Key indicators & their meaning

Key indicators & their meaning

Key indicators & their meaning

1. Not right first time A) Customer complaints Written Verbal B) Customer ppm RCIA rejection Line rejection Warranty rejection

Key indicators & their meaning

Customer complaints : Any problem faced by customer irrespective of the intensity. Communication of the complaint can be written, verbal or during visit of representative. Mechanism for capturing customer complaints should be build by the organization e.g. customer representatives should be fixed with defined frequency of visit & check sheet to capture line fall outs etc.

Customer complaint annual log sheet

S.No.

Date

Customer

Product

Rej qty

Problem

Reported by

Mode

Reason

counter measure

TAS No.

Trgt dt

Actual

Resp

Remarks

Legend :

Reported by : should be internal representative

Mode : Written, Telephone, observation of field rep

TAS No. : Trouble analysis sheet no.

Key indicators & their meaning

Customer ppm RCIA : Rejection at the time of receipt inspection at customer Line : Material getting rejected at line of customer Warranty : Rejection received from field with in warranty period specified Formula of customer ppm= (qty rejected/ qty dispatched (present month))* 10^6

Key indicators & their meaning

C) Internal rejection Quality defects observed at the time of final inspection, sub assembly or components manufacturing/ value addition stage

Key indicators & their meaning

2. Labour productivity : Increase in qty/ person over a period of time View example

Key indicators & their meaning

Labour productivity
a Product A B C D E F G H I J K L M N O P b c May 48 36 122 114 28 54 12 13 121 20 78 72 11 110 37 39 915 62 65 138 132 43 71 19 18 133 42 94 81 24 122 54 64 1162 axb % Imp 29% 96 81% 108 13% 122 16% 228 54% 560 31% 162 58% 72 38% 13 10% 3630 110% 240 21% 390 13% 216 118% 44 11% 1100 46% 111 64% 78 45% 7170 27% 67.00935 axc Qty/ Man Hr Jun % Imp 124 195 138 264 860 213 114 18 3990 504 470 243 96 1220 162 128 8739 81.6729 22% July % Imp Aug % Imp Sep Description MP deployedApr 2 3 1 2 20 3 6 1 30 12 5 3 4 10 3 2 Total 107 Sign Prodn

Labour productivity improvement

Key indicators & their meaning

180 160 140 120
Qty/ person

Qty per person

Apr May

100 80 60 40 20 0
A B C D E F G H I Products J K L M N O P

Key indicators & their meaning

3. Inventory turn ratio : This is a measure of no. of times inventory rotates in a year. If ITR is 365 i.e. inventory is turning everyday. High ITR means : a)Less working capital b)Less space reqd to keep inventory c) Less people reqd to manage inventory d)Less confusion & searching time Calculation example

Key indicators & their meaning

4. Delivery schedule achievement It is a measure of %age of dispatches achieved (within a variation of +/- 5% of qty reqd) as per customer schedule Example

Key indicators & their meaning

5. OEE (Overall equipment effectiveness)

What is OEE?
OEE is a way to monitor and improve the efficiency of your manufacturing processes (i.e. machines, manufacturing cells, assembly lines). OEE is simple and practical. It takes the most common and important sources of manufacturing productivity loss, places them into three primary categories and distills them into metrics that provide an excellent gauge for measuring where you are - and how you can improve! OEE is frequently used as a key metric in TPM (Total Productive Maintenance) and Lean Manufacturing programs and gives you a consistent way to measure the effectiveness of TPM and other initiatives by providing an overall framework for measuring production efficiency.

Key indicators & their meaning

Plant operating time
From plant operating time subtract planned shut down time e.g breaks, Lunch, planned maintenance & other time where there is nothing to produce. Remaining available time is Planned production time

Planned production time

Planned Shut down

OEE begins with planned production time & aims at eliminating or reducing Productivity & efficiency losses. There are 3 category of losses Down time losses Speed losses Quality losses

Key indicators & their meaning

Availability takes in to account down time e.g. equipment failure, material
shortage & change over time. Remaining time is operating time

Operating time

Down time

Performance takes in to account any factor that cause the process to

operate at less than maximum possible speed. Example include machine wear, substandard material, misfeeds & operator inefficiency. Remaining available time is net operating time

Net operating time

Speed Losses

Quality takes in to account produced pieces that do not meet quality

standards including reworks. Remaining time is fully productive time Fully productive time
Quality Losses

Key indicators & their meaning

Calculating OEE The Formulas The OEE calculation is based on the three OEE Factors: Availability, Performance, and Quality. Availability Availability takes into account Down Time Loss, and is calculated as: Availability=OperatingTime/PlannedProductionTime

Performance Performance takes into account Speed Loss, and is calculated as:

Performance=IdealCycleTime/(OperatingTime/TotalPieces)

Key indicators & their meaning

Ideal Cycle Time is the minimum cycle time that your process can be expected to achieve in optimal circumstances. It is sometimes called Design Cycle Time, Theoretical Cycle Time or Nameplate Capacity. Since Run Rate is the reciprocal of Cycle Time, Performance can also be calculated as:

Performance=(TotalPieces/OperatingTime)/IdealRunRate Performance is capped at 100%, to ensure that if an error is made in specifying the Ideal Cycle Time or Ideal Run Rate the effect on OEE will be limited.

Key indicators & their meaning

Quality Quality takes into account Quality Loss, and is calculated as:

Quality=GoodPieces/TotalPieces OEE OEE takes into account all three OEE Factors, and is calculated as: OEE=AvailabilityxPerformancexQuality

Key indicators & their meaning

Example OEE Calculation Item Shift Length Short Breaks Meal Break Down Time Ideal Run Rate Total Pieces Reject Pieces Data 8 hours = 480 min. 2 @ 15 min. = 30 min. 1 @ 30 min. = 30 min. 47 minutes 60 pieces per minute 19,271 pieces 423 pieces

Planned Production Time = [Shift Length - Breaks] = [480 - 60]= 420 minutes Operating Time = [Planned Production Time - Down Time] = [420 - 47] = 373 minutes Good Pieces = [Total Pieces - Reject Pieces] = [19,271 - 423] = 18,848 pieces

Key indicators & their meaning

Availability = Operating Time / Planned Production Time

= 373 minutes / 420 minutes = 0.8881 (88.81%) Performance = (Total Pieces / Operating Time) / Ideal Run Rate

= (19,271 pieces / 373 minutes) / 60 pieces per minute = 0.8611 (86.11%) Quality = = 0.9780 (97.80%) OEE = Availability x Performance x Quality Good Pieces / Total Pieces

= 18,848 / 19,271 pieces

= 0.8881 x 0.8611 x 0.9780 = 0.7479 (74.79%)

Key indicators & their meaning

Six Big Losses Defining the Six Big Losses One of the major goals of TPM and OEE programs is to reduce and/or eliminate what are called the Six Big Losses the most common causes of efficiency loss in manufacturing. The following table lists the Six Big Losses, and shows how they relate to the OEE Loss categories.

Six Big Loss Category Breakdowns

OEE Loss Category Down Time Loss

Event Examples

Comment There is flexibility on where to set the threshold between a Breakdown (Down Time Loss) and a Small Stop (Speed Loss).

Tooling Failures Unplanned Maintenance General Breakdowns Equipment Failure Setup/Changeover Material Shortages Operator Shortages Major Adjustments Warm-Up Time Obstructed Product Flow Component Jams Misfeeds Sensor Blocked Delivery Blocked Cleaning/Checking Rough Running Under Nameplate Capacity Under Design Capacity Equipment Wear Operator Inefficiency Scrap Rework In-Process Damage In-Process Expiration Incorrect Assembly

Setup and Adjustments

Down Time Loss

This loss is often addressed through setup time reduction programs.

Small Stops

Speed Loss

Typically only includes stops that are under five minutes and that do not require maintenance personnel.

Reduced Speed

Speed Loss

Anything that keeps the process from running at its theoretical maximum speed (a.k.a. Ideal Run Rate or Nameplate Capacity).

Startup Rejects

Quality Loss

Rejects during warm-up, startup or other early production. May be due to improper setup, warm-up period, etc.

Production Rejects

Quality Loss

Scrap Rework In-Process Damage In-Process Expiration Incorrect Assembly

Rejects during steady-state production.

Key indicators & their meaning

6. Value added per employee cost It is measure of productivity considering employee cost as input

Key indicators & their meaning

A Value added = Sales - Variable cost A1 A2 Sales is excluding excise duty Variable cost = RMC + Operator cost +Manufacturing variable + Selling & Distribution expenses+ Interest on working capital A21 A22 RMC = Cost of raw material consumed Operator cost = (Salary , Employee welfare, Overtime, uniform, buses, canteen, gratuity & leave encashment)of operators Manufacturing variable = Tools & Dies consumed+ Consumables + Electricity + diesel expenses Selling & Distribution = Forwarding( outward frieght) + Warranty rej inward frieght + Royalty Interest on working capital except term loan

A23 A24 A25 B

Employee cost = Fixed + Variable employee cost Value added / Employee cost = A/B

Key indicators & their meaning

7. Floor space utilization This is a measure of productivity considering floor space as input and sale value as output. Only areas related to manufacturing & services to manufacturing should be considered for calculating floor space utilization

Key indicators & their meaning

Indicator is a measure of sales revenue generated by square meter of factory floor space and demonstrates how the effective use of space can reduce the fixed cost element of the unit. It should increase over time. Unit is Rs./ m^2 Space Utilization = (Total Sales in Indian Rupees) -----------------------------------------------(Shop Floor Space in Square Meters)

Key indicators & their meaning

Total Sales in Rupees means sales revenue generated by selling the products to customers. Shop Floor Space in Square Meters means production space including tool room area, storage area for RM, WIP,FG. Exclude utilities such as generating sets, compressor, R&D facilities etc. Areas currently not in use but already owned / constructed in view of future expansion should be included in the calculation.

Key indicators & their meaning

Floor space utilization Department Assembly Moulding Press Shop Powder coating Die- casting Tool room Production engg Stores & PPC Finished goods store Maintenance Total Sales Floor space utilisation Apr Area (Sq.mtr) 1200 400 300 400 1200 700 200 600 300 100 5400 45000000 8333 May Jun Jul

Key indicators & their meaning

8. Break down hrs & 9. Breakdown frequency Lost time due to equipment failure Break down can be in machine, tools & dies , Jigs & fixtures Record of each type of breakdown should be maintained Separately & analysed to eliminate or reduce the same

Key indicators & their meaning

Breakdown register Departm ent Month a b b-a Tim e of reportTim e of closure Down tim e S.No. Date Machine No. Problem Reported byReason Counterm easure Attended by Sign Prod Sign Maint

Total Total breakdown hrs Breakdown frequency (b-a) count of breakdown

(b-a)

Note : Problem should be written by operator in his/ her own language & sim ilarly counterm easure by person who has attended the com plaint

Key indicators & their meaning

10. Single Minute Exchange of Dies:
Changeover time. Starts at the end of the last good product of the previous batch and ends with the first good product of the new batch. Internal set-up activities. Elements in the changeover which can only be done when the machine is stopped. External set-up activities. Elements that can be performed when the machine is running.

Key indicators & their meaning

What is SMED?
Single Minute Exchange of Dies is changing process tooling in 9 minutes or less. The process was developed by Shigeo Shingo at Mazda, Mitsubishi and Toyota in the 1950s and 1960s.
Separate internal and external activities. Convert internal activities to external activities. Streamline all activities.

Key indicators & their meaning

Why SMED?
Reduced inventories. Improved productivity. Higher quality levels. Increased safety. Improved flexibility. Reduction in throughput time. Improve operator capabilities. Lower manufacturing costs.

Key indicators & their meaning

Before SMED

Typical changeover: 5 10 minutes

Key indicators & their meaning

After SMED

Typical changeover: 5 10 seconds

Key indicators & their meaning

What is our economic batch quantity?

Example 1: Current set-up times are 3 hours and the run time per unit is 1 minute. Customers order in batches of 100. Target manufacturing cost is Rs.1/unit and we charge Rs.2/unit Unit cost = set-up time + production time x hourly rate number of units 60 = 180 mins + 100 mins 100 = Rs.2.24/unit Therefore, we lose 24 Paise for every product we make. x Rs.48/hr 60

Key indicators & their meaning

Our economic batch quantity is 1000
Example 2: Increase batch size to 1000 Unit cost = set-up time + production time x hourly rate number of units 60 = 180 mins + 1000 mins 1000 = Rs.0.94/unit Advantage: 58% cost reduction Disadvantage: Production planning is more difficult (we employ a prodn planner increasing overhead costs by Rs.0.05 per unit; need to store 900 products until they are called off (Stock-holding costs increase by Rs.0.08 per unit). We now make a profit of Rs.0.93 per unit. x Rs.48/hr 60

Key indicators & their meaning The economic batch quantity is what the customers ask for!
Example 3: Reduce changeovers to 20 mins Unit cost = set-up time + production time x hourly rate number of units 60 = 20 mins + 100 mins 100 = Rs.0.96/unit
Advantage: 57% cost reduction; produce only what is required Disadvantage: Requires the investment (of time) in people and processes NOTE: SMED would give a unit price of less than Rs.0.87.

Rs.48/hr 60

With 20 minute changeovers we can make Rs.1.04 per unit.

Key indicators & their meaning

12% 15 8% 10
SMED status as on _______
<10 Min 10~20 Min

No. of tools

% of tools

70

30 24%

56%

20~30 Min >30 Min

Key indicators & their meaning 11. 5S Seiri Sorting out unnecessary items Seiton Arranging necessary items Seiso Cleaning Seiketsu Making standards for cleaning Shitsuke Discipline

Key indicators & their meaning

This measure indicates the attitudinal alertness of the employees towards change management initiatives and day to day work. A good 5S improves company image in the eyes of Customer, visitors,guests. 5S awareness and training is must for all the employees in the company. 5S level in the company should be monitored through the 5S Score.

Key indicators & their meaning

It is advised to nominate 5S in-charge in each zone. Zones should be defined on shop floor, offices, utility rooms, scrap yard, open space, etc. The 5S checklist is used to measure the 5S score in the company. The zonal in-charges should be trained to do 5S audit as per the 5S score sheet

Key indicators & their meaning

The company should regularly conduct Red Tag Campaign and should define its frequency. 5S should be improved and maintained through : # 5S audit # Worst point photography This indicator should increase over time. Unit for this indicator is %.

1S Sorting Out (SEIRI) S.N. 1 Floor Cleanliness - free from dust, oil, mud etc 2 General Cleanliness inside factory - Walls, pillars, pipelines are clean without scaling, paint peeling marks, strains etc. 3 Cleanliness of containers/pallets - free from dust, oil. Container/pallet in painted condition and free from damages. 4 Cleanliness of parts - free from dust, oil (dry condition) 5 Cleanliness of Jigs, Fixtures - free from dust, oil 6 Unused/Excess material removed to separate place, away from work area 7 mix up of parts in pallets, containers, trays etc No
TOTAL FOR 1S

Out of 40 20 40 30 20 20 30 200

1S SCORE = ( TOTAL / 2) 100

S.N.

2S Set limits and Systemise(SEITON)

Out of 30 30 30 20 10 20 40 20 TOTAL FOR 2S 200 Out of 50 30 30 50 10 TOTAL FOR 3S 30 3S SCORE = ( TOTAL / 2) 200 100 Out of 50 30 50 40 TOTAL FOR 4S 30 4S SCORE = ( TOTAL / 2) 200 100 Out of 50 50

Gangway - Marking is clear and no material in the Gangway. 1 2 Use of right pallet / container, trays etc. Right pallets, containers, trays etc in right location 3 4 Right component in right containers/pallets etc 5Location of tools for easy to retrieve 6Only calibrated jigs/fixtures are used 7 Proper shadow board for tools. Proper storage of housekeeping tools. ( Broom, Brush , Small Shovel , Tool for cleaning at Heights ) 8

2S SCORE = ( TOTAL / 2) 100

S.N.

3S Shine equipment (SEISO)

Container identification and traceability available 1 2 Parts identification and traceability available Plant and Equipment available in clean condition - all sides 3 Preventive maintenance schedule available and effective 4 Chip/Swarf collection and disposable system available. 5

S.N.

4S Search Time Elimination (Seiketsu)

Retrieval of tools, document is easy ( ask for documents , related tools ) 1 2 Andon Lights On Machines Are Available And Effective Localized Shadow Boards, Tools Available For Cleaning And Maintenance And Effective 3 4 Easy To See And Inspect Facility Available On Machines And Equipment's Pre-Fixed Quantity Per Container / Pallets Is In Practice 5

S.N.

5S Standardize Practice & Discipline (Shitsuke)

People are aware for " 5S " requirement and their doing their role ( ask 2-3 people ) 1 Availability of operating Standards ( Operation sheet , work instructions ) and are effective 2 Activities are done as per schedule ( Audit , Action on NC products etc. ) 3

Key indicators & their meaning

Score of 5S Zone no. Description 1S 1A 2B 3C 4D 5E 6F 7G 8H 9I 10 J 11 K 12 L 13 M 14 N 15 O 16 P 17 Q 18 R 19 S 2S 77 59 57 61 77 73 76 56 69 66 62 60 84 77 64 74 57 61 62 81 73 66 73 72 63 70 69 76 59 71 62 84 75 81 68 61 58 56 Month 3S 76 66 76 55 83 59 76 56 56 66 84 66 70 80 56 74 84 70 78 4S 82 82 84 85 74 80 62 69 55 80 76 65 66 65 66 83 55 59 74 55 55 85 5S 69 83 80 69 78 67 72 76 61 63 75 62 80 56 73 56 61 72 84

5S score for the month of ___________ Minimum score Maximum score

Key indicators & their meaning 12.Sales data stratified on a) SOB b) New customer added, c) New product added

Key indicators & their meaning 13.Percentage employee involvement based upon : a) Kaizen b) Quality circle, c) Model machine d) 1S, 2S ( Red tag) e) Poka yoke f) Muda elimination
This measure indicates the company wide involvement of the employees in the change initiatives.

Key indicators & their meaning

Employee involvement monitoring sheet Dept S.No. Name 1A 2B 3C 4D 5E 6F 7G 8H 9I 10 J 11 K 12 L 13 M 14 N Quality circle Red tag Involvement in Model machine Poka yoke Month ____________ Kaizen Total Wk1 Wk2 Wk3 Wk4 Total 1 1 1 1 1 1 0 0 1 1 1 0 0 0 2 2 1 0 0 0 1 0 0 2 2 0 0 0 1 1 0 0 0 2 2 5 Total 10 36% Kaizen/person 0.71

Total % Employee involvement

Key indicators & their meaning 13. Absentism overall to be considered

Absentism
S.No. Emp Code 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Name A B C D E F G H I J K L M N O P Q R S T U V W X 1 P L P P P L L P P P P P P P P P P A P P A P P P P L P P L P P L P P P P P P P P A P P P P P P L 2 A P P P P A P L L L P P P P P P P A P P P P L P 3 A P P A A P P P P P P P L P L P P P A P P P L P 4 A P P P P P L P P L P P P P P P P P L P P P P P 5 P A P A P P P P P P P P L P P P L P P P P L P L 6 A P P P P P L P L P L L L P P L P L P L P P L P 7 P P L P L P P P P P P A P P P P A P P P P P P P 8 P P P P L P P P L P P P P P P A P P A P P P P P 9 10 P P P P L P P P P A P A P P P P A A P P P L P P 11 L P P L L P P P P P P A P A P P P P P P P P P L 12 P L L L L P P L P P P P P P P P P A P P L P P L 13 P P P P L P P P P P P L P P L P P P P L P P P L 14 L P L L P P P P P P L P P P P P P P P L P P P P 15 P P P P P P L P P L L P P P P P P P L P P P P P 16 P L P P P P L L P P P P P L P P L P P P P P P L 17 L L P P P P P P L P P P P L P P P A P P P P P P 18 L P P P P P P P P A A P L P L P L P P A P P A P 19 P P P P P P P P A P P L P P P P P P P P P P P A 20 P P P P P P A P P P A P P L L L P P P P P P P P 21 P L P P P P P A P A P P P P P P P A P P P P A P 22 P P P A A P P P P P P L P P P P L A P P A P P A 23 P L P L P L P P P P P P P L P P P P P L L P L L 24 P L P P P P P P P P P P P P L P P P P P P L P P 25 P L P P P P L L L P P P P P P L P P P P P L L P

Total (P) 457 Total (L) 100 Total (A) 43 Absentism 24% Legends P : Present L : Leave A : Absent

((L+A)/(P+L+A))*100

Key indicators & their meaning

This indicator measures the willingness of the employees to come to the workplace and perform value addition activities. Total absenteeism should be measured. All the employees should be covered. This indicator should decrease over time. Unit is % - percentage. The company should make a monthly trend graph.

Key indicators & their meaning

SAFETY
This indicator is a measure of an organisations commitment to implement company-wide safe work practices for all the persons in the company. All employees carrying out its operations without an injury/ physical harm to the people in the company.

Key indicators & their meaning

All the persons include : # Permanent persons # Temporary persons # Subcontractors persons # Visitors # Guests Includes Safe work practices for : # Shop floor workers and staff # House keeping and pantry persons # Utilities and Maintenance workers and staff # Office staff # Stores and logistic persons

Key indicators & their meaning

Includes all the Major and minor accidents. The company should define Major and Minor accidents There are two measures for Safety : # Accident Frequency Rate # Accident Severity Rate

Key indicators & their meaning 13. Accident frequency =

No. of accidents Total Man-hr worked (including over time)

X 10^6

The Indicator is a measure of no. of accidents occurring in the company due to unsafe practices. Company should make a monthly trend graph for it. It should decrease over time.

Key indicators & their meaning 14. Accident severity =

No. of days lost Total Man-hr worked (including over time)
X 10^6

This indicator is a measure of loss to the company in terms of man-hours due to unsafe operations. It should decrease over time.

Key indicators & their meaning

16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 17 18 Accident 19 20 21 22 23 24 25 26 27 28 29 30 31 Accident Frequency = (No.of accident/Total Manhr)*10^6 Accident severity = (Mandays lost/Total Manhr)* 10^6 No Accident

Note: In case of an accident , an accident report should be made by concerned HOD with countermeasure, trgt dt & resp. Report should be signed by Business Head . Counter measure should get implemented latest in 24 hrs & horizontal deployement within week

Key indicators & their meaning

15. NO. OF SUGGESTIONS PER EMPLOYEE This indicator measures the morale of the employees and readiness to accept the change initiatives within the work environment. Unit is Number / person This indicator should increase over time. Formula = ( Total No. of Employee Suggestions ) -----------------------------------------------------( Total No. of Employees )

Key indicators & their meaning

No. of employee suggestions means implemented and recorded suggestions. Total no. of employees means regular employees, temporary employees, subcontracted labor including supporting functions in company such as administration, purchase etc.

Key indicators & their meaning

16.COST OF INTERNAL NON-CONFORMITIES This indictor measures the cost arising from products or processes not in compliance with quality requirements. For simplicity,only defects found in the company are considered. Unit of this indicator is % - percentage This indicator should decrease over time. Formula = Cost of Internal Scrap and Rework --------------------------------------------- x 100 Total Manufacturing Cost

Key indicators & their meaning

Internal scrap and defectives means all defective products that do not meet quality requirements. Total Manufacturing cost should include labor, material,machine costs, tool change cost and overheads. Revenues from selling scrap shall not be included.

Key indicators & their meaning

INVENTORY CONTROL (Through Red, Grey, Green Inventory) Inventory shall be controlled for RM, WIP, FG, Indirect material. There are three inventory types for the above mentioned categories : Red, Gray, Green ; Definitions & Target : Inventory type Red Inventory Green inventory Definition Not at all required process lead time ( note time & date of issue of matl & note time & date of reaching to finished goods. Difference between second & first is process lead time) green inventory Target 0% 97%

gray inventory

3%

COMPANY NAME

COMPANY LOGO

REPRESENTATION OF RED, GREY & GREEN LEVELS OF INVENTORY

WIP
RESPONSIBILITY : NAME & DESIGNATION

UOM:%

100% 80% 60% 40% 20% 0%

4 16

2 16

0 16 RED GREY GREEN

80

82

84

JUNE

JULY

AUGUST

Key indicators & their meaning

Thanks