Three Manufacturing KPIs You Can’t Ignore

Written by Laura Schomaker
Published on June 27, 2019

As any savvy business leader knows, you must collect and analyze data on your performance to keep tabs on the overall health of the business and help you decide where to go from here. The problem is, most companies today have more information than they know what to do with. So, it’s hard to separate the important data from the noise. Never is this truer than in the manufacturing industry. Because you not only sell your products but also create them, you have even more to track than most. So how do you know which measures are most important?

That’s a great question, and the answer will vary based on your company’s unique needs and situation. Manufacturing KPIs fall into two major categories, financial and predictive. As you can probably guess, financial KPIs are those used to track things like costs, margins, cash flow, sales and asset utilization. They can be useful to see what’s working and what areas could use improvement. The problem with these KPIs is that they are historical. They rely on what has already happened, rather than giving you insight into the future.

That’s where predictive KPIs come in. You may know them as leading indicators. Managers can use these manufacturing KPIs to help avoid undesirable outcomes or enhance desirable ones. Rather than using your own internal data, some of these KPIs rely on outside information, like housing starts or health trends.

How to choose which manufacturing KPIs are right for you

Of course, not all KPIs will apply to every manufacturer. To figure out which make the most sense for your business, ask yourself a few questions.

  • What data do I have available to me?
  • What business goals am I trying to achieve?
  • How many KPIs can I realistically track at once?
  • Which KPIs align best with my goals?

 

With that said, there are a few KPIs that almost any manufacturing business should be tracking. Here are three of them.

Planned Versus Actual Hours and Cost

 

This is a prime indicator of how efficiently any plant is running. Just like with most manufacturing KPIs, when you first track this one, you will need to establish a baseline. Once you have that, fluctuations in this number can be early warning signs of improvements or deterioration in the plant’s overall performance.

Utilization and Capacity

If you are a lean manufacturer, you may not think of utilization as something important to you. Still, there’s real value in planning for the best use of your available resources. If you want to lower costs and improve on-time completions while reducing overtime and improving delivery rates, it’s worthwhile to investigate your resource load-balancing.

Profitability by Customer or Product Category

 

This is a manufacturing KPI many people overlook. However, we all know that not all customers or products are equal. In reality, a few of your customers might drive most of your revenue, whereas others cost you money. We could say the same for products or product lines. By tracking this KPI you can see which products and/or customers are worth pursuing and which are not.

 

We hope this overview of manufacturing KPIs has given you a starting point for tracking the overall performance of your business. If you’d like to dig deeper into this topic and learn about other important KPIs you should track, download the Acumatica white paper “Key Performance Indicators for Manufacturing.

To track these KPIs, you need the right technology at your fingertips. If your current business management system doesn’t offer the information you need, it may be time to look at modern manufacturing ERP solutions. You can explore a few of the most popular options on the market today by visiting this webpage.

Latest Articles

Related Articles

Acumatica Pro Tip: Eight Simple Steps for Acumatica Password Reset

Not being able to remember your password when you need to log into an important system like your bank account or your ERP system can be a very frustrating experience. Luckily, most online services have a streamlined the process for retrieving or resetting a lost password. Acumatica is no different. The Acumatica password reset process is easy.

4 Types of Email Scams Costing Businesses Millions and How to Stay Safe

Given the alarming rate at which email scams are growing and changing business leaders can no longer afford to stay complacent. One of the best ways to avoid falling victim is to educate yourself and your employees on the latest trends in email scams and how to stay safe. This blog is the perfect place to start.

Acumatica Pro Tip: Acumatica ERP Mobile App Won’t Load on Android

Having an app that won’t load, but instead simply shows a white screen can be a very frustrating experience. This often happens when the user reinstalls the mobile application in Android without fully clearing the data and cache. Follow these step by step instructions to get things working normally again.

Video: Six Can’t Miss ERP Consultant Selection Criteria

Determining the best ERP software for your business is hard enough. But that’s only half the battle. Next, you need to find an implementation partner to help you get it up and running. Use these quick ERP consultant selection criteria you can use to zero in on a partner who’ll be a good match for your business.

ERP Vs Accounting Software, What’s the Difference and Which One Do I Need?

Since the financial software market explosion over the last decade, the line between the two most popular system types (accounting software and ERP) has become blurry. And, although the terms may seem interchangeable, they’re different products, each with their own purpose. Before you chose one, be sure you understand the difference.

About the Author

As the head of marketing for Intelligent Technologies, Inc., my goal is to educate our current and prospective customers, helping them to navigate the complex technology buying process. If you have questions about our products and services, or would like to learn more about working with us, let me help you get connected to the right person. Message me via the chat window on our website or call (336) 315-3935 x5007.

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *