Production Efficiency Using dynamics 365 Business Central
While businesses strive for effective efficient and productive workflows to always changing customer needs.One of the major manufacturing business challenges, while running their businesses from spreadsheet is lack of clear visibility to make timely decisions, The spreadsheets can be a good choice for calculating wages and over times or tracking leaves but definitely not, when it comes to running or managing a production line efficiently.
Key Takeaways
- What is production efficiency?
- How do we calculate it?
- How can we increase it?
What is production efficiency?
Production efficiency is the ability of a business to maximize its unit production using the available resources. A business is production efficient if it uses less resources such as raw materials and labor to produce same number of units as its competitors.
How do we calculate production efficiency?
A very popular saying goes by “What you can not measure, you can not improve”. The same is true for measuring production efficiency.
Production Efficiency, a key KPI has a formula: ( Actual Output / Standard Output ) x 100.
How we calculate these two values i-e actual output and standard output varies with business KPIs, However a common approach is to use number of units produced per month as the actual output and number from best production month or industry standard as standard output.
For example, a business targets a production value of 500 units per month, and this month they produce 400 units, then their production efficiency will be calculated as 400/500 x 100 = 80%
They are operating at 80% of their capacity, which itself calls for an action to self-reflect.
How do we increase production efficiency?
Once we have measured the production line efficiency, its time to work towards improving it, these are the 4 major areas contributing significantly to improve production efficiency. They include
1. Standardize Business Processes
Standardizing business processes can significantly improve production line efficiency. Standardizing makes your day-to-day activities reliable, compliant, and safe. It can be as simple as storing or retrieving products from your warehouse. If a business does not manage storage efficiently and leaves it out to personal choices. It can cause old products waiting on shelves and new products getting shipped.
2. Identify & remove bottlenecks
Equipment failures, Supply chain issues are another area that businesses struggle with, mostly these issues arise from poor maintenance and poor planning. These bottlenecks not only cause delays in product delivery but also result in increased cost of production.
3. Minimize Waste
Defective units not only waste production capacity and time, but also result in energy and raw material waste. Approaches like Six Sigma and Kaizen are promising approaches to reduce product defects.
4.Use ERP Sofware
Using ERP system like Microsoft Dynamics 365 business central, helps you achieve manufacturing efficiency. It comes pre-packaged with processes based on best industry practices for effective efficient and productive operations, real-time visibility, best of best-of-kind security. As It is a cloud-based erp software. It uses a unified source to connect all your business units, so rather than spending time generating reports for inventory visibility and spending time reconciling reports by different business units, It provides realtime visibility to enable you make smarter decisions.
Copilot integration helps you learn from mistakes, its your organization’s brain that never forgets and improves as you go, and by using conversational AI helps you quickly retrieve what you need.