Indicates the percentage of a manufacturing facility’s total production capacity that is actually being used.

What it Measures ?

How much of our machines or facilities are being used.

Relevant StakeHolders 

Operations Manager, Production Supervisor

Why it Matters ?

Measures utilization of production capacity.

In-depth Use Case / Real-world Example

This metric shows how efficiently a plant is using its available resources. If a plant has the capability to produce 200,000 units per month but only produces 150,000 units, then its Capacity Utilization Rate is (150,000 / 200,000) × 100 = 75%. A consistently low utilization rate could point to excess capacity or weak demand, while a very high rate might indicate overstretched resources, which could risk delays or quality issues. For example, a motorbike assembly plant operating at 90% utilization during peak season shows strong demand alignment, but the management might explore adding a second shift or expanding capacity to meet future growth. This KPI helps balance cost efficiency and readiness for demand surges.