Most Tracked KPIs For Your Manufacturing Business
Boost manufacturing success with KPIs! Measure efficiency, quality, and finances with Mokkup.ai's dashboards for actionable insights and improved operations.
KPIs are measurable values that show how effectively a company achieves its key business objectives. They help manufacturers monitor everything from production efficiency to quality control. Tracking the right KPIs is crucial for any manufacturing enterprise.
The right KPIs can provide valuable insights into your operations, highlight improvement areas, and guide strategic decisions. On the other hand, tracking the wrong KPIs can lead to wasted resources and missed opportunities.
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This blog explains the importance of KPIs in manufacturing. KPIs, such as Overall Equipment Effectiveness (OEE) and Defect Rate, are vital for tracking production efficiency and quality. By aligning your KPIs with your strategic goals and leveraging the right tools and dashboard templates, you can enhance performance, reduce downtime, and drive continuous improvement.
What is a KPI for Manufacturing?
In manufacturing, Key Performance Indicators (KPIs) are measurable values that show how effectively a company achieves its business objectives. These indicators help track progress over time and highlight areas needing improvement. Here are a few manufacturing kpis examples:
Overall Equipment Effectiveness (OEE): measures the efficiency of manufacturing operations. It combines availability, performance, and quality to assess how healthy equipment is utilized. For example, a factory aims for an OEE of 85% but currently operates at 70% due to frequent downtime.
Cycle Time: This KPI tracks the time taken to complete a manufacturing process or operation from start to finish. For example, a company sets a cycle time target of 30 minutes per unit but finds that production takes 45 minutes on average.
Defect Rate: This indicates the percentage of defective products or components compared to the total produced. It reflects manufacturing quality. For example, a production line has a defect rate of 2%, meaning 2 out of every 100 units fail to meet quality standards.
Inventory Turnover: Measures how often inventory is sold and replaced over a specific period, indicating how efficiently materials are managed. For example, a high-tech manufacturer achieves an inventory turnover of many times yearly, showing efficient use of materials and reduced storage costs.
What Are The Types Of KPIs?
Understanding Key Performance Indicators (KPIs) is crucial in business analysis. They provide actionable insights into operational efficiency and performance trends, allowing proactive adjustments to enhance processes and outcomes. For example, if a KPI shows that production time is longer than expected, you can investigate and address the issue to speed up the process.
KPIs can be divided into two main types:
Leading Indicators: These KPIs predict future performance. They are like early warning signs that help you take proactive steps. For example, the number of new orders can lead to future sales. If new orders are increasing, it suggests that future sales will also rise.
Lagging Indicators: These KPIs measure past performance. They tell you what has already happened. For example, total sales for the month are a lagging indicator. It shows the results of your efforts after the fact, helping you understand how well your strategies worked.
What are Manufacturing KPIs?
Essential KPIs for tracking manufacturing performance measurements help factories and production companies track their performance. They provide helpful information about different parts of the manufacturing process, helping businesses improve their operations.
What are the 5 KPIs for Manufacturing?
Category | Examples | Importance |
Production KPIs | Cycle Time, Overall Equipment Effectiveness (OEE), Yield | The importance of KPIs in manufacturing helps measure how efficiently the production process is running. They can identify bottlenecks and areas for improvement to ensure smoother and faster production. |
Quality KPIs | Defect Density, First Pass Yield (FPY), Customer Complaints | Quality KPIs are vital for maintaining high product standards. They help reduce defects, ensure that products meet quality requirements the first time, and minimize customer complaints, leading to higher customer satisfaction. |
Inventory KPIs | Inventory Turnover, Stock Accuracy, Days Inventory Outstanding (DIO) | These KPIs are crucial for effective inventory management. They ensure you have the right amount of stock, reduce excess inventory, and improve inventory records' accuracy, saving costs and efficiently meeting demand. |
Efficiency KPIs | Machine Downtime, Labor Productivity, Energy Efficiency | Efficiency KPIs help in optimizing the use of resources. Tracking these KPIs can reduce downtime, improve worker productivity, and lower energy costs, leading to a more efficient manufacturing process. |
Financial KPIs | Cost Per Unit, Return on Assets (ROA), Gross Margin | Financial KPIs are essential for understanding the financial health of the business. They help track profitability, assess asset investment returns, and control production costs to maximize profit margins. |
How to Track Manufacturing KPIs?
- Leverage KPIs for Continuous Improvement:
KPIs should be more than just numbers; they should drive action. Regularly review your KPIs to identify areas for improvement. For example, if your production output KPI shows a decline, investigate the causes and implement changes to enhance efficiency, such as optimizing workflows or providing additional employee training.
- Benchmark Against Industry Standards:
It's essential to compare your KPIs with industry benchmarks. This comparison helps you gauge your performance relative to your peers. For instance, if the average defect rate in your industry is 2% and your rate is 4%, you know there is significant room for improvement. Use this information to set realistic goals and develop strategies to reach or exceed industry standards.
- Make KPIs Visible to All:
Ensure that KPIs are visible to everyone in the organization. Display them on digital dashboards, bulletin boards, or screens in common areas. Employees who see these metrics regularly are informed and motivated to achieve the targets. For example, displaying daily production numbers can encourage teams to meet or surpass their goals.
- Adopt Predictive Analytics:
Implement predictive manufacturing analytics to enhance your KPI tracking. These tools analyze historical data to forecast future trends, helping you anticipate issues before they arise. For instance, predictive analytics can identify patterns that lead to machine failures, allowing you to schedule preventive maintenance and avoid costly downtime.
- Utilize a Computerized Maintenance Management System (CMMS):
A CMMS helps in tracking maintenance-related KPIs effectively. This system keeps records of all maintenance activities, schedules regular inspections, and tracks equipment performance. For example, monitoring the Mean Time Between Failures (MTBF) can help you identify which machines need more frequent attention, thus improving overall equipment reliability and reducing downtime.
How to Identify the Right KPIs for Your Enterprise?
- Business Goals Alignment:
When choosing KPIs, it’s important to ensure they align with your company’s strategic goals. For example, if your goal is to increase production efficiency, you should track KPIs like Cycle Time and Overall Equipment Effectiveness (OEE). By aligning your KPIs with your goals, you ensure everyone is focused on what truly matters for your business’s success.
- Customizing KPIs:
Top KPIs every manufacturing enterprise should monitor as it is unique, so your KPIs should be tailored to fit your specific processes and industry. For instance, a car manufacturer might prioritize different KPIs than a food production company. Customizing your KPIs ensures that you are tracking the most relevant metrics that impact your particular operations.
- Stakeholder Input:
It is crucial to involve key stakeholders in the KPI selection process. These stakeholders might include managers, team leaders, and even frontline workers. Their input can provide valuable insights into what needs to be measured and why. When everyone has a say, getting buy-in and ensuring that the KPIs are practical and meaningful is easier.
- Review and Adaptation:
Business conditions change over time, so reviewing and adapting your KPIs is important. This means checking if your KPIs are still relevant and adjusting as needed. For example, if you introduce new technology or change your production process, you might need to update your KPIs to reflect these changes. Regular reviews help keep your KPIs aligned with your current business needs and goals.
Implementing KPIs Effectively
Data Collection—Establish reliable methods for collecting accurate and consistent data. This might involve automated systems, regular audits, and training for data handlers.
Data Analysis—Once data is collected, analyze it to uncover trends, patterns, and outliers. Practical data analysis transforms raw data into actionable insights that drive strategic decisions.
Reporting—Communicate KPI findings clearly through well-designed reports. Ensure that reports are easy to understand, relevant to stakeholders, and provide actionable information.
Continuous Improvement—Use KPIs to foster a culture of continuous improvement within the organization. Review and refine KPIs regularly to align with evolving business objectives and strategies.
Type of Dashboards For the Manufacturing Industry
Dashboards are essential tools for the manufacturing industry. They help monitor various processes, track performance and make informed decisions.
However, creating these kpi dashboards from scratch can be time-consuming and complex. That's where Mokkup.ai comes in.
Mokkup.ai provides ready-to-use dashboard templates that make it easy to create professional dashboards quickly. These templates are designed to cater to various needs in the manufacturing industry.
Here are the types of dashboards essential for manufacturing industries:
- Production Dashboard: A Production Dashboard layout helps track the manufacturing process. It shows how many items are being made, how long it takes to make them, and if there are any delays. This helps managers see if everything is running smoothly. For example, the Volume and Headcount Analytics Dashboard in Mokkup gives insights and analysis into the relationship between the volume of business activities and the corresponding headcount or workforce size within an organization.
Quality Control Dashboard: A Quality Control Dashboard focuses on product quality. It displays data on defects, errors, and product returns, helping to identify and fix issues to ensure high-quality products.
Inventory Dashboard: An Inventory Dashboard tracks raw materials and finished products. It shows how much inventory is available, what needs to be ordered, and if there are any shortages. This helps maintain the right amount of stock. For dashboard examples, the Inventory Volume Fluctuation Dashboard offers a comprehensive overview of fluctuations in inventory volume within a specified timeframe.
Maintenance Dashboard: Maintenance Dashboard monitors the condition of machinery and equipment. It shows when maintenance is due, any breakdowns, and the status of repairs. This helps reduce downtime and extends the life of the equipment.
Safety Dashboard: A Safety Dashboard tracks workplace safety metrics. It includes data on accidents, safety violations, and safety training, which helps ensure a safe working environment for employees.
Supply Chain Dashboard: A Supply Chain Dashboard monitors the flow of materials from suppliers to the manufacturing plant and from the plant to customers. It shows delivery times, transportation costs, and supplier performance, which helps optimize the supply chain.
Financial Dashboard: A Financial Dashboard design shows the manufacturing process's financial performance. It includes data on costs, revenues, profits, and budgets, which helps make informed financial decisions. For example, the Express Finance Analytics dashboard in Mokkup can be a big help.
How to Avoid The Common Mistakes?
Common mistakes | How to avoid them? |
Overcomplication | Avoid tracking too many KPIs; focus on KPIs that align with strategic goals to maintain clarity and direction. |
Irrelevant KPIs | Ensure all tracked KPIs directly support business objectives; regularly assess KPI relevance to avoid distraction and misalignment. |
Data Integrity Issues | Implement rigorous data validation processes and ensure consistency and accuracy through automated checks and regular audits. |
Lack of Action | Act promptly on insights derived from KPI analysis and encourage a culture in which KPI insights drive decision-making and operational improvements. |
Final Thoughts
KPIs are essential for manufacturing businesses to track efficiency, quality kpis in manufacturing, and financial health. Effective KPI tracking involves aligning with business goals, regular reviews, and using tools like dashboards and predictive analytics. Focus on relevant, actionable KPIs and maintain data integrity to avoid common mistakes.
Try Mokkup's dashboard wireframe templates for manufacturing to take the first step toward better KPI tracking and improved manufacturing performance!