This document summarizes a conversation with John Jackiw on metrics, KPIs, and process insights for implementing high performance manufacturing. It discusses a three-layered model for metrics at the corporate, operations, and external financial levels. It also introduces the concept of Resource Consumption Accounting (RCA) as a tool that brings together real-time operations data and a quantity-based cause-and-effect methodology to enable better production and financial decisions. RCA leverages both manufacturing execution systems and ERP packages to provide a common understanding of resource consumption across management levels.
Why Teams call analytics are critical to your entire business
Metrics, KPIs, and Process Insights – Implementing High Performance Manufacturing Intelligence
1. Metrics, KPIs, and Process Insights –
Implementing High Performance MI
A Conversation with John Jackiw
MESA Metrics Committee Team Leader
Alta Via Consulting
2. Increased number if SKU’s or variations produce
What are the business leaders doing?
Do you want lead or Lag in your business
Free Summary Version of “Pursuit of Performance
Excellence” available through MESA
https://services.mesa.org/ResourceLibrary/ShowResource/fc2c93d8-
00f9-472c-99cb-15c342ec8b7c
What is Business Doing to Stay Ahead
3. Three Layered Model
Corporate
Financials
Aggregated Financial
& Operations Metrics
Operations-level KPIs &
Dynamic Performance Metrics
First-pass yield
Process capability per plant (CpK)
Scrap/rework as percentage of sales
Customer reject rate (PPM)
Warranty costs
Manufacturing cycle time
Overall equipment effectiveness (OEE)
Customer fill rate/on-time delivery
Cash Flow
Net operating profit (value of shipments less
material & mfg cost)
Productivity in revenue per employee
Earnings before interest, taxes, depreciation
and amortization (EBITDA)
Customer Satisfaction
ROA/RONA
Labor cost per unit
Percentage planned vs. emergency
maintenance work orders
Hours of overtime per week
• Average days WIP inventory
• OSHA-reportable incidents/year
• Etc, etc, etc…
Increasingaggregation
External
Financial
Accounting/
Reporting
Conventions
Internal
Management
Accounting
4. Manufacturing companies typically have
disconnected operations and finance. RCA is a
Tool that brings together real-time solution,
together with a quantity-based - cause and
effect methodology.
Unlike MES or ERP packages alone, our solution
leverages both worlds and enables better
decisions for both production and finance.
Solution Summary
6. Demand driven planning with capacity
sensitivity
Built with RCA (Resource
Consumption Accounting)
methodology as a foundation
Easily understand the resources
your line/area are consuming.
Empower your managers
with common understanding
Quantity-Based Approach
7. Corporate Headquarters
MANAGERIAL ACCOUNTING –
MULTI-LEVEL P&L
7
Plant Labor
Direct
Materials
Capacity
240 Hrs.
Capacity
240 Hrs.
Capacity
Unlimited
1 lbs. per unit
4 hrs. per unit
2 hrs. per unit
80 hrs. per month
80 hrs. per month
30 hrs. per month
80 hrs. per month
Plant
Maintenance
Calculated based
on production
$300
$1.25
per unit
$200
$0.83
per unit
$10
per unit
Proportional Cost
Fixed Cost
7
Corporate P&L
Plant P&L
Product P&L
Materials
Proportional Cost
Fixed Cost
xx
xx
xx
Idle Labor
Fixed - Training
xx
xx
Fixed HQ Reporting xx
Revenue xx
Product Margin xx
Plant Margin xx
Corporate Margin xx
RCA Institute All Rights Reserved
Alignment Achieved