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What is the most important thing about every metric used in a manufacturing plant? According to Larry Fast, in an article published in Industry Week, the answer to that question is: That the metric tells the truth about what is going on in the shop. The second most important thing, you ask? That metrics be actionable and level specific.
Unfortunately, this isn’t what Fast sees when he visits manufacturing plants. A 35-year veteran of the wire and cable industry and founder and president of Pathways to Manufacturing to Manufacturing Excellence, Fast believes that scrap metrics, for example, do no good when scraps are compared to sales revenues. Why? Because they have nothing to do with sales revenues. Rather, they have everything to do with the cost of production. When looking to improve performance, the metric used must be an accurate reflection of what is really going on in the plant.
Fast cites OSHA safety standards as a good example of metrics that work. These standards are applied to every single plant in the country so that they’re all tracked the same way. The same thing must happen with manufacturing plants, Fast stated. Weighing scrap to sales revenue cannot account for sales discounts that would skew the scrap percentage when essentially nothing different has happened at the plant. However, considering scrap to the cost of goods produced provides a consistent measure.
Consistent measures are an important step in manufacturing and for business in general.