Decoding the Magic of KPIs: Beyond Metrics, Towards Operational Excellence


Presenting KPIs in dashboards that are immediately actionable and aligned with the operational pulse of your company ensures that your packaging manufacturing business stays on track. Choosing the correct KPIs to follow in your dashbooads is a key component for smart decision making. An ERP facilitates the comparison of current KPIs with historical benchmarks or industry standards, providing context for performance evaluations.

Harnessing the power of Key Performance Indicators (KPIs) is pivotal for evaluating and elevating organizational effectiveness. It’s one of the easiest ways to measure progress toward objectives, yet choosing which KPIs to monitor can be challenging: Of the hundreds of KPIs to choose from, which would you choose? Is monitoring just 5 enough? And of those 5, which would provide the best data?

In this article, you will find why KPIs are important, how to choose a useful KPI and why to use KPIs dashboards for easy tracking of KPIs for your packaging company.

What is a KPI? 

A manufacturing Key Performance Indicator is a measurable value that shows how well an organization is achieving its business objectives. KPIs are based on data collected from production and business processes within an organization used to monitor, analyze and optimize operations.

Keeping track of KPIs provides manufacturers with valuable insights that can drive informed decision-making and lead to improvements in various areas. Digging deep into these KPIs gives management the data to adjust for peak performance.

Examples of KPIs for packaging manufacturing:

Production Efficiency KPIs:

  • Overall Equipment Efficiency (OEE) machines
  • Production per hour
  • Downtime due to machine issues
  • Set-up time
  • Rework
  • Downtime due to machine issues

Quality Management KPIs:

  • Defect Rate per job
  • Customer Returns due to quality issues
  • Conformance to specifications
  • Accuracy of printing registration
  • Box crush resistance and stacking strength

Inventory and Supply Chain KPIs:

  • Raw material inventory turnover
  • Supplier lead time for packaging materials
  • Cycle Count Accuracy
  • On-time delivery of packaging materials
  • Stock-Out Rate for critical materials

Cost Management KPIs:

  • Cost per product Produced
  • Scrap and Waste Costs
  • Manufacturing Cost as a Percentage of Revenue
  • Return on Investment (ROI) for new equipment or technology

Downtime and Maintenance KPIs:

  • Machine Downtime Percentage
  • Planned Maintenance Compliance
  • Mean Time Between Maintenance (MTBM)
  • Emergency Maintenance Costs as a Percentage of Total Maintenance Costs

Workforce and Labor KPIs:

  • Labor Productivity per shift
  • Employee Training Hours related to safety and machine operation
  • Absenteeism Rate
  • Employee Turnover Rate

Customer Satisfaction KPIs:

  • On-Time Delivery of finished cartons
  • Order Fill Rate
  • Customer Complaints related to packaging quality or delivery issues
  • Net Promoter Score (NPS)

Environmental and Sustainability KPIs:

  • Fossil Fuel Reliance
  • Total Material usage
  • End-of-Life treatment
  • Carbon Footprint
  • Material Circularity

Compliance KPIs:

  • Average time to issue discovery
  • Average time to issue resolution
  • Compliance expense per job/project
  • Average cost of compliance related lawsuits
  • Total regulatory compliance expense
  • Post Audit Outstanding Issues

Choosing the Right KPIs 

In the dynamic world of packaging, there’s a multitude of KPI choices at your disposal. Start by clearly defining the objectives your manufacturing business – both short and long term — that your company aspires to achieve.

What problem are you trying to solve?

Noticing that your labor charges are high on one type of job?

  • Are jobs taking longer than estimated?
  • Too much substrate waste?
  • Operators taking too long on a job?

What goals are you wanting to achieve?

  • Reducing production waste
  • Getting OEE for specific machines
  • More accurate job costing
  • Improving Quality Control

Once you get crystal clear goals, you can break them down into actionable steps. Secondly, be aware of where the data you are collecting comes from. Are you using manual processes such as shop floor workers entering data into an Excel spreadsheet, or is your data collection automated and connected directly to machines and equipment?

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Will these KPIs genuinely propel you towards your goals?

It’s not enough to list the KPI and your collection of data for 3 months. The best KPI choices are directly connected to organizational goals. For example, if your goal is to increase production efficiency over three months, your key results could be reducing setup time by 20% or improving equipment uptime by 10% and you would be monitoring the KPI of set up time and equipment uptime amount.

Rather than making educated guesses, you can see the expected time of job completion and have the information needed to investigate the cause if it deviates from your goal. Was it operator performance? Do you track operator performance? Was the job run on a legacy machine and therefore needing more time? Why was there excessive waste? Was it operator or machine error? Perhaps the bigger question is whether your current ERP tracks data of your most important KPIs.

The second important aspect of this question is whether you collect the data to benchmark the KPI, if it is available in real time and easily accessed, and if it’s accurate. If, for example, your shop floor workers are collecting job data manually, on a spreadsheet, interrupting their tasks, the details collected may not be the most accurate.

An MIS/ERP streamlines the process of collecting and managing data for KPIs by centralizing information in one single database, automating data collection and facilitating real-time access. In addition to the data portion of an MIS/ERP, it provides configurable dashboards that allow visual representation of data at the user’s fingertips.

The KPI dashboard 

One way to communicate those insights visually is through a KPI dashboard.

A well-designed KPI dashboard serves as a central hub for monitoring and managing organizational performance, promoting data-driven decision-making, and fostering transparency across various levels of the organization. It provides a visual and easily digestible representation of complex data, enabling stakeholders to quickly grasp the status of key metrics and take timely actions.

Ask yourself whether you can drill down into the dashboard for even more data, such as budgeted hourly rate, speed of the machine. How quickly can you modify the dashboards to respond to a pressing problem? In other words, the agility of a KPI dashboard is important.

Types of Dashboards

  • Strategic dashboards
  • Provides a view of the entire business
  • Gives an overview of current state, opportunities, and weaknesses

Operational dashboards

  • Divides the business into departments
  • Provides day-to-day operations snapshot in real time
  • Large amounts of data available for analysis

Analytic dashboards

  • KPI reports
  • Offers insights into trends
  • Compares past and present performance using historical data

The dashboards in an ERP/MIS system allow users to organize, filter, drill down, analyze and visualize their most important key targets. The alternative? Wading through Excel sheets of data and other non-curated, unfiltered datasets. 

The data is sourced from multiple modules within the ERP/MIS system, from sales, to production to warehouse to quality control. ERPs break down silos by collecting cross-functional data. This is crucial for generating comprehensive KPIs that reflect the overall performance of the organization. ERPs capture data as part of the natural workflow, capturing critical information automatically as transactions occur. ERPs can generate exception reports, highlighting instances where KPIs deviate from expected values. This helps users focus on areas that require attention. ERPs facilitate the comparison of current KPIs with historical benchmarks or industry standards, providing context for performance evaluations. 

Finally, ERPs integrate with Business Intelligence tools, enhancing the capabilities for advanced analytics and reporting. This integration supports in-depth analysis of KPIs for strategic decision-making. 

Presenting KPIs in dashboards that are immediately actionable and aligned with the operational pulse of your company can ensure that your packaging manufacturing business stays on track, identify areas that need improvement and drive changes. The consequences of failing to monitor KPIs can be impactful on a business.  

At HiFlow, we work closely with our customers to configure the right KPIs that will drive improvements and business growth. Our advanced MIS/ERP collects real time data for customizable dashboards that help you measure, visualize, and report on the KPIs that matter most. HiFlow’s MES and direct machine interface modules collect data continuously so real time data fuels your KPIs for up to the minute reporting.  

Embark on the KPI journey and pursue strategic objectives with the nimbleness of a sophisticated MIS/ERP – the magic awaits 

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