The constantly updated picture of the status of manufacturing processes is fundamental to identify the aspects that can be optimized to improve service level and product quality. In a manufacturing company, it is important to identify the strategic KPI (Key Performance Indicators) to measure, to trace and to analyse the production trend from the point of view of efficiency, service level and process quality.
To implement the efficiency of manufacturing processes and to preserve competitiveness in a more and more complex global context, in the last few years many enterprises have adopted business models inspired by the principles of Kaizen philosophy, Lean Manufacturing or del Total Quality Management and Continuous Improvement.
The Key concept shared by all these approaches is the idea that to improve productivity it is necessary to start from a correct mapping of all corporate processes. In the specific case, it means to determine the variables that characterize the core activities of each corporate area: once identified, these elements must be measured and monitored constantly, to have an always-updated picture of the health state of a company. These variables, called Key Performance Indicators (KPI) are useful to assess, to trace and to analyse manufacturing performances according to the targets we want to reach. KPI must be then numerically quantifiable, easily usable and determinable, processed in short times, significant to establish a plan aimed at improving efficiency, service level and process quality; finally, they must be controllable and comparable.
KPI in the manufacturing industry
What KPI must be monitored? How? How frequently? Each corporate organization, according to the structure of the productive activity and the factors that can most influence its trend, can execute its analysis following two directions: the first approach is based on the analysis of the data collected during processes to identify the strategies that can lead to improvements in the medium-long term. The second modality is based on the performance control in real time to achieve an immediate feedback on the various manufacturing phases: through this technological course, it is possible to react timely to eventual unforeseen events, reducing the risk of having operational losses and extra-costs.
In the manufacturing ambit, some KPI taken into account are the overall plant efficiency: it is a metric obtained through multiple variables and the most “demanding” indicator, as it influenced by all those inefficiency typologies that cause lower productivity.
The work in process (WIP) indicates the number of parts (or of batches) under processing. This KPI is useful to analyse the system performances and to try understanding how to intervene to reduce the costs stemming from the immobilization of stocks of raw materials or of semi-finished products. Besides, since production rejects can be generated by the most different reasons, it is important to investigate to understand their provenience and draw up a cost estimate.
Another indicator worth considering is the lead time, that is to say the necessary time interval to fulfil the demand by a customer. The lower is this value, the faster and more flexible is the company. This KPI, together with the monitoring of delays, allows – if provided with a production planning system – assessing possible delays and revising the order management. Keeping the total number of produced units under control is another key element to evaluate costs and profits. Moreover, tracking defective units can be useful to identify the problems in a production line or process.
Two other variables to be considered are the number of unscheduled downtimes, i.e. when the production stops unexpectedly and the frequency of maintenance and upgrading interventions: these two KPI are important to survey how plants are running. Finally, it is necessary to monitor slow phases taking more time than the ideal manufacturing cycle and it is useful to count re-machining, i.e. the number of units that need either repair or the replacement of a component before being forwarded to the customer.