Machine Utilization & Capacity Planning
The difference between a shop making money and one that isn't is often just knowing how many hours their machines actually run.
Run the Numbers Instantly
Our ROI & Capacity Calculator models utilization scenarios, shift patterns, and automation impact in real time.
Machine Utilization Formula
What Counts as "Production Hours"
- ✅ Spindle turning, cutting metal
- ✅ Loading / unloading parts
- ✅ In-process inspection
- ❌ Setup / changeover
- ❌ Waiting for material
- ❌ Unplanned downtime / breakdowns
What Counts as "Available Hours"
- • 1 shift: 8 hrs × 250 days = 2,000 hrs/yr
- • 2 shifts: 16 hrs × 250 days = 4,000 hrs/yr
- • 3 shifts: 24 hrs × 365 days = 8,760 hrs/yr
- • Subtract planned maintenance windows
- • Subtract holidays / shutdown weeks
Utilization vs OEE: Know the Difference
Utilization tells you how much time the machine runs. OEE tells you how well it runs during that time.
| Metric | Formula | Answers | World-Class |
|---|---|---|---|
| Utilization | Run hrs / Available hrs | "Is the machine on?" | 75-85% |
| OEE | Avail × Perf × Quality | "Is it making good parts fast?" | 85% |
A machine can have 90% utilization but only 50% OEE — it's running all day, but slowly, with scrap. For the full breakdown, see our OEE Guide.
Industry Utilization Benchmarks
| Shop Type | Typical | Good | World-Class | Key Constraint |
|---|---|---|---|---|
| Job Shop (1-shift) | 45-55% | 60-70% | 75% | Setup time, order mix |
| Job Shop (2-shift) | 55-65% | 70-78% | 85% | Labor availability |
| Production Shop | 65-75% | 78-85% | 90% | Planned maintenance |
| Automated Cell | 75-85% | 85-92% | 95% | Tool life, pallet capacity |
Capacity Planning: Do You Need Another Machine?
The most expensive mistake in manufacturing is buying a machine you don't need — and the second most expensive is not buying one when you do.
Sum your demand
Total up all jobs for the planning period (week/month/quarter). Include setup time and secondary operations.
Apply OEE factor
Divide total demand hours by your realistic OEE (typically 0.65). This gives you the actual hours needed.
Compare to available capacity
If required > available, your options are: add shifts, add machines, outsource, or improve OEE.
The 80% Rule for Capacity:
Never plan to fill more than 80% of theoretical capacity. The remaining 20% absorbs rush jobs, rework, and unplanned downtime. Running at 95%+ capacity leads to missed deliveries and overtime costs.
5 Quick Wins to Boost Utilization
1. Reduce Setup Time (SMED)
Convert internal setup to external. Pre-stage tools, fixtures, and programs before the current job finishes.
Impact: +5-15% utilization
2. Batch Similar Jobs
Group parts with same tooling/material to minimize changeovers. Run all 6061 Aluminum jobs in one block.
Impact: +3-8% utilization
3. Stagger Operator Breaks
Don't stop all machines for lunch. Stagger breaks so at least 50% of machines are always running.
Impact: +5-10% utilization
4. Adopt Predictive Maintenance
Vibration monitoring prevents surprise breakdowns. Schedule maintenance during low-demand windows.
Impact: +3-7% utilization
5. Lights-Out Manufacturing
Run unattended overnight with pallet systems, bar feeders, or robot loading. Even 4 hours of lights-out adds 50% capacity to a single shift.
Impact: +25-50% capacity (not utilization — actual hours)