How is throughput calculated

This includes its beginnings as raw material all the way through the completion of finished goods ready to ship. Because so much of throughput time is not spent in actual process or machine time, accurate throughput time measurements give manufacturers a way to build improvements into the production cycle to shorten throughput time and improve performance and efficiency.

By adding these time cycles together, one can arrive at that total throughput time required to complete each unit. This allows for products to be costed correctly for use in other business activities such as planning, pricing and Return on Investment ROI for capital expenditures. Manufacturers can also use these cycles to look for ways to improve the manufacturing process to make it more efficient and cost-effective.

This is especially true in move time, inspection time and queue time where Lean Manufacturing , Six Sigma and other continuous improvement programs can significantly impact cost by reducing those times.

And as more and more operations move to digital conversions, even the processing time can be analyzed to identify trends and microtrends to improve that time as well. While the basic formula for throughput time was discussed above, there are other calculations related to throughput that can be used to assess performance as well.

These include:. Now that might seem like a lot of time, but you have to remember that you are going to be making more than one candle at a time. This metric gives you an idea of how you could reduce the time taken for manufacturing on a micro-scale and see in detail where the improvements can be made. Because you now have the four segments upon which you can start to analyze your manufacturing workflow.

Your processes are difficult things to change and in the case of candle making the ways to change would be to improve the machinery, the tools, and the skills of your workers. Do some research into your product and see how competitors are doing it.

Candles are a fairly easy thing to check. In our candle example, everything is moved by hand, which of course slows moving down. But what about using trolleys to move the batches? Certainly, it would be an added expense, but the amount of time saved would quickly make up for it.

Waiting is one of the most boring and necessary evils of life. So, reducing queueing can be more about what else you can fit in that time to reduce the overall throughput time. The point here is to reduce the horror of your production into bitesize chunks which you can analyze from afar, before getting your hands dirty and making those vital time-sensitive modifications. Your production planning and scheduling can be on point this way. If you can reduce your throughput time for a product enough that it gets done in one day rather than two, then your customers can get their delivery faster too.

Plus, you can start to reduce your carrying costs by being more efficient with your inventory management. Apart from the convenience of having your purchasing, production, and online sales in one place, you can work out your throughput time , in half the time. That means you can finally channel your inner cheetah, and start running your workshop like a well-oiled machine.

A master production schedule is the backbone of every productive manufacturing business. With this article, you can learn all about what is a master production schedule and how to implement it into your processes. Here are the best BigCommerce integrations for managing your sales and manufacturing orders.

Need to find an appropriate inventory management software for your business? This article lists the best ones available on the market for different types of companies. Get a live look at your manufacturing business with Katana, manufacturing ERP software that helps you with:. Start free trial. Remember that inventory in the context of throughput rate is every unit involved in the operations cycle at a given time. This includes items ready to be sold and items still in production.

If you are measuring inventory of number of customers, this would involve customers being served as well as customers waiting. This number will be represented as I in your throughput rate calculation. For example, if you have a total of party hats combined in stock and in production, I would equal Related: What Is Operations Management? Throughput rate is measured as a function of business units over time.

Depending on the kind of information you are looking for, you might want to know total units over the span of one second, one minute, one hour or another measure of time. This period of time will be represented as T in your throughput equation. When you have identified your inventory and desired span of time, simply divide the inventory figure by the measure of time.

In this case, your throughput rate would therefore equal five customers per hour. Throughput rate figures are most useful when operations management professionals and other business leaders use them to analyze a business's efficiency. Since every business accommodates a unique set of operations elements depending on its size, overhead and operating costs, you may find that an analysis of throughput rates is relative.

You might make meaning from throughput figures internally by comparing one day to another or business units in different locations. You might also compare the throughput rates of your business to others in the same industry if that information is available. Related: What Is Quantitative Analysis? First, for a process or factory, the constraining operation should be identified.

Then, Worximity's performance monitoring data can be used to identify opportunities for improvement and implement those improvements. One company that realized the benefits of Worximity's system is Voltigeurs Farm , a leading poultry processor.

The company achieved a 43 percent increase in productivity over three years, along with an increase of 90, units processed per month using Worximity's performance monitoring software and TileBoard data displays. According to Jocelyn Delisle, production director at Voltigeurs Farm,.

This way, we minimize our losses and increase production speed. Throughput is one of a company's most important performance measures. It tells you whether or not you can meet customer demand and whether process lines are performing at top levels, and it demonstrates the capacity to expand markets. To improve your factory's throughput and line performance, contact the sales team at Worximity. Schedule a demo to see what we can do for you. Worximity provides simple realtime technologies to solve food processor pains such as downtime, rejects, waste, overtime; helping them gain profit velocity by improving throughput, yield and OEE.

By Claude Archambault - April 15,