Eliyahu M Goldratt: “Show me how you measure me and I’ll show you how I perform”

“Each step in the workflow must be continually monitored to make sure that cycle times are not exceeded.”

Most companies set KPI’s for the business and decide the point at which these KPI’s should be measured. These are then devolved down through reporting structures to the shop floor and the results reported back up the chain of command. If we take the example of Overhead recovery, probably the most important measure of operations performance for the business. On the shop floor however, this measure isn’t tangible and we won’t see any improvement unless we break it down into measures that are applicable to the operators.

The primary measure on the shop floor is Overall Equipment Effectiveness, comprising of 3 main components that are impacted by different departments.

OEE = Availability x Performance x Quality

• Availability:The portion of the OEE Metric that represents the percentage of scheduled time that the operation is available to operate. This is a measure of Engineering and Planning performance based on breakdowns and materials availability.
• Performance:The portion of the OEE Metric that represents the speed at which the Work Centre runs as a percentage of its designed speed. This is a measure of Production performance and ties into consistency of cycle times
• Quality:The portion of the OEE Metric that represents the Good Units produced as a percentage of the Total Units Started. This is a measure combines production, engineering and QA responsibility and accountability.

Individually the measures show how the different departments perform, and when combined shows collective operations performance.

The point at which the measure is taken is very important to the business, in the case of overhead recovery, we could inflate operations performance at the expense of the business depending on where we take it. Do we claim it when the goods leave the production floor, or when they are released into the warehouse, or at the time of sale? When making this key decision, we need to ask ourselves which time benefits the business the most? The business as a whole only benefits at the point of sale, so surely this needs to be the point at which we recover the overheads. This focus supports the need to have the stock in the warehouse at the right time to support sales.

We all know that planning, scheduling and measuring takes time and effort, so we need to look for ways to automate this without any major Capital investment. Using Microsoft Office, you can create tools simply and effectively so that your time can be spent analysing information instead of capturing the data after the fact. You can empower your operators to capture the data which will give them real time information to measure process behaviour over time. This gives the operator the tools to make far more informed decisions about adjustments during the production run.

If you are looking to improve performance measures in your supply chain and operations,  contact Dave at SA Coaching  You can also follow Dave on LinkedIn