Transform to Industry 4.0 Part 6

Examples of Key Performance Indicators (KPIs) for the Manufacturing Industry

July 6, 2022

An important factor to consider when you transform your business into Industry 4.0 is how to use the data that has been generated for analysis decision making, then subsequently creating more efficient processes for driving or improving your business and therefore becoming data driven.

Looking at the vast amount of data available in the industry, BizOne has selected some examples of Key performance indicators (KPIs) along with the benefits of each.

1.      Production Volume

Track and estimate your production volumes based on the time of interest.

Every factory needs to have an overview of the production capacity during a certain period of interest, such as monthly, yearly, daily, or even real-time, which is useful for understanding the ability of the organization to generate income and use it to indicate progress, regression, or known anomalies that may occur when the data is compared and analyzed over time.

Examples of measurements used

  • Production Volume by Product
  • Production Volume by Machine/Device
  • Production Volume vs Production Target.

2.      Production Downtime:

Track production downtime problems and behavior.

The main factor which can cause the factory to lose revenue or customers is the production line downtime due to various factors. Knowing the problem and downtime behavior is essential information to analyze and formulate solutions to minimize downtime to avoid loss of profits.

Examples of measurements used

  • Rational Production Downtime Ratio by Cause.
  • Record of historical production downtime, identifying the machine, the cause, and the downtime period.

3.      Production Costs:

Monitor the costs in the production process

Tracking production costs by analyzing them down to the product level and type of production cost for managing the costs or products is also used as a measure of efficiency. If there is a cost change this can also help in analyzing the benefits or impact.

Examples of measurements used

  • Cost per Product.
  • Cost per Production Process
  • Cost Proportion by Type

4.      Throughput:

Measuring your production capabilities

It is a metric that can highly reflect performance as it measures a machine's ability to produce during a period of interest. It is calculated as the number of units produced during the period of interest divided by the time of interest. For example, the standard period of interest is 5 minutes. Machine A can make 20 pieces. Throughput = 20/5 or 4.0 to be used as a measure of productivity.

Examples of measurements used

  • Throughput by Machine/Device
  • Throughput by Product Type

5.      Capacity Utilization:

Monitor the utilization of production capacity to the maximum.

Capacity is the key metric in knowing your cost-effectiveness and efficiency by tracking production capacity in various situations to analyze and find ways to maximize the use of capacity to keep your machines running at the right intervals and know any issues that could be improved.

Examples of measurements used

  • Capacity Utilization by Machine
  • Capacity Utilization by Production Line.
  • Historical records of capacity utilization.

6.      First Pass Yield:

Monitor your production quality

An indicator that indicates production efficiency by calculating the rate of production of the highest quality goods produced by machines. This is based on the number of “perfect” goods divided by the total number of produced goods. If you can manage the maximum production rate of perfect goods, it means that your production processes and machines are reliable and efficient. This results in reduced costs for quality control, wastage, reproduction and increased profitability.

Examples of measurements used

  • First Pass Yield by Machine
  • First Pass Yield by Production Line.
  • Historical records of the First Pass Yield

7.      Defect Density:

Tracking the damaged goods right away

This indicator enables the tracking of the number of defective and non-standard goods becoming finished products, possibly caused by errors in various manufacturing processes which can be caused by several factors. Such as machine failure, human error, or error while conveying the workpiece. You can calculate defect density by the number of defective products divided by the total number of products produced to provide visibility of the problem and enables the organization to decide on how to fix and improve our product line further.

Examples of measurements used

  • Defect Density by Machine.
  • Defect Density by Product.
  • Defect Density by the Cause.

8.      Scrap Rate:

Track the amount of failed units

The metric is interested in the rate of material that cannot be turned into finished goods. This may be caused by manufacturing processes, defects, defects, or wasted scrap. This can be calculated in a variety of ways, such as

  • (Amount of waste material/Amount of material used in production) * 100
  • ((Number of perfect goods – expected quantity of finished goods) / expected quantity of finished goods) * 100
  • (Defective products / total number of products produced) *100

By knowing the scrap rate that occurs from various perspectives, it is possible to consider a waste management approach or reduce the amount of unnecessary waste to increase the ability to produce excellent products while also reducing material wastage and reducing unnecessary costs.

Examples of measurements used

  • Scrap Rate by Material.
  • Scrap Rate by Machine.
  • Scrap Rate by Product.
  • Scrap Rate by Waste Type.

9.      Overall Equipment Effectiveness (OEE):

Evaluates the performance of the machine.

Overall machine effectiveness provides an understanding of the production capacity of the machine during a planned production period. This is done by taking the average calculation of the three components of the machine performance:

9.1.   Availability = Operating Time / Planned Production Time

9.2.   Performance Efficiency = Total number of products produced / Machine production capacity

9.3.   Quality Rate = Perfect goods / The number of produced

By using the information above to calculate as

Overall Equipment Effectiveness = (Availability *Performance * Quality rate) * 100           

Examples of measurements used

  • Overall Equipment Effectiveness by the machine at the time of interest.
  • Historical records of Overall Equipment Effectiveness.

In some organizations productivity measurements can be detailed based on different time criteria as follows:

  • Overall Operations Effectiveness (OOE): Evaluates the efficiency of operations taking into account unplanned time by considering total operating time as the maximum.
  • Total Effective Equipment Performance (TEEP): Evaluates the maximum possible production time the machine can operate 24 hours a day. This is calculated by including periods without production shifts and no production plans.

These are just a few examples of useful key performance indicators that can be used by the manufacturing industry to help management team use data to make informed decisions to achieve their objectives. In Part 2, we will share more examples of interesting key performance indicators!

If you would like to learn more about the industry 4.0 concept or would like to see some examples of related technologies, contact BizOne for a free consultation today!