|Metrics Help Power Improved Operations, Profitability
Culture change is an essential component of success when determining key production metrics and introducing new manufacturing data systems.
By Steve Minter
Manufacturers who are investing in manufacturing IT systems and establishing clear linkages between enterprise goals and plant operations achieve better business performance, according to research from MESA International. But experts say failing to understand the cultural changes that faster, more accurate data will entail can severely impede manufacturers who treat such initiatives as simply a technical project.
“It is virtually a certainty that when someone implements a metrics performance management system, there are enormous disputes around the validity of the data,” says John Dyck, global director, Software Business Development for Rockwell Automation, in an interview at RSTechED 2012 in Orlando. “The manual processes and the paper that they’ve written their observations and done their calculations on, even for OEE that they’ve manually collected, they’ll have it at, say, 80% for five years. We put an automated system in and their real OEE is 58%.”
What accounts for the difference? Dyck says there a variety of factors from defending traditional practices at a facility to wanting to meet management expectations to incentive plans that influence manual reporting. These factors can often lead to long-term inaccuracies in the data reported.
|“That is why it is so hard for an operations executive to figure out which plants are most effective,” says Dyck. “They all report up to the same VP and it is a very subjective thing.”
Little wonder then, says Julie Fraser, a consultant with IYNO Advisors and research leader for the MESA metrics studies, that implementing an IT system to track plant metrics often results in “huge cultural changes” and generally forces companies to put a change management process in place.
“That is why executive sponsorship is a critical factor,” Dyck pointed out. “Cultures don’t change or they change very slowly. When they do change, it is because of top-down influence.”
Lessons from Business Movers
A February MESA International study, “Pursuit of Performance Excellence,” identified companies who had either improved EBITDA or net operating profit by 10%, or improved by more than 1% against 7 of 13 business metrics studied. The study found that these “Business Movers,” 25% of the sample, had faster, more rigorous metrics processes than the other companies in the study. These high performers were more likely to have aligned metrics from the enterprise level to the plant to the line level.
One advantage these Business Movers had because of strong metrics systems was speed. These companies were more likely to display operational KPIs to the data creators and operators within a shift or in real time. As a result, they could act quicker to assess performance trends and guide employees when corrective or preventive actions were needed.
MESA’s research also shows that companies that work to engage and educate employees about metrics reap the benefits of improved decision-making. Employees at all levels understand the impact of activities on the business. Operators and technicians who can view data during their shifts can make more timely adjustments.
The study found that nearly half the companies surveyed were automating data collection processes in order to improve data quality. The Business Movers were much more likely to collect data automatically on efficiency and quality metrics, and were also more likely to automatically collect data for six other operational metrics: customer and responsiveness, inventory, regulatory, asset and maintenance, IT and flexibility. About two-thirds of the companies were using an enterprise resource planning (ERP) system. The MESA research also determined that more companies that had implemented a manufacturing execution system (MES) had improved every operational metric by at least 1%.
Earlier MESA research showed that Business Movers were more likely to invest in a range of IT systems, such as ERP, business intelligence and product trace and track. This research showed they were twice as likely to invest in collaboration software and three times more likely to buy supply chain management software.
Coping with Complexity
Companies who have resisted investing in data management systems may be taking a second look in the light of manufacturing trends. For example, many facilities in the United States have been moving from high-volume, low-mix production to relatively high-mix environments, Fraser points out. “If you don’t change your plant metrics to reflect the new objectives, you are going to end up trying to be efficient when what you really want is flexibility and innovation.”
Increased complexity of operations, often resulting from the need to customize products, makes it difficult to track operations with manual processes. Rockwell Automation’s Dyck says even operations stressing lean concepts such as line of sight management are finding that automated systems provide valuable information “on what to go see first.”
Part of the implementation process for plant metrics is determining how to define a metric and calculate it. It requires the involvement of people from a number of departments, who may have had little contact previously, to reach consensus on the metrics requirements. Fraser says establishing uniform measures is one reason why automated systems are valuable.
“This is the system. It has the same definitions, the same calculations. You can’t really fudge it,” she told IndustryWeek.
At a session on metrics at Rockwell Automation’s RSTechED event the day before, Fraser noted, an attendee says he had just been assigned to a project involving 70 plants that had been acquired by his company. “Every one of them calculates OEE differently, and my job is to try and figure out how to get them all on the same page,” he told the session. Fraser says just going through the process of defining metrics can be powerful in terms of providing clarity about operational performance.
With the introduction of more data into facilities, Fraser says, systems are evolving to provide data in more usable formats, through dashboards with easy-to-understand graphic formats. Fraser says it is also important not to overwhelm operators with too many metrics at one time. She advises that line displays show no more than five metrics.