Line Efficiency! Sewing line efficiency!
How do you use efficiency figures?
Is it only a factory performance measure? Or
Is it a Key phrase to market your company? Or
You don’t know how to deal with the factory’s line efficiency.
I assume you measure line efficiency of your factory. What do you do with your line efficiency data? Just compare one line to another in a floor producing the same product? Or use it for setting per minute labour cost? Or use it for the capacity planning of your unit?
To me, efficiency is the Mantra, a magical measure (performance indicator) for a factory. Through pushing line efficiency upward one can build up his business and make a massive profit. One can bring discipline to the organization. With this single measure, one can control the cost of the company. I will show you the reason why it is a Mantra to me.
Do I need to remind you how to measure line efficiency? I love to repeat it.
Line Efficiency % = Total minutes produced by a line*100 / Total minutes worked by operators in that line
Managers who are indifferent with line efficiency or factory efficiency does not know his actual potential to make money from the manufacturing business. Few managers are in debate if their calculated efficiency is correct and it represents the true performance of the factory.
Do you know how many total minutes you used to make an order? It is directly linked with your direct labour cost. If you do not know these figures or do not measure then you don’t know your labour payroll is correct or not.
What is the minute value of an order?
Study the difference between two measures – the minute value of an order and total minutes consumed to make the order. You will find there is a big gap. This gap is the treasure for potential improvement. Do you know why this gap is there? This gap can be controlled and reduced by controlling efficiency figures.
If you know the magic of “Efficiency” figures you do not fear to give your employee performance-based incentive. The efficiency of a line can be improved further by operators’ effort and managerial skills of the supervisors. Few good things about performance-based incentives
An appropriate incentive means happy employees.
Happy employees make managers (owners) happy by producing extra units of garments.
Increase in efficiency means a reduction in cost per garment.
Not only the labour cost but the whole factory cost per minute will come down through increasing efficiency level of sewing lines. Cost per minute of the factory is calculated as Total Payroll and Expenses / SAM produced in a defined duration. Increase in line efficiency means increased produced SAM in a period. Hence, as you increase the total produced SAM in a month, factory cost per minute gets reduced. It means lower in cost per unit. It results in a higher profit margin to your pocket.
True fact – the maximum reach of efficiency depends on the order quantity or style run (number of production days). So, don’t assume all style have the same manufacturing cost per minute. Here you have to design quantity wise average efficiency rates for your factory for the cost reference. This efficiency database will save you from wrong costing.
Another KPI of an organization is productivity per labour per day. Labor Productivity increases when line efficiency is improved.
Few managers don’t bother to look into the efficiency benchmark. They think they perform better than the rest of all. As they are making enough money with the existing system they don’t bother to point out efficiency figures. These managers don’t find money to share with employees and increase employee salary yearly.
In summary major benefits of controlling efficiency
How do you use efficiency figures?
Is it only a factory performance measure? Or
Is it a Key phrase to market your company? Or
You don’t know how to deal with the factory’s line efficiency.
I assume you measure line efficiency of your factory. What do you do with your line efficiency data? Just compare one line to another in a floor producing the same product? Or use it for setting per minute labour cost? Or use it for the capacity planning of your unit?
To me, efficiency is the Mantra, a magical measure (performance indicator) for a factory. Through pushing line efficiency upward one can build up his business and make a massive profit. One can bring discipline to the organization. With this single measure, one can control the cost of the company. I will show you the reason why it is a Mantra to me.
Do I need to remind you how to measure line efficiency? I love to repeat it.
Line Efficiency % = Total minutes produced by a line*100 / Total minutes worked by operators in that line
Managers who are indifferent with line efficiency or factory efficiency does not know his actual potential to make money from the manufacturing business. Few managers are in debate if their calculated efficiency is correct and it represents the true performance of the factory.
Do you know how many total minutes you used to make an order? It is directly linked with your direct labour cost. If you do not know these figures or do not measure then you don’t know your labour payroll is correct or not.
What is the minute value of an order?
Study the difference between two measures – the minute value of an order and total minutes consumed to make the order. You will find there is a big gap. This gap is the treasure for potential improvement. Do you know why this gap is there? This gap can be controlled and reduced by controlling efficiency figures.
If you know the magic of “Efficiency” figures you do not fear to give your employee performance-based incentive. The efficiency of a line can be improved further by operators’ effort and managerial skills of the supervisors. Few good things about performance-based incentives
An appropriate incentive means happy employees.
Happy employees make managers (owners) happy by producing extra units of garments.
Increase in efficiency means a reduction in cost per garment.
Not only the labour cost but the whole factory cost per minute will come down through increasing efficiency level of sewing lines. Cost per minute of the factory is calculated as Total Payroll and Expenses / SAM produced in a defined duration. Increase in line efficiency means increased produced SAM in a period. Hence, as you increase the total produced SAM in a month, factory cost per minute gets reduced. It means lower in cost per unit. It results in a higher profit margin to your pocket.
True fact – the maximum reach of efficiency depends on the order quantity or style run (number of production days). So, don’t assume all style have the same manufacturing cost per minute. Here you have to design quantity wise average efficiency rates for your factory for the cost reference. This efficiency database will save you from wrong costing.
Another KPI of an organization is productivity per labour per day. Labor Productivity increases when line efficiency is improved.
Few managers don’t bother to look into the efficiency benchmark. They think they perform better than the rest of all. As they are making enough money with the existing system they don’t bother to point out efficiency figures. These managers don’t find money to share with employees and increase employee salary yearly.
In summary major benefits of controlling efficiency
- Reduction of manufacturing cost
- More accurate product costing based on the order quantity
- Employee motivation is possible through sharing profits earned through efficiency increment. Happy employees, less labour absenteeism and improved employee retention rate.
- Improved factory capacity. As a result more option for revenue generation with the same capital resources.