As smart watches have become more popular, everyone talks about the number of steps they take, the calories they burn or the average minute mile on their latest run. These metrics are key performance indicators (KPIs) for tracking your activity and your health. In manufacturing, as we adopt more digital technology, you probably already have systems in place – and you undoubtedly have the data that comes with it! But with all this data available to you, do you know which KPIs you need to track? The reality is that every business is different and needs to track different metrics. So, in this article, we look at the top 5 KPIs for treatment houses to track.
The importance of tracking KPIs
Treatment Houses often have tight deadlines and defined specifications that they have to work towards. As the last line before a product is delivered to the customer, quality is paramount. If something goes wrong, it can be disastrous for the business and cause extreme delays and dissatisfaction. Implementing KPIs can help to both provide greater visibility of your business and increase speed to identify and resolve issues once found.
Providing visibility of your business
For example, you probably have a good idea of what happens in each department – when things go well, and when things go wrong.
But, do you have a clear picture of how many reject occurred this month? Which department they originated from, and who logged them? Similarly, do you know who your top performing sales-person was? Or your OTIF delivery performance?
Without this information, you cannot identify areas to improve, or reasons for genuine praise and success. If employees are able to disguise the issues that occur, how can you hold them accountable for performance or identify opportunities for training and development?
Becoming more agile and responsive
Additionally, you might be monitoring some KPIs, but when orders are being turned around in days or hours, you need to be able to track the right KPIs in real-time.
Let’s take a look at an example. You’ve noticed that your reject rate is higher this quarter. Your KPIs show that the issue lies with staff members, so you assume that someone needs additional training. However, you aren’t sure on which employees are under-trained or at what point the failure occurred. This is because you’re only analysing KPIs once every 3 months. With this method, an issue that occurred in the first month of the quarter will go unnoticed for 2.5 months, potentially damaging your business.
Ultimately, you know that you need to streamline your KPIs to make improvements, whether that’s on your delivery timescales or skill sets, but you’re uncertain on where to begin.
The top 5 KPIs for treatment houses to track
While the specific KPIs you need to track may differ depending on whether you’re a powder coater, heat treater, or plater, we have found that most treatment houses need to track similar top-level KPIs. We know that your priority is to know what work is coming in, how to maintain customer satisfaction and how to balance quality and cost.
Additionally, you need to consider how you can measure these KPIs. You may initially capture some of the metrics manually, but to really make this work for you, you need to automate this process as much as possible.
With this in mind, we’ve collated our top 5 KPIs for treatment houses to track and how to implement them in your business.
1. Average lead time
The Average lead time tracks how long it takes for a part to arrive at your factory, undergo treatment and be dispatched for delivery. You may wish to track this per customer depending on your lead time with priority clients. Alternatively, you may manage the average lead time per department due to treatment operations taking different lengths of time. Regardless of the method you choose, tracking this KPI will provide visibility of how long it takes you to deliver jobs, and identify where delays are occurring. Ultimately, this will enable you to accurately cost jobs, minimise lead times and exceed customer expectations with delivery times.
To track average lead time effectively, you need a production control system that’s aligned to your process. If you need to supplement any part of the process with spreadsheets, it will impact the accuracy of information you’re analysing. This means that you might make mis-informed decisions.
Out DNAsp production control system is configurable to various types of treatments, including powder coating, heat treating and many more. This will allow you to investigate areas that can be streamlined to make your processes faster, therefore reducing your average lead time.
2. Reject rates
There are many possible KPIs to track for quality, but rejects are perhaps the most important. You should measure the quantity of rejects found internally and reworked before a customer receives the product. Tracking this will help you reduce waste and enable you to easily undertake root cause analysis. You should also measure the number of parts rejected by customers as these will impact your customer satisfaction. You can prevent the latter issue by filing non-conformance reports and implementing preventive actions from the information discovered.
By using a production control system, you can easily manage reject rates. Our DNAsp system uses real-time reporting to make your tasks easier to manage. With the ability to log non-conformance reports, and visualise them in real-time charts, you can improve on rejects thoroughly.
3. On time in full (OTIF) delivery
On time in full (OTIF) performance is one of the most useful KPIs for treatment houses to measure. It demonstrates your ability to deliver jobs to deadlines promised to customers. Late deliveries will reduce customer satisfaction. Therefore, it’s vital that you track deliveries, and investigate any issues as they occur. You can highlight inefficiencies in your full order process before future orders are delayed by tracking deliveries that are received by the time promised with no missing parts. You can then understand the possible cause to other KPIs that may be struggling, such as your labour effectiveness.
This KPI will enable you to identify if you’re always over-promising or under-delivering by further investigating which tasks are taking too long. This helps to identify whether changes in scheduling or training are needed for certain operations to be completed. Or maybe, there is a discrepancy between when you record the parts being delivered and your customer acknowledging that the parts are delivered.
With our built-in Shop Floor Data Capture (SFDC) tool, you can monitor your work in progress (WIP) easily. So, you can easily see if a job is running behind schedule, allowing you to take action to get the order back on-track. Ultimately, it provides accurate information for you to review performance overtime, identify common issues and implement improvements in your processes.
4. Overall labour effectiveness (OLE)
Overall labour effectiveness is the measure of attendance hours, performance and time spent on jobs. We know that a lot of treatments require intense labour processes, therefore it is invaluable to track your OLE. Labour is costly and having staff that aren’t maximising their productivity whilst on shift will impact you negatively. It’s important to measure performance, quality, and time so that you can find the optimal balance for your business. To gain better results, you should analyse labour by the product, team, activity, and shift. This will provide more detail so that you can address specific issues that will deliver the best enhancements.
To maximise the success of this KPI, you should be able to split and group jobs whilst managing materials. DNAsp gives you this ability, thereby ensuring that all employees are working to their maximum potential.
With SFDC, operatives receive prioritised work-to lists with all jobs assigned to them. They can then scan electronic job cards when they start, pause and stop all activities, including non-productive jobs such as meetings, training and breaks. You won’t need to physically monitor your shop floor productivity anymore, giving you time to focus on other tasks.
To help engage the team in taking accountability for KPIs, you can display relevant KPIs and jobs on dashboards on the shop floor, thereby creating a more productive factory.
5. Overall equipment effectiveness (OEE)
To gain an exact understanding of productivity, it’s important to monitor machinery as much as staff. Overall Equipment Effectiveness is a measure of how efficient your machinery is, by tracking running time, speed, and production. Tracking this will enable you to optimise the machine’s operations to improve performance. When used in conjunction with the OLE KPI, this metric can be invaluable to a business as your machinery and employees can work at optimum levels. By monitoring the quality of production, performance, and machine availability, you can then understand realistically how productive your equipment is. This will give you something to work on.
To capture true OEE, you’ll need machine sensors. However, by using SFDC and targeting an 80% efficiency in the data that you capture, you can gain a pretty good indication for this KPI. To improve accuracy though you might need to bring information together from multiple sources. That’s where our Business Intelligence module comes in.
Bringing it all together
All-together, tracking these 5 KPIs will give you a snapshot of business performance across jobs-in-production, quality performance, productivity and customer satisfaction. By using the methods above, you’ll be on your way to collecting this information in real-time. However, it is equally important to break through data silos to view your whole business together. With our new Business Intelligence module, we help you to do exactly that.
By bringing together data from your MRP system, spreadsheets and external sources, you can view all your business data in one central location that allows you to stay updated on every area of your business in real-time, wherever you are.
Additionally, you can display these reports and dashboards on your shop floor, and share them with managers. This will increase accountability and transparency across your whole business.
Get started
Of course, these top 5 KPIs for treatment houses are just the start. For an accurate view of your information, you need to implement secondary KPIs. These will help you analyse the root cause of issues quickly and efficiently. To find out more about how you can drive improvements in your business, speak to a member of our team today.