They serve as early warning systems, indicating potential disruptions or bottlenecks that could affect delivery times and overall supply chain performance. Furthermore, the use of KPIs encourages continuous improvement by highlighting areas that need attention and by fostering a results-driven culture. Ultimately, effective KPIs align production activities with business objectives, ensuring that scheduling decisions support the company's broader goals and enhance customer satisfaction through timely and cost-effective product delivery.
KPI |
Definition
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Business Insights [?]
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Measurement Approach
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Standard Formula
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Average Unit Cost More Details |
The average cost incurred for producing a single unit of product.
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Indicates the cost-effectiveness of the production process and helps in pricing and profitability analysis.
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Direct labor, materials cost, manufacturing overhead.
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(Total Manufacturing Costs / Total Units Produced)
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- The average unit cost may trend upwards due to inflation, increased material or labor costs, or inefficiencies in production processes.
- A decreasing trend could indicate improved cost management, economies of scale, or better supplier negotiations.
- Are there specific products with significantly higher unit costs, and if so, what factors contribute to this?
- How does the average unit cost compare with industry benchmarks or with historical data from previous periods?
- Regularly review and renegotiate supplier contracts to ensure competitive pricing.
- Implement lean manufacturing principles to reduce waste and improve production efficiency.
- Invest in technology and automation to streamline production processes and reduce labor costs.
Visualization Suggestions [?]
- Line charts to track the average unit cost over time and identify trends.
- Pareto charts to identify the most significant cost drivers or categories contributing to the average unit cost.
- An increasing average unit cost can erode profit margins and competitiveness in the market.
- Significant fluctuations in the average unit cost may indicate volatility in input prices or production inefficiencies.
- Cost accounting software to accurately track and allocate production costs to individual units.
- Enterprise resource planning (ERP) systems to integrate cost data with production planning and inventory management.
- Integrate average unit cost tracking with procurement systems to make informed purchasing decisions based on cost trends.
- Link cost data with product lifecycle management systems to assess the impact of design changes on unit costs.
- Reducing the average unit cost can positively impact profitability and competitiveness, but may require initial investments in process improvements.
- Significant cost reductions may also impact product quality or lead to supply chain disruptions if not carefully managed.
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Capacity Margin More Details |
The percentage of production capacity that is reserved for unexpected increases in demand.
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Evaluates whether the production facility can handle unexpected demand increases or needs investment.
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Available capacity versus required capacity for production.
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(Total Capacity - Used Capacity) / Total Capacity
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- Capacity margin may decrease over time as production capacity is utilized to meet demand, potentially indicating a need for capacity expansion.
- An increasing capacity margin could suggest underutilization of resources, leading to higher production costs.
- What factors contribute to fluctuations in the capacity margin?
- Are there specific production processes or product lines that consistently utilize a higher percentage of the capacity margin?
- Regularly review and adjust production schedules to optimize capacity utilization.
- Invest in technology and equipment upgrades to increase production efficiency and capacity.
- Implement flexible workforce management strategies to adapt to fluctuating demand without exceeding capacity limits.
Visualization Suggestions [?]
- Line charts showing the historical trend of capacity margin over time.
- Stacked bar charts comparing the allocated capacity margin versus the actual capacity utilization for different production periods.
- Low capacity margin may lead to production bottlenecks and delays in fulfilling orders.
- High capacity margin without corresponding demand may result in excess inventory and increased carrying costs.
- Advanced planning and scheduling (APS) software to optimize production schedules and capacity allocation.
- Manufacturing execution systems (MES) for real-time monitoring of production processes and resource utilization.
- Integrate capacity margin data with demand forecasting systems to align production capacity with expected demand.
- Link capacity margin tracking with inventory management systems to ensure optimal stock levels based on production capacity.
- Increasing the capacity margin can lead to higher production flexibility and responsiveness to market demand.
- However, a significant decrease in capacity margin may impact the ability to handle unexpected demand spikes or new product introductions.
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Capacity Utilization More Details |
The percentage of available production capacity that is actually used in a given period of time.
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Identifies how efficiently the production resources are being used.
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Used capacity versus total available capacity.
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(Actual Output / Maximum Possible Output) * 100
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- An increasing capacity utilization may indicate a need for additional production capacity or improved production efficiency.
- A decreasing utilization could signal overcapacity or production slowdowns that need to be addressed.
- What factors are contributing to fluctuations in capacity utilization?
- Are there specific production lines or facilities that consistently operate below capacity?
- Implement lean manufacturing principles to optimize production processes and reduce waste.
- Invest in predictive maintenance to minimize downtime and maximize equipment utilization.
- Regularly review and adjust production schedules to align with demand and avoid underutilization of capacity.
Visualization Suggestions [?]
- Line charts showing capacity utilization over time to identify seasonal or long-term trends.
- Stacked bar charts comparing utilization rates across different production lines or facilities.
- Low capacity utilization can lead to increased per-unit production costs and reduced profitability.
- High utilization rates may result in production bottlenecks, quality issues, or equipment breakdowns.
- Manufacturing execution systems (MES) for real-time monitoring of production processes and equipment utilization.
- Advanced planning and scheduling (APS) software to optimize production schedules and resource allocation.
- Integrate capacity utilization data with maintenance management systems to schedule preventive maintenance during periods of low utilization.
- Link utilization rates with sales and operations planning (S&OP) processes to align production with demand forecasts.
- Increasing capacity utilization can lead to higher production output and potentially lower per-unit production costs.
- However, overutilization may result in decreased product quality, increased lead times, and higher maintenance costs.
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CORE BENEFITS
- 47 KPIs under Production Planning and Scheduling
- 15,468 total KPIs (and growing)
- 328 total KPI groups
- 75 industry-specific KPI groups
- 12 attributes per KPI
- Full access (no viewing limits or restrictions)
FlevyPro and Stream subscribers also receive access to the KPI Library. You can login to Flevy here.
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Changeover Time More Details |
The time taken to switch a manufacturing line or plant from making one product over to making a different product.
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Reflects the flexibility of production processes and impacts on throughput.
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Time taken to switch from producing one product to another.
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Total Changeover Time / Number of Changeovers
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- Decreasing changeover time may indicate improved operational efficiency and flexibility in production.
- An increasing trend could signal issues with equipment maintenance, workforce training, or production complexity.
- What are the main factors contributing to changeover time for different products?
- Are there opportunities to standardize changeover processes or invest in automation to reduce time?
- Implement lean manufacturing principles to streamline changeover processes.
- Invest in quick-change tooling and equipment to minimize downtime during changeovers.
- Train and empower production teams to take ownership of changeover efficiency and identify improvement opportunities.
Visualization Suggestions [?]
- Gantt charts to visualize the duration and frequency of changeovers over time.
- Line graphs to track changeover time for different products or production lines.
- Long changeover times can lead to production delays, increased inventory levels, and reduced overall equipment effectiveness (OEE).
- High changeover times may limit the ability to respond quickly to changes in customer demand or market trends.
- Manufacturing execution systems (MES) with changeover tracking and analysis capabilities.
- Time and motion studies software to identify and eliminate non-value-added activities during changeovers.
- Integrate changeover time data with production scheduling systems to optimize production sequences and minimize changeover impact.
- Link changeover metrics with maintenance management systems to ensure equipment readiness and reliability during changeovers.
- Reducing changeover time can lead to increased production capacity and responsiveness to market demands.
- However, rapid changeovers may require trade-offs in terms of equipment investment, maintenance, and workforce training.
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Compliance Rate More Details |
The rate at which production adheres to regulatory and quality standards.
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Shows the effectiveness of quality management systems and risk of non-compliance costs.
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Percentage of products that meet quality and regulatory standards.
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(Number of Compliant Units / Total Units Produced) * 100
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- An increasing compliance rate may indicate improved quality control processes or stricter adherence to regulations.
- A decreasing rate could signal issues in production processes or a decline in regulatory compliance.
- Are there specific regulations or standards that are frequently not met?
- How does our compliance rate compare with industry benchmarks or regulatory changes?
- Implement regular training and education programs to ensure employees are aware of and compliant with regulations.
- Invest in quality control technologies and processes to improve adherence to standards.
- Regularly review and update production processes to align with changing regulations.
Visualization Suggestions [?]
- Line charts showing the compliance rate over time to identify trends and patterns.
- Pareto charts to identify the most common reasons for non-compliance.
- Non-compliance can lead to legal issues, fines, and damage to the company's reputation.
- Consistently low compliance rates may indicate systemic issues that could affect product quality and customer satisfaction.
- Quality management systems like ISOtrain or QT9 to track and manage compliance-related activities.
- Regulatory compliance software to stay updated on changing regulations and ensure adherence.
- Integrate compliance rate tracking with quality management systems to ensure a holistic approach to product quality.
- Link compliance rate data with supplier management systems to ensure suppliers also adhere to necessary standards.
- Improving compliance rates can enhance product quality and customer satisfaction, leading to increased brand reputation and customer loyalty.
- However, increased focus on compliance may require additional resources and could impact production efficiency.
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Customer Reject Rate More Details |
The percentage of products shipped that are rejected by the customer.
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Indicates product quality and customer satisfaction levels.
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Number of units rejected by customers out of total units sold.
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(Number of Units Rejected by Customers / Total Units Sold) * 100
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- An increasing customer reject rate may indicate quality control issues in production or shipping.
- A decreasing rate could signal improvements in product quality or better alignment with customer expectations.
- Are there specific products or product lines that consistently have higher reject rates?
- What feedback are we receiving from customers regarding the rejected products?
- Implement rigorous quality control measures at each stage of production and shipping.
- Regularly review and act upon customer feedback to address recurring issues.
- Provide additional training and support to employees involved in production and shipping processes.
Visualization Suggestions [?]
- Pareto charts to identify the most common reasons for product rejection.
- Trend line graphs to track changes in reject rates over time.
- High reject rates can damage customer relationships and lead to loss of business.
- Repeated product rejections may indicate systemic issues that could harm the company's reputation.
- Quality management software to track and analyze reject rates and reasons.
- Customer feedback and survey tools to gather insights into product satisfaction and areas for improvement.
- Integrate reject rate data with production and quality control systems to identify root causes of rejection.
- Link reject rate information with customer relationship management (CRM) systems to track customer feedback and responses.
- Reducing reject rates can lead to cost savings by minimizing waste and rework.
- However, focusing solely on reducing reject rates may lead to overlooking other important quality aspects such as customer satisfaction and product innovation.
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In selecting the most appropriate Production Planning and Scheduling KPIs from our KPI Library for your organizational situation, keep in mind the following guiding principles:
It is also important to remember that the only constant is change—strategies evolve, markets experience disruptions, and organizational environments also change over time. Thus, in an ever-evolving business landscape, what was relevant yesterday may not be today, and this principle applies directly to KPIs. We should follow these guiding principles to ensure our KPIs are maintained properly:
By systematically reviewing and adjusting our Production Planning and Scheduling KPIs, we can ensure that your organization's decision-making is always supported by the most relevant and actionable data, keeping the organization agile and aligned with its evolving strategic objectives.