What is a manufacturing KPI?
A manufacturing KPI is an essential metric for assessing the efficiency and quality of a production process. It enables quick analysis of each stage of the manufacturing process and each department involved, to identify areas where value is created and areas of improvement.
Measuring productivity and manufacturing process efficiency as well as financial and human aspects, Lean manufacturing KPIs are very strategic as they impact product quality, resource optimization, and company profitability.
By closely monitoring these key performance indicators, manufacturing companies can perform better and strengthen competitiveness in the market.
Why use manufacturing-specific KPIs?
As the management expert Peter Drucker said: “If you can't measure it, you can't manage it.”
In manufacturing environments, measuring the right KPIs is critical to ensure sustainable health and success. With manufacturing metrics, managers can accurately monitor equipment effectiveness, cost per unit, capacity utilization, carbon footprint,etc.
Manufacturing key performance indicators not only reflect the current state of production; they also provide valuable information to make informed decisions, improve manufacturing processes, and maximize profitability.
Here are the top benefits of using manufacturing KPIs:
- Resource optimization: Better management of raw materials and production capacity.
- Predictive maintenance: Anticipation of breakdowns through advanced analysis of machine performance.
- Waste reduction: Elimination of sources of loss (slow cycles, breakdowns, defects, waste, etc.).
- Increased yield: Higher production levels without lowering quality standards.
- Increased revenues: Increased production efficiency that leads to more sales.
- Reached strategic objectives: Alignment between production performance and business objectives.
Top 30 Manufacturing KPIs to Boost Production Performance
The secret of a successful manufacturing business lies in setting up the right key performance indicators, tracking them in real time, and developing a culture of sustained operational excellence.
Productivity indicators
1. Throughput
Throughput measures the rate at which products are produced. It allows for monitoring the efficiency of a production line in real time and quickly identifying any drop in performance due to breakdowns, slowdowns, or bottlenecks.
Throughput = Number of units produced / Time (hours, days, months)
2. Cycle time
This manufacturing KPI refers to the time required to manufacture a product unit, from the first step to completion. This includes processing, waiting, and transfer times between the various stages of the production process.
Cycle time is essential for identifying bottlenecks and optimizing production capacity. It can be calculated for a machine, a line, or the whole plant.
Cycle time = Process end time - Process start time
3. Production attainment
This manufacturing KPI measures the difference between what was produced and what was planned over a given period. It is used to monitor a line, workshop, or site's ability to meet planned production targets.
Production achievement = (Actual production / Planned production) x 100
4. Overall Equipment Effectiveness (OEE)
Overall Equipment Effectiveness measures the efficiency of a piece of equipment only during its scheduled production time, considering only the periods when the machine is scheduled to operate. It excludes planned downtime but focuses on actual performance during the expected production time.
This manufacturing KPI quantifies losses related to unplanned downtime, slowdowns, and production defects.
Metrics to calculate Overall Equipment Effectiveness:
- Availability rate = Actual production time / Planned production time
- Performance rate = Actual rate / Nominal rate
- Quality rate = Number of conforming units / Total number of units produced
OEE = Availability rate × Performance rate × Quality rate
5. Takt Time
Takt Time represents the production rate required to meet customer demand. It is the time to produce a unit based on available labor time and order volume.
It does not measure actual manufacturing time, but rather the production rate required to meet demand without overproduction or underproduction.
Takt Time = Available production time / Customer demand
6. Overall Operating Efficiency (OOE)
Overall Operating Efficiency refers to the performance of manufacturing processes, integrating human, material, and energy resources. Therefore, it encompasses all production factors, not just machines.
Unlike equipment-based indicators like OEE, OOE assesses manufacturing companies’ ability to efficiently transform inputs into finished products by optimizing all available resources.
OOE = (Actual production / Maximum potential production) x 100
7. Capacity utilization rate
This rate refers to the degree to which industrial equipment is used compared to its maximum potential capacity. It reflects the intensity of infrastructure use and helps to adjust production in line with demand and available capacity.
Capacity utilization rate = (Actual production / Maximum production capacity) x 100
Financial indicators
8. Cost per unit
The unit manufacturing cost is the total cost of producing a single product. It includes materials, labor, inventory management, and overheads.
This manufacturing KPI enables the organization to determine profitability and optimize its pricing strategy.
Manufacturing cost per unit = Total manufacturing cost / Total number of units produced
9. Energy cost per unit
Energy costs represent a significant proportion of industrial production expenses. Therefore, it is essential to manage them properly to reduce losses and improve profitability. This indicator measures the cost of energy consumed per product manufactured.
Energy cost per unit = Total energy cost / Number of units produced
10. Inventory turnover
The inventory turnover rate measures the frequency with which stocks are renewed over time. It can be used to assess the efficiency of supply and flow management and identify overstocks or risks of stock-outs.
Inventory turnover = Cost of Goods Sold (COGS) / Average inventory
11. Total Cost of Ownership (TCO)
Total Cost of Ownership (TCO) encompasses all the costs associated with acquiring, operating, and maintaining an item of equipment or a product over its lifetime.
It provides a complete picture of a product's actual cost over its entire life cycle, optimizing investments and improving long-term profitability.
TCO = Purchase cost + Operating cost + Maintenance cost + End-of-life cost
12. Gross margin per unit
This indicator assesses the profitability of manufactured products by measuring the profit generated per unit after deducting manufacturing costs. It helps companies adjust prices, optimize production costs, and improve competitiveness.
Gross margin per unit = Selling price per unit - Cost of Goods Sold per unit
13. Equipment Return on Investment (ROI)
This manufacturing KPI measures the profitability of industrial equipment by comparing the gains generated with its acquisition and operating costs. It is needed to guide decisions on purchasing, maintaining, or replacing machines to optimize industrial performance.
Equipment ROI = (Net gain / Total investment cost) × 100
Process indicators
14. First-Pass Yield (FPY)
The FPR measures the percentage of products manufactured in conformity from the first production run without rework or correction. This key indicator of industrial quality enables us to gauge the efficiency of manufacturing processes and identify potential sources of non-conformity.
FPR = (Units conforming on first production run / Total units produced) x 100
15. Scrap rate
This manufacturing KPI indicates the proportion of defective products that cannot be sold or corrected. It can be used to assess manufacturing efficiency and identify sources of non-conformity that lead to production losses.
Scrap rate = Number of units scrapped / Total number of units produced
16. On-Time Delivery (OTD)
This key performance indicator refers to the number of orders delivered on the date agreed upon by the customer. It reflects the reliability of the logistics organization but also depends on production cycle time, inventory management, and transportation efficiency.
A reasonable on-time delivery rate improves customer satisfaction and strengthens the company's credibility.
OTD = (Number of orders delivered on time / Total number of orders delivered) x 100
17. Machine downtime rate
The machine downtime rate represents the time a machine does not produce products. This includes planned stoppages (preventive maintenance, adjustments) and unplanned stoppages (breakdowns, personnel problems, unforeseen incidents).
Keeping a close eye on this manufacturing metric to reduce downtime and improve overall production efficiency is essential.
Machine downtime rate = Hours of downtime / (Hours of downtime + Hours of operation)
18. Production energy efficiency
This manufacturing KPI refers to the amount of energy consumed per unit produced. It can be used to identify energy-hungry equipment and implement strategies to improve industrial performance and reduce the environmental footprint.
Energy efficiency = Total energy consumption / Number of units produced
19. Mean Time Between Failures (MTBF)
This manufacturing KPI assesses equipment reliability by measuring the mean time between failures.
MTBF = Total uptime / Number of failures
20. Mean Time To Repair (MTTR)
This key performance indicator measures the speed and efficiency of maintenance interventions by indicating the average time needed to bring equipment back into service after a breakdown.
MTTR = Total time to repair / Number of breakdowns
21. Process compliance rate
This manufacturing KPI verifies compliance with industrial operations standards, procedures, and regulations, thus guaranteeing process quality, safety, and efficiency.
Process compliance rate = (Number of compliant processes / Total number of processes) x 100
Human indicators
22. Percentage of labor costs
This manufacturing KPI measures labor costs as a percentage of revenues, considering wages, social security contributions, vacation pay, insurance, and taxes. It is used to assess labor costs on profitability and identify areas for optimization without compromising productivity.
Percentage of labor costs = (Labor costs / Gross sales) x 100
23. Employee turnover
The employee turnover rate measures the proportion of workers leaving the company over a specific period. High turnover leads to additional costs in recruitment, training, and lost productivity, as new employees need time to become fully effective.
Employee turnover = (Number of departures over the period / Average workforce over the period) x 100
24. Workplace accident rate
This manufacturing KPI measures the level of risk and frequency of health and safety incidents requiring medical intervention in the workplace. It is calculated based on 1 million hours worked to enable standardized comparisons between different periods or companies.
The workplace accident rate is essential for assessing the effectiveness of prevention measures and improving employee safety.
Workplace accident rate = (Number of accidents with stoppage × 1,000,000) / Total number of hours worked
25. Overtime rate
This key performance indicator identifies inefficiencies in task planning, adjusts work organization, and improves workforce management by comparing the number of hours of overtime worked with the number of hours planned.
Overtime rate = (Overtime / Regular hours) x 100
26. Absenteeism rate
This refers to the impact of absences (sickness, unplanned leave, unjustified absences) on workforce availability and continuity of operations.
Absenteeism rate = (Absent hours / Total hours worked) x 100
27. Employee training rate
This manufacturing KPI measures the company's investment in employee skills development by comparing time spent on training with total time worked.
Employee training rate = (Number of hours of training / Total number of hours worked) x 100
Sustainability indicators
28. Carbon footprint per unit produced
This key performance indicator assesses the environmental impact of industrial production by measuring the amount of CO₂ emitted for each unit manufactured. It enables companies to reduce their carbon footprint, optimize their production processes, and meet regulatory requirements and consumer expectations regarding sustainable development.
Carbon footprint per unit produced = Total CO₂ emissions / Number of units produced
29. Industrial waste recycling rate
This metric corresponds to the proportion of waste from the production process that is recycled or recovered rather than thrown away or incinerated.
Industrial waste recycling rate = (Mass of waste recycled / Total mass of waste produced) x 100
30. Water consumption per unit produced
This manufacturing KPI measures the efficiency of water use in production by quantifying the quantity of water consumed for each unit produced.
Water consumption per unit produced = Volume of water consumed / Number of units produced
How to set good Lean Manufacturing KPIs
Setting meaningful key performance indicators for your manufacturing operations is crucial. They must be consistent and aligned with your operational and business objectives to be fully actionable.
When defining your manufacturing KPIs, consider the SMART framework:
- Determine what you want to measure (start with a manufacturing process or other critical processes).
- Be specific about why these KPIs are important.
- Make sure your manufacturing KPIs are quantifiable.
- Use actionable KPIs to guide decision making.
- Make sure your goals are achievable within a set time frame.
KPIs that comply with the SMART framework are clear and efficient tools for driving manufacturing performance in the long term.
Track KPIs in real-time and elevate manufacturing performance with UTrakk
The UTrakk Daily Management System (DMS) lets you create personalized manufacturing KPI dashboards that facilitate real-time monitoring of critical manufacturing metrics.
This solution offers robust and user-friendly features:
- Data integration: UTrakk dashboards can be fed by manually entering data or automatically integrating it from third-party software, ensuring a complete and up-to-date overview of KPIs.
- Intuitive visualizations: The platform offers various data visualization options, including bar, curve, and pie charts, lists, and more to analyze data at a glance.
- Intuitive filters and color code: Interactive filters provide accurate views of KPIs based on desired parameters. Color themes can also be applied to diagrams. This functionality allows for quick identification of performance trends and variances.
- Real-time action creation: To promptly act on KPIs that are below compliance thresholds, corrective actions can be created directly from a production dashboard.
The benefits of UTrakk dashboards:
- Immediate visibility on performance
- Accelerated problem-solving
- Informed, data-driven decision-making
- Better prioritization of actions
By integrating UTrakk dashboards into their daily operations, manufacturing companies can not only effectively monitor and analyze their production KPIs, but also foster a culture of continuous improvement, leading to increased overall performance.
Measure the right KPIs, make informed decisions, and lead your manufacturing plant to new heights
Manufacturing KPIs are not an end in themselves. They are tools that enhance management and operational efficiency by transforming raw data into strategic actions. KPIs provide deeper insight into manufacturing operations – production lines, teams, and strategic decisions – on a daily basis.
By selecting the right key performance indicators, analyzing them with discernment, and integrating them into a process of continuous improvement, manufacturing industry companies can not only optimize their operations but also foster a sustainable culture of performance and excellence.
With a platform like UTrakk, KPI tracking goes beyond one-off analysis: it becomes a driver of agility, anticipation, and progress. Accurate measurement leads to better decisions and, above all, ensures you move in the right direction.
Because, at the end of the day, what gets measured gets improved.
