NetSuite ERP Consultant Blog

NetSuite Manufacturing KPIs to Watch

Written by Alec Kostopoulos | Jul 11, 2022 2:48:44 PM

Top 3 NetSuite Manufacturing KPIs for Leading Indicators of Business Health

Decision-makers can easily miss critical early warnings while spending what most would consider too much of their valuable time buried in reports. Information overload is a real problem when the important gems of intelligence are buried in masses of data and spreadsheets. To further complicate matters, each industry has a relatively small number of metrics that are particularly important for monitoring the overall health of the business. Therefore, we hope these top 3 NetSuite Manufacturing KPIs help demonstrate how you can monitor your company's health and potential to grow.

3 NetSuite Manufacturing KPIs

In our eBook we’ve collected a set of key performance indicators (KPIs) that every manufacturing or product-based company should monitor consistently. Download this informative KPI eBook for more information: Mind Your KPIs – Metrics that Matter to Product Companies  

1. Cycle Time

Cycle time is a KPI measurement of the time an order takes, from start of production to order completion. Today's customers expect their orders sooner, not later. Therefore, reducing cycle time is one of the main levers examined when manufacturers are looking for ways to shorten lead time. Lead time is measured from the time between when an order is placed to the time it's delivered. 

You can also monitor cash-to-cash cycle time to see the length of time between paying your suppliers for materials and getting paid by your customer for the order. Ideally, you want your cash-cash cycle time to be less than one month.

Another manufacturing KPI with a lot of attention lately is the supply chain cycle time. This KPI measures the time it would take to complete an order if inventory levels are at zero, plus the order fulfillment cycle time.

2. Inventory Analysis

Can you confidently tell how well your inventory is performing? NetSuite Manufacturing KPIs help you see key inventory metrics to find ways to fill customer orders while minimizing costs.

To ensure your company doesn't run out of inventory which delays orders or keep too much on hand which ties up cash, use the inventory days of supply (IDS) KPI. By dividing your average inventory by month in dollars by your monthly product demand in dollars, then multiplying by 30. This calculation helps you roughly calculate your par level which is the ideal level of inventory to meet customer demand.

Inventory turnover reveals how fast products are moving out of the factory and creating cash flow. For manufacturing companies, inventory turnover varies greatly depending on the type of product sold (perishable v. non-perishable, hard v. soft goods, etc.) and as seasonal demand changes.

3. Fill Rate

Ideally, you want to fulfill your customers' orders on the first shipment. This is a crucial factor in customer satisfaction and a leading indicator of your company's overall efficiency. Get closer to the root causes of weaknesses in your supply and fulfillment chain by calculating and analyzing:

  • Order fill rate: the percentage of orders that were deliverd on the first attempt
  • Line fill rate: the percentage of order lines delivered on the first attempt
  • Unit fill rate: the percentage of individual items delivered on the first attempt

See Potential Risks Sooner with NetSuite and NewGen Business Solutions 

Our NewGen Business Solutions team supports NetSuite's manufacturing and production ERP software to give you the power to grow. It's easy to control inventory, provide end-to-end supply chain management, and optimize your business processes on a single, easy-to-use cloud platform. Don’t miss out on all the new NetSuite enhancements.

As a 5-star NetSuite partner, we are here to help you transform your manufacturing business with NetSuite. To see a demo of NetSuite or to speak with our team 877.932.2478 or email us at sales@newgennow.com or visit our website!