KPIs for production planning

Production planning KPIs(Key Performance Indicators) are measures used to evaluate and track the performance of the production planning process. By monitoring production planning KPIs and comparing them to target values defined in production plans, companies can determine if production is on track and identify issues that need to be addressed.

Examples of production planning KPIs

We nomenclature below some KPIs related to production planning:

• On-time delivery (OTD): The percentage of orders delivered to customers on time. This measures the efficiency of the production planning process in meeting deadlines and customer expectations.
• Production efficiency: This KPI measures how well the production planning succeeds in utilizing the available capacity of production resources. It can be expressed as the ratio of actual production output to maximum theoretical output.
• Inventory levels: KPIs related to inventory levels, such as inventory turnover rate, average inventory height, maximum inventory height, and inventory accuracy. These measure the effectiveness of production planning in managing inventory levels and minimizing excess inventory.
• Cost of production: KPIs that track production costs, such as total unit production costs, unit labor costs, and raw and material costs. This helps assess the efficiency of production planning in terms of cost control.
• Downtime: This KPI tracks the percentage of time in which no production occurs during work hours that were scheduled for production. Causes include machine downtime, tool adjustments and accidents. Some downtime may be necessary for functions such as machine work, but in general, the less downtime, the better. And the better the production planning, the lower the downtime.
• Switchover time: This refers to the time required to switch between tasks. Switchover time affects overall productivity because production is stopped during these periods. Production schedules must account for the amount of time and effort required to reconfigure production for each task, including changes to equipment, raw materials and workforce. Designing production schedules to minimize changeover time can increase efficiency.
• Overall equipment effectiveness (OEE): This is a measure of overall manufacturing productivity that takes into account quality, performance and availability. The formula for OEE is: OEE = Quality x performance x availabilityQualityis typically measured as the percentage of parts that meet quality standards. Performance is how fast a process runs compared to its maximum speed, expressed as a percentage. Availability is the percentage of uptime during a company’s scheduled hours of operation. Increasing OEE can be achieved by reducing downtime, increasing quality and maintaining a high production rate.
• On-time delivered orders: Production delays can be costly both in terms of money and reputation. Generating products on time means you’re less likely to need expensive rush shipments or other contingency measures to meet deadlines. And delivering orders on time helps keep customers happy, which means they are more likely to continue doing business with your company.
• Lead time: The average time required to complete an order from start to finish, including all steps in the production process. A shorter lead time indicates more efficient production planning and higher operational speed.
• Capacity utilization: The extent to which available production capacity is utilized. This can be measured as the percentage of total available capacity actually used, or as the ratio of actual production output to maximum capacity.
• Labor and machine productivity: KPIs that measure labor and machine productivity, such as production output per worker or machine per hour or shift.
• Quality levels: KPIs that measure the quality of products produced, such as percentage of defects, customer complaints and conformance to specifications. This assesses the effectiveness of production planning in maintaining quality standards.

Monitoring production planning KPIs

By monitoring and analyzing production planning KPIs, you can evaluate the performance of the production planning process, identify bottlenecks and make continuous improvements to optimize efficiency and effectiveness.