KPI for Measuring of Loss Ratio of Material per Order posted in category Manufacturing

WinningKPI - Manufacturing - KPI for Measuring of Loss Ratio of Material per Order posted in category Manufacturing

This indicator is for measuring the material that is lost per order as a % of the total material received per order. This is measured by calculating what percentage the lost material represents of the total order.
The material loss per order represents a high cost for the company and can be due to many factors, such as workers error, system error, external factors etc. When this KPI is compared against other KPIs (e.g. Damaged Material due to Workers Error) it can give a clearer picture of the factors behind material loss.
The company may put in place practices and systems to minimize this KPI in order to lower costs, and maximise performance and ROI.

Formula:
Total lost material / total material per order x 100

KPI Unit: %

KPI Time Frame: update quarterly or annually

Posted by Oana Boteanu | Help to protect community: Flag for moderation

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Example:
A refrigeration manufactory measures the loss ratio of material per order, over a 3 months period.
Let us assume that in a 3 months period, the manufactory ordered a total of 5000 pieces of material.
However, 1000 pieces of that total have been lost.

Therefore, the Loss Ratio of Material per Order is:
Total lost material / total material per order x 100
Hence,
1000/5000 x 100 = 20 %

This shows that 20 % of the material ordered is lost.
Oana Boteanu | + | September 13, 2012 at 9:30 am

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