Gathering and analyzing data are essential operations for all businesses, regardless of size or industry. In the manufacturing industry, this is even more important, as key performance indicators (KPIs) will significantly contribute to streamlining the production process. Respectively, a poor management of KPIs or not being aware of them will impact your overall activity and cause financial lose or unexpected periods of downtime.
According to recent forecasts, the number of employees in the manufacturing industry of the United States will be 11.59 million, a slight decrease from 2018, when the number was 12.52 million. With manufacturing businesses struggling to keep up with industry demands, technological developments, and a difficulty in finding employees, tracking all metrics that can influence the success of your plant is mandatory.
How to Use Manufacturing KPIs
Driving productivity in the manufacturing industry depends on a wide array of factors, and also varies from one manufacturing plant to the other—the main thing all businesses have in common is that you cannot achieve it without analyzing all available data and metrics. In fact, given the specificity of the manufacturing industry, there are no plans or strategies that do not require to be drafted based on thorough analyses. Whether we are speaking of the production process itself, of communication strategies, of health and safety strategies, or other endeavors, KPIs matter, and their proper tracking will make a significant difference.
Visual management through the display of vital information such as performance measurements, although highly efficient, needs to be implemented based on comprehensive knowledge in order to issue the anticipated results. Displaying such information—on the production floor, for example—with help your employees visualize the results of their work, and focus their attention towards any vulnerable aspects. Also, good metrics help increase the morale of the team, thus increasing efficiency and uptime. When you are using manufacturing KPIs, whether for displaying or to draft or amend strategies, make sure that you are not operating based on a shallow analysis.
7 Manufacturing KPIs You Should Track and Why They Matter
From metrics such as downtime, overall equipment effectiveness, and everything in between, manufacturing KPIs can considerably improve the way a manufacturing business thinks of operational excellence and the methods to achieve it. Modern times place data collection and analysis on the top of factors that help a company stay in business, and this is all the more imperative for the manufacturing industry, where miscalculation can have serious consequences.
The key performance indicator that manufacturers are most interested in is downtime, as it directly impacts business continuity efforts, and can end up having costs of various nature—health and safety hazards, financial costs, loss of prospective business partners, and more. Tracking downtime will help you better understand how your business continuity team handles such events, why they happened, and what you need to do to improve your response in the future—as well as giving you a clear look at your losses.
A KPI equally important to downtime is uptime, yet some manufacturing plants do not place a high emphasis on it, nor on other KPIs that speak of a normal production process. Tracking uptime is a requirement for calculating overall success or overall equipment effectiveness, therefore it needs to always be thoroughly tracked. The time that a production line is operating is also highly important in determining your financial gains and draft future plans accordingly.
3. Overall Equipment and Machinery Effectiveness
In the manufacturing industry, given the complexity of the production process and the equipment involved, tracking such a KPI is vital for all plants that want to stay in business. Without knowledge of data such as line availability, quality, performance, or efficiency, there can be no understanding of the day-to-day performance.
4. Production Target
Production target is a KPI that is useful not only for drafting and implementing plans and strategies, but also as loyal component of visual management. Displaying production target in real-time on the plant’s floor will help with performance, but also with tracking progress and adapting the work accordingly.
5. Changeover Time
The time it takes to complete operations such as loading, unloading, calibrating, retooling, and anything else that is necessary in order to schedule a new job or project is another KPI you need to track, as it can provide you with information on total cycle time and what needs improving, if anything. The preparation of materials and equipment is an integrant part of the production process, and without proper data on it, the overall success rate of the manufacturing plant would significantly suffer.
6. Return Rate
Keeping track of your return rates means knowing whether there is a flaw in the production process that you might have overlooked, thus saving you money and avoiding a downtime on the long run. Make sure to always be aware of the costs involved in customer returns, and use a communication solution—such as a mass notification system—through which to gather feedback and information from your employees, in order to find the problem.
7. Maintenance Percentage
Maintenance—either scheduled or unexpected—plays a significant role in understanding downtime and how to better manage it. Tracking it as a separate KPI will help your manufacturing plant allocate resources towards prevention, and reduce the time of unexpected maintenance sessions. Also, given that maintenance is performed through an internal communication channel, it also gives you an insight into how your communication strategies are doing, and what you need to improve, if anything. Tracking maintenance is also highly important for all your health and safety strategies, whether we are speaking of planning or response.
As a general rule, all KPIs that influence in the slightest any aspect of the production process, employee health and safety, employee performance, or financial operations need to be tracked and used for further developments of plans and strategies. Gathering and analyzing data in our technologically-driven world can go a long way when it comes to improving the overall performance of a manufacturing plant, as it significantly reduces the time you might need to track down and handle a problem. Make sure that all the communications involving these aspects—either internal or crisis communications—are conducted through a highly operational solution, with a wide array of features. Keeping up with industry trends and the recommendations of industry regulators is also mandatory—as is conducting systematic training for all the plant’s employees.