What is Production Efficiency?

Efficiency is key to reducing costs, staying competitive, minimizing waste and keeping up with customer demand, all without sacrificing quality. Production efficiency is a measure of how effectively a manufacturer uses time, materials, and labor to create and deliver its products. The goal is to minimize waste in all capacities without compromising product quality. Production efficiency is often measured through metrics such as overall equipment effectiveness (OEE), which determines the percentage of planned production time that was genuinely productive.

Benefits of Improved Manufacturing Production Efficiency

What are the advantages of an improved manufacturing process? From reduced costs and increased output to happier customers and more motivated employees, the benefits are vast and can directly support a business’s ability to grow and thrive.

1. Reduced costs: Effective production aims to make the most of materials, minimize energy usage and cut waste without sacrificing product quality. Efficiently run facilities also tend to prioritize preventative maintenance, minimizing risk of costly equipment breakdowns so that operations can continue to run smoothly.
2. Increased output: Efficiency helps streamline processes to support a manufacturer’s ability to speed up production and improve throughout. The more efficient the production line is, the higher the number of products that can be manufactured in the same amount of time without necessarily increasing costs.
3. Optimized resource utilization: A primary way to do so is through optimized resource utilization. For example, streamlined processes and targeted training support labor productivity and can help maximize output per work hour, while ongoing equipment maintenance supports the machinery’s ability to work at peak efficiency.
4. Improved consistency and customer satisfaction: When production processes are efficient, the quality of the output is more consistent. This is generally due to standardized production workflows that minimize errors. Higher consistency in product quality also means that customers are more likely to receive products that consistently meet their expectations, which keeps them coming back for more and inspires world-of-mouth referrals.
5. Enhanced competitiveness: The more efficient a manufacturer’s production process is, the more likely the manufacturer will be able to offer lower prices and or faster delivery times than its competitors. 
6. Amplified employee morale and safety: Well-run operations can boost employee morale by reducing stress and, ultimately, improving bob satisfaction. 
7. Less waste: As mentioned, efficient production minimizes various forms of manufacturing waste, such as material scraps, excess inventory, energy and time, etc. Waste production is typically achieved through careful demand planning, just-in-time inventory practices that ensure the company keeps only enough stock on hand for production, mindful cost management strategies and reliance on effective technology – all of which go hand in hand with efficiency.
8. Reduce carbon footprint: Another benefit of minimizing waste and optimizing energy usage is a reduced carbon footprint. For example, a manufacturing company can adopt LED lighting and high-efficiency HVAC systems to significantly reduce electric consumption.  Strategies that prioritize renewable energy sources and sustainable production practices can also be investigated and made to help companies comply with environmental regulations, appeal to eco-conscious consumers and help combat local and global issues, such as pollution and climate change.
9. A foundation for growth: Done right, efficient production processes provide a model that can handle increased volumes with agility and without a proportionate increase in headaches or costs. For example, if a team is constantly troubleshooting problems, fixing old equipment or managing frequent downtime, there may not ne enough available time or resources to grow the business. With improved production efficiency, however, the company can free up resources – both time and money – to invest in exploring new markets, enhancing product lines and or increasing production capacity.
10. More reliable delivery times: Efficient production reduces variability in the manufacturing process, making it easier to predict and manage production runs and delivery schedules. Efficiency can also minimize disruptions, like equipment breakdowns, further supporting a company’s ability to not only fulfill orders on time but also shorten lead times. 
11. Streamlined inventory management: Enhanced production efficiency supports smart inventory management strategies. It can lead to more predictable production cycles that enable just-in-time inventory practices. Efficiency can also support better manufacturing forecasting accuracy and production agility, both of which can make it easier to align inventory levels with market demands. 

Various businesses operating across industries face ever-evolving unique challenges and dynamics each day. Most businesses benefit from our comprehensive audit and development of their business operational plans which ensure customized solutions aimed at optimizing growth, profitability and innovation.

Dr Pete Mhlanga

Managing Director, MCTG Consulting

PhD Law

Harvard Professional & Executive Development

LLM (Public International Law)

LLB (Company Law and Tax Law)