Key Performance Indicator
KPIA quantifiable metric used to evaluate the success of an organization, process, or activity in meeting operational and strategic objectives. In manufacturing, common KPIs include OEE, on-time delivery, scrap rate, and cycle time, which help managers track performance and drive continuous improvement.
RELATED TERMS
Overall Equipment Effectiveness
A metric that measures manufacturing productivity by multiplying three factors: Availability (uptime), Performance (speed), and Quality (good units produced). An OEE score of 85% is considered world-class, while most manufacturers operate between 60-70%. OEE identifies losses and improvement opportunities in equipment utilization.
Throughput
The rate at which a manufacturing system produces finished goods, typically measured as units per hour or per shift. Throughput is determined by the system's bottleneck operation and represents the actual productive output that generates revenue.
First Pass Yield
The percentage of units that pass quality inspection without requiring rework, repair, or scrapping on the first attempt. First pass yield measures process capability and quality, with higher yields indicating more efficient operations and lower costs of poor quality.
Scrap Rate
The percentage of materials or products that cannot be used or sold due to defects, damage, or failure to meet specifications. Tracking scrap rate helps identify quality problems, calculate true production costs, and prioritize improvement efforts to reduce waste.