Machine utilisation and machine efficiency are probably the most commonly used KPI’s used to measure the performance of factory management. Both serve a purpose, but they do not by any means describe the “whole”.
The factor that completes the picture is “flow”, the state where product “flows” uninterrupted from one process to another, at a rate dictated by demand from the market.
Most factory managers know instinctively, if not by data, that their factories run best when there is uninterrupted flow through the processes, but if they are measured on machine efficiency, (production units/time) as they often are, they will be pushed to maximise the efficiency of individual machine points, building up inventory elsewhere, and interrupting the flow, and compromising the productivity of the factory.
The measurement of efficiency of individual points of a production process is ingrained, it is a fundamental part of the cost accounting and investment disciplines we all take for granted, but badly needs to be re-thought and taught to emerging operations and general management.