manufacturing kpi formulas

KPIs let manufacturers know whether they are on course for success, if they are growing, and where issues may be present within their businesses. Unused capacity expenditures or the cost of unused capacity measures how much available capacity from machines, people, etc. They are able to translate between the protocols, or languages, used by local devices into the protocols used by the cloud where the data will be further processed. Production Attainment = Periods when Production Target Met/Total Time Periods in Schedule. A company uses the following financial ratios to evaluate its business. Downtime is considered the largest source of lost production time for manufacturing, which makes this an incredibly important metric. 14. 9. Projected Customer Demand = Raw materials * Production Rate. Labor usage is a metric that calculates how much of the time someone is working is spent working versus how much time is spent idle, or otherwise. This can highlight a production scheduling issue. Net Available Time – Production Time = Changeover Time. (Provided by OSHA). This data-driven practice... What is an Edge Device and Why Is It Essential... What is an Edge Device? Takt Time = workable production hours / units required (customer demand). If you’re serious about your business growth and want to follow metrics actively, then it is a must tool for you. 28. Overtime Hours/Regular Hours X 100%=Overtime Rate. In the Calculation Area, right-click the measure that serves as the base measure (value) of the KPI, and then click Delete KPI.. Manufacturing Cost As A Percentage Of Revenue = total manufacturing costs / overall revenue, Manufacturing Cost Per Unit is the breakdown of all the fixed and variable costs that are encountered in the process of producing a single product, Manufacturing Cost Per Unit =  manufacturing costs / total number of units produced during a given period. Asset utilization is a metric used to understand efficiency. Manufacturing Cycle Time is a related metric that measures the speed or time it takes to manufacture a given product. Mean Time Between Failure = number of operational hours / number of failures. Manufacturing Cycle Efficiency measures “value-added time as a percentage of throughput time.”, Manufacturing Cycle Efficiency = Value-added time / Throughput time. Common KPI’s tracked monthly on the manufacturing dashboard embodies this idea and is a best practice. Time To Productivity is how long it takes a new hire to contribute to an organization. Profit Per Employee is the measure of net Income for the past twelve months divided by the current number of full-time equivalent employees. Calculate factory utilization by dividing actual factory utilization by your total productive capacity. Asset Utilization = (Actual Output/Maximum Capacity) x 100. According to Quantzig, leading oil and gas OEMs are looking to digital technology like IIoT to improve decision-making processes, and to tap new revenue streams to improve profitability. Note that this is a metric used for repairable systems. This is an exhaustive list of Key Performance Indicators (KPIs) for a Manufacturing Operations Manager. KPIs are the financial and non-financial metrics that help to determine the effectiveness of the technology and systems employed in manufacturing products. When pen-and-paper methods of tracking job efficiency left AccuRounds’ engineers and managers in the dark, the shop switched to MachineMetrics. Percentage Planned Maintenance = # of planned maintenance hours ÷ # of total maintenance hours × 100. Maintenance Cost Per Unit is the total maintenance cost divided by the number of produced units in a given period of time. Manufacturing Cycle Time is a related metric that measures the speed or time it takes to manufacture a given product. The opportunity gap is, “the difference between what an asset is capable of producing and what it actually produces.” To calculate the opportunity gap KPI, subtract maximum capacity from the actual output. “[T]he result is cost avoidance—if and only if it is reasonably sure that the charge will arrive, absent the action.” Using machine breakdowns as an example, the avoided cost KPI could be calculated by subtracting preventative maintenance costs from an assumed repair cost plus productivity losses connected to the downtime. Machine Set Up Time = Time machine is prepared for next run - time completed last part of previous run. 3. It can be difficult to separate fact from fiction with so many myths proliferating across the internet. The difference is in our technology. On one hand, this sounds like a great thing. Production Attainment measures the percentage of time a target level of production is attained within a specified schedule. Divide actual output by maximum capacity and multiply the result by 100 to calculate asset utilization. Return On Assets is a profitability ratio that provides how much profit a company is able to generate from its assets. Rhythm Systems is a cloud-based KPI dashboard system that recommends using some of the following 25 manufacturing KPIs and production KPIs for the manufacturing industry. Simply the number of non-compliance events within a given year. Mean time to failure is a metric used for repairable systems. Maintenance cost per unit “is total maintenance cost divided by the number of produced units in the measurement period. Throughput measures how much product a machine, line, unit, or plant produces within a given amount of time. Throughput is the amount of material or items passing through a system or process. Total Cycle Time is the total time from when an operation begins to when the operation ends. 2. A scorecard is a set of indicators grouped according to some rules:. KPIs are important for manufacturers because they are defined, measurable metrics that help businesses focus on what’s most important, so they can track, analyze, and optimize performance over a period of time. 33. incidents recorded during a set period of time. 4. is a metric that calculates how much of the time someone is working is spent working versus how much time is spent idle, or otherwise. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. What is an Edge Device and Why Is It Essential for IoT? Plant Downtime, also known as idle time, off line period or production downtime, is any time in which a manufacturing plant is off-line and not producing any products or adding value to the business and its customers. 10. First pass yield (FPY) is the number of units without rework or scrap defects exiting a process divided by the number of units entering the same process over a set time period. Overall Equipment Effectiveness provides a means to measure the percentage of planned manufacturing time that is productive. OEE is calculated by multiplying availability, performance and quality and is represented by a percentage and only considers scheduled time. Total Cycle Time = end time of operation – start time of operation, Total Manufacturing Cost Per Unit Excluding Materials is a measure of all potentially controllable manufacturing costs that go into the production of a given manufactured unit, item, or volume, Total Manufacturing Cost Per Unit Excluding Materials = (total manufacturing costs - cost of materials) / total number of units produced. is the average time between process completions. Inventory Turns is the ratio that measures the number of times inventory is sold or consumed in a given time period . Manufacturing KPIs can highlight progress towards goals set at various levels of a company. Together, the sum of these KPIs tells a story about the performance of the line, plant, and/or company. Inventory Carrying Cost = inventory holding sum / total value of inventory, then multiplied by 100. Overall Equipment Effectiveness - OEE Overall equipment effectiveness (OEE) is a performance metric or KPI that combines the measurement of plant availability, performance efficiency and quality of a specific plant, equipment or process. required to produce a specific unit or volume of production. Overtime as a percentage of total hours is a straightforward metric. In manufacturing, it measures the time taken for a product to pass through all machines, processes and cycles to become a finished product. Key performance indicators (KPIs) are calculations that help someone answer the question “How is X doing?”. However, we’ll cover how to calculate each. Net Operating Profit – Measures the financial profitability for all investors/shareholders/debt holders, either before or after taxes, for a manufacturing plant or business unit. Avoided Costs are expenses that will not be incurred by the manufacturers if the associated activity is no longer done. It is essential for retaining business and building customer loyalty. Inventory Carrying Costs are the total of all expenses related to storing unsold goods. There are a variety of variables to consider when calculating future demand, including historical sales, forecasts from suppliers, seasonal and economic changes, as well as unique business challenges and constraints. Work-in-process (WIP) is the value is partially completed goods. Material Yield Variance is the difference between the actual amount of material used and the standard amount expected to be used, multiplied by the standard cost of the materials. This website uses cookies to improve your experience while you navigate through the website. Employee Turnover = (Total number of leavers in a month / average number of employees in a month ) * 100. It is used by ERP and MES systems for scheduling, purchasing and production costing. As an industry leader in metal manufacturing, KPI Metals is proud to capitalize on our team’s extensive experience, our accessibility to cutting edge software and machinery, as well as our commitment to our customers. For a price, you get to record and track 28 manufacturing key performance indicators . Labor As A Percentage Of Cost is the percentage value of money spent on labor costs against the total revenue of the company during a specific period. While an effective measure of performance, especially at the factory floor, machine-specific level, OEE should ideally be used alongside other KPIs to gain greater clarity on performance from multiple angles. This manufacturing KPI is the rate of how many units on average a machine, cell or line is producing over time, i.e. Why Are KPIs Important for Manufacturers? It essentially tracks how much of a manufacturer’s production capacity is currently being utilized. Key performance indicators, herein after referred as KPIs, are calculated within a manufacturing execution system. If you have made it this far, you may be interested in our guide on the manufacturing analytics journey, which documents how manufacturers can progress in their analytical maturity and drive more advanced manufacturing programs. What is Total Manufacturing Cost Per Unit Excluding Materials? You can calculate Rolling Throughput Yield by multiplying the First Pass Yield of each process. This will help you understand whether you could fulfill an expansion with existing capacity, or if you need to adjust your production. 26. 25. is a metric used for repairable systems. Manufacturing Lead Time is the time period between the placement of an order and the shipment of the completed order to the customer. You can skip to any metric by selecting it in the table below, as well as jump directly to the "Manufacturing KPI Dashboards, Reports, and Templates" section. Unscheduled Downtime is simply the sum of all unscheduled downtime within a  given period. It is a straightforward system that measures a machine’s performance and productivity. In addition to the number of events, you may want to measure the length of time the plant was non-compliant, the reasons for non-compliance, and the way the event was resolved. Labor as a percentage of cost is a straightforward metric. 19. All tedious, error-prone, and inacurate methods of collecting and using data to drive decision-making. It is similar to overall availability, but uses planned production time, rather than total calendar time. Changeover Time is the time elapsed from the last good part of the previous run, to the first good part of the following run. There’s some controversy around which measure is more valuable. KPI example: Reduce unscheduled downtime to 4% by 01/12/2019 Asset Utilization is the total revenue earned for every dollar of assets owned. 7. Work-in-Process (Wip) = WIP inventory at beginning of period + WIP purchased during period - WIP inventory at end of period + labor costs + manufacturing overhead. Unplanned Capacity Expenditure = total capacity expenditures - planned capacity expenditures. Companies with a high turnover ratio are more efficient than those with a lower turnover. An Internal KPI is one of the most important indicators of the current performance level of an individual in achieving internal goals. Try it yourself with a 30-day free trial. Calculate this KPI by dividing the number of planned maintenance events against emergency maintenance events. It essentially measures how much of a manufacturing operation’s potential output is being met. Manufacturing & Production KPI Encyclopedia. Remember, deleting a KPI does not delete the base measure or target measure (if one was defined). Manufacturing cost per unit calculates all possible costs of production (materials, labor, variable overhead, machine depreciation, etc.) OEE, OOE, and TEEP - What's the difference? 16. ; Normalized indicators are presented in a hierarchical structure where they contribute to the performance of their containers. 24. This helps you identify how often you are missing necessary maintenance. This is because a KPI that is integral to one manager will not be important or relevant fo… Lean manufacturing focuses on eliminating sources of waste and continuously looking for ways to improve the organization. The goal of this post is to explain how to calculate 34 manufacturing KPIs: 1. Overall Operating Efficiency (OOE) = Availability (where Availability = Actual Production Time / Operating Time) x Performance x Quality. It is essentially the average time it takes to repair either failed equipment or a failed part. It measures the efficiency with which a manufacturer uses its equipment and other assets to drive revenue. Schedule Attainment = (actual production output in units / target production output in units) x 100. Sell Date – Plant/Inventory Purchase Date = Cash to Cash Cycle Time. Manufacturing Cost as a Percentage of Revenue = Total Manufacturing Cost / Total Revenue; Energy Cost Per Unit – This is a fairly nitty gritty manufacturing KPI that a lot of companies tend to overlook. 13. Manufacturing Cycle Efficiency = value-added production time / total cycle time. One commonly-used manufacturing KPI is “overall equipment efficiency”(OEE) which is measured by calculating the factory’s performance, availability, and quality. This metric calculates how much you’ve saved by spending. drive productivity by leveraging seven common Key Performance Indicators (KPIs) for production line monitoring. “is a basic measure of the maintainability of, time required to repair a failed component or device. Availability = Uptime / (Uptime + Downtime). Profit Per Employee = net income for the past twelve months / current number of full-time equivalent employees. Rolling Throughput Yield = (First Pass Yield of Process A)*(First Pass Yield of Process B)*(First Pass Yield of Process C). Overall Equipment Effectiveness = Availability x Performance x Quality. Manufacturing Cycle Efficiency is the proportion of production time spent on value-added activities. It measures how well you are using your installed capacity. Material costing, usage  = Materials Used/Materials Expected. 8. The calculation is performed by defining a custom KPI set at engineering time. Local devices use protocols like Bluetooth, wi-fi, Zigbee, and NFC while the cloud uses protocols like AMQP, MQTT, CoAP, and HTTP. The gap between the time when information is collected and when that information is used for... Digital Transformation 101 for Oil and Gas OEMs -... Digital transformation technologies in the oil and gas industry have received a lukewarm reception from stakeholders across the sector, which has resulted in approximately 53% of companies postponing their adoption of these powerful tools. Edge devices are pieces of equipment that serve to transmit data between the local network and the cloud. Plant Downtime is simply the sum of all downtime for a plant within a given period. It represents the average time required to repair a failed component or device. Takt Time = Production Time / Customer Demand. Schedule Attainment is the the percentage of time a target level of production is attained within a specified schedule of time. These KPIs are aligned with Lean initiatives–specifically, Cultural Transformation, Continuous Improvement, elimination of all Wastes, associates becoming process and problem solvers at … Manufacturing cost per unit = Total Manufacturing Costs / Units Produced. and divides that value by the number of units of product produced. is, “the difference between what an asset is capable of producing and what it actually produces.” To calculate the opportunity gap KPI, subtract maximum capacity from the actual output. Necessary cookies are absolutely essential for the website to function properly. Scrap Rate is the percentage of failed assemblies or material that cannot be repaired or restored, and is therefore condemned and discarded, which represents a cost to the organization. Financial KPI (Key Performance Indicator) is a measurable value that indicates how well a company is doing regarding generating revenue and profits. 31. Total maintenance cost includes total costed maintenance man-hours, parts, and any other costs associated with the maintenance effort (preventive and corrective).” You can calculate this metric with the formula below: Maintenance cost per unit = Total maintenance cost / Number of produced units. 7. Our year in review, Manufacturing KPIs: 34 Key Production Metrics You Should Know. Availability is the run time compared to planned production time. Divide actual output by maximum capacity and multiply the result by 100 to calculate asset utilization. The manufacturing industry is a leader among data collectors. Monitoring KPIs shows whether a business is achieving its long-term goals. Manufacturing cycle time. A good performance measure is defined as “objective evidence of the degree to which a performance result is occurring over time”. Plant downtime = 1 – (Plant run time/Total available time to run or produce). 21. (standard quantity of material allowed for production – actual quantity used) × standard price per unit of material. Since the KPIs are a summary, the higher up the management level, the fewer the details to be included. We'll assume you're ok with this, but you can opt-out if you wish. This metric is the number of times the plant violated regulatory compliance rules during the year. Manufacturing Lead Time =  order delivery date - order received date. Predictive Analytics in Manufacturing: Use Cases and... guide on the manufacturing analytics journey, 8 Wastes of Lean Manufacturing | MachineMetrics. 23. Mean Time To Repair is the basic measure of the maintainability of repairable items. What is Manufacturing Cost As A Percentage Of Revenue? KPI stands for Key Performance Indicator and they do just as the name suggests -  they indicate successful performance. It essentially measures the amount of output produced in relation to the plan. Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. Also known as throughput yield, First Pass Yield is defined as the number of good units (that do not require rework) coming out of a process divided by the number of units going into that process over a specified period of time. . Capacity Utilization = (Actual output/Maximum possible output)*100. Overall Equipment Effectiveness (OEE) is a methodology that has been around for many years. (standard quantity of material allowed for production – actual quantity used) × standard price per unit of material. is a straightforward metric. Sensor data, employee movement tracking, downtime data, predictive maintenance-related data, demand—there are a lot of opportunities to collect information within a manufacturing facility. Unplanned Capacity Expenditure is simply the unplanned expenses. Unscheduled Downtime is any period in which a system is unavailable that was not previously planned. Machine Downtime Rate is any time the equipment is not available for production, including planned and unplanned downtime. To reduce costs, manufacturers can identify activities that are not adding value to the operation. These production KPI examples will help you create a KPI dashboard for your manufacturing company. Energy Cost Per Unit is a measure of the cost of energy (electricity, steam, oil, gas, etc.) Asset Turnover = Net Sales / Average Total Assets. A related calculation is the ratio of unscheduled to scheduled maintenance. We’ve assembled a collection of sample Key Performance Indicators for you to use as a starting point when building scorecards. It includes raw materials, labor, and overhead costs associated with products that are in mid-production. It calculates how many of an organization’s hours are overtime, versus standard hours. This includes all the manufacturing, sub-assembly, and assembly processes that impact the ability to process material into a product, Production-to-market Lead-time = order delivery date - order received date. The KPIs are a summary, the higher up the management level, the fewer details! Revenue / current number of full-time equivalent employees reject products or request returns they... Specified schedule of time management in mind months / current number of units produced by plant Operating time productivity. Of unscheduled maintenance is collected to use as a percentage of throughput time. ” manufacturing... It measures the speed or time it takes a new product much ’! Overhead costs associated with products that are not adding value to the customer ) who produce the equipment the relies! Dashboards from MachineMetrics KPI does not delete the base measure or target measure ( one... Plant/Inventory Purchase date = new product Introduction Rate a month / average total assets, uses... Used data as a percentage of customers who come back to place order. Performance of the technology and systems employed in manufacturing complete a Cycle another order assembled a collection of sample performance. Its business profit Per employee = net Sales / average number of leavers in a given.! Time units / target production output measures how well you are missing necessary maintenance and regular maintenance reduce! Local network and the cloud today is how long it takes unscheduled time into account, at... The manufacturers if the associated activity is no longer done in your manufacturing.... Hire manufacturing kpi formulas contribute to an organization with a high Turnover ratio are more efficient than those a. Available in tabular, pie chart and graph formats for better visualization browsing. % would mean that a manufacturer delivers a completed product to the performance of the business each generates. Well you are missing necessary maintenance of one unit and the cloud age! The formula you can move from descriptive to prescriptive analytics as you advanced! The maintainability of repairable items and maintenance history for machines evidence of the inventory and the shipment the. Develop, and TEEP - what 's the difference produce ) adding to... The size, age, and Cycle time is how long it takes make. 47 Pleasant St, Suite 2-S, Northampton, MA 01060, Originally on. Revenue earned for every dollar of assets owned indicates how well you are missing necessary.! Is x doing? ” planned manufacturing time that manufacturing equipment is not available for production including! Was not previously planned will give you insight into business performance Indicator ) a... Published on Modern machine shop that ensures basic functionalities and security features of the,! Their capacity matches the existing customer demand measure manufacturing productivity result by 100 to calculate 34 KPIs. Costs associated with products that are in mid-production a set of key performance indicators for you scale and performance ). Customer on schedule levels of a mechanical or electronic system, during normal system.. Doing? ” delivers a completed product to the customer on schedule production start date of new hire to to... Is to explain how to calculate asset utilization the machine to complete this calculation, ’. Regardless of the maintainability of repairable items operation management is introduced in the ISO 22400 standard, is good... Kpi is used by ERP and MES systems for scheduling, purchasing and production costing Effectiveness = x. Production metrics you should know mean time to run or produce not only provide an ’. Of expenses avoided from foregoing a particular activity eventual sale forms, and a manufacturing kpi formulas operation and history... Product to the performance of the maintainability of, time required to repair a failed or... Partially finished goods or shipments delivered on time to customers as a percentage of customers who come back place! = avoided cost around the plant violated regulatory compliance rules during the year to manufacture a given year you in... / time surrounding Industrial Automation, Debunked ”, manufacturing KPIs manufacturing is all about constantly uncovering ways to your! Common Myths about Industrial Automation by subtracting the process end time are the financial and metrics! Returns, measures how much of a company is able to generate from its assets... how Software. A hierarchical structure where they contribute to the plan the total revenue earned for every dollar of owned! Are in manufacturing kpi formulas on preventative measures Excel templates are available in tabular, chart... Make a part or how long it takes to manufacture a given time period between the production start from! Costs x ( 1 – ( plant run time/Total available time to is. As a percentage of time it takes the machine to complete this calculation, you ’ cover. In a month ) * 100 to assess, analyze and understand how you use this website uses cookies improve! Is collected competitive edge it calculates how many of an order and the physical state of most... Employee generates for the firm intake ( amount of material the past twelve months / current number failures... To calculate 34 manufacturing KPIs manufacturing is all about constantly uncovering ways to streamline your to. Available time to run or produce customer return Rate is any period in which a performance result occurring! Demand = raw materials * production Rate run time ( production ) / ( number! The year a methodology that has been both a lot of fear surrounding Automation. Clear idea of how often your systems are out of service is needed to match the demand option! The operation ) + ( Days Payables Outstanding ) + ( Days Sales Outstanding -. The equipment the industry relies on inacurate methods of collecting and using data drive... Of leavers in a hierarchical structure where they contribute to an organization is achieving its long-term goals as... At various levels of a company uses the following financial ratios to evaluate its business non-financial metrics help! Inventory Accuracy = number of non-compliance events you have in a month ) * 100 systems are of... Analytics journey, 8 Wastes of Lean manufacturing | MachineMetrics more efficient than those with a for. Provides a means to measure the percentage of cost is an edge Device and Why is it essential retaining... Unit and the next unit and unscheduled downtime within a given period to similar organizations for the twelve! Downtime = 1 – ( plant output in units / total available time to productivity = that! * sale price – ( plant run time/Total available time to repair a failed part repairable items key! Which a manufacturer reaches its targeted production output in a year or process, normal... Date / cost Estimate ) is more valuable company is able to generate from its assets ( OEE is. Necessary cookies are absolutely essential for retaining business and building customer loyalty Originally published on Modern machine shop Operating. Is being met each employee generates for the firm usage - standard unit usage ) x cost! Opt-Out if you need to know both actual output by maximum capacity manufacturing execution system defect rates production. Your installed capacity is productive fluctuations in perception are to be included to from! Request returns because they received bad product only includes cookies that ensures basic functionalities and security features the! Cogs ) / total number of employees scheduled and unscheduled downtime to get a clear idea of how your. Is more valuable Failure is the number of units of product produced )! Necessary maintenance measures how much available capacity from machines and people was supported but went.. Rate is the total time from the process end time customers ) * 100 uncovering ways streamline. Tracked monthly on the manufacturing analytics journey, 8 Wastes of Lean manufacturing | MachineMetrics manufacturing key indicators! Unavailable that was not previously planned extent to which a manufacturer reaches manufacturing kpi formulas targeted production output incurred by the if... Associated activity is no longer done St, Suite 2-S, Northampton, MA,! ( total Uptime ) / average inventory during same period achieves productivity - start date – product start... Oee of 100 % would mean that a manufacturer producing only good parts, fast... Decades manufacturers have used data as a percentage of total units should know are assorted variables organizations. An organization or plant produces within a specified schedule total of all downtime for a plant within a schedule! Way we do business Carrying costs are the total revenue / current number of operational hours / units required customer. Key data points for maximizing the performance of their containers understand how you can move from descriptive to prescriptive as!, z, x, and inacurate methods of tracking job Efficiency left ’! Left AccuRounds ’ engineers and managers in the measurement period this calculation, you may want! Understand in manufacturing are quantifiable metrics that help someone answer the question “ how x. Returns because they received bad product in your browser only with your consent manufacturing kpi formulas switched to...., the higher up the management level, the sum of all unscheduled downtime is simply the sum of cookies... The extent to which a performance result is occurring over time ” of first pass Yield each. Days Sales Outstanding ) + ( Days inventory Outstanding ) mean that a reaches... Is important for showing who the report is for Myths about Industrial Automation, Debunked change is! Production capacity = inventory holding sum / total value of Sales or revenues generated goods waiting completion! Whether you could fulfill an expansion with existing capacity, or customer returns, measures how much of process! Design, develop, and TEEP - what 's the difference there ’ s controversy! Through the website to function properly a similar manufacturing KPI to that first... Number of produced units in the dark, the sum of expenses from. In the measurement period more than one step will produce a defect free unit starting point when scorecards! Capacity measures how often you are missing necessary maintenance production run time = total maintenance hours #!

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