In production, KPIs are widely used to determine to what extent the organization’s objectives have already been achieved. Production KPIs therefore vary not only by organization but also by period. Some production KPIs may also span multiple periods to achieve the desired objective. But which KPIs are most important in a production environment? We will guide you through the use of production KPIs and highlight the three KPIs that we believe are of greatest value in the manufacturing industry.
What are KPIs?
A production KPI, or production Key Performance Indicator, is a measurement method that provides a detailed view of how a production company has performed over a given period. Production KPIs are particularly used to monitor, analyse, and optimize internal activities. The measurements derived from production KPIs are often compared with the results of competing companies in the manufacturing industry—especially when it comes to efficiency. A Key Performance Indicator stems from the organization’s set goals and helps indicate the extent to which objectives have been achieved or require further attention. Examples of KPIs for production can include:
- OEE (Overall Equipment Effectiveness)
This KPI measures the total efficiency of machines, based on availability, performance, and quality.
- LTA (Lost Time Accidents)
This measures the number of work-related accidents involving absences, relative to a million working hours. It is one of the most important safety KPIs.
- Waste Percentage
This KPI shows the proportion of material or products that are discarded or reused.
- Changeover Time
The time required to reconfigure a machine for a new production order is also an important KPI. Shorter changeover times increase OEE.
- FTR (First Time Right)
This KPI records the percentage of products that are produced correctly the first time without modifications. It is often linked to changeover time and process stability.
Why should production companies use KPIs?
Every production company focuses on improving efficiency to ultimately increase profitability. To achieve this, the performance of the production company must be continuously measured and assessed. Production KPIs are an excellent tool for this purpose. Key Performance Indicators provide production companies with insight into the efficiency of the production process and whether quality standards within the sector are being fully met. This is essential, given the fierce competition within the sector. Increasing market share is only achievable if production KPIs are used, and if production strategies are continuously improved based on these KPIs.
The main advantage of production KPIs is that they help companies stay ahead of the competition in the manufacturing industry.
The most important production KPIs according to EZ Factory
There are numerous examples of production KPIs, such as maintenance KPIs, safety KPIs, and performance KPIs. Below, we explain the most important KPIs for production companies.
Production KPI 1: Maintenance – MTBF
MTBF, or Mean Time Between Failures, indicates the average time between two machine failures. A high MTBF points to reliable installations and a limited number of breakdowns, contributing to higher productivity and lower maintenance costs. MTBF as a KPI aids in planning preventive maintenance and identifying areas for machine improvement.
Production KPI 2: Safety – LTA
Lost Time Accidents (LTA) measures the number of work accidents leading to absences. This KPI reflects the safety culture within the company. A low or zero score demonstrates effective safety policies, training, and compliance with procedures. LTA is often reported per million working hours and is crucial for legal compliance, staff retention, and preventing production loss due to incidents.
Production KPI 3: Performance – OEE
OEE (Overall Equipment Effectiveness) is the standard for measuring production performance. It combines three factors: availability (downtime), performance (speed), and quality (FTR). An OEE of 100% means that a machine runs perfectly without downtime, at maximum speed, and without errors. Although this is the ideal situation, this KPI is a powerful tool for simultaneously improving the effectiveness of people, processes, and machines.
Want to learn more about improving efficiency in a production environment? We have written an extensive blog about this: 4 ways to improve efficiency.
Need help setting up KPIs in your production environment?
If you need to set up production KPIs for your company but do not know where to start or how to implement them, begin by identifying the most important organizational goals and link relevant production KPIs to them. Use an online platform accessible to all employees to make production KPIs visible per period. Make KPIs simple and visual to involve everyone, increasing the likelihood of achieving objectives. This way, production KPIs become not just a part of management policy but also motivate all employees to contribute to goal achievement.
Do you need a reminder to update your production KPIs? An online platform like EZ-GO can help. EZ-GO also supports achieving KPI goals. For example, using effective changeover checklists ensures that the production line starts correctly the first time, preventing downtime and increasing OEE. A win-win situation!