Manufacturers often struggle with measuring their production efficiency and operational excellence. So, how do you know if your production line is running at peak performance? Like any other business, tracking key performance indicators (KPIs) is crucial for manufacturers to gain insights into their business performance and improve their bottom line. With various metrics to analyze, it can seem daunting for manufacturers to monitor and optimize their production process. However, tracking your manufacturing KPIs can be easy and rewarding with the right tools and procedures in place. The first step towards optimizing your production process is understanding the metrics that determine manufacturing efficiency.
As the saying goes, you can’t improve what you can’t measure. In this post, we’ll explore the top 10 KPIs every manufacturer must track.
Top 5 Manufacturing KPIs
Average Cycle Time
The total cycle time measures the time it takes to produce and ship an item. For example, a manufacturing facility manufactures 100 units of product per 40 hour week. Therefore, the average time the manufacturer takes to produce one unit is 0.4 hours. In other words, the average cycle time is 24 minutes. A lower cycle time signifies higher efficiency, lower production cost, and therefore higher profitability. The average cycle time can also help manufacturers identify bottlenecks and make better production schedules.
Capacity Utilization
Capacity utilization is a measure that indicates the amount of available production capacity currently used to supply demand. A higher capacity utilization signifies optimum usage of your assets such as buildings, equipment, and labor. The capacity utilization KPI can also be an input to calculate realistic lead times and make better customer commitments.
Overall Equipment Effectiveness
Popularly known as OEE, this metric measures the overall effectiveness of a piece of production equipment or an entire production line. The overall equipment effectiveness is expressed as a percentage value and calculated as Availability x Performance x Quality. An OEE of 100% implies maximum performance with zero downtime and goods produced at the highest quality. An OEE of 85% is world-class for discrete manufacturers, although 60% is typically what most manufacturers would achieve.
First Pass Yield
Perhaps one of the most important KPIs, the yield KPI, measures production efficiency and profitability. The yield KPI is the percentage of good parts produced from the total units produced. A 100% yield implies that all parts manufactured were of good quality. Measuring First Pass Yield (FPY) helps identify and improve production processes requiring re-work, which is critical for decreasing cycle time.
Changeover Time
Changeover time is the amount of time it takes for a work center to unload, load, retool, calibrate, and program a new job. This metric is more relevant for work centers that process different types of parts. The Average Changeover Time can help you determine and optimize jobs that require an elaborate setup time before they can be processed. By tracking Changeover Time, manufacturers can analyze total cycle times by part and optimize the production process by identifying operator training needs and evaluating the possibility of proactive prep.
Conclusion
Becoming a world-class manufacturer is easier when you measure and monitor the right KPIs. Accurately tracking these metrics can be extremely difficult and time-intensive without the right tools. Investing in intelligent production software can help your business track manufacturing KPIs effectively and give you valuable insights into how you can improve your bottom line.
