julie fraser, cambashi president & principal industry ...€¦ · president & principal...
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Julie Fraser, Cambashi President & Principal Industry Analyst
myDIALS webinar April 7, 2009
Julie Fraser
• Long-time industry analyst, market researcher
& consultant
• Focused on how information systems
accelerate business success
• Manufacturing Business Technology
magazine columnist
Cambashi delivers research, insight and
understanding on the use of IT in production,
utilities, construction, and distribution industries.
Urgency to “move the needle” on performance
How are “Business Movers” different?
Key performance indicators and drivers
(KPIs/KPDs)
Right-time feedback via technology accelerators
Competitors Customers
Typical Metrics Program
Objective: Improve results
Context: Lean, Six Sigma,
TQM or other Continuous
Improvement Initiative
Means: Monitor outcomes◦ Financial metrics
◦ Operational metrics
Source: MESA Metrics that Matter:
Uncovering KPIs that Justify Operational Improvements
© 2006 MESA International & Industry Directions Inc.
Improved by
>1% in 6
metrics
16%
Improved by
>10% in 1
metric
10%Less
improvement/
Don't Know
55%
Improved by
>10% in 2+
metrics
19%
Source: MESA Metrics that Matter:
Uncovering KPIs that Justify Operational Improvements
© 2006 MESA International & Industry Directions Inc.
Improved by
>1% in 6
metrics
16%
Improved by
>10% in 1
metric
10%Less
improvement/
Don't Know
55%
Improved by
>10% in 2+
metrics
19%
0% 20% 40% 60% 80% 100%
Lower
Improvements /
Don't know
Business Movers
Better<------------------------------------------>Worse
Very/Pretty Somewhat Not very / In a few places Not effective / Not linked
Source: MESA Metrics that Matter:
Uncovering KPIs that Justify Operational Improvements
© 2006 MESA International & Industry Directions Inc.
0%
10%
20%
30%
40%
50%
>50% Fully automated <10% Manual input
Business Movers Others
Source: MESA Metrics that Matter:
Uncovering KPIs that Justify Operational Improvements
© 2006 MESA International & Industry Directions Inc.
0%
10%
20%
30%
40%
50%
Business Movers Others
Source: MESA Metrics that Matter:: Uncovering KPIs that Justify Operational Improvements
© 2006 MESA International & Industry Directions Inc.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Business Movers Others
Annually
Quarterly
Monthly
Weekly
< 24 hours
Source: MESA Metrics that Matter::
Uncovering KPIs that Justify
Operational Improvements
© 2006 MESA International &
Industry Directions Inc.
Source: MESA Metrics that Matter: Uncovering
KPIs that Justify Operational Improvements
© 2006 MESA International &
Industry Directions Inc.
0% 20% 40% 60% 80% 100%
Economic value / economic profit
ROA/RONA
Customer fill rate/on-time delivery
Labor cost per unit
EBITDA
Net operating profit
Source: MESA Metrics that Matter:
Uncovering KPIs that Justify Operational Improvements
© 2006 MESA International & Industry Directions Inc.
Top Business Gains >50%
Top Operational Gains
>50%
On-time delivery
Net operating profit
Labor cost per unit
EBITDA
ROA/RONA
Productivity in revenue
per employee
On-time delivery
Average overtime/week
First-pass yield
Cycle time
OSHA-reportable
incidents/year
Capacity utilization
Average days total
inventory
Areas of Outstanding or Medium Improvement
0%
10%
20%
30%
40%
50%
60%
70%
80%
Quality Customer
Service
Throughput Flexibility Compliance Utilization Inventory
Business Movers Others
Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements
© 2006 MESA International & Industry Directions Inc.
Indicators are outcomes & lagging
Drivers are activities & leading
Not all operations metrics are drivers
Activities (KPDs)
First-pass yield
OSHA-reportable
incidents/year
Capacity utilization
Outcomes (KPIs)
On-time delivery
Average
overtime/week
Average days total
inventory
Create a focus for each workday
Enable employees to see results (KPIs)
Explore drivers of those results (KPDs)
Develop action plans
You need information to succeed!
Source: MESA Metrics that Matter:Uncovering KPIs that Justify Operational Improvements
© 2006 MESA International & Industry Directions Inc.
Real-time (minutes or
less)5%
Less than 24 hours20%
Weekly29%
Monthly or less36%
Rarely/never10%
What is the Frequency or Time Lag of Data Creators Seeing Their Performance?
How Rapidly Performance Results are Shown to Operations
Grouped by Improvement to Operations KPIs
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
3+ KPIs
improved
>10%
1-2 KPIs
improved
>10%
10+ KPIs
improved >1%
Less
improvement
Don't Know
improvement
>50% of KPIs
Faste
r <
----
----
--->
Slo
wer
Rarely/never
Monthly or less
Weekly
< 24 hours
Real-time
Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements
© 2006 MESA International & Industry Directions Inc.
Source: MESA Metrics that Matter:Uncovering KPIs that Justify Operational Improvements
© 2006 MESA International & Industry Directions Inc.
0%
10%
20%
30%
40%
50%
60%
70%
On-time delivery to customer
request
Manufacturing cycle time
Average days total inventory
OSHA-reportable incidents/year
Use Plant Dashboard No Plant Dashboard
0%
5%
10%
15%
20%
25%
30%
35%
MES Dashboards
Use of MES & Operational Dashboards
Business Movers Others
Source: MESA Metrics that Matter:
Uncovering KPIs that Justify Operational Improvements
© 2006 MESA International & Industry Directions Inc.
Yes39%
No61%
For Those with a Plant Dashboard:Is it Actionable?
Source: MESA Metrics that Matter:
Uncovering KPIs that Justify Operational Improvements
© 2006 MESA International & Industry Directions Inc.
Link business metrics and operations metrics
Focus on KPDs to shift results on KPIs
Ensure information is right-time ◦ data collection
◦ results display
◦ translation of operations to business results
Use actionable dashboards◦ context
◦ KPDs & KPIs
◦ business & operations
Julie Fraser, Cambashi President & Principal Industry Analyst
myDIALS webinar April 7, 2009