It's frequently claimed that what gets measured gets done when it comes to metrics. Human nature has a role in this.
Everyone has more on their plates than ever before, and many professionals are continually re-prioritizing their job tasks.
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| 10 Different KPIs and Metrics for Performance Measurement: eAskme |
As a result, metrics that capture the attention of business and industry executives are more likely to be measured and improved upon by their employee teams.
A manufacturing KPI/ metric is a well-defined and measurable indicator used by the manufacturing industry to assess its performance over time.
Manufacturing businesses, in particular, utilize KPIs to monitor, evaluate, and optimize processes, frequently comparing their efficiency to rivals in the same industry.
10 Different KPIs and Metrics for Performance Measurement
This post will walk you through the various manufacturing KPIs and metrics to utilize in your reporting, as well as how to calculate them:
1. Return on Fixed Assets (RoFA)
Return on Fixed Assets appears to have less to do with manufacturing and more to do with finance, you may be thinking.
Financial measurements, on the other hand, are equally as essential as production data.
You can't run a business unless you're making money.
This statistic assesses how well your company uses its resources (money).
It is calculated by dividing annual net income by total assets (fixed assets + working capital).
RoFA = Net Income / Average Total Assets
2. Demand Forecasting
Companies use this manufacturing measure to predict the number of raw materials they will need to fulfill future consumer demand.
This statistic can be more difficult for businesses to exploit because it is mainly dependent on unpredictable external factors.
The fundamental formula is as follows:
Projected Customer Demand = Production Rate * Raw Materials
3. Throughput
This is most likely one of the most basic KPIs for the manufacturing business and one of the most significant.
The Throughput KPI assesses a machine's, line's, or plant's production capacity, or how much they can create in a given period.
Throughput = Number of Produced Units / Time (hour or day)
4. Production Attainment
This production performance statistic tracks production levels over time and determines what percentage of the time a goal production level is fulfilled.
Production Attainment = # of Periods Production Target Met / Total Time Periods
5. Avoided Cost
This does not imply that you can skip paying expenses and pocket all of the proceeds.
The manufacturing avoided cost measure estimates how much money you saved by spending money.
Doesn't that seem strange?
The most typical example is the amount of money spent on machine maintenance against the repair cost whenever a machine breaks down, plus the lost value of production associated with the repair interruption.
Avoided Cost = Repair Cost + Production Losses – Cost of Preventative Maintenance
6. Takt Time
Takt time is a valuable manufacturing KPI when scheduling production orders or determining whether to accept custom orders.
Takt time is the most significant length of time that a product may be manufactured while still reaching a client's deadline.
Takt is an abbreviation for "taktzeit," a German term that means "cycle time." While similar, this is not the same as the cycle time KPI.
Takt Time = Net Available Time / Daily Demand of Customers
7. Changeover Time
At its most basic, changeover time denotes the time necessary to transition from one job to another.
In most cases, it reflects the amount of time wasted while moving a production line from one product to another.
It can, however, indicate the amount of time wasted during a shift change.
Net Available Time - Production Time = Changeover Time
8. Cash to Cash Cycle Time
This is a manufacturing KPI indicator that is measured in terms of time.
It quantifies the time elapsed between an initial financial outlay for raw materials, inventory, or a manufacturing plant and the receipt of cash from consumers for the company's products.
Typically, this KPI is measured in days.
Inventory Sale Date – Inventory Purchase Date = Cash to Cash Cycle Time
9. Downtime to Operating Time
This industrial statistic may be used to assess the efficiency of machine maintenance and the machine itself.
Downtime may be minimized with proper preventative maintenance, resulting in a more efficient production process.
Businesses want to reduce this percentage as much as feasible.
Downtime to Operating Time = Downtime / Operating Time
10. Overall Equipment Effectiveness (OEE)
This KPI is often regarded as the gold standard for assessing industrial productivity.
The more your OEE, the more efficient your equipment.
A score of 100 percent indicates that you are producing 100% of the time, at 100% capacity, and 100% yield.
OEE = Availability * Quality * Performance
Conclusion
There are several KPIs to select from, and you should reduce the list so that you only measure the KPIs that will assist push your plan ahead.
The correct KPIs for one organization may not be the right KPIs for another.
Make sure you've looked into as many key performance indicators as possible to see which ones apply to your sector.
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