Utilization tells us the proportion of time a Group or Individual spent producing Production Tasks.
In order to determine the Utilization of a team or an individual we need to know the following pieces of information:
Utilized Time - Time spent producing Production Tasks
Available Time - Total time spent at work (this includes Utilized Time and Time spent on Supporting Tasks)
The formula for Utilization is:
Utilization = Utilized Time / Available Time
The diagram below provides us with all the information we need to determine what the Team's Utilization is. It also includes the inputs we need to also calculate Contribution and Yield...but for now, we will focus on Utilization:
Let's extract the information we require:
Available Time = 200 hours
Utilized Time = Available Time - Time spent on Supporting Tasks
= 200 - 25 hours
= 175 hours
Now we simply need to calculate the Utilization = 175 / 200 = 87.5%. This is telling us that the team spent 87.5 of its' Available Time producing Output and 12.5% in Supporting Tasks.
Utilization is a useful metric as it allows us to better understand one of the levers that can be pulled to increase or decrease output. For instance, if a manager knows that tomorrow is going to be light on Input volumes, they may decide to have their staff catch-up on some training...by decreasing the team's utilization to better reflect the reduction in Input, the manager can spend some time working on value-adding supporting tasks!