Kpi's in Manufacturing
Transform Operations, Enhance Productivity, and Drive Growth with Data-Driven Insights.
Business Question: How much can we produce over a specified time period?
Definition: The production capabilities of a machine, line, or plant.
Description: Throughput is a fundamental KPI in manufacturing, representing the number of units produced over a specific time period. It helps in evaluating the efficiency and capacity of production operations, enabling managers to identify bottlenecks and optimize production processes.
Formula: Throughput = # of Units Produced / Time (hour or day)
Calculation Example: If a line produces 500 units in 8 hours, Throughput = 500 / 8 = 62.5 units/hour.
Type of Chart: Line Chart
Colour Tune: Blue
Business Question: How long does it take to produce a product?
Definition: The average amount of time it takes to produce a product.
Description: Cycle Time is crucial for analyzing the efficiency of manufacturing processes. It measures the time taken to complete a product from start to finish, helping in pinpointing inefficiencies and areas for improvement. This KPI can be used to optimize processes and reduce production time.
Formula: Cycle Time = Process End Time – Process Start Time
Calculation Example: If a product starts at 8:00 AM and finishes at 4:00 PM, Cycle Time = 4:00 PM – 8:00 AM = 8 hours.
Type of Chart: Bar Chart
Colour Tune: Green
Business Question: What is our total output during a specific period?
Definition: The total number of units produced in a given period.
Description: Production Volume measures the total output achieved by the production processes. This KPI is vital for understanding the scale of production and for planning resources and capacity. It also helps in tracking progress towards production goals and meeting market demand.
Formula: Production Volume = Sum of all units produced in a given period.
Calculation Example: If 300 units are produced on Monday, 400 on Tuesday, and 500 on Wednesday, Production Volume = 300 + 400 + 500 = 1200 units.
Type of Chart: Column Chart
Colour Tune: Orange
Business Question: How much of our total capacity are we utilizing?
Definition: The percentage of total production capacity that is being utilized.
Description: Capacity Utilization is a ratio that indicates the extent to which a manufacturing entity uses its installed productive capacity. It helps in determining the efficiency of production and identifying underutilized resources that can be optimized for better performance.
Formula: Capacity Utilization = (Actual Factory Utilization / Total Productive Capacity) * 100
Calculation Example: If the factory's actual utilization is 800 hours and the total capacity is 1000 hours, Capacity Utilization = (800 / 1000) * 100 = 80%.
Type of Chart: Gauge Chart
Colour Tune: Purple
Business Question: Are we meeting the production pace required to meet customer demand?
Definition: The maximum permissible amount of time that can be spent manufacturing a product while still meeting a client's deadline.
Description: Takt Time helps in aligning production pace with customer demand. It ensures that production processes are scheduled efficiently to meet delivery deadlines without overburdening resources. This KPI is essential for maintaining a balanced workflow and preventing delays.
Formula: Takt Time = Net Available Time / Customer's Daily Demand
Calculation Example: If net available time is 480 minutes and customer demand is 60 units per day, Takt Time = 480 / 60 = 8 minutes per unit.
Type of Chart: Line Chart
Colour Tune: Yellow
Business Question: How often are we meeting our production targets?
Definition: The percentage of time a target production level is achieved.
Description: Production Attainment measures how consistently production targets are met. It helps in assessing the reliability of production processes and identifying factors that may affect target achievement. This KPI is useful for setting realistic production goals and improving process stability.
Formula: Production Attainment = (# of Periods Production Target Met / Total Time Periods) * 100
Calculation Example: If production targets are met in 20 out of 25 periods, Production Attainment = (20 / 25) * 100 = 80%.
Type of Chart: Bar Chart
Colour Tune: Green
Business Question: What is the cost associated with producing each unit?
Definition: The total cost associated with manufacturing a product on a per unit basis.
Description: Manufacturing Cost Per Unit provides insights into the cost efficiency of production processes. By tracking this KPI, companies can identify areas where costs can be reduced, such as raw materials, labor, and overhead. It is crucial for pricing products competitively and maintaining profitability.
Formula: Manufacturing Cost Per Unit = Total Manufacturing Cost / # of Units Produced
Calculation Example: If the total manufacturing cost is $100,000 and 10,000 units are produced, Manufacturing Cost Per Unit = 100,000 / 10,000 = $10/unit.
Type of Chart: Column Chart
Colour Tune: Blue
Business Question: How much overtime are employees working compared to regular hours?
Definition: The amount of overtime worked by employees as a percentage of regular hours.
Description: Overtime Rate helps in understanding workforce management and identifying inefficiencies in scheduling and staffing. A high overtime rate may indicate understaffing or poor planning, leading to increased labor costs and employee fatigue. Monitoring this KPI can help optimize workforce allocation.
Formula: Overtime Rate = (Overtime Hours / Regular Hours) * 100
Calculation Example: If employees work 200 overtime hours and 1000 regular hours, Overtime Rate = (200 / 1000) * 100 = 20%.
Type of Chart: Bar Chart
Colour Tune: Red
Business Question: How efficiently are we using our assets to generate revenue?
Definition: The efficiency with which a company uses its assets to generate revenue.
Description: Asset Turnover indicates how well a company is utilizing its assets to produce income. A higher ratio signifies efficient use of assets, while a lower ratio may suggest underutilization. This KPI is essential for assessing the return on investment in production equipment and facilities.
Formula: Asset Turnover = Revenue / Total Assets
Calculation Example: If revenue is $1,000,000 and total assets are $500,000, Asset Turnover = 1,000,000 / 500,000 = 2.
Type of Chart: Column Chart
Colour Tune: Purple
Business Question: How productive is our workforce in generating revenue?
Definition: The average revenue generated by each employee.
Description: Revenue Per Employee measures the overall productivity and efficiency of the workforce. It provides insights into how effectively employees are contributing to the company's financial performance. This KPI can help in workforce planning, training, and development strategies to enhance productivity.
Formula: Revenue Per Employee = Total Revenue / Number of Employees
Calculation Example: If total revenue is $2,000,000 and there are 100 employees, Revenue Per Employee = 2,000,000 / 100 = $20,000 per employee.
Type of Chart: Pie Chart
Colour Tune: Orange
Business Question: What percentage of products are manufactured to specification the first time?
Definition: The percentage of products that meet quality standards without requiring rework or scrap.
Description: First Pass Yield is a crucial KPI in quality control, measuring the efficiency of the production process in producing defect-free products on the first attempt. A high FPY indicates effective production processes and high-quality standards, reducing costs associated with rework and scrap.
Formula: FPY = (Quality Units / Total Units Produced) * 100
Calculation Example: If 950 out of 1000 units meet quality standards, FPY = (950 / 1000) * 100 = 95%.
Type of Chart: Pie Chart
Colour Tune: Green
Business Question: How frequently do defects occur in the products we produce?
Definition: The number of defects per unit produced.
Description: Defect Density measures the occurrence of defects within the production process. This KPI helps identify areas where quality issues are prevalent, enabling targeted improvements and ensuring product quality. Lower defect density signifies higher quality and fewer production issues.
Formula: Defect Density = Total Defects / Total Units Produced
Calculation Example: If there are 20 defects in 1000 units, Defect Density = 20 / 1000 = 0.02 defects per unit.
Type of Chart: Bar Chart
Colour Tune: Red
Business Question: What percentage of products meet quality standards on the first attempt without rework?
Definition: The percentage of products that meet quality standards on the first attempt without requiring rework.
Description: Right First Time is a measure of production precision and reliability. It assesses how well the production process is performing in producing quality products from the start, reducing costs and time associated with rework. High percentages indicate strong quality control processes.
Formula: Right First Time = (Units Meeting Quality Standards / Total Units Produced) * 100
Calculation Example: If 980 out of 1000 units are right the first time, Right First Time = (980 / 1000) * 100 = 98%.
Type of Chart: Line Chart
Colour Tune: Blue
Business Question: What proportion of our products are returned by customers?
Definition: The percentage of products returned by customers due to defects or quality issues.
Description: The Rate of Return KPI is an important measure of customer satisfaction and product quality. High return rates can indicate underlying issues in the production process or materials used, necessitating immediate attention to improve quality and reduce return costs.
Formula: Rate of Return = (Number of Returned Units / Total Units Sold) * 100
Calculation Example: If 50 out of 2000 units are returned, Rate of Return = (50 / 2000) * 100 = 2.5%.
Type of Chart: Column Chart
Colour Tune: Orange
Business Question: How effective is our overall production process?
Definition: A comprehensive measure of production efficiency, taking into account availability, performance, and quality.
Description: OOE evaluates the effectiveness of production operations by considering multiple factors: availability of equipment, performance of processes, and quality of output. This KPI provides a holistic view of production efficiency, identifying areas for improvement to enhance productivity.
Formula: OOE = Availability * Performance * Quality
Calculation Example: If availability is 90%, performance is 95%, and quality is 98%, OOE = 0.90 * 0.95 * 0.98 = 0.8361 or 83.61%.
Type of Chart: Gauge Chart
Colour Tune: Purple
Business Question: How much time is lost due to production equipment being non-operational?
Definition: The total time when production equipment is not operational due to maintenance or failures.
Description: Production Downtime is a critical KPI for identifying inefficiencies and areas for improvement in the manufacturing process. Minimizing downtime is essential for maximizing productivity and ensuring that production schedules are met. This KPI helps in proactive maintenance planning.
Formula: Production Downtime = Downtime Hours / Total Operational Hours
Calculation Example: If there are 30 hours of downtime in a 300-hour period, Production Downtime = 30 / 300 = 0.10 or 10%.
Type of Chart: Stacked Bar Chart
Colour Tune: Red
Business Question: How much time is lost when switching from one production task to another?
Definition: The amount of time required to switch from one production task or product line to another.
Description: Changeover Time measures the efficiency of the production process in transitioning between different tasks or products. Reducing changeover time is vital for improving overall production efficiency and reducing idle time. This KPI helps in streamlining processes and optimizing resource allocation.
Formula: Changeover Time = Net Available Time - Production Time
Calculation Example: If the net available time is 500 minutes and production time is 450 minutes, Changeover Time = 500 - 450 = 50 minutes.
Type of Chart: Line Chart
Colour Tune: Yellow
Business Question: What are the total financial expenditures involved in the manufacturing process?
Definition: The total costs associated with the manufacturing process, including materials, labor, and overhead.
Description: Production Costs KPI tracks all financial expenditures in the manufacturing process. This KPI is crucial for budgeting and identifying potential savings. Understanding production costs helps in setting competitive pricing, managing expenses, and maintaining profitability.
Formula: Production Costs = Sum of all costs (materials, labor, overhead)
Calculation Example: If materials cost $50,000, labor costs $30,000, and overhead costs $20,000, Production Costs = 50,000 + 30,000 + 20,000 = $100,000.
Type of Chart: Area Chart
Colour Tune: Blue
Business Question: How much money have we saved by spending on preventative maintenance?
Definition: The estimated amount of money saved by spending on preventative maintenance.
Description: Avoided Cost measures the financial benefits of investing in preventative maintenance. By comparing the costs of preventative maintenance with the potential costs of repairs and production losses, this KPI demonstrates the value of proactive maintenance strategies in reducing overall expenses.
Formula: Avoided Cost = Assumed Repair Cost + Production Losses - Preventative Maintenance Cost
Calculation Example: If assumed repair cost is $20,000, production losses are $15,000, and preventative maintenance cost is $10,000, Avoided Cost = 20,000 + 15,000 - 10,000 = $25,000.
Type of Chart: Column Chart
Colour Tune: Green
Business Question: How effective is our machinery considering both operational and non-operational time?
Definition: A measure of the absolute effectiveness of machinery, considering both operational and non-operational time.
Description: TEEP evaluates the full potential of equipment by considering its effectiveness during both production and downtime. This KPI helps in understanding the maximum capability of machinery, identifying areas for improvement, and optimizing equipment usage to enhance productivity.
Formula: TEEP = (Total Production Time / Total Time Available) * 100
Calculation Example: If total production time is 700 hours and total time available is 1000 hours, TEEP = (700 / 1000) * 100 = 70%.
Type of Chart: Radar Chart
Colour Tune: Purple
Business Question: How many times is our inventory sold over a specific time period?
Definition: The number of times inventory is sold and replaced over a specific time period.
Description: Inventory Turns is a critical measure of inventory management efficiency. High inventory turns indicate strong sales or efficient inventory management, while low inventory turns suggest overstocking or weak sales. This KPI helps optimize inventory levels and reduce holding costs.
Formula: Inventory Turns = Cost of Goods Sold / Average Inventory
Calculation Example: If the cost of goods sold is $500,000 and the average inventory is $100,000, Inventory Turns = $500,000 / $100,000 = 5.
Type of Chart: Line Chart
Colour Tune: Blue
Business Question: How much raw material will we need to meet future customer demand?
Definition: An estimate of the amount of raw materials required to meet future customer demand.
Description: Demand Forecasting helps in planning inventory levels by estimating future customer demand. Accurate demand forecasting ensures that the company has the right amount of inventory to meet customer needs without overstocking, thus reducing inventory costs and improving customer satisfaction.
Formula: Projected Customer Demand = Raw Materials * Production Rate
Calculation Example: If raw materials needed are 500 units and the production rate is 2 units per hour, Projected Customer Demand = 500 * 2 = 1000 units.
Type of Chart: Area Chart
Colour Tune: Green
Business Question: How long does it take from the initial cash outlay for inventory until receiving cash from customers?
Definition: The time it takes from initial cash outlay for raw materials or inventory until receiving cash from customers.
Description: Cash to Cash Cycle Time measures the duration of time that cash is tied up in the production and sales process. Reducing this time is crucial for improving cash flow and operational efficiency, as shorter cycle times mean quicker reinvestment of cash into the business.
Formula: Cash to Cash Cycle Time = Inventory Sale Date - Inventory Purchase Date
Calculation Example: If the inventory was purchased on January 1 and sold on January 31, Cash to Cash Cycle Time = January 31 - January 1 = 30 days.
Type of Chart: Bar Chart
Colour Tune: Orange
Business Question: What are the total financial expenditures involved in the manufacturing process?
Definition: The total costs associated with the manufacturing process, including materials, labor, and overhead.
Description: Production Costs KPI tracks all financial expenditures in the manufacturing process. This KPI is crucial for budgeting and identifying potential savings. Understanding production costs helps in setting competitive pricing, managing expenses, and maintaining profitability.
Formula: Production Costs = Sum of all costs (materials, labor, overhead)
Calculation Example: If materials cost $50,000, labor costs $30,000, and overhead costs $20,000, Production Costs = 50,000 + 30,000 + 20,000 = $100,000.
Type of Chart: Area Chart
Colour Tune: Blue
Business Question: How does the actual material usage compare to the estimated requirement?
Definition: A comparison between the estimated amount of material required for a product and the actual amount used.
Description: Material Yield Variance is a lean manufacturing KPI that highlights the efficiency of material usage. A high variance indicates wastage or inefficiencies in the production process, while a low variance suggests optimal material use. This KPI helps in reducing material costs and improving production efficiency.
Formula: Material Yield Variance = Actual Material Use / Expected Material Use
Calculation Example: If the actual material use is 950 units and the expected material use is 1000 units, Material Yield Variance = 950 / 1000 = 0.95 or 95%.
Type of Chart: Pie Chart
Colour Tune: Yellow
Business Question: What is the cost associated with producing each unit over time?
Definition: The total cost associated with producing each unit, including direct and indirect costs.
Description: Unit Costs KPI monitors and adjusts the cost per unit of production. This KPI is essential for pricing strategies and profitability analysis. By tracking unit costs, companies can identify cost-saving opportunities and ensure competitive pricing.
Formula: Unit Costs = Total Production Costs / Number of Units Produced
Calculation Example: If the total production costs are $100,000 and 10,000 units are produced, Unit Costs = $100,000 / 10,000 = $10 per unit.
Type of Chart: Column Chart
Colour Tune: Green
Business Question: How accurate are our inventory records compared to the physical inventory?
Definition: A measure of how well inventory records match the physical inventory.
Description: Inventory Accuracy is a crucial KPI for effective inventory management. High accuracy ensures that inventory records reflect the actual stock levels, reducing the risk of stockouts and overstocking. This KPI helps in maintaining accurate inventory levels and improving operational efficiency.
Formula: Inventory Accuracy = (Accurate Inventory Count / Total Inventory Count) * 100
Calculation Example: If 950 out of 1000 inventory records are accurate, Inventory Accuracy = (950 / 1000) * 100 = 95%.
Type of Chart: Stacked Bar Chart
Colour Tune: Blue
Business Question: How long does it take from placing an order to receiving it?
Definition: The time taken from placing an order to receiving it.
Description: Lead Time is a critical KPI for inventory management, affecting the ability to meet customer demand and manage inventory levels. Shorter lead times improve responsiveness to market changes and customer needs, while longer lead times require higher inventory levels to prevent stockouts.
Formula: Lead Time = Order Receipt Date - Order Placement Date
Calculation Example: If an order is placed on January 1 and received on January 10, Lead Time = January 10 - January 1 = 9 days.
Type of Chart: Line Chart
Colour Tune: Red
Business Question: How often do we run out of inventory over a specified period?
Definition: The frequency of stockouts, or instances when inventory runs out, over a specified period.
Description: Stockout Rate measures the effectiveness of inventory management in meeting customer demand. A high stockout rate indicates insufficient inventory levels, leading to missed sales opportunities and dissatisfied customers. This KPI helps in optimizing inventory levels to balance supply and demand.
Formula: Stockout Rate = (Number of Stockouts / Total Inventory Requests) * 100
Calculation Example: If there are 5 stockouts in 100 inventory requests, Stockout Rate = (5 / 100) * 100 = 5%.
Type of Chart: Bar Chart
Colour Tune: Orange
Business Question: What is the total cost of holding inventory?
Definition: The total cost of holding inventory, including storage, insurance, and taxes.
Description: Carrying Cost of Inventory KPI tracks the expenses associated with holding inventory. High carrying costs can significantly impact profitability, making it essential to optimize inventory levels and reduce unnecessary holding costs. This KPI helps in efficient inventory management and cost control.
Formula: Carrying Cost of Inventory = (Inventory Holding Cost / Average Inventory Value) * 100
Calculation Example: If the inventory holding cost is $20,000 and the average inventory value is $200,000, Carrying Cost of Inventory = ($20,000 / $200,000) * 100 = 10%.
Type of Chart: Column Chart
Colour Tune: Yellow
Business Question: How often is our machinery not operational?
Definition: A measure of the total downtime of machinery, including both scheduled and unscheduled downtime.
Description: Machine Downtime Rate is a critical KPI for understanding the operational efficiency of manufacturing equipment. High downtime rates can indicate frequent breakdowns, inefficient maintenance schedules, or operational issues. Reducing downtime is essential for maximizing production efficiency and meeting production targets.
Formula: Machine Downtime Rate = (Downtime Hours / (Downtime Hours + Operational Hours)) * 100
Calculation Example: If the downtime is 50 hours and operational hours are 450, Machine Downtime Rate = (50 / (50 + 450)) * 100 = 10%.
Type of Chart: Bar Chart
Colour Tune: Red
Business Question: What proportion of our maintenance is planned versus unplanned?
Definition: The ratio of scheduled maintenance to total maintenance.
Description: Percentage Planned Maintenance helps evaluate the effectiveness of maintenance planning. High percentages indicate a proactive approach to maintenance, reducing the likelihood of unexpected breakdowns and downtime. This KPI is crucial for improving machine reliability and operational efficiency.
Formula: Percentage Planned Maintenance = (Planned Maintenance Hours / Total Maintenance Hours) * 100
Calculation Example: If planned maintenance hours are 80 and total maintenance hours are 100, Percentage Planned Maintenance = (80 / 100) * 100 = 80%.
Type of Chart: Pie Chart
Colour Tune: Blue
Business Question: How much does maintenance cost per unit produced?
Definition: The total maintenance cost divided by the number of units produced.
Description: Maintenance Cost Per Unit measures the efficiency of maintenance activities in relation to production output. Lower costs indicate efficient maintenance practices, while higher costs may suggest excessive or inefficient maintenance. This KPI helps in optimizing maintenance budgets and improving cost management.
Formula: Maintenance Cost Per Unit = Total Maintenance Cost / Number of Units Produced
Calculation Example: If the total maintenance cost is $50,000 and 10,000 units are produced, Maintenance Cost Per Unit = $50,000 / 10,000 = $5 per unit.
Type of Chart: Column Chart
Colour Tune: Green
Business Question: How long do we lose in production when switching from one product to another?
Definition: The amount of time lost when switching a production line from one product to another.
Description: Changeover Time is a critical KPI for understanding the efficiency of production processes. Minimizing changeover time is essential for maximizing production capacity and reducing downtime. This KPI helps in identifying bottlenecks and improving production scheduling.
Formula: Changeover Time = Net Available Time - Production Time
Calculation Example: If net available time is 480 minutes and production time is 450 minutes, Changeover Time = 480 - 450 = 30 minutes.
Type of Chart: Line Chart
Colour Tune: Yellow
Business Question: How effective is our manufacturing equipment?
Definition: A measure of manufacturing productivity considering availability, performance, and quality.
Description: OEE is a comprehensive KPI that evaluates the effectiveness of equipment in the production process. A high OEE score indicates that the equipment is operating at its full potential. This KPI helps identify areas for improvement in equipment performance, maintenance, and production processes.
Formula: OEE = Availability * Performance * Quality
Calculation Example: If availability is 90%, performance is 95%, and quality is 98%, OEE = 0.90 * 0.95 * 0.98 = 0.8361 or 83.61%.
Type of Chart: Radar Chart
Colour Tune: Orange
Business Question: How effective is our machinery maintenance and the machine itself?
Definition: The ratio of downtime to operating time, indicating the effectiveness of machinery maintenance and operation.
Description: Downtime to Operating Time measures the proportion of time machinery is down relative to its operating time. A lower ratio indicates better maintenance practices and more reliable machinery. This KPI is essential for identifying and addressing inefficiencies in maintenance and operations.
Formula: Downtime to Operating Time = Downtime / Operating Time
Calculation Example: If downtime is 50 hours and operating time is 450 hours, Downtime to Operating Time = 50 / 450 = 0.111 or 11.1%.
Type of Chart: Bar Chart
Colour Tune: Red
Business Question: What percentage of products meet quality standards on the first attempt?
Definition: The percentage of products manufactured to specification the first time, without rework.
Description: FPY is a key quality metric that measures the efficiency of the production process. A high FPY indicates that most products meet quality standards without needing rework, reducing waste and production costs. This KPI helps in identifying and addressing quality issues in the production process.
Formula: First Pass Yield = (Number of Quality Units / Total Units Produced) * 100
Calculation Example: If 950 out of 1000 units meet quality standards, FPY = (950 / 1000) * 100 = 95%.
Type of Chart: Column Chart
Colour Tune: Blue
Business Question: What is the absolute effectiveness of our machinery?
Definition: A measure of the absolute effectiveness of machinery, considering both operational and non-operational time.
Description: TEEP is a comprehensive KPI that evaluates the full potential of equipment, including downtime for maintenance and other pauses in production. High TEEP indicates optimal use of equipment capacity. This KPI helps in maximizing equipment utilization and identifying improvement areas in maintenance and operations.
Formula: TEEP = (Total Productive Time / Total Time Available) * 100
Calculation Example: If total productive time is 400 hours and total time available is 500 hours, TEEP = (400 / 500) * 100 = 80%.
Type of Chart: Radar Chart
Colour Tune: Green
Business Question: How effectively are we using our machinery?
Definition: A measure of how effectively the machinery is used relative to its full capacity.
Description: Machine Utilization KPI assesses the actual usage of machinery compared to its full potential. High utilization rates indicate efficient use of machinery, while low rates suggest underutilization. This KPI helps in optimizing production scheduling and resource allocation.
Formula: Machine Utilization = (Actual Run Time / Available Run Time) * 100
Calculation Example: If actual run time is 420 hours and available run time is 500 hours, Machine Utilization = (420 / 500) * 100 = 84%.
Type of Chart: Line Chart
Colour Tune: Yellow
Business Question: How well are we adhering to our planned maintenance schedules?
Definition: A measure of adherence to planned maintenance schedules.
Description: Maintenance Schedule Compliance KPI evaluates how effectively the maintenance team follows the planned maintenance schedules. High compliance rates indicate proactive maintenance practices, reducing the risk of unexpected breakdowns. This KPI helps in ensuring reliable equipment operation and improving maintenance planning.
Formula: Maintenance Schedule Compliance = (Completed Planned Maintenance / Scheduled Maintenance) * 100
Calculation Example: If 45 out of 50 scheduled maintenance tasks are completed, Maintenance Schedule Compliance = (45 / 50) * 100 = 90%.
Type of Chart: Pie Chart
Colour Tune: Blue
