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World Class Manufacturing

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Detail Performance Measurements

In World-Class Manufacturing the focus is on continuous improvement. Measurements in place should therefore activate improvements. Management evaluates the mea­surement process based upon the rate of improvement. The measurements are designed to drive the improvement process in the critical elements of quality, cost, flexibility, reliability and innovation. The measurements we at Buker, Inc. have seen and recommend for companies striving for World-Class levels are as follows:

Quality
1. Percent reduction in total cost of quality.
2. Percent reduction in defects.
3. Percent of certified suppliers.
4. Percent reduction in supplier base.

Cost
1. Percent increase in inventory turnover.
2. Percent reduction in data transactions.
3. Percent increase in materials shipped to point of use by supplier.
4. Percent increase in dollars of output per employee.
5. Percent reduction in floor space utilized.

Flexibility
1. Percent reduction in cycle time.
2. Percent reduction in setup time.
3. Percent reduction in lot/batch size.
4. Percent increase in number of jobs mastered per em­ployee.
5. Percent increase in common materials used per product.

Reliability
1. Percent increase of process capable equipment.
2. Percent increase in overall equipment effectiveness.
3. Percent reduction in product or service warranty costs.
4. Percent reduction in engineering changes.
5. Percent increase in on-time delivery.

Innovation
1. Percent reduction in new product introduction lead time.
2. Percent increase in new product sales revenue as a percent of total sales revenue.
3. Percent increase in number of new patents granted.
4. Customer perception of the company as a leader in innovation.
5. Percent of management time spent on leading or fostering innovation.

Quality
1. Percent reduction in total cost of qualityThe reduction in total cost of quality would be measured on a monthly basis and typically is displayed in graph format. The elements of cost of quality measured are prevention, appraisal, internal failure and external failure. These four elements are measured monthly as a percent of sales.

2. Percent reduction in defects
The reduction in defects is measured in parts per million. The measurement is defects per unit relative to the number of opportunities possible for defects to occur. Reduction in defects is measured weekly and monthly. Normally this is displayed on a trend chart and is one million divided by total opportunities times the number of defects.

3. Percent of certified suppliers
Certified suppliers require, at the minimum, supplier's process has been certified to the point that there is no incoming material inspection required. Many companies that are working on certification certify by individual part rather than source of the part. Whichever method is used, the data should be displayed on a trend line and reviewed monthly and appropriate actions taken.

4. Percent reduction in supplier base
This measurement is utilized to review improvements in quality of source of supplier. The supplier base typically is reduced by rewarding those sources that continuously im­prove quality, reduce lead time, improve on-time performance and supply materials that can be delivered to the point of use. The measurement is monthly and displayed as a trend line.

5. Percent reduction in time between defect occurrence, detection and correction
There are actually three measurements: defect occur­rence, defect detection and defect correction. This could be
measured by way of a chart located in each work area with time horizontally displayed and defects vertically dis­played. Operators would record time of occurrence, detec­tion and correction. Results are summarized weekly and monthly.

To be Continued