We all want to avoid unnecessary costs in the manufacturing process, while also meeting production targets and working as efficiently as possible. With new technology, machines, and strategies in place, the manufacturing process can become much smoother and can help you avoid unnecessary bottlenecks.
Production capacity is a metric that helps capture information regarding the output of products and goods in the manufacturing process. Knowing your production capacity and having the knowledge you need to be able to improve it can help you plan better, schedule more efficiently, and give your customers more accurate lead times and forecasts. Let’s take a closer look at production capacity and some strategies to help increase your production output.
Production capacity refers to the maximum output of manufactured goods and materials that a business can achieve. As a metric, it helps to track the highest possible output of goods that can be created based on factors like time, labor, materials, and equipment. This allows businesses to see where they can optimize their processes, and where they may be running into unnecessary downtime.
Ideally, every business wants to function at full capacity so they maximize every opportunity to make money. However, the reality is that there are often inefficiencies and areas of improvement in the manufacturing process that lead to a drop in production output compared to the potential capacity.
While there are processes like lean manufacturing that can help you find areas of improvement, another strategy is to take a look at the ways you evaluate and calculate production capacity. This can help you find places to improve in order to meet full capacity.
Production capacity needs to be accurately calculated in order to provide you with a true metric for your potential targets, and what goals you are capable of meeting. Production capacity is measured and evaluated in three ways:
You can manually measure your production capacity by calculating the number of machines you have, then multiply that number by the output they have over a specific period of time. For example, if you have three machines that can each produce five goods every hour, at the end of a six-hour shift your maximum output is 90 products.
3 machines x 5 goods per hour x 6 hours = 90 products
While this is a straightforward way to track production capacity, it can sometimes be too simplistic. It’s hard to forecast future output capabilities or evaluate your production process with a large mix of goods with manual measuring.
Rough-cut capacity planning, otherwise known as RCCP, is a method of calculating production capacity. It looks at the productive hours on a given day and a product's throughput time — or the entire time it takes to make a product from start to finish. These variables help you understand the maximum output for product mixes.
For example, consider a company that produces metal spoons and forks. While the process for creating the different products is the same, the time it takes to finish one from start to finish is different. It takes 30 minutes to produce a spoon, and one hour to produce a fork. The company has eight employees making the products for six hours per day during the work week. At the end of each week, then, the company has the capacity to create either 480 spoons or 240 forks.
Spoons: 2 spoons per hour x 6 hours per day x 5 days per week x 8 employees = 480 spoons produced each week
Forks: 1 fork per hour x 6 hours per day x 5 days per week x 8 employees = 240 forks produced each week
Based on this information, a company can look at the delivery and production needs and rough-cut their production planning process to meet the expected outcomes. However, there are some downsides to the rough-cut method, namely that it doesn’t take unexpected bottlenecks or materials’ availability into consideration.
While both manual calculations and rough-cut capacity production can work for a business, to really understand production capacity you need to dive into detailed planning and scheduling for every product that you make. For example, each product needs to be broken down into a planned and measurable sequence of operations, each employee's availability needs to be considered, and material lead times also need to come into play.
Managing this without software is nearly impossible. Thankfully, there are different software applications that can help you reach your desired output, and help you plan when bottlenecks, employee absences, and other interruptions occur.
Before we can start looking at different strategies that can help to increase production capacity, we first need to examine the different things that can hinder or slow your maximum product output. Once you understand the problem areas that can affect productivity, you can start to plan strategies around those areas.
The Six Big Losses is a theory created in Japan in the 1970s. It explains the different factors and categories that can constrain production in a manufacturing setting. When taken into consideration, these losses can help to explain a machine’s overall equipment effectiveness (OEE) and the maximum capability for each piece of machinery.
The Six Big Losses are broken into three main categories:
As discussed earlier, there are different methods that you can use to calculate and understand the relationship between your product output and your maximum production capacity. Let’s look at a few of the basic principles that you need to understand in order to effectively calculate production capacity.
The machine-hour capacity refers to the number of machines that are in operation on a daily basis and the number of hours that they are in use. Similar to manually measuring production capacity, this is a straightforward calculation that you can then use as a building block for better capacity and product process planning.
For example, if a factory has 10 machines that can run 16 hours per day all seven days of the week, then there are 160 machine-hours available each day, or 1,120 available each week.
10 machines x 16 hours per day = 160 machine-hours per day
160 machine-hours per day x 7 days per week = 1,120 machine-hours per week
After determining the machine-hour capacity for each piece of equipment you have, you can then calculate the amount of time needed to produce one unit of product. After calculating each product's capacity, you can divide that by the machine-hour capacity.
Consider the hypothetical factory from our last example. If it took a worker 30 minutes to create a product using a machine, then you would take the 16-hour day and divide it by .5 to determine that a total of 32 products could be made that day, and that 224 could be made in a week on that machine.
16-hour work day / .5 hours to produce one unit of product = 32 units per day
32 products per day x 7 days per week = 224 units per week
The final layer that needs to be included in a production capacity calculation is the production capacity when dealing with multiple products. Let’s say that our factory example makes two different products. Product A can be made in .5 hours, and we’ve already calculated the daily and weekly outputs above. Product B can be made in .4 hours, or a total of 40 products a day and 280 each week.
With this information, a business would need to decide how to dedicate the available machine-hours to each product line in order to achieve their goals. For example, they could spend 120 hours a week on Product A and the remaining 1,000 hours on Product B so that both product lines are able to run within the 1,120-hour weekly allotment.
Now that you understand why it’s important to accurately measure production capacity and the steps that you need to calculate it, let’s take a look at some long-term and short-term strategies that you can employ to increase overall production capacity.
Accurately calculating and managing production capacity requires you to have some help. Having the right tools and KPIs by your side can be a big help in improving productivity and effectiveness.
Overall equipment effectiveness, otherwise known as OEE, measures the availability, performance, and quality of your machines. It helps you identify areas to improve within your machinery, including downtimes and quality issues.
For more information, check out our machine monitoring tools and see how they can help pinpoint areas of improvement within your equipment.
Total effective performance, or TEEP, is the next step in OEE. TEEP considers the total capability of a machine, not just its shift runtime. TEEP looks at the maximum availability on each machine for 24 hours a day, 365 days a year.
Utilization is the percentage of available production time on a machine during a selected time period when the machine was in operation. This can help when looking at the data for individual machines or machines as a group.
Production capacity is a key metric that can help you understand what your manufacturing process is capable of producing when everything is working optimally. Once you’ve understood where common losses occur and how to calculate your production capacity, you can start to implement both short- and long-term strategies that improve your processes.
Amper is here to help you maximize your potential and create a manufacturing process that flows smoothly, allowing you to optimize every step of the way. From machine monitoring to operational analytics tools, Amper has the applications you need to grow your business and achieve your goals.
Learn more about how Amper can help your business improve production capacity and optimize your manufacturing process — contact us to get started.
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