You can't manage what you don't measure. That sentence — attributed to Peter Drucker — sounds like a cliché until you're standing in front of a board where Quality has been red for three weeks in a row and nobody knows why.
The right manufacturing KPIs are not a collection of numbers for a management report. They're a tool for daily decision-making on the shop floor.
What Is a KPI and How Do You Define One?
A KPI (Key Performance Indicator) is a measurable indicator that shows whether a given area is hitting its target. A good manufacturing KPI meets five conditions:
- Measurable — expressible as a number or status
- Current — available the same day, not a week later
- Understandable — every employee knows what it means
- Actionable — the team has real tools to improve it
- Tied to a target — there's a threshold that defines success (e.g. ≥95% = green)
KPIs for Safety
Safety is always the first area on the SQDP board — for good reason. One workplace accident costs more than a year's worth of process savings.
Key Safety Indicators
Days without an accident — the simplest and most powerful motivational indicator. Plants with a visible accident-free day counter at the entrance record significantly lower injury rates.
Near-miss events — potential accidents that didn't result in injury. Paradoxically, a high near-miss report count is a good sign — it signals a culture of openness and active risk monitoring.
PPE compliance — the percentage of workers using required personal protective equipment (helmets, gloves, safety glasses) during daily observations.
LTIF (Lost Time Injury Frequency) — the number of lost-time injuries per million hours worked. The standard for corporate safety reporting.
How to Measure Safety Daily
Daily SQDP entry for Safety: green/yellow/red rating with a comment describing any event or observation. The monthly total of red and yellow days is your main trend indicator.
KPIs for Quality
Quality is the area that generates the most discussion — because it's the hardest to measure in a simple, daily way.
Key Quality Indicators
PPM (Parts Per Million) — the number of defective units per million produced. The standard in the automotive industry. World-class target: below 50 PPM.
FPY (First Pass Yield) — the percentage of products passing through the entire process without any rework on the first attempt. FPY of 95% means 5% of products require rework.
Customer complaints — an external quality measure. One of the most important, because it directly affects the customer relationship and costs.
Scrap Rate — the percentage of material or products rejected and unfit for repair.
How to Measure Quality Daily
On the SQDP board, Quality is green when the result is within the norm, yellow when below target but within tolerance, red when the target is exceeded or a customer complaint has arrived. The comment should include the location of the problem (line, workstation) and the initial cause.
KPIs for Delivery
Delivery measures whether you're delivering the right things at the right time — both to the external customer and to the next internal process.
Key Delivery Indicators
OTD (On Time Delivery) — the percentage of orders or deliveries completed on time. Industry target: ≥95% for series production, ≥98% for automotive.
OTIF (On Time In Full) — extends OTD to include completeness: on time and in full quantity. More demanding but a more complete picture.
Daily plan attainment — the percentage of planned production completed for the day. The key operational indicator for the shift leader.
Cycle time vs. takt — is the production pace aligned with the required takt time? Deviations in either direction signal problems.
How to Measure Delivery Daily
Yellow when plan attainment is between 90–95%, red below 90% or when a customer delivery was delayed. Comment: reason for the deviation (material shortage, machine breakdown, staffing gap).
KPIs for Production / People
The fourth area is interpreted differently depending on the company. In the classic version it's Production (line efficiency); in newer implementations it's often People (human resources).
Production — Efficiency Indicators
OEE (Overall Equipment Effectiveness) — the gold standard of production efficiency. The product of availability, performance, and quality. OEE of 85% is world-class for series production.
Production plan attainment — simple and understandable for every operator. We planned 500 units — we made 480 — attainment 96%.
Downtime — total unplanned line stoppage time. Broken down by category: breakdown, material shortage, changeover, other.
People — Human Resource Indicators
Attendance — the percentage of workers present vs. scheduled. A sudden drop in attendance on one line is a signal to act.
Employee turnover — especially relevant in high-pressure operational environments.
Training completion — the percentage of planned training and certifications completed on time.
How to Connect KPIs Into a Coherent System
The four SQDP areas don't operate in isolation. Problems in one area are often the cause of problems in another:
- Low attendance (People) → plan not met (Production) → delivery delay (Delivery)
- Material shortage (Delivery from supplier) → line stoppage (Production) → pressure to cut corners → safety incident (Safety)
- Operator error (Quality) → rework → delay (Delivery)
The SQDP board makes these connections visible. Looking at the monthly grid, a manager can see whether quality problems correlate with days of low attendance or with specific shifts.
Technology and KPI Effectiveness
Even the best-defined KPIs don't work if collecting data is painful. A shift leader who has to fill in five Excel sheets after every shift will eventually stop doing it reliably.
A digital SQDP board in LeanTools reduces the daily entry time to 2 minutes. Trend charts and monthly analysis generate automatically. Data is available to the whole team in real time — no emails, no reports, no spreadsheets.
Manufacturing KPIs and the Daily Management System
A Daily Management System (DMS) is the organisational structure that gives KPIs rhythm and meaning. Numbers alone mean nothing — they only matter when they're discussed daily at a stand-up meeting by people who have the tools to act on them. SQDP is the most widely used KPI set in DMS implementations across manufacturing plants.
Visual Management of KPIs on the Shop Floor
Visual management means KPIs are visible where they're created — not buried in reports or ERP systems. An SQDP board on a monitor next to the line, updated after every shift, is the simplest and most effective approach to shop floor visual management. Operators see the result of their work. Managers spot deviations without asking. Problems surface before they grow.
See Also
- SQDP Board — What It Is and How to Implement It
- Lean Boards vs Excel — Objective Comparison
- Kamishibai — How to Digitalise Audits in Your Warehouse and Plant
Frequently Asked Questions
How many KPIs should you track simultaneously on an SQDP board? Ideally 1–3 indicators per SQDP area. Too many KPIs means the shift leader spends more time entering data than reacting to it. Start with one key indicator per area and add more once the system is running smoothly.
How often should manufacturing KPIs be updated? KPIs on the SQDP board should be updated daily — ideally at the start of each shift. Data older than 24 hours loses its operational value. LeanTools reduces entry time to 2 minutes, which removes the main barrier to daily updates.
Can manufacturing KPIs be integrated with an ERP system? LeanTools works independently of ERP as a daily visual management tool at the shop floor level. ERP data can be transcribed manually or exported to Excel and compared with SQDP board results. API integration is planned for future versions.
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