Using your MIS for labels to measure and manage performance
“Continuous improvement” has many incarnations – six-sigma, lean manufacturing, theory of constraints and many more. Whatever philosophy you adopt at your company, there is one important aspect that is common to all – you cannot manage performance unless you can measure it.
How do you currently measure your performance? Many label converting companies are content just to have money in the bank, but they may have no idea which kinds of work they are making the most margin on and with which customers. You may think you have an idea of where your best margin is coming from – but do you have proof?
Shop floor data collection puts computers on your factory floor and your operators can log in and out of jobs and record the amount of time that is spent on a job’s make-ready, run, wash-up and any other operations that you want to track. This data can then be collected and compared against the timings and values that you originally estimated for the job. A good job costing system will look at what you bill for the job, list out all of your costs and give you a gross margin amount and percentage for every job that runs through the factory. It will also list the variance between what you estimated and what actually happened on press so you can easily see where extra time needs to be allocated for certain operations at the estimating stage.
As data is collected you should then be able to see at-a-glance how much gross margin has been gained on the jobs during that week or month. Over longer periods of time you should be able to identify patterns to see which kinds of work and which customers offer the best returns. This information can also be used as a feedback loop on your estimating standards. Are you allowing enough time for certain press set-ups? Or maybe you are allowing too much time?
You NEED to know this information. As margins get tighter and tighter, if your competitor has more accurate information about his costs, he is going to know exactly how much room he has to maneuver.
And how can you set about improving your company performance if you cannot measure where you are now and where you need to be in the future?
- What about setting performance goals for operators and offering incentives?
- How often do you currently review your estimating standards?
- Identify the work that gives you the most margin and create a targeted marketed campaign to attract new customers
- Create an open forum for employees to input ideas on improving your business – they have the most experience of your current workflow