At the RSTechEd Conference in June 2012, Julie Fraser presented the results of the MESA 2012 Research Pursuit of Performance Excellence each day. The discussions were excellent.

1. Crafting a Metrics Program
for Maximum Impact
Julie Fraser
Independent Advisor & Research Leader
Cambashi-MESA Metrics Research
www.mesa.org

2. Introductions
• My background – why am I here?
– 25 years manufacturing tech industry watcher
– Research leader for study
– Former MESA Metrics WG Chairperson
– Passion for manufacturing & improvement
• Your background
– Why are you here?
Copyright 2012, MESA International

3. Topics
• Introduction – people, topics, MESA
• What works for improvement
• Designing a metrics program
• IT and automation role in metrics
• Exercise to focus
• Key take-aways
• Whatever you want to discuss!
Copyright 2012, MESA International

4. Two Main Data Sources #1
MESA Metrics Guidebook
MESA Metrics Guidebook and
Framework
• Guidelines to drive operational
excellence
• Design of metrics program
• Linking and aligning metrics for
business success
• Get a diverse team to a common
understanding
• Justifying improvement projects
• 60-page guidebook plus
resources and a glossary
Copyright 2012, MESA International

5. #2 New Study: Pursuit of
Performance Excellence
MESA Metrics Research
• Primary research on how
manufacturers measure &
improve performance
– On-line survey New in this report:
– Telephone interviews
• Depth & detail into
– Team for analysis & advice
Best Practice Processes
• Series started in 2006: Metrics
• Views into why speed is a
that Matter, Metrics for Major
challenge
Initiatives, etc.
• Analysis of widely used metrics
• Pursuit of Performance
Excellence • Correlation between improved
– Summary Report plant & financial metrics
– Comprehensive Report • Key take-aways summary

6. Metrics maturity
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
• Where are you on the metrics maturity journey?
• Is maturity different for culture, process, automation, IT?
Copyright 2012, MESA International

7. Who is MESA International?
MESA is…
a not-for-profit industry association
a global community of like-minded companies and professionals
working to make Operations more reliable, capable and profitable
the knowledge broker for the MES/MOM* domain globally
shaping important discussions impacting the
enterprise solutions of tomorrow
*MES/MOM = Manufacturing Execution Systems/Manufacturing Operations Management
Copyright 2012, MESA International

8. Who is MESA International?
Inside MESA for YOU is…
Resource Library: Whitepapers, Guidebooks, Research, etc.
Committees & Working Groups attacking the most pressing
and demanding challenges manufacturers and producers face
Member companies and individuals in 89 countries
Industry's only independent, professional Global
Education Program
A seat at the table to shape solutions to drive
Operations Excellence for the next 20 years!
Visit: www.mesa.org
Copyright 2012, MESA International

9. MESA Metrics Working Group
Harnessing the
Members Members ROI Guidebook;
Power of Metrics
want to form WGs IndustryWeek,
to Diagnose & Solve
know Metrics Reference Model,
Metrics that WP#35
Holistic Metrics: Framework Your topics
Matter: Metrics,
Supply chain and Guidebook:
quality matter
2nd Edition
MESA Metrics Research Timeline
2004 2005 2006 2007 2008 2009 2010 2011 2012
Metrics for Liaison to
Major Initiatives:
Pursuit of
Need data ISO #22400
Lean, RTE, Quality Plant KPI Performance
Metrics Framework Correlating Standards Metrics Excellence
and Guidebook: Plant to Business begins
Makeover
Core practices Performance
Contest

10. Pursuit of Performance Excellence
• Research team:
– Cambashi analysts
– Sponsors
– Industry Council
– MESA Volunteers
• On-line survey
• Telephone interviews
• Written reports
– Summary
– Comprehensive
• Webcast
Copyright 2012, MESA International

11. 2011-2012 Study Sponsors
PREMIUM SPONSORS
SUPPORTING SEMICONDUCTOR /
SPONSOR MEDICAL DEVICE
PREMIUM SPONSOR

12. Industry Council
Industries Represented
Members
• Alcoholic beverages
• Manufacturer/producers only
(13 active) • Construction materials
• Wide range of disciplines, • Electronics
titles, responsibility, scope • Engineered industrial catalytic
converters
Experienced and • Food
passionate about • Home & garden consumer
durables
metrics
• Power generation
• Hot button issues shape
• Resins & advanced plastics
survey
• Semiconductors

13. Response Demographics
Scope of Responsibility
Senior executive / C- or
300+ Responses
VP-level executive
Companies
Director / Manager of
managers / Head of  All sizes, 40% under $100M
department
Manager / Project  24+ industries
manager
 Every production mode: discrete,
Supervisor/ Team packaged goods, other mixed,
leader
batch, continuous
Staff / Employee Individuals
0% 10% 20% 30% 40%  All regions
Source: Pursuit of Performance Excellence:  Variety of titles & domains
Business Success through Effective Plant Operations Metrics
© 2012 Cambashi Inc. and MESA International

14. Current Situation
Concern about Operator Skills:
Majority of respondents: Change Over Past Three Years
Less
• Growing revenues and 11%
production volumes
• More products, SKUs,
variants
• Increasing automation Same More
34% 55%
• Concerned about staff skills
Source: Pursuit of Performance Excellence:
Business Success through Effective Plant Operations Metrics
© 2012 Cambashi Inc. and MESA International

15. Topics
• Introduction – people, topics, MESA
• What works for improvement
• Designing a metrics program
• IT and automation role in metrics
• Exercise to focus
• Key take-aways
• Whatever you want to discuss!
Copyright 2012, MESA International

16. Who are Leading Performers?
Business Movers Defined
• Improved EBITDA 10%
Portion of Response Qualified as
or more Business Movers by Financial
Improvement
• Improved Net Operating
Business
Profit 10% or More Movers
• Improved by 1% or 25%
more on over half of the
Business Metrics
in the study
Others
75%
Improvements are average per
Source: Pursuit of Performance Excellence:
year over past three years Business Success through Effective Plant Operations Metrics
© 2012 Cambashi Inc. and MESA International

17. Business Movers Practices
Speed Fully automated data collection for two
major groups of operational metrics
• Data collection
• Analysis
• Display & Use Efficiency metrics Business
Movers
Others
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

18. Line-level metrics best practices
Portion of respondents that ALWAYS provide
line-level metrics to operators and technicians
Business Movers
Others
0% 10% 20% 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

19. Types of Metrics More Business
Movers Improve Dramatically
Portion of respondents who
improved by 10% or more on • Predictive/preventive
key operational metrics
25% • Translate operational
20% results into financial
15%
terms
10%
5%
• Include suppliers &
0% partners
Suppliers' Overall equipment
manufacturing yield effectiveness (OEE) • Holistic/multi-faceted
or test results
• Non-value added time
Business Movers Others
Source: Pursuit of Performance Excellence:
Business Success through Effective Plant Operations Metrics
© 2012 Cambashi Inc. and MESA International

20. 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% 20% 40% 60% 80% 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

21. 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

22. 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
60% management
commitment
50%
40%
Lack of will to
30% change
20%
10% IT challenges
0%
Senior executive / C- or VP- Staff / Employee
level executive
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International

23. Topics
• Introduction – people, topics, MESA
• What works for improvement
• Designing a metrics program
• IT and automation role in metrics
• Exercise to focus
• Key take-aways
• Whatever you want to discuss!
Copyright 2012, MESA International

24. MESA Metrics Guidebook
Second Edition 2011
• Guidebook:
– Why metrics matter
– Explanations by role
• Framework
– Overview
– Alignment
– Manufacturing to business
linkage
• Reference
– Metrics
– Justifying systems
– Resources
– Glossary

25. Conceptual framework
Profitability Audience:
CFO, CEO
Increasing ability to take action
Increasing aggregation
Corporate
Financials Plant Accounting,
External Internal Finance
Investors Strategic
& Creditors Business
Planning
Aggregated Financial Plant Management,
& Operations Metrics Operations
Management
Operators, Supervisors,
Operations-level KPIs & Quality, Engineers,
Dynamic Performance Metrics
Technicians
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Copyright 2012, MESA International

26. 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

27. Useful construct for metrics
framework: Vollmann triangle
Strategy
Action Measure
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Copyright 2012, MESA International

28. Linking corporate objectives to
metrics at each level
Corporate Strategy:
Increase Brand Margin & Value Improvements in Revenue
(Sales & Marketing)
Strategy
Financial Metrics Net margin per product line or brand
Action Measure
Operational
Metrics # of ProfitableStrategy Reduce
Strategy
Lower
Strategy
models/ brand Cycle time or Production
extensions Stock-outs Costs
Plant Action Measure Action Measure Action Measure
Metrics
Strategy Strategy Strategy Strategy Strategy Strategy Strategy
Action Measure Action Measure Action Measure Action Measure Action Measure Action Measure Action Measure
Changeover NPI Upside Planned vs. First OEE Energy
Speed Ramp-up Production Emergency Pass Consumption
Time Flexibility Maintenance Yield Per Unit
Ratio
Changes in Production Resources = Changes in Cost
(Operations)
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Copyright 2012, MESA International

29. Example metrics that correlate
Business Metric Operational Metrics
Main factors:
• Batch/lot/unit right first time
• Throughput
Manufacturing Secondary factors:
Cost % Revenue • Manufacturing cycle time
• Time to make changeovers
• Scrap
• Capacity utilization
• On-time delivery to commit
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
Copyright 2012, MESA International

30. Example of Conflicting Answers
How many cases can we ship out tonight?
• Production line supervisor reports line counter’s total number.
• Warehouse manager reports a smaller number.
Why?
• Some pallets were shrink-wrapped incorrectly, so they were set
aside to be wrapped again later.
• Other cases failed quality tests, so these products had to be
either reworked or scrapped.
• Others may have been put aside for further quality tests.
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Copyright 2012, MESA International

31. Example of Tradeoffs to achieve
a metric
Schedule attainment
• Resource utilization
• Changeover times
• Inventory levels
• Planned maintenance
• Customer order priorities
What happens when:
• Machine breaks
• Key skilled employee(s) out sick
• Materials don’t meet spec
• Rush order comes in for important customer
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Copyright 2012, MESA International

32. Why a Framework?
“The structure of data is only as good as your model
supports. A metrics program must take into
consideration a holistic model to link the data (metrics)
from a machine or work cell to and through the ERP,
the financial and scheduling of your discrete or process
manufacturing.”
Tony Jenovino, Campbell's Soup
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Copyright 2012, MESA International

33. Resource Consumption
Accounting for realistic decisions
Add
4,000 1,000
Units with OT
Selling Price $ 120 $ 120
Material $ 25 $ 25 Raw or Purchased material
Full Labor Cost of Work Team and
Direct Labor $ 30 $ 45 with 150% OT Premium
Work unit operating costs - Protective
Other Direct Costs $ 5 $ 5 Clothing, hand tools, etc.
Plant wide allocation of Utilities,
Machinery Depreciation,
Overhead Allocation $ 40 $ 40 Maintenance, Administration
The sum of material, Direct labor,
Expenses $ 100 $ 115 Other Direct costs and Overhead
Gross Margin $ 20 $ 5
Source: MESA Metrics Guidebook and Framework, Second Edition © 2011 MESA International
Copyright 2012, MESA International

34. Topics
• Introduction – people, topics, MESA
• What works for improvement
• Designing a metrics program
• IT and automation role in metrics
• Exercise to focus
• Key take-aways
• Whatever you want to discuss!
Copyright 2012, MESA International

36. IT Support
Use of Selected Information Technologies
100%
90%
80% Planning to buy
in next 1-2
70%
years
60%
50% Some use or
pilot
40%
30%
20% Widely in use
10%
0%
ERP MES / MOM OI/ EMI/ Ops
Dashboard
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International

37. 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

38. How did that happen?
Operational improvements
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International
Copyright 2012, MESA International

39. Operational dashboard users 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

40. Topics
• Introduction – people, topics, MESA
• What works for improvement
• Designing a metrics program
• IT and automation role in metrics
• Exercise to focus
• Key take-aways
• Whatever you want to discuss!
Copyright 2012, MESA International

41. Metrics Maturity Model
Phase Baseline / Visibility / Reliable Avert & Foresee &
Understand React Response Improve optimize
Aspect Enterprise Ecosystem
Culture
Process
Automation
IT
Copyright 2012, MESA International

42. Exercise
• Find one block in the metrics maturity
model where you lag
• Develop a description of the key gap
• Develop a business case for improving it
• Identify key stakeholders
• Set up a meeting when you return
Copyright 2012, MESA International

43. Topics
• Introduction – people, topics, MESA
• What works for improvement
• Designing a metrics program
• IT and automation role in metrics
• Exercise to focus
• Key take-aways
• Whatever you want to discuss!
Copyright 2012, MESA International

44. 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.
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International

45. Two of Top Six Take-Aways
• Engage, educate, and empower
employees
– Understand metrics to enhance skills.
– Provide line-level metrics during the shift.
Source: Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics © 2012 Cambashi Inc. and MESA International

46. Go out and improve
• Develop 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 never-
ending journey: keep at it!

47. Learn more with us…
• Report as a thank-you for attending today
• Participate in MESA
– Metrics Working Groups
– ROI Working Group
– Food Safety SIG
– Continuous Process SIG
– Technical Committee
• MESA Unconference session here at RSTechEd
St. Johns 29 Tuesday 4-5pm, Wednesday 11-noon

48. Further Discussion & Follow-up
WWW.MESA.ORG
JULIE@IYNO.COM
Copyright 2012, MESA International