Definition & Formula for KPIs

Value Stream
Value stream: The set of all the specific actions required to bring a specific product from receipt of the order to a finished product in the hands of the customer.

Takt Time
Takt Time is the rate of customer demand.
It helps to determine the rate at which products have to be made.

How to calculate: Takt Time = Available Minutes for Production Required Units of Production

Example: A company runs from 9:00 am to 5:30 pm everyday with 30 minutes of lunch break. In the month of January they work for 26 days & have to produce 48000 units. Find the Takt time.
Total time available = 26 days x 8 hours x 60 minutes = 26 x 480 minutes Takt time = (26 x 480) / 48000 = 0.26 minutes = 12.4 seconds.

Cycle Time
Cycle Time is the time it takes to complete one process cycle.
It helps to determine the rate at which the products can be made.

How to calculate: Takt Time = Available Minutes for Production Required Units of Production

Example: A company runs from 9:00 am to 5:30 pm everyday with 30 minutes of lunch break. In the month of January they work for 26 days & have to produce 48000 units. Find the Takt time.
Total time available = 26 days x 8 hours x 60 minutes = 26 x 480 minutes Takt time = (26 x 480) / 4800 = 2.6 minutes = 2.6 x 60 seconds = 156 seconds.

If cycle time of all the Operations of a module are listed down, then the operation with the highest cycle time will be the cycle time of that module.

Overtime
Overtime is the extra amount of time worked in a day excluding the normal working hours.
Example: A company works from 9:00 am to 5:30 pm with 30 minutes of lunch break. On a particular day they worked till 7:30 pm to meet the demand.
Total time worked = 8 hours + 2 hours = 10 hours

Overtime % =

Overtime Hours Worked Total Hours Worked

Downtime
Downtime is the amount of time lost in a day because of unplanned breaks like machine problem, quality issues, material delays etc.
Example: A company works from 9:00 am to 5:30 pm with 30 minutes of lunch break. On a particular day there are following breakdowns:
Quality Issues : Time lost 20 minutes. Machine Breakdown : Time lost 25 minutes Material Unavailability : Time lost 15 minutes

Total working hours = 8 hours Total Breakdown Loss = 20 + 25 + 15 minutes = 60 minutes = 1 hour

Downtime % =

Total Downtime Loss Total Working Hours

Delivery In Full On Time

Measures the shipment of the right products in the right numbers at the right time to the customer order. Shows the effectiveness of the production process in making to customer demand Shows the percentage of the scheduled customer order volumes actually shipped on schedule with full quantity. How to calculate: DIFOT % = 100 x

Orders Shipped on Time in full Quantity Total Orders Shipped

Dock-To-Dock
Dock-to-Dock Measures the flow of products from receipt of raw materials to the shipment of finished goods. Shows the speed of conversion of raw materials or customer orders to finished product. Expressed in hours or days How to calculate: Dock-to-Dock Days = Stock left at the end Average Product Run per day

First Time Through

Measures percent of total units successfully manufactured through the value stream on the first pass without being repaired, reworked, re-tested or scrapped.

How to calculate:
The First Time Through for the Value Stream is the product of the First Time Through at each Inspection/ Evaluation Point in the entire value stream:

FTT at Inspection Point (IP)

Total Units Processed - Not OKs Total Units Processed FTT (IP1) x FTT (IP2) x x FTT (IPn)

FTT for Value Stream

Efficiency
The rate of production is called efficiency Shows the rate at which the operators work

Expressed in %
How to calculate: Efficiency % = 100 x Total Standard Hours Produced Net Working Time

Standard Hours Produced = Total Output x SAH of the product

SAH : Standard Allowed Hours is the total time it takes to produce one unit product. This includes allowances such as Machine & Personal Allowances. SAH & SAM are same although SAH is calculated in Hours while SAM in minutes.

Overall Equipment Effectiveness

Measures a combination of availability, performance efficiency, and quality for a machine or a process. Identifies waste caused by machine & process inefficiencies. Shows effective use of machine or cell. Can be collected by shift, by day, by product, or by product family How to calculate: OEE = Availability x Performance Efficiency x Quality Availability = Operating Time / Net Available Time Operating Time = Net Available Time Downtime Loss Performance = (Ideal Cycle Time * Total Output) / Operating Time Ideal Cycle Time = Total Processing time of Product / No. of operators Quality = (Total Units Processed Not OKs) / Total Units Processed

Value Added Ratio

Provides insight on how many value added activities are performed compared to non value added activities, using time as a unit of measure.
How to calculate:
List down all activities Group them into Value added & Non-value added elements Add the Value Added time Add the total time

VA Ratio =

Value Added Time Total Time