MANUFACTURING PRODUCTION KPIs – A Structured Approach

Production KPIs (Key Performance Indicators) are essential for monitoring the efficiency, quality, and overall performance of a manufacturing process. The goal is to identify areas for improvement and maintain operations within the "green zone" targets. Below is a detailed and structured breakdown of the key production KPIs, along with examples for a cable factory scenario.

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1. 🔎 SAFETY KPIs 
Safety is a top priority in any manufacturing environment. Proper safety measures help reduce incidents, improve employee morale, and ensure compliance with regulations. 

• Total Recordable Incident Rate (TRIR): 
  - 🔴 > 3.0 → High risk and poor safety culture 
  - 🟠 1.5 - 3.0 → Needs improvement 
  - 🟡 0.5 - 1.5 → Acceptable but can improve 
  - 🟢 < 0.5 → Excellent safety performance 
  
  Example: 
  - A cable factory records 2 incidents per 100 employees annually. 
  - TRIR = (2 ÷ 100) × 200,000 = 4 → RED zone → Immediate action required to improve safety measures. 
  
  
• Days Since Last Recordable Incident: 
  - 🔴 < 30 days → Unsafe working environment 
  - 🟠 30 - 90 days → Needs improvement 
  - 🟡 90 - 180 days → Acceptable 
  - 🟢 > 180 days → Excellent safety record 
  
  Example: 
  - Last recordable incident was 45 days ago → ORANGE zone → Conduct safety training and improve PPE compliance. 
  
  
• Safety Observation Completion Rate: 
  - 🔴 < 70% → Poor safety culture 
  - 🟠 70 - 85% → Needs improvement 
  - 🟡 85 - 95% → Good 
  - 🟢 > 95% → Excellent 
  
  Example: 
  - Employees completed 88% of scheduled safety observations → YELLOW zone → Encourage more participation in safety audits. 
  

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2. ✔️ QUALITY KPIs 
Quality KPIs reflect the consistency and reliability of manufacturing processes. High-quality output increases customer satisfaction and reduces waste. 

• First Pass Yield (FPY): 
  - 🔴 < 85% → Poor process control 
  - 🟠 85 - 90% → Needs improvement 
  - 🟡 90 - 95% → Good 
  - 🟢 > 95% → Excellent 
  
  Example: 
  - 920 out of 1000 produced cables passed inspection → FPY = (920 ÷ 1000) × 100 = 92% → YELLOW zone → Minor adjustments to process required. 
  
  
• Customer Complaints (per million): 
  - 🔴 > 100 → Poor customer satisfaction 
  - 🟠 50 - 100 → Needs improvement 
  - 🟡 10 - 50 → Good 
  - 🟢 < 10 → Excellent 
  
  Example: 
  - 5 complaints from 200,000 units produced = (5 ÷ 200,000) × 1,000,000 = 25 complaints per million → YELLOW zone → Improve product consistency. 
  
  
• Scrap Rate: 
  - 🔴 > 5% → High waste and cost 
  - 🟠 2 - 5% → Needs improvement 
  - 🟡 1 - 2% → Good 
  - 🟢 < 1% → Excellent 
  
  Example: 
  - 10 defective cables out of 1000 produced → Scrap rate = (10 ÷ 1000) × 100 = 1% → GREEN zone → Maintain current process controls. 
  

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3. 💰 COST KPIs 
Cost KPIs ensure that production remains profitable and sustainable. 

• Overall Equipment Effectiveness (OEE): 
  - 🔴 < 60% → Major losses 
  - 🟠 60 - 75% → Needs improvement 
  - 🟡 75 - 85% → Good 
  - 🟢 > 85% → Excellent 
  
  Example: 
  - Availability = 95%, Performance = 90%, Quality = 92% 
  - OEE = 0.95 × 0.90 × 0.92 = 78.66% → YELLOW zone → Optimize machine calibration. 
  
  
• Labor Efficiency: 
  - 🔴 < 80% → Poor performance 
  - 🟠 80 - 90% → Needs improvement 
  - 🟡 90 - 100% → Good 
  - 🟢 > 100% → Excellent 
  
  
• Maintenance Cost (% of RAV): 
  - 🔴 > 5% → Excessive maintenance cost 
  - 🟠 3 - 5% → Needs improvement 
  - 🟡 2 - 3% → Good 
  - 🟢 < 2% → Excellent 
  

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4. 📦 INVENTORY KPIs 
Inventory KPIs help maintain optimal stock levels to avoid overproduction or stockouts. 

• Inventory Turnover Rate: 
  - 🔴 < 4x/yr → Poor turnover 
  - 🟠 4 - 6x/yr → Needs improvement 
  - 🟡 6 - 10x/yr → Good 
  - 🟢 > 10x/yr → Excellent 
  
  
• WIP Inventory (Days): 
  - 🔴 > 15 days → High WIP cost 
  - 🟠 8 - 15 days → Needs improvement 
  - 🟡 3 - 8 days → Good 
  - 🟢 < 3 days → Excellent 
  

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5. 🚚 DELIVERY KPIs 
Delivery KPIs track the ability to meet customer demand and production schedules. 

• On-Time Delivery Rate: 
  - 🔴 < 85% → Poor scheduling 
  - 🟠 85 - 90% → Needs improvement 
  - 🟡 90 - 95% → Good 
  - 🟢 > 95% → Excellent 
  

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6. 🌍 SUSTAINABILITY KPIs 
Sustainability KPIs measure the environmental impact and efficiency of the production process. 

• Energy Consumption per Unit: 
  - 🔴 > Base 
  - 🟠 -5% to -10% 
  - 🟡 -10% to -25% 
  - 🟢 < -25% 
  
  
• Carbon Footprint Reduction: 
  - 🔴 < 10% 
  - 🟠 10 - 20% 
  - 🟡 20 - 30% 
  - 🟢 > 30% 
  

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7. 📌 Daily Management Board Approach 
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• Focus on SQDC+ metrics instead of isolated KPIs like OEE. 
• Prioritize Safety and Quality – they drive delivery and cost performance. 
• Review daily as a team, not just for reporting but problem-solving. 
• Track trends over time, not just current state values.