* Is High or Low Best: Lower is Better
Machine Time as a Percentage of Order Lead Time measures the amount of time spent in actually making a product ordered by a customer in relation to the amount of time it takes for a customer to receive the product they ordered. A high value for this metric can be indicative of slow loading and unloading times, high rework rates, low quality of installed equipment (such low quality equipment can require frequent replacement or maintenance), poor preventative maintenance practices, inaccurate demand forecasting methods and sub-par production employee training and performance. High machine time values, as a result, can lengthen the time it takes for customers to receive the products they ordered, thus increasing customer dissatisfaction and the potential for customer attrition.
The number of minutes required for a machine to produce a single product divided by total customer order cycle time (i.e., the time from when the order is placed to when the product is received by the customer), as a percentage.
Two values are used to calculate this KPI: (1) the amount of time (measured in minutes) a machine takes to produce a single product, and (2) the amount of time it takes for a customer to receive the product they purchased after placing a product order. Machine time is defined as the amount of time actually spent using mechanical equipment to produce a product (e.g., in a drill press, machine time is considered to be the time the cutting edge spends moving forward and making a hole). Do not include loading or unloading time when calculating machine time. In order to derive the mean (i.e., average) value for customer order cycle time, take the sum of time for customers to receive all orders and divide it by the number of orders delivered during the same measurement period. Do not count orders that are delivered to customers, but only partially filled as a completed order until the entire order is filled.
(Machine Time / Customer Order Cycle Time) * 100
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