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36. KPI in All Industries

36.10 Manufacturing

Plant interviews around Chakan (Pune) and Ambad (Nashik) ask scrap and whether the line was actually available. "We ran 1,000 pieces" is not a KPI when 300 of them are scrap. These plants are fictional labels for class, not a company's shift report.

OEE (Overall Equipment Effectiveness) needs availability, performance, and quality. This table has the first and the third. Do not invent a performance factor to make OEE look complete.

KPI What the number means Who uses it Action it drives
Availability (Planned minutes minus down minutes) divided by planned minutes. Production lead A long down time is maintenance or material. Do not ask the line for more pieces that hour.
Scrap % (Total pieces minus good pieces) divided by total pieces. Quality and production High scrap stops the line. More output with the same scrap rate wastes material.
Good pieces Count that passed. Dispatch This is what can be shipped. Total pieces cannot.

Fictional sample rows. One shift. Every line was planned for 480 minutes and counted 1,000 pieces so the vanity metric is obvious.

Line Plant Planned min Down min Good pcs Total pcs
Line A Chakan, Pune 480 48 900 1,000
Line B Chakan, Pune 480 120 700 1,000
Line C Ambad, Nashik 480 24 950 1,000
Line D Ambad, Nashik 480 96 800 1,000
Line E Kolhapur 480 60 850 1,000
Line F Nagpur 480 30 920 1,000

Worked from those rows.

  • Planned minutes 2,880. Down minutes 378. Good pieces 5,120. Total pieces 6,000. Scrap pieces 880.
  • Availability is (2,880 − 378) ÷ 2,880 = 2,502 ÷ 2,880 = 86.9%.
  • Scrap % is 880 ÷ 6,000 = 14.7%.

Line B at Chakan: availability (480 − 120) ÷ 480 = 75.0%, scrap (1,000 − 700) ÷ 1,000 = 30.0%. Line C at Ambad: availability (480 − 24) ÷ 480 = 95.0%, scrap 50 ÷ 1,000 = 5.0%.

Good KPI Vanity metric
From the same rows Line B scrap 30.0% and availability 75.0% Every line's 1,000 pieces
Why Line B and Line C "produced the same". They did not. A dashboard of total pieces is a flat bar. It cannot start a maintenance job.

What the manager does. The Pune (Chakan) manager stops Line B and reads the 120 down minutes before the next shift starts. The Nashik (Ambad) manager uses Line C as the standard and looks at Line D, where scrap is 200 ÷ 1,000 = 20.0% and availability is (480 − 96) ÷ 480 = 80.0%. Do not congratulate Nagpur only because 920 good pieces is close to 1,000. Say the scrap: 8.0%.

Ravindra Bagale's Tip

Friends, many students learn OEE as one number, but the performance factor is not in the file. If it is missing, do not write OEE. Show availability and scrap separately. That is more honest. It is very simple; you only need to make it a habit.