Managing the production of a manufacturing company is an everyday challenge for an operations manager. Whether it’s taking charge of manufacturing, engineering, logistics or maintenance, your role consists of wearing several hats and responsibilities to ensure the organization’s operational profitability. Monitoring certain performance indicators (KPIs) for your plant can become your main tool to ensure the proper management of your operations and help you make informed decisions. However, you still need to put in place the systems that will allow you to evaluate and monitor your plant’s performance, both in terms of production and human capital optimization. Thanks to KPIs specific to the manufacturing sector, it is possible to access precise, complete and significant data, and thus answer many questions related to the organization’s global strategy:
- What is the plant’s overall rate of return?
- Is the equipment operating at full capacity?
- Is my human capital optimally involved?
- What is the average downtime of the production line?
Here are 6 categories of KPIs dedicated to the operational performance of a manufacturing company.
The KPIs that refer to the performance of a processing chain are intended to measure all the components involved in it. Whether it is to measure the efficiency of a machine, the resources involved or delivery times, these indicators will give you an accurate picture of the current state of your production rate.
- Overall rate of return (RGH);
- Productivity rate;
- Production level;
- Productivity rate per shift;
- Number of products produced over the period;
- Unused production capacity;
Because processes have a great influence on operational efficiency, it is advisable to target KPIs that can provide information for this purpose. These KPIs will help you obtain clues about your production cycles, the reliability of your delivery times and also help you prevent possible slowdowns on the assembly line.
- Average production time per product;
- Average production cycle time;
- Reliability of planning and forecasting;
- Queue density;
Since estimating and respecting delivery time is an issue on which a client bases his or her level of satisfaction, it is advisable to monitor the related data as closely as possible.
- Average delivery times;
- Number of deliveries received within the estimated timeframe;
- Average time to process an order;
- Average time taken to process disputes (return requests, refunds, credits, etc.);
Because the production rate of a manufacturing firm is subject to the rate at which it receives the goods it needs to operate, it is important to properly supervise the activities related to it. The use of KPIs for inventory management can avoid several problems such as: stock shortages when procuring raw materials or components, inefficient rotation of finished products, etc.
- Inventory turnover rate;
- Level of work-in-process inventory;
- Coverage of critical inventories;
- Downtime rate due to out-of-stocks;
- Number of days inventory in advance;
In collaboration with your maintenance manager, it is necessary to evaluate the level of reliability and performance of the equipment. It is possible, using various KPIs based on specific data on the behaviour of your machines, to evaluate, among other things, their capacity of use, downtime according to the reliability of the equipment and the related maintenance costs.
- Use of the equipment;
- Equipment reliability;
- Downtime cost per equipment;
- Average duration of equipment shutdowns;
Together with your quality control manager, these measurements are relevant mainly to measure the reliability of your transformation processes based on the output rate of products with no manufacturing defects.
- Rate of compliant products;
- Rate of defective products;
- Rate of conform and defective products per machine;
- Compliance and failure rates per shift;
However, depending on the level of digital maturity of a manufacturing company, the use of KPIs in management processes can discourage some people from using them, particularly because of the upstream work that is often necessary to access certain data.
Remember that to ensure the reliability of a KPI, it is important to involve data that is as accurate as possible. A company that refers to data coming from manual or semi-manual processes is at greater risk of involving data corrupted by human error than a company that refers to data generated by proven and automated processes.
Now that Industry 4.0 offers solutions that connect, analyze and disseminate data in real time, a manufacturing company can benefit from closely monitoring its operations. Plants are even turning to KPI display solutions directly in the production floor, which promotes productivity and, as a result, becomes a positive element in continuous improvement processes.
Because increasing your productivity is part of your strategic planning, analyzing your current processes (Industry 4.0 audit) is the first step in identifying your future needs.
Measure your potential for tomorrow today.