Essential Manufacturing KPIs & Metrics to Set You Up For Holiday Success
What’s Santa bringing you this year? I guess it depends on how nice or naughty you were in terms of analyzing your seasonal trends. Santa knows when you’ve been sleeping on your metrics. He’s making a list and checking it twice, because he’s a proactive son of a gun – just as you should be – making plans, goals, and reviewing the success of it all in intervals.
Santa’s also not real, and your only hope for gifts this holiday season is in the present. I italicized the pun so you wouldn’t miss out.
Planning for the holidays can be a lot of work. But as with most things, preparation can save you and your partners from a deep, dark winter depression. But what makes a good plan? It’s about being organized. Planning, prioritizing, reviewing, adjusting, and recording.
Keeping an eye on the performance of your company ensures accountability and focus. Generally, business owners don’t like surprises.
Some people are great organizers. It only makes sense to do things in the clearest way possible, right? But sometimes life can get so hectic that you can’t even match your socks. Maybe you’re too spontaneous for long-term planning. You’re a free spirit and you can’t be chained down (I’m projecting). But look here friend, you’re a part of a team. People’s lives are at stake. Well, at least, your business’ holiday success is at stake for years to come. You need a plan!
You probably know what key performance indicators (KPIs) are and understand the importance of measuring and analyzing your manufacturing metrics. You know that having a solid, layered project outline and review process will make your project unfold seamlessly. You thought long and hard about your specific objectives, you mapped out a timeline, you scheduled a review of your project’s development, you stayed loyal to your company’s goals, and you were realistic about the attainability of your manufacturing plan. Keeping an eye on the performance of your company ensures accountability and focus. Generally, business owners don’t like surprises.
That doesn’t mean you can’t dream big. Just remember to dream smart too. But you already knew that, so, let’s dig deep.
As laid out by Sisense, your plan should include four “tiers” including a business goal (the overall end result), business objectives (smaller goals – Mario Kart…see below), KPIs (what you measure – #, $), and smaller steps to connect your findings and your plans.
Having trouble strategizing? I’ve compiled the following resources to help you organize, plan, and land on your feet, just ‘cuz I like ya: Cascade, Klipfolio, The Balance Careers, and Sisense. These are just a few amongst many others. It’s a good idea to get onboard with a manufacturing software system to save yourself a lot of time and effort.
Goals, Goals, Goals
You’ve probably started thinking about your holiday manufacturing campaign’s endgame. But you should also consider other goals along the way that will help you get where you need to go. This is why setting up a timeline can help. Your KPI should include checkpoints, just like those time-trials in Mario Kart. They will keep you focused and moving.
Your goals need to be measurable, hence breaking your progress into smaller goals. A good way to quantify your success is to use graphics. Graphs, charts, colour coding. Always colour code. Everything.
It’s also not a bad idea to make your KPI results visible to your employees. The ability to see progress in real-time can be very motivating. The visual can remind employees of the company’s goals, plus, it means less nagging.
The point of measuring your goals is to monitor your levels of success; however, your reports should also be used for future reference. The act of setting goals and the ability to understand the fluctuations in results gives you something to benchmark in order to develop or maintain your project’s success.
According to ProgressPlus (UK), “the challenge for manufacturers is understanding what to measure, then setting a goal or standard metric by which your current state is measured against also known as benchmarking and then putting corrective actions into place to help you achieve or surpass these goals in a regular, sustainable fashion.”
So what do we measure?
The Metrics You Should Be Examining
MESA (Manufacturing Enterprise Solutions Association) is a global organization connecting manufacturers to resources. MESA, teamed with LNS Research, has done multiple research inquiries into the most important metrics to consider.
MESA suggests, “With the breadth and span of available metrics, it is important that organizations choose the right metric approaches that align to business and manufacturing processes to deliver optimized improvement efforts.”
Many companies, their customers, and stakeholders are all affected by the improvement of certain metrics. The top metrics involve yield, scrap rate, supplier defect rate, supplier chargebacks, and customer complaints. Your KPIs should cover the performance in areas such as production costs, labour costs, production losses, and cycle times.
The purpose of these metrics is for them to be analyzed, compared, and assessed. Communication is key here. Without attention from you and your team, you’re taking shots in the dark. It’s 2018 and we have a world of technology at our fingertips. Don’t be afraid to use it! Check out Veem’s article on the latest manufacturing trends.
Examine Your YOY Growth
In preparation for holiday success, you should analyze your previous years’ data. Measure the time certain projects took to optimize their development this year.
If your company has some history, reviewing your year-to-date (YTD) sales and year-over-year (YOY) growth are key. Manufacturers are limited because they can’t exactly pump out products based on demand; the results aren’t immediate, so planning and analyzing annual records are crucial. Keeping up with your customer’s demands, on time, while minimizing waste is a skill and necessary practice that’s often taken for granted. Check out more on supply and demand here.
YOY growth will show you the efficiency of production lines by measuring manufacturing rates over your years of operation. The analysis of these findings can prepare your business for seasonal bombardment. Bring it on.
YOY growth shows you the overall development over a larger scale, including those dips and dives that happen month-to-month. It’s difficult to see an accurate representation of your company’s production rates month to month, especially when considering seasonal trends. And of course, it isn’t accurate to only look at your year at a glance, since seasonal trends also vary year to year.
Businesses and manufacturers receive a huge bump over the holiday season, but January, February, and even March suffer greatly in terms of business. How does anyone afford to breathe in the New Year? I’m still broke from last Christmas.
Now, get to color coding. Don’t you want to see your growth? We’d love to see it.