30 Best Manufacturing KPIs and Metric

Examples for 2023 Reporting

What Is A Manufacturing KPI?

What is a KPI? A manufacturing Key Performance Indicator (KPI) or metric is a well defined and
quantifiable measure that the manufacturing industry uses to gauge its performance over time.
Manufacturing companies specifically use KPIs to monitor, analyze, and optimize operations, often
comparing their efficiencies to those of competitors in the same sector.

This post will take you through the 30 top manufacturing KPIs and metrics to use in your 2023
reporting, how they are calculated, and how you can streamline your reporting process using
manufacturing industry reporting software. Get an in-depth experience by utilizing our free interactive
manufacturing KPI dashboard pre-built with some of the manufacturing KPIs we will discuss in this
post:
Free Manufacturing KPI Dashboard Template
Get Your Template Now

Why Your Company Should Be Using Manufacturing Specific

KPIs to Stay Competitive
The manufacturing industry represents more than 10 percent of the US economy, and more than 15
percent of the global GDP. The only way to stay ahead in this fiercely competitive industry is through
the implementation of manufacturing KPIs and metrics.

Everyone strives to increase the top line of a business, trying to gain more market share in an attempt
to increase profits. While this is important, what if you could grow your bottom line without having to
take on expansion risks? This is where KPIs for the manufacturing industry come into play.

The Fundamental Manufacturing KPIs and Metrics That You

Should Be Using in 2023
When your company is just starting to implement KPIs, the whole concept can seem fairly daunting.
Rest assured, it isn’t as bad as you think. Everything can be broken down into smaller, more digestible
morsels of information. In this section, we will go over 10 of the basic examples of KPIs in
manufacturing that your company should consider using:

1. Throughput – This is probably one of the most fundamental KPIs for the manufacturing
industry while also arguably one of the most important. The Throughput KPI measures the
production capabilities of a machine, line, or plant; also known as how much they can
produce over a specified time period. Throughput = # of Units Produced / Time (hour or
day)

2. Cycle Time – The cycle time KPI is very simple in nature, but that doesn’t mean it can’t be
manipulated to be a very powerful tool. In the manufacturing industry, cycle time is the
average amount of time it takes to produce a product. Simple, right? Maybe not as simple
as you think. The cycle time metric can be used to measure the time it takes to manufacture
a completed product, each individual component of the final product, or even go as far as to
include delivery to the end user. Thus, cycle time can be used to analyse overall efficiency
of a manufacturing process on the macro scale, as well as determine inefficiencies on a
micro scale. Cycle time = Process End Time – Process Start Time
3. Demand Forecasting – This manufacturing metric is used by companies to estimate the
amount of raw materials they will require to meet future customer demand. This metric can
be a little bit trickier for companies to fully utilize, as it is highly dependent on
uncontrollable external factors. The basic formula is as follows: Projected Customer
Demand = Raw Materials * Production Rate

4. Inventory Turns – This is a measure of how many times inventory is sold over a specific
time period and helps indicate resource effectiveness. Low ratio numbers indicate poor
sales and excessive inventory, while high ratio numbers represent strong sales or
insufficient inventory. Inventory Turns = Cost of Goods Sold / Avg. Inventory

5. Production Attainment – This production performance metric measures production levels

over a specific time period and calculates what percentage of the time a target production
level is achieved. Production Attainment = # of Periods Production Target Met / Total Time
Periods
6. Cash to Cash Cycle Time – This is a time-based manufacturing KPI metric. It measures
the amount of time it takes from an initial cash outlay for raw materials, inventory, or a
manufacturing plant until the company receives cash from its customers for its products.
This KPI is typically measured in days. Cash to Cash Cycle Time = Inventory Sale Date –
Inventory Purchase Date

7. Avoided Cost – This doesn’t mean you can just avoid paying bills and keep all the profits.
The avoided cost manufacturing metric is an estimate of how much money you saved by
spending money. Seems strange, right? The most common example is how much money is
spent on machine maintenance vs. repair cost if a machine were to break down, plus the lost
production value associated with the repair downtime. Avoided Cost = Assumed Repair
Cost + Production Losses – Preventative Maintenance Cost

8. Changeover Time – At the most basic level, changeover time represents the amount of
time required to switch from one task to another. Typically, in manufacturing, it represents
the amount of time lost from switching a production line from one product to another.
However, it can also represent the amount of time lost during a shift change. Changeover
Time = Net Available Time – Production Time
 9. Takt Time – This is a very useful manufacturing KPI when scheduling production orders or
deciding whether to take an order from a client. Takt time is the maximum permissible
amount of time that can be spent manufacturing a product while still meeting a client’s
deadline. For those who are curious, Takt stands for “taktzeit,” a German word meaning
“cycle time.” While very similar in nature, this is not to be confused with the cycle time
KPI. Takt Time = Net Available Time / Customer’s Daily Demand

10. Return on Assets (ROA) – You might be thinking, this seems like it has less to do with
manufacturing and more to do with finance. That is because it does. However, financial
metrics are just as important as manufacturing metrics. You can’t have a business if you
aren’t making money. This metric evaluates how well your business is making use of its
assets (money). It is the annual net income divided by total assets (fixed assets + working
capital). ROA = Net Income / Avg. Total Assets

It is key to note that these are just the basic KPIs used in the manufacturing industry. A company
should look beyond these for more insight into their production practices.

How to Build Useful KPI Dashboards

View Guide Now
What Makes the Best Manufacturing KPI Metrics?
There is a plethora of manufacturing KPIs considered to be standard practice throughout the industry.
However, that doesn’t mean that they should all be applied to any company that produces a product.
While many of them are applicable, some are not. There might even be the possibility that a standard
manufacturing metric doesn’t even exist for what you want to measure. If you are going to create your
own production metric, there are the things you should take into consideration.

Every KPI needs a clearly defined goal. What are you trying to achieve? Is it even
something that can be achieved? What is the time period that you wish to achieve this goal?
Be specific and set up parameters that clearly define your goal. This goal needs to be
something that can be numerically defined (quantitative not qualitative).
It is very important that you are able to objectively measure your progress toward the
goal. This means collecting and interpreting data. Which bring us to the next criteria.
Data, data, data. There must be a clearly defined data source with a strict procedure of how
the data are measured or collected. There should be nothing left to interpretation here.
Reporting your data is just as important as collecting it. Different manufacturing KPIs
will have different reporting frequencies. Typically, reporting should happen on a weekly or
monthly basis, and will often make use of a manufacturing reporting software solution.

Now that we have gone over some of the basic KPIs for the manufacturing industry and have a grasp
of what makes a good KPI, we can dig a bit deeper into the world of manufacturing KPIs and explore
lean manufacturing KPIs.

Lean Manufacturing KPIs

Lean manufacturing is a practice of Japanese origin (name drop: Toyota) whereby companies attempt
to minimize the amount of “waste” without sacrificing productivity. “Waste” in this situation doesn’t
mean garbage or refuge from the production process. It actually represents any activity that does not
add value from a customer’s perspective. Listed below are 10 examples of lean manufacturing KPIs:

11. Machine Downtime Rate – While this is commonly used as a manufacturing metric to
give a general snapshot of how operation is going, it doesn’t paint a full picture. Machine
downtime is a combination of both scheduled downtime and unscheduled downtime.
Machine Downtime Rate = Downtime Hours / (Downtime Hours + Operational Hours)
12. Percentage Planned Maintenance – This production metric is used to analyze the ratio of
scheduled maintenance against the unscheduled maintenance. This KPI is useful in
identifying when more preventative maintenance is required for certain assets. PPM = (#
Planned Maintenance Hours * 100) / # Total Maintenance Hours
13. Downtime to Operating Time – This manufacturing metric can be used to measure the
effectiveness of machinery maintenance and the machine itself. With effective preventative
maintenance, the amount of downtime can be reduced, creating a more optimal
manufacturing process. Companies aspire to reduce this ratio as much as possible.
Downtime to Operating Time = Downtime / Operating Time
14. Capacity Utilization – This production KPI measures the amount of capacity being utilized
as a function of total capacity available. Ideally, companies want this number to be as high
as possible, as it indicates they are making better use of their production capabilities and
maximizing return on their assets. This metric can also be used by management when
deciding whether to take on new orders or quoting lead time, as it gives a snapshot of
available resources. Capacity Utilization = Actual Factory Utilization / Total Productive
Capacity
 15. First Pass Yield – This is one of the most fundamental production KPIs. It calculates the
percentage of products manufactured to specification the first time through the process.
This means that they do not require any rework or become scrap. A higher FPY rate is very
desirable for any company. First Pass Yield Rate = Quality Units / Total Units Produced
16. Overall Equipment Effectiveness (OEE) – This key performance indicator is considered
the gold standard for measuring manufacturing productivity. The higher your OEE, the
more effective your equipment is. A score of 100 percent means that you are manufacturing
100 percent of the time, at 100 percent capacity, at a 100 percent yield (no defective parts).
OEE = Availability * Performance * Quality
17. Manufacturing Cost Per Unit – It is very important that you know the total cost
associated with manufacturing a product on a per unit basis. Without it, you wouldn’t be
able to price a product properly. This KPI takes into account all costs associated with
production and divides the cost by the number of units manufactured. Typical costs include
materials, overhead, depreciation, labor, etc. Manufacturing Cost Per Unit = Total
Manufacturing Cost / # of Units Produced
18. Material Yield Variance – This lean manufacturing KPI takes the estimated amount of
material required for a product and compares it against the amount of material actually
used. Material Yield Variance = Actual Material Use / Expected Material Use
19. Maintenance Cost Per Unit – This production metric is often overlooked as people tend to
consider maintenance cost to be an overhead item. However, it is an important lean
manufacturing KPI to take into consideration when trying to optimize efficiency. This
calculation takes the total cost of maintenance (both preventative and emergency) and
divides it by the number of units produced for a specified time period. Maintenance Cost
Per Unit = Total Maintenance Cost / # of Units Produced
20. Overtime Rate – This metric compares the amount of overtime worked by employees to
the amount of standard hours. It helps to identify inefficiencies in scheduling and/or
staffing. Overtime Rate (Percentage) = (Overtime Hours * 100) / Regular Hours

We have covered 20 different manufacturing KPI examples at this point, as well as what it takes to
make your own. Now it is time to look at some data management best practices.

How to Keep Track of Your KPI Data

Quality control and process management are not the most exciting things going on at a manufacturing
company, but they are the backbone of the operation. After companies start to implement their newly
created KPIs and metrics, they often keep track of the collected data using Excel (hopefully no one is
still compiling data using a ledger book). However, there are a couple of things to take into
consideration when managing your data:

Data protection and security are essential. Hackers stealing your KPI data is probably not
a huge concern. However, it is critical that your data are backed up and can’t be deleted by
accident.
Reduce the amount of duplicate data. Don’t keep multiple working copies of the same
data. Have one working copy, and one unaltered backup.
Ensure your KPI data are easily accessible to your team. There is nothing worse than not
being able to do your work because you don’t have access to information that you need.

All of these concerns can actually be remedied through the use of a reporting solution. Here at
insightsoftware, we build industry leading reporting software solutions. Come and see how our KPI
dashboards can help your company get ahead of the curve.
How to Compare KPI Reporting & BI Solutions
View Whitepaper Now

Streamline Your Reporting with Manufacturing Reporting

Software
Regardless of whether your manufacturing company is large or small, using a manufacturing
dashboard can help with the following reporting processes:

Managing large data dumps manually is an inefficient process. A manufacturing

dashboard is able to automatically process collected data and turn the data into analytics
and insights.
Consolidating the data into a central location can take a long time. Manufacturing
reporting software allows companies to input all of their information into a single
centralized location.
Interface with other services. Manufacturing reporting solutions have developed over
time to become powerful tools. Any good business intelligence software will be able to
interface with your favorite ERP software.
Instant updates at your fingertips. Gone are the days of asking someone to bring you
weekly data updates from different segments of the company. Everything you need is just
one click away. With a centralized database, manufacturing dashboards can immediately
generate reports on performance, as well as send you alerts when a KPI starts to
underperform.

Having a manufacturing reporting solution is a crucial aspect of operating a company in the industry.
Centralized data with real time reporting will give any company the potential edge required to stay
ahead of their competitors. However, it is important to remember that KPIs aren’t a one-time set-and-
forget. They will require updating as your business grows and expands. Sometimes there are metrics
that you don’t think of when someone says manufacturing.

More Examples of KPIs Used in Manufacturing

Here are 10 additional manufacturing KPI metrics that might take you by surprise:

21. On-Time Delivery – This is less of a production performance metric, but a very important
KPI in the manufacturing sector nonetheless. You can have the most efficient production
line in the world, but if you can’t deliver on time, clients are not going to want to work with
you. This metric measures the percentage of products delivered on time to clients. On-Time
Delivery = (# Units Delivered On-Time * 100) / # Units Delivered
22. Health and Safety Incidence Rate – In an ideal world, this manufacturing metric would
not even exist because it would be zero. Unfortunately, the reality of the matter is that
workplace accidents and near misses do occur. This metric monitors the number of
incidents or near misses over a given period of time (normally per annum). Health and
Safety Incidence Rate = (Number of Incidences * 200,000) / # hours worked by all
employees
23. Employee Turnover – While this metric isn’t manufacturing specific, it is as equally
important as the other KPIs in this list. While employee turnover typically has a negative
connotation associated with it, not all turnover is bad. Some turnover may be required to
 remove underperformers and replace them with higher performers. However, having too
high of a turnover can lead to lower moral. Employee Turnover Rate (%) = (Employees
who left * 100) / Avg. # of Employees
24. Non-Compliance Events / Year – Every country has regulatory compliance rules that
manufacturers must follow when producing their products, whether it be safety, emissions,
or something else. Not only is it important to record the number of times a non-compliance
event occurred, it is also good practice to document the reason why it occurred, and what
the resolution was. Non-Compliance Events = # of Non-Compliance Events / Specified
Period of Time (Annually)
25. Customer Returns (Rejects) – This is a classic example of a KPI used in manufacturing,
and it is still used to this day for a reason. Keeping track of returns is imperative. This
metric calculates the percentage of products that customers return because they have
received a bad product. Needless to say, a company should strive for the lowest percent
possible. Customer Return Rate = (# of Products Returned * 100) / Total # of Products
Shipped
26. Total Manufacturing Cost Per Unit Excluding Materials – This is a performance metric
that attempts to pin down the fixed costs associated with operating a factory or production
line. These are arguably the costs that companies are able to control. TMC Per Unit Ex
Materials = TMC Per Unit – Material Cost Per Unit
27. Manufacturing Cost as a Percentage of Revenue – This manufacturing KPI will help
bring insight into how much your company is spending on manufacturing with respect to
total revenue. This is very useful data to compare against competitors in the same sector.
Manufacturing Cost as a Percentage of Revenue = Total Manufacturing Cost / Total
Revenue
28. Energy Cost Per Unit – This is a fairly nitty gritty manufacturing KPI that a lot of
companies tend to overlook. It only really comes into play when companies are fine-tuning
their operations and trying to become leaner. This KPI takes to total cost of energy spent
over a period of time and divides it by the number of units produced in that time frame.
Energy Cost Per Unit = Total Energy Cost / # of Units Produced
29. Work-in-Process – This manufacturing KPI metric measures the value of partially
completed products. It helps manufacturing companies understand how much of their
working capital is tied up in incomplete products, and can help identify supply chain
management issues. Ending Work-in-Process = Beginning WIP + Manufacturing Costs –
Cost of Goods Manufactured
30. Scrap Rate – This is a fairly straightforward manufacturing KPI. It keeps track of the
number of products that are deemed scrap due to manufacturing defects that can’t be
reworked. It gives companies insight into the ratio of products deemed scrap in a
production run, helping identify an inefficient process. Scrap Rate = # of Scrap Units / Total
# of Units

Congratulations! You have now learned the top 30 manufacturing KPIs to use in your 2023 reporting,
how to create your own KPIs, the basics of KPI database management, and how you can streamline
your reporting processes with a manufacturing reporting solution like the solutions we offer at
insightsoftware. This might seem like a lot of information to digest all at once. If you have any
questions or are interested in speaking with a reporting & KPI expert, contact us here.