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PQCDSM KPI Definitions. Part 2

 December 1, 2020 0  27 min read

Productivity

People – hours per unit volume (tonne or ‘000 units)

This indicator measures labour productivity and is based on the people hours required to
produce a single unit of volume. It is a measure of consumption and not cost.

People-hours per unit volume = Total people-hours required within

Manufacturing / Total volume (tonnes or ‘000 units)

Which Considers:

1. Should include all management, staff, and operators within the Make operation to produce
the agreed category unit of volume.
2. Casual and temporary labor FTE employed for production activities should also be included.
3. All indirect labor allocated to the production plant should be included, e.g. 50% of the Factory
Engineers time is allocated to the Hair manufacturing plant, therefore, this time should also be
included.
4. The average number of paid hours worked per employee, used to build up the total hours per
year, should exclude leave and paid holidays but include overtime.

5. Volume should consider only the agreed category unit e.g. Packed powder and not powder
transferred as an intermediate or packed soap and not noodles sold to 3rd party.
6. People included within Make should also include those involved in the following activities,
where they are under the responsibility of the factory manager:
Personnel involved in the handling and transfer of raw and pack materials to the point of
use,
Personnel involved in the handling and transfer of finished goods/intermediates from
process and packing hall.

Example:

  Managers Staff Operators

Variable      

          Process 0 0 15

          Packing 0 0 160

          FTE – Process &

Packing 0 0 20

Fixed      

  Direct labour and Supervision 0 4 110

  Repairs & Maintenance 0 3 26

  Materials handling 0 2 10

  Temporary 0 0 5

Indirects      

Allocated factory management and staff 5 8 0

     

Total Number 5 17 346

Average annual hours worked 2442 2442 2442

        
 Total people hours 898656

Volume (tonnes) 85000

People-hours per tonne 10.57

Capacity Utilization (Asset Utilization)

This measures the production floor utilization considering the impact of factory shutdowns on
availability.

Capacity Utilization = Loading Time x 100 (%) / Total Time

Which Considers:

1. This is based on the packing hall, which is normally the bottleneck of the Make operation.
2. The loading time is the time available after shutdown losses have been removed.
3. Shutdown losses include the following: Holidays, Weekends, Factory Shutdown, No
production orders, Planned maintenance, and modifications.
4. Within factory shutdowns, the unavailable time due to work patterns should be included (e.g.
If the site works 6 days per week, the seventh day should be considered as part of the factory
shutdown)
5. For a plant with more than one packing line, the weighted average based on volume should
be calculated as shown in the example.

Example:

  Line 1 Line 2 Total

Total time 8760 8760 17520

Shutdown: 4030 4280 8310

   – Factory Shutdown 1630 1630 3260

   – No production orders 620 1850 2470

   – Planned maintenance 1780 800 2580


    – Planned modifications 0 0 0

Loading time 4730 4480 9210

       

Volume  (‘000 units) 114089 28315 142404

       

Capacity Utilisation 54% 51.1%  

       

Weighted average Capacity Utilisation = (54% *114089) + (51.1% * 28315) = 53.4 %

Volume Performance

This measure allows the evaluation of planned volume against actual. Capital investment and
manufacturing structures are projected based on these expectations, and any deviation should
be considered to redirect initial plans.

Volume Performance (%) = Volume

Produced / Annual Plan Estimate * 100

(i.e., Annual Plan Estimate = Annual Contract Volume)

Which Considers:

1. Volume performance should be measured by SKU, category, and total plant. This should help
the factory to evaluate capacity utilization and return on capital investments specific to an SKU
or an innovation.

Example:

SKU Q1 Annual Plan Q1 Output Vol. Perf. (%)

 

Liquid 400ml Local 3,500 3,200 91

Liquid 200ml Local 4,600 4,700 102


 Liquid 50ml sample 200 200 100

Total 8,300 8100 97.5

Total Volume (weight)

This measure allows the collection of

actual volume produced in engineering units.

Total
Volume = Volume produced in tonnes

Which Considers:

The volume should be consistent with the volume defined in Volume Performance but
expressed in engineering units of tonnes. Products not typically measured in units of weight
may ignore this measure.

Example:

SKU Q1 Annual Plan Q1 Output Tonnes

 

Liquid 400ml Local 3,500 3,200 3,200

Liquid 200ml Local 4,600 4,700 4,700

Liquid 50ml sample 200 200 200

Total 8,300 8100 8100

Total Volume (units)

This measure allows the collection of

actual volume produced in thousands of units.

Total
Volume = Volume produced in thousands of units.

Which Considers:

This volume should be consistent with the volume defined in Volume Performance but
expressed in thousands of units. Products not typically measured in weight units or single units

of production should report this number in the number of cases produced.

Example:

SKU Q1 Annual Plan Q1 Output 000 Units

 

Liquid 400ml Local 3,500 3,200 8,495

Liquid 200ml Local 4,600 4,700 22,330

Liquid 50ml sample 200 200 3,880

Total 8,300 8100 34,700

Overall Equipment Efficiency (OEE)

This is a measure of operational performance and is based on the TPM Cost of Production.

OEE  = Availability x Performance x Quality

            Availability = {(Loading time – Downtime) / Loading time} * 100%

            Performance = {(Standard cycle time * Product Units processed) /

Operating Time}* 100%

            Quality  = {(Product Units processed – Defect Units) / Product Units

processed}  * 100%

Which Considers:

1. The loading time is the time available once shutdown losses have been removed.
2. Shutdown losses include the following: Holidays, Weekends, Factory Shutdown, No
production orders, Planned maintenance, and modifications.
3. Within Factory shutdowns, the unavailable time due to work patterns should be included (e.g.
If the site works 6 days per week, the seventh day should be considered as part of the Factory
shutdown)
4. Downtime considers the following losses: Equipment breakdown, Changeovers, cutting blade
change (if appropriate), Startup, Ramp down, Management, and Operational Motion.

5. Standard cycle time is based on the designed or maximum speed, considering the bottleneck
in the line. It is the time to manufacture one unit e.g. 500 upm = 3.3 x 10-5 hours / unit
(1hour/(500*60 units))
6. When different products run on a given line at different speeds, then a weighted average
should be used to specify the speed of the line.
7. Where more than one line is being considered a weighted value should then be calculated.
8. Weighted averages should be calculated based on the relative volumes of each line:
Line 1 produced: 1000 Tonnes @ 65% OEE
Line 2 produced: 2000 Tonnes @ 45% OEE
Weighted average = (65%*1000/3000)+(45%*2000/3000) = 52%
9. Defect units consider waste products as well as the quantity of rework. This should consider
quality defects and rework relating to product and packaging material. Even if the product left
the factory and was later returned for not matching quality specifications.
10. Total product units processed should include defect units, therefore the figure for ‘Volume
produced’ should be all products including defect units.
11. The loss tree in the template asks for a defect related time, this is converted into units by
the calculation based on design speed.
12. Definitions for individual losses should be those considered within the TPM CoP.
13. A weighted OEE can be calculated for a Global based on volume.

Example:

Availability

  Line 1 Line 2 Total

Total time 8760 8760 17520

Shutdown: 4030 4280 8310

   – Factory Shutdown 1630 1630 3260

   – No production orders 620 1850 2470

   – Planned maintenance 1780 800 2580

   – Planned modifications 0 0 0

Loading time 4730 4480 9210


 Downtime: 220 385 605

   – Equipment breakdown 0 100 100

   – Change-overs 50 120 170

   – Cutting blade change 0 0 0

   – Start up / Ramp down 0 0 0

   – Management 75 75 150

   – Operational Motion 95 90 185

Availability 95% 91% 95%

Performance

Design / Max line speed 500 160 660

Standard time 3.33 x 10-5 1.04 x 10-4  

Operating time 4510 4095  

Actual units produced 114089000 28315000 142404000

Performance 84% 72% 82%

Quality

Defects / Rework 150000 96000 246000

Quality 99.9% 99.7% 99.8%

       

OEE 80% 66% 77%

       

Overall Equipment Efficiency = 77%

Raw Material Yield


This measure enables an understanding of Raw Materials waste within the
Make process.

Raw Material Yield = {(Actual Raw materials costs –Zero Based Raw
material costs) / Zero Based Raw material costs} * 100%

Raw Material Loss (ppm)= Raw Materials Yield *

10,000

Which Considers:

1. This measure is focused on the Make process and therefore does not include obsolescence,
stock write-offs, etc.
2. The actual raw materials cost should not include consumables such as Bleaching earth,
catalysts which should be considered as part of the production cost.
3. The Zero-Based raw materials cost should not include the traditional BOM material wastage
allowances.
4. No allowance is to be made for over-packing, washouts, etc. as these are waste and
therefore should not be shown in the zero-based raw material consumption figure.
5. The raw materials cost should exclude material used for trials and pilot plant.

Example:

  Actual Zero Based Yield

Oils and Fats 25000 24500 2.04%

Perfume / Dyes 15000 14956 0.29%

Caustic / Brine 5600 5321 5.24%

Additional additives 2312 2289 0.99%

Total 47912 47066 1.80%

Packaging Material Yield

This measure enables an understanding of Packing Materials waste within

the Make process.


Packaging Material Yield = {(Actual packaging materials costs –Zero
Based packaging material costs) / Zero Based Packaging Materials Cost} *
100%

Packaging Material Loss

(ppm)= Packaging Material Yield *
10,000

Which Considers:

1. This measure is focused on the Make process and therefore does not include obsolescence,
stock write-offs, etc.
2. The Zero-Based packaging Material costs should not include the traditional BOM material
wastage allowances.
3. No allowance is to be made for packing removed from poor product etc. as this is waste and
therefore should not be shown in the zero-based packaging material consumption figure.
4. The packaging materials cost should exclude material used for trials and pilot plant.

Example:

  Actual Zero Based Yield

100ml Bottle 15700 15007 4.62%

200ml Bottle 2399 2123 13.00%

50ml Jar 14006 13456 4.09%

75ml Jar 1232 1225 0.57%

Total 33337 31811 4.80%

Rework Inventory

To measure production that does not immediately meet specifications to ship.

Rework
Inventory = The value in dollars of goods held not
shippable due to
quality issues.

Which Considers:


That product which is not immediately
meeting specification as a shippable finished good.

1. Includes all finished goods, and work-in-process material awaiting

additional conversion
steps to meet finished product specifications.
2. Includes finished goods and work-in-process material held offsite,
but not yet released as a
finished good into the warehouse system.

Mean Time Between Failures

To measure the reliability of the

production machinery and the effects of planned maintenance.

MTBF = Total
Operating Time / Number of breakdown events

Which Considers:

1. Breakdown events are greater than 10 minutes in duration.

2. Electrical or mechanical failures.

Delivery

SKU Complexity

Measure the level of

portfolio complexity in a factory.

SKU Complexity = Volume produced

/  # of unique SKUs produced

Which Considers

1. A unique SKU includes all standard and promotional

items that are manufactured in the
period of evaluation.
2. For manufacturing operations that act as regional
sourcing units even the differentiation of
two products by labels with
different languages should be considered as separate SKUs.
3. The product portfolio to use for this ratio should
be the number of SKUs actually
manufactured in the site for the given period.
4. Volume should be reported in tonnes or ‘000 units
according to the category’s normal
reporting criteria.

Example 
   Volume Produced # of different SKUs
manufactured SKU Complexity

Line A 20,000 12 1666

Line B 25,000 7 3571

Total 45,000 15 3000

Note: The number of SKUs in the example assumes an overlap in the SKUs ran in each line. For
the total, this duplication should not be considered.

Portfolio Produced Weekly

To measure the degree of flexibility and linkage of the Make Process within the overall supply
chain. The purpose of the measure is to track how closely Operating Units’ production
scheduling is to market needs. The more frequently that products are produced, the greater is
the flexibility to provide a rapid response with minimum stocks.

Portfolio Produced Weekly (PPW)% =(# Of unique SKU produced per week
X 100) / (# Of unique SKU in Portfolio)

Which Considers:

1. A unique SKU includes all standard and promotional items that are traded in the following
quarter to the period of evaluation.
2. SKU’s produced must be counted from the actual production every week
3. SKU’s Portfolio to be used considers the future three-month horizon.
4. Consolidation by month, quarter, year should be done as a weighted average by SKU volume.

Example:

April Week 1 Week 2 Week 3 Next Quarter  Portfolio

#
SKU produced 23 37 34 62

PPW
% 37 60 55  

         


 Volume
(‘000 Units) 2500 3300 2870  

         

Portfolio Produced Weekly (April) = ((37%*2500) + (60%*3300) + (55%*2870) * 100)

/ 8670 =  52%

Output Reliability by SKU

Allows measurement of a site service level to the supply chain

Output
Reliability by SKU (%) = å (Plan – ABS (Actual – Plan)) * 100

                                                                  
å
Plan

Which Considers:

1. The Plan should be frozen in the week previous to the actual production week. No changes
requested by planning or by the factory should be accepted as changes to the original frozen
plan.
2. The plan comprises a period of 7 days of production (full week).
3. Consolidation by month, quarter, year, and Global should be done as a weighted average by
SKU volume.
4. Any product rejected for quality or hygiene incidents should not be recorded as production
output in this measure
5. Measurement at the plant should be on an SKU basis.
6. Factories should track the number of plan changes per week to ensure that causes for a poor
performance in this measure can be correctly attributed.
7. Output Reliability will only be calculated on the basis of packing lines, not in processing
operations.

Example:

Site 1 Week 1  

SKU Actual Plan ABS Difference Plan – ABS

Liquid Lotion 400ml Dry Skin 30000 32000 2000 30000 

Liquid Lotion 200ml Dry Skin 45000 40000 5000 35000

Liquid Milk 200ml 42000 43000 1000 42000

         

Total 117000 115000   107000

         

OR(%)       93%

Site 1 Week 2  

SKU Actual Plan ABS Difference Plan – ABS

Liquid Lotion 400ml Dry Skin 65000 65000 0 65000

Liquid Lotion 200ml Dry Skin 33000 39000 6000 33000

Liquid Milk 200ml 40000 32000 8000 24000

         

Total 138000 136000   122000

         

OR(%)       90%

SKU Site 1 Site 2

Week 1 93 94

Week 2 90 97

     

Total Volume
  255000 266000

     

OR(%) 91 96 
Output Reliability Site 1, Week 1(OR)% = {(32000-2000)+(40000-
5000)+(43000-1000) * 100} /  115000 = 93%

Output Reliability Site 1, Period (OR)% ={(93*117000)+(90*138000) 

* 100} / 255000 = 91%

Output Reliability Global, Period (OR)% = {(91*255000) +

(96*266000) * 100} / 521000 = 93.5%

Number of SC Planning Schedule Changes

To measure the activity occurring as changes to the “frozen” plant schedule after the schedule
has been “frozen” for the current short-term planning cycle.

Number of SC Planning
Schedule Changes = The difference between the
individual SKU count planned for in the
frozen schedule and the SKUs that
ran on the lines.

Which Considers:

1. The Plan (as set by SC Planning, not plant scheduling) should be frozen in the week previous
to the actual production week. Any changes requested by planning and jointly agreed should be
accepted as changes to the original frozen plan.
2. Any product rejected for quality or hygiene incidents should not be recorded as production
output in this measure
3. Measurement at the plant should be on an SKU basis.
4. The number of plan changes per week.

The number of SC Planning Schedule Changes will only be calculated based on packing lines,
not in processing operations.

Example:

  “Frozen” Plan Actual SKU Run Change?

Liquid Lotion 400 ml 3500 3500 No


 Liquid Lotion 200 ml 2700 1000 Yes

Liquid Milk 50 ml 1500 1500 No

Liquid Rich 100 ml 6500 6500 No

Lux Super 900 ml 2000 0 Yes

Organics 500 ml 0 2000 Yes

Organics 350 ml 0 1000 Yes

Organics 250 ml 4500 4500 No

Total SC Plan Changes     4

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PQCDSM KPI Definitions

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PQCDSM KPI Definitions. Part 3

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