December 26, 2022

Top KPIs And Metrics Manufacturers Should Track To Achieve Operational Excellence


Manufacturing facilities operate in a highly regulated and competitive environment with slim revenue margins. With these conditions, companies must inevitably establish key performance indicators (KPIs) and metrics for driving operational excellence and identifying bottlenecks that may derail their business goals.

Developing KPIs and productivity metrics provides:

  • A standardized and simplified way to quantify the reliability of existing production systems
  • The efficiency of the workforce
  • Customer satisfaction
  • Insights for continuous and sustainable quality improvements
  • How to track KPIs and production metrics

Tracking KPIs and production metrics requires the monitoring of different data sets. Modern manufacturing facilities use integrated digital systems to manage routine workflows, track employee attendance and productivity, optimize supply chains, manage and track maintenance, and facilitate communication across facilities.

These are data-rich systems that can enable KPI tracking. Data from different units on the manufacturing floor is centralized, making it easier to identify ineffective work practices and the impacts of various company policies on productivity and quality. Companies can use the following tools for data management, leading to better results:

  • Labor tracking software
  • Production scheduling software/ Manufacturing execution systems (MES)
  • Computerized maintenance management systems (CMMS)
  • Enterprise resource planning (ERP) software

You can also divide KPIs and productivity metrics into short, medium, and long-term goals. However, it’s important to leave some room for flexibility — for updating and modifying KPIs to match the existing market dynamics, reflect technological advancements, and comply with regulatory and industry standards.

Here is a look at some vital KPIs and metrics manufacturers should continuously track to achieve operational excellence.

Overall Equipment Effectiveness (OEE)

The continuity and quality of manufacturing processes depend heavily on overall equipment effectiveness. The OEE metric compares the actual performances of different pieces of production equipment against their ideal or designed capacities. The OEE metric takes into account:

  • The availability of production machinery
  • Performance of production assets (consistent operating speed)
  • Production quality (how many production defects per equipment?)

Strive to optimize the OEE of every piece of equipment on the production line because low OEE scores affect productivity across the entire facility. You can accurately determine OEE scores by tracking hourly, daily, or weekly production quantities, actual production time, and comparing them with ideal productivity scores.

To achieve excellence, you should continuously improve these scores. Begin by establishing standard operating procedures, training production staff, and developing a simplified equipment availability and reliability tracking program.

To gain better visibility over equipment performance, use condition monitoring technology to track individual performances of diverse production assets. These systems rely on IoT sensors to monitor real-time equipment performance. You can even customize remote equipment monitoring by leveraging SCADA networks for data acquisition and transfer.

Employee Productivity

It is important to track employee productivity to ensure seamless collaboration among different production systems and departments. These employees leverage their skills to support production machinery, perform quality checks throughout the process, maintain production equipment, and integrate different data sets into routine manufacturing activities.

Achieving operational excellence requires the participation of all employees, irrespective of their responsibilities on the production floor. Having several unproductive employees in a facility increases operations costs.

Companies should track revenue per employee as a means to quantify the success of the existing workforce. Using solutions like employee time-tracking software enables the management to monitor effective work hours per employee and estimate if revenue per employee meets their desired benchmarks. Using next-level features like labor tracking and job costing, you can track more layers of productivity, allowing you to compare things like one employee’s productivity on a machine versus another’s.

Employee turnover should also be tracked. High turnover could indicate a lack of employee motivation and satisfaction. Manufacturers should prioritize employee retention since the sector faces an unprecedented skilled labor shortage.

Employee productivity patterns should be periodically reviewed to identify opportunities for improvement. Insights from time tracking software can help companies to develop relevant training programs for employees in different sections, develop employee appraisal programs, and reorganize production shifts to maximize yield and revenue per employee.

Maintenance Metrics

A progressive company must develop effective maintenance KPIs to maximize equipment uptime, performance, and long-term reliability. Objective asset maintenance complements production volumes — unscheduled equipment downtime results in lower production volumes, increased defect density, and longer delivery time. This explains why manufacturers should develop reliable maintenance strategies and implement proactive maintenance — to avert breakdowns, and establish a more predictable production schedule.

Maintenance KPIs and metrics help companies to ascertain whether the adopted maintenance measures optimize overall equipment effectiveness. Monitoring these metrics informs the company on whether routine maintenance and repairs are completed within the prescribed budgets. The company can identify:

  • Quantity of deferred maintenance workload
  • Quality of performed maintenance work
  • Planned maintenance percentages
  • Asset maintenance costs

Maintenance metrics like the Mean Time To Repair (MTTR) and the Mean Time Between Failures (MTBF) are used to track the progress of approved maintenance tasks. By tracking these KPIs and metrics, manufacturers can unearth ineffective maintenance practices and identify equipment failure causes, patterns, and impacts. They can proactively earmark assets approaching the end of their useful lives, and strategically phase them out.

Overall Operations Effectiveness (OOE)

Overall operations effectiveness (OOE) is a more comprehensive indicator that monitors the performance of manufacturing operations over time. It takes into account the availability, quality, and performance of manufacturing operations.

The OOE metric monitors the performance of the entire production line and includes non-productive equipment on the line — such as assets undergoing planned maintenance. Manufacturers calculate OOE using the following formula:

OOE=Performance x Quality x Availability

Availability= Actual production time/Uptime

Tracking OOE is essential for making decisions on optimizing manufacturing capacities, scaling up operations, and maximizing the flexibility of particular production practices. Improving OOE scores impacts equipment and employee productivity. Companies can enhance this indicator by streamlining other business operations — e.g., supply chain management.

You can improve OOE metrics tracking by utilizing digital technologies to monitor individual equipment performance. Install condition monitoring sensors and automate production equipment to track quality throughout the production line.

Final remarks

Achieving operational excellence in manufacturing requires the participation of all employees within the facility. Companies should establish key performance indicators and metrics depending on:

  • The scope of their operations
  • Desired business goals
  • Existing business challenges

Manufacturers should identify and implement relevant technological solutions to facilitate data collection and analysis for sustainable quality improvements, predictable production scheduling, and delivery times. Companies should update these indicators and metrics for quantifiable success in the short, medium, and long term.

Bryan Christiansen:
Bryan Christiansen is the founder and CEO of Limble CMMS. Limble is a modern, easy-to-use mobile CMMS software that takes the stress and chaos out of maintenance by helping managers organize, automate, and streamline their maintenance operations.