One efficiency number isn't enough to understand what's really happening on the line. Each type of efficiency answers a different question.

Core Time Concepts

Before reading efficiency numbers, understand the terms they're built on:

• Production Time: the estimated time to complete manufactured pieces. Calculated by multiplying quantity by the SAM of stages within the style.
• Available Time: the total time an employee can work after deducting approved downtime, maintenance periods, and breaks.
• Downtime: the cumulative duration of all approved stop requests.
• Maintenance Time: the cumulative duration of all approved maintenance requests.
• Used Available Time: available time for employees who actually participated in production, excluding unutilized employees.
• Paid Time: the total time employees are compensated for, including available time, downtime, and maintenance — break time is the only exclusion.
• Productivity Time: calculated by multiplying the scope's production quantity by the estimated time to complete it within that scope.

The Three Types of Efficiency

Labour Efficiency

Measures how productive a worker was during the time they were actually available to work. It excludes downtime, maintenance time, and unutilized employees, because the worker is not responsible for these factors. However, it includes wasted time at the start and end of the day because the worker is responsible for that.

Labor Efficiency = Production Time ÷ Used Available Time

This will always be higher than operational efficiency because it evaluates the worker in isolation from management factors.

Operational Efficiency

Measures the overall efficiency of the line including downtime, maintenance, and unutilized employees. It's the true picture of what's happening on the factory floor.

Operational Efficiency = Production Time ÷ Paid Time

Throughput Efficiency

Measures the efficiency of completing a piece through all its stages. It can be calculated at the level of the entire factory, a specific line, section, or stage.

Throughput Efficiency = Productivity Time ÷ Paid Time

How to Improve Each Number

• Low operational efficiency: look for long downtime periods or unutilized employees. Review stage scheduling to improve workforce utilization.
• Low Labour efficiency: workers are spending time on non-productive activities. Check whether the issue is in a specific stage or whether employees need more training.
• Low Throughput efficiency: there are likely bottlenecks preventing pieces from completing all stages. Identify the bottleneck location and address it first.

Frequently Asked Questions

• Why is Labour efficiency always higher than operational efficiency?
  Because work efficiency excludes downtime, maintenance, and unutilized employees from the equation, while operational efficiency includes all of them.
• Can throughput efficiency be calculated for a single stage?
  Yes, it can be calculated at the factory, line, section, or individual stage level.
• Does wasted time at the start and end of the day affect labour efficiency?
  Yes, it's included in the labour efficiency calculation because the worker is responsible for it.
• What's the practical difference between throughput efficiency and operational efficiency?
  Operational efficiency measures the overall performance of all employees, while throughput efficiency measures the efficiency of completing pieces through their full production stages.

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