In recent years, the Manufacturing Enterprise Solutions Association conducted a poll in which decision makers from manufacturing companies listed 28 manufacturing indicators as important. Ironically, the same poll revealed that most companies are unable to track more than 3 indicators concurrently.
While each company is different, we have selected the top 5 KPIs that most companies use to improve their manufacturing effectiveness.
1. Capacity Utilisation
Actual Output / Maximum Potential Output x 100%
Capacity Utilisation is critical, especially for companies that use expensive and high-capital equipment in their operations. 100% Utilisation, or close to it, is the goal, meaning no idle machines.
2. Schedule Attainment
Work Orders Completed by Original Scheduled Date / Total Work Orders Completed x 100%
This is an important indicator for your manufacturing team as it allows your production team to track production efficiency. It helps companies focus on the reasons why the completion of certain work orders are delayed.
Non-Defective Units Produced / Total Units Produced x 100%
Yield is the ratio of non-defective items out of all produced items. It gives you an insight into your manufacturing quality and if managed well, will help you to minimise rework costs.
4. On-Time Delivery
Units Delivered on Time / Total Units Delivered x 100%
On-time delivery is a top-level indicator as it shows you a summary of different manufacturing segments such as procurement efficiency, production efficiency, logistics efficiency and more. This is a mandatory requirement for high customer satisfaction.
5. Rate of Return
Rejected Goods / Total Number Of Goods Delivered x 100%
There is no point in rushing out products if your customers are not satisfied with the quality. Not only does this reduce customer satisfaction and profit, it also means that your products do not meet critical safety or usage requirements, which can cause serious reputational and financial damage to your organisation.
These manufacturing KPIs may not be new for most manufacturers. However, many companies are still unable to track them easily and reliably.
SAP Business One for Manufacturing is a fully integrated ERP software which helps companies gain visibility over production processes and manage resources effectively.
Some of the main features of the solution include: Bills of Materials, Material Requirement Planning, Routing & WIP (Work In Progress), Production Scheduling, Shop Floor Data Collection, and Manufacturing Analytics.
Contact us now to understand more and for a free consultation!