Cloud ERP for Manufacturing Enables Critical KPI Tracking

While manufacturing operations and factory floors are highly automated and precisely monitored, a surprising number or teams don't use sophisticated software to track critical manufacturing KPIs, such as NetSuite ERP.

The Importance of Measuring Manufacturing KPIs

Successful manufacturers must be able to identify and measure key performance indicators (KPIs) for critical areas such as financial operations to factory-floor to shipping efficiencies. This measurement and tracking provides a baseline to measure their critical business process improvement and to achieve higher levels of business effectiveness. To demonstrate the investment, IDC found that "Manufacturers accounted for half of the $150.8 billion investment in analytics.”

NetSuite Manufacturing ERP for manufacturers provides important context for your KPI results to help you understand how you're performing against "industry standard." For example, you'll see color coding and contextual indicators to help you determine whether you're below, at parity, or above benchmarks -indicating areas of improvement ranked as Foundational, Competitive, Best In Class, or Transformational.

So what are the critical KPIs manufacturers should benchmark and track?

KPI #1: Fill Rate

Fill rate represents the percentage of your orders that can be satisfied immediately by inventory available in your factory. This metric is essential to providing exceptional service to your customers and maintaining positive customer relationships. However, increased customer satisfaction must be balanced against the cost of maintaining higher levels of inventory. Having access to real-time inventory data can significantly impact your company’s ability to maintain proper inventory levels and achieve an optimal fill rate.

"Manufacturers accounted for half of the $150.8 billion investment in analytics.”

KPI #2: Cycle Time

A fast cycle time is critically important to manufacturers in an era where 2-day deliveries have become the normal customer expectation. Cycle time and lead time are frequently confused. Cycle time represents the time it takes from the start of production to when an order is complete, while lead time starts at the time the order is placed by the customer and ends when the order is delivered. Therefore, reducing cycle time allows for a shorter lead time, thus increasing customer satisfaction.

KPI #3: Inventory Turnover

This KPI reveals how fast products are moving out of your factory and creating cash flow. Inventory turnover for manufacturing companies vary greatly depending on the type of product sold (perishable v. non-perishable, hard v. soft goods, etc.), and as seasonal demand changes.

Another important component to consider when defining inventory turnover goals is the gross margin on the sale of your manufactured products. Lower margin items require higher stock turnover to meet revenue targets. A higher ratio indicates that money is changing hands and funds are not tied up in products with little demand or low sales.

Track and drive improvements with insights into your critical manufacturing KPIs with NetSuite ERP software. Learn more about how manufacturing companies like yours are seeing tremendous results after implementing the NetSuite manufacturing KPIs with the guidance of the experts at Oasis Solutions.