Manufacturing Metrics

 Sustaining Edge Solutions, Inc. Newsletter

Performance Improvement Solutions for Your Business                                 February 2014


This Month
* Manufacturing Metrics That Matter
* FDA UDI Initiative
* Business Continuity Management
* ANSI Standards Portal
* In the News
* Training Courses


2014 Lean and Six Sigma Conference  Feb 24-25, 2014 Phoenix, AZ.  See you there!
AZTC Aerospace, Defense & Manufacturing Requirements Day March 6, 2014 Scottsdale, AZ.  We are a presenter and exhibitor.



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Our newsletters provide information on business management systems and process improvement methods.  These systems include ISO 9001 QMS, AS9100 Aviation, Space and Defense, ISO/TS 16949 Automotive, ISO 27001 Information Security, ISO 13485 Medical Devices, ISO 14001 Environmental Management Standard, and others.  Subjects include performance improvement methods such as Six Sigma, Lean Enterprise, and other topics of interest to our readers.

If you have any questions regarding content, or have a subject of interest for a future newsletter, please let us know.   


Manufacturing Metrics That Actually Matter          

We were reading a blog entry recently by Mark Davidson, of LNS Research titled, “28 Manufacturing Metrics that Actually Matter (The Ones We Rely On)” at the company web site. This information is always important, but more so with the New Year and the need to align process metrics with your company strategic goals, objectives, and customer requirements.  


Mark identifies that effectively measuring, analyzing, and improving manufacturing metrics is not as simple as it may appear, and we agree! He goes on to state that Think “SMART” goals-Specific, Measurable, Actionable, Realistic, Time-Based should be aligned with company strategy.

Based on a metrics survey, The Manufacturing Enterprise Solutions Association (MESA) organization has sponsored research over the past years to help the manufacturing marketplace identify the most important metrics, and help decision makers understand metrics improvements and their relationships to metrics programs. As part of the most recent metrics survey, 28 manufacturing metrics were identified as being the most utilized by discrete, process, and hybrid/batch manufacturers.

Below, they have grouped these metrics with the associated top-level area of improvement/goal for each. 

Improving Customer Experience & Responsiveness


1. On-Time Delivery to Commit – This metric is the percentage of time that manufacturing delivers a completed product on the schedule that was committed to customers.

2. Manufacturing Cycle Time – Measures the speed or time it takes for manufacturing to produce a given product from the time the order is released to production to finished goods.

3. Time to Make Changeovers– Measures the speed or time it takes to switch a manufacturing line or plant from making one product over to making a different product.

Improving Quality

4. Yield – Indicates a percentage of products that are manufactured correctly and to specifications the first time through the manufacturing process without scrap or rework.

5. Customer Rejects, Return Material Authorizations, and Returns – A measure of how many times customers reject products or request returns of products based on receipt of a bad or out-of-specification product.

6. Supplier’s Quality Incoming– A measure of the percentage of good-quality materials coming into the manufacturing process from a given supplier.

Improving Efficiency


7. Throughput – Measures how much product is being produced on a machine, line, unit, or plant over a specified period of time.

8. Capacity Utilization – Indicates how much of the total manufacturing output capacity is being utilized at a given point in time.

9. Overall Equipment Effectiveness (OEE) – This multi-dimensional metric is a multiplier of availability x performance x quality, and it can be used to indicate the overall effectiveness of a piece of production equipment, or an entire production line.

10. Schedule or Production Attainment– A measure of what percentage of time a target level of production is attained within a specified schedule of time. 

Reducing Inventory

11. Work-In-Process (WIP) Inventory and Turns– A commonly used ratio calculation to measure the efficient use of inventory materials. It is calculated by dividing the cost of goods sold by the average inventory used to produce those goods.

Ensuring Compliance

12. Reportable Health and Safety Incidents – A measure of the number of health and safety incidents that were either actual incidents or near misses that were recorded as occurring over a period of time.

13. Reportable Environmental Incidents – A measure of the number of environmental incidents that were recorded as occurring over a period of time.

14. Number of Non-Compliance Events Per Year– A measure of the number of times a plant or facility operated outside the guidelines of normal regulatory compliance rules during a one-year period. These noncompliances must be fully documented as to the specific noncompliance time, reasons, and resolutions.

Reducing Maintenance

15. Percentage Planned vs. Emergency Maintenance Work Orders – This ratio metric is an indicator of how often scheduled maintenance takes place versus more disruptive or un-planned maintenance.

16. Downtime in Proportion to Operating Time – This ratio of downtime to operating time is a direct indicator of asset availability for production.

Increasing Flexibility and Innovation

17. Rate of New Product Introduction – Indicates how rapidly new products can be introduced to the marketplace and typically includes a combination of design, development, and manufacturing ramp up times.

18. Engineering Change Order Cycle Time – A measure of how rapidly design changes or modifications to existing products can be implemented, all the way through documentation processes and volume production.

Reducing Costs and Increasing Profitability

19. Total Manufacturing Cost per Unit Excluding Materials – This is a measure of all potentially controllable manufacturing costs that go into the production of a given manufactured unit, item, or volume.

20. Manufacturing Cost as a Percentage of Revenue – A ratio of total manufacturing costs to the overall revenues produced by a manufacturing plant or business unit.

21. Net Operating Profit – Measures the financial profitability for all investors, shareholders, and debt holders, either before or after taxes, for a manufacturing plant or business unit.

22. Productivity in Revenue per Employee – This is a measure of how much revenue is generated by a plant, business unit, or company, divided by the number of employees.

23. Average Unit Contribution Margin – This metric is calculated as a ratio of the profit margin that is generated by a manufacturing plant or business unit, divided into a given unit or volume of production.

24. Return on Assets and Return on Net Assets– A measure of financial performance calculated by dividing the net income from a manufacturing plant or business unit by the value of fixed assets and working capital deployed.

25. Energy Cost per Unit – A measure of the cost of energy (e.g., electricity, steam, oil, gas) required to produce a specific unit or volume of production.

26. Cash-to-Cash Cycle Time – This metric is the duration between the purchase of a manufacturing plant or business unit’s inventory, and the collection of payments and accounts receivable for the sale of products that us that inventory; typically measured in days.

27. EBITDA – This metric acronym stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It is a calculation of a business unit or company’s earnings, prior to having any interest payments, tax, depreciation, and amortization subtracted for any final accounting of income and expenses. EBITDA is typically used as top-level indication of the current operational profitability of a business.

28. Customer Fill Rate, On-Time Delivery, and Perfect Order Percentage – This metric is the percentage of times that customers receive the entirety of their ordered manufactured goods, to the correct specifications, and delivered at the expected time.

To see the full blog entry, go to this web page at the LNS Research website. 


 FDA UDI Initiative – Medical Device Manufacturers                 



The Food and Drug Administration (FDA) has released a rule requiring that most medical devices distributed in the United States carry a unique device identifier, or UDI. It also applies to certain combination products that contain devices and to devices licensed under the Public Health Service (PHS) Act.

A UDI system has the potential to improve the quality of information in medical device adverse event reports, which will help the FDA identify product problems more quickly, better target recalls and improve patient safety.  

A UDI is a unique numeric or alphanumeric code that consists of two parts (1) a device identifier (DI), a mandatory, fixed portion of a UDI that identifies the labeler and the specific version or model of a device, and (2) a production identifier (PI), a conditional, variable portion of a UDI that identifies one or more of the following when included on the label of a device:

  • the lot or batch number within which a device was manufactured;
  • the serial number of a specific device;
  • the expiration date of a specific device;
  • the date a specific device was manufactured;
  • the distinct identification code required for a human cell, tissue, or cellular and tissue-based product (HCT/P) regulated as a device.
Benefits of Unique Device Identification


When fully implemented, the UDI system can:

  • Allow more accurate reporting, reviewing and analyzing of adverse event reports so that problem devices can be identified and corrected more quickly.
  • Reduce medical errors by enabling health care professionals and others to more rapidly and precisely identify a device and obtain important information concerning the characteristics of the device.
  • Enhance analysis of devices on the market by providing a standard and clear way to document device use in electronic health records, clinical information systems, claim data sources and registries. A more robust postmarket surveillance system can also be leveraged to support premarket approval or clearance of new devices and new uses of currently marketed devices.
  • Provide a standardized identifier that will allow manufacturers, distributors and healthcare facilities to more effectively manage medical device recalls.
  • Provide a foundation for a global, secure distribution chain, helping to address counterfeiting and diversion and prepare for medical emergencies.
  • Lead to the development of a medical device identification system that is recognized around the world.  

For more information and a summary of compliance dates for the UDI Final Rule visit the FDA Medical Devices Website 



ISO 22301 Business Continuity Management             


To understand and prioritize the threats to your business, an  international standard for business continuity, ISO 22301 specifies the requirements for a management system to protect against, reduce the likelihood of, and ensure your business recovers from disruptive incidents.

ISO 22301 is suitable for use in businesses of all sizes across all sectors. It can help protect you protect against the threats specific to your business. These could include for example, natural disaster, IT failure, staff illness, terrorist threat or a disruption to your valuable supply chain.

ISO 22301 will provide your business with a framework for assessing critical suppliers and their associated risks, assessing current business practices, and planning contingency measures. This will help your business when incidents happen, you’ll be prepared and able to respond effectively. With ISO 22301, you will not only significantly help reduce the risks to your business; you will also help achieve operational resilience.

The benefits of implementing ISO 22301 include the following critical areas:

  • Delivery – following a disruption it provides a rehearsed method of restoring the ability to supply critical products and services to an agreed level and timeframe
  • Resilience – proactively improves resilience when faced with the disruption of an organization’s ability to achieve key objectives
  • Management – delivers a proven capability for managing a disruption and protecting (and enhancing) reputation and brand

Further benefits include cost savings, compliance with applicable laws and regulations, and identifying opportunities for improvement.


To find out more about ISO 22301 Business Continuity Management Standard requirements, the standard structure, and expanded benefits, visit the ISO Website.

ANSI – New Standards Portal Website

The American Standards Institute (ANSI) recently established a website for anyone to access standards that have been incorporated by reference in the U.S. Code of Federal Regulations (CFR).


The portal allows visitors to select standards at no cost in read-only PDF format, for online review.  They cannot be printed or downloaded.


Standards now available on the ANSI IBR Portal include those developed by the International Organization for Standardization (ISO), The International Electrotechnical Commission and seven other SDOs that have signed a terms and agreement with ANSI. 


All users must install a plug-in and accept an online end user license agreement before accessing any of the standards available directly through the portal.  Several SDOs are offering free access via their own websites.


To view the ANSI IBR Portal visit the ANSI Website


In the News      

Reshoring likely to alter the U.S. Economy in next 12 months  


 According to the Grant Thorton Realities of Reshoring Survey more than one-third of U.S. businesses will move goods and services work back to the United States in the next 12 months.

The numbers imply that as much as 5% of overall U.S. procurement may come back to the United States.  Executives indicated their companies are likely or very likely to bring back the following categories of work: IT services (42%); components/products (37%); customer services or call centers (35%); and material (34%).

Report: U.S. manufacturing costs are now equal to Mexico and will be equal to China by 2015

In another sign that America is becoming more competitive in manufacturing, the U.S. is now equal to Mexico in “attractiveness” as a source for manufacturing operations and is on track to achieve cost parity with manufactured imports from China by 2015. These are among the findings from new research released by AlixPartners, a global business consulting firm.

According to the survey, 37% of manufacturing executives said they would choose the U.S. as their preferred location for nearshoring. An equal percentage of respondents cited Mexico as the most attractive nearshoring locale, but in the firm’s survey just two years ago, 63% chose Mexico, while only 19% said they would choose the United States. 


Training Courses

To see the course description, schedule, and on-line registration click on the course title below. We deliver onsite training for all these courses and customized training to fit your specific needs.  We offer group discounts.  


View all our Courses

View Our Web Based E-Training Courses   

ISO 9001 Quality Management

Understanding and Implementing ISO9001:2008

ISO 9001:2008 Process Based Internal Auditor 

Documenting Your Management System

AS9100 Aviation, Space and Defense

Understanding and Implementing AS9100C (9110 &9120) Aviation, Space and Defense

AS9100C:2009 Process Based Internal Auditor

Documenting Your Management System 

ISO/TS 16949 Automotive

Understanding and Implementing ISO/TS16949:2009 Automotive

ISO/TS16949:2009 Process Based Internal Auditor
Documenting Your Management System 

ISO 14001 Environmental

Understanding and Implementing ISO14001:2004 Environmental
ISO14001:2004 Process Based Internal Auditor

Lean Enterprise and CI 

5S Five Pillars of a Lean Workplace Organization
Continuous Process Improvement
Lean Six Sigma
8 Disciplines (8D) of Problem Solving

ISO 13485 Medical Devices

Understanding and Implementing ISO 13485:2003 Medical Devices
ISO 13485 Process Based Internal Auditor 

ISO 27001 Information Security

Understanding and Implementing ISO 27001:2005 Information Security
ISO 27001 Process Based Internal Auditor 

All courses can be delivered at your company. Don’t see a course, location, or date that fits your needs?

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