By David Ortiz
Manufacturers who use automated systems to gather and share performance data are more financially successful than those who don’t, according to a new industry report.
Seifert Systems Invests in Energy Efficiency to Strengthen Operations
For manufacturers, energy is more than just another operating expense. It plays a critical role…
Learn More
And yet, very few manufacturers surveyed had state-of-the-art systems for measuring performance. That lack puts them at a serious disadvantage, the study found, because the slight operational improvements that result from employing best practices in performance metrics translate into financial gains that can transform a manufacturer into a market leader or a shareholder favorite.
The “Metrics that Matter” report was released Oct. 9 by the analyst firm Industry Directions and the trade group Manufacturing Enterprise Solutions Association International (MESA).
In recent years, most manufacturers in Rhode Island have recognized that they could become more competitive by making their employees aware of the specific connections between operational performance measures, such as safety compliance, manufacturing time cycle or on-time delivery, and the company’s financial performance measures, including earnings, labor costs and market share.
“It’s been a cultural shift,” said Leslie Taito, director of Rhode Island Manufacturing Extension Services, a nonprofit advocacy organization for small and medium-sized manufacturers.
“In traditional business, access to financial information and operational strategies was historically kept at an upper-management level,” Taito said. “Today, manufacturers understand they are ultimately more profitable when you take that knowledge set and incorporate it back into the business … at a much lower level.”
At Jay Packaging Group – a Warwick manufacturer of blister cards, folding cartons and other custom packaging – financial and operational performance metrics have been extensively measured and shared with hourly shop workers for more than a decade, said Richard Kelly, the company’s owner and president.
Charts that track such metrics as set-up time and product defects are prominently displayed in work centers throughout the manufacturing facility. Four times a year, Jay Packaging’s management team meets with the employees to share the company’s quarterly financial results and discuss operational metrics.
For two years, the company has held monthly quality performance meetings, in which employees are briefed on linked metrics regarding product defects and customer satisfaction.
As a result of those efforts, customer complaints have dropped by about 50 percent in the past year, Kelly said.
“The most important metrics are ones that are directly linked to our customers’ expectations of us,” he said. “What we share with our employees is an overview of how our customers perceive us, and then the specific data that reflects their particular work center.”
The “Metrics that Matter” report, based on an online survey of 135 manufacturers in a wide range of industries, found that many aren’t getting optimal results from their data gathering and sharing.
The quality of a metrics system is dependent on how fast the data is gathered, how well the metrics are linked and how well those results are shared with operators and supervisors who can take action, according to the report.
Too often, manufacturers bombard their employees with too much information, rather than focusing on just a few metrics that are within their control, the report said. Many manufacturers also employ manual systems for gathering and disseminating data that are too time-consuming, and essentially trade worker productivity for measuring results, the report added.
“Manufacturers measure many things, but don’t always have a clear view of how to talk about operational improvements in a way that the benefits to the enterprise are clear,” IBM’s Jonathon Siudut, chairman of the MESA Metrics Committee, said in a news release about the report.
The solution to those dilemmas is implementing an automated metric system, MESA advised. Manufacturers who use MES, plant dashboards and other automated data collection, calculation and display tools improved more significantly against 19 key metrics in the survey than those who did not, according to the report.
Manufacturers who achieve maximum business performance also are good at forging a strong link between financial and operations metrics, the report found. Most manufacturers understand the importance of well-linked metrics, it said, yet such systems aren’t common.
