Why do you think manufacturing benchmarking has emerged as a buzzword in recent years? That’s because despite running a dozen factories, you might not know which ones are high-performance and what lessons others can derive from them.
For instance, production output might be constantly high for one plant, while another faces tons of downtime. Yet another facility might struggle with troubleshooting but deliver superior-quality products. Is it possible to address and improve these differences? Yes, but only if you can detect them, identify the causes, and take effective action.
Manufacturing benchmarking helps with just that. You can compare operational performance against established standards, industry benchmarks, strategic goals, or peers. In fact, you can build a coordinated learning environment from individual factories.
Remember, benchmarking isn’t about comparing numbers every month. It’s about incorporating those findings into daily operational excellence. Benchmarking can facilitate the early detection of issues, smarter resource allocation, and better replication of successful practices.
Decoding Manufacturing Benchmarking and Its Importance
Through manufacturing benchmarking, you systematically compare processes, operational outcomes, and management practices. This helps in spotting gaps in performance as well as improvement opportunities.
Benchmarking might happen at different levels. For example, a regional director might care about comparing similar facilities across a particular geography. A plant manager, on the other hand, might compare a single factory’s production lines.
Note that manufacturing benchmarking isn’t about zeroing in on a factory that’s universally superior. Rather, the aim is to figure out why performance varies and decide which differences are crucial.
Also, benchmarking can be:
Internal
This revolves around the intra-organization comparison of facilities, shifts, production lines, and departments. You can access similar operational data and look into effective practices directly.
Competitive
You get to evaluate your performance vis-à-vis other industry players. This benchmarking reveals if your delivery performance, quality, cost, or productivity is competitive.
Process
You can evaluate how work is carried out instead of concentrating only on final outcomes. For instance, even if outputs are similar for two plants, one might have a better maintenance routine.
Each approach offers something distinct. You can unlock opportunities within the network with internal benchmarking. To establish broader context, competitive benchmarking is handy. And process benchmarking reveals how to attain improved results.
Which Manufacturing KPIs to Benchmark across Factories
For benchmarking to be useful, chosen metrics must align with valuable operational goals. Else, you cannot make better decisions. So, consider establishing these core KPIs:
Overall Equipment Effectiveness (OEE)
OEE signals manufacturing productivity by combining equipment quality, performance, and availability. By comparing this metric across facilities, you can discover opportunities for enhanced utilization of equipment.
Remember to assess the score’s components though. A low outcome triggered by recurring breakdowns should be treated differently than one caused by quality losses.
Output and Productivity
Output stands for the quantity churned out over a specific span. And productivity connects output with the utilized resources.
So, while comparing, consider differences associated with process complexity, operating duration, machine capacity, and product mix. Else, a high-volume factory might seem more productive just because it produces items that are easier to manufacture.
Quality and First-Pass Yield (FPY)
FPY indicates the proportion of items that satisfy quality requirements without repair or rework. Other measures include scrap, defect rates, hours of rework, and customer complaints. Studying them together helps you understand if better production performance is involving compromise on quality.
Downtime and Maintenance
Given underlying definitions are consistent, compare:
- Equipment availability
- Unplanned downtime
- Average repair time
- Repeated equipment failures
These metrics help you spot facilities with more robust troubleshooting, preventive maintenance, or escalation methods.
Delivery and Adherence to Schedule
Ensuring customer commitments are met is the ultimate aim of bettering production performance. So, keep an eye on adherence to production plan, schedule attainment, and timely delivery. You can easily detect any gaps between a factory’s production and delivery abilities.
Safety and Improvement
Metrics focused on safety and improvement execution enhance operational comparison. For example, you can evaluate recurring problems and incident patterns. It’s also possible to assess the completion of corrective action and time taken for troubleshooting.
How to Ensure Fair and Meaningful Benchmarking Comparisons
Despite looking accurate, a benchmarking dashboard might generate erroneous conclusions. And inconsistent measurement is often the cause. Why?
Say, when a production process is briefly interrupted, one facility considers it as downtime. But another facility doesn’t. Hence, you cannot compare their outcomes directly.
So, consider:
Establishing Common KPI Definitions
Document the definition of every enterprise KPI and cover:
- What is estimated by the metric
- Method of calculation
- Data source
- Frequency of reporting
- Responsible owner
- Any special conditions or exclusions
You get a consistent comparison basis and also spend less time on reconciling reports.
Accounting for Operating Environments
Plants don’t run under the same conditions. Results might be impacted by variations in production volume, equipment age, availability of labor, product mix and customer demands.
For example, avoid judging a facility churning out low-volume, extremely customized items vis-à-vis one known for standardized, long production runs. To take relevant differences into account, normalize metrics, segment results, or compare similar facilities.
Combine Qualitative and Quantitative Proof
While numbers help in spotting where performance differs, they don’t explain the reason necessarily. So, if the downtime for plant X is much lower than plant Y, what to do?
Look into the ‘why’. It might include equipment status, operator training, maintenance-related routines, etc. Find out which practices are responsible for the result and if they can be passed on to other plants.
Make the Data Trustworthy
Address data inconsistencies, make the rules of calculation visible, and clarify ownership regarding quality. After all, plant managers might not engage with a comparison’s findings if they think it’s unfair.
Turn Insights from Benchmarking Into Operational Improvement
While spotting a performance gap is vital, what you do next defines the true value of manufacturing benchmarking:
Detect Key Gaps
Focus on differences of maximum financial or operational significance. For instance, in a low-impact process, a minor gap might not need urgent attention. However, you mustn’t ignore a repetitive quality issue that affects multiple factories.
Simply put, prioritize opportunities as per strategic importance, viability, and business impact.
Delve Into Root Causes
To understand performance differences, get frontline workers, quality staff, maintenance teams, and plant managers together. To differentiate root causes from symptoms, adopt structured troubleshooting methods.
Just because a facility exhibits superior performance, don’t assume it has unlocked a widely applicable solution. Specific production conditions, staffing, or equipment might be influencing its results.
Replicate Validated Practices
To transfer proven practices, you might have to:
- Document a special routine for maintenance
- Train supervisors afresh
- Revise standard work
- Change how daily production reviews happen
The receiving facility should have clarity about the practice and the issue it’s meant to solve.
Track Improvements
After deploying the proven practice, keep a tab on the relevant KPI and confirm the outcome. Investigate the cause in case the expected improvement doesn’t pan out. The practice might call for adaptation or the execution might be incomplete, for instance.
Make Improvements a Part of Standard Work
Changes that are successful should be incorporated into existing operating practices. So, consider updating training materials, management routines, and relevant processes.
Also share improvements with other factories that might benefit. Let benchmarking translate to continuous improvement this way.
How to Connect Manufacturing Benchmarking With Everyday Management
Conventional benchmarking revolves around yearly assessments, quarterly reviews, or monthly reports. However, they might not be frequent enough for taking on-time operational decisions. How to approach benchmarking more effectively?
Link Organizational KPIs with Factory-Floor Actions
Executives often require a network-wide performance view. However, supervisors and plant managers need more detail for handling local problems.
A management system that’s well-designed connects these levels. As a leader, you can track repetitive patterns across plants. And local teams can study deviations and take corrective steps.
Review Benchmarking at Proper Intervals
Ensure everyday meetings deal with live deviations and prompt actions. Reviews conducted weekly or monthly can focus on recurring problems, trends, and progress made vis-à-vis targets. Periodic reviews can be about recognizing opportunities (cross-site) and strategic improvements.
Make Ownership and Execution Observable
For every critical performance gap, ensure there’s a:
- Clear owner
- Next action
- Expected date of completion
Else, benchmarking will be limited to observations that don’t lead to results. A daily management system is valuable in this regard. It can connect performance reviews with issue escalation, action monitoring, and follow-up.
Leverage Digital Tools for Minimizing Reporting Delays
When data influx happens from multiple systems and facilities, spreadsheets and manual reports aren’t enough. That’s because benchmarking uses up too many resources and becomes a sluggish affair.
Consider shifting to digital tools for performance management. Across sites, your view of KPIs, actions, and improvement projects will be more consistent.
Avoid These Manufacturing Benchmarking Mistakes
How to make the most of your benchmarking program? DON’T:
Treat Benchmarking as Competition
Avoid ranking facilities from worst to best. Teams might not share problems freely. Instead, reward transparency, willingness to learn, and improvement.
Compare Without Context
In case of widely different production conditions, raw comparisons might be inaccurate. So, use peer groups that are comparable. Also evaluate operating conditions before arriving at conclusions.
Track Too Many Metrics
Tracking a large number of KPIs makes it challenging to spot priorities. So, start with a modest set of indicators linked to strategic goals. Later, you can add other metrics if they help in explaining performance.
Ignore the Human Factor in Improvement
Performance differences aren’t always triggered by process design or technology. Leadership routines, communication, training, and problem-solving might also be responsible.
For instance, involving frontline workers can help you identify operational constraints overlooked in reports. You can make more practical and lasting changes.
Gain a Unique Edge with Manufacturing Benchmarking
Manufacturing benchmarking isn’t about getting factories to vie for the highest rank. It‘s about understanding performance variations across sites, spotting improvement areas, and sharing best practices across the network. However, linking comparison with action is the mantra for deriving real value.
And this becomes fuss-free with Fabriq. From applying common practices across sites and monitoring execution to escalating issues and increasing the visibility of improvement initiatives – you can do much.
Fabriq helps forge a meaningful connection between benchmarking insights and operations. Plants no longer operate in silos. They contribute to a shared learning and improvement environment in a connected way.
Learn how Fabriq simplifies your path from benchmarking to sustained operational excellence.
