What are the most important manufacturing key performance indicators (KPI)? Well, based on my experience, if your company needs to measure manufacturing KPI, then it must include tracking your production cycle times, your transit times between production work cells (which are a part of the larger overall cycle time) and your manufacturing productivity rates. If this sounds confusing or overwhelming, don’t despair. Surprisingly, there is a way to make these three essential manufacturing performance indicators easier to manage and easier to analyze.
Before delving into each of these performance indicators, it’s important to understand how they are all connected. For instance, cycle times can be broken down by individual operation in separate production cells, or work stations, on the shop floor. There is a cycle time in every work station for every operation, and an overall cycle time for the finished product. Transit times refer to the time it takes to move parts and materials to the next production cell or work station. These transit times play an overall role in the total cycle time for the finished product.
Your manufacturing productivity rates account for your cycle times and transit times and aim to provide you with insight into where your manufacturing is encountering lost time – which is a killer in manufacturing. So, when it comes to measuring essential manufacturing KPI, how does one go about raising the bar on cycle times, transit times and productivity rates?
1. Manufacturing Cycle Time KPI
When it comes to measuring cycle times in manufacturing, rely upon what you can see, not what you're told. What do I mean by that? Simply put, you can gain a much greater perspective by seeing cycle times occur in person – rather than relying upon what your software or MRP system tells you the cycle times are. Manufacturing software packages can only report variances and discrepancies in these times, but they simply can not provide you with the essential steps to reducing your cycle times and increasing your manufacturing throughput.
In order to establish your benchmark cycle times you must see production happen in real-time. Focus on establishing your ideal cycle times and then track those through your MRP software. The table and graph below are from a program I ran at a customer of mine. The link to the article is included below the video.
All of the above is taken from the article: Cycle Time Tracking & Variance Analysis in Excel for Small Manufacturers. The article includes a sample excel sheet that allows you to track cycle times emerging from individual work cells and work stations. The graph will then depict these cycles times and help you isolate your mean, median and mode cycle times.
2. Manufacturing Transit Time KPI
The outline below clearly demonstrates how tracking transit times between production work stations should be an essential manufacturing key performance indicators. The time it takes to move parts from one work station to the next is an essential aspect of reducing your overall cycle times and increasing production throughput. Minimize the time it takes to move parts to the next chain in the process, and your overall cycle times are lowered, your costs decrease and you manufacture more.
The above is taken from: Minimizing Transit Times Between Production Work Cells
3. Manufacturing Productivity Rates KPI
Your company’s manufacturing productivity rates will clearly show where your company is encountering lost and idle time. To calculate your productivity rates, and treat them as a key performance indicator, isn’t that involved a process. The approach is rather simple. The difficult part is in taking the time to do the analysis.
Determining your productivity rates involves understanding the amount of time your production employees actually work. For instance, if your employees are paid for 8 hours, does that mean they actually work a full 8 hours? Of course not! Your company must deduct lunch and breaks (morning & afternoon). Only then can you start to determine how much they actually work from that remaining time.
- 1 hour = 60 minutes, so 6 & ½ hours = 390 minutes
- Lost time during analysis: 135 minutes (this time is captured throughout the day)
- Available work time in minutes: 390 – 135 = 255 minutes
- Productivity rate% = 255 minutes divided by 390 minutes
This video and example are from the article: Manufacturing KPI: Critical Steps to Calculating Productivity Rates
When it comes to tracking manufacturing KPI, try to keep it simple. Your focus must be on reducing cycle times by eliminating work stoppages. Reduce the time it takes for parts and materials to move to the next chain in the process. Determine your productivity rates by calculating the actual amount of time your employees work.
Focusing on these three essential manufacturing key performance indicators will help you increase your production throughput. Within this site are a number of articles describing best practices in manufacturing. Take the time to look around. It is based on over 15 years working with manufacturers throughout North America.
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