Manufacturing

Return on Equity

What is Return on Equity?

Return On Equity (ROE) which is also known as Return On Net Worth (RONW) is a measure of your company’s profit as a percentage of the equity of shareholders, and is a good gauge of profitability.

How Do You Calculate The Return on Equity?

To calculate your return on equity, simply divide your net income by the amount of shareholder’s equity.

Return On Equity (ROE) = Net Income / Shareholders’ Equity

Manufacturing

Rate Of New Product Introduction (Days)

What is The Rate Of New Product Introduction?

The Rate of New Product introduction refers to how rapidly new products can be introduced to the marketplace based on design, development and manufacturing ramp up times.

How Do You Calculate The Rate Of New Product Introduction?

Get the total amount of days when your 5 newest products were planned, developed & launched. (The more, the better)

Add them with one another then divide it by 5. (Divide by how many products were added with one another)

For example:

Product 1 was developed from July 2, 2020 & was launched in July 4, 2020 = 2 Days
Product 2 was developed from July 5, 2020 & was launched in July 8, 2020 = 4 Days
Product 3 was developed from July 9, 2020 & was launched in July 13, 2020 = 4 Days
Product 4 was developed from July 14, 2020 & was launched in July 20, 2020 = 6 Days
Product 5 was developed from July 20, 2020 & was launched in July 21, 2020 = 1 Day

In this case, I add the total number of days it take to develop a new product with one another: 2 + 4 + 4 + 6 + 1 = 17 days

I divide them by how many they are.
17 / 5 = 3.4

Rate of New Product Introduction by Days = 3.4 Days

Manufacturing

On-Time Delivery Percentage

What is On-Time Delivery Percentage?

The On-Time Delivery Percentage refers to the percentage where customer orders are delivered on the right expected time.

This is a KPI that really keeps customers happy but is also motivating to your production employees. Set the goal for 100% on-time weekly and consider rewarding your employees if they achieve it. Many of the other leading indicators mentioned help drive this one. What percentage of total products are delivered on time?

How Do You Calculate The On-Time Delivery Percentage?

OTD is simply measured as a ratio of the number of units on time divided by the number of total units shipped on a monthly basis. It is not clear how the number of units on time is calculated. Multiply the result by 100 to convert it to its percentage.

On-Time Delivery = (# of Units Delivered on Time / Total # of Units Sold in The Same Time Period) x 100