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

 

Abstract

Manufacturing metrics play a critical role in daily execution. In this article, you will learn the power of mindsets and behaviors over tools and devices. You will learn about the Plan-Do-Check-Act (PDCA) cycle. Also, about 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 we define clear objectives and KPIs.
  • Do, which involves the execution of plans while monitoring abnormalities.
  • Check, where we evaluate results and analyze KPI data, and
  • Act, where we take decisive action based on the evaluation findings. We also standardize 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 creating a continuous improvement culture. A culture goes beyond 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.

I will share recommendations for fostering a culture that values:

  • Employee input,
  • Investing in data infrastructure and
  • Providing necessary technical and management training.

You will learn how the PDCA cycle helps achieve:

  • Continuous improvement in manufacturing.
  • Align objectives with overall goals
  • Optimize day-to-day operations and
  • Fostering a culture of innovation and excellence.

These lead 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.

Execution is critical in the manufacturing function. The Manufacturing function:

  • Holds most of your resources.
  • Creates the end product the customer will see.
  • Represents your company’s brand.

These realities affect how customers perceive and judge your products.

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. The difference makers are the mindsets and behaviors of the team members who manage and execute every day. I’ve seen poor-performing manufacturers using all the tools (Andon lights, visual management boards, Gemba walks, etc.). 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. You will successfully implement them inside your business. You will then reap the benefits of using manufacturing KPIs appropriately,

An effective method 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. Implementing PDCA will help you:

  • 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 Manufacturing KPIs.

The PDCA cycle defines clear and measurable objectives. These align 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.

Establish baselines for these KPIs. These provide 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 Manufacturing KPIs 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 Manufacturing KPI Results and Analyzing Manufacturing 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 that has a transformative power. The PDCA cycle involves a strategic and cultural shift. Here’s how to make that shift:

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 must create a sense of purpose and accountability among their teams. This commitment level implies:

  • 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 many departments and functions. Embracing PDCA requires breaking down silos and creating cross-functional collaboration. When teams collaborate, they:

  • Identify interdependencies,
  • Streamline processes and
  • 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. Also, facilitates more precise planning and enables timely responses to abnormalities.

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

Read this article to learn the five disciplines of strong manufacturing management.

2.4 Training and Skill Development

Executing the PDCA cycle requires a skilled workforce. Manufacturers must invest in training programs. This will empower their employees with the necessary skills to:

  • Understand,
  • Execute, and
  • Contribute to the continuous improvement process.

This includes technical skills and a mindset that values learning and adaptation.

2.5 Aligning Manufacturing KPI Targets with Strategic Objectives

A benefit of the PDCA cycle is the alignment of targets with strategic objectives. The PDCA cycle ensures the strategic goals are not static.  They are continuously reviewed and refined based on the feedback from the PDCA steps..

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

For example, a manufacturing organization wants to improve quality. Assume they set a target to reduce production defects by 20%. The PDCA cycle provides an 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. Finally, 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

Manufacturers that embrace the PDCA cycle foster a culture of continuous improvement. Manufacturers create a feedback loop that encourages learning and adaptation by:

  • Regularly assessing performance against set targets and
  • Applying the PDCA cycle to address shortcomings.

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. This influences 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

The benefits of embracing PDCA in manufacturing are evident. Still, 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 embrace proactive management and problem-solving. This will help them understand their work lives will be easier.

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.

Invest in data infrastructure, data collection tools, and analytics platforms. These can help overcome these obstacles. However, do not allow this to become an impediment. Teams can easily share the load on data collection and reporting.  Manual methods can still produce valuable and useful data.

3.3 Insufficient Training and Skill Development

Employees need training on:

  • The technical tools and their use and
  • On proactive management. This means preventing issues rather than always correcting them.

“Firefighting and Reactive Management Kill Manufacturing Businesses Everyday.”

Trained employees will:

  • Use data to their advantage and
  • Engage their direct reports on continuous improvement activities, such as:
    • Brainstorming solutions,
    • Documenting procedures, and
    • Implementing changes.

4. Conclusion

In manufacturing, the PDCA cycle helps achieve continuous improvement. Apply the PDCA cycle to both strategic and tactical KPIs. This allows manufacturing businesses to:

  • Align their objectives with overall goals,
  • Optimize day-to-day operations, and
  • Foster a culture of innovation and excellence.

Embrace the PDCA cycle as a core part of your organizational DNA. This will go beyond short-term successes. This discipline will position your business for long-term sustainability and growth.

 

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