Optimizing Execution: How Manufacturers Get the Most out of Manufacturing KPIs

 

Abstract

After reading this article, you will learn about the critical role of daily execution in manufacturing. I will share how the effectiveness of a manufacturing team relies more on the mindsets and behaviors of its members than on the tools and devices used. You will learn about the Plan-Do-Check-Act (PDCA) cycle and its effectiveness for continuous improvement in manufacturing. Equally applicable to both strategic and tactical Key Performance Indicators (KPIs).

You will learn the PDCA cycle’s four stages: Plan, where clear objectives and KPIs are defined; Do, involving the execution of plans while monitoring abnormalities; Check, evaluating results and analyzing KPI data; and Act, taking decisive action based on the evaluation findings and standardizing successful changes.

Successfully embracing PDCA requires leadership commitment to continuous improvement, cross-functional collaboration, data-driven decision-making, training and skill development, and alignment of targets with strategic objectives. Successfully embracing the PDCA cycle also implies the creation of a continuous improvement culture that goes beyond specific projects and becomes ingrained in the organization’s DNA.

I will share the challenges you can expect in PDCA implementation, such as resistance to change, lack of data infrastructure, and insufficient training, and I will share recommendations for fostering a culture that values employee input, investing in data infrastructure, and providing necessary technical and management philosophy training.

You will leave understanding the PDCA cycle is a powerful framework for achieving continuous improvement in manufacturing, aligning objectives with overall goals, optimizing day-to-day operations, and fostering a culture of innovation and excellence, leading to both short-term successes and long-term sustainability and growth.

Success Mindsets for PDCA Adoption

  • Action-oriented: without actions, we’re wasting our time.
  • Data-Based Decisions: Avoid assumptions. Get the facts.
  • Judgment-Free Environment: Focus on fixing the process.
  • High-Accountability: No complacency, everyone must be accountable.
  • No Dumb Ideas: We need everyone’s participation.
  • No failures. Only lessons: OK to be wrong, NOT OK to not learn and adapt
  • Embrace Systems Thinking: Formalize systems and eliminate people dependency.

Key Takeaways

DIMENSION TAKEAWAY
Mindsets The effectiveness of a manufacturing team is more dependent on the mindsets and behaviors of its members than on the tools and devices (e.g., Andon lights, visual management boards) they use.
Leadership Commitment Successful PDCA implementation requires leadership commitment to continuous improvement, manifested in resource allocation, training initiatives, and cross-functional improvement teams.
Collaboration Embracing PDCA necessitates breaking down silos and fostering cross-functional collaboration within manufacturing processes.
Data-Based Decision Making Leveraging data for informed decision-making is crucial for PDCA, providing deeper insights into KPIs and enabling precise planning and timely responses to abnormalities.
Training Effective PDCA execution requires a skilled workforce, emphasizing the need for training programs that empower employees with both technical skills and a continuous improvement mindset.
Strategic Alignment PDCA ensures alignment of targets with strategic objectives, allowing for a systematic approach to achieving and sustaining improvements based on a continuous feedback loop.
Continuous Improvement Embracing PDCA fosters a culture of continuous improvement, ingrained in the organization’s DNA, influencing how teams approach challenges, solve problems, and seek opportunities for enhancement.
Resistance Resistance to change is a common challenge in continuous improvement initiatives, and addressing it requires fostering a culture that values employee input and providing clear communication.

In the manufacturing function, more so than any other function inside the business, execution is critical. Some of the reasons are that manufacturing is where you have most of your resources; it’s also the function that creates the end product the customer will see and one of the most important aspects your company’s brand will be perceived and judged on.

This is why manufacturing is where you see the most KPIs, boards, meetings, and other activities to ensure high performance. However, it’s not these devices that help manufacturing improve their performance. What makes a difference are the mindsets and behaviors of the team members who manage and execute every day. I’ve seen manufacturers that have all the tools (Andon lights, visual management boards, Gemba walks, etc.), and their performance doesn’t improve; the real telling signs of a high-performance team are these mindsets and behaviors. The tools just help them get there faster.

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In this post, I want to share with you those mindsets and behaviors so you can successfully implement them inside your business and reap the benefits of using manufacturing KPIs appropriately,

One of the most effective methodologies for achieving this is the Plan-Do-Check-Act (PDCA) cycle. In this blog post, we will delve into the application of the PDCA cycle on both strategic and tactical Key Performance Indicators (KPIs) in a manufacturing business. By understanding how to implement PDCA at various levels of your organization, you can foster a culture of continuous improvement and enhance overall operational performance.

“Continuous improvement is a muscle that needs to be trained daily.”

1. Understanding the PDCA Cycle

The PDCA cycle, pioneered by Dr. W. Edwards Deming, is a systematic and iterative approach to problem-solving and continuous improvement. The approach consists of four interconnected stages: Plan, Do, Check, and Act. In manufacturing, this methodology serves as a guiding compass, aligning operations with strategic goals and facilitating a culture of continuous enhancement.

 

Watch this video to learn the top 5 metrics to track in a manufacturing business.

1.1 Plan: Defining Clear Objectives and KPIs.

The PDCA cycle starts by defining clear and measurable objectives aligned with their overarching business goals. These objectives are then translated into specific KPIs, such as Safety Incidents, Quality Defects, On-Time Deliveries, and Production Efficiency. Establishing baselines for these KPIs provides a benchmark for progress evaluation and goal establishment.

Read this article to learn more about how manufacturers use KPIs to improve execution and profitability.

1.2 Do: Executing the Plan and Watching for Abnormalities.

With objectives and KPIs in place, the “Do” phase involves executing those while keeping a close eye on abnormalities as progress is made. Real-time monitoring systems play a pivotal role in tracking selected KPIs during the implementation phase, ensuring immediate feedback and enabling timely adjustments. These systems could be as simple as a tracking board and as complex as business intelligence software.

“You should always know the 5W’s and 1H’s (Who, What, When, Where, Why, and How) of every abnormality in real-time.”

1.3 Check: Evaluating Results and Analyzing KPI Data

The “Check” phase involves a meticulous evaluation of the results obtained after execution. Manufacturers analyze KPI data to identify patterns, trends, variations, and root causes. If KPIs meet or exceed targets, it signals success; otherwise, adjustments are needed.

“Always focus on the process. The results will follow.”

 

1.4 Act: Standardizing Success and Identifying Further Improvements

The final “Act” phase involves taking decisive action based on the evaluation findings. These findings will serve as input to the development of countermeasures to eliminate abnormalities and improve performance. Successful changes are standardized across the manufacturing process, integrating them into standard operating procedures. Simultaneously, manufacturers identify areas for further improvement, ensuring the PDCA cycle remains a perpetual engine for enhancement.

Read this article to learn more about ways to sustain your improvements.

2. Successfully Embracing PDCA in Manufacturing

Embracing the PDCA cycle as a daily practice has a transformative power. Embracing the PDCA methodology involves a strategic and cultural shift that can be achieved by the following factors:

Watch this video to learn more about the difference between traditional leaders vs lean leaders.

2.1 Leadership Commitment to Continuous Improvement

Successful PDCA implementation begins with leadership commitment. Manufacturers who prioritize a culture of continuous improvement instill a sense of purpose and accountability among their teams. This commitment is manifested in resource allocation, training initiatives, and the establishment of cross-functional improvement teams.

“Every leader should run their unit as a business within the business. Period.”

2.2 Cross-Functional Collaboration

Manufacturing processes are often multifaceted, involving various departments and functions. Embracing PDCA necessitates breaking down silos and fostering cross-functional collaboration. When teams collaborate seamlessly, it becomes easier to identify interdependencies, streamline processes, and collectively work towards common objectives.

Read this infographic to learn more about the recommended KPIs for a manufacturing business.

2.3 Data-Driven Decision-Making

Manufacturers have more access to data than ever before. Leveraging this data for informed decision-making is a cornerstone of PDCA. This allows manufacturers to gain deeper insights into their KPIs, facilitating more precise planning and enabling timely responses to abnormalities.

Watch this video to learn more about using visual management boards.

2.4 Training and Skill Development

Executing the PDCA cycle effectively requires a skilled workforce. Manufacturers must invest in training programs that empower their employees with the necessary skills to understand, execute, and contribute to the continuous improvement process. This includes not only technical skills but also a mindset that values learning and adaptation.

2.5 Aligning Targets with Strategic Objectives

One of the fundamental benefits of embracing the PDCA cycle is the alignment of targets with strategic objectives. The PDCA cycle ensures that the goals set during the Strategic Planning process are not static; they are subject to continuous review and refinement based on the feedback loop provided by the PDCA steps.

Read this article to learn more about the consequences of accepting poor performance.

For example, if a manufacturing organization sets a target to reduce production defects by 20%, the PDCA cycle allows for a systematic approach to achieving and sustaining this improvement. The planning phase may involve analyzing the root causes of defects, the do phase would implement corrective measures, the check phase would evaluate the impact on defect rates, and the act phase would standardize successful practices.

Watch this video to learn more about the stages of improvement for a manufacturing business.

2.6 Continuous Improvement Culture

Embracing the PDCA cycle fosters a culture of continuous improvement within manufacturing organizations. By regularly assessing performance against set targets and applying the PDCA cycle to address shortcomings, organizations create a feedback loop that encourages learning and adaptation.

Watch this video to learn more about how to think about continuous improvement.

this continuous improvement culture extends beyond specific projects or goals. It becomes ingrained in the organization’s DNA, influencing how teams approach challenges, solve problems, and seek opportunities for enhancement. Employees at all levels become proactive in identifying areas for improvement and contributing to the overall success of the organization.

3. Overcoming Challenges in PDCA Implementation

While the benefits of embracing PDCA in manufacturing are evident, anticipate challenges during the implementation process. Manufacturers need to be aware of potential hurdles and proactively address them:

3.1. Resistance to Change

Employee resistance to change is a common challenge in any continuous improvement initiative.

“Buy-in to improvement should not be optional. Period.”

Manufacturers address this by fostering a culture that values employee input, providing clear communication about the reasons behind changes, and involving employees in the decision-making process. Beware of folks who reject these ideas and rely on reactive methods. Help your team understand that their work lives will be much easier when they can proactively remove their challenges.

Watch this video to learn more about how to get buy-in from your team.

3.2 Lack of Data Infrastructure

In some cases, manufacturers may face challenges in collecting, managing, and analyzing the necessary data for effective PDCA implementation. Investing in data infrastructure, including data collection tools and analytics platforms, is crucial to overcome this obstacle. However, Do not allow this to become an impediment. Teams can easily share the load on data collection and reporting using manual methods and still have valuable and useful data.

3.3 Insufficient Training and Skill Development

Employees need to receive technical training on the tools and their use. In addition, employees will need training on embracing a management philosophy focused on preventing issues rather than always correcting them.

“Firefighting and Reactive Management Kill Manufacturing Businesses Everyday.”

Using data to their advantage and engaging their direct reports on continuous improvement activities (i.e., brainstorming solutions, documenting procedures, and implementing changes).

4. Conclusion

In manufacturing, the PDCA cycle serves as a powerful framework for achieving continuous improvement. By applying the PDCA cycle to both strategic and tactical KPIs, manufacturing businesses can align their objectives with overall goals, optimize day-to-day operations, and foster a culture of innovation and excellence. Embracing the PDCA cycle as a core part of your organizational DNA will not only lead to short-term successes but also position your business for long-term sustainability and growth.

 

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