# Manufacturing Productivity: Definition, Formula and Tips for Improvement

## Productivity vs. efficiency

Although they both relate to how quickly workers produce goods, productivity and efficiency are two different ways to assess your company’s manufacturing effectiveness. Efficiency typically appears as a percent measuring the current output against industry standards or another goal, while productivity typically takes the form of a ratio, expressing multiple goods or amounts of revenue per unit of time. Efficiency may also take into account the material or energy cost of production as well as the quality of the goods produced, whereas productivity measures output by time.

## What is manufacturing productivity?

Manufacturing productivity measures how quickly a business produces finished goods to sell to customers. You can assess a company’s overall manufacturing productivity or concentrate on a particular line, team, or facility. A department or company’s overall success can be measured by manufacturing productivity when combined with efficiency, manufacturing costs, and revenue.

## Importance of measuring manufacturing productivity

Manufacturing productivity, along with manufacturing efficiency, is a crucial indicator of short-term revenue. Your manufacturing line or facility’s productivity can be seen by measuring manufacturing productivity, which can help you identify areas for improvement. You can use monitoring manufacturing productivity over the course of several months or years to identify historical growth rates and forecast future trends for your business.

## How to measure manufacturing productivity

The output in relation to labor is frequently measured as manufacturing productivity. The basic formula for calculating manufacturing productivity is:

Output value / Labor time units = Manufacturing productivity

### 1. Determine the output

Your output is a number that reflects either the volume of units produced by the group or facility you want to evaluate, or their monetary value. Depending on whether you want to measure your productivity in terms of inventory or projected revenue, you may need to choose a different value. For instance, you could use the quantity of computer chips produced or the anticipated financial value of the chips produced as your output to assess the productivity of a production line that creates computer components.

### 2. Calculate labor time units for the period

You can choose the unit of time you measure based on your needs because manufacturing productivity can be expressed as a ratio. You could measure output per hour, day, or week in order to obtain a baseline productivity rate for a plan of improvement. You could calculate productivity per year to monitor a company’s historical productivity and forecast future trends. You can add up the logged labor hours of every worker who participated in production during the unit of time you choose to determine your total labor input.

### 3. Divide the output by the input

Your manufacturing output will be measured in terms of units produced or dollars earned per hour. As an illustration, a computer manufacturing plant might produce \$50,000 worth of computer processing chips in a week while having workers put in a total of 200 hours. To calculate their productivity, the equation might look like this:

50,000 / 200 = 250

The facility calculates its productivity rate at \$250 per hour.

## Strategies to improve manufacturing productivity

Here are some methods you can use to raise manufacturing productivity at your business:

You can make a production schedule that more efficiently utilizes the time of your employees by knowing your production rate. For instance, you might decide to add more shifts to your work rotation to boost productivity, which will enable you to hire more staff while staying in the same location. You could also examine the workflow in your facility to make sure the right number of workers are assigned to each stage of the manufacturing process.

### Increase or upgrade manufacturing equipment

Your current equipment may need to be audited to see if it meets the needs of your employees because manufacturing equipment is crucial to overall productivity. By adding more machines, you can frequently increase equipment availability, which might also enable you to add new production lines. Additionally, improved manufacturing machinery might enable staff to work faster and crank out more units per hour.

### Improve your equipment utilization rate

The amount of time that important manufacturing equipment is used each workday is referred to as the equipment utilization rate. The equipment utilization rate, along with manufacturing productivity, can help you determine whether your current procedures are maximizing the value of your manufacturing equipment. You can modify your workflow or look into scheduling options like shift scheduling to increase the amount of time your equipment is being used.

### Increase training and performance reviews

Additional training and assistance for staff members may help them acquire the abilities they need to work more quickly and produce more during their shift. Production managers can identify ways to assist specific employees, enhancing their workplace satisfaction and productivity, through regular performance reviews. You can identify areas in the manufacturing process that might benefit from audits or more staff by conducting more reviews.

### Consider engaging a manufacturing consultant

Manufacturing consultants provide guidance to businesses on how to enhance their manufacturing procedures, frequently by using a multifactor analysis that places your productivity rate in context. They may look at your raw material suppliers, production process, equipment usage patterns, and a variety of other process elements. They might also make suggestions for how to innovate by utilizing new manufacturing techniques or labor-saving workflows.