14 Important Manufacturing Metrics
State of the art technology is leading the way in helping organizations across all industries gain new insights that are essential in improving their metrics or key performance indicators.
In the past decades, manufacturers have managed to reduce waste and variability in their production processes and dramatically improve their product quality and yield by implementing lean principles. But in the digital age, data is essential to maintain or grow market share, improve overall operational efficiency and achieve a seamless customer experience.
This is all achieved through the use of the Internet of Things, Artificial Intelligence, Machine Learning and Big Data Analytics – or as a whole: Intelligent Manufacturing, a fully connected smart factory.
Below we’ll focus on the metrics that we rely on and the ones that matter the most. Any manufacturer who wants to take their business processes and company to the next level needs to collect and analyze relevant data or metrics.
Here are the 14 most important metrics that data through digital technologies will allow you to achieve success:
1. Throughput – the average number of units being produces on a machine, line, unit or production plant over a period of time (for example: units per hour)
Throughput in manufacturing can mean the difference between meeting demand and losing customers to your competition. Real-time data gives production managers the ability to measure and monitor throughput and take necessary action by identifying which areas need to be improved. Please note that output is the unit of productivity while throughput is the rate of productivity against a period of time.
2. Overall Equipment Effectiveness (OEE) – the percentage of planned production time that is truly productive. Most manufacturing lines are only 60% productive, leaving a lot of space for improvements
OEE = (Good Count × Ideal Cycle Time) / Planned Production Time
OEE assesses quality, speed and downtime (availability x performance x quality). The better your OEE score, the more profitable and cost-effective your business will be.
3. Capacity Utilization – Indicates how much of the total manufacturing output capacity is being utilized at a given point in time.
Actual level of output / Maximum possible output X 100
This metric is displayed as a percentage of total potential output. Manufacturers aim to be as close to 100% as possible. In economics, this can be a good indicator of business and market conditions as most good production lines run close to 70% or 80% when there are good economic conditions.
4. Schedule or Production Attainment – A measure of what percentage of time a target level of production is attained within a specified schedule of time.
The “schedule or production attainment score” is displayed as a percentage and a lower percentage may indicate that equipment isn’t optimized for production or a team cannot cope with changes in demand.
5. Yield – the percentage of products produced correctly and to specification first time through the manufacturing process (without re-work or scrap) maintaining quality and compliance standards.
6. Customer rejects/returns – Measure of how many times customers reject products or request returns of products or request returns. This could be due to wrong specifications or low/bad quality of products received and has a direct correlation to your quality standards. If you do measure this metric and act upon the results, this metric should be as close to zero as possible.
7. Supplier quality incoming – The percentage of good quality materials incoming to your manufacturing process from a supplier. You can also measure the percentage of bad quality materials coming in which is known as supplier defect rates.
An essential metric for measuring supplier quality which determines your products final quality.
Improving the Customer Experience
8. On-Time Delivery to Commit – A percentage of time that manufacturing delivers a completed product on the schedule that was committed to customers.
9. Time to Make Changeover – A measure of the speed or time it takes to switch your manufacturing line from a product to a different one. The faster the better since you can deliver your products customers on-time.
10. Manufacturing Cycle Time – The speed/time it takes from the beginning to the end of a manufacturing process, from the time the order is released to production to a finished good.
This metric should be as low as possible and reducing it delivers reduced costs, increased flexibility and a better response to customers.
Increasing Profitability and Reducing Costs
11. Percentage Planned vs. Emergency Maintenance Work Orders – Planned Maintenance Percentage (PMP) measures the percentage of the total number of maintenance hours spent on planned maintenance activities in a specific time period. This ratio indicates how often scheduled maintenance takes places as opposed to emergency or unplanned maintenance.
12. Downtime in Proportion to Operating Time – The ratio of downtime versus operating time is crucial and an indicator of asset availability for production.
13. Manufacturing Cost as a Percentage of Revenue – A ratio of total manufacturing costs to the overall revenues produced by a production line, plant or business unit.
14. Customer fill rate / on time delivery / perfect order percentage – The percentage of orders that are shipped and delivered in full and on-time as a percentage of all your orders.
Active measuring and analyzing of your manufacturing metrics is not as simple as it appears, that’s why you need data to drive success. These metrics need to be aligned to larger business goals and objectives. Usually, a combination of these metrics are needed to meet these objectives. Data and advanced analytics can improve the quality of your processes and your products while reducing costs, optimizing supply chains bringing about overall operational efficiency. As manufacturing organizations become larger and more diverse with the sheer number of manufacturing activities, the type of data that must be managed becomes ever more complex.
The importance of accurate data is the foundation for effective performance management. In today’s day and age, an ERP system will not give you the full visibility and insights that can drive business growth and success.
“The goal is to turn data into information, and information into insight.” – Carly Fiorina, former executive, president, and chair of Hewlett-Packard Co.
Discover how to transform your operations with the latest digital technology and drive extreme efficiency gains, inspire and speed innovation and deliver a higher customer service through highly connected intelligent systems by visiting our Intelligent Manufacturing page. Improve all your manufacturing metrics in 2019 with an end-to-end technology partner.