Manufacturing is based on delivering quality and quantity products to the market on schedule. Using manufacturing KPIs can help you determine strengths and weaknesses that can direct you toward improvements in all phases of your production cycle.
Manufacturing KPIs are key performance indicators and we’ll go into greater detail about the definition and why manufacturing KPIs are so important. Then we’ll list the 10 most important manufacturing KPIs and conclude with how project management software can help you track those manufacturing KPIs.
What Are Manufacturing KPIs?
Manufacturing KPIs are like any KPI in that they’re a metric to quantifiably measure performance over time; in this case, the KPIs focus on manufacturing. In terms of manufacturers, these KPIs are used to monitor, analyze and optimize operations. Teams can use the data to compare to their previous output and see how they compare to their competitors while pinpointing inefficiencies.
This is useful information to improve production by capturing what’s working and where there’s room to improve. That can mean reducing waste or even automating processes to keep production teams focused on more important tasks while the smaller tasks are taken off their plate. Having KPIs provide insights into challenges and successes in manufacturing operations that can be resolved or exploited.
When defining metrics to use for KPIs, it’s best to follow the SMART method. This is a technique that stands for specific, measurable, actionable, realistic and time-based. For example, you don’t want to set a goal that’s unrealistic and cannot be achieved regardless of how much hard work is put in. Also, whatever goals are decided upon, it helps to have actionable steps to get there.
Whatever manufacturing KPIs you choose, you need to see them in real time rather than seeing a record of what’s already occurred. If you’re looking at old data, then you’re not sure what’s happening on the production line and your response will lag compared to the actual progress and performance of your production team. That’s why collecting manufacturing KPIs with project management software is recommended.
ProjectManager is online project management software that uses real-time data to show your manufacturing schedule as it evolves. You can get a high-level view of your production process with our live dashboard that captures metrics such as time, costs, workload and more and displays them in easy-to-read charts and graphs so you can immediately see your progress and performance. There’s no time-consuming configuration necessary as with lightweight tools. Our real-time dashboard is ready when you are.
Why Are Manufacturing KPIs Important?
Manufacturers who want to stay competitive and succeed in business are going to benefit by using manufacturing KPIs. Otherwise, you’re just going by your gut. As good as your instincts might be, without quantifiable data to back them up, you’re only guessing and you’re not going to motivate production teams, executives, investors and so forth.
Look for an industry leader in manufacturing and you’ll find a company that uses manufacturing KPIs to increase their speed to market without adding excess expenses to their process. The manufacturing KPIs point the way forward, which could lead to automation, reducing waste or having only the inventory on hand that you need rather than wasting money on unnecessary warehouse space.
There are as many reasons why manufacturers should use KPIs as there are KPIs. For example, you can uncover opportunities in your manufacturing cycle that were previously unaware of. These opportunities can lead to greater customer satisfaction, which not only improves your competitiveness but strengthens brand loyalty. You might even find ways to reduce costs, which customers will also like. Manufacturing KPIs need to be reviewed regularly and adjusted as needed to keep you on track.
10 Manufacturing KPIs Examples
By now, you should be sold on the effectiveness of manufacturing KPIs. But so far we’ve only been talking about the subject without getting into specifics. There are many different KPIs and each company has to determine what’s right for them by seeing how they align with the company’s goals. As we noted earlier, manufacturing KPIs also must be specific and measurable and provide an achievable value. Here are 10 of the most common manufacturing KPIs.
1. Cost Per Unit (CPU)
The cost per unit is how much money you’re spending for each item produced. This is an extremely important manufacturing KPI in order for you to determine a profitable price point for your product. Therefore, take all associated costs into consideration, such as materials, overhead, depreciation, labor and so forth, and then divide that by the number of units manufactured.
2. Lead Time (LT)
Lead time is how long it takes for customers to get your product after an order has been placed. Lead time can be measured by adding the order process time with the production lead time and the delivery lead time.
3. On-Time Delivery (OTD)
While not specifically related to manufacturing or production, this is a valuable KPI in that getting product to customers when they expect it is a make-or-break for your company. To calculate this KPI, you need to multiply the units delivered on time by 100 and then divide that figure by the number of units you have delivered. This creates a percentage of products that you’ve delivered on time to your customers.
4. Production Volume
Production volume measures the output for a period of time. This is how manufacturers can benchmark their manufacturing efficiency and understand the total units that are manufactured by the factory. It’s determined by the total number of products manufactured over a specific time period.
5. Production Downtime
Production downtime is the amount of time a factory’s production lines are not operating. This covers both planned downtime and unplanned downtime. Naturally, the less downtime you have, the more productive your manufacturing. To figure out production downtime add up all the downtime over a specific timeframe.
6. Overall Operations Effectiveness (OOE)
Overall operations effectiveness is performance (percentage of time your plant is working at full capacity) multiplied by quality (the quality units produced in terms of a percentage of all units started) by availability (actual production time as a percentage of scheduled time to operate). Machine maintenance isn’t included in availability.
7. Overall Equipment Effectiveness (OEE)
Overall equipment effectiveness measures how productive your manufacturing plant is with no downtime by percentage. It can be calculated by multiplying performance by quality by availability. This helps you know how long equipment on your production line can operate at its peak. In this calculation, you do include machine maintenance downtime.
8. Total Effective Equipment Performance (TEEP)
Total effective equipment performance measure utilization. It shows how your production is doing compared to if it was running all the time, all year, while always producing quality products. Again, this is determined by performance multiplied by quality by availability.
9. Capacity Utilization
Capacity utilization measures how much of a production plant’s total available capacity is being used. It helps manufacturers determine how efficient their processes are and can show the way to be more productive. It’s calculated by dividing the total capacity used during a specific timeframe by the total available production capacity and multiplying that figure by 100.
10. First Pass Yield (FPY)
A first-pass yield is the number of non-defective products that don’t require any reworking in your first run at the plant. It can help you find issues in your manufacturing process. To calculate this manufacturing KPI, divide the number of non-defective products by the total number of products manufactured.
ProjectManager Helps You Track Manufacturing KPIs
ProjectManager is award-winning project management software that helps manufacturers monitor KPIs in real time. Manufacturers can get a high-level view of production metrics whenever they want by toggling over to the live dashboard. But they can also set up production schedules on Gantt charts, manage workflows on kanban boards and track milestones with calendars. All project views are updated together so you’re always working on the most current data no matter which tool you’re using.
Get More Detail With Customizable Reports
When you schedule your production on our Gantt charts and then set the baseline, you can then track the planned effort against the actual effort in real time. This is reflected not only in the real-time dashboard but also in reporting features. You can generate status reports and portfolio reports if you manage more than one production line and many other reports with a keystroke. All reports can be filtered to show only the data you want to see. They can also be easily shared in multiple formats to keep stakeholders updated.
Another manufacturing KPI that we didn’t mention is our roundup of human resources. Our resource management features help you track your production team’s workload. Knowing how many jobs each member of the production line is responsible for can help you ensure that each is working at capacity without being over-allocated. It’s easy to see how your resources are allocated by viewing our color-coded workload chart. Now you can see at a glance who has too much work and who has too little. Then, right from the workload chart, you can reallocate your resources and balance your production team’s workload to make them more productive.
Beyond measuring manufacturing KPIs, our software has automation with task approval to ensure that only quality moves through the production cycle. You can customize workflows to gain efficiencies and do more with less labor. There are also risk management tools to track issues in your production line until they’re resolved.
Related Manufacturing Content
- What Is Lean Manufacturing?
- Just-In-Time Manufacturing & Production (JIT): A Quick Guide
- Manufacturing Overhead: Definition, Formula and Examples
- 10 Free Manufacturing Excel Templates
ProjectManager is award-winning software that tracks manufacturing KPIs in real time. Our multiple project views give you Gantt charts to plan your production, kanban boards to manage workflow and much more. Plus, our collaborative platform makes it easy to share files, comment and more. Get started with ProjectManager today for free.