Exploring Manufacturing KPIs: KPI Examples and KPI Template

What are Manufacturing KPIs?

Manufacturing KPIs, or Key Performance Indicators in manufacturing- measure, monitor, manage and analyse the performance and effectiveness of various production processes within a manufacturing organisation. Manufacturing KPIs serve as quantifiable measurements that help organisations track progress towards achieving specific organisational goals and strategic objectives related to production quality, quantity, efficiency, and overall operational excellence. By monitoring and analysing manufacturing Key Performance Indicators, companies can identify improvement areas, make data-driven decisions, and drive continuous process improvement across the entire manufacturing lifecycle.

"What are the 5 Key Performance Indicators for manufacturing?" is a common inquiry made by production managers or supervisors in the manufacturing industry. For this question, it's noteworthy to mention some common Key Performance Indicators examples for manufacturing, including Overall Equipment Effectiveness (OEE), Production Yield, Downtime Percentage, First Pass Yield (FPY), On-Time Delivery (OTD), Inventory Turnover Ratio, and Scrap Rate. Effective utilisation of manufacturing KPIs allows organisations to enhance process visibility, identify bottlenecks, minimise waste, improve resource allocation, and achieve greater competitiveness in the dynamic landscape of modern manufacturing industries.

Why are KPIs important in Manufacturing?

Manufacturing KPIs provide manufacturers with actionable insights into their operational performance and strategic alignment. Manufacturing companies use Key Performance Indicators (KPIs) to monitor, analyse, manage and optimise manufacturing operations. Moreover, monitoring KPIs enables manufacturers to proactively address issues, minimise downtime, and ensure the smooth operation of production activities. Ultimately, manufacturing KPIs promote informed decision-making, foster a culture of continuous improvement, and empower manufacturers to achieve their business objectives effectively. Thus, manufacturers must track manufacturing KPIs to maximise their profitability and meet the ever-evolving demands of the market.

Manufacturing Key Performance Indicators Vs Manufacturing Metrics

How to maximise Production Efficiency with Manufacturing KPIs?

Enhancing production efficiency with manufacturing KPIs involves real-time tracking or monitoring of Key Performance Indicators (KPIs) aligned with strategic objectives, such as Overall Equipment Effectiveness (OEE), Throughput, and Cycle time. By regularly monitoring these KPIs, manufacturers can pinpoint inefficiencies, streamline processes, and allocate resources effectively. Analysing manufacturing KPI data enables informed decision-making to address bottlenecks, reduce downtime, and enhance productivity. Implementing continuous improvement initiatives based on KPI insights fosters a culture of efficiency and innovation within the organisation.

Utilising technology and automation to capture real-time KPI data facilitates proactive problem-solving and ensures timely adjustments to optimise production performance. Digital performance tracking and strategic planning platforms like the Balanced Scorecard Software can be a perfect fit for manufacturing businesses to track, monitor, manage and analyse the KPI data. Production supervisors can easily interpret the performance of Key Performance Metrics for production planning and control using manufacturing KPI dashboards within the Balanced Scorecard Software solution to enhance the overall performance of manufacturing operations.

How do you choose the best Manufacturing KPIs for your business?

Choosing the best Manufacturing Key Performance Indicators (KPIs) for your business requires careful consideration and alignment with your organisational goals, priorities, and specific operational needs. Additionally, you can utilise a KPI evaluation checklist if you are new to setting manufacturing KPIs for your business.

A predetermined KPI checklist template guides you easily through each step of selecting manufacturing KPIs for your business. The Manufacturing KPI checklist helps you consider all relevant factors and make informed decisions when selecting the most appropriate manufacturing metrics or KPIs for your organisation.

Here are the steps that you should take to set up manufacturing KPIs and metrics for your business:

• Identify Strategic Objectives: Begin by understanding your business's strategic objectives. What are the overarching goals you aim to achieve? Whether improving efficiency, enhancing product quality, reducing costs, or increasing customer satisfaction, your KPIs should directly support these objectives.
• Map Processes: Analyse your manufacturing processes to identify key areas where performance measurement is crucial. Consider aspects such as production, quality control, inventory management, maintenance, and supply chain operations.
• Consult Stakeholders: Engage stakeholders across different levels of the organisation, including management, production staff, quality assurance teams, and supply chain personnel. Their insights can help identify critical metrics and ensure buy-in for the chosen KPIs.
• Focus on Critical Metrics: Prioritise KPIs and metrics that directly impact your business's performance and align closely with your strategic objectives. These could include production metrics like production efficiency, quality control, equipment uptime, inventory turnover, and customer satisfaction.
• Consider Industry Standards: Research industry benchmarks and best practices to gain insights into commonly used KPIs within your manufacturing sector. While industry standards can provide valuable guidance, ensure that selected metrics are relevant and tailored to your specific business.
• Ensure Measurability: Choose Key Performance Indicators for manufacturing operations management that are Specific, Measurable, Achievable, Relevant, and Time-bound (SMART). Clear and consistent data collection methods are essential for accurate performance evaluation and decision-making. For instance, you can use real-time manufacturing KPI tracking software like the Balanced Scorecard to ensure accuracy in the data collected for KPI analysis.
• Set Realistic Targets: Establish realistic targets or benchmarks for each selected KPI based on historical data, industry standards, and organisational capabilities. Ensure that targets are challenging yet achievable to motivate performance improvement.
• Review and Refine: Continuously review and refine your set of Manufacturing KPIs to ensure they remain relevant and effective. As business priorities evolve and operational dynamics change, periodically assess whether existing KPIs still align with strategic objectives and adjust as necessary.

Industry-specific Manufacturing KPIs you should consider and never ignore

Let's explore 12 best manufacturing KPIs that demand your attention and strategic focus within your specific industry. These manufacturing KPIs are important for assessing performance, optimising processes, and achieving operational excellence. Understanding why these manufacturing KPIs are essential, their calculation formulas, and who should monitor them is crucial for driving success and staying competitive in your manufacturing sector.

1. Delivery Manufacturing KPIs

• On-Time Delivery (OTD)
  • The purpose of tracking this manufacturing KPI: It evaluates your capability to meet customer orders by the agreed-upon date, serving as a measure for both carrier and fleet performance and customer satisfaction.
  • The formula for calculating this manufacturing KPI:
    
    OTD Rate = (Successful Deliveries/Total Deliveries) x 100
  • Who should monitor this manufacturing KPI?
    Production managers, logistics teams, and customer service representatives.

  2. Manufacturing Production KPIs

  • Throughput
    • The goal of observing this manufacturing KPI: To assess the efficiency of production machines, determine how many units they can produce over a specific period and identify opportunities for optimisation.
    • The formula for calculating this manufacturing KPI:
      
      Throughput = Number of Units Produced/Total Time of Production
    • Who should monitor this manufacturing KPI?
      Machine operators, Maintenance technicians, and Production supervisors.
  • Overall Equipment Effectiveness (OEE)
    • Why should you track this manufacturing KPI: To assess the efficiency of production equipment, identify opportunities for improvement, and benchmark production lines and equipment.
    • The formula for calculating this manufacturing KPI:
      
      OEE = Availability x Performance x Quality
    • Who should prioritise tracking this manufacturing KPI?
      Production managers, Maintenance engineers, and Plant supervisors.
  • Total Cycle Time
    • The objective behind tracking this manufacturing KPI: It assesses the production efficiency, monitoring how well production is managed to maximise output
    • The formula for estimating this manufacturing KPI:
      
      Cycle Time = Net Production Time (NPT)/Number of Produced Units
    • Who should observe this manufacturing KPI?
      Production managers, process engineers, and quality assurance teams.

  3. Cost & Profitability Manufacturing KPIs

  • Manufacturing Cost Per Unit
    • The purpose of observing this manufacturing KPI: To measure the average cost to produce a single unit of a product, helping to assess cost-effectiveness and profitability.
    • The formula for calculating this manufacturing KPI:
      
      Manufacturing Cost Per Unit = Total production costs/Number of Units Produced
    • Who must track this manufacturing KPI?
      Finance managers, Cost accountants, and Production supervisors.

  4. Efficiency Manufacturing KPI

  • Production Attainment
    • The intention behind monitoring this manufacturing KPI: It can signal potential problems with machinery, planning, or defects, which can lower the production rate. Enhancing this rate aims to reap cost and quality advantages.
    • The formula for computing this manufacturing KPI:
      
      Production Attainment = (Actual Output/Planned Output) x 100
    • Who should track this manufacturing KPI?
      Production planners, production supervisors, and operations managers.
  • Capacity Utilisation
    • The purpose of observing this manufacturing KPI: To ensure that production machines are operating at their maximum capacity, optimising resource utilisation.
    • The formula for computing this manufacturing KPI:
      
      Capacity Utilisation = (Actual Output/Potential Output) x 100
    • Who should track this manufacturing KPI?
      Plant managers, Production planners, and Maintenance engineers. .

  5. Performance Manufacturing KPI

  • Changeover Time
    • The goal in observing this manufacturing KPI:To minimise downtime between production runs and improve overall production efficiency.
    • The formula for estimating this manufacturing KPI:
      
      Changeover Time = Net Available Time – Production Time
    • Who should monitor this manufacturing KPI?
      Production engineers, Machine operators, and Maintenance technicians.

  6. Quality Manufacturing KPIs

  • First Pass Yield (FPY)
    • The purpose of tracking this manufacturing KPI:To measure the percentage of products manufactured without defects and identify areas for quality improvement.
    • The formula for calculating this manufacturing KPI:
      
      First Pass Yield (FPY) = (Number of Good Units Produced / Total Number of Units Produced) x 100
    • Who should track this manufacturing KPI?
      Quality control inspectors, Production supervisors, and Process engineers.
  • Scrap Rate
    • The intention behind monitoring this manufacturing KPI:To quantify material waste and implement strategies to reduce scrap generation.
    • The formula for calculating this manufacturing KPI:
      
      Scrap Rate = (Number of Discarded Units/Total Product Run) x 100
    • Who should track this manufacturing KPI?
      Material handlers, Quality assurance teams, and Production managers.

  7. Lean Manufacturing KPIs

  • Planned Maintenance Percentage (PMP)
    • The goal of observing this manufacturing KPI:To minimise emergency maintenance and optimise equipment reliability.
    • The formula for calculating this manufacturing KPI:
      
      Planned Maintenance Percentage = (Planned Maintenance Time/Total Maintenance Time) x 100
    • Who must monitor this manufacturing KPI?
      Maintenance managers, Reliability engineers, and Plant supervisors.
  • Machine Downtime Rate
    • The goal of observing this manufacturing KPI:To quantify the time manufacturing equipment is non-operational due to unplanned downtime, identify opportunities for improving equipment reliability and minimise production disruptions.
    • The formula for calculating this manufacturing KPI:
      
      Machine Downtime Rate = (Total Downtime/Planned Production Time) x 100
    • Who can benefit from monitoring this manufacturing KPI?
      Maintenance managers, Production engineers, and Equipment operators.

  These KPIs cover critical aspects of manufacturing operations and are essential for driving continuous improvement and achieving business objectives. Monitoring them can help organisations identify areas for optimisation, enhance efficiency, and maintain a competitive edge in the market.

How to keep Track of your Manufacturing KPI Data?

Tracking Manufacturing KPI data is crucial for strategic planning and management. The Balanced Scorecard (BSC) is a strategic tool for comprehensively tracking and managing Manufacturing Key Performance Indicators (KPIs) relevant for driving production success. The Balanced Scorecard framework provides a holistic view of manufacturing performance by integrating various manufacturing KPIs across the four Balanced Scorecard perspectives, aligning with organisational goals and objectives. Here's how you can benefit from using a Balanced Scorecard for tracking manufacturing KPIs in real-time:

• Strategic Alignment: Align manufacturing KPIs with overall business objectives and strategies.
• Multiple Perspectives: Incorporate KPIs from Financial, Customer, Internal processes, and Learning & Growth (FCIL) perspectives to provide a well-rounded view of organisational performance.
• Clear Objectives: Define clear objectives and targets for each KPI to guide performance measurement and improvement efforts
• Regular Monitoring: Continuous monitoring of KPIs to track progress, identify improvement areas, and drive corrective actions.
• Communication: Facilitate communication and alignment across different levels of the organisation by sharing Balanced Scorecard reports and insights.
• Continuous Improvement: Use the Balanced Scorecard framework to drive continuous improvement initiatives and strategic decision-making in manufacturing operations.

How do Manufacturing KPIs contribute to lean manufacturing practices?

Manufacturing Key Performance Indicators (KPIs) facilitate lean manufacturing practices by providing measurable insights into operational performance and efficiency. By tracking KPIs such as Cycle time, Throughput, Scrap rates, and Overall Equipment Effectiveness (OEE), organisations can identify areas for improvement and waste reduction in their production processes. These KPIs serve as metrics for evaluating the effectiveness of lean initiatives, enabling continuous improvement efforts to enhance productivity, minimise lead times, optimise resource utilisation, and deliver greater value to customers. Through the strategic alignment of KPIs with lean manufacturing principles such as Just-in-Time (JIT) production, continuous flow, and waste elimination, organisations can drive sustainable growth, operational excellence, and competitive advantage in a dynamic manufacturing environment.

Best Practices for presenting your Manufacturing KPI Dashboard Templates

• Identify your Audience and Objectives: Determine who will be using the dashboard and for what purpose, ensuring that the displayed KPIs align with their informational needs and strategic goals.
• Select Appropriate Manufacturing KPIs and Metrics: Choose relevant Key Performance Indicators (KPIs) and metrics for the manufacturing industry that directly reflect the performance and efficiency of manufacturing processes, focusing on those that drive actionable insights and decision-making.
• Utilise Suitable Charts and Visuals: Present KPIs for manufacturing operations using charts and visuals that effectively communicate trends, patterns, and comparisons. Based on the nature of the data, select formats such as bar graphs and line charts.
• Ensure Clarity with Labels and Colours: Label KPIs and data points clearly and consistently, employing colours to highlight key information and maintain visual coherence throughout the manufacturing production KPI dashboard.
• Implement Filters and Interactivity Thoughtfully: Incorporate filters and interactive elements to allow users to customise their dashboard views and drill down into specific KPI data segments, enhancing usability and relevance for diverse user groups.
• Test and Refine your Manufacturing KPI Dashboard Design: Continuously test and refine the manufacturing production KPI dashboard layout, functionality, and usability based on user feedback and performance metrics, ensuring that it remains intuitive, informative, and aligned with evolving business needs.

How often should Manufacturing KPIs be reviewed and adjusted?

• Identify Your Audience and Objectives: Determine who will be using the KPI dashboard for manufacturing and for what purpose, ensuring that the displayed KPIs align with their informational needs and strategic goals.
• Select Appropriate KPIs and Metrics: Choose relevant Key Performance Indicators (KPIs) and metrics that directly reflect the performance and efficiency of manufacturing processes, focusing on those that drive actionable insights and decision-making.
• Utilise Suitable Charts and Visuals: Present KPIs using charts and visuals that effectively communicate trends, patterns, and comparisons. Select formats such as bar graphs and line charts based on the nature of the data.
• Ensure Clarity with Labels and Colours: Label data points and KPIs for manufacturing operations clearly and consistently, employing colours to highlight key information and maintain visual coherence throughout the KPI dashboard for manufacturing.
• Implement Filters and Interactivity Thoughtfully: Incorporate filters and interactive elements to allow users to customise their dashboard views and drill down into specific data segments, enhancing usability and relevance for diverse user groups.
• Test and Refine your Manufacturing KPI Metrics Dashboard Design: Continuously test and refine the dashboard layout, functionality, and usability based on user feedback and performance metrics, ensuring that it remains intuitive, informative, and aligned with evolving business needs.

How do you overcome the challenges of selecting the right Manufacturing KPIs for your factory?

• Identifying Relevant KPIs: Conduct thorough stakeholder consultations and assessments to identify key business objectives and performance drivers, ensuring alignment with strategic priorities and operational needs.
• Data Availability and Quality: Invest in data collection and Data Management Systems (DMS) to ensure data integrity and accessibility, implementing data validation and verification protocols to enhance reliability.
• Balancing Leading and Lagging Indicators: Integrate a mix of leading and lagging indicators into your KPI (Key Performance Indicators) framework, leveraging leading indicators to drive proactive decision-making and lagging indicators to assess past performance and validate results.
• Avoiding Information Overload: Prioritise KPIs that directly align with strategic objectives and operational priorities, maintaining a manageable number of metrics to ensure clarity, relevance, and actionable insights.
• Finding new Improvement Opportunities: Establish a regular review cadence to evaluate KPI performance, adapt to changing business conditions, and identify opportunities for refinement and optimisation.

Why do manufacturers prefer a Balanced Scorecard Software over a Manufacturing KPI Software?

Manufacturers often opt for Balanced Scorecard Software over Manufacturing KPI Software due to its strategic focus and comprehensive approach to performance management.

Manufacturing KPI examples

These are just a few examples of the diverse range of manufacturing KPIs used to monitor and improve performance across different facets of manufacturing operations. Depending on a manufacturing organisation's specific goals and priorities, additional KPIs may be implemented to measure and manage performance effectively.

• Production KPIs: Overall Equipment Effectiveness (OEE), Cycle Time and Throughput
• Efficiency KPIs: Capacity Utilisation, Downtime Percentage and Setup Time
• Quality KPIs: Net Promoter Score (NPS), Customer Retention Rate and Cost of High Quality (COHQ)
• Inventory Management KPIs: Inventory Turnover Ratio, Cost per Unit and Return on Investment (ROI)
• Cost KPIs: Cost Variance (CV), Cost per acquisition (CPA), Cost-Per-Lead (CPL)
• Procurement KPIs: Supplier defect rate, Rate of emergency purchases and Supplier lead time
• Delivery KPI: On-time Delivery (OTD), Lead Time and Order Fulfilment Rate
• Lean Manufacturing KPIs: Labour Productivity Rate, Supplier Defect Rate, Capacity Utilisations Rate
• Safety KPIs: Lost Time Injury Frequency Rate (LTIFR), Near Miss Frequency Rate (NMFR) and Safety Compliance