You already know that ERP automation can simplify and streamline manufacturing operations. Yet, how do you measure success?

The key is knowing where your operations currently stand and where you want them to go. By measuring performance before and after your implementation, you can make sure your project stays on track and delivers on expected benefits.

Today, we’re sharing the key manufacturing operations metrics to monitor. 

8 Manufacturing Operations Metrics

1. Production Throughput

How many products can your manufacturing facility create within a certain timeframe? With the right ERP system in place, this number will increase.

By applying automation to some of your manual, time-consuming processes, you’ll be able to complete those tasks faster and send higher-quality products to market before your competitors. 

We recommend measuring your throughput before and after implementation, so you can see how much more efficient your teams are with the software in place.

In addition to products produced, you can also track how productive your machines, resources, and employees are at each phase. 

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2. Cycle Time

In the manufacturing realm, cycle time refers to how long it takes your company to produce a certain product. This metric can take many different forms and become increasingly granular as you break down each process.

For instance, you might measure the amount of time it takes your team to manufacture a completed product. Alternatively, you can measure how long it takes you to produce each separate component that makes up the final product. You can even measure the amount of time it takes to deliver that product to the end-user. 

With ERP, all these cycles should shorten as your teams become more productive.

3. Overall Equipment Effectiveness​

You can measure the overall equipment effectiveness (OEE) of a specific piece of production equipment or the entire line across your supply chain.

The higher your OEE, the more productive your facility is. This metric takes into account equipment availability, performance, and quality. If all three factors are measuring at 100%, then that means you’re manufacturing at:

  • 100% uptime
  • 100% capacity
  • 100% yield (defect-free)

While you might not reach this gold standard, you can expect to increase your OEE by implementing one of the top ERP systems for manufacturing

4. Demand Forecasting

Manufacturers need the ability to predict how much raw material they will need based on customer demand. Without this analysis, they could over-invest or under-invest in the goods they require to keep their operations afloat. 

ERP software makes demand forecasting more accurate than ever, allowing business leaders to easily identify trends and patterns, then represent that data in a visual format.

By comparing your forecasting accuracy pre-implementation with your accuracy post-implementation, you can see how much closer your predictions are becoming. 

5. Costs Avoided

To keep a balanced manufacturing budget, it isn’t enough to closely monitor the money coming into your company. You also need to measure the money that’s going out of it. 

Take non-fixed costs, for example. These costs can cut into your bottom line and negatively affect your budget without proper planning.

While you can’t anticipate every manufacturing operations expense, you can use ERP to stay on top of your preventative maintenance activities. By taking care of your equipment, you can avoid paying sky-high fees for product line or machine maintenance down the road.

6. Inventory Turns

This metric monitors the number of inventory units that your business sells over a given time period. You can find this ratio by dividing your total cost of goods sold by your average inventory numbers. 

If the ratio is too low, it indicates that your sales are low, and your inventory is high. If the ratio is too high, it signifies that your sales are up, but your inventory could be low.

An ERP platform can help you stay on top of these numbers so you can achieve the ideal balance. 

7. Changeover Time

When it comes to manufacturing metrics, every second counts. In this realm, changeover time most often refers to how long it takes to switch your production from one product to another.

You can also measure how long it takes your team members to transfer their duties during a shift change. 

As your employees adopt new ERP software, your operations will become more streamlined and efficient, and these periods of inactivity should decrease.

8. First Pass Yield

You can’t always get it right on the first try, but when you do, warehouse productivity skyrockets.

First pass yield measures the percentage of products that your company manufacturers without having to rework the design or classify the product as a scrap.

The more components you can create with a first pass yield, the quicker you’ll be able to create each finished product. This means your customers will receive their orders sooner. 

Gain Efficiencies Across Your Supply Chain

After go-live, you need hard data to prove the software is doing what it should. By monitoring these manufacturing operations metrics, you can discern the progress you’ve made and how far you need to go to reach your goals.

Our ERP implementation consultants can help you set the right KPIs for your ERP investment. Contact us below for a free consultation.

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