Right systems, right metrics

Manufacturers faring best are those that ensure the broadest possible business context when constructing performance metrics. That's chief among the findings from a global study carried out by engineering business analyst Cambashi and MESA International (the Manufacturing Enterprise Solutions Association), which focuses on MESs (manufacturing execution systems). The pair reason that, while it still makes sense to maintain departmental and functional controls, using, for example, standard lineside, factory and business KPIs, the real winners are doing something subtly different. They're relying much more heavily on multi-faceted KPIs, such as OEE, which balance quality, productivity and throughput. As Cambashi principal industry analyst Julie Fraser puts it: "It's apparent that the companies performing best have done a much better job at aligning metrics between all the relevant levels – and using those metrics consistently to improve financial outcomes." Sounds woolly? Well, yes and no. Fraser gives the example of successful companies using broader-based KPIs to drive product quality right back into their suppliers – and similarly for OTIF. That's not so woolly: most enlightened companies would accept that regarding suppliers, at some level, as part of your operation is mission-critical, particularly in a just-in-time world. So how you measure their behaviour and output plainly matters. And Fraser extends the thinking to include what she terms 'predictive metrics', geared to helping prevent business problems from occurring – or at least to ameliorate them. One might be the proportion of orders still being booked during the production schedule freeze period. If rush orders are allowed to creep in, she argues, then performance may drop – but there's a balance to be struck. And the point is that 'context rich' metrics provide another tool with which we can improve business decision making. Which is where MESs come in: Cambashi's research suggests that manufacturers with such systems have a much better ability to understand detail in the context of the bigger picture – and to act quickly on those insights. What's more, the result is not just more efficient and/or more flexible factory performance. For the winners, getting the right shopfloor information at the right time directly influences big-ticket business processes – and this leads to statistically significant improvements in earnings performance.