Key performance indicators (KPI) are factors that tell you how your business is doing by calculating the performance of each section or functionality of your company using business intelligence (BI) tools and representing them as graphical data. Such KPIs are typically integrated with a company’s ERP system where the board of Directors can keep a real-time track of the ups and downs in the performance in a specific section and make business decisions accordingly. Manufacturing industries, especially, need this KPI data to ensure the cycle from product forming to delivering is run smoothly and make changes to enhance its overall efficiency.
If you’ve just started you’re manufacturing business or are a long time player in the manufacturing industry, here are some most essential KPI factors that your ERP system must track to get helpful data on your ongoing operational processes:
Supply Chain Cycle Time:
A product’s cycle time is the collective time taken for making a product out of raw materials and finishing its packing and delivery. This is the most prominent factor to determine whether your business makes profit or loss behind manufacturing a product.
By knowing which process is delaying the production time or where it can be reduced, you can improve the total quantity of production per day. You can also predict the costs spent on a single product and the time in which that cost is recovered.
The cost of labour, equipment, raw materials/ingredients, handling, and distribution are some of the factors that drive your total spendings and which you might keep a track of.
However, by tracking these individual costs along with the financial condition of the market, your income and available funds, you can derive articulate financial results for budgeting your future funds for individual sectors of your company and also predict future losses.
Inventory Turns And Deviation:
An inventory turn is the amount of time it takes for your single lot of inventory to be sold out and replaced with a new lot. Since your income depends on the sales of your inventory, knowing how long it takes for a lot to sell out can help you judge the right speed and quantity of financial investments in your company.
You can also diagnose your workflow to reduce this turning time and increase the speed of the cash flow on both receiving and investing ends.
Downtime Due To Errors & Rejections:
Errors are a part of the manufacturing process which can be minimized with proper monitoring and analysis of the product cycle.
Knowing how often failures occur in a particular sector or how many products are being faulted and rejected can help you diagnose your total losses efficiently.
This information is greatly helpful for improving maintenance and investing in new techniques and machinery to keep your downtime as minimal as possible.
Industry trends and External Factors:
Along with all the internal KPI factors of your company, tracking the external affairs and changes in the manufacturing industry can have unimaginable benefits for your business choices.
Based on what products you make, the raw material costs that you incur for your production can be greatly affected by the frequent fluctuations in our country’s finance, weather and other social factors. Deriving a common conclusion based on the happenings of these individual factors can be achieved through an ERP system. And having prominent predictions of such factors will guide in making important alterations in your business strategies.
To achieve such great benefits from an ERP system, it should be customised to the flow and nature of your business. And if you require a customized ERP software for manufacturing industry, Pune has some top-of-the-line software companies to help you. Neotic Labs is one such highly adept custom software development company in India. Their experts are known to take all your business requirements and desires into account and smartly integrate the latest BI tools and design strategies to deliver something above your expectations. Visit the Neotic Labs website to consult with the experts from one of the best ERP software companies in Pune.