Manufacturers are always looking for ways to boost productivity and cut costs. One key metric to focus on is manufacturing cycle efficiency. Improving this can have a big impact on your bottom line. This article will show you how to calculate your cycle efficiency and share practical tips to optimize it and get ahead of the competition.

What is Manufacturing Cycle Efficiency?

Manufacturing cycle efficiency (MCE) is a metric that measures the proportion of production time that is spent on value-added activities. Value-added activities refer to the steps in the manufacturing process that directly contribute to creating the final product, such as assembly, painting, etc. 

How to Calculate Manufacturing Cycle Efficiency

MCE = Value-added time / Total Cycle Time

To calculate MCE, you divide the value-added production time by the total cycle time. The total cycle time includes not just the value-added production time, but also time spent on non-value-added activities like inspection, moving products between workstations, and waiting in queues. 

A high MCE, meaning a large portion of the total time is spent on value-added work, indicates an efficient manufacturing process. Conversely, a low MCE suggests there are opportunities to reduce non-value-added activities and improve overall efficiency.

Manufacturing Cycle Efficiency Example

MCE = Value-added production time / (Process time + Inspection time + Move time + Queue time)

For example, if a product has:

• Process (value-added) time of 2 days
• Inspection time of 0.4 days
• Move time of 0.6 days
• Queue time of 5 days

Then the total cycle time is 2 + 0.4 + 0.6 + 5 = 8 days, and the MCE would be:

MCE = 2 days / 8 days = 0.25 or 25% 

The goal is to maximize the value-added time and minimize the non-value-added time to achieve a high MCE, which indicates an efficient manufacturing process.

Improve Your Manufacturing Cycle Efficiency in 5 Simple Steps

Improving manufacturing cycle efficiency requires a holistic, step-by-step approach. Let’s explore the key stages that manufacturers should focus on to streamline their production processes and eliminate waste.

Step 1: Identify Value-Added Activities

The conceptual and development phase for new products presents significant opportunities to build in lean manufacturing principles. Companies that invest adequate time in this feedback and assessment stage can identify potential sources of waste or redundancy early on.

Step 2: Streamline the Order Process

Efficient manufacturing hinges on aligning demand for finished goods with the manufacturer’s supply capabilities. The order placement process is a critical early step – it must be streamlined to account for factors like current inventory levels, sales volume, and market trends.

Step 3: Optimize the Production Schedule

Once an order is placed, the production schedule needs to be optimized to maximize the use of manufacturing facilities. Tight production scheduling ensures that goods are manufactured within the required timeframe to meet customer demand.

Step 4: Leverage Data and Analytics

With the production schedule in place, the actual manufacturing process can commence. Leveraging machine monitoring software and other modern analytics tools can help companies identify and eliminate waste on the shop floor.

Step 5: Enhance Transportation and Logistics

The final stage involves the efficient transportation of finished goods to their final destinations, whether that’s a warehouse, distributor, or retailer. Minimizing delays and errors in this last mile of the supply chain is crucial for meeting customer expectations and preserving manufacturing cycle efficiency.

What Are Some Common Challenges in Calculating Manufacturing Cycle Efficiency?

Calculating an accurate and meaningful MCE metric can be challenging for manufacturers due to several key factors:

Defining and Tracking Time Components: Precisely measuring the different time elements that make up the total manufacturing cycle time can be difficult. This includes accurately distinguishing between value-added process time, non-value-added inspection and move time, as well as queue time. Manufacturers often lack robust data collection systems to capture all these details.

Distinguishing Value-Added Activities: Determining which specific activities truly add value versus those that are wasteful or unnecessary is a subjective exercise. There can be ambiguity in clearly categorizing certain process steps as value-added or non-value-added.

Accounting for Wait Time: MCE calculations focus solely on the manufacturing cycle time, but do not account for the wait time between order placement and the start of production. This wait time can significantly impact the overall delivery cycle, but is excluded from the MCE metric.

Lack of Standardization: There is no universal, standardized approach to defining and measuring manufacturing cycle time and value-added time. Definitions and calculation methods can vary across different organizations and industries, making benchmarking and comparisons challenging.

Interpreting MCE in Context: Even with a well-calculated MCE value, interpreting its significance requires understanding the company’s specific performance goals and industry standards. A high or low MCE may be considered “good” or “bad” depending on the operational context.

The Bottom Line

Improving manufacturing cycle efficiency is a powerful lever for boosting productivity, reducing costs, and staying competitive. By focusing on the five key steps as mentioned above, manufacturers can unlock significant gains in their overall cycle efficiency. Implementing these practical strategies can have a measurable impact on the bottom line, making it a crucial area of focus for any manufacturing operation.

What You Should Do Next

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