Lack of KPI Identification

Analyze Your Entire Business

Key Performance Indicators (KPIs) are metrics that analyze the overall functionality of particular areas of a business. Let’s say you want to know your daily employee wages, or how much waste is being produced from each product line, KPIs track and display that data. All businesses have to utilize resources effectively in order to make a profit.  Having a tool that tracks all these different resources helps to establish efficient practices within the company. Think about it, KPI’s are like the gauges on your car. You wouldn’t drive your car without a dashboard, it tells you how fast you’re going, how much gas you have and when you need service. Your car is a machine just like your business is, so having a way to monitor its performance gives you the control to make decisions based on facts and not just your gut.

However, if you have been in the manufacturing industry for several years and the business has been passed down from generation to generation your gut may be a great decision-making tool. But think of KPIs as the assurance of always knowing if it is the right one. 

Siloed Data

Having a lack of KPI identification in an organization can also be caused by being highly departmentalized. In other words, each department containing data silos. Your finance department may be using a platform to assist in its operations such as QuickBooks, or your sales department may be using salesforce strictly for their use. The key piece in all this is communication, as I mentioned in the beginning. If your departments are the components of a tree; soil, seeds, water, and sunlight they must work together to grow. The seeds must consistently receive water, nutrients, and sunlight to produce a healthy tree but if cut off from one another they will wither away. 

Another issue may be that you are a middle manager who reports to top-level managers. Part of any managers tasks involve reporting in some form so having an automated tool that sends accurate reports can turn a hefty task into a simple click of a button. If we dive even deeper into this scenario, a problem that is evident in many big organizations is the understanding of data. KPIs can be graphs, tables, goal lines or a percentage. Top-level managers want the answer as soon as possible and straight to the point. Think of KPIs as a simple summary that comes directly from the source.

You’re Almost There

So how do you set up KPIs? It’s simple, you may already have a few and not know it. KPIs can be created in excel or by using enterprise software designed to pull data from integrations you are using like Salesforce, Hubspot, Quickbooks…etc. Enterprise software makes it simple to pull everything into one place for displaying KPIs. Once all your data can be correctly brought into one platform, the build-out of KPIs can begin. Most of these software applications have prebuilt metric functions or ways to easily build custom graphs, so if you know how to manipulate data, creating KPIs should be easy. If not there are some enterprise software solutions that bring all the data in one place and build the metrics for you. This is ideal for companies who don’t want to spend a lot of time and money getting employees trained on the software.

Important KPI’s

Here are some of the most important KPIs in manufacturing and their functions:

Overall Operating Efficiency: The purpose is to increase the overall percentage of this metric by measuring how much value your employees are contributing while working.

Machine Downtime: Measures the sum of time machines are spent being setup, changed over or receiving maintenance. This metric is one of the single most important when it comes to measuring waste. An average car manufacturer loses $22,000 a minute alone from machine downtime, so knowing this number is vital.

First Pass Yield: Quantity of products produced that were up to the correct standards on their first inspection.

Quality: An obvious metric to have, but important in knowing things like your percent defective rate.

Profit Per Employee: Allows you to breakdown the insights of your workforce to see things like the amount of revenue each employee brings in and what ways you can capitalize on lost profits.