How Manufacturers Can Improve Efficiency?

Manufacturing and production times are important for any business, and with more time in a day, a factory can produce more, increasing sales. Efficiency is beneficial to any company, and it doesn’t matter whether your business is manufacturing or service oriented. Manufacturing more effectively can help save costs, increase throughput, and reduce environmental impact on a broad scale.

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All of these are just some general advantages that lead to extra improvements later on, for example, higher sales and quality manufacturing, as well as an improved image for the company. Here are the best ways that a manufacturer can improve its efficiency.

Review All Processes

In any business, assets and liabilities determine the profit output at the end of the financial year. Some businesses may not realize that they’re bleeding money if they are unaware of the value of something in the manufacturing process. An outdated piece of machinery may be costing more in maintenance than the value of what it’s supposed to be producing.
One way to avoid this is to quantify everything with a dollar value. This can be the price paid for the item, or how much electricity is spent on running a particular piece of equipment.

Revise Payment Plans

Whether a large company or a small client is paying, consider revising your financial terms and conditions to allow for more cash flow. This can be done by offering clients discounts on early settlements or extending monthly payment plans. The offer to receive a discount for paying an outstanding account early is often enough to entice customers – both large and small. These strategies for improving cash flow in manufacturing businesses allow manufacturers to receive money before the expected date.

Keep Up with Maintenance Plans

All mechanical equipment requires regular maintenance to ensure it is operating correctly. Manufacturers of large equipment, whether it be an office printer or laser cutting machine, always suggest a maintenance check at least every 3 to 6 months. Keeping up to date with these plans can help to save money in the long term.

Maintenance plans are a separate operational cost for manufacturers. However, without them in place you may end up paying for entirely new equipment. It is also very important that employees are trained properly and know how to identify when a machine needs a check-up.

Choose the Best Machinery Lease – Capital lease vs Operating lease

Leasing of equipment is pretty standard in the manufacturing industry. This is primarily because heavy machinery costs a lot of money and businesses would rather have the cash flow. If a business is fairly new or a start up, they’re not going to want to part with huge amounts of cash for machinery, so Instead, they’ll enter into a lease agreement. When looking at whether a capital lease vs operating lease is better for you business, it helps to know what each is. In short, an operating lease is more akin to rental, where you’re renting the equipment for a period of time specified by the agreement. Whereas a capital lease is more like a loan. A capital lease is considered to be a purchase of an asset, whereas with an operating lease you’re renting it. Leasing machinery can be a fine choice if you wish to preserve capital but deciding on the lease type is eminently important to your business. Remember, new lease accounting changes (ASC 842) are now in force and can effect the accounting treatment of each lease, so pick with that in mind.

Restructure Floor Space

When there is too much clutter it becomes difficult to move around quickly, and some tasks may become inefficient. A simple restructuring of the floor space can open up more workspace where additional manufacturing equipment can be installed.

Additional employees can also be hired if there is more space, and this will ultimately increase efficiency with more productive output. For employees, changing the workspace may allow them to move freely and attend to the more important tasks quicker.

Many manufacturers believe that boosting efficiency means decreasing costs as much as possible. Often this just results in a drop in the quality of the manufactured product. However, there are some simple and risk-free ways to boost manufacturing efficiency without losing product quality or employees.

Improve Staff Training

Real-world, hands-on training cannot be substituted. You need to have a staff of employees capable of dealing with what happens in an appropriate way. Also, it is a very good idea to train them to be able to handle several processes. This is useful since one employee can help another employee troubleshoot. When one is home ill, a substitute is available. And relief can be offered when talking about repetitive tasks.

An extra advantage of a complex staff training program is that all employees will be able to understand the manufacturing process. This better understanding means they will instantly figure out exactly what their role is.

Assign Dollar Values

Quantifying everything in the manufacturing process is a great thing to do that every manufacturer should take into account. Basically, this means assigning dollar values to all aspects of the process. This is quite obvious when looking at material costs. But it can quickly become difficult when looking at things like wear and tear, obsolescence, and man hours.

When you assign numbers to the manufacturing process, the big advantage is that you quickly figure out all areas that require an immediate attention. You can simply become very effective when it comes to prioritizing what you have to do, which does translate into increased profits in the future.

Build An Efficient Workspace

This should always be a huge priority for you and you have to be sure everything is as organized as possible. Analyze the entire factory floor. Can employees easily find all hand tools? Do Waste products pile up somewhere?

Everything used in the manufacturing process should be very easy to get to. This includes instructions, materials, parts, and tools. And all your employees should be aware of the place where everything goes.

Limit Individuality And Standardize Work

Whenever talking about manufacturing anything, there is no such thing as individuality. This is important to know because we all have our way of doing things. But, when you standardize work, you automatically increase efficiency.

Remember that even really simple tasks can and should be standardized. Start this process with a checklist. Then, place it all around the workspace. After, you have to be sure that every single employee will follow the created checklist. You will thus reduce downtime and you will improve product quality.

Take Advantage Of Cellular Manufacturing

Cellular manufacturing stands out as a highly effective way of improving manufacturing efficiency. It relies on grouping all similar processes. Its methodology involves dividing all the workspaces into cells. Then, every single cell is assigned tasks. Employees and machines in one cell can do several jobs. However, they need to focus on just one to decrease downtime for unnecessary tasks like tooling installation and re-calibration. All this will instantly improve quality and consistency.

With cellular manufacturing, you also have to think about the overall manufacturing process. See it as separate steps, Then, you can easily zero in and find ways to drastically reduce manufacture waste. Also, the process of quantifying every single part becomes so much easier.