Idle capacity: what is it + how to reduce the indicator?
The structure set up by industries meets a specific production flow, generating a constant production volume. However, when part of the assets are not used in the work, the idle capacity index increases.
The total production level is difficult to achieve, but the objective is for the variation to be minimal. In this way, the difference between the ideal and actual projection should be small, ensuring maximum use of production capacity .
Therefore, the operational scenario in industries must be closely monitored to identify bottlenecks and make adjustments before idleness affects not only productivity, but also revenue.
Want to better understand the concept and role of the indicator? Continue reading the article and learn examples, calculation formulas and tips for reducing idle production capacity.
Happy reading!
What is idle capacity?
Idle capacity is an indicator that shows how much of a company’s human and material resources are not used in the operational process. The process occurs due to failures, bottlenecks in the processes or lack of team skills in the tasks.
The calculation of idle capacity also indicates losses in a given period, showing what was not produced in relation to what was planned.
Therefore, paying attention to metrics is crucial for productivity in the industry. After all, investments in machinery, equipment and personnel are made to maintain a high level of production.
Examples of idle production capacity
There are several examples of idle production capacity that can occur in an industrial operation. The main occurrences are:
Machines left over
The set of machines and equipment used in the operational cycle creates an operation with a maximum capacity which, after discounting foreseeable losses, results in the effective capacity.
Therefore, when there are spare machines , i.e., machines that are not working, idle production capacity increases, indicating that production planning failed to include the assets. The error also affects the volume of work that the team can perform.
Underutilized team
Another example of idle production capacity is the underutilization of the operational team . The distribution of labor must be done strategically so that each stage has professionals trained to perform the tasks.
Without the necessary skills, or with professionals without a job, the idle capacity rate is higher. Therefore, managers need to pay extra attention to moving employees between roles, avoiding drops in productivity.
Excessive inputs
A company’s inputs are essential to keep production active. Therefore, raw material purchasing management must closely monitor stock replenishment.
The goal is to avoid excessive storage of inputs , which increases acquisition and storage costs, as well as maximizing the risk of damage to materials that are not stored carefully.
How to calculate idle capacity?
The calculation of idle productive capacity in a given period (month, quarter, half-year) is done by subtracting the maximum capacity volume from the actual production volume. Then, the result is divided by the maximum capacity again. The formula looks like this:
- Idle production capacity = (maximum capacity – actual production) ÷ maximum capacity
Note: The final value can be multiplied by 100 to obtain the result as a percentage.
Maximum production capacity means the quantity of products that the company can manufacture in the period analyzed with all available machinery and staff resources. Actual production is the total number of products actually produced in the period evaluated.
Monitoring idle capacity is essential to monitor how team time is used when there are no anticipated or unforeseen obstacles, such as fault correction, scheduled maintenance stops, among other factors.
Therefore, the responsible manager must record the time that maintenance takes, as well as holidays and weekends to use accurate data in the calculation.
How to reduce idle capacity in industry?
Taking care to reduce idle capacity in the industry helps to increase productivity, make good use of materials and optimize team time management. See what you can do to reduce the indicator’s result.
1. Root cause of the problem
The first step to reducing idle capacity is to find the root of the problem .
To do this, the manager needs to evaluate the current stages of the production cycle and identify the bottleneck that most impacts the work, such as lack of team qualifications, supply errors, technical failures, among others.
2. Adjust production capacity according to demand
Another way to reduce the idle capacity index is to ensure that production capacity is adjusted to demand .
In other words, the company must structure its entire network of machinery and labor to have sufficient resources available to handle the projected volume.
3. Set productivity goals
Productivity goals serve as motivation for the team, in addition to helping to reduce idle capacity. The main concern is to set realistic and achievable goals, providing all the necessary working conditions for the team to perform.
4. Invest in control technologies
Technology is another essential step in reducing downtime in operations. With the support of controls and sensors on the machines, the maintenance team monitors all equipment, ensuring maximum use.
Industrial automation software is another solution that helps managers in their work, indicating the necessary adjustments based on reliable data to improve productivity.
5. Upgrade team skills
Finally, the last tip to reduce idle capacity is to update team skills , promoting refresher training and introduction to new technologies implemented.
This way, employees learn to handle new equipment, making full use of these resources to achieve defined goals.