10 most important KPIs for the Paper Industry
Keeping KPIs in mind can help you analyze your paper production, and help you enhance performance and increase profit.
Looking to expand your paper manufacturing business? Focusing on Key Performance Indicators (KPIs) can help you consider the risks that come with expansion, along with increasing your profits.
What is a KPI?
KPI is used to measure the performance of your paper mill or paper trading company, in order to monitor, analyze, compare, and optimize the process of paper production. KPI Stands for Key Performance Indicators
Here are some of the benefits of keeping KPIs in mind:
– Increase the accountability of your paper manufacturing system
– Boost the visibility of your products
– Enable you to make better business-related decisions
– Facilitate the improvement of manufacturing performance
– Amp up the profit of your paper mill
– Optimize resource utilization
Awareness here plays a crucial role.
Most Crucial KPIs for Paper Industry
We have compiled a list of the top 10 most important KPIs for the paper manufacturing industry and mills that will help you to scale and improve your mill’s manufacturing process.
- Cycle Time : As simple as this might sound, it’s actually the most important KPI for your mill. Cycle time — the average time taken to produce the product — can also sometimes be measured concerning the time that takes for the product to reach thecustomer. Paper Industry cycle time can be calculated as the time since the order has been received till the time the order has been completed.
- Inventory Turns: If you’re looking to find out how many times an inventory has been sold in a certain duration in order to calculate the resource effectiveness, this could be the best and your go-to KPI. Inventory turns can be calculated as the cost of sales per average inventory. Scoring high on this KPI indicates that you’ve got good sales but poor inventory. On the other hand, a low result would suggest that the sales are poor but the inventory is fine.
- Throughput: Another important KPI for a paper mill is the throughput, which is useful to analyze the progress and growth statistics of the mill. Throughput of a paper mill is the capacity of paper production of that mill, including the production capability of a machine, line, or the entire plant. It is measured in relation to a specific time. For instance, the number of sheets produced per day.
- Cash-to-Cash Cycle Time: A time and cash-based KPI has a crucial role to play when it comes to analyzing the profits of the mill. This KPI measures the time taken from the first cash drawn out from the company for buying raw material to the time at which the customer pays for the products. Here, the cash-to-cash cycle time is the time from investment to returns.
- Demand Forecasting: This KPI is considered by paper mills to evaluate the amounts of raw materials required for paper production. This forecasting can vary from time to time and is based on frequent uncontrollable factors. The demand can be calculated as raw materials multiplied by the production rate.
- Return on Assets (ROA): In terms of manufacturing and profits, financial metrics are quite significant because ultimately, every paper mill’s objective is to make or increase profits. The return on assets KPI helps you evaluate how your paper mill is performing in terms of money. It can be calculated as net income divided by average total assets.
- On-Time Delivery: What’s the one thing that builds a loyal customer base? Good quality products and timely services. Providing on-time delivery to your customers is key to business success. This KPI calculates the number of orders that were delivered on time and the ones that were delayed. An understanding of this KPI helps you plan better and prepare a seamless schedule that enables faster and timely delivery.
- Training Hours: It is believed that the ‘sink or swim’ methodology is not the perfect way to advance your business. So this might come as a surprise to many, but training is actually quite an effective solution to make processes better. Wondering how? It promotes productivity, thereby enhancing the performance of workers and the mill at large. Allocate a set number of training hours and witness the improvement yourself!
- Defective products: There are always some products that end up having defects. However, what’s important here is to note the number of defective products per lot, as compared to the perfect ones. To do this, divide the defective number of products by the total number of products. The lesser the answer you get the better it is. If the number is consistently higher, you need to decrease the defectiveness by making changes to the manufacturing process accordingly.
- Customer Returns: Keeping track of the number of return orders and requests is imperative to ensure business growth. This metric is used to get an understanding of the number of orders returned and the possible reasons behind that. And it’s beyond doubt that one should aim for the lowest return orders.
Working your way around these top 10 KPIs will definitely help you streamline the paper manufacturing process in your converting factory/ mill. Whilst we have referred frequently to a Paper Mill these 10 KPI’s are valid for any Producing/Converting Industry! Also, learn the applications of automation in paper industry.
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