+1 (919) 872-7800 Contact Support !

Home » 30 Best Manufacturing KPIs and Metric

Examples for 2021 Reporting

30 Best Manufacturing KPIs

and Metric Examples for 2021
Reporting

May 2, 2021
insightsoftware is the global provider of enterprise software
solutions for the O!ce of the CFO to connect to & make
sense of data in real time, driving "nancial intelligence across
[…]

What Is A
Manufacturing
KPI?
A manufacturing Key Performance Indicator
(KPI) or metric is a well de"ned and
quanti"able measure that the manufacturing
industry uses to gauge its performance over
time. Manufacturing companies speci"cally
use KPIs to monitor, analyze, and optimize
operations, often comparing their e!ciencies
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
2021 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 "ercely 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 pro"ts. 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 2021
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 speci"ed 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 "nal product, or even go as far as to
include delivery to the end user. Thus,
cycle time can be used to analyse overall
e!ciency of a manufacturing process
on the macro scale, as well as determine
ine!ciencies 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
speci"c time period and helps indicate
resource e#ectiveness. Low ratio
numbers indicate poor sales and
excessive inventory, while high ratio
numbers represent strong sales or
insu!cient inventory.

Inventory Turns = Cost of Goods Sold /

Avg. Inventory

5. Production Attainment – This

production performance metric
measures production levels over a
speci"c 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 pro"ts. 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
"nance. That is because it does.
However, "nancial 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 ("xed
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 de!ned 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 speci"c and set up
parameters that clearly de"ne your goal.
This goal needs to be something that
can be numerically de"ned (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 de"ned 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. Di#erent manufacturing
KPIs will have di#erent 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 sacri"cing 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 e#ectiveness of machinery
maintenance and the machine itself.
With e#ective 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 speci"cation the "rst
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 E"ectiveness (OEE)

– This key performance indicator is
considered the gold standard for
measuring manufacturing productivity.
The higher your OEE, the more e#ective
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 e!ciency. This calculation
takes the total cost of maintenance
(both preventative and emergency) and
divides it by the number of units
produced for a speci"ed 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 ine!ciencies in
scheduling and/or sta!ng.

Overtime Rate (Percentage) =

(Overtime Hours * 100) / Regular Hours

We have covered 20 di#erent 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 ine!cient 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 "ngertips. Gone

are the days of asking someone to bring
you weekly data updates from di#erent
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 e!cient 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 speci"c, 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 / Speci"ed 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 "xed 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 "ne-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
ine!cient process.

Scrap Rate = # of Scrap Units / Total #

of Units

Congratulations! You have now learned the

top 30 manufacturing KPIs to use in your 2021
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 o#er 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.

5 Things Not to do When

Choosing a KPI Reporting Tool

Download Now:

Business Email *

Primary Financial System

-- Select One --

Financial System Version

-- Select One --

I'd like to see a demo of insightsoftware

solutions

I agree to receive digital communications

from insightsoftware containing, news,
product information, promotions, or event
invitations. I understand that I can
withdraw my consent at any time. Privacy
Policy.

ACCESS NOW

Having trouble?

! " #

Related Resources

White Paper

Achieve Critical Time Savings for

Project-based Businesses

Brochure

Tidemark: Planning for the

Manufacturing Sector

Video

Modernize Your Finance & Project

Reporting With Live Deltek Data – In
Excel

Webinar

Maximize Your Aptean Manufacturing

Data With Real-Time Margin Analysis
Reporting

Articles

Predictive Analytics in Action:

Manufacturing

Sample Report

Manufacturing KPI Dashboard

Customer Story

ABM’s Audit Process Amped Up With

Jet Reports

Products
Angles
Atlas
Bizview
Calumo
Certent
Clausion
CXO Software
Dundas
Hubble
IDL
Jet (Jet Global)
Legerity Financials
Logi Analytics
Longview
Magnitude
Mekko Graphics
Spreadsheet Server
Tidemark
Viareport
Wands

Solutions
Financial Reporting
Business Intelligence
Budgeting & Planning
Consolidation and Close
Dashboards
Data Migration
Data Warehouse
Financial Planning & Analysis Software
Power BI Integration
Sample Reports
Tax
Transfer Pricing

Partners
Oracle
Microsoft
SAP
Oracle EBS
Oracle ERP Cloud
Oracle HFM
JD Edwards
D365 for Finance & SCM
Dynamics 365 Business Central
NetSuite
Deltek
MRI Software
Over 140+ ERP & EPM Systems

About
About Us
Careers
User Community
Become a Partner
Contact
Legal

© insightsoftware. All Rights Reserved.

Terms of Use Privacy Policy Trust & Security