KPIs for Manufacturers
Regardless of the type of manufacturing or industry in which your business operates, you rely on measurements to monitor business activities and performance. Furthermore, the reliable documentation of success and challenging factors to enhance your decision-making. However, simply measuring these parameters is not enough. Modern business leaders need to incorporate these measurements into valuable intelligence that empowers them to boost efficiency and productivity. In this guide, we discuss KPIs for manufacturers.
We can all agree that simply measuring for the sake of measuring is counterintuitive. These measurements can be used to improve performance and result in custom manufacturing and high-volume consumer goods production; in discrete (hard goods) and batch production and in the latest demand-driven hybrid production.
Thousands of measurements have been defined over the year including many “common” measurements that virtually every manufacturer can use—things like profit and loss, cash flow, production schedule compliance, inventory turns, and the like.
In addition, specific vertical industries have measurements that apply to their situation and needs. There can be too much of a good thing, however. Information overload is a real problem when the important gems of intelligence are buried in masses of data. Decision-makers can easily miss the critical early warning while spending entirely too much of their valuable time buried in reports.
Among this wide array of possible measurements, each industry has a relatively small number of measures that are particularly important for monitoring the overall health of the business. Commonly called Key Performance Indicators (KPIs), these measurements are often gathered together into an executive dashboard display with graphics that provide an at-a-glance picture to help executives quickly zero in on opportunities or challenges.
These dashboards offer drill-down for analysis of the details and can be adapted to provide key measurements to individual departments or functions within the organization, focused on the specific measurements that are important in their individual span of interest.
Most manufacturing management software, sometimes called back office or ERP (Enterprise Requirements Planning) systems, offer such an Executive Information System with a variety of predefined KPIs which the various users within the company can pull together and tweak to fit their specific situation.