This comprehensive guide enumerates the most impactful manufacturing metrics and key performance indicators (KPIs) that can propel your business to new heights. Discover which parameters are critical for your enterprise, how to proficiently track them using intuitive dashboards, and implement data-oriented strategies to enhance performance. Let this guide be your roadmap to steer your industrial evolution successfully.
What Exactly are Manufacturing Metrics?
Manufacturing metrics serve as an analytical tool to evaluate and benchmark the efficacy of production processes. These invaluable measurements offer a wealth of data, facilitating the effective management and optimization of production activities over time. They serve as a fundamental backbone to underpin and substantiate your key performance indicators (KPIs).
Key Insights
- Manufacturing metrics and KPIs effectively illustrate the triumphs and trials within the scope of manufacturing operations.
- Industrial evolution is not a choice but a necessity to stay competitive across all manufacturing sectors.
- Consider implementing SMART (Specific, Measurable, Actionable, Realistic, Time-bound) objectives while outlining metrics and KPIs.
Understanding Manufacturing Key Performance Indicators: Leverage KPIs to gauge, scrutinize, and improve your plant operations over time. But how does one assess manufacturing performance? The answer lies in Manufacturing Key Performance Indicators. They offer a numerical representation of your operation’s strengths and weaknesses, supplying invaluable insight into how production activities align with and contribute to overarching company objectives.
Why Employ Manufacturing-Specific Key Performance Indicators
Top-tier manufacturing companies utilize KPIs to enhance the speed and quality of their operations while simultaneously diminishing costs. The employment of digital technologies to concentrate on minor yet progressive improvements emerges as a best practice for optimizing operations, often coined as industrial transformation.
A pivotal facilitator of today’s digital manufacturing shift is the application of Enterprise Manufacturing Intelligence (EMI). ERP platforms equipped with advanced manufacturing features allow the automation and consolidation of diverse manufacturing and enterprise data, enabling real-time analysis through interactive dashboards.
Adopting a data-oriented strategy for operations through real-time KPIs and dashboards empowers manufacturers to concentrate on quality, adaptability, and efficiency.
Principles for Manufacturing Key Performance Indicators
Metrics that accurately assess, analyze, and track performance in alignment with business objectives have the most significant influence. Prioritize KPIs that motivate your business to amplify process speed and quality, enrich customer experience, and achieve more with fewer resources.
Consider the following principles while identifying and defining manufacturing metrics:
- Well-articulated objectives: Define what your organization aims to achieve. Align manufacturing goals with broader business objectives such as enhancing product quality or increasing output. Select metrics that signal the achievement of these goals.
- Reliable method to gauge progress: Is your chosen metric actionable? Adopt the SMART (specific, measurable, actionable, realistic, and time-based) approach while setting goals, and amass data to track progress towards these targets.
- Identified data sources: What data are accessible to you? Once you’ve defined your SMART metrics, leverage your ERP solution to obtain the required information in real-time. Access to accurate and reliable data equips management with the reporting and metrics necessary for informed decision-making.
- Efficient reporting methodology: Consolidated, customizable dashboards that are easily accessible are ideal for providing pertinent information at the right moment to the management team and stakeholders.
5 Top Manufacturing KPIs to Monitor Success
18 Premier Manufacturing Key Performance Indicators
What constitutes KPIs in manufacturing? Manufacturing KPIs act as benchmarks to evaluate productivity, quality, customer satisfaction, and profitability. Different KPIs can be employed to scrutinize and enhance operations across your production lines.
- Production Volume. This KPI quantifies the total units manufactured within a specified time frame, providing a foundation for benchmarking manufacturing efficiency. It grants insight into the maximum output your factory can generate.
Production volume = Total # of products manufactured during a specified time frame
- Production Downtime. It measures the duration when a factory’s production lines are non-operational, encompassing both planned and unplanned downtime. Striving to minimize and control this downtime aids in enhancing productivity.
Production downtime = Sum of all downtime during a specified time frame
- Production Costs. This encompasses all the costs associated with manufacturing a product, including direct expenses like raw materials and labor, and indirect ones like rent and overhead.
Formulas:
- Production costs = Direct labor cost + direct material cost + overhead costs
- Per-unit product cost = Production cost/number of units manufactured
- Overall Equipment Effectiveness (OEE). OEE represents the proportion of time your plant is productive or manufacturing high-quality products swiftly without any downtime.
Formula: OEE = Performance x Quality x Availability
Each component is expressed as a percentage:
- Availability: Actual production time as a percentage of scheduled operating time.
- Performance: Percentage of time your machinery or plant is working at full capacity.
- Quality: Quality units produced as a percentage of all the units initiated.
- Overall Operations Effectiveness (OOE). Similar to OEE, OOE also includes maintenance time in the availability calculation.
Overall operations effectiveness (OOE) = Performance x quality x availability
Each component is expressed as a percentage:
- Availability: Actual production time as a percentage of the total possible operating time, including maintenance.
- Performance: Percentage of time your machinery or plant is working at full capacity.
- Quality: Quality units produced as a percentage of all the units initiated.
- Total Effective Equipment Performance (TEEP). This KPI is used to evaluate utilization, assessing how your plant is performing relative to the output achievable if it were running 24/7 for 365 days a year and consistently producing quality products.
Total effective equipment performance (TEEP) = Performance x quality x availability
Each component is expressed as a percentage:
- Availability: Actual production time as a percentage of total time if the plant were running for 24 hours a day, 365 days a year.
- Performance: Percentage of time your machinery or plant is working at full capacity.
- Quality: Quality units produced as a percentage of all the units initiated.
- Capacity Utilization. This measures the proportion of a plant’s total available capacity that is in use, useful for assessing efficiency and identifying future growth opportunities.
Formula: Capacity utilization = (Total capacity used during a specific time frame / Total available production capacity) x 100
- Defect Density. This quality metric tracks the ratio of defective products to the total volume of manufactured products. Defects can impede profitability and customer satisfaction.
Formula: Defect density = Number of defective units / Total units produced
- Rate of Return (ROR). ROR is a financial measure reflecting the efficiency of a capital expenditure or investment over time.
Formula: ROR = (Current value – Initial value / Initial value) x 100
- On-Time Delivery. This KPI quantifies the percentage of products delivered on time to customers compared to the total volume of delivered products. It is an indicator of customer satisfaction.
Formula: On-time delivery = On-time units delivered / Total delivered units
- First Time Right (FTR). Aiming for efficient and lean production operations, this Six Sigma goal measure emphasizes getting processes right the first time, every time.
Formula: FTR = Total number of good units / Total number of units in process
- Inventory Turns. This inventory management KPI evaluates the usage and replacement rate of stock over a specific period.
Formula: Inventory turns = Cost of goods sold (COGS) / Average inventory during a given period
- Asset Turnover. Asset turnover gauges the use of equipment and other assets to generate revenue.
Formula: Asset turnover = Net sales / Average total asset value
- Unit Costs. Also known as the cost of goods sold (COGS), it calculates the average cost to manufacture a single product unit.
Formula: Unit Costs = (Variable costs + Fixed costs) / Total units produced
- Return on Assets (ROA). ROA measures profitability concerning available assets, indicating the ability to use assets to generate revenue.
Formula: ROA = Net income / Average value of total assets
- Maintenance Costs. These comprise all expenses, both preventive and corrective, incurred to maintain and repair production equipment.
Formula: Maintenance cost per unit = Total maintenance costs in a specific period / Number of products produced during the same period
- Revenue per Employee. This KPI calculates the average revenue generated per employee, allowing benchmarking over time and against similar companies.
Formula: Revenue per employee = Total revenue in a given period / Average number of full-time employee equivalents in that period
- Profit per Employee. Similar to revenue per employee, this KPI assesses the average profit generated per employee, providing a measure of your organization’s bottom-line profitability.
Formula: Profit per employee = Net income for a given period / Average number of full-time employee equivalents in that period
Enhanced Manufacturing Efficiency Metrics
Manufacturing efficiency underscores the importance of maximizing resource utilization while minimizing costs. The objective is to create high-quality products at the lowest possible expense. Manufacturing efficiency KPIs (Key Performance Indicators) aim at fostering a culture of doing things correctly, eliminating wastage in the process.
- Throughput. Throughput quantifies the volume of products manufactured within a specific period. This KPI is crucial for evaluating and contrasting the effectiveness of similar equipment, production lines, or entire factories.
Throughput rate = Total number of quality units produced / time frame
For instance, if an eight-hour shift initiates the production of 450 units and results in 400 quality units, the throughput rate would be 400 units per eight hours, or equivalently, 50 units per hour.
- Work in Process (WIP). Work in Process refers to the products that are partially finished, awaiting completion and sale. This encompasses raw materials, labor, and overhead costs linked with unfinished goods. By analyzing this KPI, you can gain insights into material utilization efficiency and the value of semi-finished products.
Work in Process (WIP) = (Initial WIP + manufacturing costs) – cost of goods manufactured
- Schedule or Production Attainment. Schedule attainment is a comparison between the actual number of manufactured goods and the planned output.
Schedule attainment = (Actual production output in units / target production output in units) x 100
- Scrap Material Value
Scrap material signifies the surplus material remaining after a product has been completed. While typically unusable, scrap material often finds a market as is.
Scrap material value = Revenue from disposing of scrap material – disposal cost
- On Standard Operating Efficiency
If your manufacturing process involves a piece-rate or incentive system, then “On Standard Operating Efficiency” gauges the actual performance against the anticipated labor costs that you factored into your product costing. This KPI aids in monitoring labor costs, enabling you to tweak product pricing or seek more efficient processes to reduce production expenses.
On standard operating efficiency rate = # of products produced at or below estimated costs within a period / total # of products produced in the same timeframe
- Asset Utilization
Also known as the average return on assets, Asset Utilization measures the efficiency of asset deployment in production.
Asset utilization = Revenue within a specific period / [(Value of assets at the start of the period + Value of assets at the end of the period)/2] x 100
Cost & Profitability Metrics in Manufacturing
Understanding financial and profitability KPIs can provide you with a deeper comprehension of your product costs.
- Total Manufacturing Cost per Unit Excluding Materials. Improving efficiency isn’t solely about sourcing materials at a lower cost; it also involves closely examining and monitoring labor and overhead expenses.
Total manufacturing cost per unit excluding materials = (Total manufacturing costs – cost of materials) / total number of units manufactured
- Manufacturing Cost as a Percentage of Revenue. This KPI contrasts total production costs against revenue, providing a means to compare similar production assets and pinpoint potential areas for cost savings.
Manufacturing cost as a percentage of revenue = Total manufacturing costs / overall revenue
- Net Operating Profit. Net operating profit is a measure of profitability that can be applied to a manufacturing plant, business unit, or the company as a whole. It is calculated by deducting the cost of goods sold, operating expenses, interest, and taxes from the revenue.
Net operating profit = (Revenue – operating expenses) – interest and taxes
- Productivity in Revenue per Employee. Revenue can serve as a significant indicator of productivity. This KPI can be implemented for a specific plant, business unit, or across the company.
Productivity in revenue per employee = Total revenue / total employees
- Average Unit Contribution Margin. This metric answers the question: How much profit is each unit generating? A product’s contribution margin represents the funds remaining to cover fixed costs after accounting for all unit variable costs. Employ this business performance metric to identify underperforming product lines.
Average unit contribution margin = (Total revenues – total variable costs) / total volume of production
For instance, if the total revenue minus total variable costs equated to $100,000, and 10,000 units were produced during that period, the average unit contribution margin would be $10 per unit.
- Return on Net Assets (RONA). RONA measures the percentage of net income produced by your company’s assets, assisting you in assessing how effectively your organization utilizes its assets for profitable operations.
Return on net assets (RONA) = Net income / (value of fixed assets + net working capital)
RONA provides insight into how an organization uses its fixed assets, such as equipment and raw materials, to generate revenue.
- Energy Cost per Unit. This metric quantifies the amount of energy required to manufacture each unit. The energy cost has a direct impact on the profitability of product lines.
Energy cost per unit = Total energy costs / number of units manufactured
- Cash-to-Cash Cycle Time. This metric evaluates the duration required to convert investments in inventory into cash flow, which comes from the receipt of payments for sold products.
Cash-to-cash cycle time = (Days inventory outstanding) + (days sales outstanding) – (days payables outstanding)
- Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). EBITDA is a widely utilized metric for investors to compare companies. As an alternative to net earnings, EBITDA can assist you in evaluating operational profitability.
EBITDA = Net income + interest + taxes + depreciation + amortization
- Projected Customer Demand. Projected customer demand is a forecasting technique that incorporates historical data and current market conditions to predict future demand. Utilize this data to optimize your supply chain. The correct ERP tools can assist you in moving beyond speculation by providing historical trends, automated re-order points, and management of safety stock and cycle counts.
Understanding reorder points is a critical element for projecting customer demand.
Reorder point = (# units used daily x # days lead time) + # units safety stock
- Employee Turnover. A high turnover rate can adversely affect your bottom line. The processes of recruiting, onboarding, and training new employees can be time-consuming and costly. Monitoring your employee turnover helps identify if there are necessary adjustments to encourage employees to stay, such as enhancing company culture and offerings, including trainings and career development, to boost employee engagement.
Employee turnover = (Turnover Rate = # of separations in a given period / (# of employees at start of period + # of employees at end of period/2)) × 100
Manufacturing Compliance Metrics
These KPIs focus on the assessment of business, financial, legal, and reputational risks. They also incorporate aspects of employment law, including health, safety, environment metrics, as well as product safety and customer data privacy.
- Recorded Health and Safety Incidents. This metric documents the number of safety and hazard occurrences that need to be reported to the Occupational Safety and Health Administration (OSHA) within a defined period.
Recorded health and safety incidents = Number of health and safety incidents reported to OSHA during a specific time frame
- Health and Safety Incident Rate. The health and safety incident rate denotes the number of work-related injuries per 100 full-time workers over a year. It’s also known as the Total Case Incident Rate (TCIR).
Health and safety incident rate = (Number of OSHA-recorded injuries and illnesses X 200,000*) / total employee hours worked
*Note: 200,000 equates to 100 employees working 40 hours per week, for 50 weeks per year.
- Documented Environmental Incidents. This metric notes the number of environmental issues that your company is required to report to the Environmental Protection Agency (EPA). These incidents may pertain to air and water pollution, recycling concerns, and other environmental factors.
Documented environmental incidents = Number of environmental incidents reported to the EPA during a specified time frame
- Annual Non-Compliance Events. This metric tracks the number of instances in a year where a manufacturing plant failed to comply with established guidelines. Managers must document the timing, reason, and resolution of all non-compliance events.
Annual non-compliance events = Number of non-compliance events during a 12-month period
- Audit Failures. It is crucial to plan and conduct regular safety audits across all areas of your manufacturing facilities and equipment. Track the frequency of operations not meeting compliance standards.
Audit failure rate = Number of failed audits in a given period / total number of audits conducted in the same period
Manufacturing Compliance Metrics
These KPIs focus on the assessment of business, financial, legal, and reputational risks. They also incorporate aspects of employment law, including health, safety, environment metrics, as well as product safety and customer data privacy.
- Recorded Health and Safety Incidents. This metric documents the number of safety and hazard occurrences that need to be reported to the Occupational Safety and Health Administration (OSHA) within a defined period.
Recorded health and safety incidents = Number of health and safety incidents reported to OSHA during a specific time frame
- Health and Safety Incident Rate. The health and safety incident rate denotes the number of work-related injuries per 100 full-time workers over a year. It’s also known as the Total Case Incident Rate (TCIR).
Health and safety incident rate = (Number of OSHA-recorded injuries and illnesses X 200,000*) / total employee hours worked
*Note: 200,000 equates to 100 employees working 40 hours per week, for 50 weeks per year.
- Documented Environmental Incidents. This metric notes the number of environmental issues that your company is required to report to the Environmental Protection Agency (EPA). These incidents may pertain to air and water pollution, recycling concerns, and other environmental factors.
Documented environmental incidents = Number of environmental incidents reported to the EPA during a specified time frame
- Annual Non-Compliance Events. This metric tracks the number of instances in a year where a manufacturing plant failed to comply with established guidelines. Managers must document the timing, reason, and resolution of all non-compliance events.
Annual non-compliance events = Number of non-compliance events during a 12-month period
- Audit Failures. It is crucial to plan and conduct regular safety audits across all areas of your manufacturing facilities and equipment. Track the frequency of operations not meeting compliance standards.
Audit failure rate = Number of failed audits in a given period / total number of audits conducted in the same period
Maintenance Manufacturing Metrics
These metrics evaluate the effectiveness of maintenance programs in enhancing equipment performance, maximizing uptime, and minimizing costs. They also consider the availability of production line equipment.
- Cost of Maintenance per Unit. This metric tracks the cost of maintaining and repairing equipment relative to the number of units produced. It includes all costs associated with ensuring the equipment’s reliable operation. Use this KPI to monitor the effectiveness of a machine over time.
Cost of maintenance per unit = Total maintenance costs within a specified timeframe / Number of products produced during the same period
- Mean Time Between Failures (MTBF). MTBF computes the average time between equipment failures, such as issues with a conveyor belt or industrial valve. This metric provides insights into the reliability of your production assets.
MTBF = Total operating time in hours / Number of failures
- Mean Time to Failure (MTTF). MTTF is a metric akin to MTBF. However, it takes into account non-repairable components like electronics or circuit breakers, which require replacement upon failure.
MTTF = Total operating time in hours / Number of failures
- Percentage of Planned Maintenance (PMP). This metric compares the total time spent on repairing and maintaining production machinery with the anticipated required time.
Percentage of planned maintenance = (Number of planned maintenance hours / Total number of maintenance hours) x 100
- Ratio of Planned vs. Emergency Maintenance Work Orders. This metric evaluates the proportion of equipment maintenance that is planned against emergency repairs. Unplanned maintenance can disrupt workers and customer service.
Ratio of planned vs. emergency maintenance work orders = (Number of planned maintenance hours / Number of unplanned maintenance hours) x 100
For non-critical equipment or components, plant managers often implement a corrective maintenance strategy following an unplanned downtime event.
- Unscheduled Downtime. Unscheduled downtime measures the duration when equipment, although scheduled to operate, cannot due to reliability or equipment problems. This downtime can lead to lost customers and revenue, making it a crucial metric to evaluate the success of your maintenance plans.
Unscheduled downtime = Total unscheduled downtime during a specified timeframe
- Ratio of Downtime to Operating Time. Expressed as a ratio, this metric compares the duration of equipment non-operation to its operating time.
Ratio of downtime to operating time = Total downtime : Total operating time
- Prevented Costs. Prevented costs are savings realized from preventive maintenance activities. By investing in the upkeep of your equipment, you avoid expensive repairs and extended periods of unscheduled downtime.
Prevented costs = (Projected repair cost + production losses) – cost of preventive maintenance
- Equipment Set-Up Duration. Equipment set-up duration is the time it takes to prepare equipment for its next production cycle after completing a run.
Equipment set-up duration = Time required to ready equipment for the next cycle
Customer Experience & Responsiveness Manufacturing Metrics
Monitor these metrics to assess your effectiveness in prioritizing customer experience. Manufacturing is integral to the punctual delivery of superior-quality products, which form the bedrock of an exceptional customer experience.
- Punctuality in Delivery Commitment. This metric gauges the frequency with which manufacturing can fulfill its product delivery commitments. It monitors the productivity of production lines and the success rate of adhering to product timelines.
Punctuality in delivery commitment = Number of products delivered on time / Total number of products delivered
- Customer Lead Time. Customer lead time quantifies the entire duration from order placement to customer receipt.
Customer lead time = Order processing time + production lead time + delivery lead time
- Customer Fulfillment Rate. Pay attention to how well your organization satisfies customer demand using the existing product inventory. This KPI signifies the capacity of the company to meet customer needs at any given moment.
Customer fulfillment rate = (Number of orders delivered / Number of orders placed) x 100
- Customer Retention Rate. How much of your business is generated by returning customers? This metric offers a valuable insight into customer retention and loyalty.
Customer retention rate = (Number of returning customers / Total number of customers) x 100
- Customer Satisfaction Index. How do you discern if customers are content with the products you deliver? Begin by soliciting their feedback. Customer satisfaction surveys can enlighten you about their satisfaction levels with your products and customer service, and whether they’d recommend your company to others. One of the basic satisfaction metrics is gathered through a simple Likert scale asking customers to rate their satisfaction with your product.
Customer satisfaction index = (Number of customers who reported being either very or extremely satisfied / Total number of completed surveys) x 100
Quality Manufacturing Metrics
These KPIs are predictive indicators of production performance, quantifying defects at every stage of the production cycle.
To evaluate manufacturing quality, employ quality KPIs such as yield, flawless order percentage, and customer rejection rate, which assess the adherence of products to their planned specifications.
- Manufacturing Yield. Manufacturing yield is a proportion of the total volume of products manufactured relative to the input of raw materials. This metric does not factor in process inefficiencies like rework or scrap.
Manufacturing yield = (Actual quantity of products manufactured / Maximum possible yield based on raw material input) X 100
- Initial Production Yield. Initial production yield quantifies the quality of products, representing the number of non-defective products released without the need for wasteful rework. Utilize this KPI as an early warning indicator of potential manufacturing problems such as material quality or equipment.
Initial production yield = Number of non-defective or satisfactory units / Total number of products manufactured
- Flawless Order Rate. What percentage of complete orders are delivered on time out of all orders? This KPI tracks the number of orders shipped without incidents like delayed delivery, damaged products, or missing items.
Flawless order rate = (Percentage of orders delivered on time) X (Percentage of complete orders) X (Percentage of damage-free orders) X (Percentage of orders with accurate documentation) X 100
Use this KPI to determine if order capture, order management, manufacturing, and fulfillment processes are harmonized.
- Return Merchandise Authorizations (RMA). This metric quantifies the frequency with which customers express dissatisfaction and request and receive refunds for returned goods.
Return merchandise authorizations = (Number of RMAs / Number of orders delivered) X 100
- Customer Rejection Rate. The customer rejection rate measures the number of defective parts delivered to customers. Products can comprise multiple parts, and this metric provides a detailed view of how many specific parts are rejected by customers.
Customer rejection rate = (Number of rejected parts / Total number of parts in all products shipped) x 100
- Incoming Supplier Quality. A crucial KPI for your supply chain, this metric scrutinizes the quality of incoming raw materials.
Incoming supplier quality = Number of quality raw materials received / Total number of incoming materials
- Waste Rate. The waste rate quantifies the volume of material discarded during manufacturing. Reducing the amount of waste produced in your manufacturing process can lead to cost savings by utilizing raw materials more efficiently. Moreover, waste materials can consume significant labor and time to sell, recycle, or dispose of.
Waste rate = Volume of waste material produced during a manufacturing job / Total input of materials into the process
Lean Manufacturing Metrics
To evaluate manufacturing efficiency, lean manufacturing KPIs, metrics designed to examine and enhance process efficiency, are used. Utilize lean KPIs to pinpoint opportunities for waste reduction and speed enhancement.
- Order Cycle Time. What is the average duration to fulfill a customer order? Order cycle time provides insight into your business’s readiness to meet customer demand.
Order cycle time = (Time of order receipt by customer – Time of order placement by customer) / Total number of shipped orders
- Initial Production Yield. Initial production yield is a crucial quality indicator that signifies the count of non-defective products manufactured on the first attempt, without necessitating rework. Employ this KPI as a precursor of potential challenges in the manufacturing process.
Initial production yield = Number of non-defective products excluding rework and scrap / Total number of products manufactured
- Production Capacity Utilization. Production capacity utilization gauges the extent to which a facility’s production capacity is utilized. Consult this KPI to evaluate efficiency and project future growth.
Production capacity utilization = (Total capacity employed during a specific timeframe / Total available production capacity) X 100.
- Equipment Downtime Rate. Equipment downtime rate captures the duration during which equipment is unoperational, hindering product manufacturing. It accounts for both planned and unplanned downtime for scheduled maintenance and equipment failure.
Equipment downtime rate = Total operational time / Total operational time + Total downtime
- Operational Availability Ratio. Track the readiness of assets for production. Operational time is the duration an asset is available for production, while downtime is when assets are unoperational due to planned or unplanned maintenance. Use this KPI to evaluate manufacturing equipment efficiency.
Operational availability ratio = Total time available to run – Scheduled and unscheduled stoppages
- Material Efficiency Variance. Material efficiency variance is the discrepancy between the volume of material employed and the standard.
Material efficiency variance = (Actual unit usage – Standard unit usage) x Standard cost per unit
- Extra Working Hours Percentage. This metric quantifies the additional hours employees work beyond their normally scheduled working hours.
Extra working hours percentage = (Overtime hours / Total hours worked, including overtime) X 100
Performance Metrics
How do you derive production KPIs? Manufacturing performance or production metrics are designed to monitor the effectiveness of each phase of production. This encompasses metrics such as production achievement, transition time, and pace time.
- Production Achievement. Production achievement evaluates the manufacturing sector’s capability to reach its predetermined production level. A higher value indicates superior performance.
Production achievement = (Actual production / Targeted production) x 100
- Transition Time. Transition time represents the duration required to switch a production line from producing one product to another.
Average transition time = Total time spent on production line changeovers / Number of changeovers
- Pace Time. Pace time indicates the rate at which a product must be completed to meet demand. This KPI is calculated by dividing the customer demand by the available production time.
Pace time = Total available production time / Average customer demand
Manufacturing Innovation
Metrics Consider these metrics to foster creativity within the organization. Innovations could be in the form of novel or upgraded products, leveraging process enhancement, or incorporating new technology such as Artificial Intelligence in manufacturing.
- Rate of Product Innovation (RPI). The rate of product innovation quantifies how frequently your organization launches new products. It is advisable to evaluate RPI for new products brought to the market.
Rate of product innovation = Number of new products introduced / Targeted number of product introductions
- Product Modification Cycle Duration. Product modification cycle duration gauges the period required to complete a product modification from the time the change order is received until it is implemented. The metric is typically based on the average duration needed to accomplish the modification.
Product modification cycle duration = Duration of the product modification cycle in days, weeks, or months
Manufacturing KPI Dashboards
A manufacturing dashboard serves as a central hub, amalgamating crucial KPIs for real-time monitoring of production data by plant managers. The sources for dashboard inputs are diverse, ranging from Industrial Internet of Things (IoT) sensors to integrated manufacturing software systems with multiple features such as warehouse management, financial accounting, costing, among others.
With the aid of advanced data visualization techniques, information becomes effortlessly digestible at a glance, while also enabling in-depth exploration through pre-constructed reports. Role-specific manufacturing dashboards are utilized by plant managers and personnel to track operational health, rectify process inefficiencies, curtail costs, and seize opportunities for quality and performance enhancement.
A manufacturing KPI dashboard might integrate data regarding production efficacy, quality, and performance, showcasing KPIs like Overall Equipment Efficiency (OEE) and customer satisfaction. This offers real-time insights for enhancing manufacturing process speed, quality, and overall profitability.
Key metrics:
- Overall Equipment Efficiency (OEE)
- Customer Satisfaction
- Production Volume
- Reported Health and Safety Incidents
- Return On Net Assets (RONA)
Production Performance Dashboard
This dashboard presents real-time KPIs pertaining to equipment status and production, comparing the actual and planned values for each metric. It facilitates real-time assessment of equipment performance and its impact on production, aiding optimization of manufacturing volumes and throughput.
Key metrics:
- Equipment Downtime
- Idle Time
- Run-Time Hours
- Mean Time Between Failures (MTBF)
- Percentage of Planned vs Emergency Maintenance Work Orders
- Downtime in Proportion to Operating Time
Manufacturing Quality Dashboard
A quality dashboard in manufacturing might juxtapose the total yield with the first pass yield, tracking defective production against non-defective products manufactured correctly on the first attempt. It might also include the customer return rate for faulty or inaccurate product orders, the quality of incoming materials from suppliers, or other relevant logistic KPIs. This provides rapid insights into potential issues within the manufacturing process, like material quality, labor inefficiencies, or equipment issues.
Key metrics:
- Yield
- First Pass Yield
- Return Merchandise Authorization (RMA)
- Rate of Return
- Supplier’s Quality Incoming
Manufacturing Cost Management Dashboard
These dashboards offer real-time KPIs about product costs and profitability, encompassing graphs and tables illustrating unit, maintenance, and energy costs. They might also comprise asset turnover and average unit contribution margin. With manufacturers aiming for higher returns on invested capital, such financial dashboards are invaluable for ensuring maximized profitability, while adhering to quality and safety norms.
Key metrics:
- Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
- Cash-to-Cash Cycle Time
- Total Manufacturing Cost per Unit excluding Materials
- Net Operation Profit
- Net Return on Assets
Lean Manufacturing Dashboard
Lean manufacturing dashboards focus on process efficiency, tracking on-time completions or production vis-à-vis customer order shipment dates. They might also spotlight anomalies or deviations impacting production output or equipment status. All manufacturing firms, irrespective of size, can benefit from enhanced efficiency. Emerging and start-up manufacturers can establish effective and efficient protocols, and optimize every dollar spent, using EMI platforms to monitor and display data in dashboards.
Key metrics:
- Cycle Time
- Capacity Utilization
- Machine Downtime Rate
- Overtime Rate
Optimizing Tracking and Reporting for Manufacturing Key Performance Indicators and Metrics
To stay ahead in the competitive landscape and expedite the digital transformation of manufacturing operations, organizations should harness the power of Enterprise Resource Planning (ERP) platforms. These innovative solutions automate and seamlessly amalgamate data from the shop floor, value chain, supply chain, and the entire enterprise.
This wealth of data can be harnessed to gain insights into various areas such as manufacturing resource planning, integrated inventory management, dynamic replenishment, warehouse management, financial accounting and costing, customer and partner relationship management, e-commerce, and analytical operations. By leveraging this data, organizations can unearth invaluable insights that can boost production speed, enhance quality, and elevate performance to unprecedented levels of excellence.
Enhancing Manufacturing KPIs and Metrics Tracking with NetSuite
Observing manufacturing KPIs illuminates areas of strength, points for improvement, and guides the path forward. A powerful ERP platform like NetSuite offers a comprehensive solution to gather precise and up-to-date information about product and process quality. This results in data-driven insights that empower organizations to make informed, intelligent decisions about their manufacturing operations.
