# Job Shop KPI Definitions and Formulas Reference

> Source: https://netray.co/tools/job-shop-kpi-definitions-reference
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Standard formulas and ERP data sources for the KPIs a small machine shop should track.

## Category

mes-shop-floor

## Industry

Job Shop Manufacturing

## Audience

- Operations manager
- Shop owner
- Controller

## Tool

**Kind:** worksheet

**Mode:** reference

**Columns:**

#### KPI

**Key:** kpi

**Type:** text

#### Area

**Key:** area

**Type:** text

#### Formula

**Key:** formula

**Type:** text

#### Unit

**Key:** unit

**Type:** text

#### Typical ERP data source

**Key:** source

**Type:** text

**Rows:**

**Kpi:** On-time delivery (OTD)

**Area:** Delivery

**Formula:** Lines shipped on or before promise date / total lines shipped x 100

**Unit:** %

**Source:** Sales order lines and shipment dates

**Kpi:** Average days late

**Area:** Delivery

**Formula:** Sum of days late on late lines / number of late lines

**Unit:** days

**Source:** Promise date versus ship date

**Kpi:** Lead time

**Area:** Delivery

**Formula:** Ship date minus order received date, averaged

**Unit:** days

**Source:** Sales order and shipment

**Kpi:** Machine utilization

**Area:** Capacity

**Formula:** Productive spindle or run hours / available hours x 100

**Unit:** %

**Source:** Shop floor time collection and work center calendar

**Kpi:** Work center load

**Area:** Capacity

**Formula:** Scheduled hours / available hours x 100

**Unit:** %

**Source:** Open job operations and capacity calendar

**Kpi:** Setup ratio

**Area:** Capacity

**Formula:** Setup hours / (setup hours + run hours) x 100

**Unit:** %

**Source:** Actual time by operation

**Kpi:** Estimate accuracy (hours)

**Area:** Estimating

**Formula:** (Actual hours - estimated hours) / estimated hours x 100

**Unit:** %

**Source:** Job estimate versus actual time

**Kpi:** Quote hit rate (count)

**Area:** Sales

**Formula:** Quotes won / quotes issued x 100

**Unit:** %

**Source:** Quote status history

**Kpi:** Quote hit rate (value)

**Area:** Sales

**Formula:** Value of quotes won / value of quotes issued x 100

**Unit:** %

**Source:** Quote totals by status

**Kpi:** Quote turnaround

**Area:** Sales

**Formula:** Quote issued date minus request received date, averaged

**Unit:** days

**Source:** Quote header dates

**Kpi:** Scrap rate

**Area:** Quality

**Formula:** Scrap quantity / total quantity started x 100

**Unit:** %

**Source:** Operation scrap reporting

**Kpi:** First pass yield

**Area:** Quality

**Formula:** Good parts first time / parts started x 100

**Unit:** %

**Source:** Inspection records

**Kpi:** Customer return rate

**Area:** Quality

**Formula:** Parts returned / parts shipped x 100

**Unit:** %

**Source:** RMA or return records

**Kpi:** Cost of poor quality

**Area:** Quality

**Formula:** Scrap cost + rework cost + returns cost + concessions

**Unit:** currency

**Source:** Non-conformance and job costs

**Kpi:** WIP turns

**Area:** Inventory

**Formula:** Cost of goods shipped over a period / average WIP value

**Unit:** turns

**Source:** Job costing and ledger

**Kpi:** Open jobs aging

**Area:** Inventory

**Formula:** Count of open jobs by days since release

**Unit:** count

**Source:** Job header release date and status

**Kpi:** Material variance

**Area:** Costing

**Formula:** Actual material cost - estimated material cost

**Unit:** currency

**Source:** Job material issues versus estimate

**Kpi:** Job margin

**Area:** Costing

**Formula:** (Invoiced value - actual job cost) / invoiced value x 100

**Unit:** %

**Source:** Job costing and invoicing

**Kpi:** Revenue per employee

**Area:** Financial

**Formula:** Annual revenue / average headcount

**Unit:** currency

**Source:** Ledger and HR headcount

**Kpi:** Outside process on-time

**Area:** Purchasing

**Formula:** Outside operations returned by due date / outside operations returned x 100

**Unit:** %

**Source:** Purchase order receipts

**Kpi:** Supplier on-time delivery

**Area:** Purchasing

**Formula:** PO lines received by promise date / PO lines received x 100

**Unit:** %

**Source:** Purchase order receipts

**Notes:** Define each KPI once in writing, including exactly what counts as a late line or an available hour, before you build dashboards.

## Content

**Intro:** Most shops track on-time delivery and not much else, usually because nobody agreed on the formulas. This table gives a consistent definition for each common job shop KPI and points to where the data lives in an ERP.

**Sections:**

#### How to use the table

**Body:** Pick five to eight KPIs, not all twenty. Search by area, read the formula, then check whether your ERP captures the required data reliably. A KPI built on data that people only sometimes enter will mislead. Export the rows you adopt and attach them to your ERP requirements or dashboard specification.

**Bullets:**

- Start with OTD, utilization, estimate accuracy and scrap rate
- Write down your own rule for what counts as late
- Review the same KPIs monthly with the same definition

#### Definitions that trip people up

**Body:** On-time delivery can be measured against the customer's request date or your promise date, and the two give very different numbers. Utilization can use calendar hours, scheduled shift hours or available machine hours. Pick one definition and publish it. Estimate accuracy is most valuable by operation or work center, not only per job.

#### Data quality comes first

**Body:** Time and quantity entries drive nearly every KPI here. If operators enter time at the end of the week or scrap is not reported by reason, the numbers will be wrong. Fixing the data capture step usually adds more value than a better dashboard.

**Cta:** If you want these KPIs pulled live from your ERP without building reports by hand, Netray can set up read-only questions and dashboards over your data.

**Faq:**

#### What is a good on-time delivery rate for a job shop?

**Answer:** Targets vary by customer and industry, but many shops aim for the high ninety percent range. What matters more is a consistent definition and tracking trend by customer and work center.

#### How do I calculate machine utilization?

**Answer:** Divide productive run hours by available hours for the period. Decide whether available hours means calendar, scheduled shift or planned production hours, and keep the same choice every month.

#### What is estimate accuracy?

**Answer:** It compares actual hours or cost on a job against what you quoted. Tracking it by operation shows which routings or machines are consistently under-quoted.

#### Which KPIs need shop floor data collection?

**Answer:** Utilization, setup ratio, estimate accuracy and scrap rate all depend on timely time and quantity entries from the floor. Financial KPIs can come from the ledger alone.

## Search terms

job shop KPIs, machine shop metrics, on time delivery formula manufacturing, machine utilization formula, quote hit rate formula, WIP turns formula, shop floor KPI list

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