In any manufacturing business, efficiency is everything. From your production line to the manufacturing process, your performance data can provide valuable insights that will help you grow your business and maintain quality.
The most effective way to gather this data is by setting KPIs. Your KPIs will help measure the different aspects of your business, allowing you to create data reports and make improvements based on your insights.
Take a look at the 25 best examples of manufacturing KPIs to help you inform your data management strategy.
What does KPI stand for in manufacturing?
The term KPI stands for Key Performance Indicator. Manufacturing KPIs or manufacturing metrics are a type of measure that is defined, quantifiable, and provides information about performance. Manufacturing companies use KPIs to monitor and assess performance, using insights to improve processes and boost operational efficiency.
Manufacturing KPIs can be used to monitor various aspects of your manufacturing process, ensuring manufacturing cycle efficiency and more effective management of manufacturing costs. They can also prove valuable for other areas of the company to provide insight to inform areas such as marketing and human resources.
Using Key Performance Indicators to improve your business
Key Performance Indicators can help manufacturing businesses measure performance against objectives and goals. Effective manufacturing KPIs can inform decisions around labor, suppliers, and raw materials costs, to ensure the best possible outcomes for the business.
KPIs can enhance the production process, manufacturing process, and production line performance, providing clear and informative metrics. Not all manufacturing KPIs are relevant to all businesses, but you can tailor your KPIs to ensure you measure the most useful data for your manufacturing company.
25 manufacturing KPI examples to use in 2022
KPIs to enhance the production process
Overall Equipment Effectiveness (OEE)
Overall Equipment Effectiveness is another key metric for production efficiency. It uses data from scheduled production time to measure your equipment effectiveness. Using OEE can highlight data anomalies that can indicate a problem. Swift identification enables solutions and maintenance can be actioned swiftly to limit production disruption.
OEE is calculated by measuring Availability x Performance x Quality.
Machine Downtime forms a part of OEE measurement, but it can also provide an overview of operations performance. Machine Downtime includes unscheduled downtime and scheduled downtime, covering maintenance, machine changeover time, and setup time.
Unscheduled downtime can have a significant impact on your production schedule. With preventative and scheduled maintenance, you can minimize unscheduled downtime, keeping performance at a higher volume to ensure normal system operation.
Cycle Time can be a very useful metric for your production process. It measures the overall time taken from the beginning of the manufacturing process to the delivery of the product to the end customer.
Machine Set-Up Time
Machine Set-Up Time impacts production, and an understanding of how long this process takes can help you implement processes that reduce lost production time. Machine Set-Up Time metrics could also help identify periods where setup can take place without causing disruption to the overall production.
Production Volume provides a basic metric of how much you are able to produce during a defined period. It can help to highlight your best-performing machines and production lines, allowing you to make contingencies in the event of a breakdown or high periods of absences.
Overall Operations Effectiveness (OOE)
Overall Operations Effectiveness is a useful metric to determine the effectiveness of your production process and how this improves over time. It is calculated by measuring Performance x Quality x Availability (Operation or Actual Production Time).
Percentage Planned Maintenance
Percentage Planned Maintenance can be useful to measure the rate of scheduled maintenance versus unscheduled maintenance. It can give manufacturers an indication of where preventative maintenance can help to avoid unscheduled downtime.
Percentage Planned Maintenance could be used alongside the total maintenance cost of unscheduled downtime, demonstrating the benefits of planned maintenance.
Customer Return Rate
Customer returns can highlight quality issues with manufactured products. If customer returns are high due to defective products, this could indicate problems during the manufacturing or production process. Zero returns is the ultimate goal here, indicating customer satisfaction.
A Customer Return Rate KPI can also benefit other areas of your business, such as your customer service or marketing teams.
KPIs to enhance the manufacturing process
First Pass Yield
Another crucial manufacturing KPI, First Pass Yield will determine the number of products that are manufactured correctly first-time. The higher the number, the better for your business.
First Pass Yield rates provide valuable insight into the effectiveness of your manufacturing processes. They also evidence the ability of your workers to produce quality results on the first manufacturing attempt.
Throughput is a crucial manufacturing KPI. It determines the production capacity of either a machine, production line, or the entire operation over a defined time period.
Put simply, Throughput measures the number of units produced within an hour, day, week, etc.
Rework metrics highlight the number of units that need reworking due to quality issues. Rework can cost a manufacturing plant time and money due to the additional raw materials used.
High levels of Rework can indicate a need for further or additional training for your production line.
Cost Per Unit
Your manufacturing cost per unit is an essential metric for your business. The cost per unit highlights the total cost of manufacturing a product, including production costs, materials, labor, and others.
Your Cost Per Unit is a key performance indicator that allows you to price your product, helping to identify your profit margins for each of your manufactured products.
You could combine this metric with others to assess the impact different events (such as maintenance or supply chain descriptions) can have on your unit manufacturing cost.
Inventory Turnover Ratio/Inventory Turns
Storing high levels of inventory has several consequences for your business. It’s stock that takes up essential production space and isn’t making a profit by sitting in your plant. A high inventory turnover ratio can indicate effective supply chain management and helps make a business more agile in its response to customer demands.
Inventory accuracy is an important element of the manufacturing process, ensuring your inventory levels are correct for your needs.
Supplier On-Time-In-Full (OTIF)
Supplier On-Time-In-Full (OTIF) is an optional KPI to measure the performance of your suppliers. If there are delays from suppliers, your production line could be affected, in addition to your other KPIs.
Multiple reports of low OTIF rates may indicate it’s time to switch to a different supplier.
KPIs to boost production line performance
Capacity utilization measures the capacity used versus the available capacity of your production line. A higher capacity utilization rate indicates materials, equipment, and workspaces have high usage rates, providing better value for money.
Capacity utilization can also help inform resource allocation, ensuring resources are appropriately allocated across different manufacturing lines.
On-Time Delivery is a Key Performance Indicator that reflects the number of products delivered on time.
The reason why On-Time Delivery is important is that this figure should be at 100%. A 100% result shows that the products were delivered on time to the customer (something that should be a key objective for manufacturers), while also helping to motivate your production line.
Instances, where On-Time Delivery is lower than 100%, will highlight the need to improve your production processes.
Production Schedule Attainment
Effective planning is a must for successful manufacturing, and a Production Schedule Attainment KPI can help you assess the efficiency of production workers and whether targets are met. It’s calculated by measuring the Actual Output/Planned Output x 100.
Over time, Production Schedule Attainment can identify trends throughout the calendar year that may impact your ability to meet your targets. This will allow you to adjust your processes to drive improvements.
On Standard Operating Efficiency
On Standard Operating Efficiency provides data on employee performance compared to your defined labor standards. This can be useful to identify areas where improvements are needed and to address individual performance.
On Standard Operating Efficiency can also help provide the data to help with incentive management within your company.
When combined with other key performance indicators, Training Hours can provide useful insights on the level of training needed to help drive KPIs such as Revenue Per Employee.
Training is an essential part of any business, ensuring employees know how to perform their roles correctly, which can help reduce employee turnover and prevent accidents.
It’s possible to make some relevant correlations between Training Hours KPIs and Production Volume, On Standard Operating Efficiency, and other manufacturing metric types.
Employee Turnover is an important metric for any business or organization. Turnover rates reflect the levels of happiness within an organization. If your turnover is high, it’s vital to investigate the reasons why.
High turnover can also correspond to quality-based manufacturing KPIs. Newer employees may need additional training to reach the levels of units produced by more experienced employees on the manufacturing line.
Reported Health and Safety Incidents
Health and safety standards need to be maintained to ensure a safe and happy work environment. It should be a priority for any business in the manufacturing industry to achieve a Reported Health and Safety Incidents rate of zero.
Accidents can impact a company’s finances, morale, and the personal lives of its employees. If there are high rates of reported health and safety incidents, additional training and improved safety measures may be required.
Revenue Per Employee
Your Revenue Per Employee metric provides a basic key performance indicator that measures the effectiveness of your operations. You can use this metric to analyze whether things are improving or declining or maintaining a steady level.
Revenue Per Employee can also give some useful insights when looking at growth or expansion and whether there are benefits to bringing in additional employees.
Profit Per Employee
Profit Per Employee can also serve as a key manufacturing KPI. It shows how well your business is doing, and identify opportunities to increase your profits.
Absenteeism impacts businesses in many ways. In manufacturing, absenteeism can lead to production downtime and lower production volume rates.
Absenteeism at high volumes can also be a cause for concern. During a situation like a pandemic, for example, absenteeism can become severe. It can also be an indicator of employee happiness and satisfaction.
An Absenteeism Rate of 1.5% should be considered normal. If a rate increases much more than this, further investigation may be required. Workplace health and wellbeing programs could be one method of reducing your absenteeism rate.
Capturing your manufacturing KPIs
The list of manufacturing KPIs is extensive, covering everything from your total manufacturing cost to your employee happiness rates. Finding ways to capture this data effectively can help you improve your overall operating efficiency and help you identify trends within your business.
The most effective way of capturing your manufacturing metrics is through a manufacturing KPI dashboard. Your dashboard can provide at-a-glance and detailed information to help inform decision-making, reporting, and more. Thanks to technology, a manufacturing KPI dashboard is easy to manage, with many methods for capturing data automatically.
PerformOEE™ has an incredibly powerful built-in analytics engine that already displays many of these Manufacturing KPIs in eye-catching and easily interpreted Dashboards. Our Dashboards Module allows your management and production teams to create specific dashboards, tailored to each department or requirement, containing all the reports and data needed to assess productivity in a multitude of ways such as by line, product, shift or time period. Data can be presented as units, frequency or percentage and gives a variety of visual representations be they graphs, charts or paretos.
The KPI examples above should provide you with an overview of the types of manufacturing KPIs you can use to monitor, evaluate and improve your manufacturing processes. Identify the metrics most relevant to your business objectives to help you capture useful data insights for your manufacturing company.