Ways to increase production efficiency

In the face of increasing competition and a crisis in the economy, effective production management is becoming a critical task. To solve it, it is necessary to develop an integrated approach based on the analysis of a number of factors.

Performance Evaluation Criteria

Assessment of production efficiency is based on a number of criteria. More often, quantitative performance indicators are used in the analysis. Tracking their dynamics allows you to identify a decrease in production efficiency and take measures to resolve this problem.

One of the key criteria analyzed is profitability, which reflects the efficiency of the use of enterprise resources. In general, profitability is the ratio between revenue (gross income) and total costs. It can be expressed through indicators of net profit (the ratio of sales to sales profitability), productivity (the ratio of the number of products sold to labor costs), and innovation (a factor determining the competitiveness of production and the role of innovation in the production process).

The priority and specific weight of each of the criteria depends on the type of enterprise, its position in the market, staffing, etc. The task of enterprise management is to identify key factors for increasing production efficiency.

Most often, the solution to the problem of inefficient production is reduced to three areas - optimization of production costs, the introduction of innovations in production, as well as changing the management system.

Cost optimization

If, as a result of the analysis, it was revealed that the enterprise has low competitive positions in terms of profitability and profitability of production, the priority should be the development of measures to reduce costs. These may include, for example, steps to optimize the cost of raw materials by searching for more profitable business offers from suppliers or changing the ingredients and components of the production process.

Another option is to reduce fixed costs (for example, rent, logistics costs) in the cost structure due to an increase in production volume. True, this can only be done if there are guaranteed markets for products.

Finally, the third option is to optimize the number of employees. For example, by outsourcing part of the services. Companies often used this method during the financial and economic crisis, transferring accounting and legal functions to third-party contractors.

Production modernization

In modern conditions, the use of innovation is one of the key factors in a company's competitiveness. After all, they can reduce production costs and offer better products.

Modernization can be carried out by introducing modern software or new, more productive equipment. So, the software can automate part of the business processes, or improve internal communications between employees. In the context of a constant increase in the cost of energy resources, one of the significant factors in increasing production efficiency may be the introduction of energy-efficient saving technologies.