Make it Easier to Assess the Health of your Manufacturing Business

Running a factory can feel like steering a large ship: it takes a long time to respond to adjustments and results must be measured carefully. Even then, predicting where the currents will take your vessel can be difficult.

Choose your metrics wisely

Much has been written about manufacturing dashboards and the importance of picking the right metrics. Manufacturing Enterprise Solutions Association (MESA) International for instance offers 28 widely used measures such as manufacturing cycle time, yield and the number of health and safety incidents.

These are good, as are the other 25, but they make for a cluttered dashboard where it’s hard to gage your factory’s direction. A recent piece in Industry Week magazine offered a simpler set of measures.

Assume Nothing: 5 Tests Every Manufacturer Should Run Quarterly” proposes five metrics:

1.Utilization versus capacity

It’s good to “sweat the assets”, but watch the trend. While moving downwards suggests orders are drying up and costs rising, going up (higher utilization) can also imply challenges ahead. When the factory’s running 24-7 maintenance slips, overtime working increases and mistakes happen.

2.Per-project profitability

Knowing how much profit comes from which job should inform resource allocation, pricing and investment decisions. Without a

measure like this how do you weed out the less profitable work to make room for more money-makers?

3.Client mix

Every industry and market has ups and downs, which is why diversification matters. This measure shows if you’re becoming more or less diverse over time.

4.Workload diversity

Too much variety in the type of work you undertake can force you into using lower volume and uncompetitive processes, but you can also be too focused. Adding related and complementary products to the mix can fill spare capacity on high cost equipment and dilute overheads.

5.Sick time and personal time off

When morale is high these numbers tend to be low. A rising trend is a sign that something’s not right. Perhaps people are working excessive overtime, (check the utilization metric for a clue,) or there’s dissatisfaction with working conditions. Unplanned absences and accidents are expensive, so this measure is one to watch closely.

Data at the heart

Good measures depend on gathering quality data. Manual methods are inefficient and impractical: they’ll quickly be abandoned. The answer lies in using technology already in place.

An end-to-end ERP system provides most of the numbers you need, with CRM filling the gaps. ERP tracks capacity, utilization, material yields, actual costs per project and employee hours, in real-time, down to the individual workcell and even machine level. Mobile devices and bar code technology simplify data capture, and accuracy is far higher than paper or spreadsheet-based methods. Meanwhile, CRM adds the client-driven data, helping you identify new opportunities for growth.

Navigate stormy waters

Good metrics are essential for gaging the direction your business is headed, but metrics depend on data. ERP coupled with CRM produces accurately and timely numbers that help keep you moving the right way.

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