ERP for Manufacturers: What Are KPIs and Matrices It Should Track?

Jul 25, 2023
Nandinee Biswas

Efficiency, productivity, and seamless operations have become fundamental to the success of manufacturing businesses today. To navigate the intricacies of their operations and achieve excellence, companies seek a comprehensive solution that can optimize production processes and empower decision-making. They need an industry-specific enterprise resource planning (ERP) platform that offers robust tracking of metrics and key performance indicators (KPIs) that provide actionable insights. Here are the top measures manufacturers should monitor in their ERP system.

Why ERP Platform Tracking is Crucial for Manufacturers?

An ERP platform tracking is the backbone of a manufacturing operation, integrating various business functions and enabling seamless data flow across departments. This centralized system streamlines processes and serves as a treasure trove of valuable data. By harnessing this data through efficient tracking, manufacturers can make informed decisions, optimize resource allocation, and maintain a competitive edge in the market.

What Metrics and KPIs Must Manufacturers Track with ERP Software?

Production efficiency

Production Efficiency, measured by Overall Equipment Effectiveness or OEE, is a critical manufacturing metric. OEE evaluates the performance of manufacturing equipment by assessing its availability, performance rate, and quality output. It provides valuable insights into downtime reasons, equipment utilization, and overall productivity. A high OEE indicates optimized production processes, minimal downtime, and increased output, while a low OEE signifies areas for improvement and potential bottlenecks.


Throughput measures the rate at which products move through the production process. It evaluates the efficiency of the production line and identifies potential bottlenecks. A high throughput indicates streamlined workflows and optimal production flow, leading to increased output and faster delivery times. By tracking throughput in a manufacturing ERP platform, manufacturers can enhance productivity, identify process inefficiencies, and make informed decisions to improve overall operational efficiency.

Cycle time

Cycle time is the duration taken to complete one cycle of a specific manufacturing process. It assesses the efficiency and effectiveness of production processes, providing insights into workflow optimization. A shorter cycle time signifies increased productivity and faster production output, enabling manufacturers to meet customer demands promptly. By tracking cycle time in an ERP platform, businesses can identify areas for improvement, streamline operations, and reduce production lead times.

Scrap and rework rates

The scrap rate measures the percentage of defective or unusable products generated during manufacturing, while the rework rate represents the products that require additional work to meet quality standards. High scrap and rework rates indicate inefficiencies and potential quality issues in the production process. By tracking these rates in an ERP system, manufacturers can identify root causes, implement corrective actions, and improve overall product quality.

Inventory turnover ratio

The inventory turnover ratio measures how efficiently inventory is used during a specific period. It estimates the number of times stock is sold and replaced during a particular period. A higher inventory turnover ratio indicates effective inventory management, with products moving quickly through the supply chain. This can lead to reduced carrying costs and minimized risk of obsolete inventory. By tracking this ratio in an ERP platform, manufacturers can identify slow-moving items, optimize stock levels, and ensure a streamlined supply chain.

Lead time

Lead time measures the time taken to fulfill an order from when it is placed to when it is delivered to the customer. Shorter lead times enable businesses to respond swiftly to customer demands, improving customer satisfaction and retention. By tracking lead time in an ERP platform, manufacturers can identify bottlenecks and streamline workflows, reducing production delays and enhancing operational efficiency. A well-managed lead time enables businesses to stay competitive, meet customer expectations, and seize market opportunities effectively.

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Downtime directly impacts production efficiency, decreasing output and potential revenue losses. By tracking downtime in an ERP platform, manufacturers can identify the root causes of interruptions, optimize preventive maintenance schedules, and improve overall equipment reliability.Timely response to downtime ensures smoother operations, improved resource utilization, and enhanced customer satisfaction through timely deliveries.

Supplier performance

Supplier performance measures the effectiveness and reliability of suppliers in delivering materials on time and maintaining quality standards. It impacts production continuity and product quality. By tracking supplier performance in an ERP platform, manufacturers can identify top-performing suppliers, negotiate better terms, and build stronger partnerships. Poor supplier performance can lead to production delays, increased costs, and customer dissatisfaction. Manufacturers can make informed decisions by assessing supplier performance data, ensuring a smooth supply chain, and maintaining high-quality standards.

Customer returns and complaints

Tracking customer returns and complaints helps manufacturers identify product issues and design flaws, leading to continuous improvement in product quality and customer satisfaction. Monitoring these manufacturing metrics helps manufacturers identify product issues, design flaws, or supply chain inefficiencies. Effective resolution of complaints, proactively address customer concerns, improve product quality, and enhance overall customer experience,increasing customer loyalty and retention.

Overall cost of production

The overall cost of production assesses the total expenses incurred to manufacture goods, including raw materials, labor, overheads, and operational costs. Tracking this metric in an ERP platform enables manufacturers to comprehensively understand their cost structure and identify areas for cost optimization. By analyzing the cost of production, businesses can implement cost-saving measures, enhance operational efficiency, and improve profit margins.


Utilizing an ERP platform to track essential KPIs and metrics gives manufacturers valuable insights to enhance productivity, quality, and overall operational efficiency. With cloud-based ERP software, manufacturers can harness the power of real-time data, make informed decisions, and achieve excellence in the manufacturing arena.

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