Earlier this year at the North American MESA International conference, LNS Research co-hosted a session that included many lively discussions on the disconnects that exist between business executives and the business metrics on which they naturally focus. The discussions also touched on any linkages that exist with the detailed metrics used by the people managing their production operations.
This creates challenges on both sides. Many executives don’t have an appreciation for how improvements in manufacturing metrics and KPIs can impact the bottom line. Conversely, many manufacturing professionals have a difficult time quantifying and relating the improvements they’re making in their day-to-day metrics with the impacts to the financial bottom line that executives care about.
Bridging the Gap Between Business and Manufacturing Operations
In order to better understand these interrelationships and the potential actions that can be taken to bridge the gap across the two worlds of business and manufacturing, LNS Research and MESA are focusing on this issue as part of the current/active ‘Metrics That Matter’ research study.
Part of what the study will continue to uncover are the statistical interrelationships between manufacturing metric improvements and business metric improvements. It will focus on specific metric improvements that are happening across a wide range of manufacturing industries, such as overall equipment effectiveness (OEE), yield, rate of new product introduction, and net operating profit, to name just a few (more complete list here).
The other thing we want to accomplish in this year’s 'Metrics That Matter' study is to investigate which areas of manufacturing metrics are the ones that executives best relate to. We also seek to understand what the top methods are for manufacturing enterprises to align and educate business and manufacturing professionals, with the common goal of maximum impact through alignment and education.
What Is the Current State of Executive Awareness?
To answer the first part of this question, the survey asks, “Which areas of manufacturing operations metrics does executive management of your company believe has the biggest financial impact on your business?” Respondents are requested to pick the top three manufacturing metric areas from the following list:
How Are Companies Bridging the Understanding Gap Between Manufacturing and Executives?
Through our research and discussions with executives, we've seen many successful approaches and activities that serve to raise executive awareness on potential business imporvements in manufacturing operations and bridge the gap between the two organizations. The following are some of the successful ways we've seen companies achieve this goal:
- Conducting Manufacturing Tours for Executives
- Performing Routine Manufacturing Business Review Meetings with Executives
- Holding Peer Review Meetings that Include Manufacturing and Other Executives
- Holding Skip-Level Review Meetings Between Executives & Manufacturing Staff
- Including the Manufacturing Strategy as Part of Annual Business Planning Process
- Creating Plant Management Reports Containing Financial Impacts of Manufacturing Metrics
- Creating Real-Time, Plant Management Dashboards That Contain Financial Impacts
- Creating Real-Time, Executive Dashboards That Contain Manufacturing Financial Impacts
- Using Balanced Scorecard Training
- Conducting Manufacturing Program Training – e.g. Lean, Six Sigma, ISO, etc.
- Executives Participating in Peer Councils
- Executives Participating in Industry Associations
- Executives Having Conversations and Consultations with Industry Analysts
- Leveraging Executive Focused, Manufacturing Trade Publications
'Metrics that Matter' Research Survey
We’d like to hear from you as to how your company is seeing and addressing these challenges. Please leave a comment, and take the 'Metrics That Matter' survey in order to receive one year of access to the LNS Research Performance Management research library.
