fusion point research Marketing Research Reports

Marketing to Productivity Measurement Leaders in Manufacturing

Understanding Their Role

Manufacturing is highly competitive, and companies confront constant changes in customer requirements, regulations, technology and the cost of materials.1 Manufacturers have a culture of “continuous improvement” and relentlessly evaluate their process in search of better, faster and more efficient methods.2 These companies use a wide variety of productivity measures to identify problems, measure improvements and keep their organization aligned with the highest priorities. Names for these reports vary, including Metrics, Key Performance Indicators (KPIs), Dashboards, Scorecards and Measures. Most compare an actual result to an expected (planned) result, or show a trend over time.3 Measures differ by plant, but common areas include:

 

  • Overall productivity – comparisons of inputs to outputs, for example “cost per unit” or “revenue per employee”.4
  • Quality – number or percentage of defects, customer returns, on-time delivery, etc.
  • Employee – number of workers, percent trained, overtime hours, etc.
  • Workstation / Machinery - overall equipment effectiveness (OEE), cycle time, scrap rate, throughput, etc.
  • Environmental – energy usage, water usage, waste, emissions, etc.5

 

These metrics are usually reported using data from the plant’s Manufacturing Execution System (MES) or Enterprise Resource Planning (ERP) system.6 Managers must always keep metrics in balance, for example focusing on both quality and cost at the same time, because single-minded focus on one area might damage results in other areas.7

 

“[Employees] wanted to make sure this wasn’t ‘just words.’ But after seeing the KPIs on the Philips ‘dashboard’ and learning that if you were in the red you could expect a call from the CEO, people said OK. People become resourceful and inventive when you challenge them.”

- Philips CEO Frans van Houten8

 

1 Humphlett, Mark. “Smart Manufacturing Technologies, Intelligent Processes.” Control Engineering 61, no. 4 (2014): 36. EBSCOhost(95900410).

2 Davies, John, and Mike Ryan. “Productivity and the Role of Industrial Engineering Techniques.” Management Services , 2013. HighBeam(3190317601).

3 Professionals, Council of Supply Chain Management, and Nada Sanders. THE DEFINITIVE GUIDE TO MANUFACTURING AND SERVICE OPERATIONS . Edited by Jeanne Glasser Levine. 1st ed. Pearson Education LTD., 2013.

4 Davies, John, and Mike Ryan. “Productivity and the Role….”

5 Schniepp, Susan J. “The Meaning of Metrics.” Pharmaceutical Technology 37, no. 6 (2013): 26. EBSCOhost(88038450).

6 Bakliwal, V. K. Production and Operations Management . 1st. ed. MARK PUBLISHERS, C-390, Ist Floor, Amrapali Circle, Vaishali Nagar, Jaipur-302021, Ph.: 9413678649, E-mail: markpublishers@ymail.com: MARK PUBLISHERS, 2011.

7 CHANESKI, WAYNE S. “Selecting Units of Measure.” Modern Machine Shop 86, no. 7 (2013): 34 – 36. EBSCOhost(92987619).

8 Fleming, Thomas and Zils, Markus. “Toward a circular economy: Philips CEO Frans van Houten.” McKinsey Quarterly. February 2014. Accessed: 11/18/2015. Available at: www.mckinsey.com/insights/sustainability/toward_a_...

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Manufacturing companies utilize a wide range of metrics to monitor performance and continuously improve their operations.
fusion point research Marketing Research Reports
Manufacturing companies utilize a wide range of metrics to monitor performance and continuously improve their operations.
  • Overall productivity – comparisons of inputs to outputs, for example “cost per unit” or “revenue per employee”.
  • Quality – number or percentage of defects, customer returns, on-time delivery, etc.
  • Employee – number of workers, percent trained, overtime hours, etc.
  • Workstation / Machinery - overall equipment effectiveness (OEE), cycle time, scrap rate, throughput, etc.
  • Environmental – energy usage, water usage, waste, emissions, etc.