Manufacturing KPIs to Watch in 2026

Manufacturing is a major part of the United States economy. The sector generates more than 9% of national GDP and employs more than 13 million workers across close to 240,000 companies. Most manufacturers operate with small teams and tightly managed production schedules. Rising material costs and longer lead times make it difficult to evaluate performance through informal observations. Many companies are focusing on key performance indicators, or KPIs, to get clearer operational information and identify where changes can support output, cost control, or delivery. To help clients, prospects, and others, BMSS Advisors & CPAs has summarized the key details below.

Why KPIs Matter in Manufacturing

Manufacturers track many types of operational data, but not all metrics influence performance in the same way. Metrics describe activity. KPIs highlight the measures that connect directly to business goals such as output, quality, cost control, or delivery. Focusing on KPIs ensures that reporting supports decision making.

A useful KPI is:

• Clearly tied to a specific business objective
• Defined and measured the same way across the organization
• Actionable, meaning results prompt follow up steps
• Consistent and reliable

This helps manufacturing companies avoid tracking information that does not support operational or financial improvement. KPIs also help stabilize operations when outside conditions change. They give manufacturers one lever to pull when order volume declines or input costs rise. External conditions are difficult to influence, but internal operations remain within the company’s control.

Key Manufacturing KPIs

What KPIs need to be measured and reported? That depends on the specific manufacturing business, but there are a few common denominators. The following KPIs give manufacturers a look at how operations are performing and where improvement efforts can make the biggest impact.

• Overall Equipment Effectiveness (OEE) — OEE is one of the clearest indicators of how well production assets are performing. It combines availability, performance, and quality into a single measure, giving manufacturers a quick way to understand whether equipment is producing at its full potential. A declining OEE often signals issues like downtime, speed loss, or recurring defects. (OEE = Availability x Performance x Quality)

• Throughput — Throughput measures how much finished product a facility produces within a certain period. It’s a reflection of output capacity and is closely tied to revenue and customer delivery. Tracking throughput helps manufacturers identify bottlenecks and evaluate the impact of process changes on overall production. (Throughput = Number of Units Produced / Total Time of Production) 

• Cycle Time — Cycle time shows the time it takes to complete one unit from start to finish. Processing and scheduling are key here. Looking at daily/monthly trends can help teams pinpoint steps in the process that may be slowing production. However, a shorter cycle time is not beneficial if quality or safety is put in danger. (Cycle Time = Net Production Time / Number of Units Produced)

• Changeover Time — Changeover time measures how long it takes to switch a machine or line from one product to another. It can also refer to how long it takes to switch from one shift to the next. Faster changeovers can reduce downtime and improve production. (Changeover Time = Total Time – Time Spent on Production)

• On-Time Delivery — On-time delivery reflects how consistently customers receive products when promised. If on-time delivery metrics are lagging, the problem could be with production, scheduling, inventory management, or logistics. Deeper inquiry may be needed. (On-Time Delivery = On-Time Deliveries / Total Deliveries) 

• Right First Time / Rate of Return — Right First Time is a quality control metric. It measures how often products meet standards without needing to be reworked or returned. Improving this KPI reduces waste and typically protects customer satisfaction. From there, it supports stronger profit margins. (Right First Time = Products Right the First Time / Total Deliveries)  

• Scrap Rate — The scrap rate tracks the percentage of materials that are hauled away or discarded. High scrap levels eat into profitability, especially when raw material costs are up. Monitoring this KPI helps manufacturers focus waste reduction and related processes. (Scrap Rate = Number of Scrap Units / Total Number of Units)

• Cost Per Unit — Cost per unit calculates the total cost of producing one unit of product, including labor, materials, overhead, and operating expenses. It is one of the most direct indicators of profitability and operational efficiency. Tracking this KPI helps manufacturers understand how process changes, material prices, or labor affect the bottom line. (Cost Per Unit = Total Cost / Number Produced) 

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KPIs show what is happening on the production floor, but the real benefit comes from using that information to make changes. When manufacturers review KPIs on a regular basis, they are able to identify where even small improvements will have a big impact.

If you have questions about manufacturing KPIs or need assistance with another tax or accounting issue, BMSS Advisors & CPAs can help. For additional information call (833) CPA-BMSS or click here to contact us. We look forward to speaking with you soon.