Manufacturing KPIs

KPI Performance Key

Your business may just be beginning to track this metric, perform this business function or identified this as a problem. Improved execution in this area should be a high priority.

Your business is competitive in this area, but there’s still room for advancement. Consider investments to improve related operations to achieve better results.

Your performance in this area is considered best in class and is superior to the average company in your sector. You’ve laid a solid foundation in this business function, and the next step is optimization.

You’re achieving the optimal results for this metric. Your business processes in this area are highly efficient and stand out against competitors. Keep investing in this area to maintain these results.

Top Performers

Fill Rate

Fill rate represents the percentage of your orders that can be satisfied immediately by inventory available in your factory. This metric is essential to providing exceptional service to your customers and maintaining positive customer relationships. However, increased customer satisfaction must be balanced against the cost of maintaining higher levels of inventory. Having access to real-time inventory data can significantly impact your company’s ability to maintain proper inventory levels and achieve an optimal fill rate.

< 97%
Foundational
97%
Competitive
97.8%
Best in class
98.5%
Transformative

Leveraging AI

Manufacturing

32%

Of Manufacturers Don’t Know Where to Start with AI

Learn tips on where to begin here.

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Manufacturers accounted for half of the $150.8 billion investment in analytics.”

Source: IDC

Cycle Time

A fast cycle time is critically important to manufacturers in an era where 2-day deliveries have become the normal customer expectation. Cycle time and lead time are frequently confused. Cycle time represents the time it takes from the start of production to when an order is complete, while lead time starts at the time the order is placed by the customer and ends when the order is delivered. Therefore, reducing cycle time allows for a shorter lead time, thus increasing customer satisfaction.

> 96 days
Foundational
84 days
Competitive
54 days
Best in class
< 24 days
Transformative

Inventory Turnover

Inventory turnover reveals how fast products are moving out of the factory and creating cash flow. Inventory turnover for manufacturing companies vary greatly depending on the type of product sold (perishable v. non-perishable, hard v. soft goods, etc.), and as seasonal demand changes. Another important component to consider when defining inventory turnover goals is the gross margin on the sale of your manufactured products. Lower margin items require higher stock turnover to meet revenue targets. A higher ratio indicates that money is changing hands and funds are not tied up in products with little demand or low sales.

< 3 turns
Foundational
6 turns
Competitive
7 turns
Best in class
11 turns
Transformative
Foundational
Competitive
Best in class
Transformative

Order Cycle
Time

> 96 days

84 days

54 days

< 24 days

Order Cycle Time

Represents the time from the moment the company starts the manufacturing of an order until the order is ready for shipment to a customer.

eCommerce
Growth

< 12%

12%

14%

16.3%

eCommerce Growth

This metric indicates the rate at which your company’s e-commerce revenue is growing.

Revenue
Growth

< 3%

9.2%

15.7%

22.1%

Revenue Growth

This metric indicates the rate at which your company’s total revenue is growing.

Days Sales
Outstanding

101 days

69 days

57 days

45 days

Days Sales Outstanding

How many days, on average, it takes your customers to pay invoices. Also called DSO or Days Receivable, it is a financial ratio that illustrates how your receivables are being managed. The lower this number is, the better.

Inventory Turnover

< 3 turns

6 turns

7 turns

11 turns

Inventory Turnover

Ratio showing how many times your company’s inventory is sold and replaced over a period of time. The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand. A low turnover ratio signifies weak sales and excess inventory. A high ratio suggests either strong sales or large discounts.

Fill Rate

< 97%

97%

97.8%

98.5%

Fill Rate

Percentage of customer or consumption orders satisfied from stock at hand. It’s a measure of an inventory’s ability to meet demand. A higher fill rate indicates a better ability to meet sales requests, influencing higher customer satisfaction.

Customer Service
Responsiveness

> 1 day

> 8 hours

< 5 hours

Real-time

Customer Service Responsiveness

This metric indicates the average time it takes to respond to customer issues. A lower response time drives more efficiency, freeing labor time for more valuable tasks or reducing the need to hire additional staff.

Time to Close
Books

> 10 days

7 days

3 days

< 3 days

Time to Close Books

How many days it takes your finance team to produce a Profit and Loss Statement, Balance Sheet and other analyses so that managers can understand how the business performed for that period (typically monthly). The fewer days, the more efficient the finance team.

Total IT Spend
as a % of
Revenue

> 2%

1.7%

1.3%

0.8%

Total IT Spend as a % of Revenue

Dollars spent on IT infrastructure and IT teams as compared to total revenue. The lower this percentage, the higher the efficiency.

Source(s): Finlistics

Other Categories
This metric indicates how fast your company’s revenue is growing in the eCommerce space. The higher this percentage is, the faster your eCommerce growth.
This metric indicates how fast your company is growing, measured by total revenue. The higher this percentage is, the faster your revenue growth.
How many days, on average, it takes your customers to pay invoices. Also called DSO or Days Receivable, it is a financial ratio that illustrates how your accounts receivable are being managed. The lower this number is, the better.
Ratio showing how many times your company’s inventory is sold and replaced over a period of time. The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand. A low turnover ratio signifies weak sales and excess inventory, while a high ratio suggests either strong sales or large discounts.
Percentage of customer or consumption orders satisfied from stock at hand. It’s a measure of an inventory’s ability to meet demand. A higher fill rate indicates a better ability to meet sales requests, therefore maintaining higher customer satisfaction.
Dollar amount spent on distribution costs versus total revenue. The lower this number is, the more efficient the distribution process is.
This metric indicates the average time it takes to respond to customer issues. A lower response time drives more efficiency, freeing labor time for more valuable tasks or reducing the need to hire additional staff.
How many days it takes your finance team to produce a Profit and Loss Statement, Balance Sheet and other analyses so that managers can understand how the business performed for that period (typically monthly). The fewer days this number is indicates a more efficient finance team team.
Dollar amount spent on IT infrastructure and IT teams as compared to total revenue. The lower this percentage is indicates higher efficiency.
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