ERP for the food industry, this is my job. Working as a food technologist for a company that develops such a tool for data capture, processing, and evaluation, I often find myself confronted with questions regarding the optimization of production processes. These questions invariably lead to more questions about measurability; that is, about key performance indicators. That is why I decided to dig a little deeper into KPIs. Without anticipating the outcome of my work, I can say that KPIs always depend on the goals you pursue.
For my master’s thesis, I then set to work on developing a scientific system for the systemization of KPIs. After all, you need a basis for the comprehensive management of equipment availability in order to create process reliability.
The problem is that there is a growing demand for individual products in the process industry, and the processes are becoming more and more individual, complex, and flexible. It is not easy to meet these requirements while keeping the entrepreneurial success factors – time, cost, and quality – under control. Yet, if you manage to accomplish this for your equipment (a significant value-creating component in the process industry), the reliability and the availability will improve.
Once the process reliability has been ensured, you can achieve maximum equipment availability. Now multiple stakeholders (i.e. aspects) affect the process reliability and the equipment availability, as was confirmed in several interviews with experts from the food industry and in quantitative surveys conducted in the industry. For each aspect, there are multiple KPIs that are taken account of in the pursuit of the overall goal to “improve the process reliability and to optimize the equipment availability”.
1. Equipment – optimally controlled
Equipment and production processes require high investments and are therefore in the focus of optimization and efficiency improvements. This creates tensions between the high utilization of equipment to keep the unit cost as low as possible, and the provision of sufficient capacities to safeguard economic flexibility and growth.
Keeping this balance calls for a high level of flexibility – a requirement that has become the major driver for Industry 4.0 where cyber-physical systems interconnect equipment with each other and with people, and provide equipment data in near real time. This newfound data quality opens up new ways for companies to respond to incidents quickly or in real time, or to anticipate incidents and to take corrective action.
There are three key performance indicators to reflect the use and the performance of your equipment:
- the availability of the equipment
- the performance of the equipment (that is, the comparison of actual output and expected output)
- the Overall Equipment Effectiveness.
Drawing conclusions from the difference between actual and expected output will reveal potential error sources and helps you to identify opportunities for optimization.
2. Maintenance – keeping your equipment running
With their products, the equipment manufacturers make a continuous contribution to the necessary automation of the process industry. Besides the OPC UA interface, they are developing other standardized interfaces that harmonize the hitherto heterogeneous data processing. These interfaces also provide for the required transparency and facilitate the automated transfer of data. Interconnecting the equipment enables predictive maintenance based on KPIs. This type of maintenance enhances process reliability, reduces costs by reducing the downtime of the equipment, and helps to improve wear-out reserve levels.
This inevitably increases the importance of predictive maintenance as part of the maintenance strategy mix. The current strategy mix in the food industry still emphasizes reactive and preventive measures, which leads to increased machine downtime and production failure. The following KPIs help you to track and achieve the goals for reduction of unplanned repairs, shortening repair times, and the maintenance task completion ratio.
- Degree of unplanned repair
- Mean Time To Repair (that is, the average time between reporting an incident and restoring the operational status of a machine)
- the level of maintenance work performed compared to maintenance work that is scheduled.
3. Procurement – working hand in hand with suppliers
Procurement aims to avoid material shortages through an optimum order process, to safeguard permanent delivery readiness, and to minimize inventories through short supplier lead times. Choosing the right suppliers and maintaining a good supplier relationship is essential to the success of efficient and synchronized production. Measurable targets like transport routes, on-time delivery, flexibility and reliability mainly depend on the suppliers. Companies can make demands on the mentioned targets and assess their suppliers based on these KPIs in order to secure the production and to guarantee availabilities. Relevant KPIs to assess the suppliers with regard to their on-time delivery performance and product quality include:
- On-time delivery
- Supplier defect rate
- Supplier availability and rate of emergency purchases – to assess the supplier lead time and the flexibility during critical standstill phases. These factors have an impact on restoring the equipment operability and, consequently, on the equipment availability.
4. Customers – improving satisfaction
Although customer requirements are only at the end of the value chain, they are still the starting point of any consideration. The following key performance indicators are essential for measuring on-time delivery and product quality:
- Customer complaint ratio
- Return rate
- On-time delivery
The resulting customer satisfaction is an indicator for your own product quality, where the need for replacement products also affects the production and equipment planning.
5. Quality – preventing deviations
Quality has a major impact on the productivity of a company. The quality requirements of a product are defined in the safety regulations and in the customer requirements. Quality issues can arise throughout the entire production process and so this is one of the wastes in the production process. Looking at the quality is imperative in order to identify availability deviations caused by deficient product quality and necessary rework. By determining quality deviations, you can increase the process reliability. These goals can be measured by
- the quality level
- the reject level
- the rework level
These KPIs provide an overview of the quality of the goods produced so you could intervene early on whenever it is necessary. They are also indicators for necessary maintenance work, and they are used to calculate the equipment effectiveness.
The big picture - at a glance
A KPI system provides a consolidated view of the KPIs for the above aspects, including target values, actual values, and target achievement levels. Employees can see the relevant information at a glance, and a traffic light system directly indicates the areas where things are not going to plan.
In the visualization of the KPI system, it is essential that all stakeholders can understand the strategic goals to achieve the vision. A transparent presentation of the KPI system helps to increase the employees’ awareness for the target achievement. The displayed KPIs need to be captured and reported in a regular cycle. A secure, automated data transfer runs via Industry 4.0 standards and OPC UA interfaces.
Experience has shown that subject to coherent capturing of KPIs for monitoring, a KPI system contributes to increasing process reliability and optimizing equipment availability. Technically, the requirements for process optimization through near real-time data collection and data processing have been fulfilled.
In practice, however, the combination of data into KPIs and their consolidation in KPI systems has not been put to its full use. This was also the outcome of my qualitative and quantitative research. One of the reasons for this is that often it is simply not clear which data should be combined into which KPIs, and what their benefits are. From its vision and strategy, every company should individually infer the relevant goals, KPIs, and strategic actions for each of the above-mentioned perspectives and present them in clear-cut dashboards. The presented results reflect the current situation and show opportunities for optimization – an opportunity you should not miss!