Connecting Manufacturing Key Performance Indicators to the ERP Business Level
As more mid-size manufacturers take action to optimize their businesses, Key Performance Indicators (KPIs) play a big role in how businesses can move forward and become more successful. The number of KPIs for manufacturing is plentiful and finding the correct ones for your company depends on your product and application. Throughput, uptime, and overall equipment effectiveness (OEE) are just a few KPIs that companies may employ, but businesses are also evaluating how to connect operations data to the ERP business level.
The benefits of ERP and KPI integration include being able to optimize inventory, purchasing, and improve project management, to name a few. Plus, the Dynamics 365 Business Central platform and its modules allow for extensive custom configuration and connectivity, and offers the ability to manage forecasting, automatic purchase order creation, understand manufacturing capacity, and improve production schedules.
Currently, companies are effectively using operations software to monitor plant floor data and combine it with established KPIs for real-time feedback at the operations level. However, KPIs are a critical element to any digital transformation as companies keep moving towards integrating operations data to the ERP business level for improved financial performance.
Trusted Manufacturing KPIs for Mid-Size Manufacturers
Below are some of the most trusted KPIs in manufacturing, along with formulas that show you how to start creating benchmarks for operations.
- Throughput: This KPI is a measurement of how much product your manufacturing processes can put out over a set period. This metric can give you an idea of how much you’re able to produce, and when measured for individual machines; it can also give you an idea of where bottlenecks may occur in your process.
- Uptime: A corresponding KPI of throughput is utilization and/or uptime. Many companies will use asset management software systems on the operations floor to identify a machine or a set of work cells. The main formula used is Overall Equipment Effectiveness.
- Overall Equipment Effectiveness: OEE = Good Count x Product line Availability / Planned Production Time
- Downtime/Maintenance metrics: This is data that can be sent into an ERP system, which can help with financial planning and recognize macro trends for operations. These are the core KPIs for downtime and accompanying formulas:
- Unscheduled Downtime = hours of unscheduled/total period measured x 100
- Reactive maintenance Work % = Weekly production schedule (hrs.) / Total maintenance labor hours x 100
- Maintenance costs = Total Maintenance Costs/ Standard Units Produced
- Mean Time Between Failure = Operating time (hours) / Number of Failures
- Work Order Cycle Time = Work order Completion Date – Work order Creation Date (in days)
- Quality: This data considers goods produced that do not meet quality standards.
- Quality = Good Count / Total Count
Additionally, quality data is very valuable for Finance departments and automatically importing this information into Business Central can allow financial officers to evaluate, for example, raw material costs and grade the supplier product over a period of time. Which can lead to questions around how much are we paying for this type of raw material and how good is the product?
KPIs help create benchmarks for a variety of plant floor operations and getting this information to the business level is critical. With Business Central, companies can rely on operations data to track fulfillment, sub-standard raw material deliveries, and vendor metrics, to name just a few.
Every company has different pain points and deciding on which KPI can be a challenge. However, most companies begin by starting with simple objectives and KPIs that support your company’s goals.
Greater Visibility, Greater Control with Dynamics 365 Business Central
ArcherPoint offers a range of solutions around manufacturing and supply chain using Microsoft Dynamics 365 Business Central. For more information on supply chain optimization and manufacturing trends, sign up for our Supply Chain Quarterly newsletter.