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How do I measure labour productivity and efficiency on a production line?
Labour productivity is output divided by labour hours, for example good units per direct labour hour. Labour efficiency compares standard hours earned (units produced multiplied by standard hours per unit) with actual hours worked, expressed as a percentage.
It matters because labour is often a major controllable cost and the clearest lever for cost per unit.
Commonly misread:
- Comparing products with different standard times in one units-per-hour figure.
- Counting hours paid rather than hours worked on the line, or the reverse, without being consistent.
- Blaming workers when output was limited by machine downtime or missing material.
Read labour efficiency alongside downtime and material availability. Record hours by line and by product so that mix changes do not appear as performance changes.
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