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The Top 12 Manufacturing KPIs

To Track Operational Excellence
by Jason Sindel | Feb 15, 2019 | Manufacturing Excellence, OEE

This is part of the series of blog posts we are writing called “Measuring for
Excellence”, in which we’ll be exploring the strategies and best practices some
of the most successful companies employ to build a culture of manufacturing
excellence in their organization.

Of course, being in the data business, we’ll be paying special attention to the
manufacturing Key Performance Indicators (KPIs) they track in order to
measure their progress and how manufacturing analytics can track them in
real time. In this blog, we thought it would be useful to list out the top KPIs
used by manufacturing leaders to create sustainable manufacturing excellence.
So, what are key performance indicators for manufacturing plants?:
1. On-Time Delivery
Work Orders Delivered by the Original Schedule Date ÷ Original Schedule Work
Orders Due

“ What good is a 100% OEE if we don’t have any

customers to sell our product to?

This metric measures the percentage of orders delivered on-time, most often
de ned by The metric is often tallied monthly for statistical relevance and the
aim should be 100% ful llment.

The metric is a favorite of ours ever since we learned it was the number one
business goal of one of our best customers, a large contract manufacturer. In
the CEO’s o ce, it was listed number one among many other goals on the
whiteboard and was circled for extra emphasis.

When asked about this KPI, he responded:

“As long as we are hitting this, we are less concerned about OEE, or even machine
downtime,” he told us. “What good is a 100% OEE if we don’t have any customers to
sell our product to?”

2. Schedule Attainment
Work Orders Delivered by the Original Schedule Date ÷ Original Schedule Work
Orders Complete
This KPI tracks how often the production team meets the target level of
production and provides is an important way to set performance benchmarks,
ne-tune work order delivery time estimates, and make sure that performance
issues aren’t causing costly delays. If a manufacturer only tracks On-Time
Delivery for instance, often times, issues within the production process itself
might be obscured and the change undocumented.One of the keys to ensuring
on-time delivery, if tracked daily, this KPI keeps the production team’s eyes on
the prize and could eventually be tweaked to track a level of early delivery
performance as well.
3. Total Cycle Time
This manufacturing KPI measures the time it takes for a customer order to start
and nish the entire production process all the way to shipping and represents
the full time required to convert raw materials into nished goods from one
end of the line to the other. A Cycle time KPI is the average of all cycle times of
all orders in a speci c period and is generally calculated using Machine Cycle
Time.At the core of any plant performance metric is machine cycle time,
de ned in detail here. This measure of e ciency sets the bar for how e cient
a machine is and allows for real-time reporting on that machines performance
(on the minute). Each machine should have an Ideal Cycle Time based on the
part being produced.When viewed as set of multiple cycles, it can be measured
as Cell Cycle Time.

4. Throughput
Units Produced / Time
This manufacturing KPI is the rate of how many units on average a machine,
cell or line is producing over time, i.e. 1200 units/minute. While cycle time is the
measure of the time it takes between two points, throughput should be
monitored in real-time since when throughput decreases it is usually indicative
of an issue on the line.Throughput can be increased by eliminating downtime,
calibrating machines to run at an ideal cycle time, reducing the number of
touches or steps in cycle to reduce shortstops, changing the raw materials or
tooling required to produce the good, improving machine maintenance.

5. Capacity Utilization
Actual Output / Potential Output x 100
If a machine is producing goods at an ideal cycle time, it is said to be running at
100% capacity. When running slower or anytime a machine is idle, this
percentage will drop, indicating available capacity and slack in the system. A
great KPI to understand the facility’s ability to scale production or institute
more agile job scheduling.

6. Changeover Time
Changeover Time is the time it takes to unload/load, retool, calibrate, and
program a new job. Changeover is most relevant when there’s a switch
between one type of part to another before a production run. When taken as
an average this KPI can help determine which job types and parts might require
some reduction in setup time if possible. By tracking changeover time,
manufacturer’s can de ne total cycle times by part, ne tune their estimates,
and recognize the need for more operator training, better planning, proactive
prep of required materials.

7. Yield
Good Parts Produced / Total Units Produced
The Yield KPI is a measure of quality and performance and is a the heart of
production e ciency and pro tability. Measuring First Pass Yield (FPY) will
identify which processes require substantive re-work which will a ect
throughput and in uence total cycle times, and provide a target of a 100% yield
in which no defective parts were produced at all.

8. Scrap
Total Scrap / Total Product Run
Scrap is the discarded or rejected material from the manufacturing process, so
it can be a measure of units or volume. Some organizations track defective
items as scrap (waste), while others focus on the leftover raw material from a
subtractive manufacturing process, but however your organization de nes
scrap, tracking this manufacturing KPI should be one of the rst steps to
lowering your material costs, possibly increasing cycle times, and focusing on
producing more quality goods.

9. Planned maintenance percentage (PMP)

Planned Maintenance Time / Total Maintenance Time
By calculating the percentage of scheduled maintenance vs. planned
maintenance plus all the emergency maintenance required to address
breakdowns. This metric is essential for manufacturers to appropriately
allocate resources towards preventative maintenance. One rule of thumb
established by advocates of preventative maintenance is 85% PMP, in which an
organization is targeting less than 15% maintenance time be dedicated to
emergency work orders. Since emergency xes can cost on average 3-9 times
more than planned maintenance due to overtime, rushed parts, service call
outs, scrapped production, this metric should be stable for manufacturing
seeking uptime and trying to lower operational costs.

10. Availability
Uptime / Uptime + Downtime
At the core of most manufacturing reporting is the availability KPI – the
measure of machine uptime/downtime. Downtime is by far and away the
biggest loss facing most manufacturers today. No matter what industry you are
in downtime costs money. Ideally availability should take into account all
downtime, making no distinction between whether it is planned or unplanned.
In addition, in order to address the issues causing downtime and reduce it,
manufacturers need to start tracking downtime reasons so when viewed on a
pareto chart, downtime can be analyzed within the context of the machine
a ected, by operator and shift, and by any other factor on the plant oor.

11. Customer Return Rate

Rejected Goods / Total Number Of Goods Delivered
As a measure of performance, increasing customer returns might indicate a
aw in the production process or a missing step in quality control. The costs of
customer returns can quickly escalate due to the rework required and the
e ort and cost of reverse logistics.
12. OEE – Overall Equipment E ectiveness
Availability * Performance * Quality
OEE is ne and well– and it has its place in the industry, but we feel strongly
that many manufacturers track OEE as a panacea, believing that if they achieve
a high enough OEE, they are operating at a level of manufacturing excellence –
something we fundamentally dispute. We’ve talked a lot in the past about
what’s good and what isn’t regarding the metric (so for our extended take on
OEE, see here).

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