Although overtime and subcontracting can be necessary and cost-effective ways to increase capacity to meet consumer demand, they can also be warning signs that a factory is not maximizing its throughput.
Throughput is the average number of units being produced during a specified period of time, whether by machine process or a factory line—for example, how many ready meals are completed per hour or how many pounds of apples are boxed in a day.
The Importance of Manufacturing Throughput
Finding out how to improve throughput in manufacturing will help factories operate more efficiently, saving time and costs and fostering positive business relationships by meeting both demand and deadlines.
Throughput is one of the most easy-to-understand manufacturing metrics, but knowing what is impacting throughput is not so easy. Not understanding where and when inefficiencies are originating and occurring makes it difficult to identify issues and find a solution. Unknown machine problems and overlooked human error could be negatively impacting throughput. That’s when factories turn to subcontractors or overtime pay to meet demand, creating a never-ending loop of costly patches as managers try to speed up throughput.
The Business Cost of Unplanned Overtime and Subcontracting in Manufacturing
Food manufacturing companies can make some use of planned overtime and subcontracting, usually to meet a new or short-term demand or to meet a specialized consumer demand, such as kosher or gluten-free bread products.
Companies can strategize and plan for seasonal demand, and although meeting sudden and unexpected consumer demand can be tricky, it can be worth the overtime and the risk of subcontracting. When you can quickly meet high consumer demand, you increase your bottom line and strengthen your relationship with your customer base.
But there is risk involved in subcontracting. You have to trust someone else to do what you do with the same effort and precision and ask individuals outside of your organization to care about your company, customers, and workers as much as you do. It is crucial that all subcontracted work reflect the processes and values of the food manufacturer.
Additionally, subcontracting can cause lasting damage if it results in missed deadlines and low-quality products. For example, a bread company subcontracts out gluten-free bread products, but the subcontracted company’s workers take cleaning and sterilizing shortcuts so they can increase throughput. However, the shortcuts lead to a recall, which translates to waste and poor customer relations. Even losing a slim portion of customers can make or break a food manufacturer’s competitiveness.
When Overtime Is Unnecessary
If your workers are putting in extra hours to meet high consumer demand, overtime can be a good “problem” to have. But when unplanned overtime is caused by lagging machinery or poorly communicated processes, it’s just a waste that can slow throughput and make you fall short of consumer demand.
Using Automated Processes and OEE to Eliminate Overtime and Subcontracting
Often, slow throughput can be the result of faulty manual processes, poor machine maintenance, and unclear process communication. Improving throughput in manufacturing requires taking a critical look at all of your processes and finding more automation opportunities. If you’re already using automation but still have a few “workaround” manual processes, those processes could be responsible for your low throughput. Using Smart Factory software to monitor manual processes can help you increase throughput.
Additionally, human error is easy to overlook, especially when you use lean manufacturing principles on the factory floor and have clear and ongoing machine training. Using Smart Factory software, you can analyze factory data to find training opportunities that will improve human behavior.
For example, when a new machine is installed or recalibrated, the worker operating the machine may not notice they’re powering it on too early, even after they’ve been trained. Smart Factory data provides managers with a clear view of where processes are lagging.
Using OEE to Improve Throughput
Determining the overall equipment effectiveness (OEE) to measure the real-time efficiency of factory equipment helps managers identify key problems on the factory floor so they can pinpoint possible improvements. Managers can measure the efficiency and performance of workstations, equipment, process lines, departments, and overall plants. This gives valuable insight into performance so you can tighten up processes and make unplanned overtime and subcontracting a thing of the past.
Worximity’s free OEE Calculator is a great tool that helps you track your production equipment’s availability and efficiency in real time. The calculator helps you register the number of rejects and assess your overall performance of your machines. Using this information to benchmark OEE for each machine will help you determine what to improve and how; does equipment need to be differently calibrated, or does a machine need to be replaced?
Learn More About How to Improve Throughput in Manufacturing
Eliminating unplanned overtime and subcontracting is just one of the many benefits of improving throughput. Improving throughput also helps you strengthen relationships with your customers and get an edge on the competition.
The only way to maximize your throughput is with digital technology. Worximity’s Smart Factory analytics software can give you real-time, actionable data to help you take steps to improve throughput and put a stop to unplanned overtime and subcontracting.
Find out everything you need to know about throughput and more on Worximity’s blog. Learn about how to improve everything from throughout and bottlenecks to process improvement and worker compliance.