If used effectively, tracking and monitoring Units Produced Per Hour will allow you to easily pinpoint roadblocks or problems with existing processes that affect production negatively. Most manufacturers and distributors are looking for ways to impact the bottom line and make positive improvements every day. Being able to fix issues in production when they happen will not only improve the overall production rate, but also the P&L.
Today, we are going to define units produced per hour, dig into its key drivers, and discuss ways you can impact it positively.
Defining: Units Produced per Hour
Units Produced per Hour = # of Units Produced/# of Hours
If you’ve been here before, you know that we like to use frozen pizzas in our examples… because who doesn’t love a good frozen pizza?!
Let’s say your employees produced 2,400 frozen pizzas in 200 total hours. Your Units Produced per Hour would be 12 units per hour.
Units Produced Per Hour has a ‘buddy metric’ if you flip the equation: Time Per Unit. If you want to know how long it takes to produce each unit, flip the equation: 200/2,400 = 0.083 hours per unit produced or it takes an average of 5 minutes to produce each unit.
Hours not relevant to you?
Hours is simply a time period. Depending on the business and the unit they are producing, time periods “by minute”, “by shift” or “by day” may be more appropriate. It is up to each business to decide which granularity makes the most sense.
Think about it in terms of different units. For a pizza, “per hour” or “per minute” might make sense since you can make pizzas quickly. If you are producing something more complex like a trailer or an airplane, you most likely aren’t producing more than one per hour. It probably would make more sense to look at the metric per shift, per day or even per week.
It is important to note that this metric is an average over a specific time period, and that at any one moment the rate could be higher or lower than the average. To look at this metric over time, by week or by month, can also help to see the overall health of the business and will allow you to notice trends.
Now, we’re going to dig into the key drivers of Units Produced per Hour.
Key Drivers of Units Produced per Hour
There are three key drivers of units produced per hour. They are:
- 1. Productivity
- 2. Hours
- 3. Headcount
Let’s dig a little deeper:
- 1. Productivity: This is the # of units produced during a time period.
- a. When productivity is up… units produced per hour will likely trend positive.
- b. When productivity is down… units produced per hour will likely trend negative.
- 2. Hours: This is the number of hours worked during a time period.
- a. If productivity is held constant and you are above your hours budget… units produced per hour will likely trend negative.
- b. If productivity is held constant and you are below your hours… units produced per hour will trend positive.
- 3. Headcount: This is the number of people you have working at a point in time.
- a. If productivity is held constant, and you are above your headcount budget… units produced per hour could trend negative.
- b. If productivity is held constant, and you are below your headcount budget… units produced per hour could trend positive.
Back to our pizza…Let’s say Line 2’s target is 2,400 pizzas produced per week in 200 total hours and there are 5 people working per line. Each worker must make 480 pizzas per week or 96 pizzas per day to hit their productivity goal. But, on Tuesday only 2 people showed up to their shift, so they had to work overtime to make up for lost productivity.
At the end of the week, you notice your productivity was 2,400, but your number of hours was 240. This means your units produced per hour decreased to 10 pizzas per hour, and you need to dive deeper into your labor expense, hours budget, and headcount budget to see its effect on the bottom line.
As you see in our example, units produced per hour is all about your productivity, hours and headcount. Here are some questions to ask yourself to get started:
- 1. How is my productivity trending this week?
- 2. Am I above or below my hours budget?
- 3. Am I above or below my headcount budget?
So, what does this mean?
Units produced per hour is a core metric that is needed to understand the overall productivity and efficiency of a business. Noticing when production is decreasing can help businesses pinpoint areas of improvement or issues with existing processes. Resolving issues with production, staffing, headcount and scheduling can make it easy to stay on target for overall productivity.
This metric can also tell managers if they are being efficient in production. If lines are continually missing production goals, this can be a key indicator that something needs to be changed systematically, or that the goals should be adjusted to a more realistic number.
Keeping on your units produced per hour can be challenging if you do not have the right tools to get the work done. In order to impact this metric positively, it is imperative to:
- Be closely monitoring productivity
- It will drive down if you do not have the ability to hit your production goals.
- Or, it will drive up if you are able to keep your production stable or up and keep your hours stable or down.
- Be closely monitoring hours
- It will drive down if you have the ability to decrease the number of worked hours.
- Or, it could drive up your labor expense because you are not able to monitor scheduling and worked hours.
- Be closely monitoring headcount
- It will drive if you have the ability to hit your production goals.
- Or, it could drive up your labor expense because you have too many people working too many hours.
A Risk in Units Produced per Hour
Units produced per hour does not take into account your labor expense per hour. While units produced per hour is an efficiency metric, it is not a labor efficiency metric. Your labor expense could still spike even when closely monitoring hours per unit because of overtime or the various pay rates you have in place for your team members. You may consider tracking Cost Per Unit as well.
If you would like to learn more about labor efficiency, check out our blog on Cost per Unit.
That's Why We're Here
At analytic.li, we uniquely understand the need for manufacturers and distributors to closely monitor their units produced per hour (...or any time period). After all, it is one of the foundational metrics that impacts labor efficiency and productivity.
With our first-ever, cross-functional labor efficiency and worker productivity platform we break down data barriers and organizational barriers to set up operations managers for success. This means businesses can arm their leaders with real-time insights by alerting leaders of staffing shortages, labor overages, and productivity trends to manage units produced per hour.
If you’d like to learn more about ways to proactively monitor units produced per hour or discuss how analytic.li will work for your organization, reach out to us. We’re eager to connect with you. If now is not the time to consider new software but you liked what you read here, subscribe to our blog below.