Situation: An early stage manufacturing company has established repeatable operations that produce the desired quality. The CEO now wants to focus on efficiency. Early research suggests a number of areas on which they could focus. Based on your experience, what efficiency metrics are most important in manufacturing?
Advice from the CEOs:
- Much depends upon what is being manufactured, and both the complexity and labor intensity of the manufacturing process. Start with the basics: looks for a relevant quality metric, and a time / delivery metric. Test these for relevance to your operations and adjust or change them as necessary over time.
- Start with simple metrics and make them more complex over time.
- On an ongoing basis, monitor your processes for continuous improvement. If an employee comes up with an improvement that increases efficiency and saves money, recognize and reward that employee.
- Be selective. Limit your focus to 2-3 metrics per quarter. Make first period performance the baseline for the next period.
- Areas in which to focus:
- Cycle times.
- Statistical process control to monitor:
- On time delivery to production schedule.
- Quality check at end of production – yield rates versus pre-set targets.
- Use Google to see what others are using. Google “Manufacturing Performance Indicators”.
- As you develop your efficiency metrics, include your most effective metrics in performance measurement for bonus awards.