It is important to grow the top line of your business on an annual basis, but you also need to make sure the bottom line is healthy which can help fund that growth. This is particularly important if you are a manufacturing company. In most cases, the two biggest expenses in your business are labor and raw materials. There are exceptions, of course, in machine intensive automated manufacturing environments, but let’s focus on the former. So how can we make sure the production floor is running at peak performance? One very effective way is to put the right balance of production KPIs in place. Some of these KPIs are leading indicators and some are results. It is good to have both, although I always prefer leading as these drive the results.
Here are some of my favorite KPIs that I used when I ran or set up manufacturing companies.