Overview: Manufacturing KPIs (key performance indicators) are essential metrics that help manufacturers understand and improve how effectively their operations are running, from equipment performance to product quality and production efficiency. The article highlights foundational KPIs such as downtime, uptime, production targets, defect rates, first-time yield, cycle time, and overall equipment effectiveness (OEE) that provide visibility into where processes are performing well and where inefficiencies or quality issues exist. Tracking these metrics enables manufacturers to identify bottlenecks, reduce waste, improve quality, and make more informed operational decisions. Pyramid Solutions supports this space by helping manufacturers capture, analyze, and act on real-time production data through our IntelliWORKS MES solution, enabling smarter, more efficient, and more data-driven manufacturing operations.
Manufacturers have the ability to collect data on almost anything. So the question becomes, what data should you collect? We identified eight key performance indicators (KPIs) that manufacturers should track and why.
The 8 KPIs You Should Track
1. Downtime
Downtime is a period when the line or operation is down or not producing any products. When production doesn’t take place, money doesn’t come in.
Downtime falls into two categories: scheduled and unscheduled. Scheduled downtime is planned and includes breaks, lunch, shift change and meetings. Unscheduled downtime varies depending on the process but includes events like out-of-stock, equipment malfunction, and operator error.
When manufacturers analyze unscheduled downtime data, they glean valuable information, including:
- Causes
- Trends
- Process issues
- Bottlenecks
- Equipment issues
Knowing this information enables manufacturers to improve processes, increase profitability, and calculate overall equipment effectiveness (OEE). (Continue reading to learn about why you should track OEE.) After implementing an integrated MES, some our clients decreased downtime by upwards of 20%.
2. Uptime
If downtime tracks the time that a line is down, uptime tracks the opposite: the time that a production line or process makes money for the business. Manufacturers asses this process or production-performance KPI individually or together with the downtime KPI. Uptime is also a required KPI to calculate the OEE KPI.
Manufacturers calculate uptime as a percentage of production run-time divided by available production time:
Uptime = Run-Time (Production) ÷ Total Available Time
Production Run-Time = Total Available Time to Run – Scheduled and Unscheduled Downtime
Uptime identifies increases in production stoppages, product changeover times, and maintenance issues such as plant breakdowns. Factors such as time of downtime, affected operations, and downtime length contribute to capturing down and uptime, which goes hand-in-hand. Understanding of these manufacturing KPIs provides a basis for resolving issues and a mechanism for tracking the results.
3. Production Target
Production target is a simple and common production-process KPI. The production target is the amount of production (in terms of units) the manufacturer expects to produce in a certain time period. Tracking production counts and target allows for visibility of production performance.
Production target KPIs fall into two categories. The first is “gross production” which includes total good and scrap units produced. The second is “saleable production” which includes only parts deemed as good and acceptable to ship to the customer.
Real-time visibility of this KPI shows line performance and gives manufacturers the ability to react to possible process or operation issues.
4. Defects On a Line
Defect tracking is an important KPI in the production environment. This metric indicates the number of defects during the production process, final inspection, or quality audit phase. You also need this KPI to calculate the first pass yield percentage and the defects per 1,000 or per 1,000,000.
Tracking defects on a line is valuable because it allows manufacturers to recognize trends related to the quality of a product and the operation of equipment. For example, if a line of car doors all have a scratch in the same spot, you can identify which machine is causing the defect. Many defect tracking solutions also display real-time data to prevent you from running a defective line for a whole week.
5. Defects Per Thousand Units or Per Million Units
A practical way to communicate the quality of products produced or served is the quantity of defects per thousand or per million units.
This manufacturing KPI is easy to interpret. It points to equipment or maintenance problems, production issues, and skills deficiencies. The amount compared to (thousand or million) depends on the industry and/or production levels. Most manufacturers have a target threshold they strive to stay below.
Here’s an example formula using defects per 1,000:
Defective units ÷ (total units per 1,000)
To calculate the value, take a sample of production and count the defective units that don’t meet the required standards. Here’s an example of this measure:
Units manufactured this month: 23,030
Defective units as per quality tool standards: 12
Defects per thousand units produced: 0.52
23,030 ÷ 1,000 = 23.03
12 ÷ 23.03= 0.52
6. First Time Through (FTT)
The first time through (FTT) or first time yield (FTY) KPI is a measure of production efficiency, ability/skill, and quality. It’s a percentage that places the number of units without defects or re-work, against the total units produced in a production process or value stream. The formula to calculate FTT is:
(Total Units Produced – Defective Units) ÷ Units Produced
Units of production that are scrap, re-work, do not meet standards, require repair, or are not sellable fall under the definition of defective units.
The FTT will help you identify production efficiency and changes in performance in the production process. You can also use it as an indicator to perform further analysis and improvements if it exhibits sudden big changes.
7. Cycle and Takt Time
Cycle time is the amount of time taken to complete an operation in a production process. Typically, each operation within a given production process collects this data. Cycle time opens insight into operation efficiency and bottlenecks.
Compare this to takt time. Takt time is how quickly you must create the product to satisfy the needs of the customer. When comparing the two, you can see where potential issues may lie because the deviation is outside of expected parameters. Using this data enables efficient line balancing/rebalancing and a uniform line.
8. Overall Equipment Effectiveness (OEE)
OEE is a manufacturing KPI that combines line availability, performance efficiency and quality of a specific line, equipment or process. Management commonly evaluates this KPI to compare performance among similar or identical machines, lines, or plants. OEE is a ratio usually expressed as a percentage.
Calculate OEE by multiplying the three factors: plant availability, performance efficiency, and FTT/quality.
Availability = Uptime/Planned Production Time
Run Time = Planned Production Time – Downtime
Performance = (Ideal Cycle Time × Total Count) ÷ Run Time
Ideal Cycle Time (Takt Time) = Ideal/expected cycle time that your process should achieve
Quality = Good Count ÷ Total Count
Total Count = Good + Defective + Scrap
Tracking OEE is beneficial because it allows local plant operations teams to assess their specific plant or process and analyze day-to-day, week-to-week, and month-to-month performance, to continuously identify and solve issues.
Data can be an incredibly useful tool – if you know what to collect and how to use it.
Reach out to learn more about IntelliWORKS MES and how it can help you improve productivity and profitability at your plant.
