The 14 manufacturing cost metrics you need to follow

The top manufacturing metrics portfolio

If you walk into most respectable manufacturing sites across the world, we see plots, charts, dashboards as frequent as the products themselves. These measures are all focused to enhance the quality, on time delivery, motivation and bottom line performance of each production step. The list of actual end metrics varies from product to product, customer to customer and from one method of production to another. Yet, the most frequent question we still get asked is “which metric should I be measuring?”.

To help provide an answer to this popular question we reviewed a collection of measures, KPI input drivers and then created this broad brush list of 14 metrics. Your business may be already measuring them, or some, yet what is more important is that you review the frequency of measurement, the range of measures and base assumptions. That is as important as the metrics themselves.

  1. Percentage cost of quality

  2. Percentage cost reduction

  3. Percentage decrease in stock carrying costs (Net working capital)

  4. Percentage of rework costs

  5. Percentage of machine utilization

  6. Percentage of unused machine capacity

  7. Percentage reduction in downtime

  8. Percentage reduction in labor costs

  9. Percentage reduction of variable costs

  10. Number of average units per labor hour

  11. Maintenance cost per unit

  12. Ratio of actual to projected unit production costs

  13. Total cost of preventative maintenance

  14. Amount of power consumption per hour of production

This list will spark debate on what is missed or another variation on the actual metric. Yet from a broad brush general manufacturing perspective this portfolio of 14 metrics will ignite greater cost control, quality and on time delivery awareness. We often discover that initial values are set into ERP systems and then never updated due to a host of various reasons. So, reviewing these basic metrics should help a producer of goods the foundation and corner stones for higher performance.