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Plant Metrics (Part II)

driving results metrics performance strategy
Factory Metrics

Your Plant Metrics

Most key dashboard metrics should flow down from your company's annual strategic plan. But not all. Some metrics, such as safety and quality performance, may not be strategic objectives this year, but these measure are critical measures, none the less. Below are  some ideas for your key metric categories. You will need to assess your own specific metric needs, the ones that are essential for effective manufacturing performance at your plant. Privately owned companies may choose not to post revenue or profits as may be viewed as confidential and held close-to-the-vest by the owners. This is totally fine. Choose about 6-10 total and feel free to change them as the plant’s dynamics change. Below are some metrics that I find typical and effective. Which ones fit your plant?

Safety Metrics

Safety is paramount in any manufacturing environment. Monitoring these metrics helps protect employees and reduce liability.

  • Recordable Incident Rate (RIR): Tracks the number of OSHA-recordable incidents per 10,000 work hours. Lower RIR indicates a safer workplace.
  • Lost Time Injury Frequency Rate (LTIFR): Measures the number of injuries resulting in time off work. Reducing LTIFR reflects a strong safety culture.
  • Near Miss Reporting: Tracks potential safety hazards that were identified before causing harm. A high rate of reporting often signifies an engaged workforce and proactive safety management. 

Quality Metrics

Quality is critical in maintaining customer satisfaction, reducing rework, and minimizing waste.

  • First Pass Yield (FPY): Measures the percentage of products manufactured correctly the first time without rework.
  • Defect Rates: Tracks the number of defective units produced as a percentage of total output.
  • Customer Returns/Warranty Claims: These post-production metrics reflect product quality as perceived by customers and can indicate issues that were not detected internally.

Service Metrics

Service metrics help in evaluating how well the company is supporting its customers.

  • On Time Delivery: On-time delivery tracks the percentage of customer orders that ship on-time per the PO scheduled date.
  • Lead-time: Lead-time delivery is the length of time that it takes from the initial order placement to the time to shipment. Typically, but not always customers want short lead-times. I.e. order it today, get it tomorrow.
  • Backorders: Backorders are often tracked in dollars. A backorder metric is used to track the quantity of late orders, expressed in dollars.

Efficiency Metrics

Efficiency metrics help in evaluating how well resources are used during production.

  • Overall Equipment Effectiveness (OEE): OEE is a comprehensive metric that combines availability, performance, and quality. It measures the percentage of time that equipment is truly productive.
  • Labor Productivity: Measures output per labor hour. It indicates how effectively the workforce is utilized.
  • Downtime: Tracks both scheduled and unscheduled equipment downtime. Analyzing downtime helps in improving maintenance practices and production planning.

Production Metrics

These metrics focus on how well a plant produces goods, measuring output and productivity.

  • Throughput: This metric measures the amount of product manufactured over a given time.
  • Cycle Time: This measures the time it takes to complete one cycle of production, from start to finish. Reducing cycle time increases responsiveness and efficiency.
  • Capacity Utilization: This shows how much of the plant’s potential output is being used. Operating too far below capacity can indicate overhead cost issues and operating above capacity leads to  growing backorders.

Inventory Metrics

Managing inventory effectively is essential to control costs and ensure smooth production flow.

  • Inventory Turnover: This metric shows how often inventory is used and replaced over a period. A high turnover rate suggests efficient inventory management.
  • Days Inventory Outstanding (DIO): Measures how long it takes to sell or use inventory.

Maintenance Metrics

Good maintenance practices reduce downtime and increase asset longevity.

  • Mean Time Between Failures (MTBF): The average time a piece of equipment operates before failing. Higher MTBF indicates more reliable equipment.
  • Mean Time to Repair (MTTR): The average time it takes to repair equipment. Shorter MTTR reflects an efficient maintenance response.
  • Preventive Maintenance Compliance: Measures how consistently scheduled maintenance tasks are completed. High compliance helps prevent unexpected failures.

Financial Metrics

Ultimately, manufacturing metrics should align with financial goals.

  • Manufacturing Variance: Measures the budgeted cost to produce an order vs. the actual cost to produce it. This included materials, labor, and often overhead and it is expressed in either dollars or percentage.
  • Revenue: This represents the plants volume and is measured in sales dollars.
  • Profit: This is generated by the plant’s finance team and is often reflected as EBIT or EBITA.

Conclusion

To be effective, manufacturing metrics must be relevant, accurate, timely, and actionable. It’s important to align them with strategic goals and ensure that everyone in the organization understands their importance. Using dashboards or visual management tools can help communicate performance metrics in real time and foster accountability. Moreover, combining metrics—for example, using OEE alongside FPY and MTTR—provides a fuller picture of performance and are effective tools for project teams.

Metrics are more than numbers—they are strategic tools that, when used correctly, drive success.

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