written by | December 26, 2022

Efficiency Formula- Calculate Operator Efficiency/Line Efficiency

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https://khatabook.com/blog/human-resource-planning-process/The efficiency formula is very useful in production. It measures labor and overhead efficiency. Whether they are productively utilized in the production. This helps the businesses to figure out the idle time in production or the times that goes otherwise wasted. Based on the efficiency of the factory, businesses develop operation strategies to improve line production.

If you consider to calculate the work output in 60 seconds then the formula would be 100 times (Work output / Work input) The efficiency formula would look something like this if you thought of work input and output in terms of "minutes" - the ratio of total standard minutes generated to full minutes spent on the task.

Did You Know? The efficiency formula was developed to measure the productivity in manufacturing, especially in lean manufacturing which was developed as a post world war strategy to revive the Japanese economy. 

What is the Efficiency Formula?

The production efficiency of workers and batch production are both measured using the efficiency formula. Efficiency is the work produced from a process, represented as a percentage, divided by the work input into the same operation. The following generic formula is used to determine efficiency -

How to calculate efficiency in Production or Manufacturing?

Efficiency in production is important to measure the idle time wasted during production. With the data at our disposal, an Operational strategy can be formulated to reduce idle time and ways to increase productivity. However, the following is the efficiency formula -

Efficiency% = (Total minutes produced multiplied by 100)/ (Total hours worked multiplied by 60)

To express in percentage, the above formula is multiplied by 100 and 60 to turn hours into minutes.

For Example- In a factory, 100 workers work 8 hours a day assuming no hour remaining idle as a break between production. While based on the previous production, One unit of a product takes 2 labor hours to produce and a total of 1800 units are produced within the week. In a week, the factory runs for 5 days, Saturdays and Sundays remain unproductive due to closure. 

So, 

The efficiency of the factory (in %) = 216000*100/4000*60 = 90 

Interpretation: 90 % of production efficiency represents that the Factory is producing at 90 % productivity or efficiency and 10 % goes idle. Alternatively, It can mean for every 100 hours of factory run, only 90 hours is only utilized in production and the rest goes idle or to waste. Where,

Total Minutes Produced = Unit produced per hour * Total units produced 

= 1800*2*60

=216000

Total Hours Worked = Total workers * Working hours per day * Number of days in a week

= 100*7*5

=4000 which is the total production efficiency in a factory for one week.

Also Read: Most Profitable Manufacturing Business to Start in India

What is the Production target per hour?

An alternative approach to measuring the efficiency of the factory is a Production target per hour. Under the second calculation, Outputs are taken into account against per unit of input under the targeted hour. The production target is determined using the formula below.

Production target per hour (at 100 percent efficiency) = (60/Operation Standard Allowed Minutes).

Regardless, The efficiency calculation formula remains the same in every situation. Depending on where the formula is applied, it is necessary to determine the total minutes produced and the total minutes worked.

Operational Efficiency

Operational efficiency is a metric or numerical data that calculates the capability of profit gained as a function of operating cost. The more is the operator efficiency the more profit is counted to be earned. This is the result of greater income with same input of effort utlizised. 

What is Machine Operator Efficiency?

Machine operator efficiency in lean manufacturing refers to a worker's performance when operating commercial machinery. The operator's efficiency is calculated as the product's production time divided by the operator's on-duty time.

For instance, if an operator is tasked with operating a CNC machine tool for seven hours but only produces workpieces continuously and uninterruptedly for four hours, their Machine Operator efficiency rating for this seven-hour period of time is 57% (4 divided by 7). 

Also Read: Successful Small and Micro Manufacturing Business Ideas in India

What is Overall Equipment Effectiveness?

Overall Equipment Effectiveness (OEE) is a measurement of how efficiently a manufacturing operation uses its resources (Human, time, and material) in comparison to how efficiently it could be used in the future. It determines how much of the time spent on manufacturing is actually productive. An Overall Equipment Effectiveness of 100% indicates that only high-quality good parts are produced at maximum effectiveness without any interruption.

It is the manufacturing best practice to measure Overall Equipment Effectiveness. A significant understanding of how to methodically enhance the production process can be achieved by monitoring Overall Equipment Effectiveness and the underlying losses. Overall Equipment Effectiveness is a useful indicator for locating waste, assessing development, and raising industrial equipment productivity (i.e., eliminating waste). 

Overall Line Efficiency

In manufacturing, overall line efficiency (OLE) is based on the Overall Equipment Effectiveness measurement, which is a formula used to calculate the percentage of projected production in order to cut costs and streamline procedures. Overall Line Efficiency, which should not be confused with Overall Equipment Effectiveness, is a different metric that is used to compare a manufacturing line's actual performance to what it could be. In order to best optimize the interaction between data and human resources, this formula analyses data pertaining to machinery or equipment as well as personnel productivity.

Also Read: How to Set Up a Successful Plastic Manufacturing Company?

How to Calculate OLE (Overall Line Efficiency)

You need to be available with a variety of data points, such as how many minutes are produced by employees working in the production line and how much time employees spend on manufacturing products, in order to compute Overall Line Efficiency on a regular basis (output). The computation itself is often expressed in percentage form and is based on the output data from the production line.

You must first obtain the given below information before calculating Overall Line Efficiency:

  • The line output - The Line output is the overall number of items the line produces.
  • Garment Standard Allowed Minutes (SAM) - Standard minutes of a garment (including machine SAM and manual SAM)
  • Manpower - Total number of people working on the line in manpower (including all departments)
  • Shift Hours - Shift hours are the number of hours a factory is open each day.

Following is the formula to calculate Overall line Efficiency - 

Line Efficiency (in %) = Line Output* Garment SAM / Manpower * Shift Hours * 100

For example- Assuming that, Line-1 is making style ABC produces 410 pieces in 8 hours shift day. Standard minute of the style Z is 20 minutes and Total no. of manpower (operators + helpers) is 30. Total minute produced= (410 *20) =8200 Minutes

Total minutes worked = (30*8*60) =14400 Minutes (60 is multiplied to convert hours into minutes) Line Efficiency %= (8200 * 100/14400) = 57% Hence, the overall efficiency% of this line is 57%.

Conclusion

The efficiency formula is widely used by businesses to evaluate the overall factory productivity and to identify the problem areas. The idle time then identified can be converted into productive hours through operational strategy. We have come so, In this article, we have discussed what is the efficiency formula, how to calculate it, Operator efficiency, Overall Line efficiency, and equipment effectiveness followed by a conclusion.

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FAQs

Q: What is the Difference Between Overall Line Efficiency vs Equipment Effectiveness

Ans:

Manufacturing managers can use a mix of Overall Equipment Effectiveness and Overall Line Efficiency calculations to track the performance of production, which is a very helpful tool for ensuring optimal factory Productivity. Overall Equipment Effectiveness measurement helps producers in their goal of expanding their business by concentrating on and enhancing certain production floor areas. Overall Line Efficiency helps manufacturers by highlighting troubling patterns and revealing the information needed for root-cause analysis.

Q: What is the formula to calculate Overall Line Efficiency?

Ans:

Following is the formula to calculate Overall line Efficiency - 

Line Efficiency (in %) = Line Output* Garment SAM / Manpower * Shift Hours * 100

Where, 

The line output - The Line output is the overall number of items the line produces.

Garment Standard Allowed Minutes (SAM) - Standard minutes of a garment (including machine SAM and manual SAM)

Manpower - Total number of people working on the line in manpower (including all departments)

Shift Hours - Shift hours are the number of hours a factory is open each day.

Q: Why is it important to measure efficiency in production?

Ans:

Efficiency in production is important to measure the idle time wasted during production. With the data at our disposal, an Operational strategy can be formulated to reduce idle time and ways to increase productivity. However, the Following is the efficiency formula -

Efficiency% = (Total minutes produced multiplied by 100)/ (Total hours worked multiplied by 60)

To express in percentage, the above formula is multiplied by 100 and 60 to turn hours into minutes.

Q: What is Efficiency Formula used for?

Ans:

The production efficiency of workers and batch production are both measured using the efficiency formula. Efficiency is the work produced from a process, represented as a percentage, divided by the work input into the same operation. The following generic formula is used to determine efficiency -

100 times (Work output / Work input)

The efficiency formula would look something like this if you thought of work input and output in terms of "minutes". the ratio of total standard minutes generated to full minutes spent on the task.

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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.