Successful manufacturing businesses monitor their activities and health through Key Performance Indicators (KPIs) and technology has made this type of measurement flexible and cost-efficient for businesses of all sizes. By gathering data from the entire manufacturing process and using it in powerful and easy-to-read dashboard metrics, business owners can easily monitor the progress being made to achieve goals, or if potential improvements or changes are needed.
Every kind of manufacturing business, in any industry (e.g. food and beverage, cosmetics, automotive, fabrication, plastics, home goods and more) rely on data to accurately measure and monitor their business, document successes and challenges, and help direct decision-making. Smart management will use quantitative measure to drive business in the right direction not only to increase profits but help the business become more efficient and effective.
Some organizations track zero-defects, 5-star reviews, customer profitability, product profitability, current released orders, and so many more...
Which KPIs Should I Track?
All manufacturing businesses can benefit from establishing meaningful KPIs, but which ones should you use? That depends on your unique business, processes, and what is most important to you. So how do you prioritize what data to track and when?
Maybe you have more advanced technology and want to track information coming from mobile devices with integrated sensors. Or it’s most important to track inventory quantities in each warehouse. Or you want to keep a close eye on planned versus actual hours. No matter what, choosing your KPIs wisely is the key to success. There is such a thing as data overload and your important metrics will get buried in the vast amounts of data.
To get started choosing your KPIs, ask yourself if you have an accurate picture of:
Your utilization and capacity
Your production schedule
Next, ask what information you would need to have to help you get an accurate picture.
After you answer those questions for your business, you can start thinking about which KPIs are best for you.
Even though there are a wide array of measurements depending on your specific business, there are a small number of measures that are important for monitoring the overall health of your manufacturing business. These summaries and analyses, play best with various types of KPIs.
For example, common financial KPIs monitor sales, costs, margins, cash flows, and asset utilization. Most of these are classified as historical measurements. There are also predictive KPIs, which measure indicators to predict patterns and trends in your industry and business.
Maybe you need more operational metrics. Operational KPIs commonly include inventory measures: Inventory Turnover Ratio, On-Time Delivery, Plan vs. Actual Hours & Costs, Utilization & Capacity, and Scheduled Production.
Taking the time to properly think through the metrics you want to monitor and find the correct KPI to visualize them is important.
Download our free eBook from Acumatica Cloud ERP on Key Performance Indicators for Manufacturing and learn about the different KPIs manufacturing businesses use most, as well as:
What the two main categories of KPIs can tell you about your business?
What is the ideal number of KPIs to monitor daily?
What is the best technology allowing you to monitor and manage your KPIs?
Mobile accessibility for KPIs.
How you can ensure your KPIs are keeping pace with your changing business.
Focus on what matters for your business. Talk to the experts at Milestone and find out how we can help take your company to the next level with smart ERP solutions like Acumatica. Reach out – call us at (360) 734-3387, email us, or fill out our online contact page.