Metrics Strategies of Leading Performers

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2012 Cambashi Inc.

Industry Knowledge for Business Advantage

Speakers
Julie Fraser, Principal Industry Analyst
Cambashi Inc. Research Leader MESA Metrics Working Group Co-chair

Ted Bobkowski, Principal

Innovative Manufacturing Solutions Industry Council Active MESA Metrics Working Group member

Mark Lincoln, VP Quality and Operations

Terumo Cardiovascular Systems Industry Leader and respondent

2012 Cambashi Inc.

Industry Knowledge for Business Advantage

How to Participate Today

Open and close your Panel View, Select, and Test your audio Submit written questions in Questions box. Q&A addressed at the end of todays session The presentation is being recorded and will be posted along with the slides to MESAs Resource Library within one week. Available to Premium members. www.mesa.org

2012 Cambashi Inc.

Industry Knowledge for Business Advantage

Cambashi overview
Mission-critical aspects of discrete, batch, process, and related industries Wide range of services from strategy to action
Industry analysts, market researchers & consultants

Bringing IT buyers & sellers together

25 years

Headquarters UK (Cambridge)
US office (Massachusetts)

Industry Knowledge for Business Advantage

2012 Cambashi Inc. 4 Industry Knowledge for Business Advantage

Manufacturing Enterprise Solutions Association Mission

Global community for improving Operations

Management capabilities with effective technology solutions:

Best practices & guidance to drive greater productivity & overall

profitability of manufacturing enterprise

Global Education Program: Educate manufacturing operations on

best practices

Facilitate innovation, collaboration & understanding for realtime enterprise & Plant to Enterprise (P2E) integration

Connect members to, contribute & exchange strategies for

operations excellence

Visit: www.mesa.org
2012 Cambashi Inc. 5 Industry Knowledge for Business Advantage

MESA International - www.mesa.org

Waiting for you in MESA is

A world-class Resource Library of valuable articles, whitepapers, Guidebooks and more Member companies and individuals in 89 countries Industry's only independent, professional Global Education Program supported by the global MESA community A seat at the table to contribute to the dialogue shaping the solutions to drive Operations Excellence for the next 20 years!

2012 Cambashi Inc.

Industry Knowledge for Business Advantage

MESA Metrics Working Group

Harnessing the Power of Metrics Members Members ROI Guidebook; to Diagnose & Solve form WGs want to IndustryWeek, WP#35 Metrics know Reference Model, Metrics that Framework Your topics Holistic Metrics: Matter: Metrics, and Guidebook: Supply chain quality matter 2nd Edition

MESA Metrics Research Timeline

2004 2005 2006 2007 2008 2009 2010 2011 2012

Need data Metrics Framework and Guidebook: Core practices

2012 Cambashi Inc.

Metrics for Major Initiatives: Lean, RTE, Quality

Liaison to ISO #22400 Plant KPI Correlating Standards Plant to Business begins Performance
7

Metrics Makeover Contest

Pursuit of Performance Excellence

Industry Knowledge for Business Advantage

Pursuit of Performance Excellence: continued MESA Metrics Research

Continued MESA Metrics Research

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
Previous studies available in MESA Resource Library

2012 Cambashi Inc.

Industry Knowledge for Business Advantage

Thank you to our sponsors

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SUPPORTING SPONSOR

SEMICONDUCTOR / MEDICAL DEVICE PREMIUM SPONSOR

2012 Cambashi Inc.

Industry Knowledge for Business Advantage

Industry Council
Members
Manufacturer/producers only (13 active) Wide range of disciplines, titles, responsibility, scope

Industries Represented

Alcoholic beverages
Construction materials Electronics Engineered industrial catalytic

converters

Experienced and passionate about metrics

Hot button issues shape survey

Food Home & garden consumer durables

Power generation
Resins & advanced plastics Semiconductors

2012 Cambashi Inc.

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Industry Knowledge for Business Advantage

Response Demographics
Scope of Responsibilty
Senior executive / Cor VP-level executive Director / Manager of managers / Head of department Manager / Project manager Supervisor/ Team leader

300+ Responses Companies

All sizes, 40% under $100M 24+ industries

Every production mode: discrete, packaged goods, other mixed, batch, continuous

Individuals
Staff / Employee 0% 10% 20% 30% 40%

All regions Variety of titles & domains

Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics 2012 Cambashi Inc. and MESA International
2012 Cambashi Inc. 11 Industry Knowledge for Business Advantage

Current Situation
Majority of respondents:

Growing revenues and production volumes

More products, SKUs, variants Increasing automation Concerned about staff skills

Concern about Operator Skills: Change Over Past Three Years

Less 11%

Same 34%

More 55%

Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics 2012 Cambashi Inc. and MESA International

2012 Cambashi Inc.

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Industry Knowledge for Business Advantage

People Want Speedier Metrics

Satisfaction with Staff Speed to See Metrics by Timing of Availability
Real-time (minutes or less) Within a shift End of shift Daily Weekly Monthly or less Rarely/ never
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

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

2012 Cambashi Inc.

13

Industry Knowledge for Business Advantage

Operational dashboard users tend to use good line level metrics practices
When do operators, line workers, supervisors, and those managing the operations see the metrics for their scope of control?
Less Frequent OI / EMI Users Daily Others

Within/end of shift

Real-time (minutes or less) 0% 10% 20% 30% 40% 50%

Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics 2012 Cambashi Inc. and MESA International

2012 Cambashi Inc.

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Industry Knowledge for Business Advantage

Challenges in timeliness
How necessary is it to have an analyst involved to cleanse the data prior to analysis and display?
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Extremely Reasonably Not very Not at all
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics 2012 Cambashi Inc. and MESA International

2012 Cambashi Inc.

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Industry Knowledge for Business Advantage

Differences of opinion about issues

What is the Major Problem Causing Slower or Less than Ideal Frequency of Metrics Display of Results?
70% Lack of management commitment

60%
50% 40% 30% 20% 10% 0% Senior executive / C- or VP-level executive
16

Lack of will to change

IT challenges

Staff / Employee

Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics 2012 Cambashi Inc. and MESA International
2012 Cambashi Inc. Industry Knowledge for Business Advantage

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
Portion of Response Qualified as Business Movers by Financial Improvement
Business Movers 25%

Improvements are average per year over past three years

Others 75%
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics 2012 Cambashi Inc. and MESA International

2012 Cambashi Inc.

17

Industry Knowledge for Business Advantage

Business Movers Practices

Speed
Data collection
Analysis Display & Use
Efficiency metrics Business Movers Others

Fully automated data collection for two major groups of operational metrics

Quality metrics

0%

10%

20%

30%

40%

Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics 2012 Cambashi Inc. and MESA International

2012 Cambashi Inc.

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Industry Knowledge for Business Advantage

Line-level metrics best practices

Portion of respondents that ALWAYS provide line-level metrics to operators and technicians

Business Movers

Others

0%

5%

10%

15%

20%

25%

30%

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

2012 Cambashi Inc. 19 Industry Knowledge for Business Advantage

Metrics Maturity Journey

Understand
Training and education

Start manual

Gain visibility to react Respond and be reliable in the plant

See trends across the business

Include suppliers and partners; be predictive

2012 Cambashi Inc.

20

Industry Knowledge for Business Advantage

Types of Metrics More Business Movers Improve Dramatically

Predictive/preventive
Portion of respondents who improved by 10% or more on key operational metrics
25% 20%

Translate operational results into financial terms Include suppliers & partners Holistic/multi-faceted Non-value added time

15%
10% 5% 0% Suppliers' Overall equipment manufacturing yield effectiveness (OEE) or test results Business Movers Others

Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics 2012 Cambashi Inc. and MESA International

2012 Cambashi Inc.

21

Industry Knowledge for Business Advantage

Key to Success: Linking Plant and Business Metrics

How well linked are the operational metrics to your financial and business metrics?

Extremely Business Movers

Reasonably

Not very

Others

Not at all 0% 10% 20% 30% 40% 50% 60%

Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics 2012 Cambashi Inc. and MESA International

2012 Cambashi Inc.

22

Industry Knowledge for Business Advantage

IT Support
Use of Selected Information Technologies
100% 90% 80%

70%
60% 50% 40% 30% 20% 10% 0% ERP MES / MOM OI/ EMI/ Ops Dashboard

Planning to buy in next 1-2 years

Some use or pilot

Widely in use

Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics 2012 Cambashi Inc. and MESA International

2012 Cambashi Inc.

23

Industry Knowledge for Business Advantage

MES/MOM Use Correlates to Success

Higher portion of MES Users achieved at least 10% improvement on key financial metrics

EBITDA

MES/MOM Users
Others

Manufacturing cost as % of revenue

0%

5%

10%

15%

20%

Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics 2012 Cambashi Inc. and MESA International

2012 Cambashi Inc.

24

Industry Knowledge for Business Advantage

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.

Engage, educate, and empower employees

Understand metrics to enhance skills. Provide line-level metrics during the shift.

2012 Cambashi Inc.

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Industry Knowledge for Business Advantage

Go out and improve

Use 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 neverending journey: keep at it!

2012 Cambashi Inc.

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Industry Knowledge for Business Advantage

Julie Fraser

Ted Bobkowski

Mark Lincoln
2012 Cambashi Inc. Industry Knowledge for Business Advantage

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Industry Knowledge for Business Advantage