Julie Fraser, Cambashi President & Principal Industry Analyst

myDIALS webinar April 7, 2009

Julie Fraser

• Long-time industry analyst, market researcher

& consultant

• Focused on how information systems

accelerate business success

• Manufacturing Business Technology

magazine columnist

Cambashi delivers research, insight and

understanding on the use of IT in production,

utilities, construction, and distribution industries.

Urgency to “move the needle” on performance

How are “Business Movers” different?

Key performance indicators and drivers

(KPIs/KPDs)

Right-time feedback via technology accelerators

Competitors Customers

Typical Metrics Program

Objective: Improve results

Context: Lean, Six Sigma,

TQM or other Continuous

Improvement Initiative

Means: Monitor outcomes◦ Financial metrics

◦ Operational metrics

Source: MESA Metrics that Matter:

Uncovering KPIs that Justify Operational Improvements

© 2006 MESA International & Industry Directions Inc.

Improved by

>1% in 6

metrics

16%

Improved by

>10% in 1

metric

10%Less

improvement/

Don't Know

55%

Improved by

>10% in 2+

metrics

19%

Source: MESA Metrics that Matter:

Uncovering KPIs that Justify Operational Improvements

© 2006 MESA International & Industry Directions Inc.

Improved by

>1% in 6

metrics

16%

Improved by

>10% in 1

metric

10%Less

improvement/

Don't Know

55%

Improved by

>10% in 2+

metrics

19%

0% 20% 40% 60% 80% 100%

Lower

Improvements /

Don't know

Business Movers

Better<------------------------------------------>Worse

Very/Pretty Somewhat Not very / In a few places Not effective / Not linked

Source: MESA Metrics that Matter:

Uncovering KPIs that Justify Operational Improvements

© 2006 MESA International & Industry Directions Inc.

0%

10%

20%

30%

40%

50%

>50% Fully automated <10% Manual input

Business Movers Others

Source: MESA Metrics that Matter:

Uncovering KPIs that Justify Operational Improvements

© 2006 MESA International & Industry Directions Inc.

0%

10%

20%

30%

40%

50%

Business Movers Others

Source: MESA Metrics that Matter:: Uncovering KPIs that Justify Operational Improvements

© 2006 MESA International & Industry Directions Inc.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Business Movers Others

Annually

Quarterly

Monthly

Weekly

< 24 hours

Source: MESA Metrics that Matter::

Uncovering KPIs that Justify

Operational Improvements

© 2006 MESA International &

Industry Directions Inc.

Source: MESA Metrics that Matter: Uncovering

KPIs that Justify Operational Improvements

© 2006 MESA International &

Industry Directions Inc.

0% 20% 40% 60% 80% 100%

Economic value / economic profit

ROA/RONA

Customer fill rate/on-time delivery

Labor cost per unit

EBITDA

Net operating profit

Source: MESA Metrics that Matter:

Uncovering KPIs that Justify Operational Improvements

© 2006 MESA International & Industry Directions Inc.

Top Business Gains >50%

Top Operational Gains

>50%

On-time delivery

Net operating profit

Labor cost per unit

EBITDA

ROA/RONA

Productivity in revenue

per employee

On-time delivery

Average overtime/week

First-pass yield

Cycle time

OSHA-reportable

incidents/year

Capacity utilization

Average days total

inventory

Areas of Outstanding or Medium Improvement

0%

10%

20%

30%

40%

50%

60%

70%

80%

Quality Customer

Service

Throughput Flexibility Compliance Utilization Inventory

Business Movers Others

Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements

© 2006 MESA International & Industry Directions Inc.

Indicators are outcomes & lagging

Drivers are activities & leading

Not all operations metrics are drivers

Activities (KPDs)

First-pass yield

OSHA-reportable

incidents/year

Capacity utilization

Outcomes (KPIs)

On-time delivery

Average

overtime/week

Average days total

inventory

Create a focus for each workday

Enable employees to see results (KPIs)

Explore drivers of those results (KPDs)

Develop action plans

You need information to succeed!

Source: MESA Metrics that Matter:Uncovering KPIs that Justify Operational Improvements

© 2006 MESA International & Industry Directions Inc.

Real-time (minutes or

less)5%

Less than 24 hours20%

Weekly29%

Monthly or less36%

Rarely/never10%

What is the Frequency or Time Lag of Data Creators Seeing Their Performance?

How Rapidly Performance Results are Shown to Operations

Grouped by Improvement to Operations KPIs

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

3+ KPIs

improved

>10%

1-2 KPIs

improved

>10%

10+ KPIs

improved >1%

Less

improvement

Don't Know

improvement

>50% of KPIs

Faste

r <

----

----

--->

Slo

wer

Rarely/never

Monthly or less

Weekly

< 24 hours

Real-time

Source: MESA Metrics that Matter: Uncovering KPIs that Justify Operational Improvements

© 2006 MESA International & Industry Directions Inc.

Source: MESA Metrics that Matter:Uncovering KPIs that Justify Operational Improvements

© 2006 MESA International & Industry Directions Inc.

0%

10%

20%

30%

40%

50%

60%

70%

On-time delivery to customer

request

Manufacturing cycle time

Average days total inventory

OSHA-reportable incidents/year

Use Plant Dashboard No Plant Dashboard

0%

5%

10%

15%

20%

25%

30%

35%

MES Dashboards

Use of MES & Operational Dashboards

Business Movers Others

Source: MESA Metrics that Matter:

Uncovering KPIs that Justify Operational Improvements

© 2006 MESA International & Industry Directions Inc.

Yes39%

No61%

For Those with a Plant Dashboard:Is it Actionable?

Source: MESA Metrics that Matter:

Uncovering KPIs that Justify Operational Improvements

© 2006 MESA International & Industry Directions Inc.

Link business metrics and operations metrics

Focus on KPDs to shift results on KPIs

Ensure information is right-time ◦ data collection

◦ results display

◦ translation of operations to business results

Use actionable dashboards◦ context

◦ KPDs & KPIs

◦ business & operations

Julie Fraser, Cambashi President & Principal Industry Analyst

myDIALS webinar April 7, 2009