What are the key contract manufacturing KPIs and how do you track them?

1 Quality KPIs

One of the most important aspects of contract manufacturing is quality, as it affects your customer satisfaction, brand reputation, and regulatory compliance. Quality KPIs are metrics that evaluate how well your contract manufacturer meets your quality standards and specifications, such as defect rate, yield rate, rejection rate, and customer complaints. You can track quality KPIs by conducting regular audits, inspections, and tests on your contract manufacturer's facilities, processes, and products. You can also use quality management systems (QMS) and quality control tools, such as Six Sigma, to analyze and improve quality performance.

2 Delivery KPIs

Another critical aspect of contract manufacturing is delivery, as it affects your inventory management, order fulfillment, and cash flow. Delivery KPIs are metrics that measure how timely and reliable your contract manufacturer delivers your products, such as on-time delivery rate, lead time, cycle time, and delivery accuracy. You can track delivery KPIs by using supply chain management (SCM) software and systems, such as enterprise resource planning (ERP) and material requirements planning (MRP), to plan, monitor, and optimize your production and distribution processes. You can also use logistics and transportation tools, such as GPS and RFID, to track and trace your shipments and deliveries.

3 Cost KPIs

A major benefit of contract manufacturing is cost reduction, as it allows you to leverage the economies of scale, expertise, and resources of your contract manufacturer. However, you also need to control and optimize your costs to ensure profitability and competitiveness. Cost KPIs are metrics that assess how efficiently and effectively your contract manufacturer uses your resources and budget, such as cost per unit, cost of goods sold (COGS), gross margin, and return on investment (ROI). You can track cost KPIs by using accounting and financial software and systems, such as QuickBooks and Excel, to record, analyze, and report your expenses and revenues. You can also use cost management tools, such as lean manufacturing and value analysis, to eliminate waste and increase value.

4 Communication KPIs

A key factor for successful contract manufacturing is communication, as it enables you to align your expectations, goals, and requirements with your contract manufacturer. Communication KPIs are metrics that indicate how well you communicate and collaborate with your contract manufacturer, such as response time, feedback frequency, issue resolution rate, and satisfaction score. You can track communication KPIs by using communication and collaboration software and platforms, such as Slack and Zoom, to facilitate and document your interactions and exchanges. You can also use feedback and survey tools, such as SurveyMonkey and Google Forms, to collect and analyze your contract manufacturer's opinions and suggestions.

5 Innovation KPIs

A competitive advantage of contract manufacturing is innovation, as it allows you to access the latest technologies, capabilities, and trends of your contract manufacturer. Innovation KPIs are metrics that evaluate how much your contract manufacturer contributes to your product development and improvement, such as new product introduction (NPI) rate, time to market, patent count, and innovation index. You can track innovation KPIs by using product lifecycle management (PLM) software and systems, such as SolidWorks and Autodesk, to design, test, and launch your new or improved products. You can also use innovation management tools, such as brainstorming and prototyping, to generate and validate your ideas and concepts.