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Key performance indicators for ERP implementation
Key performance indicators for ERP implementation to know
As companies extract value from their ERP software for several years, it is necessary to track long-term key performance indicators as well as short-term indicators.
Only then will you be able to ensure how close your business is to achieving its strategic goals.
Once you post the software, tracking the next ERP can help you get a final picture of its success along with the areas you need to adjust your ERP strategy.
- Downtime
One of the reasons you choose to implement ERP is to reduce or eliminate downtime.
It is therefore logical to monitor the ERP system's success in achieving this goal.
Make a record of downtime and duration, as well as the reasons for it.
This will help you recognize recurring problems, allowing you to solve them and improve performance in the future.
This is one area where you need to keep numbers low.
- Meet the timetable
This indicates how much you can help the ERP system maintain the production schedule you want.
It is once again an important key performance indicator; After all, timely completion of projects and increased productivity is one of the important objectives of ERP implementation.
A strong ERP solution will ensure that the gap between scheduled and actual production is as low as possible.
If not, it means something goes wrong , and it needs to be fixed.
- Inventory turnover
ERP measures the amount of inventory sold in a specified period of time.
The ERP system helps to end operations and provides improved visibility, ideally increasing stock turnover.
Let's say you found that a particular product's inventory is always excess; In this case, your ERP system will be able to assess how much of this product you need to store in the future.
Based on consumer purchasing behaviour, ERP can expect sales in the near future in just seconds.
While this can be done manually, it can take a very long time.
When you divide your sales by your average inventory, you get an inventory turnover ratio.
Suppose you set a target of selling 9,000 pairs of product every week.
When your ERP system is successfully implemented, it will track sales closely and provide insight into the inventory process as well as ways to sell more products.
Inventory management unit helps you avoid overstocking and connecting funds, as well as lack of inventory and inability to meet customers' demands.
You can keep the optimal stock to ensure efficiency, continuous production and/or sale at an economic cost.
- Project margins
Tracking project margins will allow you to check if ERP gives your business the benefits you want.
This especially applies to construction and other project-based industries.
Project margins measure a company's earnings after reducing expenses incurred on employment, materials and overheads.
A strong ERP system can reduce labor costs, automate processes, ensure optimal use of resources, and streamline your budget, helping you increase your project margins.
Materials, employment, expenses, invoices, budgets, reservations, estimates, milestones and completion are some of the key performance indicators you should target.
ERP systems collect data on all these key performance indicators so that you get a comprehensive presentation of cost and revenue for each project.
- Real-time data
Unfortunately, the majority of companies do not have access to accurate data in real time; ERP application helps them achieve data consistency across organizations, and acquires insights that make proactive decision-making possible.
Different ERP systems have different levels of business intelligence capabilities, but most systems have very complex AI functions.
They can show you when your manufacturing equipment will need maintenance - to give you a small example.
This will help you reduce downtime as well as set practical expectations for consumers.
Another key performance indicator can be how much you can reduce the machine breakdown time.
- demand forecasting
Demand forecasting measures determine the reliability of the company's demand forecasts in the near future of its products and services.
The ERP solution provides near perfect forecasting accuracy, helping companies anticipate demand for certain products.
Takes into account factors such as seasonal trends, market conditions, impending (weather-related) disasters and historical sales data to make these forecasts.
- increasing purchasing power
One of the key ERP performance indicators you can track is how much you reduce material costs by having better bargaining power.
An effective ERP system helps reduce costs and maximize business purchases required, thereby improving your purchasing power.
This can be achieved by leveraging the vendor performance management feature to indicate weaknesses and bargaining points for more suitable terms with suppliers.
- scheduling
Scheduling metrics can help you track production speed according to schedules to ensure you achieve important landmarks
For example, for a manufacturer, a highlight can be manufacturing and offering 3 times the usual amount of best-time sellers to shop in season.
The software development company can have a timeline for launching the latest fix within x number of days.
Thanks to ERP, you can now easily schedule these features; It provides an illustration of how manufacturing processes vis-à-vis deadlines, along with insights into potential outages, helping you take proactive corrective action.
- employee satisfaction
Employee satisfaction cannot be accurately measured, unlike sales or stock turnover.
However, it can be measured through the successful implementation of ERP.
If employees are happy, you will find an increase in productivity and retention, which translates into increased sales - and lower attrition.
If employees are happy, you will find an increase in productivity and retention, which translates into increased sales - and lower attrition.
- Business productivity
Business productivity is measured to check business performance everywhere in the world.
Business objectives can remain unfulfilled if the company's divisions and teams do not use business hours productively.
Supply chain problems, equipment failures, reduced staff production and process shortcomings are among the most common obstacles to business productivity.
However, these factors can be easily followed through enterprise resource planning and comprehensive evaluation.
This will help you assess everything that affects your productivity, and make the right decisions to improve those factors.
Suppose a particular product has a high order but shipping is delayed just because there is a shortage of packing staff - the manager can see that in the system.
The Manager can solve this problem by recruiting additional staff.
- customer services
The ability to provide improved customer service is one of the main reasons why companies want to implement ERP systems.
Customer services is one of the key performance indicators you shouldn't ignore to measure.
When your business resources are optimally allocated and your operations streamlined, business functions related to customer service are automatically improved; In fact, anything you improve in your operations is meant to improve customer service.
E-business owners know that ERP helps them manage important information such as customer orders and shipping.
You provide improved customer service when processing and shipping orders on or before time.
To provide good customer service, you also have to be consistent; You should provide familiar and positive experiences to make sure they come back to you.
Late delivery of orders or the delivery of wrong products, and mishandling of the situation may leave customers for you.
Unlike an employee's experience, this is a measurable measure.
You can ask customers for feedback on your social media pages and website; You can easily check the number of new customers and returning customers as well.
ERP systems can also help make improvements that can help you make customers happy like multiple options, more flexibility, faster promised deliveries, etc.
- Business Processes and schedules
You need to check whether your operations are able to better agree with your business goals and whether you are able to commit to your schedules.
The purpose of ERP implementation is to streamline the process after all.
You can reduce hardware costs, maintenance, hosting and subscription through the correct ERP app.
- Expenditure on information technology
In today's technological intelligence world, IT spending is essential; But do you spend a lot?
By following key performance indicators for IT expenditure, you can ensure maximum benefit from your technology investment at the lowest cost.
You can reduce hardware costs, maintenance, hosting and subscription through the correct ERP app.
If you are still continuing to use old systems, you may end up paying huge funds for maintenance as you will need specialized resources for it.
But if you post a modern ERP, you'll get all the metrics easily and you won't have to worry about upgrades and customization.
This information will help you reduce costs without compromising performance.
- Sales and revenue growth
You should be able to see growth in your revenue once published an efficient ERP system, through higher sales and lower expenses.
Expenditures are reduced through streamlined business processes and increased operational efficiency in your organization.
By accessing real-time data, you can make informed decisions to improve sales.
To illustrate, the key revenue and sales performance indicators show you how much you've achieved selling your goods and services over a certain period of time, as well as how this trend is likely to be over a longer period - for example, a year.
The average order value, operating margin and average profit per product are the most measured key performance indicators.
These metrics will help you see the best opportunities for growth, with areas where costs can be reduced by improving efficiency.
These two types of ideas can help increase sales and profitability.
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