In the world of manufacturing, productivity is one of the key measures of success. In fact, the core purpose for most manufacturers is to produce enough goods in order to grow (and to meet customer demand).
But what exactly is productivity, why is it so important, and is it always better to produce more? What is the difference between efficiency and productivity, and how can a small business go about increasing its productivity?
We’ve put together some useful tips to answer these questions for you.
What is productivity in manufacturing?
For manufacturers, productivity is the amount of output that is generated, in relation to the input required to achieve this.
Output is any item that is ready to be sold to customers. Input can be a combination of elements, including time, energy, equipment and raw materials.
Why is productivity so important?
Productivity fuels the profitability of any given manufacturing business. Not generating enough produce results in reduced income, as there is simply less to sell.
If production levels are low, prices may need to be raised, in order to achieve the necessary profits for survival. But this action will likely drive customers away if they can find a cheaper price elsewhere.
So, you could assume that it’s always better to produce more, as the quantity of output is the only thing that matters. However, this shouldn’t be at the expense of other important factors. A sole focus on high output could be detrimental for several reasons.
Increasing the speed of the production (in order to produce more) could result in a decrease in product quality, as the process will be rushed. This will ultimately lead to poor customer satisfaction.
Similarly, if a large amount of input is needed for each product to be created, then it will not be possible for the company to thrive, even though production levels might be higher than they’ve ever been. This is where efficiency must come into play.
What is the difference between productivity and efficiency?
Efficiency is all about performing optimally, through the streamlining of processes. A balance of productivity and efficiency is what all businesses should strive for, as this is where the best results are achieved.
Being able to attain the biggest return from the smallest investment is the epitome of efficiency. You should look to get the most out of your existing resources, whilst incurring the lowest cost possible.
The ‘Production Possibility Frontier’ is an economic model that could be helpful in terms of increasing your efficiency. This model demonstrates the production of two products on a graph. Based on the resources currently at your disposal, the graph shows a curve, which represents the maximum possible output for each product.
Anything within the curve is considered inefficient, and anything outside of the curve is unattainable. Making use of this model can help with the quest for greater efficiency.
Ways to increase productivity in manufacturing
Maintain equipment and workspace
Failing to maintain equipment effectively can seriously disrupt manufacturing productivity. If a particular machine breaks down at a pivotal moment, this will inevitably impact a company’s performance.
You should always be on the lookout for better equipment, so that existing machinery can be updated when the appropriate moment arises. Taking this proactive approach keeps you ahead of the curve (and the competition).
Your physical factory floor is an aspect you should look to optimise too. Is it easy to get from one stage to the next in the production process? It could be crucial to analyse the layout of your workspace. You want it to be as empty and as tidy as possible. If it is cluttered, things are more likely to go wrong, and level of performance will inevitably decline.
The actual journey of going from one step to the next in the manufacturing process should also be reviewed. If a step or two can be removed from the product creation cycle (with the quality of the finished item being unaffected), then you should look to do this.
Invest in employees
Employees are arguably the most valuable asset any business has. Not investing in this asset will only do harm to the organisation. If employees are given the relevant training, they will be able to perform better, contributing more to overall productivity.
Processes are always evolving, and the tools you use will change over time, so you must ensure your staff are given the relevant know-how and training, in order to do their job properly. When you spend money on an employee’s personal development, they feel valued too. This leads to greater satisfaction in their role, and they are less likely to leave.
Hiring new people (and training them from scratch) requires a significant sacrifice of time and effort. You won’t have to go through this process as often if the existing workforce are fulfilled.
There’s also value in providing people with the skills to do multiple roles. This ensures that there is no downturn in productivity in the event of an absent employee (as someone else can simply step into their shoes). This tactic also leads to reduced boredom for workers, as there will be more variety in their everyday activities.
Waste can be one of the biggest contributors to inefficiency and loss of money. If your business is highly productive, but simultaneously wastes a large percentage of materials that are purchased, this is unsustainable.
You should first figure out how to get the most out of your existing resources, before thinking about scaling up production levels. Once you’ve hit this optimal point, you can figure out how to increase output.
Having effective stock control processes can be key to reducing waste, and just generally ensuring you don’t have an excess of materials. Just-in-time manufacturing is a method of production whereby you only source materials for goods when there is the appropriate demand, rather than stockpiling ahead of time.
Wastefulness is an undesirable trait in the eyes of potential partners too. With more people being environmentally conscious, suppliers and customers may not want to be seen working with a company that is reckless in this regard. Therefore, reducing waste is not only good for efficiency, but it’s also good for the planet and keeps your reputation intact.
Implementing technology is a proven way of increasing manufacturing productivity and efficiency quickly. Using a computer system, rather than paper-based techniques, immediately reduces instances of human error. It also increases speed, as these machines can make calculations right away, that otherwise might have taken an age.
Many manufacturers now look to adopt software, with the objective of automating a large part of their business operations. This automation allows for production to be scaled up, without the risk of reduced quality or employee discontentment. This subsequently arms smaller manufacturers with the ability to grow.
Manufacturing Software brings all areas of an organisation together, which facilitates cohesive and accurate data between departments. This data can be used to make predictions around financial performance, which can also dictate decisions around production.
This type of system allows for a smarter approach when it comes to stock control. It connects a company’s e-commerce platform to the management its inventory, meaning that they’ll never be left short (or be overstocked) when it comes to producing the required numbers of finished goods. The automation of a manufacturer’s supply chain can only be of assistance when tackling the goal of upping production levels.
The extra efficiency that arises with Manufacturing Software ensures waste is drastically reduced, timeliness around logistical processes is improved, and employees no longer have to worry about the repetitive tasks that used to take up all of their time. Instead, they can focus on adding real value to the company.
If you’re looking to increase productivity and efficiency, take a look at our Manufacturing Software, which is designed to help manufacturing SMEs grow (as a result of driving optimised processes).