Are the following really the top 10 Manufacturing KPIs?
Well, It depends on your perspective, your goals, and the approach you choose to take. Engineering is sometimes not just about mathematics but also about philosophy.
1. Production Activity (Volume)
- Description: Calculates the value of production output in monetary value.
- Formula: Sum of monetary value of all finished goods produced within a defined period.
2. Cycle Time
- Description: The average amount of time to make one product, including process, inspection, move, and queue time.
- Formula: Process time + Inspection time + Move time + Queue time.
3. Takt Time
- Description: The rate at which a product needs to be completed to meet customer demand.
- Formula: Production available time / Customer demand.
4. Inventory Turnover
- Description: The time it takes from the purchase of an item until it is sold.
- Formula: Cost of Goods Sold / Average Inventory (over a period of time).
5. Return on Assets (ROA)
- Description: Measures how effectively a company is using its resources to generate profit.
- Formula: Net Income / Average Total Assets.
6. First Pass Yield
- Description: A measure of quality and performance, crucial for production efficiency.
- Formula: Number of good products finished / Number of production orders started (expressed as a percentage).
7. Yield Factor
- Description: Calculates the number of items needed to start to have one good finished product.
- Formula: Number of production orders started / Number of good products finished.
8. Overall Equipment Effectiveness (OEE)
- Description: Compares the performance of a machine to its relative capacity.
- Formula: Good Count × Ideal Cycle Time / Planned Production Time.
9. On-Time Delivery
- Formula: On-time units / Total units.
- Description: Measures if the organization is meeting its promised delivery times.
10. Avoided Costs
- Formula: Assumed Repair Cost + Production Losses – Preventative Maintenance Cost.
- Description: Reflects the money saved by using preventive maintenance.
