Operations & Production KPIs for SMEs
Several are shared KPIs that the Ops Head shares with the IT Head, HR Head, Sales Head, and Finance Head.
Operating Expense Ratio
Operating expense ratio is an indicator of how well a company is managing the ongoing costs of operating the business. It takes the operating expenditure (OPEX) and divides them by sales in a given period.
Operating Expense Ratio = (OPEX in period t / Sales Revenue in period t) x 100
Service quality is a measure of the service quality a company provides to its customers. Based on a multi-item survey that takes into account both service expectations and service perceptions it provides an insight into the gap between the service level customers expect and their actual view of the service.
Capacity Utilisation Rate
Capacity utilisation rate measures the extent to which a company is leveraging its full production or work potential. It puts the actual capacity in relation to the possible capacity.
Capacity Utilisation Rate = (Actual Capacity in time period t / Possible Capacity in time period t ) x 100
Process Waste Level
Process waste level is an indicator of the extent to which a company's processes are lean and effective.
Measuring the waste depends on the metrics used for each waste type, but usually consists of simple counting or measuring.
Order Fulfillment Cycle Time
Order fulfillment cycle time measures the time it takes from customer order to the receipt of the product or service by the customers. It therefore provides an insight into the internal efficiency and supply chain effectiveness.
Order Fulfillment Cycle Time = Source Cycle Time + Make Cycle Time + Delivery Cycle Time
Delivery In Full, On Time (DIFOT) Rate is a measure of delivery reliability. It measures the percentage of deliveries that have been completed in full and on time.
Delivery in-full and on-time (DIFOT) = units or orders delivered in full on time / total units or orders shipped
Inventory Shrinkage Rate
Inventory Shrinkage Rate is a measure of inventory control.
Inventory Shrinkage Rate = (IV1 - IV2) / IV1
IV1 is the inventory according to records, &
IV2 is the actual inventory
Project Schedule Variance
Project schedule variance (PSV) is a measure of the extent to which projects are delivered on schedule.
Project Schedule Variance (PSV) = SCT - ACT
ACT is the Actual Completion Time, &
SCT is the Scheduled Completion Time
Project Cost Variance
Project Cost Variance (PCV) is an indicator of the extent to which projects are delivered within budget.
Project Cost Variance (PCV) = SPC - APC
SPC is the Scheduled Project Costs, &
APC is the Actual Project Costs
Earned Value (EV) measures the extent to which projects are making the desired progress. It allows companies to understand how much work has been completed as well as the costs of the work, both in relation to the project expectations.
EV = % complete x BCWP
BCWP is the Budgeted Cost of Work Performed = the total budgeted costs for labour and resources for the project.
Performance Level = (ACWC / EV) x 100
ACWC is the Actual Cost of Work Scheduled or the total amount in labour and resources that has been spent on the project to date.
Vitality Index is the % of total sales derived from products introduced in the past 5 years.
Vitality Index = Sales derived from products introduced in the past 5 years / total sales
Return on Innovation Investment
Return on innovation Investment measures the returns generated from investments in innovation.
Return on Innovation Investment = [(Net Profit from new products and services) - (innovation costs for these products and services)] / (innovation costs for these products and services)
Time to Market
Time to market measures how long it takes to get new products or services to a point where they are sold to customers.
First Pass Yield
First Pass Yield (FPY) is a measure of the operational efficiency. It basically measures the percentage of items that are moving through a process without any problems.
First Pass Yield (process q) = FPY (process step a) x FPY (process step a) x FPY (process step a) x … x FPY (process step 'n')
Rework level measures the amount of rework that has to take place in a process and is therefore an indicator of internal operational efficiency. It simply measures the number or percentage of items that require rework.
Quality Index is usually a measure that assesses key dimensions of operational and service quality. It might include metrics such as First Pass Yield, Defect rates, Delivery Performance, etc.
Overall Equipment Effectiveness
Overall equipment effectiveness (OEE) measures the extent to which existing machines and equipment is producing the desired output. It is a composite KPI that measures output based on capacity taking into account process availability, efficiency and quality.
OEE = Availability x Performance x Quality
Process Downtime Level
Process downtime level measures the extent to which an operational process is available and running.
Process Downtime Level = (TA t / PPT t) x 100
PPT t is the planned productive time that a process should be available in a given time period t, &
TA t is the actual productive time that a process has been available in a given time period t.
Machine Downtime Level
Machine downtime level measures the extent to which an operational process is available and running.
Machine Downtime Level = (TA t / PPT t) x 100
PPT t is the planned productive time that a machine should be available in a given time period t, &
TA t is the actual productive time that a machine has been available in a given time period t.
Supplier Scorecard is a composite measure of supplier performance. It might take into account metrics such as delivery performance, quality, costs, etc. to create an index weighted according to the organisational priorities.
First Contact Resolution
First contact resolution (FCR) is a measure of the effectiveness with which a company is resolving customer queries. It basically measures the rate at which customer queries are resolved at first contact.
FCR Call Statistics = (Total number of queries) / (Total number of calls) x 100
Carbon Footprint (ISO certification)
Carbon footprint is a measure of the level of harmful greenhouse gas emissions a company produces. An organization's carbon footprint can be broken down into the primary and secondary footprints.
The primary footprint is the sum of direct emissions of greenhouse gases from the burning of fossil fuels for energy consumption and transportation. The secondary footprint is the sum of indirect emissions of greenhouse gases during the lifecycle of products used by an individual or organization.
Energy consumption is a measure of how much energy a company is consuming which can be measured by the amount of energy purchased from an energy supplier in a given period.
Water footprint is a measure of the total level of freshwater consumption for the direct or indirect operation of the business.
Supply Chain Distance
Supply chain miles measures the distance goods (or services) have traveled across the supply chain of a business.
Supply Chain Distance = Distance between location of production and the location of the final delivery
Waste Reduction Rate
Waste reduction rate is a measure of the level to which a company is able to reduce the waste it is generating as part of its operations.
Waste Reduction Rate = [Wasted Raw Material (in this period a) / Wasted Raw Material (in the last period b)] x 100
Waste Recycling Rate
Waste recycling rate measure to what extent a company is able to recover waste it is generating for reuse or recycling.
Waste Recycling Rate = [Amount of waste recycled or reused / Total waste produced] x 100
Product Recycling Rate
Product recycling rate measures the proportion of the products a company sells that is recycled or reused.
Product Recycling Rate = [Amount of products recycled or reused / Total amount of products sold] x 100
Time Lost due to Accidents or Injuries
Time lost due to accidents or injuries is an indicator of safety in the operational environment of a business and indicates the risks of accidents
Time Lost Due to Accidents or Injuries = number of man days lost due to accidents or injury in a period / total hours worked in this period
System downtime measures the extent to which IT systems are available when they are needed.
System Downtime = Planned Operating Time in time period t - Actual Operating Time in time period
Cost to Serve
Cost to serve (by customer or segment) is a measure that helps to understand the profitability of a customer account (or segment) by assigning costs of serving this customer based on the level of activity and overhead costs incurred by this customer.
Cost Avoidance Score
Cost avoidance score is a measure that helps to assess to what extent implemented cost reductions are realised. When companies embark on a cost reduction programme they need to establish whether actual savings have been made at the end of the programme.
Supplier Performance Score
Supplier performance score is a measure that assesses the performance of suppliers on dimensions including bargaining power, dependence score, price, delivery, quality, service, etc)
Incident Resolution Index
Incident resolution index measures the incidents that are resolved within the Service Level Agreement. Incidents can refer to infrastructure incidents or incidents with applications. Both can be measured and reported separately.
Incident Resolution Index = Incidents resolved within SLA / Total Incidents
Regulatory Compliance Score
Regulatory compliance score is a measure that help to assess the extent to which companies are compliant with regulatory rules and regulations. It is usually measured using measures that depend on the regulatory requirements.