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Research Reveals The Best Operations Use Metrics

Companies that improve on multi-faceted metrics such as overall equipment effectiveness, and forward-looking metrics such as portion of orders booked within schedule freeze period, are more likely to improve their financial performance. This is just one finding from the report “Pursuit of Performance Excellence: Business Success through Effective Plant Operations Metrics,” released by the Manufacturing Enterprise Solutions Association (MESA) International and industry analyst and consulting firm Cambashi.

Rock Products was the exclusive aggregates industry media sponsor of the study, which included input from crushed stone and sand and gravel companies. Corporate sponsors included companies such as Rockwell Automation.

This primary research revealed that significant improvements in financial performance are the result of a multi-faceted effort in the areas of plant performance metrics programs, improvements, and IT applications. Based on a survey of 305 individuals from a wide range of manufacturing and production companies, the results illustrate the approach, business processes, and software technologies used today and how they correlate to dramatic business performance improvement.

The report also includes information on what metrics are most commonly used, and which operational metrics correlate most closely to improving earnings, net profit, and manufacturing cost as a percentage of revenue.

The research also shows that over a third of responding companies are piloting or planning to buy manufacturing execution systems or manufacturing operations management systems (MES/MOM) and operational dashboard software, also called operational intelligence (OI) or enterprise manufacturing intelligence (EMI). Those using MES/MOM and operational dashboards are more likely to have made greater business performance improvements than others.

“Aggregates industry companies have done a responsible job of measuring operation level and financial level, and aligning those,” said Cambashi’s Julie Fraser. “The study points to the need to provide people at every level in a company organization metrics and context: a way to see the direct impact of their activity on the broader set of metrics."

Fraser said that when down-line workers get to see how they contribute to the success of the company it has a broader, company wide effect.

“Metrics that allow people to be proactive in preventing errors, and taking operational metrics and turning them into financial terms, is also important,” she said. “Measuring where you are wasting time is as important as how your time impacts the operation’s success.”

The report shows that for aggregates operations, there is increasing concern about skills of workers. “Do we have people who are capable of doing the work that is left after automation?” Fraser said.

Also, many operations are tying to better use real-time data. “The more-advanced operations have the data, but still need to use it better,” Fraser said.