Manufacturing KPIs that a plant manager should not ignore

Today, it is more important than ever for companies to accelerate their digital transformation in order to remain competitive in today's market, which faces challenges such as the global shipping crisis, semiconductor shortages and the ongoing coronavirus pandemic.

However, many companies are discouraged by the implementation of new technological solutions and tools and, of course, by the initial investment required. This often means that projects cannot be completed without the necessary skill sets for the future and serious consideration and calculation.

However, there is one way in which manufacturers can reap significant benefits through digitalisation, and that is by measuring, tracking and improving their OEE.

What is OEE and why is it one of the Manufacturing KPIs What do manufacturers measure?

OEE is an acronym for Overall Equipment Effectiveness and represents the percentage of manufacturing time that is truly productive and is considered one of the Manufacturing KPIs standard for measuring manufacturing productivity. OEE is a measure of how close a company is to achieving perfection in production.

To achieve an OEE of 100%, a manufacturer would have to produce only perfect parts in terms of quality, in the shortest possible time and with no downtime. For today's manufacturers, OEE measurement has become best practice and doing so provides valuable insight into a company's manufacturing process.

Why is it important to measure Manufacturing KPIs?

The OEE is widely regarded as the best of the Manufacturing KPIs to identify aspects of the production process that are underperforming. This enables companies to assess their progress with a view to improving the productivity of their manufacturing equipment in the future.

Although manufacturers can get a general idea of how good their OEE is by asking the production manager to keep track, this approach is fraught with potential areas of inaccuracy.

For example, downtime. With a manual setup, production operators are often responsible for tracking downtime by recording all instances as they occur. However, operators may forget to record all downtime, especially instances that last less than a few minutes and do not require maintenance personnel intervention. After all, the operator's primary goal is to ensure production. But the reality is that all these short stoppages add up and can have a significant impact on a line's overall OEE.

Without measuring all downtime, manufacturing companies will never truly know how efficient their operations are. They could be losing hundreds of hours of production each year due to minor stoppages that could be caused by a very simple problem which, once resolved, could dramatically increase productivity.

So, although company managers can ask their production managers questions to get an idea of the workshop's OEE, they will never get a true picture of what is happening. And without a clear view of the current situation, the manufacturer cannot establish a benchmark for How OEE solutions for industrial plants improve production KPIs.

An intuitive, effortless, and automatic approach to monitoring Manufacturing KPIs

There are advanced OEE monitoring solutions that automatically capture data, allowing manufacturers to monitor production in real time through intuitive dashboards. These solutions eliminate the need for manual OEE tracking, solving the following problems in the process:

• Underreporting of production downtime, breakdowns, or minor issues because they are short-lived and may be considered irrelevant.
• Manual data collection, which is time-consuming and can be inaccurate, is eliminated, allowing production managers to focus on the line and value-added tasks.
• Inability to monitor, visualise and react in real time to production issues.

With an OEE monitoring solution, manufacturers can automatically, intuitively, and effortlessly monitor Manufacturing KPIs of their production lines. In addition to enabling manufacturers to verify whether continuous improvement efforts are having a positive impact, OEE monitoring solutions also offer a number of benefits.

Discover the most important manufacturing KPIs for your plant with the Equation for calculating OEE: Is there really a standard formula that all OEMs can use?

Benefits of monitoring solutions for Manufacturing KPIs

Financial benefits

Although OEE is often considered a shop floor manufacturing metric, it should also be used as a Manufacturing KPIs financial training for executives.

The most effective and straightforward method for linking OEE to financial benefits is to consider the three aspects that OEE monitors and assign a monetary equivalent to each one.

• Availability: The monthly cost of downtime can be calculated by multiplying the number of hours of downtime by the hourly cost of downtime, which includes employee time, fixed machine costs, etc.
• Performance: The cost of underperformance in production can be realised by calculating the costs associated with running a machine or line for longer to compensate for the shortfall. Find out more about how KPI measurement for the control of air compressors in industrial plants can improve a plant's performance.
• Quality: The cost of substandard production can be calculated by multiplying the number of rejected products by the cost of each one. However, this does not reveal the true impact, as it does not include the cost of rework.

With these simple calculations, manufacturers can get an idea of the financial impact of production inefficiencies. Once known, OEE improvement strategies that focus on increasing quality, performance, and availability can be measured in financial terms, highlighting the impact that inefficient production lines can have on a company's bottom line.

Using OEE to drive business decisions

A good way to visualise this is in relation to how strict OEE monitoring can drive business decisions. For example, a company may face an increase in demand that it cannot currently meet. The instinctive reaction is often to invest in additional capacity in the form of new equipment. However, by having a clear understanding of the production process, including problems and efficiency figures, management can seek to maximise the utilisation of its existing assets in the first instance, rather than making a capital expenditure on new equipment.

Furthermore, by having accurate and timely information on cycle times, manufacturers can take advantage of more intuitive resource planning strategies and benefit from greater resource utilisation as a result. Not only does this enable potentially higher profit margins, but it also allows manufacturers to adopt more competitive pricing, differentiating themselves in their market.

With OEE directly linked to financial results, companies can prioritise the most inefficient areas of their production lines and literally put money back on the balance sheet.

Cultural benefits

In the manufacturing industry, cultural disconnects between management and the shop floor are common. As a result, communication between the two entities can sometimes be poor, especially when it comes to production line efficiency.

Manual recording and feedback of OEE scores require time and effort from the production manager. In addition, there is the pressure associated with ensuring that the information conveyed is complete and accurate.

With an OEE monitoring solution, manufacturers can alleviate some of the pressure of OEE monitoring for production managers. This allows these individuals to spend more time focusing on the production line and value-added tasks, rather than recording and reporting. Not only does this provide a morale boost, but it also helps to bring senior management teams and production plants closer together, while reducing the cultural disconnect that often exists between the two.

Many companies display their OEE in real time on large screens located in the production area. These screens allow production workers and managers to see exactly how a line is performing at any given moment. This reality gives all shop floor workers the information they often wish they had.

Boost productivity and attract talent

Manufacturers can use this real-time OEE visualisation to add a bit of competition between production teams. This can compel production teams to strive to be the best, driving production efficiency and effectiveness across all process lines, without compromising quality.

Finally, by implementing energy efficiency monitoring solutions, manufacturers underscore their commitment to adopting new technologies. This is an important factor in attracting the best new talent. People today, especially those from younger generations, want to benefit from the latest solutions. That is why they often opt for digitalised companies.

Different areas of a company that can use the information from the Manufacturing KPIs

Monitoring solutions for Manufacturing KPIs not only provide valuable information for production teams. The information they capture and visualise can also be leveraged by other departments within the manufacturing organisation.

For example, the sales department. The team may have received a request from a customer to produce a small batch of products. In a situation like this, the sales team usually contacts the production team to see what the situation is before committing to the order.

With a monitoring solution, the Manufacturing KPIs, the sales team can immediately see all the useful production metrics needed to make a decision about the potential order. Furthermore, as production information is captured and displayed in real time, sales teams can also keep customers up to date on the status of orders they have placed. Being able to convey this information to the customer at the first point of contact improves the overall customer experience.

Real-time OEE monitoring enables more intuitive analysis of root causes.

Similarly, maintenance teams can also gain valuable insights from OEE monitoring solutions. For example, a particular line may have a habit of failing on a specific day or at a specific time. With this information, maintenance teams can ensure that a technician is always available when needed most.

Since OEE monitoring solutions capture and display information in real time, production and maintenance teams can be alerted to line issues as they occur. This allows production managers and maintenance teams to investigate slowdowns in real time, which is key to determining the root cause. If investigated as soon as it occurs, there is a better chance that the problem will be permanently resolved.

The implementation of a monitoring solution for Manufacturing KPIs it does not have to be difficult or expensive

Most manufacturers have at least some legacy machinery or equipment. As a result, they often believe that they cannot take advantage of overall equipment effectiveness (OEE) monitoring solutions due to incompatibility issues.

However, the reality is that many of the best energy efficiency monitoring solutions for equipment are designed to be compatible with older equipment on the production line. In fact, the best overall equipment efficiency monitoring solutions allow manufacturers to install a simple piece of hardware and obtain the valuable information they need from a cloud-based system. This makes such solutions literally plug ‘n’ play.

Furthermore, as these solutions are cloud-based and do not require manufacturers to invest capital in new IT infrastructure, such as servers and network equipment, costs are kept to a minimum.

If you would like to learn more about the importance of measuring Manufacturing KPIs, Don't miss out! The 25 best examples of industrial manufacturing KPIs for production reports.