Key Quality Metrics - Manufacturing - Putting together a scorecard
I'm putting together a scorecard for my company and I was wondering if there were any key metrics I was missing. I know this can vary quite a bit, depending on the business and what the current needs are, but I wondered if we could come up with a list of core/"must haves" for a manufacturing company. Here is what I have so far:
1) #Field Claims / #Shipments (% by month)
2) #Production Nonconformances
3) Scrap$
4) #Safety Incidents
5) #Supplier Line Items Returned / Line Items Received (%)
6) #ECNs Created
7) #Waste or Error Correction ECNs Created
8) #Failed First Articles / #First Articles Performed (%)
9) #Internal Audit Nonconformances
I have a few others that are more custom to our business, but here I thought I'd start with the core from manufacturing (Purchasing, Inventory, Production, Shipping, Engineering, etc). I know service related businesses would probably have even more metrics - but I'd like to limit this thread to manufacturing. Sorry service folks - start your own thread.
I don't care for 6 and 7, but I'm looking for a good way to measure how Design Engineering is doing.
I'm putting together a scorecard for my company and I was wondering if there were any key metrics I was missing. I know this can vary quite a bit, depending on the business and what the current needs are, but I wondered if we could come up with a list of core/"must haves" for a manufacturing company.
Ahhh....Key Performance Indicators....something my life appear to revolve around of late. The core or "must haves" for KPI's are up to you, or rather your organization, to determine. But when developing them, ensure you ask the following:
What are we measuring?
Why are we measuring it?
What does it mean to us?
What do we hope to gain from measuring this?
How will we measure it?
How will we use the data?
Who is responsible for generating/collecting/analyzing/responding to the data?
How frequently will be measure/collect/analyze/discuss the data?
Does this impact our ability to meet requirements (be it Safety, Environment, or Quality)?
Is the process under control at this time? Do we have acceptable limits to indicate when we are under control and when we are not?
How will we take action on KPI's not under control?
Andy, I don't know who developed your list, and perhaps you have started off with a high-level organization KPI list, but my suggestion would be to start at the bottom and work your way up. Talk with the the departments on an individual basis. Find out what they feel is vital to keeping their own department/process alive and under control. Find out what seems to be triggers to them that all is not as it should be.
From these lists and discussion, you might that your core list of KPI's is substantially different than what you have at this time.
1) #Field Claims / #Shipments (% by month)
Assuming "Field Claims" equate to "Customer Complaints", I like this. We do something very similar - we then break it down to 1 Complaint / X tons shipped. The higher the X value, the better we have done. But we also break down this KPI into four categories. Invoice Complaints and Service-Sales Complaints are the responsibility of Sales to resolve. Service-Mill and Quality Complaints are the mills' responsibility to resolve.
2) #Production Nonconformances
At a high level this is a number that is almost meaningless until you:
Have previous years' data so that you can compare where you are know to where you were then (assuming you have conistent cycles).
Filter it down to the crew/department level, so you can analyze if there is a particular problem area.
3) Scrap$
Cost of unQuality basically, right?
4) #Safety Incidents
We break ours down into Medical Aids and Lost Time Accidents. We also then do the frequency rate and compare ourselves to those organizations in the same industry. Yes, one accident is one too many, but it is good to see how we do in comparison to others.
5) #Supplier Line Items Returned / Line Items Received (%)
Unsure what this means...could be that you use difference terminology than what I am used to.
6) #ECNs Created
What about ECNs closed? Or ECNs open > X days? Or ECNs open > X days with Actions Pending? "#ECNs Created" does not provide much information on the status or effectiveness of Engineering. The others help to show process efficiency...or prompt discussion on the allocation of resources.
7) #Waste or Error Correction ECNs Created
We look at similar items on a category basis. Safety, department, crew, particular process aspect...
8) #Failed First Articles / #First Articles Performed (%)
Don't know what this is.
9) #Internal Audit Nonconformances
What about External? What about Opportunities for Improvement? What about breaking it down to minors and majors, instead of lumping them all together? What about time to resolve? Internal Audits are supposed to be beneficial and help the organization...their KPI should show the improvement.
Quote:
Originally Posted by Andy Nutt
I have a few others that are more custom to our business, but here I thought I'd start with the core from manufacturing (Purchasing, Inventory, Production, Shipping, Engineering, etc). I know service related businesses would probably have even more metrics - but I'd like to limit this thread to manufacturing.
We also show such KPI's like:
Utilization
Energy consumption metrics
Waste to Landfill ratio
% Overtime
...and so on...
Like I said....KPI's are my life, of late....learning to love them as a tool of visual management.
How will you be communicating the KPI's? The results, the status, etc.? Stop-light colouring? Okay, okay...getting all excited here...
__________________
~ Roxane ~
"There's a fine line between genius and insanity. I have erased this line." - Oscar Levant
Great questions. Thanks.
Some more thoughts or philosophies, if you will....
The list of questions you would ask about a metric is a good one, but before I ask any of those I ask, "is improving this metric wildly important to our company?" Taken from a Franklin/Covey seminar on execution. The list is intended to be high level, something for management review. Other departmental metrics like % utilization are also important and we track that too, but I left that off as something that Manufacturing would monitor but we would not focus on for management review.
I also agree you need to break down each metric into categories. Each metric I listed is going to be displayed on a one page "football field," as an overview since we are a lighting company. And then each metric will also have a tab in the spreadsheet (see sample attached) showing top level Pareto and current corrective actions in place.
I disagree with starting at the bottom and working up to identify metrics. I think you come up with too many, maybe not meaningless but not critical to the company. I believe the list should be short as possible. Each department manager should probably not have more than two key ones to focus on at any given time otherwise effective execution is not possible.
1) #Field Claims / #Shipments (% by month)
Assuming "Field Claims" equate to "Customer Complaints", I like this. We do something very similar - we then break it down to 1 Complaint / X tons shipped. The higher the X value, the better we have done. But we also break down this KPI into four categories. Invoice Complaints and Service-Sales Complaints are the responsibility of Sales to resolve. Service-Mill and Quality Complaints are the mills' responsibility to resolve.
2) #Production Nonconformances
At a high level this is a number that is almost meaningless until you:
Have previous years' data so that you can compare where you are know to where you were then (assuming you have conistent cycles).
Filter it down to the crew/department level, so you can analyze if there is a particular problem area.
3) Scrap$
Cost of unQuality basically, right?
4) #Safety Incidents
We break ours down into Medical Aids and Lost Time Accidents. We also then do the frequency rate and compare ourselves to those organizations in the same industry. Yes, one accident is one too many, but it is good to see how we do in comparison to others.
5) #Supplier Line Items Returned / Line Items Received (%)
Unsure what this means...could be that you use difference terminology than what I am used to.
6) #ECNs Created
What about ECNs closed? Or ECNs open > X days? Or ECNs open > X days with Actions Pending? "#ECNs Created" does not provide much information on the status or effectiveness of Engineering. The others help to show process efficiency...or prompt discussion on the allocation of resources.
7) #Waste or Error Correction ECNs Created
We look at similar items on a category basis. Safety, department, crew, particular process aspect...
8) #Failed First Articles / #First Articles Performed (%)
Don't know what this is.
9) #Internal Audit Nonconformances
What about External? What about Opportunities for Improvement? What about breaking it down to minors and majors, instead of lumping them all together? What about time to resolve? Internal Audits are supposed to be beneficial and help the organization...their KPI should show the improvement.
1) Agree with breaking it down, see my last post.
2) Agree
3) Basically yes, I should also include rework.
4)
5) Line item is P.O. line item, basically lots nonconforming vs lots received
6) 2 schools of thought on ECNs, one is that all ECNs represent waste -- "why wasn't it designed right in the first place?", and two is that all ECNs are value added -- you're making a change that is an improvement. In truth, both are correct, so what should you measure? I don't like #created or #closed, because who is to say what is the right number? Cycle time is good but also difficult because some changes could be done in minutes, but other design changes could take months.
7) I like to focus on waste ECNs: those needed to correct a tolerance, properly define a datum, correct an error, etc. Anything that should have been caught during a properly run design review.
8) First articles are 100% dimensional inspections we perform on new piece parts or significant changes or new tooling. It is basically to qualify the tooling and sometimes we accept the supplier's measurements.
9) Agree externals should be included as well.
Always open to more thoughts and philosophies! What's works for one organization does not necessarily work for another...
Quote:
Originally Posted by Andy Nutt
The list of questions you would ask about a metric is a good one, but before I ask any of those I ask, "is improving this metric wildly important to our company?" Taken from a Franklin/Covey seminar on execution. The list is intended to be high level, something for management review. Other departmental metrics like % utilization are also important and we track that too, but I left that off as something that Manufacturing would monitor but we would not focus on for management review.
So what is management to review? What do you expect the outputs to be from their review? And do the KPI's you listed address these outputs?
Quote:
Originally Posted by Andy Nutt
I also agree you need to break down each metric into categories. Each metric I listed is going to be displayed on a one page "football field," as an overview since we are a lighting company. And then each metric will also have a tab in the spreadsheet (see sample attached) showing top level Pareto and current corrective actions in place.
If that works for your organization, great! My experience has show that a simple chart using the stop-light colouring method allows all people at all levels to understand at a glance how things are going. Green means the results demonstrate a controlled process. Yellow means we're outside of control and steps are being taken, where practical, to get back under control. Red means we're outside of control for the third month in a row and some serious root cause analysis is required - no more band-aid fixes.
Quote:
Originally Posted by Andy Nutt
I disagree with starting at the bottom and working up to identify metrics. I think you come up with too many, maybe not meaningless but not critical to the company. I believe the list should be short as possible. Each department manager should probably not have more than two key ones to focus on at any given time otherwise effective execution is not possible.
Why must the department manager focus on the KPI? Why not have team leaders do this? Why not have people from the floor spearhead a focus on a KPI? This helps in morale, involvement, and communication.
The reason I prefer a "bottom's up!" approach is because the guys on the floor know the process the best. They know what is important. They can tell us what impacts the process. Of course, this is for production-based KPI's only....you probably know best what to report for audits, etc.
From their input, supervisors and managers can filter through and determine those KPI's that have a strong financial, safety, environmental, quality focus.
From that point, upper management can focus on the KPI's that best show the overall health of the organization.
This approach works for us. It may not work for everyone. I do know, however, that implementing the team-based environment, along with stronger communication tools, between all levels has helped improve not only morale, but it has helped our KPI's and our understanding of our own processes.
However, if what you have works for you, great! Just don't let that stop you from considering alternate ways of collecting/analyzing/presenting the data. Even our method does not remain stagnant - every year there is at least one minor change to our KPI process.
Andy[/QUOTE]
__________________
~ Roxane ~
"There's a fine line between genius and insanity. I have erased this line." - Oscar Levant
So what is management to review? What do you expect the outputs to be from their review? And do the KPI's you listed address these outputs?
Management reviews all of the KPI's, and the corrective actions in place to drive improvement in those metrics. They also look for weaknesses or improvements that could be made to the overall Quality Management System.
What do you think of the metric #7, # of waste ECN's created?
Is this a good one to track for design engineering?
Management reviews all of the KPI's, and the corrective actions in place to drive improvement in those metrics. They also look for weaknesses or improvements that could be made to the overall Quality Management System.
We have several levels of KPIs and several levels of review. At the department level, a department reviews all of their specific KPIs and details associated with them. Usually, there a few members of Management there, as well, to keep up to speed on what's happening.
At the Management level, they review the KPIs they feel are the best to demonstrate how the company is doing. The do not review all KPIs - no time to do that and it would not be an effective/efficient useo f their time.
Quote:
Originally Posted by Andy Nutt
What do you think of the metric #7, # of waste ECN's created?
How will it be determined that an ECN is due to an improperly run design review or otherwise?
Is this a good one to track for design engineering?
Andy[/QUOTE]
__________________
~ Roxane ~
"There's a fine line between genius and insanity. I have erased this line." - Oscar Levant
Key Quality Metrics - Manufacturing - Putting together a scorecard
What's works for one organization does not necessarily work for another...
Just don't let that stop you from considering alternate ways of collecting/analyzing/presenting the data. Even our method does not remain stagnant - every year there is at least one minor change to our KPI process.
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