www.mesa.org
Crafting a Metrics Program
for Maximum Impact
Julie Fraser
Independent Advisor & Research Leader
Cambashi-MESA Metrics Research
Introductions
• My background – why am I here?
– 25 years manufacturing tech industry watcher
– Research leader for study
– Former MESA Metrics WG Chairperson
– Passion for manufacturing & improvement
• Your background
– Why are you here?
Copyright 2012, MESA International
Topics
• Introduction – people, topics, MESA
• What works for improvement
• Designing a metrics program
• IT and automation role in metrics
• Exercise to focus
• Key take-aways
• Whatever you want to discuss!
Copyright 2012, MESA International
Two Main Data Sources #1
MESA Metrics Guidebook
MESA Metrics Guidebook and
Framework
• Guidelines to drive operational
excellence
• Design of metrics program
• Linking and aligning metrics for
business success
• Get a diverse team to a common
understanding
• Justifying improvement projects
• 60-page guidebook plus
resources and a glossary
Copyright 2012, MESA International
MESA Metrics Research
• Primary research on how manufacturers measure & improve performance
– On-line survey
– Telephone interviews
– Team for analysis & advice
• Series started in 2006: Metrics that Matter, Metrics for Major Initiatives, etc.
• Pursuit of Performance Excellence
– Summary Report
– Comprehensive Report
New in this report:
• Depth & detail into
Best Practice Processes
• Views into why speed is a
challenge
• Analysis of widely used metrics
• Correlation between improved
plant & financial metrics
• Key take-aways summary
#2 New Study: Pursuit of
Performance Excellence
Metrics maturity
• Where are you on the metrics maturity journey?
• Is maturity different for culture, process, automation, IT?
Copyright 2012, MESA International
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
Who is MESA International?
MESA is… a not-for-profit industry association
a global community of like-minded companies and professionals
working to make Operations more reliable, capable and profitable
shaping important discussions impacting the
enterprise solutions of tomorrow
the knowledge broker for the MES/MOM* domain globally
*MES/MOM = Manufacturing Execution Systems/Manufacturing Operations Management
Copyright 2012, MESA International
Who is MESA International?
Resource Library: Whitepapers, Guidebooks, Research, etc.
Member companies and individuals in 89 countries
Committees & Working Groups attacking the most pressing
and demanding challenges manufacturers and producers face
A seat at the table to shape solutions to drive
Operations Excellence for the next 20 years!
Inside MESA for YOU is…
Industry's only independent, professional Global
Education Program
Copyright 2012, MESA International
Visit: www.mesa.org
MESA Metrics Working Group
MESA Metrics Research Timeline
2004 2005 2006 2007 2008 2009 2010 2011 2012
Need data
Members
want to
know Metrics that
Matter: Metrics,
quality matter
Metrics Framework
and Guidebook:
Core practices
Members
form WGs
Metrics for
Major Initiatives:
Lean, RTE, Quality
Holistic Metrics:
Supply chain
Correlating
Plant to Business
Performance
Harnessing the
Power of Metrics
to Diagnose & Solve
WP#35
Liaison to
ISO #22400
Plant KPI
Standards
begins
Metrics
Framework
and Guidebook:
2nd Edition
Metrics
Makeover
Contest
Pursuit of
Performance
Excellence
ROI Guidebook;
IndustryWeek,
Reference Model,
Your topics
• Research team:
– Cambashi analysts
– Sponsors
– Industry Council
– MESA Volunteers
• On-line survey
• Telephone interviews
• Written reports
– Summary
– Comprehensive
• Webcast
Pursuit of Performance Excellence
Copyright 2012, MESA International
2011-2012 Study Sponsors
SEMICONDUCTOR /
MEDICAL DEVICE
PREMIUM SPONSOR
SUPPORTING
SPONSOR
PREMIUM SPONSORS
Industry Council
Members • Manufacturer/producers only
(13 active)
• Wide range of disciplines,
titles, responsibility, scope
Experienced and
passionate about
metrics • Hot button issues shape
survey
• Alcoholic beverages
• Construction materials
• Electronics
• Engineered industrial catalytic
converters
• Food
• Home & garden consumer
durables
• Power generation
• Resins & advanced plastics
• Semiconductors
Industries Represented
Response Demographics
300+ Responses
0% 10% 20% 30% 40%
Staff / Employee
Supervisor/ Teamleader
Manager / Projectmanager
Director / Manager ofmanagers / Head of
department
Senior executive / C- orVP-level executive
Scope of Responsibility
Source: Pursuit of Performance Excellence:
Business Success through Effective Plant Operations Metrics
© 2012 Cambashi Inc. and MESA International
Companies
All sizes, 40% under $100M
24+ industries
Every production mode: discrete,
packaged goods, other mixed,
batch, continuous
Individuals
All regions
Variety of titles & domains
Current Situation
Majority of respondents:
• Growing revenues and
production volumes
• More products, SKUs,
variants
• Increasing automation
• Concerned about staff skills
More 55%
Same 34%
Less 11%
Concern about Operator Skills: Change Over Past Three Years
Source: Pursuit of Performance Excellence:
Business Success through Effective Plant Operations Metrics
© 2012 Cambashi Inc. and MESA International
Topics
• Introduction – people, topics, MESA
• What works for improvement
• Designing a metrics program
• IT and automation role in metrics
• Exercise to focus
• Key take-aways
• Whatever you want to discuss!
Copyright 2012, MESA International
Who are Leading Performers?
Business Movers Defined
• Improved EBITDA 10%
or more
• Improved Net Operating
Profit 10% or More
• Improved by 1% or
more on over half of the
Business Metrics
in the study
Improvements are average per
year over past three years
Business Movers
25%
Others 75%
Portion of Response Qualified as Business Movers by Financial
Improvement
Source: Pursuit of Performance Excellence:
Business Success through Effective Plant Operations Metrics
© 2012 Cambashi Inc. and MESA International
Business Movers Practices
Speed
• Data collection
• Analysis
• Display & Use
0% 10% 20% 30% 40%
Quality metrics
Efficiency metrics
Fully automated data collection for two major groups of operational metrics
BusinessMovers
Others
Source: Pursuit of Performance Excellence:
Business Success through Effective Plant Operations Metrics
© 2012 Cambashi Inc. and MESA International
More likely to use other best practices that enable action
Line-level metrics best practices
0% 10% 20% 30%
Others
Business Movers
Portion of respondents that ALWAYS provide line-level metrics to operators and technicians
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
Types of Metrics More Business
Movers Improve Dramatically
• Predictive/preventive
• Translate operational
results into financial
terms
• Include suppliers &
partners
• Holistic/multi-faceted
• Non-value added time
0%
5%
10%
15%
20%
25%
Suppliers'manufacturing yield
or test results
Overall equipmenteffectiveness (OEE)
Portion of respondents who improved by 10% or more on
key operational metrics
Business Movers Others
Source: Pursuit of Performance Excellence:
Business Success through Effective Plant Operations Metrics
© 2012 Cambashi Inc. and MESA International
People Want Speedier Metrics
0% 20% 40% 60% 80% 100%
Rarely/ never
Monthly or less
Weekly
Daily
End of shift
Within a shift
Real-time (minutes or less)
Satisfaction with Staff Speed to See Metrics by Timing of Availability
Yes: typically fast enough: satisfactory No: typically not fast enough: unsatisfactory
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
Metrics drive behavior, actions & outcomes so FASTER = BETTER
Challenges in timeliness
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Extremely Reasonably Not very Not at all
How necessary is it to have an analyst involved to cleanse the data prior to analysis and display?
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
Differences of opinion about
issues
0%
10%
20%
30%
40%
50%
60%
70%
Senior executive / C- or VP-level executive
Staff / Employee
What is the Major Problem Causing Slower or Less than Ideal Frequency of Metrics Display of Results?
Lack ofmanagementcommitment
Lack of will tochange
IT challenges
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
Topics
• Introduction – people, topics, MESA
• What works for improvement
• Designing a metrics program
• IT and automation role in metrics
• Exercise to focus
• Key take-aways
• Whatever you want to discuss!
Copyright 2012, MESA International
MESA Metrics Guidebook
Second Edition 2011
• Guidebook:
– Why metrics matter
– Explanations by role
• Framework
– Overview
– Alignment
– Manufacturing to business
linkage
• Reference
– Metrics
– Justifying systems
– Resources
– Glossary
Conceptual framework
Copyright 2012, MESA International
Inc
reas
ing
ag
gre
ga
tio
n
Audience:
CFO, CEO
Plant Accounting,
Finance
Plant Management,
Operations
Management
Operators, Supervisors,
Quality, Engineers,
Technicians
Profitability
Inc
reas
ing
ab
ility to
take
ac
tion
CorporateFinancials
Aggregated Financial& Operations Metrics
Operations-level KPIs &Dynamic Performance Metrics
External
Investors
& Creditors
Internal
Strategic
Business
Planning
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Key to Success: Linking Plant
and Business Metrics
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
0% 10% 20% 30% 40% 50% 60%
Not at all
Not very
Reasonably
Extremely
How well linked are the operational metrics to your financial and business metrics?
BusinessMovers
Others
Useful construct for metrics
framework: Vollmann triangle
Copyright 2012, MESA International
Strategy
MeasureAction
Strategy
MeasureAction
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Linking corporate objectives to
metrics at each level
Copyright 2012, MESA International
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Strategy
MeasureAction
Corporate Strategy:
Increase Brand Margin & Value
Net margin per product line or brand
# of Profitable
models/ brand
extensions
Reduce
Cycle time or
Stock-outs
Lower
Production
Costs
Financial Metrics
Operational
Metrics
Plant
Metrics
Changeover
Speed
NPI
Ramp-up
Time
First
Pass
Yield
Planned vs.
Emergency
Maintenance
Ratio
Upside
Production
Flexibility
OEE Energy
Consumption
Per Unit
Changes in Production Resources = Changes in Cost
(Operations)
Improvements in Revenue
(Sales & Marketing)
Example metrics that correlate
Copyright 2012, MESA International
Business Metric Operational Metrics
Manufacturing Cost % Revenue
Main factors:
• Batch/lot/unit right first time
• Throughput
Secondary factors:
• Manufacturing cycle time
• Time to make changeovers
• Scrap
• Capacity utilization
• On-time delivery to commit Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
Example of Conflicting Answers
How many cases can we ship out tonight?
• Production line supervisor reports line counter’s total number.
• Warehouse manager reports a smaller number.
Why?
• Some pallets were shrink-wrapped incorrectly, so they were set
aside to be wrapped again later.
• Other cases failed quality tests, so these products had to be
either reworked or scrapped.
• Others may have been put aside for further quality tests.
Copyright 2012, MESA International
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Example of Tradeoffs to achieve
a metric
Schedule attainment
• Resource utilization
• Changeover times
• Inventory levels
• Planned maintenance
• Customer order priorities
What happens when:
• Machine breaks
• Key skilled employee(s) out sick
• Materials don’t meet spec
• Rush order comes in for important customer
Copyright 2012, MESA International
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Why a Framework?
“The structure of data is only as good as your model
supports. A metrics program must take into
consideration a holistic model to link the data (metrics)
from a machine or work cell to and through the ERP,
the financial and scheduling of your discrete or process
manufacturing.”
Tony Jenovino, Campbell's Soup
Copyright 2012, MESA International
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Resource Consumption
Accounting for realistic decisions
4,000
Units
Add
1,000
with OT
Selling Price $ 120 $ 120
Material $ 25 $ 25 Raw or Purchased material
Direct Labor $ 30 $ 45 Full Labor Cost of Work Team and
with 150% OT Premium
Other Direct Costs $ 5 $ 5 Work unit operating costs - Protective
Clothing, hand tools, etc.
Overhead Allocation $ 40 $ 40
Plant wide allocation of Utilities,
Machinery Depreciation,
Maintenance, Administration
Expenses $ 100 $ 115 The sum of material, Direct labor,
Other Direct costs and Overhead
Gross Margin $ 20 $ 5
Copyright 2012, MESA International
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Topics
• Introduction – people, topics, MESA
• What works for improvement
• Designing a metrics program
• IT and automation role in metrics
• Exercise to focus
• Key take-aways
• Whatever you want to discuss!
Copyright 2012, MESA International
IT Support
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
ERP MES / MOM OI/ EMI/ OpsDashboard
Use of Selected Information Technologies
Planning to buyin next 1-2years
Some use orpilot
Widely in use
MES/MOM Use Correlates to
Success
37
0% 5% 10% 15% 20%
Manufacturing cost as % ofrevenue
EBITDA
Higher portion of MES Users achieved at least 10% improvement on key financial metrics
MES/MOMUsers
Others
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
How did that happen?
Operational improvements
Copyright 2012, MESA International
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
Operational dashboard users line
level metrics practices
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
0% 10% 20% 30% 40% 50%
Real-time (minutes orless)
Within/end of shift
Daily
Less Frequent
When do operators, line workers, supervisors, and those managing the operations see the metrics for their scope
of control?
OI / EMIUsers
Others
Topics
• Introduction – people, topics, MESA
• What works for improvement
• Designing a metrics program
• IT and automation role in metrics
• Exercise to focus
• Key take-aways
• Whatever you want to discuss!
Copyright 2012, MESA International
Metrics Maturity Model
Phase
Aspect
Baseline /
Understand
Visibility /
React
Reliable
Response
Avert &
Improve
Enterprise
Foresee &
optimize
Ecosystem
Culture
Process
Automation
IT
Copyright 2012, MESA International
Exercise
• Find one block in the metrics maturity
model where you lag
• Develop a description of the key gap
• Develop a business case for improving it
• Identify key stakeholders
• Set up a meeting when you return
Copyright 2012, MESA International
Topics
• Introduction – people, topics, MESA
• What works for improvement
• Designing a metrics program
• IT and automation role in metrics
• Exercise to focus
• Key take-aways
• Whatever you want to discuss!
Copyright 2012, MESA International
Two of Top Six Take-Aways
• Align metrics from business to plant to
line and through the supply base
– Train and communicate in all levels critical to
business success.
– Use metrics consistently as part of the
company culture.
– Employ sound practices in performance
measurement.
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
Two of Top Six Take-Aways
• Engage, educate, and empower
employees
– Understand metrics to enhance skills.
– Provide line-level metrics during the shift.
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
Go out and improve
• Develop metrics to align efforts, learn and improve
• Gain speed: it matters to employees and results
• Move toward metrics that tell the entire story
• Use applications to support speed and improvement
• Be confident IT has a payback
• Metrics maturity is a never-ending journey: keep at it!
Learn more with us…
• Report as a thank-you for attending today
• Participate in MESA
– Metrics Working Groups
– ROI Working Group
– Food Safety SIG
– Continuous Process SIG
– Technical Committee
• MESA Unconference session here at RSTechEd
St. Johns 29 Tuesday 4-5pm, Wednesday 11-noon
WWW.MESA.ORG
Further Discussion & Follow-up
Copyright 2012, MESA International