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ERP KPIs: Not Just for Execs Anymore

Enterprise Resource Planning (ERP), Smart Manufacturing
January 10, 2023

Enterprise resource planning (ERP) software helps companies manage their core business processes, including HR, finance, supply chain, and manufacturing. Companies can manage their business processes more efficiently by integrating them into a single software solution.

Today, most ERP systems are cloud based and use cutting-edge technology like AI and machine learning to deliver insights to executives and others across the company. And many are designed specifically for manufacturing.

Changing Impressions

When most people think of ERP systems, they consider them separate software from MES, MRP, CMMS, quality, and other platforms used to run the more granular aspects of production. ERP systems have traditionally focused on KPIs that deal with areas that staff and team members feel are removed from manufacturing decision-making and fall under a broad concept of administration or finance.

But as companies move toward digitizing their manufacturing processes, these impressions are changing. Cloud-based computing and the rise of smart manufacturing platforms mean that real-time, standardized data can be used across the enterprise to enhance the capabilities of all these systems, including enterprise resource planning software.

The Value of ERP KPIs in Manufacturing

There are many ERP KPIs that are used exclusively at the executive level. They drive high-level decisions based on market trends, available capital, and other variables.

These KPIs include:

  • IT spending
  • Customer experience
  • Human resources (employee satisfaction)
  • Demand forecasting
  • Inventory turns
  • Revenue growth

However, as system integration accelerates, ERP technology provides more direct access and information to managers, technicians, and line employees who directly impact manufacturing.

MRP as Part of ERP Within Manufacturing

Materials Requirements Planning (MRP) is a critical component of an enterprise resource planning software system. MRP ensures that sales orders and purchases are turned into inputs that enable manufacturing to complete orders on time. They also maintain inventory and facilitate purchases of raw materials.

Powered by common and standardized data across a smart manufacturing platform, these functions are available through reports and dashboards that let team members, manufacturing managers, and supervisors visualize progress and plan manufacturing tasks accordingly.

ERP KPIs for Manufacturing

Here are a few KPIs that can be accessed and consumed by manufacturing users through dashboards, terminals, and HMIs:

  1. Production Scheduling – In the age of small lots and mass customization, scheduling is critical to manufacturing success. The impact of incoming orders within the ERP system impacts the production schedule dynamically. Linking these workflows with scheduled production lets users understand how items and units perform.
  2. Equipment Utilization – Equipment utilization informs execs of when to purchase new equipment and what to buy. Line employees and managers using a smart manufacturing platform to optimize production processes can use this information to see their work's impact and better manage floor operations.
  3. Capacity – While execs use capacity to measure CapEx purchasing and plan for growth, managers and supply chain staff also benefit from these KPIs. Machine, labor, and resource capacity have become an integral part of manufacturing planning and are a critical part of any modern manufacturing strategy.
  4. Planned Hours and Actual Hours – As smart manufacturing platforms become more integrated with software like ERP, valuable KPIs provide insights into the impact of planned vs. actual hours. These variables help assess the health of the company and how it evaluates labor resources against expected outcomes. Dynamic systems for smart manufacturing and ERP allow for robust scenario planning for contingencies.

Empower Your Entire Organization

The right smart manufacturing platform for your business should tap into machine and operations data to optimize processes and deliver actionable insights to users across the enterprise. Linked to an ERP system, such a platform can unlock near real-time, standardized data, analysis, and other information so that ERP KPIs can be used by everyone, not just those at the executive level.

For more tips that empower your entire operation and not just your boardroom, read about these 10 ERP warning signs.

About the Author

Plex Team