Article | December 23, 2021
Every manufacturing company aims to be as efficient as possible to maximize profit. However, it's difficult to determine where you stand and what targets to establish unless you can precisely measure your efficiency. Manufacturing KPIsplay an important role in this process.
Keeping track of many indicators without considering their commercial worth is a waste of time.
“Not everything that can be counted counts and not everything that counts can be counted”
- Albert Einstein
But connecting goals to measurements is a certain way to track progress and improve processes. So let's get started with how to choose the most appropriate key performance indicators(KPIs) for your business.
Manufacturing KPI 2022: How to Choose the Right One?
Why are KPIs called “Key” Performance Indicators? While any statistic can be used to assess performance, KPIs are the most critical. Hence they are called key performance indicators. Companies' priorities while selecting their company KPIs may differ substantially depending on the industry in which they operate.
“Strategic-operational KPIs alignment gives the organization a powerful tool to use when implementing change.”
― Pearl Zhu
A corporation should not track more than ten manufacturing KPIs to avoid overblowing processes. So, manufacturing efficiency, customer satisfaction, lead times, etc., should all be included.
Depending on your business nature, you must select your KPIs. However, each of those indicators must meet a set of criteria before being considered meaningful.
So, what is a decent KPI for manufacturing?
It gives objective and clear data on progress toward a certain goal
It measures efficiency, quality, punctuality, and performance
It allows for tracking performance over time
It helps in decision making
It should be the one that matches the company's long-term objectives
It has to be measurable and quantifiable
It must be realistic and actionable
Following that, let's have a look at the most important manufacturing KPIs for 2022, which will assist you in better understanding your manufacturing business and formulating a growth strategy in line with that understanding.
Most Critical Manufacturing KPIs in Order of Priority
Despite the fact that manufacturers should also monitor general key performance indicators (KPIs) such as sales revenue, net profit margin, and so on, the manufacturing business demands the tracking of specific manufacturing metrics. Below are some of the most important manufacturing key performance indicators (KPIs).
Using this manufacturing KPI metric, you can see how much value there is in products still in progress. It assists manufacturing organizations in determining how much of their working capital is locked up in incomplete products and can aid in identifying supply chain managementdifficulties.
You can compute the Work-In-Progress (WIP) by using the formula provided below.
Return on Assets
This manufacturing KPIseems to be more about financing than manufacturing. Yes, it does. However, financial measurements are just as vital as production ones. A firm cannot exist unless it generates revenue, and this indicator measures how efficiently your company uses its assets and generates revenues.
The Return on Assets (ROA) of your company can be calculated using the formula below.
Cost Per Unit
It is critical to understand the overall manufacturing cost per unit. You can't appropriately price a product without it. This manufacturing KPIdivides total manufacturing costs by the number of units produced. Materials, overhead, depreciation, and labor are standard costs.
Companies utilize this manufacturing statisticto forecast future raw material needs to satisfy client demand. Unfortunately, this statistic is more challenging to employ because it is mainly dependent on unpredictable external circumstances. The basic formula is:
The seasonal factors are distinct
Average demand is calculated as:
A company's lead time, also known as order cycle time, is an important KPI. It shows how swiftly your organization processes orders and meets client requests. It is time it takes to complete an order from confirmation to delivery.
Long lead times can imply process inefficiencies that produce bottlenecks and excessive expenses. Conversely, short lead times are important since they allow you to respond to consumer needs swiftly and efficiently.
The total lead time can be divided into smaller segments as follows:
The time it takes to manufacture a product from start to finish
The time it takes to deliver a product from stockto a client
The time it takes suppliers to deliver products to manufacturers
By segmenting the lead time, you may more precisely identify the areas where inefficiencies in the process occur.
Toyota’s Four Key Performance Metrics
As a company, Toyota places a high focus on environmental protection. Toyota's vehicles are designed to use less fuel and produce less waste.
Regardless of the company's size, Toyota is committed to protecting the environment. Toyota's 'Earth Charter' was created in 1992 as part of the company's Global Policy initiative. It was Toyota's first overseas facility and the UK's first ISO14001-certified car manufacturer. Waterborne paints were utilized for the first time and zero waste was sent to landfills. In 2009, Toyota Manufacturing UK did not use any incinerators.
Toyota has developed a set of key performance indicators (KPIs) for each of its major production areas. There are four key performance metrics: energy, water, waste, and volatile organic compounds (VOCs).
Since its start in 1992, Toyota Manufacturing UK has attempted to mitigate its environmental impact. The figure below illustrates the environmental KPIsfor the Burnaston plant. Each year, Toyota sets new goals to improve its results.
79% reduction in vehicle energy consumption
62% reduction in waste per car
76% reduction in VOC emissions per car
79% reduction in water consumption per vehicle
You can use the aforementioned manufacturing KPIsto construct your manufacturing KPI template, but keep in mind that the manufacturing metricsyou need to track may differ from those listed here. The first prudent move any business can make while examining its operation is to identify and track the relevant KPIs. Also, in manufacturing, there are several different KPIs, phrases, and abbreviations need to be understood and used where it makes the most sense.
What is manufacturing KPI?
A manufacturing Key Performance Indicator (KPI) or metric is a well-defined and measurable indicator that the manufacturing sector uses to evaluate its performance over time and compare it to that of other industries.
What are the key KPIs for manufacturers?
On-Time Delivery, Production Schedule Attainment, Total Cycle Time, Throughput, Capacity Utilization, and Changeover Time are some of the key manufacturing KPIs.
Article | July 28, 2021
Rex Moore Group, Inc. is a Top50 electrical contractor delivering unmatched integrated electrical solutions. As an early adopter of Lean manufacturing principles, Rex Moore has created a company-wide culture of continuous improvement that drives significant value to their clients. The firm contracts and performs both design/build and bid work for all electrical, telecommunications, and integrated systems market segments.
Rex Moore has a full-service maintenance department to cover emergency and routine requirements for all facilities, whether an existing facility or one that has been recently completed by the company. The ability to negotiate and competitively bid various forms of contracts including lump-sum, fixed fee, hourly rate, and cost-plus work as a prime contractor, subcontractor, or joint venture is enhanced with Project Business Automation (PBA) from Adeaca. This solution permits the company to propose work only if they are in a position to be competitive in the marketplace and provide excellent service with fair compensation.
Rex Moore used Adeaca PBA as a construction management software for builders and contractors to integrate and facilitate its business processes in its ERP system. Together with Microsoft Dynamics, PBA integrated processes across the company on a single end-to-end platform. This allowed the company to replace 15 different applications with a single comprehensive system, eliminating the costs and inefficiencies associated with multiple systems and silos of information.
Article | April 6, 2021
As the pandemic upended plans for marketing and sales in 2020, it forced marketers in the manufacturing industry to adopt the tactics of the remote world. Many of them are still wondering how they can focus on driving business growth in 2021. Intent data has undoubtedly added some spice to the season of online marketing.
Research conducted by B2BecNews on 110 businesses found that 59.5% of business buyers research two to three websites before buying while 29.7% research up to seven websites.
The “How” of Intent Data
Intent data allows businesses to channel their expenditure to the leads that matter the most. It boosts sales and encourages marketers to be smarter by doing more in less time.
Moreover, b2b buyers now tend to look for an immersive digital experience and are likely to conduct more and more searches before engaging with a brand. Such digital activity will tell you what a visitor’s intentions are called the intent data.
To drive your business, here are some tried-and-true and unexpectedly productive ways to scale up your marketing and sales game using intent data.
Improve your Sales Pitches/Pipelines
When you are expanding or redefining your business because you want to target a new market or audience, third-party intent data is a decent place to start. Through intent data, your sales team can build a year’s pipeline by reaching target audiences.
To get the value of your sales, you can use intent data categorizing with a professional group, seniority, functional area, business size, and more for targeted prospects. And if your data provides contact information, your sales team will have an even deeper understanding of the dynamics of prospects’ buying activities.
Moreover, learning about the fact if a CEO or a random visitor visits your website creates a difference between a quality lead and a generic one. There are times when organizations don’t vigorously look for a product. But with the right content force, you can direct them towards a purchase decision. This way, you can get a chance to pitch and improve sales.
So, how can content pitch sales?
The next point explains the importance of nurturing content on your website.
Nurture with Personalized Content
Once you target new prospects, you can nurture them with excellent and informational marketing content. These can be in various forms like articles, blogs, advertisements, social media, infographics, and more.
Personalization results better in the sea of marketing (digitally or manually). Since the pandemic has pushed the digital world extensively, personalization is on a hike. Companies that personalize their marketing strategies to communicate are improved by 86% in customer relations, have higher conversation rates, and observed improvement in businesses.
To personalize your content, you have to look at intent data and search for the prospect’s interests. After your research, you can create content for them. Paying attention to contextual information will improve the prospect’s experience, causing them to turn into your client.
After you create personalized content, what will happen next? Find out ahead.
Generate High-Quality Leads
Intent data tells you how far each prospect has progressed. A combination of intent and context data helps with lead scoring, which shows you the quality of leads.
A visit to your website by an intern is somewhat different from a CEO’s visit.
Consuming content on general industry information differs in value from product-specific content that provides information on websites.
When a visitor compares prices, it intends to buy, opposite to a visitor who bookmarks pages.
Besides, intent data for manufacturers also tells:
Channels to target your prospects actively.
Content to encourage
Offers to serve
The timing of each lead nurturing action
Improve Account-Based Marketing Campaigns
Account-based marketing and intent data go hand-in-hand. So, it would be best if you worked through every possible path to collect more information about your prospects. This way, it will help you take a focused approach. Once you identify the interested prospects, you can focus your time and energy on those accounts and expand your reach.
Intent data helps you to find more in-market customers. They can score leads with better precision and re-shape your marketing campaigns by showing up with the right message at the right time.
Include Marketing Automation Operations
Implementing marketing automation technologies with intent data will save your team's time. As they usually spent analyzing data entry by automatically setting alerts when buyers intend to show their interest.
Why is Intent Data for Manufacturing Becoming Crucial for Future?
With marketers, or say, manufacturing marketers, it's always vital to drive revenue for business and get ahead with trending marketing paths. For this, knowing intent of prospects is a must to gain success.
Knowing a prospector’s behavior can help your marketing team target a specific profile and create personalized content on demand to increase their purchase decision. After all the information is collected, prospects become more knowledgeable and informed of the decision they make. More information attracts more potential buyers when they are informed conveniently at the right time and manner. In this entire process, you gain an increased ROI.
These aspects are incomplete without intent data for manufacturers, which targets numerous data and creates an easy baseline so that marketers can learn precisely about potential prospects’ behaviors. Intent data can be used for the future through a particular pattern. Generic marketing campaigns delivered to a random audience will simply shut down your business. Because now, the users expect to see content that’s valuable to them.
Therefore, intent data for manufacturers is the key to providing better answers and solutions and allowing better marketing budgets. Both of these lead to more conversions which results in more revenue.
Frequently Asked Questions
How is intent data collected?
The collection of intent data is not new to marketers. It has gained prominence only after the pandemic. The data is gathered through the website. Its analysis is done by tracking visitors to the website, clicks, chatbots, duration of stay, and information search.
How can manufacturers leverage intent data?
The steps to leverage are:
1. identify the prospect and what it wants to search or trying to search. It could be keywords, trending words or phrases, and more.
2. Create quality yet informational content following the prospects’ interest.
3. Now, it’s time to promote content with the right on different channels to attract prospects.
What are the intent data tools for manufacturers?
Some good intent data tools manufacturers can use are:
What is buyer intent data for manufacturers?
Through buyer intent data, your sales team easily reaches out and gets engaged with the right prospect at the right time. Manufacturing marketers use it to plan can create effective campaigns to target potential ones and convince them to buy.
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"text": "The steps to leverage are:
1. identify the prospect and what it wants to search or trying to search. It could be keywords, trending words or phrases, and more.
2. Create quality yet informational content following the prospects’ interest.
3. Now, it’s time to promote content with the right on different channels to attract prospects."
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"text": "Some good intent data tools manufacturers can use are:
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"text": "Through buyer intent data, your sales team easily reaches out and gets engaged with the right prospect at the right time. Manufacturing marketers use it to plan can create effective campaigns to target potential ones and convince them to buy."
Article | December 30, 2021
Risk management in manufacturing has always been a top priority for manufacturers to avoid any unfortunate incidents. As a result, it is possible to create a more secure work environment for employees by conducting risk assessments and implementing remedies.
“If you don’t invest in risk management, it doesn’t matter what business you’re in, it’s a risky business.”
– Gary Cohn, an American Business Leader.
As of 2019, the worldwide risk management market was valued at $7.39 billion, and it is expected to rise at a CAGR of 18.7% from 2020 to 2027, according to allied market research.
Why is Risk Assessment Critical in Manufacturing?
The manufacturing industry must have a credible risk assessment and management plan to defend itself from any breaches. Risk assessment helps firms understand the dangers they face and their implications if their systems are compromised. Hence, risk assessment is very critical in the manufacturing industry.
Five Risk Assessment Principles
Identify hazards/risks - Employers must examine their workers' health and safety risks. Therefore, an organization must regularly inspect its employee’s physical, mental, chemical, and biological threats.
Identify who may be hurt and in what way – Identifying the personnel both full-time and part-time at-risk. Employers must also examine threats to agency and contract personnel, visitors, clients, and other visitors.
Assess the risks and act accordingly - Employers must assess the likelihood of each danger causing injury. This will evaluate and lower the chance at the working space. Even with all safeguards, there is always some danger. Therefore, employers must assess if danger is still high, medium, or low risk.
Get the Risks Documented - Employers with five or more employees must record the critical findings of the risk assessment in writing. In addition, register any risks identified in the risk assessment and actions to minimize or eliminate risk.
This document confirms the evaluation and is used to examine working practices afterward. The risk assessment is a draft. It should be readable. It shouldn't be hidden away. The risk assessment must account for changes in working techniques, new machinery, or higher work objectives.
5 Manufacturing Risks to Consider in 2022
Accidents at Work
Even if official safety policies and programs are designed, followed, and enhanced, manufacturers may endure workplace accidents and injuries. Risk assessment for workplace accidents assists in mitigating the negative impact on both employees and the organization.
Manufacturers have distinct issues regarding fuel handling and hazardous waste disposal in facilities. Sudden leaks or spills may be extremely costly to clean up and result in fines from state and federal agencies. Risk assessments for such plant accidents assist businesses in mitigating financial losses.
Essential machinery throughout the production process might fail at any time, incurring significant repair or replacement costs. Therefore, it's critical to recognize that business property insurance may not cover mechanical issues.
Risk assessment and prepayment solutions protect against equipment failures without interfering with typical company operations.
Supply Chain Disruption
Dependence on your supply chain may result in unintended consequences that are beyond your control. For example, if you experience downtime on the manufacturing line due to a supplier's failure to supply materials or parts, you risk losing revenue and profitability. If a disturbance to your supply chain poses a hazard, risk management can assist you in managing it more effectively by quickly identifying the risk and providing a suitable response.
Operation Temporarily Suspended
Depending on the severity of the weather event, a factory might be severely damaged or perhaps utterly wrecked. While major repairs or rebuilding are being undertaken, recouping lost income might be vital to the business's future profitability.
Risk assessment in this area enables your organization to budget for overhead expenditures such as rent, payroll, and tax responsibilities during the period of suspension of operations.
Risk management is critical in manufacturing because it enables manufacturers to comprehend and anticipate scenarios and create a well-planned response that avoids unnecessary overhead costs or delays in delivering the production cycle's final result. Manufacturing risks are undoubtedly not limited to the risks listed above and may vary according to the nature of the business and regional environmental conditions. Therefore, create a well-defined strategy to overcome threats in your business and be productive at all times.
How are manufacturing business risks classified?
In most cases, the business risk may be categorized into four types: strategic risk, regulatory compliance risks, operational compliance risks, and reputational risks.
Why should a manufacturer conduct a risk assessment?
Every manufacturing employment has risks for injury or illness. But risk evaluations can significantly minimize workplace injuries and illnesses. In addition, they assist companies in discovering strategies to reduce health and safety risks and enhance knowledge about dangers.