21 Production KPI (Key Process Indicator ) Examples for the

Manufacturing Industry

1. Capacity Utilization – This measures how much of your available capacity

you are actually using on your production line. The higher the better.
Buildings and equipment are expensive assets and you want to maximize their
use. It also helps to manage what you sell by production center so you do not
over or undersell a particular manufacturing line, thereby balancing the
workload.
2. On Standard Operating Efficiency – If you have a piece rate or incentive
system in place, you want to measure how employees are performing against
the labor standards you used to cost the product. If these numbers are low, it
is beneficial to examine methods and do post-production analysis. It is very
common for companies to underestimate labor costs, and this KPI can help
you identify this.
3. Overall Operating Efficiency (OOE)– This is one of my favorites because it
includes on standard time as well as off standard time. You are trying to
maximize this percentage so that employees are adding value the majority of
the time they are clocked in and present. 
4. Overall Equipment Effectiveness OEE– This metric measures the overall
effectiveness of a piece of production equipment or the entire line. Availability
x Performance x Quality. This is a great KPI to maximize to ensure you are
running the plant effectively.
5. Machine Downtime – This KPI and the two below are components of OEE
above, but worth measuring on their own. This includes scheduled downtime
for maintenance, setups and unscheduled downtime and can include machine
changeover.
6. Unscheduled Down Time – This one can be a killer and one to minimize
because it affects other processes in the production chain. Scheduled and
predictive maintenance can help minimize unscheduled downtime. There are
wireless sensors you can use which can help support predictive maintenance
to reduce unscheduled downtime.
7. Machine Set Up Time - A lot of production time can be lost to set up and
changeovers. Implementing SMED (single minute exchange of dies or similar
techniques) can really help keep this lost time to a minimum. Look for ways to
incorporate parts of the set up so that they are internal to the process to avoid
taking machines offline for any longer than you need to. Quick changeover
setups also reduce this time.
8. Inventory Turns – In today’s Lean environment and pull approach, keeping
inventories to a minimum can really help free up cash and give you the ability
to respond to changing customer needs much more efficiently and with better
delivery times. It also keeps your on-hand inventory fresh and relevant to
avoid obsolescence and mask quality problems. 
9. Inventory Accuracy – There is nothing worse than putting a work order into
production only to find your raw goods inventory was inaccurate. This either
delays the start of production or causes delays in the line if the order
happened to make it into process. I had a rule to never let an order begin
production unless everything was available in-house for the order. This helps
you manage and maintain your supply chain to keep the right amount of
inventory on hand to keep things running.
10. Quality – This is a no-brainer and table stakes today, but still necessary to
measure. There are many ways to measure quality, and I am listing a few
below for consideration. Percent defective is one of many ways you can
measure quality. Establishing clear and consistent standards goes a long way
to reaching your quality goals.  The only way to continuously improve is to
learn from your mistakes, so don't just measure the quality - determine the
root cause and fix it.
11. First Pass Yield – The percentage of products manufactured correctly and to
spec the first time through the process. Getting this number up reduces the
next two listed.
12. Rework – There is no bigger waste of time and raw materials than rework.
Implementing quality at the source and effectively training people can go a
long way to minimizing this waste.
13. Scrap – Raw material costs are expensive so minimizing scrap is important.
The more robust your processes and training programs are, the less scrap you
are likely to produce. When you do produce scrap, do your best to recycle it if
possible.
14. Failed Audits – There is nothing worse than having a shipment ready to go
out the door that fails a final quality control audit. Better here than on the
customer's doorstep, but this still leads to rework, scrap and delays. The goal
for this KPI should be 0 failed audits, and if it’s not, a root cause analysis is in
order.
15. On-Time Delivery – This is a KPI that really keeps customers happy but is also
motivating to your production employees. Set the goal for 100% on-time
weekly and consider rewarding your employees if they achieve it. Many of the
other leading indicators mentioned help drive this one.  What percentage of
total products are delivered on time?
16. Customer Returns – There is nothing worse than getting a defective product
back from customers. Not only is it embarrassing, it ruins customer
confidence. Even though this is a result indicator, it can help you determine
problems in the production chain when you evaluate returned products. A
good goal is to strive for zero returns.
17. Training Hours – This is a great leading indicator that can drive a lot of the
other KPIs on this list. Training doesn’t solve every problem, but there is no
substitute for a good training and onboarding program. Too many companies
still use the sink or swim method which creates a lot of problems. 
 18. Employee Turnover – Happy employees make happy customers. If your
turnover is high, it is time to do some root cause analysis to determine why.
Quality and efficiency problems often stem from high turnover due to training
new inexperienced employees. 
19. Reportable Health & Safety Incidents – Here's another KPI to strive for zero
on. Many companies have embedded this in their culture. I grew up in a big
railroad town, and I remember driving past the billboard of a locomotive
where they would list how many days achieved with zero accidents. Very
motivating for employees and something they were proud of. Accidents drive
up workers' compensation rates and are hard on employee morale.
20. Revenue per Employee – This is a basic indicator but can be a quick helpful
way to see how the operation is doing overall; improving, standing still or
becoming less efficient. It is also a good metric to use to compare your
company against others in a similar industry.  
21. Profit per Employee – I like this KPI even more than the one above. Even
though it’s lagging, it takes into consideration how well you are doing on
many of the leading indicators above. Revenue per employee may look good,
but you may see you have opportunities to improve profitability.

Bonus Production KPI: Cycle Time - The total time from the beginning to the end
of your process, as defined by you and your customer.   This is the amount of time it
takes from the manufacturing process until the end of the process, sometimes
defined as the delivery date to the end customer.