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What KPI Metrics in Manufacturing Should You Measure and Why

Written by Laura Schomaker

March 10, 2022

From the production floor to accounting, KPI metrics in manufacturing are a must. By effectively monitoring data, your manufacturing business can improve efficiency on the production line, increase sales, and reduce operational costs. According to a benchmark survey, manufacturers leveraging metrics were more likely to reach best-in-class status when compared to companies that did not monitor key performance indicators. How can you get the most out of metrics? By tracking KPIs across departments powered by the right ERP solution. Let’s look.  

Manufacturing Metrics

Let’s start with where you expect to monitor KPIs in manufacturing—on the production line and across the manufacturing chain. With the right ERP solution, you can glean some essential metrics here to power productivity:

  • Throughput: Perhaps no metric is as essential to manufacturing as throughput. By measuring the rate at which you generate or process products, you can identify and minimize the weakest links in your production chain.  
  • Schedule Attainment: Analyze actual production completion dates run against required dates to understand how effectively your production chain is meeting customer requests and requirements.
  • Utilization and Efficiency: Monitor labor and machine utilization and efficiency to spot issues and identify ways to reduce costs and improve profitability.

Sales and Marketing KPI Metrics in Manufacturing

A comprehensive ERP solution designed for manufacturing can also give you insightful metrics in your sales and marketing departments. Your sales pipeline is one of the leading indicators you have on hand to predict both future revenue and manufacturing volume, particularly your estimated conversions and quote volume. When you stay on top of this marketing/sales KPI, you will better position yourself to meet future demand.

ERP can also provide important insights into customer metrics. Monitoring KPI metrics in manufacturing related to total customer lifetime value, churn, customer acquisition costs and growth can help drive more effective decision making at the C-suite level.

Financial Metrics

An effective ERP solution in the manufacturing space can help with key financial metrics, as well. Besides tracking revenue via total sales of products, you can also monitor new revenue against recurring revenue. Tracking of metrics related to expenses can also help you breakout indirect fixed costs associated with production volume, non-manufacturing costs such marketing and sales, and more. You’ll find you are more on top of cash flow with the financial metrics available in an ERP solution. So, you can purchase materials months in advance to keep up with customer demand.

Operational Metrics

And, ERP can provide a way to delve deep into operations, improving efficiency and staff availability via detailed staffing metrics. KPIs related to operating margins and the length of the quote-to-cash cycle, too, can help ensure a more productive order cycle and more efficient order fulfillment.

Working with an ERP consultant is the best approach to take when implementing an ERP solution. They can help you develop a game plan and implement a version of an ERP solution that ticks all the boxes for your business, powering dynamic KPIs and business insights in every department at your company. Contact us today to explore how metrics can transform your manufacturing business.

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