These analytics focus on asset efficiency, which helps companies get ahead of failures and increase uptime. 4. If a facility uses a predictive and prescriptive approach via continuous monitoring, it will reduce the amount and cost of downtime. 4 Metrics to Track Operational Efficiency, © MAGNET: The Manufacturing Advocacy and Growth Network An Ohio MEP Affiliate, early- and late-stage strategies for reducing defects, Future Factories: A Symposium on Manufacturing Talent, Technology, and Tactics. To achieve more uptime and better capacity utilization, plants should plan maintenance around load rather than planning load around maintenance. If this is the case, it becomes difficult to ascertain the most important outcome (y) measures from the metrics and indicators (x’s) that influence them. We create jobs and drive change by collaborating with manufacturing CEOs, governments, community leaders, and educators to solve problems and build opportunities. Efficiency can be improved by installing energy efficient computing equipment and cooling systems. Condition monitoring and improved maintenance programs can reverse these problems. How can operational metrics help my business? Because parts rarely fail without warning, the goal of continuous monitoring is to identify weak or poorly implemented controls so that they can be corrected or replaced before yield is affected. If plants can predict maintenance, they can diagnose the problem and have parts ready ahead of time. If machinery does not meet its intended level of performance, machine operators must be alerted immediately, not with uninterpretable numbers, but with actionable information (i.e. With the right implementation, continuous machine monitoring can improve production and increase equipment effectiveness. No matter your manufacturing goals, every company should have a set of key performance indicators (KPIs) that are used for measurement, benchmarking, and tracking success. Avoid falling behind by keeping detailed service records and updating your existing machinery as needed. In Part 4, we’re getting technical, describing operational metrics: scaling milestones & contraction triggers, sell-through rate & inventory turns, A/R aging & bad debt, and fixed vs. variable operating expenses. Predictive maintenance—as the name suggests—leverages data collection to enable users to predict when equipment failure might occur so they can implement maintenance before equipment breaks down. MAGNET is a non-profit consulting group. Machine Downtime Continuous data gathering and analytics are key to understanding how assets are functioning in real time. Some Pitfalls to avoid when measuring operational efficiency. Metric 1: Operational Efficiency A high-performance PMO is a master of operational efficiency — and not just through project delivery. Idea of KPIs 2. Train, train and train again. By getting ahead of the failure, a facility can eliminate several of those steps. To begin tracking efficiency across your operations, begin with the lifeblood of your manufacturing plant—the machines. Posted March 26, 2018. 1. SCALING MILESTONES & CONTRACTION TRIGGERS The article “Achieving Effective Lubrication” in Reliable Plant and Lean Manufacturing Journal reports that contamination causes 70 to 85 percent of hydraulic system failures. This indicator should be measured by a ratio (generally represented by a number) which portrays the progress of the process as a whole or in part. ... And while there are attempts to coordinate metrics and data between departments and functional areas, there is only so much that can be done before the data sets become too unwieldy to allow them to be used at a … Flipping that ratio through the use of continuous machine monitoring and predictive/prescriptive maintenance (200 hours of planned downtime, 100 hours of unplanned downtime) would result in $2.5 million in savings. The workbook contains the following metrics: Incidents created over time Since operational efficiency is about the output to input ratio, it must be measured on both the input and output side. These five metrics, which can be improved by continuous machine monitoring, directly affect operational efficiency. Quite often, company management is measuring primarily on the input side, e.g., the unit production cost or the man hours required to produce one unit. It unlocks (through data analytics) real-time insights into the slightest changes in operating conditions—changes that directly affect the quality of the products. He is a published researcher in the field of reliability and micro/nano devices. International pressures require machine shops to compete at a higher level, doing more with less, and manufacturing facilities have been forced into 24/7 operation. Although manufacturers generally think of total yield as a measure of quality, it also has a major impact on operational efficiency. Among the pitfalls when measuring operational efficiency is having too many measures and metrics in place. Missed your issue of Pumps & Systems because you are not at work? What is a Minimum Viable Product and How Do I Create One? This strategy involves optimizing equipment and processes to produce the greatest number of quality products possible. As a result, equipment reliability has become a core industry concern. Here are 4 KPIs to help you get started. The result? If one area of the production line is backed up due to an unusable asset, full production may come to a screeching halt—resulting in increased costs, missed customer deadlines, and lags in efficiency. Efficiency vs. Choosing digital transformation metrics. If the application is available for some users but not all, is it "available?" Debt Asset Ratio How does this directly affect efficiencies? Develop early- and late-stage strategies for reducing defects. Companies dealt with fallout in many ways, but show optimism if reliable vaccine arrives. Few deny that demands from the manufacturing and energy sectors will continue to drive industry growth. Continuous monitoring offers actionable insights that empower operators to make better decisions. The five parts are: Basics, Customers, Team, Operational Efficiency, and Investment. Our practical consulting helps start-ups thrive and small and medium-sized companies transform with technology, innovation, and talent. Additionally, the ramifications of unplanned downtime are decreased with an environment that welcomes open employee communication. A PMO operating at its peak should centralize all projects and portfolios to create maximum visibility and accurate oversight. This review looked at productivity and efficiency in English non-specialist acute hospitals, which account for half of the total health budget, using a series of metrics and benchmarks to enable comparison. Preventive maintenance had its place 20 years ago, but new technological advances allow for more refined and reliable methods of tracking machinery health and avoiding potential failures. Planned downtime is one-sixth the cost of unplanned downtime. If a certain timeline was established with an end-user, it’s up to the manufacturer to efficiently produce that product to meet deadlines and keep customer satisfaction up. Five key metrics define operational efficiency, and continuous machine monitoring could be the answer to improving these metrics. Uncover more on operational efficiency and best practices at our 8th annual Northeast Ohio manufacturing symposium, Future Factories: A Symposium on Manufacturing Talent, Technology, and Tactics, on Thursday, September 26. Specific Situation of Regional Airports The evaluation consistsof two phases. This KPI indicates the percentage of products that are manufactured correctly the first time through the production process. 5 Key Metrics that Affect Operational Efficiency, Pumping Systems: Essential Now & in the New Year, SEEPEX President Mark Jones on State of Industry Entering 2021, How the Pump Industry Is Dealing With COVID-19, Centrifugal Pumps: The Condition Monitoring Comparison Guide, Water@Work: Emerging Technology & The 2020 Impact, Replacing Metallic Wear Components with Composites in Centrifugal Pumps, In-depth articles on pump industry issues, Expert insights into important topics in the field. Operational Efficiency and the Limits of Lean and Six Sigma. Timely identification of problems combined with actionable data provides an ideal solution for improving operational efficiency. How to eliminate wet well maintenance & premature wear of pumps. For more information, visit dattus.com. Operational efficiency, also known as operational effectiveness or operational productivity, is a metric used by organizations worldwide. Document Control - The ability to find necessary documents as easily as possible is a crucial part of operational efficiency. Operational priorities and their associated metrics tend to go unrecognized or they take a back seat to order fulfillment and revenue growth. Free Download: Enabling Operational Excellence with Manufacturing Metrics. Financially, operational efficiency can be defined as the ratio between the input required to keep the organization going and the output it provides. This varies from traditional maintenance programs, which are limited by intermittent information and a lack of real-time insights. This does not factor in the savings from the avoidance of other downtime-related losses—product losses, injuries or equipment damages. quantifiable value expressing the business performance in a shorter time-frame level Energy efficiency might be expressed in the number of kilowatts per part manufactured. Find out which processes in your business most contribute to meeting this customer desire Operational efficiency is often measured by overall equipment effectiveness (OEE), which breaks a manufacturing facility’s performance into three measurable components: availability, performance and quality. According to downtime consultants, the majority of manufacturers face a 5% loss in efficiency due to downtime—but it can be as high as 20%. How a minimum viable product will launch your product-based startup. Specifically, track unplanned downtime as a topline KPI. Operational metrics are key performance indicators that allow you to view your team or project’s current status in real-time, or by the hour, day, week or month. An OEE score presents “an accurate picture of how effectively your manufacturing process is running. I keep seeing the word efficiency in the manufacturing media. This is critical because these operational metrics give you a closer look at where your people or systems are falling off track and allows you to take action immediately. The key is enabling solutions that reduce the cost and complexity of adoption, work well with IT departments, and are an easy retrofit option for existing infrastructure. Garg may be reached at agarg@dattus.com. For example, you’ll maximize the financial ROI and operational efficiency from digital transformation when 80% of the user base adopts the technology. Net Profit Margin 4. It is also important to measure the variability of performance (discussed further in the supplemental operational metrics section). Key regulations are back on the table under a new presidential administration. If a maintenance program is to be successful, a company should experience zero unplanned downtime. OTD also helps manufacturers identify areas of inefficiency and bottlenecks within the production line, whether it is a lagging machine, employee, or process. Net Profit 3. Intermittent maintenance schedules may not catch these inadequate conditions until it is too late. The average time it takes to render a screen or page. We grow the manufacturing industry and unlock prosperity in Northeast Ohio. Regular training (and cross-training) on systems and processes is critical to running efficient operations for associates and management alike. Strategic Process Performance Metrics serve to show if the organization is achieving the objectiv… >>>Related Resource: Discover how to break down information silos between departments. Continuous tracking and quality testing are key to optimizing yields, but monitoring machinery also may help achieve this purpose. A simple 3 percent improvement in uptime or operational efficiency can result in a $2 million impact on any continuous manufacturing operation’s bottom line (assuming the cost of unplanned downtime is more than $20,000 an hour). In this era of demanding conditions, operational efficiency has never been more vital. For example, you may consider prototyping new products or product advancements to identify and fix defects before advancing in the production process. Manufacturers know operational efficiency equals more production, better allocated resources, happier customers, and more profits. Gross Profit Margin 2. Unexpected downtime causes serious hiccups for operational efficiency. A manufacturing company should aim for 100% yield to avoid rework and scrap, as both of these outcomes will negatively impact daily efficiencies. Continuous data gathering and analytics are key to understanding how assets are functioning in real time. Manufacturing companies often measure operational efficiency by percentage yield. Find out which technologies work best to keep centrifugal pumps from causing downtime in critical industrial processes. One facility, for example, follows a two-production-shift followed by one-maintenance-shift cycle every day. Learn how early adopters are benefitting from emerging technology as well as the impact COVID-19 has had on water management. With increased competition saturating topline revenue growth, businesses are focusing on improving operational efficiencies and managing cost centers to impact their bottom lines. 2. If a product was produced with any defective parts, the entire product may require substantive rework, which inevitably affects total cycle times within production. One of the most important metrics to track to gauge operational success is efficiency. Do you believe there is room for improvement across your operations? It may be time to repair, rebuild, or replace if your machines aren’t producing at (or close to) 100% capacity utilization. In many ways, these methodologies were an attempt to bring together data and metrics available through the more sophisticated Consider a continuous manufacturing operation (assume opportunity cost of unplanned downtime is $30,000 an hour) that has 100 hours of planned downtime annually and 200 hours of unplanned downtime. An inventory turnover rate is an example of an efficiency measure. The program start date was June 1, 2014. The percentage of time the application is functioning properly. This can be difficult to define. 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