Want to be a customer-focused manufacturer? You need these five quality metrics

Louis Columbus Profile picture for user louis.columbus June 3, 2018
Manufacturers run better with metrics. But if your systems are siloed, metrics can't help you. And what data should you be acting on? In the IQMS diginomica debut, Louis Columbus shares five manufacturing metrics that matter.

Are you ready for the era of customer-driven manufacturing, where every system, process, and workflow needs to contribute to excellent quality products that meet and exceed customer expectations? Alas, most of us aren’t. Why?

Because you can’t get this done without the right metrics. And here’s the rub: you’re can’t track the right metrics when key systems are siloed.

Every system, from ERP, Quality Management, Manufacturing Execution System (MES), to Supply Chain Management (SCM) and CRM have their own clock speed. For most manufacturers, business-as-usual is siloed.

Do you want the quickest path to mediocre product quality and losing customers? Then all you need to do is let each of these systems continue to run at their speed, siloed, with no orchestration toward customer-driven goals.

At the opposite end of the quality spectrum are manufacturers who integrate these systems together, orchestrating them to excel at quality daily. And yes – some of them are doing this today. How?

  • On the shop floors of these manufacturers, there is extreme ownership over every aspect of quality.
  • Flat panel screens reflect product quality, production efficiency and in many, Overall Equipment Effectiveness (OEE).
  • Machine operators know quality goals and targets and why their effort to excel matters.
  • Everyone knows which products are being built for which customers and what their quality requirements are.

With the right metrics, quality becomes core part of a company’s DNA. To see it in action on a shop floor is impressive.

Five metrics to drive your manufacturing success

The metrics any manufacturer chooses today define who they will be tomorrow. It’s easy to get bogged down in dashboards as metrics proliferate. The good news? Five key manufacturing metrics are all you need to push ahead.

The five quality metrics that help to keep manufacturers customer-focused include the following:

Overall Equipment Effectiveness (OEE) - OEE is calculated by multiplying machine Availability by Performance by Quality. Stabilizing machinery performance is the factor that initially drives the majority of manufacturers to adopt OEE. As individual machines and production lines stabilize, OEE reflects manufacturing reliability. Here is the IQMS roadmap for how to improve Overall Equipment Effectiveness (OEE):


Return Material Authorizations (RMAs) And Returns - RMAs are a direct measure of product quality and a products’ nonconformance to customers’ specifications and requirements. They are issued for a wide variety of reasons, and it’s important to have a monthly Pareto Analysis done of the top 20% of factors that drive 80% of the returns. This will make cause troubleshooting more efficient, leading to permanent solutions to problems that may be causing RMAs to begin with.

Perfect Order Performance – Provides an immediate measure of how well synchronized each step of order capture, order management, production and fulfillment are, perfect order performance is measured as an index value. To calculate the Perfect Order Index (POI), multiply % of orders delivered on time by % of orders completed by % of orders damage free by % of orders with accurate documents by 100. The following is the equation broken out: (Percent of orders delivered on time) * (Percent of orders complete) * (Percent of orders damage free) * (Percent of orders with accurate documentation) * 100. According to e American Productivity and Quality Center (APQC), top performers have perfect order index scores between 90 and 95%. The following graphic explains how Perfect Order Performance levels vary between Top, Median and Bottom performers:


Source: Supply & Demand Chain Executive Metric of the Month: Perfect Order Performance, April 22, 2016

Supplier Quality Acceptance Rate - This metric is an excellent indicator of how effective the Supplier Quality Assurance (SQA) systems and processes are in a manufacturer and how responsive they can be for customers. The goal of an SQA is to provide suppliers with an accurate, reliable framework for delivering the highest quality raw materials, components, subassemblies and assemblies used in production. Manufacturers often create a time series of this metric to quantify how effective supply chain collaboration is across suppliers, buyers, procurement, and production. The Supplier Quality Acceptance Rate quantifies the percentage of raw materials, components, subassemblies and assemblies that pass minimum quality standards and are then used in production. Many manufacturers evaluate this metric every 90 days with all suppliers to evaluate relative quality levels by product and sourcing area.

Corrective Action/Preventative Action (CAPA) events – Also known as Corrective Action Requests (CAR), addressing this metric and the events they define are required to stay in compliance with rigorous quality standards that vary by industry. CAPA is a measure of how well the initial engineering specifications combined with build instructions on the shop floor reflect customer requirements. An example is FDA 21 CFR 820.100 for medical device manufacturers that require their quality management systems have CAPA tracking, reporting and auditing accessible on a 24/7 basis by FDA auditors.

Metrics are the key to quality manufacturing and OEE

At IQMS, our field work with customers has shown us again and again that selecting the right series of metrics enables greater quality, by increasing the speed of and scale of operations.

Being able to flex in response to short-notice production runs without sacrificing product quality or gross margins, knowing in real-time what every machines’ and production line OEE levels are, and having a Perfect Order Performance level over 95% are the sure signs of a customer-driven manufacturer excelling at what they do.

Bottom Line: By increasing their intensity, insight and focus on product quality, manufacturers are making it a core part of their DNA, attracting new customers and retaining existing ones.

End note: You can learn more about how to increase OEE performance from the ebook, Lessons Learned On How To Increase OEE Performance.

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