that would make him, or her, a machine. So, the question then becomes: “How much time does the employee actually work?”
2. Track Lost or Idle Time in Minutes
In this step you have to watch production as it happens. Your goal is to track the amount of lost time as it occurs. At the same time, you’ll essentially be determining the cycle times at the work station. Reducing lost time is the same as improving cycle times and increasing productivity. Track lost time as it occurs and be sure to document the causes of work stoppages.
3. Deduct “Lost Time” From “Available Work Time”
In our example, we’ll assume you’ve documented 135 minutes of downtime in this particular work station. Now, you must deduct this lost time from the available work time. This means it is 390 minutes minus 135 minutes. This leaves us with 255 minutes of actual work time. So what’s the productivity rate?
4. Determine Productivity Rate and Track Over Time
You’ll now take the actual work time and divide it by the available work time. This is 255 minutes divided by the 390 minutes. This gives a productivity rate of 65%. However, we’re not finished yet. This particular productivity rate may be an anomaly where the work stoppages were caused by something unforeseen. Therefore, for this rate to be relevant means the company must track it over time. Comparison is essential. All the steps are summarized below.
- 1 hour = 60 minutes, so 6 & ½ hours = 390 minutes
- Lost time during analysis: 135 minutes (this time is captured throughout the day)
- Available work time in minutes: 390 – 135 = 255 minutes
- Productivity rate% = 255 minutes divided by 390 minutes
The above video explains how to design work cells and work stations, while also measuring the productivity rates and volumes emerging from these cells: It is take from the post: Manufacturing Work Cell Optimization: Design, Layout and Analysis
Using productivity rate as a manufacturing key performance indicator is a powerful way of identifying and eliminating lost time. While this example is based on analyzing the cycle times in a given work station, the same rule applies throughout the production floor. In fact, if you concentrate on eliminating downtime at each production work station, then you’ve successfully increased your production throughput.
I would then take this a step further and track actual production volume relative to this productivity rate. So, if the productivity rate of 65% correlates to a production level of 100 completed units, then what would an increase in productivity rate to 70% mean to your business and production throughput?
When it comes to using productivity rate as a manufacturing key performance indicator, take the time to analyze the performance of individual work stations. The idea is that production employees are much like surgeons. As such, they must have their tools, bill of materials, assembly drawings and work order instructions, in good working order. No delay is acceptable.
When analyzing this manufacturing KPI, welcome lost time. It allows you to pinpoint areas of concern. When you use the above mentioned approach, you’ll likely identify a number of causes of downtime. As such, it is incumbent upon you to put a plan in motion to reduce their impact.
If you want additional information about how to track multiple cycle times emerging from a given work cell, then please visit: Cycle Time Tracking & Variance Analysis in Excel for Small Manufacturers. The excel sheet in the post will track your cycle times and provide you with a layout like the graph below, while also helping to explain your mean, mode and median cycle times.
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