What to measure, and which way is better.
The indicators that show how a warehouse, a production line, maintenance and quality are doing: what each one shows and how it is worked out.
Warehouse
Whether stock is where the records say, and orders leave right and on time.
Recorded by Inventory Management (WMS)- Stock record accuracy
How far the stock records can be trusted, location by location.
Locations whose count matches the recordLocations counted
- Picking accuracy
Orders that leave with the right items in the right quantities.
Orders picked without an errorOrders picked
- Dock-to-stock time
How long goods wait between arriving and being ready to use.
Time from arrival to put away and recorded, on average
- On-time shipments
Promises kept at the dock.
Orders shipped on timeOrders shipped
- Lines picked per hour
The pace of picking.
Order lines pickedPicking hours
- Order cycle time
How long a customer waits for an order to leave.
Time from order received to order shipped, on average
- Stock turns
How often the stock is used up and replaced in a year.
Cost of goods sold in a yearAverage stock value
- Days on hand
How many days of use the stock would cover.
Average stock valueCost of goods sold per day
Production
How much of the planned time makes good units, and whether the plan is kept.
Recorded by Manufacturing Execution (MES)- Overall equipment effectiveness (OEE)
The share of planned time that makes good units at the ideal speed.
Availability × performance × quality
- Availability
The planned time the line actually runs.
Run timePlanned production time
- Performance
How close the line runs to its ideal speed.
Ideal cycle time × units producedRun time
- Quality ratio
Good units among all the units made.
Good unitsUnits produced
- Total effective equipment performance (TEEP)
How much of all the hours in the period make good units.
Fully productive timeCalendar time
- Throughput rate
Units made for each hour of production.
Units producedProduction time
- Schedule attainment
The planned output actually made in the period.
Units made to planUnits planned
- Changeover time
The time between orders when nothing good is made.
Time from the last good unit of one order to the first good unit of the next
- Manufacturing lead time
How long an order spends from release to completion.
Completion time − release time, on average
- Output per labour hour
Units made for each hour people work.
Units producedLabour hours
Maintenance
How long equipment runs, how fast it is back, and how much work is planned.
Recorded by Maintenance Management (CMMS)- Mean time between failures (MTBF)
How long equipment runs between failures.
Operating timeFailures
- Mean time to repair (MTTR)
How long a repair takes, from failure to running again.
Repair timeRepairs
- Failure rate
Failures for every hour of operation.
FailuresOperating time
- Inherent availability
The share of time equipment can run, counting failures and repairs only.
MTBFMTBF + MTTR
- Planned maintenance percentage
Maintenance done to plan rather than after a failure.
Planned maintenance hoursAll maintenance hours
- Preventive maintenance compliance
Preventive work done when it was due.
Preventive work orders done on timePreventive work orders due
- Reactive work
Maintenance hours spent on breakdowns.
Hours of corrective work after failuresAll maintenance hours
- Maintenance backlog
Work waiting, in weeks of the crew's time.
Hours of work waitingCrew hours available a week
- Maintenance cost to replacement value
A year's maintenance against what the equipment would cost to replace.
Maintenance cost in a yearReplacement value of the assets
Quality
Units right the first time, defects per million, how capable the process is, and what poor quality costs.
Recorded by Quality Control (QMS)- First pass yield
Units right the first time, without rework.
Units good the first timeUnits produced
- Scrap ratio
Units that cannot be saved.
Units scrappedUnits produced
- Rework ratio
Units made twice.
Units reworkedUnits produced
- Defective parts per million
Defective units on the scale customers often use.
Defective unitsUnits produced× 1.000.000
- Defects per million opportunities (DPMO)
Defects against every chance there was to make one.
DefectsUnits × opportunities per unit× 1.000.000
- Process capability (Cp)
Whether the process spread fits the tolerance.
Upper limit − lower limit6 × standard deviation
- Process capability index (Cpk)
Whether it fits where the process is actually centred.
Distance from the mean to the nearer limit3 × standard deviation
- Cost of poor quality
What failures cost, against sales.
Internal and external failure costsSales
- Complaint rate
How often customers find a problem.
ComplaintsDeliveries
- Corrective action closure time
How long it takes to remove a cause for good.
Days from opening a corrective action to closing it, on average
Definitions follow the standards and associations named with each indicator. Indicators without a name beside them are worked out the same way everywhere.
Sources
- Warehousing Education and Research Council (WERC), DC Measures, the yearly benchmarking study of warehouse and distribution metrics. werc.org
- ISO 22400-2:2014, Automation systems and integration: key performance indicators for manufacturing operations management, Part 2: definitions and descriptions. International Organization for Standardization. iso.org
- IEC 61703:2016, Mathematical expressions for reliability, availability, maintainability and maintenance support terms. International Electrotechnical Commission. webstore.iec.ch
- Society for Maintenance & Reliability Professionals (SMRP), Best Practices Metrics. smrp.org
- EN 15341:2019+A1:2022, Maintenance: maintenance key performance indicators. European Committee for Standardization (CEN).
- ISO 13053-1:2011, Quantitative methods in process improvement: Six Sigma, Part 1: DMAIC methodology. International Organization for Standardization. iso.org
- ISO 22514-4:2016, Statistical methods in process management: capability and performance, Part 4: process capability estimates and performance measures. International Organization for Standardization.
- BS 6143-2:1990, Guide to the economics of quality: prevention, appraisal and failure model. British Standards Institution. knowledge.bsigroup.com