Key Performance Indicators for Manufacturing Operations Management in

the Process Industry

Li Zhu1,2, Charlotta Johnsson2, Jacob Mejvik2, Martina Varisco3, Massimiliano Schiraldi3
1
Department of Control Science and Engineering, Dalian University of Technology, Dalian, China
2
Department of Automatic Control, Lund University, Lund, Sweden
3
Department of Enterprise Engineering, University of Rome Tor Vergata, Rome, Italy
1
li.zhu@control.lth.se

Abstract - The international standard ISO 22400 has energy efficiency performance of manufacturing plants
defined a set of Key Performance Indicators (KPIs) to and provides a seven step method to develop production-
evaluate the performance of manufacturing operation. tailored and energy-related key performance indicators,
However, the defined KPIs seem to be inspired from the using these supports the identification of weaknesses and
discrete production context, and hence do not automatically areas of energy efficiency improvements related to the
fit the process industry context. The process industry is
operation management. Arinez et al[8] combines the
defined as the industry in which the raw material undergoes
conversion during a continuous process in order to become traditional production KPIs with energy KPIs through a
finished products. To make the defined KPIs more suitable discrete event simulation modeling method and gives
for evaluating the operational performance in process benchmarks to assess the energy performance of
industry, this paper analyzes the different characteristics of production system, process and facility. Zhu et al[9]
process industry and discrete industry, and proposes a new discusses the relationship of multi-KPIs when evaluating
framework for organizing KPIs in process industry. Some manufacturing equipment and proposes a multi-KPI
modifications are discussed to make the proposed ISO 22400 coordination model to discern and balance the relationship
KPIs fit to the process industry. Such a study can provide among multi-KPIs.
useful ideas for manufacturing engineers and decision-
However, the most critical issue of evaluating the
makers to define and measure suitable KPIs for
performance evaluation in process industry. manufacturing operations management is not defining the
KPIs in general, but identifying and selecting the most
Keywords - Key Performance Indicators (KPIs), useful KPIs according to the application. The appropriate
manufacturing operation management, ISO 22400, KPIs selection and improved understanding of the KPIs could
framework, process industry help the manufacturing enterprises fulfill the desired
business objectives[10]. Addressing this issue, the
international standard series ISO 22400 in its latest update
I. INTRODUCTION – ISO 22400-2:2014/Amd1:2017 – presents a total of 38
KPIs to evaluate the performance of manufacturing
With the rapid scale expansion and increasing diverse operations. Four out of these 38 KPIs, are however
market incentive in modern manufacturing industry, introduced in an amendment and will not be considered in
production enterprises have to maintain sufficient this article. In the standards, the KPIs are described by
flexibility, high quality standards, productivity and means of their formula, corresponding elements, unit of
sustainability to combat these emerging challenges and measure, timing and other characteristics. Despite the
achieve their full economic potential. Therefore, efforts to make the standards generally applicable to all
manufacturing industries nowadays implement manufacturing industries, it seems to be primarily
performance measurement system to evaluate the designed for evaluating performance of the discrete
operating state of their manufacturing activities[1, 2]. In industry. Indeed, in some cases the ISO 22400 explicitly
order to quantify the efficiency and effectiveness of indicates that the indicators are unsuitable for continuous
manufacturing operations management, a set of detailed processes. However, the indications are often imprecise
indicators are defined to realize the strategic goals of and ambiguous, and the information provided is
process management and improvement, which are called sometimes fragmented; thus, the indications of the KPI
Key Performance Indicators (KPIs)[3, 4]. applicability in the standards should not be considered as
KPIs are defined as the quantifiable and strategic rigorous constraints.
measurements that reflect enterprise’s critical success Taking the characteristics of the process industry into
factors[5]. The modern tools of information technology account, improvements and corrections of these 34 KPIs
provide opportunities to gather a large set of necessary should be made in order to evaluate the performance
data and estimates, supporting the acquisition and properly and accurately. Though it should be noticed the
calculation of KPIs. Hence, the KPIs used to evaluate the standards explicitly indicate that some KPIs are unsuitable
performance of manufacturing production systems have for continuous processes. Based on a survey conducted at
been given more attention both in the academia and a large process industry in Sweden, this paper evidences
industry in recent years. Margret et al.[6] uses KPIs as an the difference between the process and discrete industry
interface between scheduling and control to maximize in relation to the ISO 22400 standard. In doing so, the
plant performance. Gokan et al[7] focuses on measuring KPIs requiring modifications are identified and amended

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accordingly. Hence, the ISO 22400 standard becomes (OM) to continuous mode (CM), including several
suitable for the process industry while maintaining its intermediate alternatives of intermittent production.
generality. Thirdly, the driver of the flow depends on the origin of
To support these contributions, this paper is organized the production trigger: either production is triggered by an
as follows. The second section recalls the typical actual customer order (CD) or not, which is the case when
characteristics of the process industry and points out the production is expected to meet future orders (SD),
difference between process and discrete industry. A novel including several intermediate alternatives of production
framework for organizing KPIs in the process industry is cases, among which assembly-to-order production.
proposed to help structuring the KPIs and associated From these three perspectives, the characteristics of
measurement elements in section 3. The section 4 presents the industry can be clearly described and distinguished.
some adjustment and modifications to make the ISO Figure 1 illustrates the three perspectives in a cube where
22400 KPIs more suitable for the process industry. The the typical characteristics for the process industry are
section 5 discusses the contribution and the future shaded in dark grey.
research directions. Finally, concluding remarks are given
in section 6.

II. CHARACTERISTICS OF PROCESS INDUSTRY

Two main types of manufacturing industry are

generally identified by the way the products are realized,
which are called process industry and discrete industry[11].
The process industry is defined as the industry in which
the raw material undergoes conversion during a
continuous process in order to become finished
products[12], alternatively referred to as continuous
industry. While the discrete industry is related to the
process where successive changes of discrete and analog
states occur during the whole process, and the production Fig. 1. The production characteristics from three perspectives.
is based on discrete time moments of instant and non-
instant controls[13, 14]. The process and discrete industries III. A FRAMEWORK FOR ORGANIZING KPIS IN
have different characteristics, and hence can have THE PROCESS INDUSTRY
different needs for performance measurements and,
therefore, different needs for the KPIs. By investigating A framework can provide useful ideas for
the differences between the typical process and discrete manufacturing engineers and decision-makers aiming to
industries, some general conclusions can be drawn. To define and measure suitable KPIs for performance
clarify what is meant by the respective terms in this paper, evaluation in process industry. The framework will help
a summary of the difference is presented in Table 1. structuring the KPIs and the associated measurement
elements.
TABLE I Basic measurements, called measurement elements,
The difference characteristics of process and discrete industry have to be collected in order to calculate the KPIs.
Difference Process industry Discrete industry According to ISO 22400 Part2, these elements – i.e. the
Production modality Continuous Discrete entity “relevant measurements for use in the formula of a key
outflow
Production orientation Disassemble assemble
performance indicator” – can be divided into three main
Production process Continuous Discontinuous categories; time, quality and logistical. The logistical
Production form Fluid-based Pieces and parts elements contain both quantity and inventory
Work unit Unit Work cell measurements. In this paper, the focus will be on the two
Production transparency Invisible Visible
Production runs Open-ended Well defined
categories time and quantity measurement elements.
Operation manner Steady state On-off The time measurement elements are comprised of
data related to the duration of the production process,
Furthermore, the characteristics of the production including planned operation time and actual operation
industry can be described based on three central time. Moreover, the actual operation time can be divided
perspectives: object-type, mode-type and driver-type[15]. into production time and down time to increase the level
Firstly, the object transformed in the flow can be of of detail. The time elements are similar to the definitions
two different types, discrete object (DO) or continuous in ISO 22400.
object (CO), including several intermediate alternatives of Since in the process industry it is likely that the
production batching. product being processed in a certain production unit is not
Secondly, the transformation can be performed in visible for the operators and it is also difficult to measure
different modes ranging from one-time occurrence mode what is happening inside the equipment, input and output

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quantities often become the only available logistical ABT = APT + ADT
measurement elements. The relationship among the time elements is presented
The input includes both raw material as well as the schematically in Fig 3.
energy medium, which are the fundamental components
for producing the product. Likewise, the output can be
divided into the desired product, by-product and scrap.
When doing this division it is however important to also
consider expected future customer orders. Furthermore,
since the process industry is dominated by raw material
and energy costs, the production, quality and energy
aspects are the three most important when evaluating the Fig. 3. The relationship among the time elements.
performance. It should also be noted that even though it
is continuous outflow and disassembly-oriented 3.1.2. Quantity elements
production, the performance of the whole process is
directly influenced by the performance of the production Input quantity (IQ): the material used for equipment or
equipment. Therefore, the KPIs for process industry process to produce the output.
could be analyzed from two levels, process KPIs and Raw material quantity (RMQ): the feedstock used to
equipment KPIs. produce the output.
Figure 2 presents the proposed framework for Energy medium quantity (EMQ): the energy material
organizing the KPIs in the process industry. used to provide the necessary energy for production.
Output quantity (OQ): the items that satisfy the
requirements of production, including products and
energy. It should be noted that the commonly used term in
industry is produced quantity.
Desired product quantity (DPQ): the primary product,
which the production process is originally designed for.
By-product quantity (BPQ): the secondary product
generated during the production of the primary product.
Scrap quantity (SQ): The result of the production
process which cannot be transformed in product,
including waste materials.
Thus, IQ is comprised of RMQ and EMQ while OQ is
a set of DPQ, BPQ and SQ. Hence, the relationships can
Fig. 2. The framework for organizing the KPIs in the process industry. be expressed as:

3.1. Measurement elements IQ = {RMQ,EMQ}

OQ = {DPQ, BPQ,SQ}
The measurement elements, middle part of the
Framework in Figure 2, are comprised of the data directly
The relationships among the quantity elements are
monitored and collected during the production process.
presented in Fig 4.
These are used to describe and calculate the equipment
KPIs and process KPIs. Below the list of the basic
measurement elements according to characteristics of the
process industry company is provided.

3.1.1. Time elements

Planned operation time (POT): the scheduled time

during which the equipment or process can be utilized.
Actual busy time (ABT): the actual time for execution
and production.
Actual production time (APT): the actual time in
which the equipment or process is producing.
Fig. 4. The relationships among the quantity elements.
Actual down time (ADT): the time in which the
equipment or process is delayed due to malfunction-
3.2. Equipment KPIs
caused interruptions, minor stoppages and other
unplanned events.
The equipment KPIs, lower part of the Framework in
We obtain:
figure 2, are calculated based on the measurement

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elements. Based on the survey of ISO 22400 KPIs used in APT

TE =
the process industry, the high-relevance equipment KPIs ABT
include allocation ratio, utilization efficiency and 3.3.2. Quality process KPIs
equipment load ratio. Due to the characteristics of process
industry, some of the calculations of these KPIs are Quality ratio (QR): the relationship between the
different from the one defined in the ISO 22400 and desired product quantity and the produced quantity.
should be adjusted. According to the measurement
elements, the equipment KPIs can be descried as follows: DPQ
Allocation ratio (AR): the percentage of actual QR =
OQ
production rate and maximum production rate. It provides
the valuable information on the allocation of available
Actual to planned scrap ratio (APSR): the ratio relates
capacity.
the actual quantity of scrap to planned scrap quantity.

AR =
( Actual OQ )
ABT
actual SQ
( Maximum OQ ) APT APSR =
planned SQ

Utilization efficiency (UE): the ratio between actual Scrap ratio (SR): the relationship between the scrap
production rate and planned production rate. quantity and the produced quantity

UE =
( Actual OQ ) ABT SQ
( Planned OQ ) POT SR =
OQ

Equipment load ratio (ELR): the ratio of actual Finished goods ratio (FGR): the ratio of the desired
produced quantity in relation the maximum equipment product quantity produced in relation to the input
production capacity (EPC), which shows what the material, including energy material quantity.
equipment parts actually produce when it is in progress to
the load it could achieve. DPQ
FGR =
IQ
Actual OQ
ELR =
( Maximum OQ ) APT
3.3.3. Energy process KPIs

3.3. Process KPIs Energy consumption (EC): the ratio between all the
energy consumed in a production cycle and produced
The process KPIs, upper part of the Framework in quantity.
figure 2, are calculated based on the measurement
elements. Based on the survey at the process industry EMQ
company of ISO 22400 KPIs used in process industry, it EC =
OQ
is concluded that the KPIs can be divided into three
categories: production, quality and energy process KPIs.
IV. DISCUSSION
Production process KPIs includes throughput rate and
technical efficiency. Quality process KPIs includes
The ISO 22400 defines and describes a set of KPIs
quality ratio, actual to planned scrap ratio, scrap ratio and
for manufacturing operation management in general.
finished goods ratio, and comprehensive energy
Although the standard intends to make the defined KPIs
consumption is the energy process KPIs.
generally applicable to manufacturing industries, the
3.3.1. Production process KPIs indicators result to be primarily designed for the discrete
industry. No matter which perspective of analysis, such as
Throughput rate: measures the produced quantity per production objects, modes and drivers, there are vast
order in relation to the actual busy time, and often used in differences between process industry and discrete
the name of production rate (PR) in process industry. industry. In order to identify and redefine KPIs in the ISO
22400 to properly evaluate performance in a process
OQ industry setting, the different characteristics of process
PR =
ABT and discrete industry are analyzed. In addition, the
practical requirements in the process industry are acquired
Technical efficiency (TE): the relationship between the through the survey of the process industry company in
production time and the busy time. Sweden. Based on the characteristics, the framework of
KPIs in the process industry is proposed to structure the

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ACKNOWLEDGMENT Oracle. 2013:254.
[15] Wikner J, Noroozi S. Typology for planning and control–
Combining object type, mode type, and driver type.
The authors gratefully acknowledge financial support
from China Scholarship Council. This work was
supported by the Fundamental Research Funds for the
Central Universities (DUT17RC(4)08) and the Swedish
Research Council through the LCCC Linnaeus Center.

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