Key Takeaways
- To increase throughput, Custom Machine Builders need to take the entire production process into consideration. This includes acquiring raw materials to delivering the final product; and for ETO manufacturers, every change order that happens in between.
- Common mistakes that affect throughput include inadequate planning, poor inventory management, quality issues, underutilized tech, inadequate performance monitoring, and inefficient communication/collaboration.
- To improve your throughput, consider being more proactive with manufacturing software. Leveraging data is a great place to start. Then you’ll want to evaluate your current processes that will help show you areas where you can reduce downtime. If finding reliable data is difficult, consider an ERP software solution.
Improve Throughput
“How to increase throughput” is a question a lot of manufacturers ask every day.
For Custom Machine Builders, flexibility and precision are of utmost importance. Integrators, Panel Shops, and OEMs face the same struggles that standard manufacturers deal with, as well as a few that are unique to them. That’s why every moment matters for Engineer To Order (ETO) manufacturers. The organization must maintain consistent throughput despite needing to adapt to fluctuating demand, supply chain issues, and other bottlenecks.
Throughput directly affects the success of each project and the company as a whole. So, we’ll discuss some of the biggest mistakes ETO manufacturers make that impact throughput. Then, we’ll explore some tips to help improve your processes. First, let’s examine why throughput is especially important for original equipment manufacturers.
Understanding Throughput in Custom Manufacturing
Technically, the concept of throughput is the same for manufacturers, regardless of building custom or standard machines. It’s the rate at which a company produces units within a specified time frame. Throughput takes the entire production process into consideration. From acquiring raw materials to delivering the final product, throughput measures the output achieved.
Custom Machine Builders, however, need to work a little bit harder to reach and maintain ideal throughput. Each project involves diverse product specifications and fluctuating orders. There’s also usually design changes that happen throughout the process, even after the BOM has been released to procurement. Each of these factors has the potential to negatively impact throughput.
Common Mistakes That Affect Throughput
There are a few common mistakes that ETO manufacturers make that impede throughput time. Consider each one and whether or not you can relate.
Inadequate Planning: Projects without a comprehensive production plan and schedule are often delayed. Without the ability to forecast demand accurately, or allocate resources effectively, bottlenecks don’t just happen, they compound.
Poor Inventory Management: It’s understandable why stock shortages would slow down a project, but excess stock can also cause problems. ETO manufacturers need to find a balance to prevent disruption. Many Integrators, Panel Shops, and OEMs struggle without the right data to plan with or learn from.
Quality Issues: Poor product quality often creates rework, or scrap. Either way, throughput time and production costs go up. Quality can also include inadequate production line maintenance. When machines or components fail, you’re no longer running at full capacity. Remember, scheduled maintenance creates less downtime than a breakdown.
Inefficient Communication and Collaboration: Effective communication throughout the organization is essential. For Custom Machine Builders though, engineering and procurement are the priority. Without the right tools to properly communicate and collaborate your throughput is negatively affected. This of course includes communication within your team but also with your clients and suppliers.
Underutilized Tech: Software and hardware are advancing so quickly these days, it’s understandable that organizations can’t keep up. However, failing to leverage these opportunities can limit throughput improvement. Investing in shop software, such as ERPs designed for ETO manufacturers or hardware, such as IoT-enabled sensors, will enhance overall performance.
Inadequate Performance Monitoring: For organizations that strive for continuous improvement, it’s necessary to continuously evaluate your processes. Collecting and utilizing data is much easier for standard manufacturers. Integrators, Panel Shops, and OEMs struggle to pull together reliable data. Being able to track project workflow, though, and learn from past projects will improve your efficiency, accuracy, and profitability.
How to Increase Throughput
Addressing these common mistakes and taking a proactive approach to increasing throughput presents your team with opportunities to improve. And you’ll be glad you did! Your efforts to increase throughput will make your organization more reliable and competitive. Below are a few great ways to start.
TIP #1 Make Informed Decisions by Leveraging Data
Every manufacturer generates vast amounts of data, but most teams aren’t utilizing it. Some don’t know how to access the information they need; others don’t even know it’s there. Custom Machine Builders struggle the most to find, organize, and utilize data.
However, a study by McKinsey & Company shows when manufacturers tweak their processes based on data, they experience productivity gains of up to 50%. The transformative potential of data-driven decision-making is truly inspiring.
In many cases, the applications you’re already using are collecting valuable data. This could include your accounting software such as QuickBooks and Sage, as well as manufacturing software including CAD systems such as SOLIDWORKS or Inventor. Connecting an enterprise resource planning (ERP) system to your current shop software helps you find this information. It also helps you to translate, or fully understand the analytics. It’s a big bonus too, when this data is available in real-time, increasing the accuracy and relevancy of each decision.
TIP #2 Evaluate Your Current Processes and Manufacturing Software
Collecting data gives your team the ability to make informed decisions. Combining that information with your current processes gives you a road map to success. When examining your current workflow, there are four specific areas to focus on:
- Equipment: How are your machines performing? Are they regularly inspected and maintained? Is your manufacturing software up to date?
- Labor: Are all your staff sufficiently trained? Do you have enough people in place? Are they motivated to continuously improve?
- Processes: Do you have a system that supports meaningful communication? Are there steps that can be automated? Do you see any bottlenecks?
- Engineering: Does your team experience bottlenecks anywhere? Can you relate to other ETO manufacturers with the slowdown between engineering and procurement?
TIP #3 Reduce Downtime
Nothing hurts your throughput quite like downtime. You’ve learned from your own experience as well as this article that downtime is unavoidable, but its effect can be mitigated. Downtime like this typically hurts standard machine builders more than custom, but both types of manufacturing can benefit from the following:
- Maintain your equipment: When you suffer a surprise breakdown, it’s likely to last longer than scheduled maintenance. Another perk to scheduling maintenance is that you can preplan and make better use of your staff’s time. Research from Deloitte shows that predictive maintenance increases productivity by 25%, reduces breakdowns by 70%, and lowers maintenance costs by 25%.
- Use Real-Time Analytics: Real-time monitoring systems can capture data on production processes, equipment performance, and more. There’s a variety of manufacturing software that can help you in different areas of your business. It’s more efficient (and often less expensive), however, to find an ERP that matches your workflow. This means Integrators, Panel Shops, and OEMs need an ERP as dynamic as they are. Take time regularly throughout the year to study the data to find inefficiencies or abnormalities. That’s a great place to start when reducing downtime.
- Employee Empowerment: Your equipment is only as good as the people operating it. Investing in your staff is one of the best things a manufacturer can do to improve productivity, safety, and quality. Additionally, proper training reduces maintenance costs along with downtime.
- Improvement-Based Culture: Establish a working environment of continuous improvement. A study published by the International Journal of Production Research shows over the course of one year, downtime is reduced by an average of 25%, for manufacturers that reward continuous improvement. Start by using data collected by your ERP software solution to analyze performance. Employees should also feel comfortable reporting bottlenecks and other issues. Your frontline workers are usually in the best position to identify potential sources of downtime.
TIP #4 Focus on Quality
By reducing your parts rejection rates, you’ll not only increase throughput but also minimize waste. Statistical process control (SPC) can be used to monitor and control your processes in real-time. Data you collect through shop software or your ERP can help you identify deviations from quality standards. The Journal of Quality & Reliability Management published a study that confirms manufacturers utilizing SPC techniques significantly reduce defects and parts rejection rates.
Procurement can also help your organization improve quality. Working closely with suppliers can help you ensure consistent quality of raw materials. It’s recommended you perform supplier audits and continuously monitor the quality of goods when they arrive. Research from the Institute for Supply Management shows companies with superior supplier practices see a 25% reduction in parts rejection. A 15% improvement in overall product quality is also realized.
Automating the Automator
Engineer To Order manufacturers know the power of automation better than anyone. Automated systems typically outperform most teams. Even your best employees get tired, leading to a reduction in throughput. Exhaustion also increases the risk of injury.
When you automate redundant tasks, your talented employees can focus on what they do best. Automating steps along the way also boosts morale and quality, along with throughput.
Consider speaking to your team about areas in your process that can be automated. Similar to your frontline staff knowing the best areas to minimize downtime, your team will be happy to help you find additional ways to increase throughput with automation.
Conclusion
Maximizing your throughput is one of the best ways to improve your business. Your team will become more efficient and productive, and feel less stressed throughout the day. When you use data collected through your ERP, you’ll discover new efficiencies, optimize production processes, and create sustainable growth.
An ERP software solution might be just what your team needs! See firsthand how using an Engineer To Order ERP will increase your throughput rates, book a demo.
Written by Taylor Dykstra
