Not all the Key Performance Indicators are the same and some of them are probably more important for your company than others.
Here are the 28 most important metrics to capture in manufacturing, divided into five important goals, that are essential for a successful business.
Improving Customer Experience & Responsiveness
1. On-Time Delivery to Commit: Percentage of time that manufacturing delivers a completed product on the schedule that was committed to customers.
How to calculate it? On-Time Delivery to Commit = Number of units ordered / number of orders delivered on-time.
2. Manufacturing Cycle Time: Measures the speed or time it takes for manufacturing a given product from time the order is released to production to finished goods.
How to calculate it? Manufacturing Cycle Time = process end time – process start time
3. Time to Make Changeovers: Measures the speed or time it takes to switch a manufacturing line or plant from making one product over to making a different product.
How to calculate it? Changeover Time = Net Available Time – Production Time
Improving Quality & Ensuring Compliance
4. Overall Yield: is the percentage of products produced that may, or may not, require re-work to fall within compliance and quality standards.
5. First Pass Yield: is the percentage of products that are manufactured correctly and according to specifications at the first time, without scrap, re-run or rework.
How to calculate it? FPY Rate = Quality Units / Total Units Produced
6. Customer Rejects/Return Material Authorizations/Returns: – How many times customers reject products or request returns of products, based on receipt of a bad-quality or out-of-specification product. It is evidence of your quality standards.
7. Supplier’s Quality Incoming: Measure the percentage of good quality materials coming into the manufacturing process from a supplier. You can also measure the percentage of bad quality materials coming in, the “supplier defect rate”.
How to calculate it? Supplier’s Quality Incoming = Good Quality Materials / Total incoming Materials
8. Customer Rejects/Return Material Authorizations/Returns: Percentage of times that customers reject products or request returns because they received a bad product.
How to calculate it? Customer Rejects Rate = Customer Rejects / Total Orders
9. Customer fill rate, on-time delivery, perfect order percentage: Percentage of your orders that are shipped in full and on time as a percentage of all your orders. Shows how efficient your production line is when it comes to getting the product done and how successfully you are keeping to production schedules.
How to calculate it? On-Time Delivery Rate = On-Time Delivers / Total Delivers
10. Reportable Health and Safety Incidents: Measure the number of health and safety incidents that were either actual incidents or near misses that were recorded as occurring over a period of time.
11. Reportable Environmental Incidents: Measures the number of health and safety incidents that were recorded as occurring over a period of time.
12. The number of Non-Compliance Events / Year: Measure the number of times a plant or facility operated outside the guidelines of normal regulatory compliance rules over a one-year period. These non-compliances usually need to be fully documented as to the specific non-compliance time, reasons, and resolutions.
13. Demand Forecasting: Measure the number of raw materials they need to fulfill their expected customer demand.
How to calculate it? Projected Customer Demand = Raw materials * Production Rate
14. Throughput: Measure the business process flow rate. Essentially, it measures the movements of inputs and outputs within the production process. It is an important metric in the operations management of a company.
How to calculate it? Throughput = Output / Flow time
15. Capacity Utilization: Utilization is the amount of output you generate as a proportion of your total possible output; measures how much a line, plant, or factory uses its total productive capacity.
How to calculate it? Utilization = (Actual Utilization / Total Productive Capacity) * 100
16. Production Attainment: Measures the percentage of time a target level of production is attained within a specified schedule.
How to calculate it? Production Attainment = Periods when Production Target Met/Total Time Periods in Schedule
17. Overall Equipment Effectiveness (OEE): is a way to measure manufacturing productivity.
How to calculate it? OEE = Availability X Performance X Quality
18. Asset Utilization: Percentage of a specific asset that is being used.
How to calculate it? Asset Utilization = (Actual output / Maximum capacity of the asset) * 100
19. Opportunity Gap: Metric related to asset utilization. Difference between what an asset is capable of producing and what it actually produces.”
How to calculate it? Opportunity Gap = Maximum capacity – Actual Output
20. Percentage Planned vs. Emergency Maintenance Work Orders: Measures how often scheduled maintenance takes place, versus more disruptive/unplanned maintenance.
21. Downtime in Proportion to Operating Time: Measures asset availability for production.Plant uptime and plant downtime measure production performance at the plant level.
How to calculate it? Plant Uptime = plant run time (production) / Total available time to run or produce
Plant run time = Total available time to run – scheduled and unscheduled downtime/stoppages.
Plant downtime = 1 – (Plant run time/Total available time to run or produce)
Reducing Costs & Increasing Profitability
22. Avoided Cost: Measures estimated savings based on preventative measures, calculating how much you’ve saved by spending.
How to calculate it? Avoided Cost = Assumed Repair Cost + Production Losses – Preventative maintenance cost
23. Total Manufacturing Cost per Unit Excluding Materials: Measure all the potentially controllable manufacturing costs that go into the production of a given manufactured unit, item or volume.
24. Manufacturing Cost as a Percentage of Revenue: Ratio of total manufacturing costs to the overall revenue produced by a manufacturing plant or business unit.
25. Productivity in Revenue per Employee: Measure how much revenue is generated by a plant, business unit or company, divided by the number of employees.
How to calculate it? Productivity in Revenue per Employee = Revenue/number of employees
26. Average Unit Contribution Margin: Ratio of the profit margin that is generated by a manufacturing plant or business unit, divided into a given unit or volume of production.
How to calculate it? Average Unit Contribution Margin = Profit margin/volume of production
27. EBITDA: Stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a calculation of a business unit or company’s earnings, prior to having any interest payments, tax, depreciation, and amortization subtracted for any final accounting of income and expenses. EBITDA is typically used as a top-level indication of the current operational profitability of a business.
28. Cash-to-cash cycle time: Measures the time between a manufacturing plant purchase or inventory purchase, and the collection of payments from the sale of the inventory produced or purchased.
How to calculate it? Cash to Cash Cycle Time = Sell Date – (Plant/Inventory Purchase Date)
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