Only those who measure and check their results will be able to improve. Whether it is Kaizen, Lean Manufacturing, Six Sigma, Total Quality Management or Continuous Improvement, in order to optimize processes, the “Key Performance Indicators” (KPIs) must be considered. Performance data is a sensitive area and KPIs and visual management must be understood as an overarching project and developed with stakeholder participation. If the visualization is transparent, then the desired motivation can grow from it.
By definition, KPIs are categorized variables that a company uses to assess, analyze and track manufacturing processes. These performance measures can be used to assess success against tactical and strategic objectives.
Visual management is the process of visually representing critical information, such as KPIs, that specifically relate to the output, efficiency, and quality of manufacturing processes. By visibly displaying this data in a company’s production area, employees gain a better understanding of the level of production needed. Visual management also provides actionable information that allows supervisors to better monitor job performance and pinpoint areas where improvement is advised, in real time. The overall result helps to increase productivity throughout the company by improving efficiency and quality and improving the availability of machinery and equipment.
Different KPIs are used as guidelines in the companies. These guidelines are sometimes determined by the functionality of the ERP systems, although this should be the other way around. Below are the most commonly used KPIs in use in the industry.
The count value (Good or Bad)
A key measurement in the production sector is the number of products manufactured. The count value (good or bad) usually refers to either the number of products produced since the last machine changeover or the total production for the entire shift or week.
The scrap rate
Production processes occasionally produce scrap, which is measured as the scrap rate. Minimizing scrap helps organizations achieve profitability goals. It is therefore important to track whether or not the amount of scrap produced is still within tolerable limits.
The cycle rate
Machines and processes produce goods at variable cycle rates. With varying speeds, slow cycle rates usually result in lost profits, while cycle rates that are too fast make quality control more difficult. That’s why it’s important to keep operating speeds consistent.
The target value
Many organizations set target values for production output, rate and quality. This KPI helps motivate employees to achieve specific performance goals.
The cycle time
The cycle time is the time, or cycle duration, for the execution of a task. It usually refers to the cycle duration of specific work processes. By visualizing this KPI, manufacturers can quickly determine where bottlenecks or chokepoints occur in a process.
Overall equipment effectiveness
Overall Equipment Effectiveness (OEE) is a metric that multiplies availability by performance and quality to determine resource utilization. An increase in OEE values is usually desired because this indicates more efficient utilization of available personnel and machinery.
Downtime is considered one of the most important observable KPIs – whether it is the result of a technical malfunction or a simple changeover. When machines are not working, no money is generated; therefore, reducing downtime is a direct way to improve profitability.
Today, sustainability can be found in all of the above KPIs in one way or another. According to Prof. Dr. Péter Horváth, there is a fundamental need to establish a process for the further development of all instruments with a focus on sustainability – from operational cost accounting to strategy development. In his opinion, the greatest need for development lies in the development of new, environmental and social metrics and their connection (cause-effect) to the financial dimension. In addition, appropriate business analytics tools would also need to be developed.
Managing productivity and profitability with sustainability in mind is a major task for operations managers in manufacturing companies. The level of productivity and profit improvement an organization can expect depends largely on the company and its existing processes.
Powerful ERP systems in the printing industry provide decent evaluations based on operational data collection. Some may also be classified at the business intelligence level. If the system does not offer the desired visualization or if the figures are to be displayed in a company network, correlated with those from other sources, programs such as Power-BI or Tableau are a good choice.
Companies that manage with KPIs should take the time to evaluate the numbers and consider how visual management could increase productivity throughout the organization. Visual management systems come with a cost. The costs are offset by reduced risk and typically high benefits in the form of process improvements and profitability gains.
A picture is worth a thousand words, goes the popular saying, meaning that complex issues can be explained more easily with a pictorial representation. Dashboards with comprehensible real-time data often achieve more than extensive tables. After all, there is a reason why the weather map is shown at the end of the messages and not the tables that were used to calculate the weather forecast. Visual management is not about dealing with the past, which of course has its purpose, but about looking ahead to the next steps. With advanced and predictive analysis and forecasting, performance can be improved in the long term. In other words, I will take the umbrella or the sunglasses or both. On that note, “Stay dry.”