PQCDSM KPI Definitions. Part 2

Productivity

People – hours per unit volume (tonne or ‘000 units)

This indicator measures labour productivity and is based on the people hours required to produce a single unit of volume. It is a measure of consumption and not cost.

People-hours per unit volume = Total people-hours required within Manufacturing / Total volume (tonnes or ‘000 units)

Which Considers:

1. Should include all management, staff, and operators within the Make operation to produce the agreed category unit of volume.
2. Casual and temporary labor FTE employed for production activities should also be included.
3. All indirect labor allocated to the production plant should be included, e.g. 50% of the Factory Engineers time is allocated to the Hair manufacturing plant, therefore, this time should also be included.
4. The average number of paid hours worked per employee, used to build up the total hours per year, should exclude leave and paid holidays but include overtime.
5. Volume should consider only the agreed category unit e.g. Packed powder and not powder transferred as an intermediate or packed soap and not noodles sold to 3rd party.
6. People included within Make should also include those involved in the following activities, where they are under the responsibility of the factory manager:
   • Personnel involved in the handling and transfer of raw and pack materials to the point of use,
   • Personnel involved in the handling and transfer of finished goods/intermediates from process and packing hall.

Example:

	Managers	Staff	Operators
Variable
Process	0	0	15
Packing	0	0	160
FTE – Process & Packing	0	0	20
Fixed
Direct labour and Supervision	0	4	110
Repairs & Maintenance	0	3	26
Materials handling	0	2	10
Temporary	0	0	5
Indirects
Allocated factory management and staff	5	8	0
Total Number	5	17	346
Average annual hours worked	2442	2442	2442
Total people hours	898656
Volume (tonnes)	85000
People-hours per tonne	10.57

Capacity Utilization (Asset Utilization)

This measures the production floor utilization considering the impact of factory shutdowns on availability.

Capacity Utilization = Loading Time x 100 (%) / Total Time

Which Considers:

1. This is based on the packing hall, which is normally the bottleneck of the Make operation.
2. The loading time is the time available after shutdown losses have been removed.
3. Shutdown losses include the following: Holidays, Weekends, Factory Shutdown, No production orders, Planned maintenance, and modifications.
4. Within factory shutdowns, the unavailable time due to work patterns should be included (e.g. If the site works 6 days per week, the seventh day should be considered as part of the factory shutdown)
5. For a plant with more than one packing line, the weighted average based on volume should be calculated as shown in the example.

Example:

	Line 1	Line 2	Total
Total time	8760	8760	17520
Shutdown:	4030	4280	8310
– Factory Shutdown	1630	1630	3260
– No production orders	620	1850	2470
– Planned maintenance	1780	800	2580
– Planned modifications	0	0	0
Loading time	4730	4480	9210
Volume  (‘000 units)	114089	28315	142404
Capacity Utilisation	54%	51.1%

Weighted average Capacity Utilisation = (54% *114089) + (51.1% * 28315) = 53.4 %

Volume Performance

This measure allows the evaluation of planned volume against actual. Capital investment and manufacturing structures are projected based on these expectations, and any deviation should be considered to redirect initial plans.

Volume Performance (%) = Volume Produced / Annual Plan Estimate * 100

(i.e., Annual Plan Estimate = Annual Contract Volume)

Which Considers:

1. Volume performance should be measured by SKU, category, and total plant. This should help the factory to evaluate capacity utilization and return on capital investments specific to an SKU or an innovation.

Example:

SKU	Q1 Annual Plan	Q1 Output	Vol. Perf. (%)
Liquid 400ml Local	3,500	3,200	91
Liquid 200ml Local	4,600	4,700	102
Liquid 50ml sample	200	200	100
Total	8,300	8100	97.5

Total Volume (weight)

This measure allows the collection of actual volume produced in engineering units.

Total Volume = Volume produced in tonnes

Which Considers:

The volume should be consistent with the volume defined in Volume Performance but expressed in engineering units of tonnes. Products not typically measured in units of weight may ignore this measure.

Example:

SKU	Q1 Annual Plan	Q1 Output	Tonnes
Liquid 400ml Local	3,500	3,200	3,200
Liquid 200ml Local	4,600	4,700	4,700
Liquid 50ml sample	200	200	200
Total	8,300	8100	8100

Total Volume (units)

This measure allows the collection of actual volume produced in thousands of units.

Total Volume = Volume produced in thousands of units.

Which Considers:

This volume should be consistent with the volume defined in Volume Performance but expressed in thousands of units. Products not typically measured in weight units or single units of production should report this number in the number of cases produced.

Example:

SKU	Q1 Annual Plan	Q1 Output	000 Units
Liquid 400ml Local	3,500	3,200	8,495
Liquid 200ml Local	4,600	4,700	22,330
Liquid 50ml sample	200	200	3,880
Total	8,300	8100	34,700

Overall Equipment Efficiency (OEE)

This is a measure of operational performance and is based on the TPM Cost of Production.

OEE  = Availability x Performance x Quality

            Availability = {(Loading time – Downtime) / Loading time} * 100%

            Performance = {(Standard cycle time * Product Units processed) / Operating Time}* 100%

            Quality  = {(Product Units processed – Defect Units) / Product Units processed}  * 100%

Which Considers:

1. The loading time is the time available once shutdown losses have been removed.
2. Shutdown losses include the following: Holidays, Weekends, Factory Shutdown, No production orders, Planned maintenance, and modifications.
3. Within Factory shutdowns, the unavailable time due to work patterns should be included (e.g. If the site works 6 days per week, the seventh day should be considered as part of the Factory shutdown)
4. Downtime considers the following losses: Equipment breakdown, Changeovers, cutting blade change (if appropriate), Startup, Ramp down, Management, and Operational Motion.
5. Standard cycle time is based on the designed or maximum speed, considering the bottleneck in the line. It is the time to manufacture one unit e.g. 500 upm = 3.3 x 10^-5 hours / unit (1hour/(500*60 units))
6. When different products run on a given line at different speeds, then a weighted average should be used to specify the speed of the line.
7. Where more than one line is being considered a weighted value should then be calculated.
8. Weighted averages should be calculated based on the relative volumes of each line:
   • Line 1 produced: 1000 Tonnes @ 65% OEE
   • Line 2 produced: 2000 Tonnes @ 45% OEE
   • Weighted average = (65%*1000/3000)+(45%*2000/3000) = 52%
9. Defect units consider waste products as well as the quantity of rework. This should consider quality defects and rework relating to product and packaging material. Even if the product left the factory and was later returned for not matching quality specifications.
10. Total product units processed should include defect units, therefore the figure for ‘Volume produced’ should be all products including defect units.
11. The loss tree in the template asks for a defect related time, this is converted into units by the calculation based on design speed.
12. Definitions for individual losses should be those considered within the TPM CoP.
13. A weighted OEE can be calculated for a Global based on volume.

Example:

Availability
	Line 1	Line 2	Total
Total time	8760	8760	17520
Shutdown:	4030	4280	8310
– Factory Shutdown	1630	1630	3260
– No production orders	620	1850	2470
– Planned maintenance	1780	800	2580
– Planned modifications	0	0	0
Loading time	4730	4480	9210
Downtime:	220	385	605
– Equipment breakdown	0	100	100
– Change-overs	50	120	170
– Cutting blade change	0	0	0
– Start up / Ramp down	0	0	0
– Management	75	75	150
– Operational Motion	95	90	185
Availability	95%	91%	95%
Performance
Design / Max line speed	500	160	660
Standard time	3.33 x 10-5	1.04 x 10-4
Operating time	4510	4095
Actual units produced	114089000	28315000	142404000
Performance	84%	72%	82%
Quality
Defects / Rework	150000	96000	246000
Quality	99.9%	99.7%	99.8%
OEE	80%	66%	77%

Overall Equipment Efficiency = 77%

Raw Material Yield

This measure enables an understanding of Raw Materials waste within the Make process.

Raw Material Yield = {(Actual Raw materials costs –Zero Based Raw material costs) / Zero Based Raw material costs} * 100%

Raw Material Loss (ppm)= Raw Materials Yield * 10,000

Which Considers:

1. This measure is focused on the Make process and therefore does not include obsolescence, stock write-offs, etc.
2. The actual raw materials cost should not include consumables such as Bleaching earth, catalysts which should be considered as part of the production cost.
3. The Zero-Based raw materials cost should not include the traditional BOM material wastage allowances.
4. No allowance is to be made for over-packing, washouts, etc. as these are waste and therefore should not be shown in the zero-based raw material consumption figure.
5. The raw materials cost should exclude material used for trials and pilot plant.

Example:

	Actual	Zero Based	Yield
Oils and Fats	25000	24500	2.04%
Perfume / Dyes	15000	14956	0.29%
Caustic / Brine	5600	5321	5.24%
Additional additives	2312	2289	0.99%
Total	47912	47066	1.80%

Packaging Material Yield

This measure enables an understanding of Packing Materials waste within the Make process.

Packaging Material Yield = {(Actual packaging materials costs –Zero Based packaging material costs) / Zero Based Packaging Materials Cost} * 100%

Packaging Material Loss (ppm)= Packaging Material Yield * 10,000

Which Considers:

1. This measure is focused on the Make process and therefore does not include obsolescence, stock write-offs, etc.
2. The Zero-Based packaging Material costs should not include the traditional BOM material wastage allowances.
3. No allowance is to be made for packing removed from poor product etc. as this is waste and therefore should not be shown in the zero-based packaging material consumption figure.
4. The packaging materials cost should exclude material used for trials and pilot plant.

Example:

	Actual	Zero Based	Yield
100ml Bottle	15700	15007	4.62%
200ml Bottle	2399	2123	13.00%
50ml Jar	14006	13456	4.09%
75ml Jar	1232	1225	0.57%
Total	33337	31811	4.80%

Rework Inventory

To measure production that does not immediately meet specifications to ship.

Rework Inventory = The value in dollars of goods held not shippable due to quality issues.

Which Considers:

That product which is not immediately meeting specification as a shippable finished good.

1. Includes all finished goods, and work-in-process material awaiting additional conversion steps to meet finished product specifications.
2. Includes finished goods and work-in-process material held offsite, but not yet released as a finished good into the warehouse system.

Mean Time Between Failures

To measure the reliability of the production machinery and the effects of planned maintenance.

MTBF = Total Operating Time / Number of breakdown events

Which Considers:

1. Breakdown events are greater than 10 minutes in duration.
2. Electrical or mechanical failures.

Delivery

SKU Complexity

Measure the level of portfolio complexity in a factory.

SKU Complexity = Volume produced /  # of unique SKUs produced

Which Considers

1. A unique SKU includes all standard and promotional items that are manufactured in the period of evaluation.
2. For manufacturing operations that act as regional sourcing units even the differentiation of two products by labels with different languages should be considered as separate SKUs.
3. The product portfolio to use for this ratio should be the number of SKUs actually manufactured in the site for the given period.
4. Volume should be reported in tonnes or ‘000 units according to the category’s normal reporting criteria.

Example

	Volume Produced	# of different SKUs manufactured	SKU Complexity
Line A	20,000	12	1666
Line B	25,000	7	3571
Total	45,000	15	3000

Note: The number of SKUs in the example assumes an overlap in the SKUs ran in each line. For the total, this duplication should not be considered.

Portfolio Produced Weekly

To measure the degree of flexibility and linkage of the Make Process within the overall supply chain. The purpose of the measure is to track how closely Operating Units’ production scheduling is to market needs. The more frequently that products are produced, the greater is the flexibility to provide a rapid response with minimum stocks.

Portfolio Produced Weekly (PPW)% =(# Of unique SKU produced per week X 100) / (# Of unique SKU in Portfolio)

Which Considers:

1. A unique SKU includes all standard and promotional items that are traded in the following quarter to the period of evaluation.
2. SKU’s produced must be counted from the actual production every week
3. SKU’s Portfolio to be used considers the future three-month horizon.
4. Consolidation by month, quarter, year should be done as a weighted average by SKU volume.

Example:

April	Week 1	Week 2	Week 3	Next Quarter  Portfolio
# SKU produced	23	37	34	62
PPW %	37	60	55
Volume (‘000 Units)	2500	3300	2870

Portfolio Produced Weekly (April) = ((37%*2500) + (60%*3300) + (55%*2870) * 100) / 8670 =  52%

Output Reliability by SKU

Allows measurement of a site service level to the supply chain

Output Reliability by SKU (%) = å (Plan – ABS (Actual – Plan)) * 100

                                                                   å Plan

Which Considers:

1. The Plan should be frozen in the week previous to the actual production week. No changes requested by planning or by the factory should be accepted as changes to the original frozen plan.
2. The plan comprises a period of 7 days of production (full week).
3. Consolidation by month, quarter, year, and Global should be done as a weighted average by SKU volume.
4. Any product rejected for quality or hygiene incidents should not be recorded as production output in this measure
5. Measurement at the plant should be on an SKU basis.
6. Factories should track the number of plan changes per week to ensure that causes for a poor performance in this measure can be correctly attributed.
7. Output Reliability will only be calculated on the basis of packing lines, not in processing operations.

Example:

Site 1	Week 1
SKU	Actual	Plan	ABS Difference	Plan – ABS
Liquid Lotion 400ml Dry Skin	30000	32000	2000	30000
Liquid Lotion 200ml Dry Skin	45000	40000	5000	35000
Liquid Milk 200ml	42000	43000	1000	42000
Total	117000	115000		107000
OR(%)				93%

Site 1	Week 2
SKU	Actual	Plan	ABS Difference	Plan – ABS
Liquid Lotion 400ml Dry Skin	65000	65000	0	65000
Liquid Lotion 200ml Dry Skin	33000	39000	6000	33000
Liquid Milk 200ml	40000	32000	8000	24000
Total	138000	136000		122000
OR(%)				90%

SKU	Site 1	Site 2
Week 1	93	94
Week 2	90	97
Total Volume	255000	266000
OR(%)	91	96

Output Reliability Site 1, Week 1(OR)% = {(32000-2000)+(40000-5000)+(43000-1000) * 100} /  115000 = 93%

Output Reliability Site 1, Period (OR)% ={(93*117000)+(90*138000)  * 100} / 255000 = 91%

Output Reliability Global, Period (OR)% = {(91*255000) + (96*266000) * 100} / 521000 = 93.5%

Number of SC Planning Schedule Changes

To measure the activity occurring as changes to the “frozen” plant schedule after the schedule has been “frozen” for the current short-term planning cycle.

Number of SC Planning Schedule Changes = The difference between the individual SKU count planned for in the frozen schedule and the SKUs that ran on the lines.

Which Considers:

1. The Plan (as set by SC Planning, not plant scheduling) should be frozen in the week previous to the actual production week. Any changes requested by planning and jointly agreed should be accepted as changes to the original frozen plan.
2. Any product rejected for quality or hygiene incidents should not be recorded as production output in this measure
3. Measurement at the plant should be on an SKU basis.
4. The number of plan changes per week.

The number of SC Planning Schedule Changes will only be calculated based on packing lines, not in processing operations.

Example:

	“Frozen” Plan	Actual SKU Run	Change?
Liquid Lotion 400 ml	3500	3500	No
Liquid Lotion 200 ml	2700	1000	Yes
Liquid Milk 50 ml	1500	1500	No
Liquid Rich 100 ml	6500	6500	No
Lux Super 900 ml	2000	0	Yes
Organics 500 ml	0	2000	Yes
Organics 350 ml	0	1000	Yes
Organics 250 ml	4500	4500	No
Total SC Plan Changes			4

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