KPI stands for Key Performance Indicators. KPI’s are a set of quantifiable measurements used to gauge a company’s overall long-term performance. Manufacturing companies should use KPI’s to monitor, analyze and optimize operations. If you want to grow your business, gathering and analyzing data is very important. It helps you to identify bottlenecks and take steps to remove them. Thus, assisting in the growth of the company.
 
6 important KPI’s in the chemical manufacturing industry are:

1. Throughput – Throughput is the actual time taken for the product to be manufactured. An increase in throughput indicates that the production process is efficient and there is a faster conversion of raw materials to finished products. An increase in throughput can be achieved by analyzing the current operational process, identifying the bottleneck in the process and accordingly changing the operational process to increase efficiency.

 

2. Inventory Optimization – A higher level of inventory adds to the overall cost, whereas stockouts can slow down the sales of the company. It is very important to maintain an optimum level of inventory by keeping a little buffer stock so that it does not curb sales. 

 
 

3. Machine Downtime – Machine downtime refers to the time wasted due to scheduled or unscheduled maintenance of the machine. Machine downtime can slow down the production process. It is important to keep track of time wasted due to the maintenance of machines. Scheduled maintenance will ensure that there is no unexpected breakdown of the machinery. Machine downtime can be reduced by scheduling maintenance during those periods when the sales are slow.

 

4. Delivery – On-time delivery is an important KPI. The aim of the company should always be that the products are delivered to their customers as per the delivery schedule. If there is a delay in delivering, identify the cause of the delay and try to remove them.

 
 

5. Capacity Utilization – Capacity utilization refers to how much of the plant’s total production capacity are you utilizing. A higher utilization indicates that the company is making better use of their production capability. This measure can be used by the management when taking new orders or quoting lead time as it gives them an understanding of the available resources.

 

6. Customer Rejections – It is vital to keep track of the total rejections of the product. If the number of rejections is high, it should be treated as a warning sign that the customers are not satisfied with the quality of the products and some changes has to be made to improve quality. Zero or low rate of rejections indicates that the customer is satisfied with the quality of your products and efforts should be taken to ensure the same quality is maintained.

 
Measuring the above-mentioned KPI's regularly can give the company insight into whether they are achieving their goals or falling short of them. If there are any shortfalls the company can take steps to rectify them and ultimately increase its productivity.