Manufacturers often run up to 20 reports with various parameters to extract meaningful information from their systems. Yet these reports don’t give them the ability to visualize the data, drill down, and really understand it. Lack of data clarity ultimately limits your business’ capacity to mitigate risk, pursue growth, and pivot as needed in a quickly evolving production environment.
This is where metrics come in to play. All manufacturers can benefit from well-defined, thoughtfully selected metrics that can be regularly monitored and leveraged. Otherwise, you may come to a point where you need specific insights, and your data comes up short.
Key Performance Metrics Manufacturers Should Track
NetSuite compiled 73 potentially essential metrics for manufacturers in a transformation state. But that doesn’t mean you must cut and paste those metrics into your plans and go all-in in every category immediately.
While there is no one-size-fits-all approach, there are four main areas manufacturers can track to optimize efficiencies and eliminate waste:
Sales
Every manufacturing company records orders, revenue from orders, and shipped orders daily, weekly, monthly, and annually whether they do it on paper or digitally.
By reviewing sales metrics, manufacturing sales leaders can review performance, monitor progress, and adjust efforts to influence sales success. For example, if revenue is growing, but the gross margin is not, sales leaders can drill down into each product line to determine what is adversely impacting gross margin. This might lead to giving the sales team more incentives to sell a more profitable product line.
Quality
Since quality issues impact profitability, tracking quality metrics is key. These include:
- Frequency of quality issues (day, week, month, year)
- Where quality issues occur in the production process
- Scrap rate
- Supplier chargebacks
- Rate of return
- Yield
When manufacturers make sense of data through their quality metrics, they can proactively impact quality issues in real-time so more products pass final inspection. It can also pinpoint equipment issues causing defects.
Manufacturing Capacity
A manufacturer needs to understand labor and machine resources, including:
- Number of shipments
- Late shipped orders
- Overtime rate
- Production volume
With specific insights into capacity, manufacturers can uncover ways to maximize space, labor, materials, and equipment to run operations at full capacity.
Productivity and Utilization
Manufacturers can identify opportunities to improve productivity metrics such as:
- Takt time (production to demand)
- Planned and unplanned machine downtime
- Overall equipment effectiveness (OEE)
- Overall operations effectiveness (OOE)
- Throughput by work center, operator, and specific asset
Manufacturers can troubleshoot inefficiencies and minimize unplanned downtime by assessing productivity and utilization metrics. For instance, manufacturers can monitor the causes of downtime, such as missing parts, equipment service, or broken machines. Then they can create an action plan to resolve the issues, such as replacing machines or scheduling maintenance more consistently.
Leveraging Data with Manufacturing Metrics
It’s not enough to thoughtfully determine the right metrics to track. If you don’t leverage the data you monitor, it isn’t going to make a difference.
Leveraging – and empowering – data goes back to aligning metrics to outcomes and defining the actions that will get you there. It’s giving each metric or combination of metrics a “job” and meaning.
Potential outcomes manufacturers might pursue include:
- Growing topline revenue
- Growing customer base
- Gaining better control over costs
- Minimizing risk
- Growing business value
In any of these cases, it’s critical to define, understand, and empower the data that could drive these outcomes. Yet, what many manufacturers have on their hands today is either data chaos or dysfunction – it’s either too sporadic or it’s not functioning as anticipated and something is “off.”
