Let's Talk Quality
The IndustryWeek Best Plants competition takes a holistic approach to plant performance, meaning that it looks at a host of performance metrics and practices that occur within a plant -- as well as several supplier-related metrics.
Among those we review is the quality metric of first-pass yield. IW's definition of first pass yield is the percentage of finished products that meet all quality-related specifications at a final test point. When calculating yield for components, the percentage that meets all quality-related specifications at a critical test point without being scrapped, rerun or reworked. In process industries, yield often is calculated as the percentage of output that meets target-grade specifications (excluding saleable "off-grade" product).
Here we present aggregated data from our IW Best Plants winners and finalists. Given the average first-pass yield over the past five years is 96.1%, this quality metric is one at which most of the winners and finalists excel.
Customer Reject Rate
Customer reject rate, expressed in parts per million, is another metric requested in the IW Best Plants application. This measure reflects the number of completed units rejected or returned by external customers. This calculation includes parts reworked by customers. It applies to all shipped units, including parts. This measure can vary widely depending both on the product and processes involved.
Are your employees -- all employees -- engaged in improvements that make your facility a better place to work and a producer of better products? The IW Best Plants competition wants to know, and so we ask. This data is among a wealth of information we seek about employee involvement at the plant level.
Safety is Paramount
"Safety first" is a familiar refrain. The IW Best Plants competition looks for plants that not only say they take safety seriously but also have implemented steps to assure a safe workplace. As this table indicates, most of the IW Best Plants winners and finalists perform better than their industry average in this metric, although 2016 tells a bit of a different tale.
On-time Delivery by Suppliers
No manufacturing plant can operate near peak efficiency without the help of its suppliers. With that in mind, the IW Best Plants competition requests several pieces of information about a plant's relationship with its suppliers. Among those questions: Are your suppliers getting their orders to you by the date you requested? For our IW Best Plants winners and finalists, the answer is largely "yes."
Manufacturing Cycle Time Improvements
Manufacturing cycle times are going to vary widely by industry; however, efforts to reduce those times are universal. Among their benefits, shorter cycle times give manufacturers greater flexibility amid demand swings, and they can be cited as a competitive advantage when wooing new customers. As this slide indicates, many of IW's Best Plants winners and finalists have made significant gains in reducing their manufacturing cycle time.
The definition of manufacturing cycle time used by IW is: The time of actual production from when a customer order is released to the plant floor for a particular product through to the completion of all manufacturing, assembly, and testing for that specific product. (Does not include front-end order-entry time or engineering time spent on customized configuration of nonstandard items, or time in finished goods inventory.)
Delivery On Time
Manufacturing quality products for your customers sounds like a good thing, and it is if you can get the goods to your customers when they need them. If you can't, those customers won't look to you as a supplier for very long.
Our IW Best Plants winners and finalists show a robust ability to deliver orders to their customers by the request date, with an average on-time rate of 96.5% over the past five years.
Managing Your Raw Materials
As mentioned previously, the IW Best Plants competition takes a holistic look at processes that occur within manufacturing plants. Among those processes is inventory management. Participants are asked to provide data regarding raw, WIP and finished-goods inventory levels.
While there are no overall optimal levels, the data can reveal both good and questionable practices within a plant. For example, the judges may question why a plant with a manufacturing cycle time of two hours carries 300 days of finished goods inventory. Or why raw materials inventory numbers 60 days when your key suppliers are located down the street. While there may be completely logical responses for these questions, there also may not. The IW Best Plants application also requests information about how inventory levels have changed over the years. Have they increased, for example. If so, why?
ISO 14001 sets out the criteria for an environmental management system, and a manufacturer can become certified to it. That said, the majority of IW Best Plants winners and finalists have not become certified to this standard.
Manufacturers embark on improvement efforts with a goal of making their businesses more competitive and more compelling to potential customers. With that in mind, the IW Best Plants competition application requests participants provide several pieces of data that help show the results of their improvement efforts.
Among data we collect is that around manufacturing cost changes. As the table shows, IW Best Plants winners and finalists have reduced their per-unit costs over the past three years, with the average reduction coming in at 5.4%.
Of course, this data show results that do not include purchased material costs. The application also requests the same data with purchased-materials costs included.