Episode E.021 Operational Measures

Introduction
This week we continue our focus on the post pandemic re-opening of business. Other than dealing with customer and employee fears, there is nothing different or special about today's show except urgency. Unlike other expansions at the end of a contraction, this was not a structural - it was imposed. Normally a contraction (recession) is a result of over supply and decreasing demand awaiting a unplanned event to prick the bubble. In this case the demand still exists with diminished supply and we have sufficient information to predict the beginning of an expansion. The purpose of IBGR programming this month is to prepare the entrepreneur for the turnaround. it will require acting with urgency over the next 4 months.
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Show Objectives
Scheduling 
The key is getting a balanced schedule that doesn’t overburden the system and at the same time maximizes the use of resources. Never forget profit only comes from maximizing the use of resources. What is critical for measuring the production process:

1. smooth out weekly, daily or even hourly production demands, and
2. taking into account all of the factors under and outside your control to mix your production schedule and ensure there is no work stoppages.

Efficiency
The key is providing clarity to people on expectations – both worker and supervisor. The best method is the creation of a SOP for each step or task in the project. Use the push for greater efficiency to drive how the jobs are designed.  What is critical for measuring efficiency

1. focus on how every minute of every day is spent by workers and supervisors,
2. which happens when you streamline a process to make doing it right easy and then measuring how well they comply with the standard, and
3. visually tracking performance and sharing it with everybody inside the company.

​Waste
The key is taking away the distractions that create quality problems upstream. Once the front line workers were freed from that burden, we can focus them on doing the job right eliminating waste. What is critical for eliminating waste

1. training people how to identify and fix it immediately, and
2. measuring it visually.

What You Need to Know
Scheduling (Build to Schedule)

• Actual Production Volume / Scheduled Production Volume - how accurate are you at scheduling people, equipment, raw materials AND creating customer expectations - what you delivered divided by what you planned over a period of time (weekly, monthly, etc.) - used to determine accuracy of longer forecasts;
• ​Actual Scheduled Mix / Scheduled Mix - because resources are finite, scheduling requires using the same people, equipment, materials at multiple locations within a confined time span, how well did you blend several project or job demands to maximize the use of resources - used to determine accuracy of shorter forecasts;
• Actual Sequence as Schedule / Number of Sequences - once you have made the schedule for sharing resources, it is a comparison between your scheduled mix of resources against what actually occurred - used to determine efficient use of resources across projects or jobs.

Efficiency (Use of Resources)

• Actual Processing Time (what is possible over planned period) - given this step in the project or the job, how much time is available - used to determine the percentage of available time;
• ​Shift Time (what is scheduled in project plan) - given this step in the project or job, how much time is scheduled - used to determine how the available time is used;
• Finished Units (what is actually completed within shift time minus defects) - given this step in the project or job, what was produced or achieved during that period - used to determine what is actually completed or accomplished in the given time.

Waste (First Time Thru)

• % of Scrapped Units (can’t use) - materials or work thrown away because it couldn’t be used or broken tools – used to measure effectiveness of material ordering, inventory storage, and preventive maintenance; 

• % of Returned Units (done wrong) - returned to the person who did the job because it was done wrong and not usable as is – used to measure first time quality;

• % of Repaired Units (done over) - tasks that must be immediately done over because it doesn’t work – used to measure first time quality.

What You Need to Do

1. Build to Schedule: based on the work schedule – quantity and mix of jobs, comparison of scheduled sequence vs. actual. This metric calculates how well the process is managed versus a plan or schedule. It measures how well the process meets multiple customer needs.
2. Dock to Dock: based the work schedule and demand on all combined steps. It is the total calendar time from the date / time when a project is accepted or raw materials were unloaded at receiving (and the clock starts ticking on Accounts Payable) to the date / time of finished goods delivered to the customer (Accounts Receivable).
3. First Time Through: first of the individual metrics. It is the percentage of units that go through the process from start to finish without requiring rework or failing to complete a process step. This means each step in the process is a series of activities – what percentage of those activities are done right the first time?
4. Work in Process: second of the individual metrics. It measures the waiting time between steps – unfinished activities that prevent the next step from occurring. This represents money timed up because of inefficiencies in the process.
5. Overall Equipment Efficiency: that last individual metric. It is used to evaluate how well the equipment is utilized for identifying future process improvements.

​Next Show: E.022 Marketing & Sales Measures