The Complete List of Strategy KPIs for Manufacturing

It’s important with any organisation to be strategic and focused with clear goals and targets, and no less so in Manufacturing.

Your strategy should hold the important objectives and strategic goals and you need to carefully track your progress against strategy. Let’s take a look at some Strategic KPIs / Strategic Metrics or OKR options relevant to Manufacturing:

Add-on Acquisitions per Portfolio Company: This KPI is used mainly in buy-and-build strategies to measure the average number of add-on acquisitions per portfolio company, indicating the growth via acquisitions.

Aging Work in Progress (WIP) This measures the amount of time a partially completed product has been in the production process. High aging WIP can indicate inefficiencies in the production process.

Backorder Rate This KPI measures the number of orders that cannot be fulfilled at the time of order placement due to insufficient inventory. A lower backorder rate signifies better inventory management and higher customer satisfaction levels.

Capacity Utilization Rate (CUR) This measures the extent to which a manufacturing company uses its installed productive capacity. It reflects the level of production efficiency. High CUR indicates that a company is getting the most out of its assets, which could mean better return on assets (ROA).

Cash-to-Cash Cycle Time This KPI measures the time it takes for a company to convert resource investments into cash flows from sales. A shorter cycle can be a sign of operational efficiency.

Changeover Time This measures the time taken to switch a production line or machine from manufacturing one product type to another. Shorter changeover times indicate more efficient processes, allowing for greater production flexibility.

Cycle Time Ratio This measures the actual production time for a product against the planned production time. A lower ratio indicates better efficiency and process control.

Days Sales of Inventory (DSI) This KPI measures the average number of days a company holds inventory before selling it. A lower DSI could indicate stronger sales or more efficient inventory management.

Demand Forecasting Accuracy This measures the difference between forecasted and actual demand. High accuracy helps in better production planning, reducing the risk of stock-outs or overstocks.

Direct Labor Efficiency Variance This metric shows the difference between the actual hours worked and the standard or expected hours it should have taken to manufacture the units produced.

Fill Rate This KPI measures the percentage of customer demand that is met through immediate stock availability, without backorders or lost sales. High fill rates can signify effective inventory management.

First Pass Yield (FPY) This measures the effectiveness of the production process by calculating the percentage of products manufactured correctly without requiring any rework. High FPY indicates an efficient and well-managed production process, which contributes to higher margins.

First Time Through (FTT) This measures the percentage of products produced that meet quality standards without need for rework or repair. High FTT rates suggest a high level of quality control.

Machine Breakdown Frequency This KPI measures how often the machines used in the production process break down. A high frequency of breakdowns might indicate the need for machinery upgrades or improved maintenance.

Machine Downtime Rate This indicates the percentage of time that a machine is not operational during scheduled production times. High rates can signify maintenance issues or machine inefficiency, negatively impacting production.

Maintenance Costs as a Percentage of Replacement Asset Value (RAV) This KPI is particularly relevant to capital-intensive manufacturing sectors. It measures the cost of maintaining assets relative to the cost of replacing them, providing insights into the efficiency of asset management.

Manpower Efficiency This KPI measures output per man-hour. Higher manpower efficiency can suggest better workforce management and training programs.

Manufacturing Lead Time This measures the time taken from the start of the production process to the completion of the final product. A shorter lead time can indicate better efficiency and faster time-to-market.

Manufacturing Velocity This measures the speed at which material is moved through the production process from start to end. Faster velocities can mean shorter lead times and increased throughput.

Material Availability This measures the proportion of time that necessary materials are available for the production process. Higher material availability can lead to smoother operations and lower downtime.

Materials Usage Variance This KPI measures the difference between the standard cost of materials that should have been used for the products manufactured and the actual cost of materials used. It’s useful in identifying inefficiencies in material use.

Materials Yield Variance This KPI measures the difference between the actual amount of material used and the standard amount expected to be used in the production process.

Order Fulfillment Cycle Time This KPI measures the time taken from receiving an order to delivering the finished product. Short cycle times can mean more efficient processes, leading to increased customer satisfaction and repeat business.

Order Picking Accuracy Rate This KPI is used in warehouses to measure the percentage of orders picked without errors. Higher accuracy rates can lead to higher customer satisfaction and lower costs of correcting mistakes.

Overall Equipment Effectiveness (OEE) This KPI measures the efficiency of a manufacturing process by combining three crucial factors: quality, performance, and availability of machinery. It provides a quick overview of how well resources are utilized and can identify areas for improvement.

Percentage of Non-Standard Orders This KPI measures the number of custom or non-standard orders as a proportion of total orders. This could be relevant for sectors where customization is common, impacting production planning and potentially increasing costs.

Percentage of On-Time Supplier Deliveries This KPI calculates the percentage of deliveries from suppliers that arrive on schedule. High percentages signify reliable suppliers, which is important for maintaining production schedules.

Percentage of Premium Freight Charges This KPI calculates the percentage of freight charges that are higher due to expedited shipping. Lower percentages suggest better planning and scheduling of shipments.

Percentage of Products Meeting Regulatory Standards In industries with strict regulations, this KPI measures the percentage of products that meet all regulatory standards. High percentages can indicate effective quality control and compliance processes.

Percentage of Recalled Products This KPI measures the percentage of products that have been recalled due to safety concerns or defects. Lower percentages indicate better product quality and safety compliance.

Percentage of Sustainable Materials Used In industries where sustainability is a focus, this KPI measures the proportion of materials used that are renewable or have a reduced environmental impact.

Process Yield Rate Especially relevant in continuous manufacturing processes, this KPI measures the number of usable units that come out of a process compared to the number of units that went in. A higher yield rate signifies a more effective process.

Production Attainment This KPI measures how often the planned production levels are reached. A higher attainment rate can be a sign of an efficient manufacturing process.

Production Cost Variance This KPI tracks the difference between actual production costs and budgeted or standard costs. Significant variances can highlight efficiency issues or errors in cost estimation.

Production Flexibility While not a traditional ratio or rate, production flexibility evaluates the ability of a manufacturing company to switch between different product lines or adapt to changes in production volumes.

Rate of Product Obsolescence This KPI measures how frequently products become obsolete due to technological advancements or changes in customer preferences.

Rate of Return This KPI measures the rate at which manufactured products are returned by customers. High return rates can indicate potential quality issues.

Rework Rate This KPI measures the percentage of manufactured products that must be reprocessed due to not meeting quality standards. A lower rework rate indicates a higher initial quality and a more efficient manufacturing process.

Schedule or Production Adherence This measures the degree to which manufacturing sticks to their production schedule.

Scrap Rate This KPI measures the percentage of production that ends up as waste. A lower scrap rate indicates a more efficient and potentially more sustainable operation.

Supplier Defect Rate This KPI measures the percentage of materials or parts received from suppliers that are defective.

Supplier Lead Time This KPI measures the time taken for suppliers to deliver materials or components after an order has been placed.

Throughput This KPI measures the amount of material or number of items coming out of a production process over time.

Waste Percentage This measures the percentage of materials input into the production process that is wasted.

If you’d like to download these in a spreadsheet format you could then use to set value and targets for a two or three year plan then take a look at our Top 50 Manufacturing Strategy KPIs.

So, there are a bunch of important KPIs to track in Manufacturing. As we always say with our lists of KPIs, it’s best practice to not have too many metrics on your KPI Dashboards. KPIs are there to keep everyone focused on the most important aspects of performance that you need to get right. If you have too many, then you will be reducing the focus. So pick your winners, add them to your KPI Dashboards, and start tracking them.

Good luck with hitting your targets 🎯