What is Manufacturing Cycle Efficiency?

Manufacturing cycle efficiency measures the proportion of production time spent on value-added activities . A business can use this information to pare away non value-added activities, thereby reducing costs and shortening the time required to manufacture a product. Both outcomes can be used as competitive advantages, since a business can then lower its prices while maintaining robust profits , while also offering faster turnaround times to its customers .

How to Calculate Manufacturing Cycle Efficiency

To calculate manufacturing cycle efficiency, divide value-added production time by total cycle time. Total cycle time is the aggregate amount of all process time, inspection time, queue time, and move time. A typical outcome of this analysis is to find that process (value-added) time comprises an inordinately small part of the total cycle time. All remaining parts of total cycle time are non value-added, and so should be examined to see if they can be compressed or eliminated.

Example of Manufacturing Cycle Efficiency

An analyst finds that a particular production process requires the time intervals noted in the following exhibit.