Profitability is dependent on manufacturing efficiency. Manufacturing and inventory wastes and leaks result in sales that are lost. Whether it's due to under-trained staff, rusted machines, or muddled systems, these issues reduce your manufacturing efficiency.
There are many other aspects to consider, such as space, storage, and supply chain configuration, but we'll focus on how software might help you enhance production efficiency in this blog. Let's get started!
1. Measure your costs and margins
To accurately assess the entire costs of creating things, you must compute expenses at each stage of your manufacturing line. Big cost cutbacks on raw materials don't make sense if you want to offer high-quality products. Optimizing costs across the cycle, on the other hand, is a more balanced strategy. Knowing where costs originate is the first step toward lowering or optimizing costs.
To begin, keep track of your expenses starting with the bill of materials. The raw material costs as well as the operating costs can be seen. Workstations, fuel, energy, labor, and other operating expenditures are included.
Workstation costs such as fuel, electricity, rent, and so on can then be stored in the Workstation form once production begins. These costs are then entered into the BOM to be costed properly. Finally, in the case of fixed wages, employee wages can be viewed on pay slips. Hourly wages are also possible to compute. It is possible to create and track timesheets.
In addition, the actual time spent processing materials can be documented in the Job Cards. There is an option to start and stop a timer in each work card, which will show the total time spent doing activities at each stage.
The costs may be seen in the BOM and timesheets once these elements have been taken into account. The cost price is calculated by entering the valuation rate in the final products, and the selling price is calculated by adding an item price for selling. As a result, you'll have a better understanding of your manufacturing costs and margins.
We need to take a step backwards in order to lower production costs even more. The notion of design to cost argues that all costs should be considered during the design phase. Engineers and designers can be innovative when creating products in CAD systems, but if manufacturing is expensive or time-consuming, efficiency suffers. Making less complex designs, using off-the-shelf components, employing a common design philosophy, and so on are all smart ways to cut costs during the design to cost phase.
2. Recycle your scrap, sell it (waste management)
Many manufacturing plants discard their waste. By thinking of your scrap as byproducts, you can make a lot of money by selling it. A basic example would be furniture manufacturing plants, where sawdust and wood chips are frequent garbage.
Let's have a look at how scrap can be handled in ERPNext.
Scroll down to the scrap area of the bill of materials. Add the scrap goods here, along with a rate at which they will be sold afterwards. Only created scrap objects are available for selection; if none are available, you can create one on the fly. The materials will then be transferred between warehouses using "Stock Entry" during production, when using a work order to handle the materials. If you added the scrap to the BOM, you'll see it there.
You can then use sales orders to sell the scrap pieces just like any other item.
Alternatively, depending on the resources, you can recycle your scrap.
3. Standardize processes Production efficiency is improved through reducing variation in manufacturing processes. Your outputs will be more consistent if your methods are similar. Standardizing and documenting those standardizations guarantees that work is completed in a consistent manner independent of variables such as different workers, time of day, or any raw material confusion.
Identify the current procedure first, and then the quality gaps by holding quality meetings. Quality meetings should have well-defined agendas that are aimed at resolving a production line inefficiency.
Set quality actions with particular problems-solutions pairings to remove bottlenecks and standardize every process once the existing process has been identified:
Then, in a Quality Procedure, notes, or PDFs, document these required criteria and tie them to forms in the system. A quality technique can be seen in this screenshot:
Set up curriculums in ERPNext to train staff on standard processes utilizing education courses and themes. This may seem excessive, but all personnel must be well-versed in conventional procedures in order to enhance efficiency.
4. Reduce downtime
Machine downtime causes bottlenecks, which slow down the entire line and cause deliveries to be delayed. When it comes to production planning, factoring in machine downtime, as well as raw supplies, workstation load, and worker shifts, is critical.
Keep track of the state of your machines' downtime so that personnel are aware. This prevents them from wasting time or operating an equipment that they are not authorized to operate. There may be several reasons for a machine's downtime; choose the right one from the following options:
5. Maintain your machines
Machine maintenance is an often-overlooked component that adds to production efficiency. Older machines, or ones that haven't been serviced in a long time, don't operate as well as newer machines and slow down your manufacturing line. As a result, regular maintenance visits are necessary to ensure that your machines remain in good working order. Better yet, arrange frequent maintenance slots in advance to ensure that your manufacturing machines receive the attention they require.
Schedule visits to your machines for maintenance:
Maintenance schedules assist in the planning of maintenance visits. Set a start and finish date, as well as the frequency with which maintenance must be performed, and then click "Generate Schedule" to generate a list. You'll get emails if you combine this with Notifications. This way, you'll know if the maintenance provider forgets to come.
6. Get the optimal suppliers
Getting a quote from one source isn't enough; you should be able to acquire quotes from all suppliers in one spot so you can pick the best one. The best option isn't usually the cheapest; shipping distance and any applicable delivery fees are also factors to consider.
Use the supplier portal in ERPNext to gather all supplier quotations in one place, respond to them, and pick the best one for you. You must first establish a 'Request for Quotation,' which can then be sent to several providers. This data will be saved to your account under 'Supplier Quotation' in the draft form when the suppliers provide their quotations and any conditions. You can then pick and choose which records to upload to the system. Multiple emails and spreadsheets are certainly out.
Request quotes from all of your vendors and provide them with a link to complete the form. This way, you'll have all of the provider quotations in one location and can easily choose the best one:
7. Communicate, bring everyone on the same page
When it comes to production planning, omitting a worker or, worse, a shop manager, miscommunication and delayed execution are common. If a worker is unaware that they are required to work an additional two hours on a Wednesday late evening shift to complete your order, they will cheerfully go home while your order is delayed. Even the precise assignment of workstations and the delivery of goods to the appropriate warehouses are dependent on effective communication.
However, because they are not part of the ERP system, verbal declarations, emails, and even instant messaging frequently go missing. Employees can be tagged in the system to handle this better. To tag people in dialogues below a form, use @ symbols followed by their names to mention colleagues, subordinates, and superiors. Whether you're changing machines or postponing production, they'll get email updates and always be in the loop.
For major production choices, you can also send emails to many employees and CC others. This will start an email chain that can be followed directly from the production plan/work order.
Assigning various jobs to different persons creates difficulty while planning. Someone could go on leave, be unaware that they were given this operation, or forget that it was intended to be completed during the morning shift. Assign work orders or jobs to individual employees by clicking “Assign” next to a work order or job card, and they will be notified. There's no need for lengthy meetings or ambiguity. Have your plans changed? Remove the assignment and assign it to someone else.
8. Ask your employees
Executives with fancy business degrees and a bird's eye view of problems are brought in. However, the genuine solution is sometimes found among those who labor on the shop floor. Use web forms to actively engage employees in brainstorming sessions and to reward good ideas with attractive incentives. A good bonus is a tiny price to pay for a brilliant concept that can save hours of time and effort through increased efficiency.
Internally, send out web forms to collect staff ideas. Select the best and provide incentives to them.
We looked at eight different ways that software might help you boost your production efficiency. Standardizations to scrap, communications to expenses, and a few other concerns were discussed.
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