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12 Key Manufacturing KPIs to Track: Leverage Purpose-Built Software to Boost Results

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12 Key Manufacturing KPIs to Track: Leverage Purpose-Built Software to Boost Results

Aug 30, 2022

John McCurdy
A manufacturing professional in hardhat uses a tablet on the shop floor.

Big data in the manufacturing industry is big business. According to Fortune Business Insights, the monetary value of the global market is expected to reach $9.11 billion by the end of 2026, with the figure expanding at a compound annual growth rate (CAGR) of 14% between 2019 and that time.

Manufacturing industry professionals know this truth, too. According to the Aptean 2022 Manufacturing Forecast, a study conducted in conjunction with B2B International, 39% of businesses have already invested in quickly obtaining and analyzing data on performance and efficiency, and another 58% are currently looking to invest in that same practice.

Obviously, manufacturers are willing to put their money where their mouth is, so to speak, when it comes to big data. But why, exactly, is it so crucial to the success of manufacturing companies? And why are certain metrics—namely key performance indicators (KPIs)—so important to calculate and track?

Think of it this way—if you don’t know where you’re falling short, then you can never know which areas to focus on and how to improve. Conversely, if you don’t know where you’re succeeding, you’ll have difficulty understanding what’s working well and how those practices can be carried over to other areas of the organization; you also won’t have insight into the most crucial of all—your competitive advantages.

Of course, simply stressing the vital nature of data won’t help you leverage your findings for better results. That’s why we’ve pulled together this list of twelve manufacturing KPIs that every business in the industry should track as well as an explanation of how purpose-built enterprise resource planning (ERP) and business intelligence (BI) technologies aid in the process.

1. Integration/Visibility

While this first inclusion may seem difficult to track and less a KPI than just a characteristic of good operational models, integration and visibility are actually some of the most important metrics to measure. That’s because your employees need to always have accurate, up-to-date information at their fingertips, so knowing where and how often they’re dealing with data siloes is crucial for improvement.

2. Cycle Time

Efficiency is key in manufacturing, and your company likely has ambitious production targets to hit to satisfy demand. Tracking cycle time—the period that begins with picking materials and ends with the completion of finished goods—helps you identify what steps or procedures in the process are dragging so that they can be investigated and resolved.

3. Inventory Turns

This KPI—which measures how long it takes for your company to sell all inventory in stock and order replenishments—is of significant importance considering that the materials and products in your warehouse likely represent a sizeable portion of your financial assets. Knowing which items sell well and which ones don’t helps you focus on what makes the most sense, profit-wise.

4. Inventory Deviation

Hopefully, you use an industry-specific ERP for inventory management and have done away with manual methods of record-keeping instead trusting barcode scanners and other technology to handle the procedure digitally. Either way, though, knowing how often the totals in your system deviate from actual levels is useful, as it should allow you to determine where errors are occurring so you can shore up the process.

5. Costs

Thinking of costs as a KPI might at first seem counterintuitive, but measuring how much you’re spending using technology that is designed to track performance based on precise numerical calculations helps you understand the true cost behind your items. It should take into account cost of labor, equipment use, raw material consumption, handling, landed costs, distribution and more—all of which an ERP can help you capture.

6. Downtime

An unplanned halt on your production lines can not only hinder your staff’s ability to hit daily plan attainment—it can also lead to a scramble on the factory floor to discover and rectify the issue, which is undesirable at best and downright dangerous at worst. Knowing how long these periods last and the causes behind them is critical for rectifying the underlying problems going forward.

7. Reject Ratio

Scrap and waste that result from flawed production processes represent both a financial loss and a setback in your sustainability goals. Understanding when and why you’re encountering these unfortunate occurrences and comparing your expected reject ratio to the actual total can lead to continuous improvement and make your organization more eco-friendly, making it among the most valuable KPIs for manufacturing.

8. Financials

This KPI helps you understand your entire operation's financial performance, including your accounts payable and receivable; monthly, quarterly and year-end figures; cash flow; income statements; and final balance sheet. Thanks to its cross-functional nature, an ERP system provides tools to track and analyze these figures alongside procurement- and production-focused features.

9. Sales

Measuring sales as a KPI with your ERP solution focuses on understanding the purchasing patterns of your customers, tracking developing trends and shaping your demand forecasts and production plans accordingly. Having your finger on the pulse of this metric also lets you dial in your purchasing based on how quickly you expect to consume your stock, helping to prevent both supply shortages and excess inventory that goes to waste.

10. Quality

Your quality control efforts shouldn’t be limited to just your finished products—it’s also necessary to perform proper checks on your raw materials as you receive them so as to determine any faults and track provider performance. A purpose-built ERP platform can help you establish distinct KPIs for both processes, and advanced systems have the ability to automate checks or prompt your employees to complete them with on-screen alerts, ensuring the performance results you’re evaluating are as comprehensive as possible.

11. Order Management

As much as you’d like to assume that all orders are delivered on time and in full, the fact of the matter is that mistakes can happen in picking, manufacturing, packaging and shipping—and even then, the customer’s expectations may not be met due to another unforeseen factor. Tracking order management and returns as a KPI will give you insight into where errors most frequently occur so that processes can be revised and additional training implemented.

Get the KPI Tracking Technology You Need from Aptean

At Aptean, we’re serious about results. We designed our full suite of manufacturing business solutions based on decades of collective experience and have leveraged our in-depth knowledge of best practices to design the tools and features that help you conquer the challenges you faces today.

We proudly offer industry-specific ERP software for the food and beverage; process; industrial; retail and distribution; fashion and apparel; and equipment dealer markets. Better still, our lineup also includes Aptean Business Intelligence, which can add to the KPI tracking capabilities of your ERP with more than 300 pre-programmed out of the box.

What’s more, our dedicated professionals are trained to act as partners for your business as you begin—or accelerate—your digital transformation initiative. We help you set the foundation with the ERP that’s right for your company and map out your plan for implementation and the rollout of additional systems as necessary to help you track the most important manufacturing performance metrics and get the most out of your operational data.

So, ready to learn more about Aptean and our complete ecosystem of cutting-edge software offerings? Don’t hesitate to contact us today or request a personalized demo.

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