How to Improve Production Efficiency in 8 Simple Steps

Standard operating procedures (SOPs) often vary from company to company. However, one overarching goal remains the same across industries: achieving strong production efficiency. SOPs support production efficiency because they yield strong supply chains, happy customers, and safe employees.

Exceptional managers consistently strive to achieve maximum output without sacrificing high-quality standards. Of course, they don’t always achieve their goals. As reported by Carpedia, most companies squander 50 percent of their labor and equipment resources. Several factors can and do affect organizational production efficiency for large enterprises and small businesses alike.

This article will share tips for how managers can increase the likelihood of hitting vital production efficiency benchmarks. Before we begin, let’s review the technical definition of production efficiency.

What is Production Efficiency?

Investopedia defines production efficiency (also known as productive efficiency) as follows:

Production efficiency is an economic term describing a level at which an economy or entity can no longer produce additional amounts of a good without lowering the production level of another product.
‍Investopedia

It’s about economics. An organization reaches its apex of production efficiency when, economically, it cannot produce any more of one good without lowering production levels. In other words, a company reaches maximum production efficiency once a team is producing as much output as possible—without wasting time, money, or other finite resources.

Production efficiency is often measured in terms of Overall Equipment Effectiveness (OEE). OEE is a key performance indicator and “best practices” metric that identifies the percentage of planned production time that is genuinely productive.

An OEE score of 100 percent represents a perfect production line that produces only good parts, as quickly as possible, with zero downtime. Facilities use OEE as both a benchmark and a baseline of production efficiency.

The metric becomes a benchmark when comparing a particular asset’s performance to industry standards, similar in-house assets, or its own output across different shift schedules. Alternatively, OEE becomes a baseline when tracking progress over time to eliminate production waste.

World-class manufacturers achieve OEE scores of 85 percent, while average manufacturers typically score around 60 percent.

How to Increase Production Efficiency

Use the following general steps as jumping-off points to start internal discussions about increasing production efficiency.

The concrete steps you take will be unique to your organization’s challenges, resources, and production systems.

Step 1: Improve Your Business Processes

Have you ever found yourself tip-toeing around big egos in a new managerial role? If so, someone probably told you: But this is how we’ve always done it!

Much like individuals, businesses are subject to developing daily habits that aren’t always conducive to success. Perhaps a company system was once sufficient, but it’s unlikely to remain effective over decades.

For example, it’s not unusual for organizations to periodically upgrade production equipment with “the latest and greatest” technology. However, should they experience immediate gains, team members will likely pat themselves on the back without evaluating the technology resources that support their core production equipment.

All organizations need to take the time to review current business processes and look for areas to improve, redefine, or reorganize.

Key Takeaways:

1. Challenge the status quo.
2. Old systems and processes are likely inefficient.
3. Review technology used across your entire operation.

Step 2: Evaluate Your Production Line

Next, evaluate every aspect of your production line. Pay special attention to measuring throughput—the average number of units your company produces in a given period. This measurement will highlight any issues you have with specific machines.

Another essential metric to review is your capacity utilization. This measurement involves calculating the capacity of your total manufacturing output per factory at any given moment. Analyzing capacity utilization allows you to see which production lines are operating at their highest possible output.

Both metrics illustrate precisely how costly equipment downtime can be. For example, say your standard output rate is $500,000 worth of widgets made every hour. The difference between a technician taking 15 minutes to repair a broken conveyor belt versus 30 minutes suddenly seems critical. The difference could cost your company $125,000.

Key Takeaways:

1. Measure throughput—the average number of units you can produce in a given period.
2. Track capacity utilization in a given period.
3. Understand and measure the cost of your equipment downtime—those “extra 15 minutes” to repair equipment may be costing your organization serious extra money.

Step 3: Update Technology

Technology debt is an unpleasant fact of life for businesses today. If you don’t provide your team with the tools it needs to be efficient, you’ll find yourself losing both customers and employees.

While technology often requires hefty upfront investments, taking the plunge may help you stay ahead of the competition. For example, say your office computers take 5 minutes to load. That’s a 5-minute delay for new information to reach your production line or at least 22 hours of delay per year on that machine and employee alone!

We could make the same argument with any production-dependent piece of equipment in your operation. Your willingness to make these types of changes not only improves operating efficiency but can dramatically boost employee morale and retention. Not to mention, technology upgrades don’t always have to be expensive.

Team collaboration tools like MaintainX’s CMMS software improve communication, streamline work order automation, and simplify asset management for nominal monthly fees. In fact, the figures provided by the software’s Advanced Reporting functionality provide deep insights that often save users hundreds of thousands of dollars per year!

Key Takeaways:

1. Review your organization’s internal technology state and assess how any inefficiencies may be causing bottlenecks in your operation.
2. Modern technology attracts the best talent and the best customers.
3. Consider MaintainX to help keep your team on the same page and streamline processes.

Step 4: Identify Production Bottlenecks

Production bottlenecks occur when there is a breakdown somewhere on your production line. People often assume machine- or equipment-related deficiencies drive bottlenecks. However, organizations have the most costly bottlenecks in the “human” components of their processes.

Managers can incorrectly categorize machine-driven bottlenecks as “machine errors” when the real culprit is a poorly run preventive maintenance (PM) program. Alternatively, a technician’s slow response time could dramatically impact your ability to get things back on track.

On the other hand, some bottlenecks are purely administrative. Are you always waiting for sign-off approval before you can proceed? For example, do simple part replacements require approval that eats into your downtime?

Key Takeaways:

1. Think outside the box when evaluating your SOPs to look beyond production bottlenecks.
2. Machines, people, and procedures can cause production blockages.
3. Identify and present the issues you uncover to management to initiate problem-solving steps.

Step 5: Find and Eliminate Wastefulness

Waste occurs in many forms, some of which aren’t always obvious. For example, poor ventilation and ineffective heating/cooling aren’t usually visible to the naked eye.

Additionally, waste occurs in the form of unnecessary labor costs and worker mismanagement, which can significantly impact production efficiency. And don’t neglect the cost of wasted human physical energy. Does your team follow SOPs that can be measured and improved?

If everyone on your team takes a different approach to the same task, you could be wasting hundreds, if not thousands, of work hours each year on workflow inefficiencies alone. Consider hiring an objective third party to evaluate without bias your organization’s use of resources.

Key Takeaways:

1. Wastefulness is not always evident to day-to-day operators.
2. Standard operating procedures can help measure efficiency across your teams and identify areas to improve.
3. Wasted human energy can cost staggering amounts of capital each year when aggregated across your workforce.

Step 6: Consider Recycling

This tip is pretty straightforward—an easy way to improve production efficiency, and cut costs, is to reuse manufacturing materials.

If you have a well-equipped facility, you can quickly sort waste for recycling and reuse. Anything you can put back into the production process, whether leftovers or scraps, should be used.

Key Takeaways:

1. Set up a system that allows you to sort waste.
2. Put whatever you can back into the production process.

Step 7: Get Organized

A disorganized team is inefficient. Organize and standardize your processes across the board. From how your tools are handled on the shop floor to how your team collaborates, everything that can run with a repeatable process should be optimized.

Make it your goal to quantify and organize every process your company puts into practice—and not just those on the shop floor. Ask yourself questions like: How does your front office receive production updates from the floor? How does your warehouse team know when products are ready to ship? How is all of this communicated?

Do your team members have to check their email inboxes, text messages, phone calls, walkie-talkies, and office paper inboxes to be fully in the loop? Streamlining and organizing your internal communications have compounding benefits that begin immediately.

Key Takeaways:

1. If your processes aren’t standardized, they may be disorganized.
2. Organize your processes so you can measure results and work to improve them.
3. Successful organizations streamline communication across as few channels as possible.

Step 8: Improve Your Training Processes

If you find your employees are inefficient, it’s probably not their fault. New employees receive training, both directly and indirectly, to adhere to company standards. Translation: if you haven’t taken the time to outline employee protocols, new hires will learn by copying those around them.

Ensure you have standardized operating procedures (SOPs) in place—after you’ve identified gaps in employee knowledge, skills, and processes—before creating necessary training programs.

Ideally, you can eliminate most onboarding training hurdles using modern software, like MaintainX, to reinforce and apply SOPs to every task. The benefits of incorporating these processes into a software solution are that any relevant process can be at your team’s fingertips wherever they are.

Most importantly, allow your employees to add their ideas about how to improve efficiency. If they do the job every day, they will have insights that no consultant or executive will have!

Key Takeaways:

1. Standardize your training so you can measure and improve processes.
2. Provide accessible SOP training resources for your employees to reference.
3. Use a modern software solution like MaintainX to help build a knowledge base for your employees to reference on the go.

Improve Production Efficiency with MaintainX

Boosting organizational production efficiency is an ongoing process. Don’t underestimate the value of making small tweaks to production waste management, employee training, and bottlenecked production lines.

Sometimes, the smallest, strategic, operational changes yield the biggest returns. With that said, the quickest way to increase production efficiency is by enforcing standard operating procedures using mobile CMMS.

MaintainX allows manufacturing managers to create online libraries of SOPs, assign work orders, and manage assets from one centralized dashboard. The app also allows workers to conveniently access quality control checklists, safety audits, and PMs from their tablets and smartphones.

The result? A digitized audit trail that proves compliance, alongside a powerhouse of data that can improve production efficiency. Oh, and the app also boasts a team messaging feature that our customers love using!