Manufacturing Metrics That Really Matter eBook

PAGE
TABLE OF
CONTENTS
2013-2014
MANUFACTURING
METRICS
THAT REALLY MATTER
© 2014 MESA International and LNS Research
2013-2014
MANUFACTURING METRICS
THAT REALLY MATTER
TABLE OF CONTENTS
Section 1: Research Objectives & Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2: Improvements in Financial & Operational Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3: Key Relationships Between Operational & Financial Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4: Key Relationships Between Metrics and Software Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5: Role-Based Performance Dashboards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6: Anticipated Impacts of Emerging Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7: Best Practices for Metrics Program Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8: Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9: Summary & Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Sponsors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
lnsresearch.com
mesa.org
SECTION 1
Research
Objectives & Overview
Research Objectives & Overview
PAGE
4
The manufacturing industries are experiencing a bit of a renaissance
these days. As shifts continue to occur in the global economic landscape
MANUFACTURING METRICS
THAT REALLY MATTER
around labor and energy costs, supply and demand preferences, regulatory
considerations, and new applications of automation and information tech-
TABLE OF
what you do not measure,” and “what gets measured gets done.” Therefore,
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4 5 6
7 8 9
nologies, we are seeing a resurgence of manufacturing excellence across
FINDING ANSWERS & INSIGHTS
•
•
both established and emerging regions of the world.
Core to new levels of excellence is a keen focus on continuous improvement programs that go after business and manufacturing process
improvements – supported by the collaborative efforts of people and smart
•
How do we connect operational metrics to financial metrics?
•
How can technology help support and impact metrics
programs and performance?
•Which
effective metrics approaches continue to be key to manufacturing excellence.
was to understand the business impacts of metric programs and Key
Performance Indicators (KPIs) that are being utilized across a wide range
of manufacturing industries. With so many different metrics that are
possible, it is important for organizations to choose the right metrics
approaches that align to their business and manufacturing processes to
help drive improvements in their organizations.
How does my company’s performance improvements
compare to industry?
technologies. Also, these sayings are absolutely true, “you cannot improve
The focus of this MESA Metrics research, conducted by LNS Research,
Which metrics are being used to best understand manufacturing
performance and opportunity areas for improvement?
•
metrics are being utilized as part of role-based dashboards?
How frequently should these metrics be measured and utilized?
•What
are some of the best practices I can learn from market leaders?
Research Methodology
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MANUFACTURING METRICS
THAT REALLY MATTER
5
TABLE OF
CONTENTS
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4 5 6
7 8 9
This 2013-2014 MESA Metrics research survey was conducted in partnership between MESA International and LNS Research from October
KEY OBSERVATION:
2013 through February 2014. MESA International is a global not-for-profit
66% of survey respondents were knowledgeable about financial
industry association of manufacturers, producers, industry leaders, and
and/or operational metrics improvements in their organizations and
solution providers. LNS Research is a technology research firm focused on
able to provide specific metric performance data.
operational excellence in the industrial space.
A comprehensive online survey was created and conducted by LNS Research with the assistance of the MESA Metrics Working Group, along with
21%
an industry advisory team with members from Aditya Birla, Volvo, and Whirlpool, and also with inputs from the following leading companies that were
sponsors of the 2013-2014 MESA Metrics research project: Epicor, InfinityQS,
2013-2014 Metrics That Matter
Survey - Industries
COLOR BY INDUSTRY
45%
13%
Discrete Manufacturing
Batch Manufacturing
Plex Systems, Rockwell Automation and Schneider Electric (Invensys).
Process Manufacturing
21%
Data analysis and research report creation was done by LNS Research
Other
and reviewed by the MESA Metrics Working Group. Valuable insights came
from this team approach, given that this is the fifth generation of MESA
Metrics That Matter research that has been conducted every two years. The
16%
goal was to collectively understand and present new results in context to
where the industry has come from, based on previous survey results.
As part of the data analysis, a number of market leading performers in
COLOR BY COMPANY REVENUE
51%
33%
financial and operational metrics were identified, and the research team is
2013-2014 Metrics That Matter
Survey - Company Sizes
able to share some of their specific case study information. As the graphs
Small: $0 - $250MM
Medium: $250MM - $1BB
Large: $1BB+
indicate, 214 survey respondents from a mix of manufacturing industries,
company sizes, and geographies contributed to this year’s research. Typical
10%
titles of respondents were plant managers, operations managers, manufacturing IT leaders, engineering and quality leaders, and continuous improvement team leaders.
12%
53%
2013-2014 Metrics That Matter
Survey - Geographies
COLOR BY HQ LOCATION
North America
25%
Europe
Rest of the World
Asia / Pacific
Scope of Metrics Information Provided
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6
Survey respondents were asked about the scope of the annual improvement information they were providing. We can see that across all 28
MANUFACTURING METRICS
THAT REALLY MATTER
metrics (Overall), that the largest percentage (42%) were providing Corporate/Company-Wide information. The next most popular level of informa-
TABLE OF
Financial metrics were only provided 19% of the time.
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tion that was provided was at the Business Unit and Plant levels – at 27%
each. Production Line level information was typically provided – at 3%.
Scope of Overall Metrics
42%
Corporate Level
Business Unit Level
27%
Plant Level
27%
Looking at the subset of Financial and Operational metric categories,
there were some additional insights that can be uncovered from these
responses. For Financial metrics, almost half (49%) of respondents indicat-
0%
ed that they were providing Corporate level information, and Plant level
Operational metric inputs were dominated by Plant level (36%) and
Corporate level (35%) information, followed by Business Unit level information, at 23%.
3%
Line Level
10%
20%
The data indicates that most Operational metrics programs are reviewing
a combination of individual Plant level metrics rolling up to a Corporate
40%
50%
Scope of Financial Metrics
49%
Corporate Level
31%
Business Unit Level
KEY OBSERVATION:
30%
19%
Plant Level
Line Level
view. Also, most Financial metrics programs are reviewing Corporate and
1%
0%
10%
20%
30%
40%
50%
40%
50%
Business Unit level metrics. Note that some Machine and Line level metrics are required in order to aggregate into Plant level metrics, as well as to
Scope of Operational Metrics
support detailed operator actions.
36%
Corporate Level
35%
Business Unit Level
23%
Plant Level
6%
Line Level
0%
10%
20%
30%
SECTION 2
Improvements in Financial
& Operational Metrics
Improvements in Financial & Operational Metrics
PAGE
financial and operational metrics were included in this year’s survey. All re-
KEY OBSERVATION:
spondents were also asked about their specific performance levels for three
Manufacturers continue to make great strides as this new survey shows
that the overall average for those who provided metrics was consistently
ment Effectiveness (OEE), and % of successful New Product Introductions
10% or above for most metric categories.
(NPIs). It is important to note that these three metrics are multi-disciplinary
This level of annual performance improvement is unlikely to be occurring
in nature and not fully under the control of the manufacturing operation.
across the entirety of the manufacturing industries.
MANUFACTURING METRICS
THAT REALLY MATTER
8
Based on the most utilized metrics from previous surveys, 28 different
critical metrics – % of On Time Complete Shipments (OTCS), Overall Equip-
The additional 25 metrics were grouped into the eight categories indicat-
Most of the respondents that took this survey are also engaged in continu-
ed by the dials in this figure, and respondents were asked for year-on-year
ous improvement activities for manufacturing excellence. In fact, 85% cur-
% performance improvements for each of the metrics within each category.
rently have formal process improvement programs in place, such as Lean,
TABLE OF
Only those who knew their performance improvements for the specific
Six Sigma, ISO 9000/9001, etc. Therefore, many of the learnings that this
categories were included and evaluated further.
report explores can be considered best industry practices.
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The dials indicate the average annual performance improvement for that
category of metrics. The graph to the right also shows these same categories
of metrics and which were most relied upon to manage operations.
Types of Manufacturing Metrics Relied on for Managing Operations
There were very impressive levels of improvements being made by respondents, and these results may provide some inspiration for others on
69%
Financial
what is achievable. In the previous Metrics That Matter survey, the analysis
looked at companies that improved metrics by 10% or more versus all others.
Average Manufacturing Performance Improvements from 2012-2013
62%
Quality
53%
Efficiency
52%
Inventory
43%
Reponsiveness
Maintenance
28%
Compliance
27%
15%
Innovation
0%
10%
20%
30%
40%
50%
60%
70%
80%
Improvements in Financial Metrics
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MANUFACTURING METRICS
THAT REALLY MATTER
9
TABLE OF
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This section takes a closer look at what is behind these categories of average
annual performance improvements, starting with the Financial metrics.
EBITDA is typically used as top-level indication of the current operational
profitability of a business.
The graph shows the average improvements for each of 10 individual
. Revenue Per Employee – A measure of how much revenue is generated by
Financial/Business oriented metrics, and below is a brief description/defi-
a plant, business unit, or company, divided by the number of employees.
nition of each:
A financial measure of productivity.
. Total Cost Per Unit Excluding Materials – A measure of all potentially
. Cash To Cash Cycle Time – The duration between the purchase of a
controllable manufacturing costs that go into the production of a given
manufacturing plant or business unit’s inventory, and the collection of
manufactured unit, item, or volume.
payments/accounts receivable for the sale of products that utilize that
. Customer Fill Rate/On-Time Delivery/Perfect Order Percentage – This
inventory – typically measured in days.
metric is the percentage of times that customers receive the entirety of
. Return On Net Assets (RONA) – A measure of financial performance calcu-
their ordered manufactured goods, to the correct specifications, and
lated by dividing the net income from a manufacturing plant or business
delivered at the expected time. This metric is very often utilized by busi-
unit by the value of fixed assets and working capital deployed.
ness management as it is of top concern to customers and has a strong
. Average Unit Contribution Margin – This metric is calculated as a ratio of
correlation to overall financial performance. It is also known as On Time
the profit margin that is generated by a manufacturing plant or business
Complete Shipments (OTCS).
unit divided into a given unit or volume of production.
. Energy Cost Per Unit – A measure of the cost of energy (electricity, steam,
KEY OBSERVATIONS:
oil, gas, etc.) required to produce a specific unit or volume of production.
The survey showed that the average OTCS was 87.6%.
The top performers achieved OTCS of 95% or better and this represented
Types of Manufacturing Metrics Relied on for Managing Operations
21% of the respondents. Top performers’ solutions are explored later in
this eBook.
. Net Profit Margin – Measures the financial profitability for all investors/
shareholders/debt holders, either before or after taxes, for a manufacturing plant or business unit.
13.1%
Total cost per unit - excluding materials
Customer fill rate/On-time delivery/
Perfect Order
12.5%
Net profit margin
10.4%
Manufacturing cost as a % of revenue
10.2%
8.6%
. Manufacturing Cost as a Percentage of Revenue – A ratio of total manufac-
EBITDA
turing costs to the overall revenues produced by a manufacturing plant or
Revenue per employee
8.0%
Cash to cash cycle time
7.9%
business unit.
. EBITDA - Stands for Earnings Before Interest, Taxes, Depreciation, and
Return on net assets (RONA)
Amortization. This is a calculation of a business unit or company’s earn-
Average unit contribution margin
ings prior to having any interest payments, tax, depreciation, and amor-
Energy cost per unit
tization subtracted for any final accounting of income and expenses.
6.0%
5.0%
3.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Improvements in Operational Metrics – Inventory, Innovation, and Responsiveness
PAGE
MANUFACTURING METRICS
THAT REALLY MATTER
10
These graphs show the details behind average annual improvements for
Even though Engineering Change Order Cycle Time was the only metric
the Inventory, Innovation, and Responsiveness categories of Operational
surveyed for annual improvements in the Innovation category, the % of
metrics. Below is a brief description/definition of each:
successful NPIs is also a key measure of a manufacturing company’s ability
to innovate.
. WIP Inventory/Turns – A commonly used ratio calculation to measure the
efficient use of inventory materials. It is calculated by dividing the cost of
goods sold by the average inventory used to produce those goods. This
was the only metric used in the Inventory category.
KEY OBSERVATION:
Based on the survey results, the average % of successful NPIs was 71.5%.
2012 to 2013 Average Improvements - Inventory Metric
TABLE OF
Therefore, introducing new, ever more complex products to market is an
imperfect science. The top 7% performers achieved 90% or greater successful NPIs. Solutions used by these top performers will be explored later.
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15.0%
WIP INVENTORY
TURNS
1 2 3
4 5 6
7 8 9
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
. Manufacturing Cycle Time – Measures the speed or time taken for manufacturing to produce a given product from the time the order is released
to production to finished goods.
16.0%
.Time to Make Changeovers – Measures the speed or time taken to switch
a manufacturing line or plant from making one product over to making a
different product.
. Engineering Change Order Cycle Time – A measure of how rapidly design
changes or modifications to existing products can be implemented all the
2012 to 2013 Average Improvements - Responsiveness Metrics
way through documentation processes and volume production.
ENGINEERING
CHANGE ORDER
CYCLE TIME
REDUCING TIME TO
MAKE CHANGEOVERS
7.8%
0.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
10.7%
MANUFACTURING
CYCLE TIME
2012 to 2013 Average Improvements - Innovation Metric
14.0%
16.0%
2.0%
4.0%
6.0%
8.0%
9.3%
10.0%
12.0%
14.0%
16.0%
Improvements in Operational Metrics – Efficiency and Quality
PAGE
11
These graphs show the details behind average annual improvements
for the Efficiency and Quality categories of Operational metrics. Below is
MANUFACTURING METRICS
THAT REALLY MATTER
a brief description/definition of each:
The survey showed that the average OEE was 70.7.
. Production Output/Throughput – Measures how much product is
being produced on a machine, line, unit, or plant over a specified
period of time.
. Production/Schedule Attainment – A measure of what percentage of time
a target level of production is attained within a specified schedule of time.
. Capacity Utilization – Indicates how much of the total manufacturing
TABLE OF
output capacity is being utilized at a given point in time.
SECTION
2012 to 2013 Average Improvements - Efficiency Metrics
CONTENTS
1 2 3
4 5 6
7 8 9
KEY OBSERVATIONS:
The top performers achieved an OEE of 80 or better, representing 11% of
the of the respondents. Solutions used by these top performers will be
explored later.
. Customer Rejects/Return Material Authorizations/Returns – A measure of
how many times customers reject products or request returns of products based on receipt of a bad or out-of-specification product.
. Supplier Quality Incoming – A measure of the percentage of good quality
materials coming into the manufacturing process from a given supplier.
. First Pass Yield – Indicates a percentage of products that are manufactured
correctly and to specifications the first time through the manufacturing
INCREASED PRODUCTION /
THROUGHPUT
PRODUCTION /
SCHEDULE ATTAINMENT
INCREASED
CAPACITY
UTILIZATION
15.0% 15.5%
17.6%
process, without scrap or rework.
2012 to 2013 Average Improvements - Quality Metrics
17.3%
CUSTOMER REJECTS /
RMA / RETURNS
16.1%
16.0%
16.5%
17.0%
17.5%
SUPPLIER QUALITY
INCOMING
18.0%
In addition to these three efficiency oriented metrics, OEE is another
FIRST PASS YIELD
related and popular metric that contains multiple dimensions.
. OEE – A multiplier of Availability x Performance x Quality, and can be used
to indicate the overall effectiveness of a piece of production equipment
or an entire production line.
15.0%
0.0%
2.0%
4.0%
6.0%
13.3%
12.9%
8.0%
10.0%
12.0%
14.0%
16.0%
Improvements in Operational Metrics – Maintenance and Compliance
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MANUFACTURING METRICS
THAT REALLY MATTER
12
These graphs show the details behind average annual improvements
. Reportable Environmental Incidents – A measure of the number of
for the Maintenance and Compliance categories of Operational metrics.
health and safety incidents that were recorded as occurring over a
Below is a brief description/definition of each:
specified period of time.
. Downtime in Proportion to Operating Time – This ratio of downtime to
. Non-Compliance Events – A measure of the number of times a plant or
operating time is a direct indicator of asset availability for production.
facility operated outside the guidelines of normal regulatory compliance rules over a specified period. These non-compliances need to be
. Planned Versus Emergency Maintenance Work Orders – This ratio
metric is an indicator of how often scheduled maintenance takes
. Reportable Health and Safety Incidents – A measure of the number of
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7 8 9
resolutions.
place, versus more disruptive/un-planned maintenance.
CONTENTS
SECTION
fully documented as to the specific non-compliance time, reasons, and
health and safety incidents that were either actual incidents or near
2012 to 2013 Average Improvements - Maintenance Metrics
DOWNTIME IN PROPORTION
TO OPERATING TIME
PLANNED VS. EMERGENCY
MAINTENANCE WORK ORDERS
0.0%
2.0%
4.0%
6.0%
8.0%
15.8%
misses that were recorded as occurring over a specified period of time.
2012 to 2013 Average Improvements - Compliance Metrics
14.0%
10.0%
12.0%
14.0%
REPORTABLE
ENVIRONMENTAL INCIDENTS
16.0%
NON-COMPLIANCE
EVENTS
18.0%
REPORTABLE
HEALTH & SAFETY
INCIDENTS
15.5%
16.0%
16.5%
17.0%
19.9%
18.5%
17.1%
17.5%
18.0%
18.5%
19.0%
19.5%
20.0%
Impact of Changing Manufacturing Business Conditions
PAGE
13
In order to further understand shifts in the manufacturing business
landscape, a multiple choice question was asked that was consistent with
Changing Manufacturing Business Conditions - 2012 to 2013
MANUFACTURING METRICS
THAT REALLY MATTER
previous Metrics That Matter surveys, “Please indicate if your business has
undergone any of the following shifts over the past 18 months.” The graph
shows the results by indicating the % of respondents that experienced
specific business shifts.
As global and regional manufacturing goes through continual changes,
the job of manufacturing businesses is more challenging than ever. There-
Increased the
Number of products,
SKUS, or variants
71%
Increased
volatility of
customer demand
66%
fore, there were some specific metric improvement correlations based on
these changing business conditions.
TABLE OF
64%
Introduced more
complex products
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KEY OBSERVATIONS:
The number of product variants/SKUs has increased to 71% of respondents over the last survey, which was 62%. This indicates a greater level
of challenges in getting new products to market along with the need for
increased flexibility within manufacturing operations.
Those who improved the % of successful NPIs appear to also be doing a
better job at OTCS, at an average annual improvement of 19.1% versus an
overall annual OTCS improvement average of 12.5%. This makes sense,
given that effective management of new product processes would carry
forward into ongoing customer deliveries.
Those who introduced more complex products appeared to have a more
difficult time managing Inventory turns, with an average annual improvement of only 4.1% versus an overall annual improvement average of 7.8%.
This also made sense, since carrying larger inventory buffers can make up
for unplanned or unexpected activities that can be associated with complex
products.
Customers
demanding increased
traceability
documentation
54%
Shortened the time
for new product
introduction
45%
Increased the
amount of work sent
out as sub-contracting or out-sourcing
42%
Taken on new
business as a subcontractor to others
41%
Created or moved
a manufacturing
facility
39%
Undertaken a
merger, or acquired
another company
or facilities
35%
0%
10%
20%
30%
40%
50%
60%
70%
80%
SECTION 3
Key Relationships
Between Operational and
Financial Metrics
Key Relationships Between Operational and Financial Metrics
PAGE
15
There should be no surprise that one of the key relationships that was
uncovered in this year’s survey was positive correlations between average
Conversely, those who did not improve any of these same Efficiency metrics by 10% or more (17-19% of respondents) only had average annual Fi-
MANUFACTURING METRICS
THAT REALLY MATTER
annual Operational metric improvements or Operational metric perfor-
(10% of Respondents for each) had average Financial improvements of 14%.
mance, and improvements in average annual Financial metrics. This has
KEY OBSERVATIONS:
had 24% annual improvements in Net Profit Margin % versus an average
TABLE OF
Average annual Financial improvements were 8.6%; however, top Opera-
of 10.4% overall.
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been true in every MESA Metrics Survey since 2006. It stands to reason
nancial improvements of 6%.
that the converse is also true. Those who had lower Operational metrics or
Those who increased Production Throughput/Output by 10% or more also
improvement percentages also had lower Financial metric improvements.
had 15% annual improvements in Cash to Cash Cycle Time versus an average of 7.9% overall.
Additionally, those who increased Capacity Utilization by 10% or more
tional metric performers did significantly better:
OEE
SUCCESSFUL NPIs
Those with OEE of 80 or better (11% of Respondents) had average Financial
Those with Successful NPIs of 90% or better (7% of respondents) had av-
improvements of 14%.
erage annual Financial improvements of 16%.
They also had 32% annual improvements in Customer Fill Rate/On Time
Delivery/Perfect Order versus an average of 12.5% overall.
Additionally, they had 17% annual improvements in RONA versus an average of 6% overall.
Lastly, they also had 14% annual improvements in Average Unit Contribution Margin versus an average of 5% overall.
WIP/INVENTORY
Those with annual Inventory WIP Improvements of 10% or better (7% of
respondents) had average annual Financial improvements of 12%.
EFFICIENCY
Those who had top annual improvements in Efficiency metrics such as Increased Production Throughput/Output by 10% or more, or Increased Capacity
Utilization by 10% or more, or Improved Schedule Attainment by 10% or more
They also had 20% annual improvements in Revenue per Employee/Productivity versus an average of 8% overall.
More Relationships Between Operational and Financial Metrics
PAGE
MANUFACTURING METRICS
THAT REALLY MATTER
16
TABLE OF
RESPONSIVENESS
Those who had top improvements in Responsiveness and improved Manufacturing Cycle Time by 10% or more (7% of respondents), had average
Financial improvements of 14%.
Those who had top improvements in improved Manufacturing Cycle Time
by 10% or more also had 22% annual improvements in Manufacturing Costs
as a % of Revenue versus an average of 10.2% overall.
QUALITY
CONTENTS
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4 5 6
7 8 9
Those who had top annual improvements in Quality metrics such as Improved First Pass Yield by 5% or more, or Increased Supplier Quality Incoming by 5% or more, or Reduced Customer Rejects by 5% or more (10-11% of
respondents for each) had average Financial improvements of 14%.
Conversely, those who did not improve any of these same Quality metrics
by 5% or more (21-22% of respondents) only had average annual Financial
improvements of 6%.
Those who had top improvements in Supplier Quality Incoming of 5% or
more also improved Total Cost Per Unit – Excluding Materials by 24% versus
an average of 13.1% overall.
SECTION 4
Key Relationships Between
Metrics and Software Use
Key Relationships Between Metrics and Software Use
PAGE
18
One of the key relationships that was uncovered in this year’s survey
Manufacturing Software Applications Currently Implemented and Plans
was the correlations between average annual metric improvements and/or
MANUFACTURING METRICS
THAT REALLY MATTER
market leading metric performance and the use of software technologies
in support of these improvements.
17%
ERP Software
9%
The graph shows the categories of manufacturing software that are
74%
either currently implemented, planned within one year, or not planned by
survey respondents.
Reflecting on changes in adoption of these technologies since the last
survey, there are some interesting trends that were uncovered.
30%
Planning, Scheduling & Dispatching
software
17%
53%
31%
Quality
Management
software
TABLE OF
CONTENTS
22%
47%
SECTION
1 2 3
4 5 6
7 8 9
KEY OBSERVATIONS:
The most deployed applications by all respondents were Enterprise Resource Planning (ERP); Planning, Scheduling & Dispatching; Quality Man-
30%
Document
Management
software
23%
47%
agement; Document Management; Data Historians; Manufacturing Execution Systems (MES); and Asset Management Software.
In comparison to previous Metrics That Matter survey respondents, com-
41%
Data
Historian(s)
17%
42%
panies had more manufacturing software applications implemented. Key
examples include ERP, which grew from 67% to 74% adopted, Data Historians, which grew from 39% to 42%, and MES, which grew from 35% to 40%.
There were many more, as well as much stronger (up to 2x) correlations
39%
Manufacturing
Execution System(s)
20%
40%
between the use of software technologies and improvements in Financial
and Operational metrics in this year’s survey.
48%
Asset
Management
software
14%
38%
0%
10%
Not Planned
20%
30%
40%
Planned within 1 year
50%
60%
70%
80%
Currently implemented
To put software use in perspective, it is important to note that 85% of
PAGE
19
survey respondents also have process improvement programs in place
The next key correlation to discuss is average annual improvements in
Net Profit Margin.
such as ISO 9000/9001, Lean Manufacturing, Six Sigma, Operational Ex-
MANUFACTURING METRICS
THAT REALLY MATTER
cellence, etc. So software in and of itself is not magically creating these
differences; however, software is being used to support, accelerate, and
sustain process and metrics improvements.
One of the key correlations uncovered was exceptional annual performance improvements in making product cost reductions by companies
use ERP software was only 2% versus 10.4% for all respondents.
Average annual improvement in Net Profit Margin was 19.4% for users of a
gence (OI/EMI) or MES and software applications versus all respondents.
Comprehensive Suite of Manufacturing Operations Management (MOM)
software versus 10.4% for all respondents.
ERP systems are clearly a fundamental tool of most manufacturers today.
TABLE OF
1 2 3
4 5 6
7 8 9
The average annual Net Profit Margin improvement for those who DID NOT
that use either Operational Intelligence/Enterprise Manufacturing Intelli-
CONTENTS
SECTION
KEY OBSERVATIONS:
ERP systems are the most adopted software application for many good
KEY OBSERVATIONS:
Average annual improvement in Total Cost Per Unit Excluding Materials was
24.1% for users of OI/EMI software, versus 13.1% for all respondents.
reasons. They enable consistent business and financial practices and typically contain the master data for customers and products alike. They also
perform the overall manufacturing resource planning of what will be produced, when, and where.
Average annual improvement in Total Cost Per Unit Excluding Materials
was 22.5% for users of MES software versus 13.1% for all respondents.
These relationships stand to reason. OI/EMI software specifically helps users to aggregate and contextualize data coming from multiple information
sources or applications and uncover correlations between operational and
financial performance. MES software enforces operational procedures
and provides traceability of, among other things, all steps and procedures,
labor, quality, and other in-process performance of sub-assemblies and
completed products. These two software applications make for a powerful combination of tools for manufacturers who are looking to carefully
monitor and improve product costs by allowing users to look across all of
the steps and procedures in the manufacturing value chain that are under
manufacturing’s control. Typically, material and component selection is in
the control of engineering departments. That is why this metric excludes
material costs.
When survey respondents referred to a Comprehensive Suite of MOM
software, they were indicating a combination of real-time, in-process
management software tools that included combinations of MES, OI/EMI,
Quality Management, Document Management, Workflow, Asset Management, etc. Sometimes these capabilities are all available in a single, pre-integrated software package, and other times it takes a suite of real-time
applications to cover all required functionality. It certainly stands to reason that companies that have a comprehensive set of real-time process
management applications in place would have their processes and quality
in control for greater profitability.
More Relationships Between Financial Metrics and Software Use
PAGE
20
The next key set of financial correlations was related to average annual
improvements to OTCS.
The percentage of use of these applications by this group is in line with data
from all respondents; however, the role that these applications can play in
MANUFACTURING METRICS
THAT REALLY MATTER
OTCS related initiatives will be explored further.
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7 8 9
It has been established that ERP is fundamental to managing and planning
KEY OBSERVATIONS:
production on behalf of customers. The use of Quality Management software
Average OTCS performance was 87.6%—with the top 21% of respondents
to ensure consistent in-process quality as well as the handling of non-confor-
having OTCS of 95% or better.
mances can also be key to ensuring customer deliveries are being met.
Average annual improvement in OTCS was 22.0% for users of MES software versus 12.5% for all respondents.
Planning, Scheduling & Dispatching software is often utilized at both the enterprise level and at the plant level of organizations to deal with the dynamics
of supply and demand and ensure that the best possible plans are being put
Average annual improvement in OTCS was 19.1% for users of Product Life-
into action to meet customer deliveries. MES ensures production procedures
cycle Management (PLM) software versus 12.5% for all respondents.
happen according to those plans and Asset Management systems can help
Average annual improvement in OTCS was 20.4% for users of Quality Man-
ensure that equipment and other production assets are properly maintained
agement software versus 12.5% for all respondents. Conversely, the average
and available.
annual OTCS improvement for those who DID NOT use Quality Management
PLM systems have traditionally been used by engineering organizations to as-
software was only 7% versus 12.5% for all respondents.
sist with managing new product designs into production. However, more and
Those who use Quality Management software had an average OTCS of
91.0%, and those who DID NOT use Quality Management software only
averaged 85.2%.
more, these systems are integrating with real-time plant workflows and bi-directional information from MES and Quality Management applications in order
to speed time-to-market for engineering changes, while receiving direct feedback on production issues and quality in order to improve future designs.
Quality Management Software Use and Average % OTCS
Applications Used by Companies with OTCS of 95% or Better
USING Quality
Management software
NOT USING Quality
Management software
91.0%
75.0%
80.0%
85.0%
90.0%
95.0%
Quality Management
45.0%
Planning, Scheduling & Dispatching
45.0%
100%
The top manufacturing applications used by companies that had OTCS of
95% or better are shown in the graph. When looking at the top performers that had OTCS of 95% or better, ERP; Quality Management; Planning,
Scheduling & Dispatching; MES; PLM; and Asset Management are the top
applications used by this group.
68.0%
ERP
85.2%
41.0%
Document Management
Asset Management
32.0%
MES
32.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Key Relationships Between Operational Metrics and Software Use
PAGE
21
The following are key relationships identified between Innovation and
MANUFACTURING METRICS
THAT REALLY MATTER
Efficiency related Operational metrics.
The top manufacturing applications used by companies that had NPI success rates of 95% or better are shown in the graph below. ERP; Planning,
Scheduling & Dispatching; and Document Management use was significantly higher than that of all survey respondents.
KEY OBSERVATIONS:
Average % of Successful NPIs was 71.5%, while the top 7% of respondents
Going beyond ERP, it makes sense that effective use of the below set
had 90% or better.
manufacturing applications could also be contributing to the success-
Those who use ERP software had an average of 75.4% Successful NPIs, and
those who DID NOT use ERP software only averaged 59.9%.
ful lifecycle of new product introductions, as these collectively support
both the business planning and the manufacturing reality dimensions.
TABLE OF
CONTENTS
Those who use Quality Management software had an average OTCS of
SECTION
91.0%, and those who DID NOT use Quality Management software only
1 2 3
4 5 6
7 8 9
averaged 85.2%.
Applications Used by Companies with OTCS of 95% or Better
93%
ERP
Planning, Scheduling
& Dispatching
ERP Software Use and the Average % of Successful NPIs
60%
Document Management
75.4%
USING ERP software
67%
53%
Quality Management
59.9%
NOT USING ERP software
0%
10%
20%
30%
40%
50%
60%
70%
80%
Process Management /
Workflow / EWI
47%
MES
47%
Comprehensive
MOM suite
47%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
PAGE
MANUFACTURING METRICS
THAT REALLY MATTER
22
KEY OBSERVATIONS:
Average OEE was 70.7, while the top 11% of respondents had OEE of 80 or
The top manufacturing applications used by companies that had OEE of
better.
80 or better are shown in the graph below. The percentage of use of
Those who use Quality Management software had an average OEE of 73.5, and
those who DID NOT use Quality Management software only averaged 67.7.
these applications by this group is in line with what the data showed for
all respondents.
Since driving higher OEE requires a combination of ensuring production
uptime and availability, along with ensuring consistent high quality, it
Quality Management Software Use and Average OEE
was no surprise to see that high OEE performers are using ERP and Planning, Scheduling & Dispatching on the planning and management side,
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7 8 9
USING Quality
Management software
73.5
NOT USING Quality
Management software
along with Quality Management, MES, and MOM to support both the
quality and production dimensions.
67.7
60
62
64
66
68
70
72
74
76
Applications Used by Companies with OTCS of 80 or Better
ERP
67%
Planning, Scheduling
& Dispatching
67%
58%
Quality Management
54%
Document Management
50%
Asset Management
46%
MES
Comprehensive
MOM suite
42%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
More Relationships Between Operational Metrics and Software Use
PAGE
23
The following are key relationships between Compliance related Op-
MANUFACTURING METRICS
THAT REALLY MATTER
erational metrics.
These key observations make a strong case for the powerful combination of Document Management and Quality Management applications in
support of compliance initiatives.
All of these initiatives require diligent monitoring and documentation
KEY OBSERVATIONS:
of procedures as well as enforcement to specified actions surrounding
Average annual improvement in Reportable Health & Safety Incidences was
any type of incident – whether the incident is related to Health & Safety,
23.8% for users of Quality Management software versus 17.1% overall.
Environmental, or Industry Regulations. Document Management software
Conversely, the average annual improvement in Reportable Health & Safety
solutions capture and track the lifecycle of documents such that only the
Incidences for those who DID NOT use either Document Management or
most up-to-date and valid document is in use and only authorized per-
TABLE OF
Quality Management software was only 6%.
sonnel can access or modify documents. They also support team collab-
SECTION
Average annual improvement in Reportable Environmental Incidences was
CONTENTS
1 2 3
4 5 6
7 8 9
27.6% for users of Quality Management software versus 19.9% overall.
Average annual improvement in Reportable Environmental Incidences was
oration around documentation. Given that documented proof is required
in support of compliance activities, Document Management is a natural
supporting fit.
It is also clear that today’s Quality Management software solutions
23.9% for users of Document Management software versus 19.9% overall.
are being used not only to focus on ensuring that quality procedures are
Conversely, the average annual improvement in Reportable Environmental
being followed, but also compliance related procedures as well. All related
Incidences for those who DID NOT not use either Document Management
actions are enforced and recorded in these systems. And most of them
or Quality Management software was only 7%.
include a Document Management capability and/or can work directly with
Average annual improvement in the Number of Non-Compliance Events was
a separate Document Management system.
24.6% for users of Document Management software versus 18.5% overall.
Conversely, the average annual improvement in the Number of Non-Compliance Events for those who DID NOT use either Document Management or
Quality Management software was only 7%.
SECTION 5
Role-Based
Performance Dashboards
Role-Based Performance Dashboards
PAGE
MANUFACTURING METRICS
THAT REALLY MATTER
25
As part of corporate-wide and manufacturing metrics programs, com-
One goal of this year’s survey was to understand how the use of dash-
panies have been on a path over the last decade to bring greater visibility
boards continues to evolve in relation to the previous survey. And more
of key performance indicators to their employees so they can take decisive
specifically, to understand how people were tailoring dashboards to suit
improvement actions. As part of these initiatives, there have been many
specific roles, as well as to look at the timeliness of role-based information.
lessons learned, including how to do this “right,” with “right” meaning:
Related to this is the associated automated versus manual data capture, and
the dashboard technologies and functionality being deployed in support
. Ensuring that the only the right/appropriate/correct information
of metrics programs.
is presented
. Delivering this right information only to those individuals who
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7 8 9
need it, such that people are not distracted or overloaded with
informational noise
. Delivering this right information in the right/timely fashion, so
people have what they need to take action while there is still time
to impact a situation
KEY OBSERVATION:
Operational dashboard use did not change from an overall usage perspective (38%) from respondents of the previous Metrics That Matter survey.
However, there were a number of shifts in how they are being used and
these will be explored further in this section.
. Ensuring that the right information is delivered in context with the
right/correct rationale, so that people are clear about why they are
receiving the information and what they need to do about it
Operational Dashboards in Use
. Ensuring that the right actions are being taken and the right processes
and procedures are being followed for a given situation
A number of these “right” things are addressed by today’s performance
dashboard software applications. Some of these applications are intended
to be more enterprise/business focused, such as Business Intelligence (BI)
dashboards. Others are more directly focused on manufacturing operations, such as OI/EMI. In addition, there is some blending/integration of
38%
62%
business and manufacturing operations information on dashboards seen
in the marketplace.
No
Yes
Operations Use of Performance Dashboards
PAGE
26
As part of the survey, respondents were asked about the timeliness of
Timelines of Performance Dashboard Information Operators & Supervisors
MANUFACTURING METRICS
THAT REALLY MATTER
information being delivered on performance dashboards that are currently
TABLE OF
in use in support of the needs of a wide number of manufacturing organi-
7%
12%
zation roles. Responses are organized into three groupings – Operators &
Supervisors, Technical Staff, and Management.
The graph shows the existing timeliness/frequency of performance dash-
8%
Supervisors
29%
10%
board information for different levels of Operators, as well as Supervisors.
21%
14%
18%
CONTENTS
KEY OBSERVATIONS:
SECTION
Operators and Supervisors are seeing more performance information in
1 2 3
4 5 6
7 8 9
real-time than respondents of the previous Metrics That Matter survey.
13%
9%
Plant level
operators
23%
7%
15%
15%
In the previous survey, the percentage was approximately 17%, and this
is now up to 26% of Machine Level Operators seeing their performance
21%
information in real-time, and 19% of Line/Area Level operators are as well.
Seeing performance information within a shift has increased from the previous survey average of approximately 13% for Line/Area and Plant Level
11%
9%
Line / Area
level operators
19%
5%
Operators to 15% in this new survey.
15%
19%
Plant Level Operators and Supervisors appear to be the sweet spot for using high frequency performance dashboard information in manufacturing
25%
operations.
The overall trend is toward faster visibility of performance metrics for
manufacturing operations.
11%
6%
Machine level
operators
18%
4%
9%
26%
0%
5%
10%
15%
20%
25%
Rarely / Never
Monthly
Weekly
Daily
End of Shift
Within a Shift
Real-Time (Seconds, Minutes)
30%
Technical Staff Use of Performance Dashboards
PAGE
27
The graph on this page shows the existing timeliness/frequency of per-
Timelines of Performance Dashboard Information - Technical Staff
MANUFACTURING METRICS
THAT REALLY MATTER
formance dashboard information for different manufacturing technical
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7 8 9
10%
roles, including Maintenance, Engineering, Process Improvement, IT/Business Analysts, and Quality personnel.
The graph shows that daily information is most typical for use by techni-
17%
15%
Quality
personnel
30%
6%
11%
10%
cal staff. Maintenance and IT/Business Analysts are not using performance
dashboard information as much as other roles that are more reliant, such as
23%
Quality, Process Improvement, and Engineering.
It was not surprising to see that in general, Technical Staff are less
engaged in using performance dashboards than Plant Level Operators or
26%
IT / Business
analysts
15%
21%
2%
5%
Supervisors according to the survey, showing that more of the Technical
8%
Staff rarely/never use them. Operations have more opportunities to make
13%
day-to-day impacts on performance.
Process /
Improvement
staff
18%
17%
28%
3%
12%
8%
15%
17%
10%
Plant / Control
engineers
28%
6%
12%
12%
22%
15%
10%
Maintenance
personnel
29%
8%
14%
13%
0%
5%
10%
15%
20%
25%
Rarely / Never
Monthly
Weekly
Daily
End of Shift
Within a Shift
Real-Time (Seconds, Minutes)
30%
Management Use of Performance Dashboards
PAGE
28
Timelines of Performance Dashboard Information - Management
The graph on this page shows the existing timeliness/frequency of per-
MANUFACTURING METRICS
THAT REALLY MATTER
formance dashboard information for different management roles, including
9%
C-Level Executives, Business Unit Managers, Plant Managers and Operations Managers.
50%
C-level
executives
16%
13%
1%
5%
5%
KEY OBSERVATIONS:
7%
31%
Management roles are not seeing as much performance information in reTABLE OF
CONTENTS
al-time as other roles (5% to 12% of managers are depending on role/level).
SECTION
However, a good portion of management roles are seeing performance in-
1 2 3
4 5 6
7 8 9
formation within a day or sooner (27% to 65% are depending on role/level).
Business unit
managers
23%
27%
1%
4%
7%
Operations Managers are in the highest category of seeing/utilizing per6%
formance information within one day or sooner at 65%, and this is almost
15%
16%
double when compared to the last Metrics That Matter survey.
This indicates a stronger engagement and involvement of Operations Man-
Plant
managers
40%
3%
7%
12%
agers in the overall manufacturing performance management process.
4%
11%
19%
Operations
managers
37%
6%
10%
12%
0%
10%
20%
30%
40%
50%
Rarely / Never
Monthly
Weekly
Daily
End of Shift
Within a Shift
Real-Time (Seconds, Minutes)
60%
The State of Data Collection for Metrics
PAGE
29
Another section of the survey asked where companies were on their
Financial & Operational Metrics - Data Collection Methodologies
MANUFACTURING METRICS
THAT REALLY MATTER
journey towards more automated data collection techniques in support of
their manufacturing performance metric programs.
The graphs show the spectrum of manual to automated data collection
Keyed into spreadsheets
in three different views. The first is overall/across both the Financial and
Fully automated
Operational metrics. The second view is just for the Financial metrics and
the third is just Operational metrics. The goal was to see if there were
11%
10%
0%
10%
20%
30%
40%
50%
60%
Financial Metrics - Data Collection Methodologies
TABLE OF
1 2 3
4 5 6
7 8 9
25%
Manually recorded
differences in the levels of information automation for these groupings.
CONTENTS
SECTION
55%
Partially automated
KEY OBSERVATIONS:
The graphs show there is more automated data collection occurring for
52%
Partially automated
34%
Keyed into spreadsheets
Operational metrics than Financial metrics, whereby a total of 67% have
Fully automated
Operational metrics that are partially or fully automated versus a total of
Manually recorded
60% for Financial.
8%
6%
0%
10%
20%
30%
40%
50%
60%
There were no significant movements seen in going to fully automated data
collection methodologies, when compared to respondents from the previous Metrics That Matter survey. Progress in this area appears to be a longer
journey in spite of the fact that the amount of available manufacturing information is rapidly increasing as more intelligent devices and systems are
being deployed.
Operational Metrics - Data Collection Methodologies
55%
Partially automated
23%
Keyed into spreadsheets
12%
Fully automated
10%
Manually recorded
0%
10%
20%
30%
40%
50%
60%
Software Functionality of Performance Dashboards
PAGE
30
The next area that was explored in relation to role-based performance
Operational Dashboards - Deployed Functionality
MANUFACTURING METRICS
THAT REALLY MATTER
dashboards was the specific functionality that has been deployed to date.
TABLE OF
CONTENTS
SECTION
1 2 3
4 5 6
7 8 9
Some of the functionalities go to the heart of delivering on the needs
that were discussed earlier as being “right.”
69%
Covers a
single plant
The graph indicates that most Operational Dashboards cover a single
plant – at 69%. However, 43% of respondents also indicated that their
dashboards are covering multiple plants. Multiple selections were allowed
Purely electronic,
rather than
print outs
57%
in the survey.
At 57%, most have purely electronic/visual displays. It is relatively
common to be able to drill down on dashboard displays to get to root
43%
Covers
multiple plants
causes and more detailed information at 40%, while 35% have the capability to proactively alert users based on conditions/rules.
A recorded 40% have Operations performance information rolling up
Allows drill down
to find
root causes
40%
Operations data rolls
up to an enterprise
scorecard
40%
to Enterprise dashboards/scorecards. This is consistent with the trend described earlier towards more high frequency engagement by Operations
Management in plant performance activities.
Can create an
escalation or alert
based on rules
KEY OBSERVATIONS:
In comparison to respondents of the previous Metrics That Matter study,
only 31% had dashboards that could escalate/alert based on rules, versus
35% in this new study.
Previously, only 30% rolled up to an enterprise scorecard; now it is 40%
on average. This indicates further sophistication in the use of dashboards,
along with higher transparency of manufacturing information going up the
enterprise.
35%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Technologies for Performance Dashboards
PAGE
31
The last area of exploration in relation to role-based performance
Operational Dashboards - Software Packaging
MANUFACTURING METRICS
THAT REALLY MATTER
dashboards was to understand the different software technologies and
packages that are being utilized.
TABLE OF
KEY OBSERVATIONS:
CONTENTS
The graph clearly shows that there is a broad range of manufacturing
Part of a plant
Historian software
package
32%
and business applications being utilized to support metrics programs with
visual performance dashboards.
SECTION
There is no clear single approach/package being used, and many compa-
1 2 3
4 5 6
7 8 9
nies are using multiple different software applications to meet their overall needs.
The percentage of companies using the performance dashboard functionality provided with MOM/MES and Quality Management software packages appears to be higher than the portion of companies using the ERP based
performance dashboards.
This can be concluded from comparing the percentages of manufacturing
software deployed by survey respondents (in Section 4), versus the associated use of the operational dashboards of those same software packages.
For example, ERP is the most used manufacturing software application at
74%, but ERP operational dashboard use is only 31%.
31%
Part of an ERP
software package
Part of a BI
software package
30%
Part of a MOM /
MES software
package
30%
Part of a Quality
Management
software package
28%
17%
Part of an EMI / OI
software package
0%
5%
10%
15%
20%
25%
30%
35%
SECTION 6
Anticipated Impacts
of Emerging Technologies
Anticipated Impacts of Emerging Technologies
PAGE
MANUFACTURING METRICS
THAT REALLY MATTER
33
TABLE OF
There are a number of rapidly emerging technologies that are already
is well understood at 39%, along with unburdening the IT organization
having a significant impact on manufacturing performance management
at 37%. Users are anticipating greater speeds of implementation (29%),
approaches. These include cloud, mobile, and big data technologies, and an
as well as making it easier to aggregate performance information across
important research goal was to understand where and how these emerging
multiple plants/facilities in the future (24%).
technologies will be utilized in manufacturing company’s futures.
CLOUD-BASED SOFTWARE
Impact of Cloud-Based Software for
Manufacturing Performance Management
IT communities have rapidly embraced cloud-based software applications due to lower total lifecycle costs. Initial capital expenditures on
CONTENTS
hardware, licensing fees, and updates can comparatively make traditional
SECTION
software delivery mechanisms more costly and time consuming. Cloud-
1 2 3
4 5 6
7 8 9
based “software as a service” delivery outsources the hardware and
Lower the total cost of ownership for implementing
manufacturing performance software
39%
Don’t know
37%
Unburden IT organizations from having to
maintain servers and software updates
37%
software support for the user, is faster and easier to deploy, updates automatically, and allows for nearly unlimited storage space.
Though many business leaders still have reservations about the cloud
for manufacturing applications, the space is advancing rapidly to address
major concerns around connectivity and security, as well as other issues,
Speed the time it takes to implement
manufacturing performance software
29%
while making the benefits of cloud adoption too attractive to ignore. In
a separate LNS Research vendor survey, 50% of manufacturing software
providers were found to be already offering some cloud-based offerings,
and over 90% of were investing in cloud capabilities for future products.
Performance information applications such as Data Historians and OI/
EMI are good examples of cloud-based software in use today with little reservation, since they do not directly control production. There are also cloud-
Enable performance information
on mobile devices
24%
Make it easier to compare
performance information across
multiple plants / facilities
24%
Make it easier to integrate
performance information across
my different systems
based ERP and MES offerings that are available and proven in manufacturing.
The graph shows the expectations of survey respondents for the impact
Other
19%
3%
of cloud-based software in their operations.
While 37% are still unsure, the lower total cost of ownership message
0%
5%
10%
15%
20%
25%
30%
35%
40%
Anticipated Impacts of Mobile Technologies
PAGE
34
The use of Mobile devices and applications has removed the restrictions of needing to be on-site to access performance and other production
Impact of Mobile Technologies on
Manufacturing Performance Management
MANUFACTURING METRICS
THAT REALLY MATTER
information. Mobile devices have the potential to enable workers from
across every level of the enterprise to access the performance and decision
TABLE OF
functions using a mobile device.
CONTENTS
SECTION
1 2 3
4 5 6
7 8 9
support information applicable to their respective roles.
Virtually all of the manufacturing software providers have some mobile application(s) available, and with more on the way.
The graph shows the roles that are expected to benefit from mobile
technologies, along with the extent of use expected – ranging from performance information to being able to perform the majority of their job
Plant Supervisors (54%) are the top users anticipated to have the ability to
have everything they need to do their jobs in the palm of their hands. Plant
Managers (53%) are anticipated to have the ability to manage performance
in real-time from mobile devices.
Given that most Maintenance professionals have a need to be highly
mobile, it was no surprise to see them at 47%, with all the information they
need to do their jobs remotely.
Facilitating access to mobile information also holds the promise for an
entirely paperless manufacturing environment for 35% of respondents.
Only 25% were unsure of how mobile technologies would impact manufacturing performance management, which implies that mobile applications
in manufacturing are better understood than cloud-based software, which
was at 37% “Don’t Know.”
54%
Plant supervisors having all the information they need to do
their jobs on mobile devices
53%
Plant managers have real-time performance
information on mobile devices
Maintenance personnel having all the information they
need to do their jobs on mobile devices
47%
44%
Executives have real-time performance
information on mobile devices
Quality personnel having all the information they
need to do their jobs on mobile devices
41%
Technical personnel having all the information
they need to do their jobs on mobile devices
41%
37%
Plant operators having all the information they
need to do their jobs on mobile devices
35%
Creating a completely paperless
manufacturing environment
Engineering and manufacturing have same design
and manufacturing information on mobile devices
All personnel have same design and manufacturing information on mobile devices
28%
25%
Don’t know
Sharing information with
suppliers via mobile devices
22%
Sharing information with
customers via mobile devices
22%
0%
32%
10%
20%
30%
40%
50%
60%
The last emerging technology impact we will explore is “big data.” The
of their biggest and most important challenges and objectives. Reinforcing
current buzz-term may be slightly misleading to some. Most manufactur-
this, note that the top nine responses each has a response rate of over 30%.
ers are quite accustomed to having “big,” or some might say huge amounts
A mere 5-6% felt that big data would not have any future use or impact on
MANUFACTURING METRICS
THAT REALLY MATTER
Anticipated Impacts of ‘Big Data’ Technologies
of data flowing throughout their organizations, but they have historically
their manufacturing performance improvement personnel.
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enough that nobody is entirely sure how they will play out in manufactur-
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35
CONTENTS
lacked the context that gives that data actionable meaning—giving birth to
the phrase, “data rich, but information poor.”
And this is where the emerging technological capability referred to as
big data is coming into play. The potential for previously unknown correlations to be discovered, and for informational silos to be broken down,
is accelerating. But big data concepts are still both nascent and broad
ing, although the possibilities are potentially transformative.
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Impact of Plant and/or Enterprise ‘Big Data’ on Manufacturing
Performance Improvement Personnel
The graph shows where survey respondents see this going. Given the
importance of production, it is not surprising that better production/
forecasting was the top response at 46%. Here, big data could operate in
myriad ways, including identifying correlations between customer data,
scheduling, and maintenance, which would have the potential to identify
hidden patterns that could enable greater operational efficiency, better
anticipate order lead times, shorten asset/machine downtimes, and make
materials purchasing and WIP decisions more effectively.
Other top responses, such as being able to understand plant performance across multiple metrics (45% of responses), servicing and supporting customers faster (39%), and real-time alerts based on analyzing
finding ways to overcome informational silos/disparate data sources and
maintaining/developing a more customer-driven organization.
It seems clear from these responses that manufacturers today are poised
to have their personnel take advantage of big data analytics to attack some
45%
Understand plant performance across multiple metrics
39%
Service and support customers faster
Real-time alerts based on analyzing manufacturing data
38%
Correlate manufacturing and business
performance information together
36%
Correlate performance across multiple plants
36%
Mine combinations of manufacturing and
other enterprise data
31%
Perform predictive modeling of
manufacturing data
31%
Improve interactions with suppliers
31%
29%
Don’t know
manufacturing data (38%) are in line with some of the important objectives and challenges that manufacturers are talking about today, such as
46%
Better forecast products / production
Understand customer
requirements for new products
6%
I don’t think they will
use plant ‘Big Data’
5%
I don’t think they will
use enterprise ‘Big Data’
0%
5%
10%
15%
24%
20%
25%
30%
35%
40%
45% 50%
SECTION 7
Best Practices for Metrics
Program Success
Best Practices for Metrics Program Success
One of the industry best practices that MESA and LNS Research see
Here are the key steps (further explained in the MESA Metrics Guide-
for metrics program success is to take the organization through a strat-
book) to take in a Strategic Decomposition/Goal & Metric Alignment
MANUFACTURING METRICS
THAT REALLY MATTER
PAGE
egy decomposition and goal alignment process. By definition, company
Process:
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measures, and how these need to be interpreted into more detailed, but
37
CONTENTS
strategy needs to be a “top down” exercise, but the alignment of strategy,
actions, and metrics as they relate to individual areas of the business, de-
1. Understand and Articulate Strategy: Have a clear and universally
partments, and individuals is a cross-functional engagement exercise that
understood manufacturing strategy that is in support of the corporate
ensures that employees can clearly see the relationships between their
business strategy.
work efforts and their contributions toward strategy achievement.
The diagram shows an example of top level strategy, actions and
aligned plans across a manufacturing enterprise.
2. Translate Strategy into Specific Goals: Turn that strategy into specific
goals for business groups and associated supply chains as well as
plants, units, and production lines.
3. Map Goals and Specific Metrics for Success: Use a cross-functional
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4 5 6
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team to map each detailed translation across the enterprise.
4. Determine Key Performance Indicators: Develop a set of manufacturing
STRATEGY
Vollman Triangle
CORPORATE
ACTION
MEASURE
KPIs to measure progress toward goals.
5. Establish Communication Procedures for KPIs: Make sure the right
information is getting to the right people in a timely manner.
6. Set Processes for How to Act on KPI Information: Determine best practices
for individuals from the shop- to top-floor to interact with KPIs.
7. Match Performance Incentives to Aligned Goals: Reinforce the effectiveness of measuring KPIs by incentivizing progress.
When everyone across an organization is aligned with their respective
individual, group, and company goals and metrics, and everyone has the
information they need to do their jobs efficiently, truly great things can
happen at an accelerated pace.
Production Process
Source: Dr. Peter G. Martin
Getting Executives and Operations on the Same Page
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38
One of the specific challenges that was discussed at length at the 2013
Operational Metrics that Executives Believe have the Biggest Financial Impact
MESA “unConference” session on Metrics That Matter was the organizaEfficiency
plant operations. “Business-speak” and “manufacturing-speak” are very
Responsiveness
different languages, and there was a sense that if executives could better
Inventory
understand “manufacturing-speak” and the potential impact that manu-
Don’t know
TABLE OF
approach” questions were asked. The first graph shows which categories of
CONTENTS
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1 2 3
4 5 6
7 8 9
facturing can have on business success, then this two-way understanding
could accelerate many more manufacturing initiatives to move forward.
on financials. The top four responses were Efficiency (33%), Quality (31%),
Responsiveness (26%) and Inventory (21%), with 18% indicating that they
didn’t know, and these responses represent the extent of the disconnect.
Next, respondents were asked about what approaches have been taken
in the past to successfully bridge this gap by educating executives on manufacturing business improvement potential.
21%
18%
8%
6%
6%
Compliance
Innovation
0%
provements that were uncovered in the survey, two related “attitude and
5%
10%
15%
20%
25%
Executive business review
meetings
29%
28%
Manufacturing tours
Real-time dashboards
contain financial impacts
24%
Don’t know
23%
turing strategy as part of the overall business planning process. This is con-
Participation in industry
associations
20%
Balanced
scorecard training
20%
multiple responses, along with simple review meetings and plant tours.
MESA and LNS Research recommend that you consider employing a
number of these approaches to get executives and operations on the same
page. This will facilitate a greater two-way understanding of both challenges and opportunities and likely cut down on some frustrations.
40%
35%
Plant reports contain
financial impacts
communication opportunity, at 40%. Next, at 35% was including manufac-
Manufacturing performance dashboards and reporting came up in
35%
40%
Manufacturing strategy
part of annual businesses
23%
sistent with the Strategic Goal Alignment best practice discussed earlier.
30%
Approaches Taken to Successfully Educate Executives on Manufacturing
Business Improvement Potential
Manufacturing peer
review meetings
The graph shows that executive business review meetings were the top
33%
26%
Maintenance
Therefore, in addition to the specific Operational and Financial im-
Operational metrics that executives already believe have the biggest impact
31%
Quality
MANUFACTURING METRICS
THAT REALLY MATTER
tional and understanding related gaps that exist between executives and
16%
Manufacturing
program training
10%
Trade publications
Participation with
industry analysts
9%
Participation in
peer councils
7%
No actions taken
in this regard
5%
3%
Skip level meetings
1%
Other actions taken
0%
5%
10%
15%
20%
25%
30%
35%
40%
SECTION 8
Case Study
CASE STUDY
Murata Power Solutions
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MANUFACTURING METRICS
THAT REALLY MATTER
40
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Headquartered in Mansfield, MA, Murata Power Solutions is a leading
global supplier of converters, power supplies, and related products. The
deliver, the company is moving forward with further integration of its MES
company operates in a highly competitive industry—requiring rapid prod-
and ERP systems, as well as intensifying efforts to speed its new product
uct development, stringent quality standards, and high customer respon-
introduction process and reduce costs by incorporating FMEA (Failure
siveness to both maintain and elevate its market position.
Mode and Effects Analysis) initiatives into additional manufacturing phases
- beginning with design. Additionally, the company is implementing a Six
With a strong continuous improvement company culture to build
from, the company has recently added Project Management (PM) software to its operations and integrated its formerly disparate MES system
and reporting methods.
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Spurred on by the metrics improvements these initiatives have helped
The addition of this PM software has fostered additional inter-departmental collaboration, and the company’s software initiatives around
MES and Quality Management software have shown valuable operational
correlations that have helped the company improve in several operational
areas over the past year.
Murata has recorded significant annual performance improvement
metrics, such as:
Customer fill rate/on-time delivery: Annual improvement of 80%,
versus survey respondents’ annual improvement average of 12.5%.
First Pass Yield: Annual improvement of 50%, versus survey respondents’ annual improvement average of 12.9%.
Supplier Quality Incoming: Annual improvement of 25%, versus survey
respondents’ annual improvement average of 13.3%.
Sigma program at its main facility and selecting specific individuals for belt
training in this program.
SECTION 9
Summary &
Recommendations
Summary & Recommendations
To conclude, here is a summary of some key answers to questions
PAGE
MANUFACTURING METRICS
THAT REALLY MATTER
42
Average Manufacturing Performance Improvements from 2012-2013
posed in the introduction:
Q.Which metrics are being used to best understand manufacturing performance and opportunity areas for improvement?
A. The top 10 Financial metrics and top 18 Operational metrics are listed
and highlighted in Section 2.
Q.How does my company’s performance improvements compare to
industry?
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A. You can compare with the average annual improvements achieved by
SECTION
others for metrics categories are shown in the dials. Additionally:
1 2 3
4 5 6
7 8 9
The average % of successful NPIs was 71.5% and the top performers
SUCCESSFUL NPIs
Those with Successful NPIs of 90% or better had average annual Financial
averaged 90%.
improvements of 16%.
The average OTCS was 87.6% and the top performers achieved 95%
WIP/INVENTORY
or better.
Those with annual Inventory WIP Improvements of 10% or better had
The average OEE was 70.7 and the top performers achieved 80 or better.
average annual Financial improvements of 12%.
Q. How do we connect operational metrics to financial metrics?
A. T here were many positive correlations between average annual Operational metric improvements or Operational metric performance,
and improvements in average annual Financial metrics highlighted
in Section 3. Average annual Financial improvements were 8.6%;
OEE
Those with OEE of 80 or better had average Financial improvements of 14%.
RESPONSIVENESS
Those who improved Manufacturing Cycle Time by 10% or more had
average Financial improvements of 14%.
however, top Operational metric performers did significantly better.
QUALITY
Examples follow.
Those who had top annual improvements in Quality metrics such as
Improved First Pass Yield by 5% or more, or Increased Supplier Quality
Incoming by 5% or more, or Reduced Customer Rejects by 5% or more,
all had average Financial improvements of 14%.
Summary & Recommendations (Continued)
PAGE
Q. How can technology help support and impact metrics programs and
Financial performance?
MANUFACTURING METRICS
THAT REALLY MATTER
43
A. The most deployed applications by all respondents were ERP;
Planning, Scheduling & Dispatching; Quality Management; Data
Historians ; and MES. Additionally:
Average improvement in Total Cost Per Unit Excluding Materials
was 24.1% for users of OI/EMI software, and 22.5% for users of MES
software versus 13.1% overall.
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SECTION
Q. What are some of the best practices I can learn from market leaders?
A. One of the industry best practices that MESA and LNS Research see
for metrics program success is to take the organization through a
strategy decomposition and goal alignment process (Section 7) to
ensure that the right metrics are being applied and evaluated across
the business. This is one focus of the MESA Metrics Guidebook. Also,
helping executives and manufacturing personnel to better understand each other and the potential impact that manufacturing can
users of PLM software versus 12.5% overall.
Q. Which metrics are being utilized as part of role-based dashboards and
how frequently should these metrics be measured and utilized?
A. The top 10 Financial and top 18 Operational metrics that are being
utilized by respondents are detailed in Section 2. Most Operational
metrics programs are looking at a combination of individual Plant
level metrics rolling up to a Corporate view. Most Financial metrics
programs are looking at Corporate and Business Unit level metrics.
The overall trend is toward faster visibility of performance metrics for
manufacturing operations. Examples follow.
26% of Machine Level Operators and 19% of Line/Area Level Operators are seeing their performance information in real-time.
15% of Line/Area and Plant Level Operators are seeing perfor-
within a day or sooner depending on role/level.
Comprehensive Suite of MOM software versus 10.4% overall.
and 20.4% for users of Quality Management software, and 19.1% for
Average improvement in Net Profit Margin was 19.4% for users of a
Average improvement in OTCS was 22.0% for users of MES software,
1 2 3
4 5 6
7 8 9
27-65% of Management are seeing performance information mance information within a shift.
have on business success can accelerate many more manufacturing
initiatives in the future.
Sponsors
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THAT REALLY MATTER
44
TABLE OF
CONTENTS
MESA International and LNS Research would like to thank the sponsors of
this 2013-2014 MESA Metrics research project. Development and distribution of this valuable information was made possible by:
Presented by:
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4 5 6
7 8 9
Author:
Mark Davidson, Principal Analyst
[email protected]
© MESA International and LNS Research.

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