Welcome back to my two-part blog series addressing 28 measurable metrics that manufacturers must consider in order to achieve essential goals. If you missed Part I, you can read it here.
In today’s blog post, we will explore the metrics related to Ensuring Compliance, Reducing Maintenance, Increasing Flexibility and Innovation, Reducing Costs and Increasing Profitability.
Ensuring Compliance
- Reportable Health and Safety Incidents: The number of reported health and safety incidents in a specified time period.
- Reportable Environmental Incidents: The total number of environmental incidents that occurred over a defined period of time.
- Non-Compliance Events/Year: The number, date, time, reason, and resolution of occasions when the plant or facility operated outside the regulatory compliance mandates in a one-year period.
Reducing Maintenance
- Percentage Planned vs. Emergency Maintenance Work Orders: The ratio of proactive versus reactive maintenance.
- Downtime-Operating Time: A ratio that identifies availability of assets for production.
Increasing Flexibility and Innovation
- Rate of New Product Introduction: Time required to introduce a new product to the marketplace, from design and development through manufacturing.
- Engineering Change Order Cycle Time: Speed of making design changes or modifications.
Reducing Costs and Increasing Profitability
- Manufacturing Cost per Unit, Excluding Materials: A measurement of the controllable cost of manufacturing processes.
- Manufacturing Cost as a Percentage of Revenue: A ratio that reflects the portion of revenue that is absorbed by manufacturing costs.
- Net Operating Profit: The bottom line profitability, after taxes and expenses are subtracted from the gross revenue.
- Employee Productivity in Revenue: Divide the total revenue of a plant, facility, or business unit by the number of employees for an average of overall productivity.
- Average Unit Contribution Margin: The profit margin generated by the plant or business unit, divided by a given unit or volume of production, to identify its position in the value stream.
- Return on Assets/Return on Net Assets: Divide the net income by the value of the fixed assets and working capital applied.
- Energy Cost per Unit: The cost of energy (e.g., electricity, gas, oil, steam) required per production unit.
- Cash-to-Cash Cycle: Time between the purchase of inventory and the receipt of the payment for the sale of the finished product that used that inventoried material.
- Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA): The base earnings, which demonstrate the profitability of the business without additional income and expenses.
- Customer Fill Rate/On-Time Delivery/Perfect Order Percentage: Indicator of complete orders that are received accurately and on time.
Have you taken the time to measure any or all of these metrics? Do you collect the data outlined here? L-Tron can customize a data collection solution to provide the metrics you need to achieve your operational goals.
Questions?
About the Author:
RAD DeRose is the President & CEO of L-Tron Corporation. He has over 30 years experience in industrial automation and data collection technology solutions and brings a deep industry knowledge-base on the challenges faced in the commercial and public safety sectors. RAD can be reached at (800) 830-9523 x114; rad.derose@L-Tron.com.