Metrics Driving Bottom Line Value


 Sustaining Edge Solutions, Inc. Newsletter

Performance Improvement Solutions for Your Business                              December 2012


This Month
* Metrics Driving Bottom Line Value
* Quality Management Metrics
* The Best Selling Standard
* In the News
* Training Courses


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Our newsletters provide information on business management systems.  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, and others.  Subjects include performance improvement methods such as Six Sigma, Lean Enterprise, and other topics of interest to our readers.

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Metrics Driving Bottom Line Value       

As the end of the year approaches, many businesses are rolling their sleeves-up developing revised management strategies and seeking methods for driving improved business performance in the coming year. Successful organizations understand that to thrive in an ever-changing business environment, they must identify key risks and opportunities to realize competitive gains.


The American Productivity and Quality Center (APQC) has released its Best Practices Study, focused on understanding leading practices and approaches for successful performance measurement. The study identified 20 best practices that help organizations use performance measurement as a tool for achieving long- and short-term business goals. The practices in the report support improvement at enterprise, operating unit, and individual staff levels.


1.  Identifying Actionable Measures 

  • Have  senior management analyze business processes that have the greatest impact on strategic organizational imperatives. 
  • Use collaboration systems that allow direct stakeholder feedback, and link measures to specific business processes.
  • Align individual employee measures with departmental performance measures.
  • Use a balance of leading and lagging indicators.
  • Use fewer than 5 measures to access each business process.
  • Include a diverse blend of cost, efficiency, and quality measures.    

2.  Effective Measurement Through Staff Buy-In

  • Involve staff in developing the measurement system, and
  • provide employees with a documented roadmap of the measurement process and outcomes.
  • Include process measures as part of performance appraisals, and connect measures with compensation.
  • Use a variety of techniques (meetings, dashboards, scorecards) to communicate the importance of measurement to all employees. 
  • Involve executive staff in communicating with employees about measurement.  

3.  Analyze Metrics for Proactive Decision Making

  • Leverage a number of different process improvement techniques that involve analyzing process measures, including project analysis, Lean Six Sigma, and benchmarking.
  • Provide activity and outcome measurement information directly to employees who are responsible for executing a process.  
  • Create stability through documentation and measurement system processes to avoid disruption when there are personnel changes.

4.  Success Factors

There are six factors that the best-practice organizations use to create successful measurement systems.

  • a business process management (BPM) center of excellence.
  • strong alignment of the organization’s measures with its strategic objectives.
  • compensation and rewards linked to the achievement of metric targets/results.
  • a process to provide measurement data to employees doing the work being measured.
  • a culture of accountability for measures and results, and
  • a centralized group responsible for analytics.         
Effective measurement systems have the information needed to focus attention on desired behaviors and results. Contributing employees at all levels need information that is sufficiently complete, accurate, and consistent in order to demonstrate results and be given the ability to focus on outcomes.
To view the APQC Best Practices Study Report visit the website.
Looking to improve your company performance measurement methods and results.  Contact us.


Dashboard Quality Management Metrics    


Corporate executives are often inundated with data which makes it difficult to pull out needed visibility into operational metrics. Gaining more control of the impact quality has over your business requires metrics that represent the effectiveness of the quality system.       
The following metrics will help however, depending on your industry and requirements additional metrics most likely would apply.   

1. Cost of quality. The definition of this metric is similar to the way it sounds. It measures the cost incurred by an organization to manufacture a quality product. Further narrowing things down, these costs come from two main categories: cost of good quality and cost of poor quality.


2. Overall equipment effectiveness (OEE). Quality affects many different parts of the business, so it is critical to establish a comprehensive metric that provides visibility into the most important areas of operations. The answer to this lies with calculating the OEE formula: OEE = Availability × Efficiency × Quality.


First, OEE measures how often an asset is available when it should be producing product for a customer. Second, when an asset is producing product for a customer, OEE measures how close the asset is producing to its theoretical maximum. And third, for those products that are produced, OEE measures the percentage that are produced within quality specifications.


3. Percentage of products in compliance. This is a critical metric in regulated industries such as medical devices, pharmaceutical, and biotechnology. Even in industries such as automotive, aerospace, and defense, this metric plays a crucial role. It measures the percentage of products that are in compliance with government regulations and internal guidelines.

Additionally, compliance to restriction on hazardous substances (ROHS), or the waste electrical and electronic equipment (WEEE) directive impact companies differently based on the industry, which adds to the complexity of selling in a global market. This metric measures how effective your organization is in being compliant with local, national, or global policies that affect your business.


4. On-time and complete shipments. Managing the quality of the product should not be at the expense of delaying final delivery from the plant floor. Even though on-time and complete shipments as a metric sounds fairly easy to understand, there are many different ways companies measure this metric. One definition is this metric as percentage of products delivered on time and complete with no errors or redelivery dates.


5. New products introduction (NPI). NPI as a metric is defined as a percentage of new products introduced in the market that hit time, volume, and quality targets. New products are often introduced in the market and are a source of competitive advantage in industries such as automotive and consumer electronics.  Profit growth depends not only on how successful your organization is at introducing new products into the market, but also how effective your organization is at hitting NPI targets.


These five key metrics provide an executive with critical insight into operational and financial performance. Does your organization measure any of the above metrics?  Let us know!


The Best Selling Standard            


Did you know that the ISO 31000:2009 Risk Management series of standards is the second highest-selling series of standards in the world after ISO 9001:2008? The high worldwide interest in the approaches these standards provide reflects the needs of organizations to properly manage risk throughout their business processes.


Have you heard that the future ISO 9001:2015/2016 Standard will have Risk Management Requirements?  


Risk management is the identification, assessment, and treatment of “risks” that may negatively affect an organization, business or municipality, including those which can occur through accidents, disasters, natural causes, legal or financial liabilities. It also includes those things that can have positive effects, such as new technologies, business ventures, or continual improvement. 


Worldwide, the ISO 31000 series of risk management standards is second only to the ISO 9000 series in popularity. These standards provide principles and guidelines on risk management that can be used by any public, private, or community enterprise, association, group or individual and therefore. The standards can be applied throughout the life of an organization, and to a wide range of activities, including strategies and decisions, operations, processes, functions, projects, products, services, and assets. 


The principles, framework, and process are applicable to all industries:

  • In manufacturing, a risk-based approach to manufacturing is more critical than ever for U.S. firms and has positively impacted the overall quality, safety and efficacy of the product, but also supply chain assurance, lean targets, product launch timing, and by removing unnecessary investments. 
  • In service, risk management is specifically used to reduce risks associated with critical business information (client data, financial data, etc.) or risks that could undermine key business initiatives. ISO 31000 assisted organizations to place controls where they are needed across the entire information lifecycle (processes, management), helping to ensure information is always an asset and never a liability. 

A bundle of three standards representing the U.S. Adoptions of ISO Guide 73:2009, IEC/ISO 31000:2009, and IEC/ISO 31010:2009 can be purchased at the ASQ Store.   


In the News    

U.S. Manufacturing Technology Orders Up.

U.S. manufacturing technology orders totaled $667.47 million according to AMT – The Association For Manufacturing Technology. This total, as reported by companies participating in the USMTO program, was up 40.7%  when compared with the total of $588.80 million reported for September 2011. With a year-to-date total of $4,282.11 million, 2012 is up 5.6% compared with 2011.


Western Region – Our home base region
Western Region manufacturing technology orders in September stood at $104.72 million, 33.7% more than the August total of $78.34 million and 53.4% higher than the figure for September 2011. The $510.09 million year-to-date total was 8.0% above the total for the same period in 2011.


FABTECH 2012  Confirms Manufacturing is Back


A record high first day attendance, “Sold” signs on equipment and a packed house at education programs and special events were the hallmarks of the recently concluded FABTECH 2012 in Las Vegas, the largest metal forming, fabricating, welding and finishing event in North America.


Show organizers are reporting that 25,903 attendees walked the more than 450,000 net square feet of floor space at the Las Vegas Convention Center to see live equipment demonstrations, compare products side-by-side and find cost-saving solutions.

“If you can take the pulse of the economy by what’s happening in manufacturing, then you have to be optimistic that we are headed for economic growth, said Mark Hoper, FABTECH show co-manager. “A constant theme I heard both on the show floor and at the seminars was that, while challenges and uncertainties remain, most manufacturers believe that their businesses are headed for continued growth in 2013.”


FABTECH is co-sponsored by five industry-leading associations: the American Welding Society (AWS), the Fabricators & Manufacturers Association, International (FMA), the Society of Manufacturing Engineers (SME), the Precision Metal forming Association (PMA), and the Chemical Coaters Association International (CCAI).


Training Courses

To see the course description, schedule, and on-line registration click on the course title below. We deliver onsite training for 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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