When it comes to calculating a company’s manufacturing productivity rate, it's essential to determine the actual hours available for work. In addition, one must document the total lost time because of delays and work stoppages. Not understanding the actual amount of time available to work, and not identifying and totaling the lost time as it occurs in manufacturing, is often the reason why companies perceive their productivity rate to be higher than it actually is. So, how does a company determine its manufacturing productivity rate?
Do Employees Work a Full Eight Hours?
When it comes to figuring out the productivity rate on the manufacturing floor, it is first essential to understand that nobody works a full eight hours. There is both lunch to deduct, as well as breaks in the morning and afternoon. Assuming it’s a full hour for lunch, and two 15 minute breaks, a company is then left with 6 & ½ hours of available work time. So, while a company may pay its employees for 8 hours, they don’t actually work that full eight hours. However, of the 6 & ½ hours that remain, how much do the employees actually work? Do they work non-stop, without interruption, for the full 6 & ½ hours? Of course they don’t. What needs to be figured out is the actual amount of time employees work out of that 6 & ½ hours of available work time.
How Does a Company Identify Lost or Idle Time in Production?
When it comes to figuring out the productivity rate, it is incumbent upon a company to identify the bottlenecks, and lost time in manufacturing. To do this, a company actually has to document the lost and idle time as it occurs. For some companies, it might involve using a Materials Resource Planning (MRP) software, which tracks work orders in production, allowing the company to immediately identify wasted time. However, for those companies that don’t have a software, they can still determine the lost time by tracking that lost time as it occurs. This involves physically standing there while manufacturing is taking place, and diligently tracking lost time as it happens. Even companies that track their manufacturing via a software program, will often choose to see for themselves what causes the actual lost time.
What is the Calculation that Determines Productivity Rate?
Let’s assume a company has documented the lost and idle time in a manufacturing work station, and found that the total amount of lost time was 145 minutes during a day. How does this lost time equate to a productivity rate? Well, to simplify the example, take the 6 & ½ hours and convert it to minutes, which is 390 minutes of total available work time. The calculation is simply the available work time in minutes, minus the lost time, divided by the available work time. To simplify this, here is a breakdown of the calculation.
- 6 & ½ hours of available work time: 390 minutes
- Lost time in manufacturing: 145 minutes
- Actual time worked in manufacturing: 390 – 145 = 245 minutes
- Productivity rate calculation = 245 minutes / 390 minutes or 62.8%
Depending upon the industry, and the company, this 62.8% productivity rate might be reasonable or completely unacceptable. However, not knowing is perhaps the biggest sin. If a company wants to improve its productivity rate in manufacturing, it must involve properly identifying available work time, and identifying lost time as it occurs. Companies that properly document their lost time, and its causes, are best able to make the necessary adjustments to reduce that lost time and improve their productivity rate.
Ian Johnson - I currently run a business blog called www.driveyoursuccess.com. I have over 15 years consulting experience in production cell management, ...
