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Metrics that Matter: Uncovering KPIs that Justify Operational Improvements Charlie Gifford Director, Lean Production Management.

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Presentation on theme: "Metrics that Matter: Uncovering KPIs that Justify Operational Improvements Charlie Gifford Director, Lean Production Management."— Presentation transcript:

1 Metrics that Matter: Uncovering KPIs that Justify Operational Improvements Charlie Gifford Director, Lean Production Management

2 Metrics that Matter Page 2 Metrics Matter: How Mfg Operations Influence Business You can’t improve what you can’t measure. You can’t measure what you can’t see. - Dr. W. Edwards Deming

3 Metrics that Matter Page 3 Metrics that Matter Topics  Study Background  Metrics Matter to Performance  Fast, Effective Metrics  Manufacturing Enterprise Solutions Use  Guide to Metrics Framework Success

4 Metrics that Matter Page 4 MESA Metrics that Matter Study Sponsors Lead Sponsors Supporting Sponsor

5 Metrics that Matter Page 5 Industry Council MESA Members Guided Project Scott Daugherty, Plant Manager, Cormetech Inc. John Plassenthal, Project Manager, Strategic Integration, Enterprise Applications IT, International Truck and Engine John Moore, Quality Program Manager, KLA Tencor Neil Crew, Group IT Director, Princes Limited Brian Leinbach, MES Deployment Team Lead, Wyeth Pharmaceuticals

6 Metrics that Matter Page 6 Response Demographics On-line: 135 different manufacturers –Representing 20 industries –Range of Products Counts & Mix in plants –Nearly evenly divided by size: over $2B, $500M-$2B, under $500M Telephone: 16 “Industry Leaders”

7 Metrics that Matter Page 7 Every Production Type Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

8 Metrics that Matter Page 8 Three Major Respondent Groups by Role Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

9 Metrics that Matter Page 9 Metrics that Matter Topics  Study Background  Metrics Matter to Performance  Fast, Effective Metrics  Manufacturing Enterprise Solutions Use  Guide to Metrics Framework Success

10 Metrics that Matter Page 10 Metrics Justify Improvement MES Projects Industry struggles with the financial hurdles Disconnect between operations, IT and finance Bridging gap justifies projects

11 Metrics that Matter Page 11 Common Business & Financial Metrics Net Operating Profit (78%) EBITDA (71%) Labor cost per unit (68%) Customer Fill Rate / On-time Delivery (64%) ROA / RONA (62%) Economic Value / Economic Profit (60%) Market Share (54%) Top Productivity Metrics Revenue per employee Revenue per square foot Cash-to-cash cycle time Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

12 Metrics that Matter Page 12 Business Movers: Operations Improvement to Financial Metrics Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

13 Metrics that Matter Page 13 Business Movers Improved Operations Areas Also Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

14 Metrics that Matter Page 14 Some Operations KPIs Are Common Across Segments Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

15 Metrics that Matter Page 15 Which Operations KPIs Matter Varies by Industry Type Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

16 Metrics that Matter Page 16 Metrics that Matter Topics  Study Background  Metrics Matter to Performance  Fast, Effective Metrics  Manufacturing Enterprise Solutions Use  Guide to Metrics Framework Success

17 Metrics that Matter Page 17 Business Movers: More Effective Links Between Business & Ops Metrics Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

18 Metrics that Matter Page 18 KPI Data Collection: Core to Link Operations KPIs Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

19 Metrics that Matter Page 19 24 Hours or Faster Feedback to Operators So They Can Take Action Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

20 Metrics that Matter Page 20 Latency between Business Metrics and Operations that Cause Them Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

21 Metrics that Matter Page 21 Metrics that Matter Topics  Study Background  Metrics Matter to Performance  Fast, Effective Metrics  Manufacturing Enterprise Solutions Use  Guide to Metrics Framework Success Metrics that Matter Page 21

22 Metrics that Matter Page 22 Most Common Applications in Investment Plans for Next 12 Months Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

23 Metrics that Matter Page 23 MES, ERP, Stand Alone, Custom for Common MES Functions Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

24 Metrics that Matter Page 24 Gaining Benefits from Manufacturing Software Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

25 Metrics that Matter Page 25 Those with MES & Dashboards Perform Better Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements © 2006 MESA International & Industry Directions Inc.

26 Metrics that Matter Page 26 Metrics that Matter Topics  Study Background  Metrics Matter to Performance  Fast, Effective Metrics  Manufacturing Enterprise Solutions Use  Guide to Metrics Framework Success

27 Metrics that Matter Page 27 MESA Metrics Guidebook & Framework Source: Metrics that Matter Guidebook & Framework © 2006 MESA International

28 Metrics that Matter Page 28 Graphical Representation of Metrics Framework Corporate Strategy: Increase Brand Margin & Value Net margin per brand Financial Metrics # of Profitable Brand Extensions Reduce Stock-outs Lower Production Costs Operational Metrics Plant Metrics Changeover Speed NPI Ramp- up Time First Pass Yield Planned vs. Emergency Maintenance Upside Production Flexibility OEE Energy Consumption Per Unit Source: Metrics that Matter Guidebook & Framework © 2006 MESA International

29 Metrics that Matter Page 29 [Presenter] Title Company


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