The 12 most important metrics to measure in manufacturing

You can’t manage it if you can’t measure it. Any manufacturer who wants to take their business to the next level needs to collect and analyse the relevant data, or metrics.

Numbers are powerful things in business. The right metrics can help you find the sticking points or weak spots in your production line and processes, giving you the information and insights you need to continuously improve and refine your business.

But you can’t be unsystematic about it. As well as collecting the right metrics in the right way, you also need a proper process in place to review — and then act on — the results.

Here are the 12 most important metrics to measure in manufacturing that are essential for a successful business:

1. Manufacturing cycle time. Cycle time is the total time from the beginning to end of a process. In manufacturing, it measures the time taken for a product to pass through all machines, processes and cycles to become a finished product. The total time an item spends in the manufacturing system between the order release and completion is the “total manufacturing cycle time”. Reducing this time can deliver reduced costs, better response to customers and increased flexibility.
2. Time to make changeovers. Changeover is the process of converting a line or machine from running one product to another. So this metric simply measures the speed or time it takes to make this switch. Depending on your equipment, a changeover can last minutes, hours or even days. By tracking this metric, you can identify how and where you could improve your changeover times, for example, by using equipment that is easier to set up and configure.
3. Throughput. This is one of the simplest — yet most important — manufacturing metrics. It measures the average number of units being produced on a machine, line, unit or plant over a specified period of time, e.g.: units per minute. If your throughput suddenly decreases, you know that you have an issue on the line. Improving throughput can be achieved with automated equipment, lean processes and so on.
4. Capacity utilization. Operations staff love this metric because it indicates how much of the total manufacturing output capacity is being utilized at a given point in time. In other words, to what degree are your potential output levels are being met or used? Displayed as a percentage of total potential output, this metric gives insight into the overall slack that is in your facility. So when your facility is said to be working at full capacity, there is 100% capacity utilization.
5. Overall Equipment Effectiveness (OEE). An analysis of efficiency and productivity, OEE is globally recognised as a best practice measure and key performance indicator in a range of industries. OEE assesses quality, speed and downtime (availability x performance x quality), and can be used to indicate the overall effectiveness of a piece of production equipment or an entire production line. The better your OEE score, the more profitable and cost-effective your business will be. So an OEE score of 100% is perfect production: manufacturing only high quality units, as fast as possible, with no downtime. 
6. Schedule or production attainment. How often does your facility attain its target level of production within the set time? This is the “schedule attainment score” or “production attainment score”. This metric measures the actual production as a percentage of the scheduled production. Lower percentages may indicate that a machine isn’t optimised properly or that the production team isn’t able to plan for real-life changes.
7. Percentage planned vs emergency maintenance work orders. Planned maintenance percentage (PMP) is a widely used measure for maintenance staff, and shows the percentage of the total number of maintenance hours spent on planned maintenance activities in a given time period. For example, if 300 hours were spent on planned maintenance activities out of 400 total hours spent on all maintenance, the PMP is 75%. This could also be shown as a ratio metric, which indicates how often scheduled maintenance takes place versus more unplanned (emergency) maintenance — in this case 3:1. The idea is to reduce the incidences of unplanned work, because they can cost up to nine times more than planned maintenance due to rushed parts, service callouts, downtime, overtime and so on.
8. Availability. This metric is the ratio of operating time to planned production time. Operating time is simply the planned production time minus downtime, which is any period of time where production is stopped. The result is a direct indicator of availability for production.
9. Yield. Yield is one of the oldest metrics in the book. There are typically two:

• First Pass Yield: is the percentage of products that are manufactured correctly and to specifications the first time, without scrap, re-run or rework. It is the number of units coming out of the process divided by the number of units going into the process over a set period of time.
• Overall Yield: is the percentage of products produced that may, or may not, require re-work to fall within compliance and quality standards.

1. Customer rejects/returns. This simply tells you how many times customers reject products or request returns because they have received bad-quality or out-of-specification products. It is direct evidence of your quality standards; however, if you are measuring all of the above correctly and acting on the result, this should never be a high number!
2. Supplier quality incoming. Measuring supplier quality is crucial in determining a product’s final quality. This metric is the percentage of good quality materials coming into the manufacturing process from a supplier. Alternatively, you can measure the percentage of bad quality materials coming in, i.e.“supplier defect rate”.
3. Customer fill rate, on-time delivery, perfect order percentage: This metric is key to the order-management process and will ultimately determine your customer relationships. It shows you the percentage of your orders that are shipped in full and on time as a percentage of all your orders. In other words, it tells you the likelihood that you will effectively service your customers. The higher your fill rate, the more likely your customers are to trust you and choose you over your competitors. It also helps show how efficient your production line is when it comes to getting the product out of the door, and how successfully you are keeping to production schedules. Never aim lower than 100%.

Remember, what you don’t know CAN hurt you. Put aside some time to work out how you can better collect, manage and act on your business metrics, and you’ll have a powerful way to manage your business growth.

Re-post for LinkedIn: Article by Matt Nichol