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    Bill Bither
    Bill Bither MachineMetrics / October 01, 2020 manufacturing analytics / October 01, 2020

    Manufacturing KPIs: Top Metrics, Definitions, Formulas, and Dashboards

    What Are KPIs in Manufacturing?

    KPIs in manufacturing are quantifiable metrics that offer insight into business performance. KPI stands for Key Performance Indicator and they do just as the name suggests -  they indicate successful performance.

    One commonly-used manufacturing KPI is “overall equipment efficiency”(OEE) which is measured by calculating the factory’s performance, availability, and quality. While an effective measure of performance, especially at the factory floor, machine-specific level, OEE should ideally be used alongside other KPIs to gain greater clarity on performance from multiple angles.  Manufacturing businesses can, and should, choose several KPIs to focus on in order to help guide decision-making. 

     

    Why Are KPIs Important for Manufacturers?

    KPIs are important for manufacturers because they are defined, measurable metrics that help businesses focus on what’s most important, so they can track, analyze, and optimize performance over a period of time. 

    KPIs let manufacturers know whether they are on course for success, if they are growing, and where issues may be present within their businesses. Having a KPI dashboard readily available can make company goals and priorities stay in focus and ensure the organization is moving forward as a whole.

     

    Manufacturing KPIs and Formulas

    Below we cover over 50 manufacturing KPIs, providing both their definitions as well as how to calculate each of them. You can skip to any metric by selecting it in the table below, as well as jump directly to the "Manufacturing KPI Dashboards, Reports, and Templates" section.

     

     

    Asset Turnover 

    What is Asset Turnover? 

    Asset Turnover is the value of sales or revenues generated. It measures the efficiency with which a manufacturer uses its equipment and other assets to drive revenue. Companies with a high turnover ratio are more efficient than those with a lower turnover.

    How to Calculate Asset Turnover 

    Asset Turnover = Net Sales / Average Total Assets

     

    Asset Utilization 

    What is Asset Utilization? 

    Asset Utilization is the total revenue earned for every dollar of assets owned.  It measures how well you are using your installed capacity.

    How to Calculate Asset Utilization 

    Asset Utilization = (Actual Output / Maximum Capacity) *100

     

    Availability 

    What is Availability? 

    Availability is the run time compared to planned production time. It is similar to overall availability, but uses planned production time, rather than total calendar time. 

    How to Calculate Availability 

    Availability = Uptime / (Uptime + Downtime)

     

    Avoided Cost 

    What is Avoided Cost? 

    Avoided Costs are expenses that will not be incurred by the manufacturers if the associated activity is no longer done. For example, a manufacturer may discontinue a product line, which means they will have a variety of avoided costs in the form of labor and equipment usage.

    How to Calculate Avoided Cost 

    Avoided Cost = Sum of expenses avoided from foregoing a particular activity

     

    Capacity Utilization 

    What is Capacity Utilization? 

    Capacity Utilization is the rate at which potential output levels are being met or used. It essentially tracks how much of a manufacturer’s production capacity is currently being utilized.

    How to Calculate Capacity Utilization 

    Capacity Utilization = (Actual output/Maximum possible output)*100

     

    Cash To Cash Cycle Time 

    What is Cash To Cash Cycle Time? 

    Also known as the cash-conversion cycle, Cash To Cash Cycle Time is the the number of days between paying for raw materials and components and getting paid for a product. 

    How to Calculate Cash To Cash Cycle Time 

    Cash To Cash Cycle Time = (Days Inventory Outstanding) + (Days Sales Outstanding) - (Days Payables Outstanding)

     

    Changeover Time 

    What is Changeover Time? 

    Changeover Time is the time elapsed from the last good part of the previous run, to the first good part of the following run. 

    How to Calculate Changeover Time 

    Changeover Time = T∆ = total changeover time, typically in minutes or seconds

    T∆e = external changeover time, in the same unit of measure as T∆  

    T∆i = internal changeover time, in the same unit of measure as T∆"

     

    Customer Return Rate 

    What is Customer Return Rate? 

    Customer Return Rate is the percentage of customers who come back to place another order. It is essential for retaining business and building customer loyalty. 

    How to Calculate Customer Return Rate 

    Customer Return Rate = (return customers / total customers) * 100

     

    Cycle Time 

    What is Cycle Time? 

    Cycle Time is how long it takes to make a part or how long it takes the machine to complete a cycle. For a comparison between takt time and lead time, read this article

    How to Calculate Cycle Time 

    Cycle Time = total parts produced / production run time 

     

    Demand Forecasting 

    What is Demand Forecasting? 

    Demand Forecasting works to predict customer demand to optimize supply choices. 

    How to Calculate Demand Forecasting 

    There are a variety of variables to consider when calculating future demand, including historical sales, forecasts from suppliers, seasonal and economic changes, as well as unique business challenges and constraints. Here is a good resource on demand forecasting for manufacturers.

     

    Direct Material Usage Variance 

    What is Direct Material Usage Variance? 

    Direct Material Usage Variance is the difference between the standard quantity of materials that should have been used for the number of units actually produced, and the actual quantity of materials used, valued at the standard cost per unit of material 

    How to Calculate Direct Material Usage Variance 

    Direct Material Usage Variance = (standard quantity of material allowed for production – actual quantity used) × standard price per unit of material. (standard quantity of material allowed for production – actual quantity used) × standard price per unit of material

     

    Employee Turnover 

    What is Employee Turnover? 

    Employee Turnover is the number or percentage of workers who leave an organization and are replaced by new employees. 

    How to Calculate Employee Turnover 

    Employee Turnover = (Total number of leavers in a month / average number of employees in a month ) * 100

     

    Energy Cost Per Unit 

    What is Energy Cost Per Unit? 

    Energy Cost Per Unit is a measure of the cost of energy (electricity, steam, oil, gas, etc.) required to produce a specific unit or volume of production. 

    How to Calculate Energy Cost Per Unit 

    Energy Cost Per Unit = Sum of all energy costs / Units or Volume of Production

     

    First Pass Yield 

    What is First Pass Yield? 

    Also known as throughput yield, First Pass Yield is defined as the number of good units (that do not require rework) coming out of a process divided by the number of units going into that process over a specified period of time. 

    How to Calculate First Pass Yield 

    First Pass Yield = number of “good” units completed (excluding scrap/rework) / total number of units entering the process

     

    Health And Safety Incident Rate (Total Case Incident Rate (TCIR) 

    What is Health And Safety Incident Rate? 

    Health and Safety Incident Rate, also known as the total case incident rate (TCIR), is the number of work-related injuries per 100 full-time workers during a one year period 

    How to Calculate Health And Safety Incident Rate (Total Case Incident Rate (TCIR) 

    Health And Safety Incident Rate  =  (Number of OSHA Recordable injuries and illnesses X 200,000) / Employee total hours worked = Total Case Incident Rate. (Provided by OSHA)

     

    Inventory Accuracy 

    What is Inventory Accuracy? 

    Inventory Accuracy measures the discrepancies that exist between electronic records that represent the inventory and the physical state of the inventory. 

    How to Calculate Inventory Accuracy 

    Inventory Accuracy =  number of counted items that perfectly match every aspect of the record / total number of items counted

     

    Inventory Carrying Costs 

    What are Inventory Carrying Costs? 

    Inventory Carrying Costs are the total of all expenses related to storing unsold goods. 

    How to Calculate Inventory Carrying Costs 

    Inventory Carrying Cost = inventory holding sum / total value of inventory, then multiplied by 100

     

    Inventory Turns 

    What is Inventory Turns? 

    Inventory Turns is the ratio that measures the number of times inventory is sold or consumed in a given time period .

    How to Calculate Inventory Turns 

    Inventory Turns = cost of goods sold (COGS) / average inventory during same period

     

    Labor As A Percentage Of Cost 

    What is Labor As A Percentage Of Cost? 

    Labor As A Percentage Of Cost is the percentage value of money spent on labor costs against the total revenue of the company during a specific period. 

    How to Calculate Labor As A Percentage Of Cost 

    Labor As A Percentage Of Cost = Labor Costs / Gross Sales

     

    Machine Downtime Rate 

    What is Machine Downtime Rate? 

    Machine Downtime Rate is any time the equipment is not available for production, including planned and unplanned downtime. Downtime is considered the largest source of lost production time for manufacturing, which makes this an incredibly important metric.

    How to Calculate Machine Downtime Rate 

    Machine Downtime Rate = (total uptime) / (total uptime + total downtime) 

     

    Machine Set Up Time 

    What is Machine Set Up Time? 

    Machine Set Up Time is the period of time that is required to prepare a machine for its next run after it has completed production of the last part of the previous run.

    How to Calculate Machine Set Up Time 

    Machine Set Up Time = Time machine is prepared for next run - time completed last part of previous run

     

    Maintenance Cost Per Unit 

    What is Maintenance Cost Per Unit? 

    Maintenance Cost Per Unit is the total maintenance cost divided by the number of produced units in a given period of time.

    How to Calculate Maintenance Cost Per Unit 

    Maintenance Cost Per Unit = total maintenance cost / number of produced units in measurement period

     

    Manufacturing Cost As A Percentage Of Revenue 

    What is Manufacturing Cost As A Percentage Of Revenue? 

    Manufacturing Cost As A Percentage Of Revenue is the ratio of total manufacturing costs to the overall revenue produced by the manufacturing plant or business unit. 

    How to Calculate Manufacturing Cost As A Percentage Of Revenue 

    Manufacturing Cost As A Percentage Of Revenue = total manufacturing costs / overall revenue

     

    Manufacturing Cost Per Unit 

    What is Manufacturing Cost Per Unit? 

    Manufacturing Cost Per Unit is the breakdown of all the fixed and variable costs that are encountered in the process of producing a single product 

    How to Calculate Manufacturing Cost Per Unit 

    Manufacturing Cost Per Unit =  manufacturing costs / total number of units produced during a given period

     

    Manufacturing Lead Time 

    What is Manufacturing Lead Time? 

    Manufacturing Lead Time is the time period between the placement of an order and the shipment of the completed order to the customer. 

    How to Calculate Manufacturing Lead Time 

    Manufacturing Lead Time =  order delivery date - order received date

     

    Material Yield Variance 

    What is Material Yield Variance? 

    Material Yield Variance is the difference between the actual amount of material used and the standard amount expected to be used, multiplied by the standard cost of the materials. 

    How to Calculate Material Yield Variance 

    Material Yield Variance = (Actual unit usage - Standard unit usage) x Standard cost per unit

     

    Mean Time Between Failure (MTBF) 

    What is Mean Time Between Failure? 

    Mean Time Between Failure is the predicted elapsed time between inherent failures of a mechanical or electronic system, during normal system operation. 

    How to Calculate Mean Time Between Failure 

    Mean Time Between Failure = number of operational hours / number of failures

     

    Mean Time To Repair (MTTR)

    What is Mean Time To Repair? 

    Mean Time To Repair is the basic measure of the maintainability of repairable items. It is essentially the average time it takes to repair either failed equipment or a failed part. It is most commonly represented in hours.

    How to Calculate Mean Time To Repair 

    Mean Time To Repair = sum of unplanned maintenance time spent on repair / total number of failures

     

    Non-compliance Events Per Year 

    What is Non-compliance Events Per Year? 

    Non-compliance Events Per Year is a measure of the number of times a plant or facility operated outside the guidelines of normal regulatory compliance rules during a one-year period 

    How to Calculate Non-compliance Events Per Year 

    Simply the number of non-compliance events within a given year.

     

    On-time Delivery 

    What is On-time Delivery? 

    On-time Delivery is the ratio of finished goods or shipments delivered on time to customers as a percentage of total units delivered or shipped. It is a good metric to use in ensuring customer satisfaction. 

    How to Calculate On-time Delivery 

    On-time Delivery = on time units / total units

     

    Overall Equipment Effectiveness (OEE) 

    What is Overall Equipment Effectiveness? 

    Overall Equipment Effectiveness provides a means to measure the percentage of planned manufacturing time that is productive. OEE is calculated by multiplying availability, performance and quality and is represented by a percentage and only considers scheduled time. An OEE of 100% would mean that a manufacturer producing only good parts, as fast as possible, with no stop time. 

    How to Calculate Overall Equipment Effectiveness 

    Overall Equipment Effectiveness = Availability x Performance x Quality

    Where:

    • Availability = actual production time / planned production time
    • Performance = actual production rate / ideal production rate
    • Quality = good parts / total parts produced

     

    Overall Operating Efficiency (OOE) 

    What is Overall Operating Efficiency? 

    Overall Operating Efficiency is similar to OEE except it takes unscheduled time into account, looking at Total Operations Time as the maximum. 

    How to Calculate Overall Operating Efficiency (OOE) 

    Overall Operating Efficiency (OOE) = Availability (where Availability = Actual Production Time / Operating Time) x Performance x Quality



    Percentage Maintenance Planned (PMP) 

    What is Percentage Maintenance Planned?

    Percentage Planned Maintenance is the a maintenance metric that measures the number of planned maintenance tasks in comparison to all maintenance tasks. 

    How to Calculate Percentage Maintenance Planned 

    Percentage Planned Maintenance = # of planned maintenance hours ÷ # of total maintenance hours × 100



    Plant Downtime 

    What is Plant Downtime? 

    Plant Downtime, also known as idle time, off line period or production downtime, is any time in which a manufacturing plant is off-line and not producing any products or adding value to the business and its customers. 

    How to Calculate Plant Downtime 

    Plant Downtime is simply the sum of all downtime for a plant within a given period.



    Production Attainment 

    What is Production Attainment? 

    Production Attainment is the number of units manufactured by the company divided by target production output over a certain period of time, as a percentage. It measures the extent to which a manufacturer reaches its targeted production output. 

    How to Calculate Production Attainment 

    Production Attainment = total number of units manufactured by the company / target production output over a certain period of time



    Production-to-Market Lead-time 

    What is Production-to-Market Lead-time? 

    Production-to-Market Lead-time, also known simply as lead time, is the amount of time it takes to build and ship a product if all the materials are available. This includes all the manufacturing, sub-assembly, and assembly processes that impact the ability to process material into a product 

    How to Calculate Production-to-market Lead-time 

    Production-to-market Lead-time = order delivery date - order received date

     

    Profit Per Employee 

    What is Profit Per Employee? 

    Profit Per Employee is the measure of net Income for the past twelve months divided by the current number of full-time equivalent employees.  

    How to Calculate Profit Per Employee 

    Profit Per Employee = net income for the past twelve months / current number of full-time equivalent employees

     

    Return On Assets (ROA) 

    What is Return On Assets? 

    Return On Assets is a profitability ratio that provides how much profit a company is able to generate from its assets. 

    How to Calculate Return On Assets 

    Return On Assets = net income / average total assets

     

    Revenue Per Employee 

    What is Revenue Per Employee? 

    Revenue Per Employee, similar to profit per employee, is a ratio that measures how much revenue each employee generates for the firm. 

    How to Calculate Revenue Per Employee 

    Revenue Per Employee = total revenue / current number of employees

     

    Schedule Attainment 

    What is Schedule Attainment? 

    Schedule Attainment is the the percentage of time a target level of production is attained within a specified schedule of time. It essentially measures the amount of output produced in relation to the plan. 

    How to Calculate Schedule Attainment 

    Schedule Attainment = (actual production output in units / target production output in units) x 100

     

    Scrap Rate 

    What is Scrap Rate? 

    Scrap Rate is the percentage of failed assemblies or material that cannot be repaired or restored, and is therefore condemned and discarded, which represents a cost to the organization. 

    How to Calculate Scrap Rate 

    Scrap Rate = scrap material / total materials intake (amount of material put into the process)

     

    Takt Time 

    What is Takt Time? 

    Takt Time is the required product assembly duration that is needed to match the demand. It helps manufacturers ensure that their capacity matches the existing customer demand. 

    How to Calculate Takt Time 

    Takt Time = workable production hours / units required (customer demand)

     

    Throughput 

    What is Throughput? 

    Throughput is the amount of material or items passing through a system or process. 

    How to Calculate Throughput 

    Throughput Rate = total good units produced / time

     

    Time To Productivity 

    What is Time To Productivity? 

    Time To Productivity is how long it takes a new hire to contribute to an organization. 

    How to Calculate Time To Productivity 

    Time To Productivity = date that new hire achieves productivity - start date of new hire

     

    Total Cycle Time 

    What is Total Cycle Time? 

    Total Cycle Time is the total time from when an operation begins to when the operation ends. 

    How to Calculate Total Cycle Time 

    Total Cycle Time = end time of operation – start time of operation

     

    Total Manufacturing Cost Per Unit Excluding Materials 

    What is Total Manufacturing Cost Per Unit Excluding Materials? 

    Total Manufacturing Cost Per Unit Excluding Materials is a measure of all potentially controllable manufacturing costs that go into the production of a given manufactured unit, item, or volume 

    How to Calculate Total Manufacturing Cost Per Unit Excluding Materials 

    Total Manufacturing Cost Per Unit Excluding Materials = (total manufacturing costs - cost of materials) / total number of units produced

     

    Unscheduled Downtime 

    What is Unscheduled Downtime? 

    Unscheduled Downtime is any period in which a system is unavailable that was not previously planned. 

    How to Calculate Unscheduled Downtime 

    Unscheduled Downtime is simply the sum of all unscheduled downtime within a  given period

     

    Unused Capacity Expenditures 

    What is Unused Capacity Expenditures? 

    Unused Capacity Expenditures measures how much available capacity from machines and people was supported but went unused. 

    How to Calculate Unused Capacity Expenditures 

    Unused Capacity Expenditures is simply the sum of any unused capacity within a given period.

     

    Utilization 

    What is Utilization? 

    Utilization is the proportion of time that manufacturing equipment is used. It essentially measures how much of a manufacturing operation’s potential output is being met.

    How to Calculate Utilization 

    Utilization = (plant output in a given time period x 100) / maximum output in a  given time period

     

    Work-in-Process (WIP) 

    What is Work-in-Process? 

    Work-in-process is a company's partially finished goods waiting for completion and eventual sale. It includes raw materials, labor, and overhead costs associated with products that are in mid-production.

    How to Calculate Work-in-Process 

    Work-in-Process (Wip) = WIP inventory at beginning of period + WIP purchased during period - WIP inventory at end of period + labor costs + manufacturing overhead

     

    Manufacturing Cycle Efficiency 

    What is Manufacturing Cycle Efficiency? 

    Manufacturing Cycle Efficiency is the proportion of production time spent on value-added activities. To reduce costs, manufacturers can identify activities that are not adding value to the operation.

    How to Calculate Manufacturing Cycle Efficiency 

    Manufacturing Cycle Efficiency = value-added production time / total cycle time

     

    Rolling Throughput Yield (RTY) 

    What is Rolling Throughput Yield? 

    Rolling Throughput Yield is the probability that a process with more than one step will produce a defect free unit. It is a similar manufacturing KPI to that of first pass yield, but takes into consideration rework. You can calculate Rolling Throughput Yield by multiplying the First Pass Yield of each process.

    How to Calculate Rolling Throughput Yield 

    Rolling Throughput Yield = (First Pass Yield of Process A)*(First Pass Yield of Process B)*(First Pass Yield of Process C)

     

    Unplanned Capacity Expenditure 

    What is Unplanned Capacity Expenditure? 

    Unplanned Capacity Expenditure is simply the unplanned expenses.

    How to Calculate Unplanned Capacity Expenditure 

    Unplanned Capacity Expenditure = total capacity expenditures - planned capacity expenditures



    Manufacturing KPI Dashboards, Reports, and Templates

    Below we provide a large variety of example KPI reports and dashboards from MachineMetrics. We offer these so you can get an idea of the data MachineMetrics can provide and run reports on, as well as for general inspiration if you are building reports and templates for your organization.

     

    Harness the Power of Machine Data

     

    Cycle Time Dashboard


    Cycle Time Dashboard

    Downtime Report Dashboard


    Downtime Report Dashboard

    Machine Diagnostic Timeline Report


    Machine Diagnostic Timeline Report

    Machine Downtime Dashboard


    Machine Downtime Dashboard

    Machine Health Dashboard


    Machine Health Dashboard

    Machine Monitoring and Notifications Dashboards


    Machine Monitoring and Notifications Dashboards

    MachineMetrics Production Performance Dashboard


    MachineMetrics Production Performance Dashboard

    Manufacturing Machine Diagnostics Dashboard


    Manufacturing Machine Diagnostics Dashboard

    Manufacturing Production Report


    Manufacturing Production Report

    OEE Dashboard


    Overall Equipment Efficiency (OEE) Dashboard

    Part Production Dashboard


    Part Production Dashboard

    Part Quality Dashboard


    Part Quality Dashboard

    Part Quality Report


    Part Quality Report

    Preventative Maintenance Dashboard


    Preventative Maintenance Dashboard

    Rejected Parts Dashboard


    Rejected Parts Dashboard

    Utilization Report


    Utilization Report

     

     

    Letting Data Guide You

    Key performance indicators allow manufacturers to understand where they currently stand as well as the direction they are trying to go. Data analytics provide insight into overall business performance, the extent of unused capacity, how to continue reducing costs, and so much more. 

    If you have made it this far, you may be interested in our guide on the manufacturing analytics journey, which documents how manufacturers can progress in their analytical maturity and drive more advanced manufacturing programs. Learn how you can move from descriptive to prescriptive analytics as you adopt advanced manufacturing strategies.


    The Manufacturing Analytics Journey eBook

     

    START DRIVING DECISIONS WITH MACHINE DATA.

    Ready to empower your shop floor?

    Learn More

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