5 KPIs that Help to Benchmark a Manufacturing Businessby Isabel Blamey Professional writer
While every business has different sets of performance indicators, this article names out the key performance indicators (KPIs) that manufacturing businesses need to target to benchmark themselves in the industry.
It is important for businesses, regardless of their size or type to grow their bottom-line i.e. sales and profits. While striving to grow their bottom-line, most entrepreneurs need to recognise the relevance of key performance indicators (or KPIs). Targeting the KPIs and improving each of them will help a business to evolve in all aspects. Most importantly, attaining the highest standards for each of the KPIs will help your business in benchmarking its performance in the entire marketplace. It will subsequently make you more competitive and help you gain more share in the market.
KPIs are unique for each business. So, if you are into the manufacturing business, then this article is the right piece to read. Here are the key indicators that are relevant to your company and you should work to improve them.
It is the first consideration in the list because it evaluates the amount of products that your resources are able to produce. Thus, achieving a good production volume will imply that you are able to meet the demands of the market. Whereas comparing the indicator over the years will help you understand the progress or regress in the capacity of your resources in the production.
Costs of Production
If you want to benchmark your business, reduce the cost that you are incurring in the production of the products. It includes different types of costs like materials costs, human resource costs and tooling costs. The overall production costs represent how much you are investing in the final goods and check it if it is increasing with years.
ROI (Return on Investment)
ROI is a direct measure for the results of your investments on the production of the goods. It includes the use of resources and the costs involved and compares them with the income of the business. Determining the ROI of your business is essential because it helps you to evaluate the real income of your business compared to the investments. Thus, measuring the ROI each year will give the best idea of your business’s performance financially.
Production downtime implies the time for which the machines remained idle, resulting in some losses in the production. More downtime means more loss of money. Thus, minimising this KPI must be a goal of your business. The only effective way to reduce the downtime is monitoring the machines regularly for issues and maintaining them.
Of course, this KPI counts because it will mark the satisfaction that your company provides to the customers. Ensuring on-time delivery for every lot of products will be your prime goal and for that, you need to motivate your employees. Consider rewarding them with incentives to make them efficient for providing on-time delivery.
The first step for a business in benchmarking itself the industry is identifying the KPIs and improving them to drive the results of the business. They provide the manufacturers with key insights into their business and help them to ensure a healthy bottom-line by taking appropriate measures for improving the KPIs.
Author bio: Dylan Munro is an expert business consultant who helps entrepreneurs to boost their business’s productivity and profits by suggesting various measures. He spends his free time by writing blogs where he demonstrates the ways of business benchmarking, the KPIs that business should target and tips to benchmark your business in the respective industry.
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Created on Dec 30th 2019 23:44. Viewed 247 times.
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