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Dividing value-added processing time by total cycle time provides a measure of efficiency referred to as manufacturing cycle efficiency (MCE). (A service company would compute service cycle efficiency by dividing actual service time by total cycle time.) If a company’s production time were 3 hours and its total cycle time were 24 hours, its manufacturing cycle efficiency would be 12.5 (3 24) percent.
MCE = (Value-added manufacturing time , Manufacturing cycle time)
Although the ultimate goal of 100 percent efficiency can never be achieved, typically, value is added to the product only 10 percent of the time from receipt of the parts until shipment to the customer. Ninety percent of the cycle time is waste. A product is much like a magnet. The longer the cycle time, the more the product attracts and creates cost.
A just-in-time manufacturing process seeks to achieve substantially higher efficiency by producing components and goods at the precise time they are needed by either the next production station or the consumer. Thus, a significant amount of idle time (especially in storage) is eliminated. Raising MCE can also be achieved by installing and using automated technology, such as flexible manufacturing systems.
