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:
    • Yield
    • Throughput
    • Fall-out
  • 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.

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