Manufacturing companies always seek to maximize resources to boost productivity and reduce production costs. Manufacturers in competitive edge always look forward to investing their valuable resources into précised production planning and production schedules to get a grip on lead times.
Manufacturers calculate production capacity to understand the maximum returns of their facilities. Additionally, they depend on production capacity figures for financial planning and solid strategies for business growth. For this, companies need to precisely calculate production capacity to announce their business decisions over a while.
Production capacity is the production’s maximum output that a company can produce through its available resources over a while. This factor is vital as it informs the manufacturer’s short- and long-term business decisions. For instance, if a business wants to produce a large order, the decision-makers should know if the existing equipment and operations are sufficient to meet customer demand.
Manufacturers monitor production capacity to check labor utilization and capex decisions such as usable machines, facilities, and equipment. Both in-facility and administrative decisions are taken to maximize production capacity.
Calculating Production Capacity
As discussed, production capacity provides vital information for business executives and personnel to make diverse decisions regarding their operations. A manufacturer’s production capacity depends on the type of operation at hand. For example, the production capacity requirements for a low-volume, high-mix will differ from mass production, high-volume business type.
The primary hurdle is determining the machine’s hour capacity.
Machine hour capacity = no of working hours x no of usable machines.
With this, you can calculate the production capacity of an operation that produces a type of product by factoring in the time it takes to produce one item.
The formula for production capacity is:
Single item production capacity = machine hour/time taken to produce an item.
Calculating the production capacity of multiple products is important to improving productivity because your company might produce a diverse range of products.
Ways To Increase Production Capacity
For companies looking to increase capacity by scaling up their operations, here are some ways to do it.
Adding work shifts
A production company can increase capacity by extending the time available for the production process. Manufacturers can do this by proposing overtime pay to encourage employees to work for more hours.
Shift-based operations can also be adopted. Different niches of employees can ensure that the machine runs longer than usual and extend production time to increase production capacity.
Improving equipment effectiveness
Machine maintenance can always ensure that the equipment is always in good working condition. Additionally, there will be less machine downtime for interrupting the production operation. Businesses can increase their production capacity by maximizing overall equipment effectiveness.
At times, your machinery might be working at its maximum but wouldn’t be sufficient to produce enough to meet demand. Manufacturing companies can outsource the work to a contract manufacturer to meet short-term demands.
Investing in new machinery
You can invest in new equipment and machinery by investing in them within your budget, which can be feasible when your current equipment supports and works at its full capacity but doesn’t meet the demands. These purchases are important for companies looking to grow their businesses over time; on the other hand, outsourcing to contract manufacturers is a better option if looking for a short-term fix.
Adopting lean manufacturing processes
The lean manufacturing process ensures that the operation runs smoothly and efficiently without waste during the manufacturing facility. As a result, adopting manufacturing processes will lead to extra efforts from employees and machines to produce more products.
Why Choose Contract Manufacturing?
Opting for contract manufacturing along with the right contract manufacturer has a lot of benefits. However, it is the best option for companies looking for reduced labor, cost savings, and concentrating on other important metrics of businesses. Let us dig into a few advantages of choosing contract manufacturing.
Improving resource allocation
Contracting a firm to manufacture your products will give you more time, money, and space to focus on other aspects of your business and its overall growth. Contract manufacturing helps your employees to concentrate on areas like sales or marketing.
Reduced costs and maximized profits
The primary benefit of contract manufacturing is that you save money in various areas, from manufacturing equipment, facility costs, and machine maintenance costs to product and operator design. Labor costs are another benefit; contract manufacturers hire their skilled workers and employees.
Access to better equipment and technical insights
Teaming up with a contract manufacturer will always give you high-quality products. The manufacturer will ensure that your products meet industry standards with access to advanced manufacturing tools such as mixing vessels, precise instruments, and CNC machines or additional equipment necessary for your business.
The manufacturing business is a high-stakes industry requiring firms to ensure minimal quality. Manufacturing business also needs a competitive edge to stay ahead of the game, and most companies find this by earning accreditations such as ISO 9001 quality standard, etc. Better quality standards mean the firm will meet the specifications you have outlined.
Response to uneven market demands
There will be fluctuating seasons where your production capacity will be overwhelmed. During such seasons, you need to ensure that you meet the increased demand, and that’s where a contract manufacturing production process comes into play. A contract manufacturer can help you meet the demands year-round and outshine your competitors by establishing yourself as a trustworthy and reliable business.
With the help of the right equipment, contract manufacturers can produce faster with high-speed production and turnaround time. Sourcing raw materials, working with vendors, organizing couriers, and operating machines contribute to slow production. Taking these duties off and surpassing them to a contract manufacturer can hugely streamline production and increase efficiency.
Another benefit of contract manufacturing is cost-efficient and better scalability. Even if the production increases, contract manufacturers can manage with lower costs because of their longest relationship with vendors and capability to procure bulk materials at low prices.
We have seen several benefits of opting for contract manufacturing and signing a long-term contract with a contract manufacturer to increase the production rate and meet the future demand of the growing market. Contact Violin Technologies, one of India’s Best Wire harness manufacturers, to meet your wire harness manufacturing needs!
About the Author
Amulya Sukrutha, passionate computer science engineer specialized in Data science field. I also describe myself as a enthusiastic strength and endurance trainee. I have played professional Tennis during my early years and found my path in Software development and machine learning later. I’m also passionate about creating content, and learning about new technologies.