Manufacturing Cycle Efficiency (MCE)

Manufacturing cycle efficiency (MCE) calculates the percentage of the time spent in manufacturing products that are devoted to value added activities.

Value added activities refer to activities that cannot be eliminated without affecting the quality of the product. Non-value added activities refer to those that generate no increased value to a product, hence can be eliminated or reduced.

In computing for the manufacturing cycle efficiency, the time spent for value added activities is compared to the entire manufacturing cycle time. The manufacturing cycle time includes process time, inspection time, move time, and queue time.

Process time refers to the length of time spent in working on the products. Inspection time is spent on making sure that the products are not defective. Move time is time spent in transferring products between workstations. And queue time is the total time spent by the products in waiting to be processed, moved, inspected, and delivered.

Among them, the only time spent for value added activities is the process time.

Manufacturing Cycle Efficiency Formula

MCE =
Value added time (or Process time)
   
Manufacturing cycle time

where:
Manufacturing cycle time = Process time + Inspection time + Move time + Queue time

Example

XYZ Company recorded the length of time spent in various activities in its operations. The following information has been drawn from its records.

Wait time
2 days
Process time
10 days
Inspection time
2 days
Queue time
3 days
Move time
1 day

Solution:

Manufacturing cycle time = Process + Inspection + Move + Queue
  = 10 + 2 + 1 + 3 days
Manufacturing cycle time = 16 days
MCE =
Value added time (or Process time)
   
Manufacturing cycle time
     
  = 10 / 16
     
MCE = 62.50%

The above indicates that the company uses 62.50% of its manufacturing time for value added activities. 37.50% is spent for non-value added activities. The judgment as to whether such manufacturing process is efficient or not is dependent upon the basis of saying so. The company may use several information as basis, such as historical data and industry standards. To increase MCE, the company should reduce non-value added activities.

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