Three Types of Machine Utilization Rates – Example Explained
Saying that you are a factory manager or owner and just now received a monthly report of machine hours analysis on a machine, as Figure 1 shows. Will you feel nervous and wonder why idle time takes a high proportion of the total machine time? Will you promptly call the shop floor to meet asking why and asking them to throw up some improvement actions?
Figure 1: Machine hours analysis & distribution – monthly report (Machine no. M001; November 2022)
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You might have managed the factory for a time long enough and known that the factory schedules its production capacity in two shifts (16 hours) a day and five days (Monday to Friday) a week; hence, you are not surprised to see the idle time to take a part of the whole machine time of the month. However, you should still wonder, in the month and on the machine, whether the scheduled capacity is utilized well for delivering sales orders, how the shop floor performs in delivering manufacturing orders, and what the capacity utilization will look like if the machine capacity scheduled uses up all the time of 24 hours a day and seven days a week. To answer these essential managerial questions, you need to know the three types of machine utilization rates and their differences, which associates with manufacturing order, scheduled capacity, and absolute capacity individually, as shown in Figure 2. ?
Figure 2: Machine utilization rates – monthly report (Machine no. M001; November 2022)
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Firstly, Figure 2 shows that the machine utilization rate of manufacturing orders is 89.48%, meaning that almost 90% of the manufacturing order time on the machine has been effectively and truly utilized in producing parts for delivering sales orders. The performance of this type of machine utilization rate should solely attribute to the shop floor. If the shop floor wants to or needs to improve it, they can zoom in on the analysis result of the ineffective machine hours (i.e., machine stop hours) under the manufacturing orders in Figure 1; then, they should be able to easily spot the fields the focus should be on to take actions, as shown in Figure 3.?
Figure 3: Ineffective machine hours analysis – monthly report (Machine no. M001; November 2022)
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Secondly, Figure 2 also shows that the machine utilization rate of scheduled capacity is 99.05%, meaning that almost all the scheduled time (i.e., two shifts a day and five days a week) has been truly used in producing parts of manufacturing orders for delivering sales orders; it has been quite a good utilization of the machine in the month as planned.
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Thirdly, Figure 2 further shows that the machine utilization rate of absolute capacity is 48.42%, meaning that with the maximum machine capacity (i.e., 24 hours a day and seven days a week) provided, less than 50% of it will be utilized in producing parts of manufacturing orders for delivering sales orders. It will be a lot of waste in the machine hours and echo the significant idle time proportion in the machine hours analysis result shown in Figure 1.
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In this case, if factory managers or owners don't receive information about the three types of machine utilization rates, which are all based on the raw data of immediate machine hours reported on the shop floor every day of the month, they might keep barking up the wrong tree and asking the shop floor to reduce the idle time, but it should not be their responsibility. How many factory managers or owners know that, in the end, the shop floor might act to reduce idle time by slowing down their production speed and performing more inefficiently in their manufacturing order operation? How many factory managers and owners know that it actually is the starting point that leads to another managerial behavior of themselves – asking the shop floor why they look so busy but cannot deliver manufacturing orders on time?
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Having known that the machine utilization rates of the manufacturing order, scheduled capacity, and absolute capacity are 89.48%, 99.05%, and 48.42% respectively, the factory managers or owners should realize that the shop floor has performed well, though they might need to improve further (e.g., in case the performance target is 95% for a machine utilization rate of manufacturing order), and the scheduled capacity has nearly been fully utilized. To reduce the machine's idle time and increase utilization of the machine's absolute (i.e., maximum) capacity, the factory managers and owners should first go to the production planners and know whether there consistently exists more manufacturing orders waiting for scheduling into the scheduled capacity. If so, it suggests it's time to officially increase the scheduled capacity by opening the third shift (i.e., eight more hours a day and 40 more hours a week). If not, the factory managers and owners should meet the sales team and know whether they can get more sales orders to feed the idle time in the long term.
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Do you know what the machine utilization rate really means in your factory?
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Do you know what the machine utilization rate thrown up by your Industry 4.0 solution really means?
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Reference articles:
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