{"id":713,"date":"2017-04-03T14:23:32","date_gmt":"2017-04-03T14:23:32","guid":{"rendered":"https:\/\/www.mrpeasy.com\/blog\/?p=713"},"modified":"2024-12-18T10:23:08","modified_gmt":"2024-12-18T10:23:08","slug":"kpis-important-manufacturing","status":"publish","type":"post","link":"https:\/\/www.mrpeasy.com\/blog\/kpis-important-manufacturing\/","title":{"rendered":"Which KPIs are Important in Manufacturing?"},"content":{"rendered":"\n<p><strong>We have updated this article, you can find it here &#8211; <\/strong><a rel=\"noreferrer noopener\" aria-label=\"Top Manufacturing KPIs (opens in a new tab)\" href=\"https:\/\/www.mrpeasy.com\/blog\/manufacturing-performance-indicator\/\" target=\"_blank\"><strong>Top Manufacturing KPIs<\/strong><\/a><strong>.<\/strong><\/p>\n\n\n\n<p><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.mrpeasy.com\/blog\/wp-content\/uploads\/2017\/04\/kpi_1280x720-1024x576.jpg\" alt=\"\" class=\"wp-image-714\" srcset=\"https:\/\/www.mrpeasy.com\/blog\/wp-content\/uploads\/2017\/04\/kpi_1280x720-1024x576.jpg 1024w, https:\/\/www.mrpeasy.com\/blog\/wp-content\/uploads\/2017\/04\/kpi_1280x720-300x169.jpg 300w, https:\/\/www.mrpeasy.com\/blog\/wp-content\/uploads\/2017\/04\/kpi_1280x720-768x432.jpg 768w, https:\/\/www.mrpeasy.com\/blog\/wp-content\/uploads\/2017\/04\/kpi_1280x720.jpg 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<p>Being a highly competitive manufacturing company means that you should have all your major KPI\u2019s in place since it is barely possible to improve the efficiency of your production processes without being able to track their performance.<\/p>\n\n\n\n<!--more-->\n\n\n\n<p><em>You can also listen to this article:<\/em><\/p>\n\n\n\n<iframe loading=\"lazy\" title=\"Which KPIs are Important in Manufacturing?\" height=\"122\" width=\"100%\" style=\"border: none;\" scrolling=\"no\" data-name=\"pb-iframe-player\" src=\"https:\/\/www.podbean.com\/media\/player\/7es9v-d4fb7f?from=pb6admin&amp;download=1&amp;version=1&amp;auto=0&amp;share=1&amp;download=1&amp;rtl=0&amp;fonts=Helvetica&amp;skin=1&amp;pfauth=&amp;btn-skin=103\"><\/iframe>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #343333;color:#343333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #343333;color:#343333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.mrpeasy.com\/blog\/kpis-important-manufacturing\/#What_is_key_or_manufacturing_performance_indicator_or_KPI\" >What is key (or manufacturing) performance indicator, or KPI?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.mrpeasy.com\/blog\/kpis-important-manufacturing\/#Selecting_the_right_performance_metrics\" >Selecting the right performance metrics<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.mrpeasy.com\/blog\/kpis-important-manufacturing\/#Focus_on_KPIs_that_matter\" >Focus on KPIs that matter<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.mrpeasy.com\/blog\/kpis-important-manufacturing\/#1_Overall_Equipment_Effectiveness_%E2%80%93_OEE\" >1.&nbsp;Overall Equipment Effectiveness &#8211; OEE<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.mrpeasy.com\/blog\/kpis-important-manufacturing\/#2_Yield_or_First_Time_Through_KPI\" >2.&nbsp;Yield or First Time Through KPI<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.mrpeasy.com\/blog\/kpis-important-manufacturing\/#3_Production_Downtime\" >3.&nbsp;Production Downtime<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.mrpeasy.com\/blog\/kpis-important-manufacturing\/#4_On-Time_Delivery\" >4. On-Time Delivery<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.mrpeasy.com\/blog\/kpis-important-manufacturing\/#The_power_of_KPIs\" >The power of KPIs<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_key_or_manufacturing_performance_indicator_or_KPI\"><\/span>What is key (or manufacturing) performance indicator, or KPI?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In the manufacturing industry, KPIs are also known as MPIs (<strong>manufacturing performance indicators<\/strong>), which are basically the same. KPI is a set of data that reflects or measures efficiency, capability and effectiveness of various manufacturing aspects.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Selecting_the_right_performance_metrics\"><\/span>Selecting the right performance metrics<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Depending on your particular industry, there might be more specific <strong>KPIs<\/strong> that you need to measure and improve, but there are a few indicators that are used by most manufacturers, and we will briefly describe what they are.<\/p>\n\n\n\n<p>In addition, when figuring out which manufacturing performance indicators matter the most in your industry, we suggest relying on a rule of thumb that a KPI must be:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Specific<\/li>\n\n\n\n<li>Measurable<\/li>\n\n\n\n<li>Actionable<\/li>\n\n\n\n<li>Aligned with goals<\/li>\n\n\n\n<li>Up-to-date<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Focus_on_KPIs_that_matter\"><\/span>Focus on KPIs that matter<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Keep in mind that decisions based on unreliable metrics with high probability can lead to risky or fatal decisions, so if you are unable to meet most of the requirements above, it would be better to exclude such metrics. For example, if you are unable to influence the metric, then what is the use of measuring it?<\/p>\n\n\n\n<p>Also, due to a large number of possible metrics (there are at least 28 common key performance indicators used in manufacturing, according to <a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"http:\/\/www.mesa.org\" target=\"_blank\">MESA<\/a>), it is better to focus on several ones that play the main role in your manufacturing business.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Overall_Equipment_Effectiveness_%E2%80%93_OEE\"><\/span>1.&nbsp;Overall Equipment Effectiveness &#8211; OEE<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>OEE<\/strong> is widely used as one of the main KPIs among manufacturers in different industries, from electronics to pharmaceutical. OEE is a metric that shows how manufacturing assets perform related to their theoretical maximum capacity. OEE combines several measurements, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Availability<\/strong><\/li>\n<\/ul>\n\n\n\n<p>For how much of the planned timeframe was the machinery available?<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Performance<\/strong><\/li>\n<\/ul>\n\n\n\n<p>Ideally, both machinery and people are working at full capacity, but in reality, there is a gap caused by machinery not operating correctly, or workers underperforming.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Quality<\/strong><\/li>\n<\/ul>\n\n\n\n<p>Low quality output means lost output; that\u2019s why quality is as important as availability and performance.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Yield_or_First_Time_Through_KPI\"><\/span>2.&nbsp;Yield or First Time Through KPI<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The first time yield (<strong>FTY<\/strong>) or first time through (<strong>FTT<\/strong>) key performance indicator measures production efficiency and quality. FTT, or Yield, reflects the number of units produced without defects or additional improvements against the total number of produced items.<\/p>\n\n\n\n<p>The formula to calculate this metric is simple: (Total Items Produced \u2013 Defective Items) \/ Items Produced.<\/p>\n\n\n\n<p>Any units that do not meet the quality standards after the production process are considered to be defective items. FTT is usually higher when the production process is not fully set up, or is done manually.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Production_Downtime\"><\/span>3.&nbsp;Production Downtime<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Production downtime<\/strong> is a period when the manufacturing process is on hold and no products are produced. Such terms as: Idle time, downtime or off line period usually relate to the same KPI.<\/p>\n\n\n\n<p>Usually, this KPI shows a ratio of downtime to operating time, and is directly related to the availability of assets for production.<\/p>\n\n\n\n<p>Downtime is a critical metric, since if, for some reason, no product is being produced, there will be a loss. There might be various reasons why the whole production is on stop, beginning with human factors, or mistakes, and ending with broken equipment. It is also a good practice to record the reasons for downtime and try to reduce them in the future.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_On-Time_Delivery\"><\/span>4. On-Time Delivery<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>On-time delivery,<\/strong> or sometimes called <strong>Perfect Order Rate,<\/strong> is a performance indicator which measures the amount of perfectly finished goods shipped to the customer in full and on time. This KPI shows how well the agreed-upon deadlines are met. On-time delivery is a <a href=\"https:\/\/www.mrpeasy.com\/blog\/supply-chain-kpis\/\" target=\"_blank\" rel=\"noreferrer noopener\">supply chain efficiency metric<\/a>, which can reveal processes or bottlenecks that negatively affect delivery.<\/p>\n\n\n\n<p>To calculate on-time delivery, one must divide the total number of delivered on-time items by the total number of shipped items. The reason why this metric is so important is because customers meeting or missing the deadline could mean a loss or profit, which directly impacts the level of customer satisfaction.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_power_of_KPIs\"><\/span>The power of KPIs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Remember that KPIs are intended to make changes and improvements to your manufacturing processes, based on reliable and accurate data.<\/p>\n\n\n\n<p>Simply monitoring KPIs, without setting tactical and strategic plans and milestones, is useless. The \u201cP\u201d in KPI is for performance &#8211; this is what really matters for any successful business, not only in manufacturing and this is why KPI\u2019s play such an important role.<\/p>\n\n\n\n<p>More information on KPIs:&nbsp;<a href=\"https:\/\/www.mrpeasy.com\/blog\/manufacturing-performance-indicator\/\" target=\"_blank\" rel=\"noreferrer noopener\">Top 10 most important manufacturing performance measures<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>We have updated this article, you can find it here &#8211; Top Manufacturing KPIs. Being a highly competitive manufacturing company means that you should have all your major KPI\u2019s in place since it is barely possible to improve the efficiency of your production processes without being able to track their performance.<\/p>\n","protected":false},"author":1,"featured_media":714,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[94],"tags":[25,3],"class_list":["post-713","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tips","tag-kpis","tag-manufacturing"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Which KPIs are Important in Manufacturing? - Blog for Manufacturers and Distributors<\/title>\n<meta name=\"description\" content=\"What key performence indicators (KPIs) are the most important in manufacturing business and why? 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