Top 3 KPIs for Manufacturing, Operations and Finance

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Download this Guide and Measure the Right KPIs for Manufacturing to Help You Grow

Today’s manufacturing systems and processes are extremely complex there's an unmanageable amount of data to track without the right integrated systems in place. It's important to have a modern ERP (Enterprise Resource Planning) solution with the capacity to collect the data.  Once you centralize the data in one system,  it's critical to have a plan to use it to help grow your business.  There are hundreds of metrics to choose from to measure performance and make adjustments, accordingly. There are 3 strategic key performance indicators (KPIs) that successful manufacturers use to grow.

Click below and download this guide reviewing the importance of tracking key performance indicators (KPIs), diverse metric types, and common mistakes made by manufacturing executives. Discover the most important metrics to monitor for continuous improvement and align goals for actionable metrics to drive growth and efficiency throughout the organization.

Manufacturing Metrics that Really Work

1. Manufacturing KPIs

  • Throughput:  A critical metric for manufacturing businesses, this KPI measures your production volume by units produced. In some companies, throughput is measured as a percent of total production capacity.
  • Schedule Attainment:  You can compare completion dates to required dates to understand how your team performs compared to what customers request and require.
  • Efficient Utilization:  It’s important to monitor the utilization of both factory machines as well as staff. You’ll be better able to spot issues that prevent schedule attainment. And over time, analysis of this data will help you reduce costs by showing you where to take action to save time and money.

2. Operations KPIs

  • Operating Margin:  Sometimes referred to as Return on Sales or ROS, the operating margins KPI shows you profits remaining before interest and tax after paying your variable costs. This KPI is generally relied upon to monitor topline operational performance.
  • Quote-to-Cash Cycle: This metric measures the span between a customer quote being issued to a cash receipt. Another topline metric, it indicates the efficiency of order cycles, including fulfillment, invoicing, and payments.
  • Staffing: Manufacturers monitor their team members’ availability and overall efficiency with staffing KPIs. Typical staff KPIs include attendance, performance, capacity, and utilization.

3. Finance KPIs

  • Revenue:  Monitor your firm’s revenue in total sales of products and services. This lagging indicator is typically measured against sales targets. In some cases, this KPI will need to be adjusted for market fluctuations or seasonal impacts. Be sure to measure new revenue and recurring revenue separately. Recurring revenue is much easier to predict.
  • Expenses:  Monitor fixed costs separately from your variable costs. Direct variable costs such as materials and labor will have impacts on your costs of goods sold. In contrast, costs related to overhead such as equipment and rent should be tracked as indirect fixed costs because they’re independent of sales and production volume.
  • Cash Flow:  This metric is one of the most vital KPIs for manufacturers who keep materials on hand in inventory, sometimes for months. It’s important to make sure there is enough cash coming in to keep up with expenses without running out of money or accumulating too much supply inventory. Operating cash flow metrics rely on accurate net income calculations, non-cash expenses, and working capital analysis.

Real-time, Actionable Insights

Dynamics 365 and Acumatica, for example, are solutions that empower manufacturing companies with real-time insights through role-based dashboards, live reports, and inquiries supported by drill-down capabilities to the source transactions. These modern ERP systems provide dimensional business insights and intelligent workflows empowering leaders with tools to measure KPIs for manufacturing enabling growth and improved operations.

Such  ERP solutions are developed with a cloud platform and include native artificial intelligence and machine learning.  You get the deep functionality you need for manufacturing and operations. Most growing manufacturing companies also need robust financials, native customer relationship management, and powerful business intelligence applications.

Most growing manufacturers need to maximize resources, and improve profits with best-in-class applications for production, estimating, engineering, material planning, scheduling, product configuration, and manufacturing data collection. Dynamics 365 and Acumatica are both modern ERP software systems designed to handle the needs of make-to-stock, make-to-order, configure-to-order, engineer-to-order, repetitive, and project-centric manufacturers.

Trust an Experienced Partner like Clients First

We have experts ready to help guide you on your digital transformation journey and ensure your KPIs support your company’s growth. Nothing replaces a live presentation so please reach out to us to schedule a demonstration for your business. Please call us at 800.331.8382 or send us an email at today.

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