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What are KPIs and what are they (Part 3)

KZK Solutions /kzoli62/
Published by Z. Kovács in Production · 19 November 2021
Tags: Production;KPI
Most recently, I promised to describe HR-related KPIs in the last part of the series.

HR related KPIs

It is easier to understand that all measurable parameters related to production can influence and define KPIs. How is HR activity measured, how does it affect success?
The answer is relatively simple and obvious. Production, for the time being, until full automation is achieved, also requires human labor. This is where personal affairs come into play.

PA (Personal availabiliy) Staff availability

Production is planned to require a certain number of staff. The number of staff available should always be compared to this.

The available staff consists of the following parts:

  • Own staff (OP)
  • Hired staff (RP)
  • Short Term Patient (SIL)
  • Long-term patient (LIL)
  • Those in legal stock such as childcare, maternity leave (LS)
  • Holidays (HP)

Taking these into account, calculate the value of PA, where ai demand (PN):

PA = (OP + RP - SIL - LIL - LS - HP) / PN

In general, it can be said that the value must be above 95%, in which case the missing value can be bridged even with work organization.

It should be noted here that personnel below the LIL and LS values ​​should preferably, e.g. to be replaced by contract staff, it is usually still "cheaper" than hired labor.

Quality KPIs

A quality indicator, delivery quality (QD), has already been mentioned. Let’s take a look at some more that are commonly used by companies below.

NCR (New Claim Recived) New complaint received

With this indicator we can track the number of complaints received during the given time (eg one month). The target value is always to reach as small a number as possible, ie 0.

TAT (Turn-around time) 8D rotation speed

If a complaint has already been received, it does not matter how long it takes for the manufacturer to react to it, how long it takes to take and implement measures.

Here, the generally accepted target value is for the manufacturer to close the 8D within 8 business days.

Finally, let’s look at a very important, not yet discussed KPI in the field of production.

OEE (Overal equipment effectiveness)

This metric is one of the most important used by manufacturing companies. In any case, it must be said that this is one of the most complicated to follow and calculate. Its complexity is caused by:

  • All technology equipment should be tested separately if possible
  • A lot of data needs to be recorded and tracked

OEE is a product of three production indicators: the quality indicator, the availability indicator, and the performance indicator. All three indicators, and thus the value of the product, are between 0 and 1, ie between 0% and 100%.

The quality indicator is the ratio of the good number of pieces produced (not scrapped and not to be reworked) to the total number of pieces produced.

The availability indicator is the ratio of the theoretical total working time of the machine or production line to the actual working time. Factors that reduce the theoretical total working time are, for example, maintenance, unplanned repairs, or downtime due to lack of materials or manpower.

The performance indicator is the ratio of the number of pieces delivered during the actual working time of the machine to the theoretically achievable norm, ie (expressed in times) the product of the number of pieces produced and the planned cycle time divided by the actual running time of the machine.

OEE = (quality indicator) × (availability indicator) × (performance indicator)

If we substitute the definitions of the previous indicators in the above product, there will be several identical factors in the numerator and the denominator, so that they “pronounce” each other, and finally the following remains:

OEE = (good number of units produced) × (planned running time) / (planned running time of the machine)

Nevertheless, when calculating total asset efficiency, it is still advisable to calculate all three indicators separately, as they carry different information and, if they are low, can be improved by different measures.

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