Manufacturing efficiency consists of two core elements:.
1. Fulfill customer orders as quickly and reliably as possible
The primary purpose of a manufacturing system is is to fulfill customer orders. An efficient manufacturing company fulfills customer orders as quickly and reliably as possible. Target shipping dates are established as orders are received and orders are shipped on time.
2. Use the least amount of inventory and WIP
Fulfilling customer orders requires inventory – raw materials, components, subassemblies, and finished items – and work in process – which includes labor and subcontract services. An efficient manufacturing company meets sales order required dates using the least amount of inventory and WIP.
Benefits
•Quick and reliable shipments increase customer satisfaction and boost sales.
•Increased sales boost shop utilization, which spreads fixed manufacturing overhead costs over more items to lower unit overhead costs and increase gross margins.
•Minimizing inventory frees up working capital and warehouse space.
•Minimizing WIP increases shop efficiency with smaller run sizes, shorter queue times, less material in aisles and staging areas, and fewer quality problems with less material handling.
