Build Up Your Business by Measuring our Top 4 Manufacturing KPIs

Posted on 24th May 2017 in KPIs

Written by Freya Hughes

We appreciate that businesses in the manufacturing industry can take many shapes and forms. Building your products from parts or raw materials takes time and skill, with a bit of help from machinery too, so there’s a lot of training that needs to be undertaken. To save you time and stress, we’ve compiled a list of our top KPIs for manufacturing so you can get to work on building up your business.

Monitoring your KPIs (that’s Key Predictive Indicators) is a surefire way to get an extensive knowledge on how your business is operating. These days, with a large range of machinery available, you’ll be saving on staffing and time taken to complete jobs. It’s important to be watching over each metric so you can feel comfortable that your revenue is coming in regularly, and you can get on with nurturing your product. We recently caught up with manufacturing company Skunkworks Surf Co., who explain how using FUTRLI has helped them measure their KPIs. As the first company of its kind in Northern Ireland, the team are innovators in their field and know the importance of measuring metrics. Find out what they had to say here.


Check out our KPI Library to find out more about which metrics you should be measuring


Training time

When operating a manufacturing business, you need highly skilled professionals to keep your orders going out to customers. Measuring this KPI will give you a solid understanding of how taking on new staff will impact your bottom line – you’re not just spending cash on their wages after all. It’s key to have these skilled workers on side, especially when a busy period is on the horizon. If you’re hesitant to invest in new workers, set up a forecast with FUTRLI to see if it’s a good time to hire.

Backorders %

Tracking your backorders percentage will help you maintain customer satisfaction and brand loyalty. Any order you cannot fulfil (perhaps due to a lack of stock or staff sickness) will be measured here. While having a small percentage isn’t the end of the world, take care to ensure this percentage doesn’t get too large. This KPI will directly correlate with customer retention too – if you wish to obtain a loyal customer base, you must not allow your backorders to mount up.

Get your perfect order rate looking healthy too, which will combat a high backorder percentage. This calculates the proportion of orders which you send out without delays or problems with production, shipping, handling or in any avenue of your process. This results in the perfect conclusion for the customer – their order arrives in full with no extra wait time or cost. Find out more about calculating your backorder percentage here.

Reject/Scrap

As you can imagine, having to reject products because of faults will cost you. Whether it’s a wasted part, or an entire product, you’re not going to be able to sell something that’s imperfect. Measure this KPI and you’ll be able to identify the issues causing imperfect products. You’ll need to work out if this is an issue with staff, or if it’s a machine not working to its optimum. Once you’ve identified the issue at hand, you can make changes to minimise the chances of the problem arising again. If you’re throwing out a lot of materials after each batch, have a look at your ordering and see if you could use a smaller quantity. Are your team using every bit of the materials given to them? Measuring this KPI will save you money in both the short and long term.

Labour Cost

Your labour cost is the amount it is costing you to produce one item. As you’d assume, the lower this figure is the better. Keeping track of your labour costs is important in order to ensure that your profitability per item is not being compromised. You’ll need to measure this against price of materials and staff wages to ensure you’re correctly pricing out your products. If this figure creeps up, it may be time to find new suppliers, or consider taking on freelance workers who can work per project rather than having to commit to a full time wage. Calculate your labour costs here.


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