The Opposite of World Class – Do You Know These Plants?

Many organizations are motivated to improve by seeing and witnessing operational excellence among their peers and exploring neighboring plants or leaders in their industry. Good companies or facilities seek to set stretch targets and become world-class; other sound operations benchmark for ways to get better and establish more competitive goals. Many plants, though, are looking to simply stabilize dysfunctional operations and apply some means of improvement.

Manufacturing metrics from U.S. plants that participated in the MPI Manufacturing Study, years 2006-2010, reveal operations challenges that face about one in 10 manufacturing facilities. (And these are the plants that at least have the will to improve — they participated in the annual study and are interested in what other companies and facilities are doing.)

• On-time delivery: 13% of plants report on-time delivery rates of 80% or lower.
• Scrap and rework: 11% report scrap and rework rates, as a percent of sales, of 10% or higher.
• Labor turnover: 17% report annual labor turnover of 20% or higher.
• Warranty costs: 9% report warranty rates, as a percent of sales, of 5% or higher.
• Machine availability: 13% report machine availability of 50% or lower.
• Customer retention: 10% report customer retention rates of 80% or lower.
• No improvement method in place: 12% report the plant has no methodology in place to improve – none.

If you’re a customer of plants with metrics like these, you probably know their struggles firsthand and have been on the receiving end of their problems. Or do you recognize your plant in these numbers? How does your operation stack up? Take the 2011 MPI Manufacturing Study to find out.

By George Taninecz, VP of Research, The MPI Group

Comments

[Ben Benjabutr]

I think we shouldn't pay too much attention to single KPI but try to see the big picture. Another important thing is to know which KPI is critical to customers. In reality, we can't win them all, then we should prioritize improvement based on customer's requirements.