The importance of industrial production indicators

Performance indicators for industrial production measure product and process quality, inventory control, manufacturing and setup time, overall output and customer and employee satisfaction, among other points.

The goal is to improve the company’s performance. With them, you can:

• align strategy with business goals;
• track the quality of what is delivered to the customer;
• see the relationship between cost and benefit;
• check the performance capacity of the resources in use.

This text shows how to choose indicators and presents 3 industrial production indicators to track.

How to choose industrial productivity indicators?

Every company has different processes, products and services. So the starting point is to choose indicators that meet three criteria:

• they are tied to a business goal;
• they measure something the customer notices, such as quality, lead time and complete delivery;
• they are tracked at a defined frequency.

These indicators need concrete, reliable, accurate and up-to-date data. Information taken from loose spreadsheets inspires little confidence when deciding and when building the strategic plan.

3 industrial production indicators to track

Measuring, analyzing and improving activities with indicators takes more than one metric. Some indicators work well for specific jobs, but it is often necessary to combine several to reach a business goal.

Industries are made, basically, of people and equipment. So the three indicators below look at equipment (OEE), labor (OLE) and delivery to the customer (OTIF).

OEE: overall equipment effectiveness

OEE (Overall Equipment Effectiveness) measures the overall efficiency of equipment. It shows how the manufacturing operation is being carried out and helps improve maintenance and production processes.

It is “overall” because it combines the three main success factors of a plant:

• availability;
• performance (productivity);
• quality.

There is no point in having equipment available if it produces below the expected performance, or produces a lot but without quality.

OEE = availability x performance x quality

The formula for each factor is:

• availability = produced time / available time x 100;
• performance = actual output / theoretical output x 100;
• quality = good parts / total parts produced x 100.

How do you know if the result is good?

The world-class reference for OEE is 85%. It is a TPM (total productive maintenance) convention, attributed to Seiichi Nakajima, not a standard. It comes from targets for each factor:

• availability of 90% or more;
• performance of 95% or more;
• quality of 99% to 99.9%.

Use the number as a point of comparison rather than a pass mark. The reference varies by sector and type of process.

OLE: overall labor effectiveness

OLE (Overall Labor Effectiveness) analyzes the cumulative effect of three workforce factors on labor productivity. With it, operational decisions become more precise and corrective actions faster.

The three factors are:

• availability: the percentage of time employees spend making effective contributions;
• performance: the quantity of product delivered;
• quality: the percentage of product made that is fit for sale.

OLE helps identify machine downtime, delays and absenteeismopens in a new tab, and assess team performance in their roles.

OLE = availability x productivity x quality

The calculation for each factor is:

• availability = operators’ productive work time / planned hours;
• productivity = operators’ actual output / expected output (or work standard);
• quality = total sellable parts / total parts produced.

OTIF: on-time, in-full delivery

OTIF (On Time In Full) shows whether the order was delivered on time and complete. Meeting this indicator contributes to customer satisfactionopens in a new tab.

It highlights failures in the process, from order creation to delivery, and answers a direct question: did it meet the target or not.

• On time: the commitment to the customer was met, on the agreed day and time.
• In full: nothing was missing from the delivery, neither material nor parts, and the products follow the agreed specifications. Otherwise, the order was not delivered in full.

OTIF = orders delivered on time and in full / total orders x 100

For example, if 90 out of 100 orders arrived on time and complete, OTIF is 90%. An OTIF of 100% means every order was met on time and in the right quantity and specification.

How to track production indicators

Calculating OEE, OLE and OTIF once is not enough. The value is in tracking them regularly and comparing them with the target. In spreadsheets, this depends on manual entry and on different versions of the same number, and confidence in the data drops.

Management software brings formulas, targets and results together in one place.

Stratws, the management platform created by Siteware, does this tracking: each indicator has a defined formula, target and frequency, and the dashboard, in the feature called Farol, shows the result against the target. Production data can come from the ERP and other systems, without re-entry.

Get to know Stratwsopens in a new tab and see how to track your operation’s indicators.