How to Calculate Production Efficiency

High-tech futuristic image, production efficiency formula
High-tech futuristic image, production efficiency formula

Key Performance Indicators (KPIs), like production efficiency, are metrics that help maintenance managers determine optimal operating conditions of people, processes, and equipment. The production efficiency formula will determine where your actual output and standard (or optimal output) intersect. This is important because it helps professionals understand the point at which they operate at maximum production levels and efficiency. 

This article will introduce you to the production efficiency formula. We’ll provide some key steps for calculating it and best practices for improving your facility’s production and efficiency levels before introducing LLumin’s CMMS+ (Computerized Maintenance Management System). 

What is Production Efficiency?

Production efficiency is a relevant metric in the maintenance world because it compares an organization’s actual output to its potential under optimal conditions. This metric is important because it measures how effectively a company uses its assets and resources, which affects productivity levels and, thus, profitability, as well.

What is the Production Efficiency Formula?

Production efficiency occurs when output levels cannot increase further without impacting the production of other products. 

The production efficiency formula divides your actual output by your benchmarked, standard output rate (which are historical measurements collected under optimal conditions). The closer your measurement gets to 100 percent, the better your efficiency. 

It’s multiplied by 100 and displayed as a percentage.

Actual Output = Actual costs divided by actual output

Standard Output = Requires a study assessment of your historical maintenance data to determine. It will be your average of work produced per unit of time. For example, 100 glass units/hr. 

Ex. Formula:
Actual Output Rate
Standard Output Rate
X 100%

How to Calculate Production Efficiency

You can calculate your production efficiency easily with your standard output amount. Suppose your factor can produce 500 glass bottles per hour at peak performance levels. That would be reflected as 500 glass bottles/hr. Now, on any given day, let’s say your facility produces around 375 glass bottles per hour. 

You can then calculate production efficiency as follows:

Production Efficiency:
375
500
X 100% = 75%

In this scenario, your facility is only at 75% of its optimal output rate, so adjustments must be made to reduce waste and operate at higher efficiency levels. The process of monitoring efficiency can be made easier using LLumin’s CMMS+

Strategies to Improve Production Efficiency

While there are several standard strategies that you can use, including standardization, workforce training, quality control, and more, to improve efficiency levels, the best way to resolve any inefficiency is to perform root cause analysis and isolate the factors that are causing your assets or team to underperform. 

Standard Ways to Improve Production Efficiency

Quality Control

Upholds product and service standards with standardization and inspection processes. 

Training

Involves providing training to improve employee skills and thus affect measurable change in work performance

Equipment Maintenance

Requires preventive maintenance to ensure that equipment is operating at optimal conditions and avoids unplanned downtime and mechanical failure

Eliminate Waste

Analyze production process and eliminate waste

Identify Bottlenecks

Identify and mitigate issues that slow the production process

Real-time condition monitoring of both your team and your equipment is one of the best ways to accomplish this. With LLumin’s CMMS+, you can start making data-driven decisions to upgrade your facility that will result in quantifiable improvements. Tracking historical performance data, identifying the equipment or underlying causes of your inefficiencies, and completely streamlining your production processes will become easier.

Introducing LLumin’s CMMS+

In addition to helping to give you a high-level, real-time overview of your facilities, machinery, and personnel, LLumin’s mobile-ready, cloud-based solution can help you pinpoint areas that need improvement and share that data throughout the organization company-wide.

LLumin’s CMMS+ Benefits

Improved Collaboration

Optimized Machine Uptime

Automated Reports

LLumin can help make maintenance tasks easier and more efficient, helping you to properly allocate resources, cut costs, and improve customer satisfaction rates.

LLumin improves machine uptime by enabling maintenance and production to share data, helping to keep track of machine health, and alerting your team before major problems occur.

LLumin’s system automates compliance and SLA reporting across machine operations, maintenance, and supply chain activities, enhancing efficiency and reducing manual effort.

Personnel Management

Adaptability

LLumin’s CMMS+ software streamlines the scheduling of maintenance and engineering staff by tracking task duration and offering analytics and tools for efficient labor and skill management.

LLumin’s software is flexible and customizable, allowing companies to set rules tailored to their specific needs and automate the outcomes, with the option to modify these rules as business requirements evolve.

Improve Facility Efficiency With LLumin’s CMMS+

Are you still struggling with inefficient paper-based processes? Or, are you and your maintenance team currently in the dark about inefficiencies in productivity and resource management that seem to elude the best management practices? 

If you’re trying to figure out how to calculate production efficiency, LLumin can help you shine a light on areas in your organization that require optimization and improvement and unlock higher degrees of success. Join the increasing number of happy customers who use LLumin to achieve higher performance levels today!

Getting Started With LLumin

LLumin develops innovative CMMS software to manage and track assets for industrial plants, municipalities, utilities, fleets, and facilities. If you’d like to learn more about the total effective equipment performance KPI, we encourage you to schedule a free demo or contact the experts at LLumin to see how our CMMS+ software can help you reach maximum productivity and efficiency goals.

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