BatchMaster Software Pvt. Ltd

Key Metrics That Drive Higher Manufacturing Quality

In all our previous blogs, we have discussed how quality is the most important attribute people look for in a product or service, and it is that predominant factor that decides the fate of products, services, as well as brands.

It is essentially why the business organizations across the globe focus on understanding the multi-layered concept of quality, and delivering it by inculcating a culture of quality within the organization, and integrating it throughout their operations.

This strategy of focusing on quality with the same intensity though each process, operation, and all the organizational resources helps them grow faster than their competitors, gain market share, and thwart price wars. And this holds true for organizations of all types and sizes…

…Including the manufacturing organizations

Quality gains greater significance in the manufacturing industry, where it is one of the biggest factors that determines customer satisfaction. Nobody wants to buy a product that’s prone to breakage, or might need to be replaced shortly after the purchase.

When we talk specifically about the process manufacturing industries such as pharmaceutical, food & beverage manufacturing, etc., within the broader manufacturing category, quality gains all the more significance, with the health of the consumers at stake.

Additionally, in these manufacturing businesses, poor quality of the products negatively impacts the manufacturing operations, as it can prove to be a costly proposition for the manufacturers to perform re-work on items that don’t meet quality standards.

Hence the need to drive higher manufacturing quality

More than any other industry, the manufacturing industry finds it paramount to maintain the quality standards of the products. In fact, it is one of their most essential responsibilities to ensure that the final output is safe, durable, and complies with all internal/external quality standards.

But when we talk about driving higher manufacturing quality, it is easier said than done. It may sound like an easy thing and a simple process, but in reality it is a complex thing to achieve. To begin with, it requires a thorough assessment of the manufacturing plant’s quality performance, which in turn relies on many metrics.

These metrics help identify whether you are producing a high number of quality products in the most efficient manner, and gain complete understanding of the current quality performance of your production facility while highlighting areas of improvement.

But, in the first place, what are metrics?

Manufacturing metrics or Key Performance Indicators (KPIs) are well-defined and quantifiable measure that the manufacturing businesses use to gauge their performance over time. These metrics can be defined as data and numbers that are indicator of a manufacturing company’s actions, abilities, and overall quality.

Organizations use these performance indicators to monitor, analyze, and optimize their manufacturing operations, and also to compare their efficiencies with those of their competitors. There are many different forms of metrics, and some examples include profit, return on investment, market share, customer satisfaction, customer reviews, and process excellence, etc.

These metrics are integral to an organization’s success, and hence it is important to track, manage, and eventually, improve them. Let’s understand the key metrics that can be measured, analyzed, and improved upon so as to drive higher manufacturing quality, in detail, and some others, in brief.

  • Metrics related to quality improvement

There are a few metrics that are directly related to quality improvement, such as yield, customer rejects/returns, and supplier’s quality incoming. Yield is the most basic quality performance metric for manufacturing businesses, as it reveals the percentage of quality products manufactured at a factory within a given time period.

Customer rejects/returns is a measure of the number of times customers reject or request a return for a product after it fails to meet the desired specification. Supplier’s quality incoming, on the other hand, suggests the percentage of good quality raw materials coming into the manufacturing process from a particular supplier.

  • Metrics related to customer satisfaction improvement

Customer satisfaction is another valuable measure of product quality. There are a few metrics that are a good indicator of the overall customer experience, and can help improve their satisfaction levels. Customer complaint is one such metric, which when tracked and addressed properly can throw light on areas of improvement and bring down quality control issues in future.

Then there are few other customer satisfaction metrics, such as your churn rate and the cost of customer acquisition. Then there’s also the ‘On-Time Delivery to Commit’ metric, which indicates the percentage of time when a completed product was delivered on the schedule that was committed to customers.

  • Metrics related to efficiency improvement

A few metrics such as throughput, capacity utilization, overall equipment effectiveness (OEE), etc. are a good indicator of an organization’s efficiency. While throughput measures what quantity of product is being produced on a machine, or plant over a defined period of time, capacity utilization indicates the total manufacturing output capacity which is utilized at any given point in time.

OEE takes into consideration availability, performance, and quality, and can be used to suggest the overall effectiveness of production equipment or an entire production line. Schedule attainment is yet another metric which indicates the percentage of time a target level of production is attained within a specified schedule.

  • Metrics related to compliance improvement

For an industry with so many moving parts, maintaining compliance is absolutely non-negotiable for manufacturing businesses. Hence, it is important for the manufacturers to track, measure, and manage key metrics related to compliance improvement, which eventually help drive higher manufacturing quality.

Metrics such as reportable health and safety incidents, which is an indicator of the number of health and safety incidents recorded in a defined period of time, and non-compliance events / year, a measure of the number of times a plant went outside the guidelines of normal regulatory compliance rules during a year, to operate, are also useful metrics.

  • Metrics related to cost reduction and profitability improvement

There are quite a few important metrics that impact cost reduction and improve profitability, and thus drive higher manufacturing quality. To name a few, ‘Total Manufacturing Cost Per Unit Excluding Materials’, ‘Manufacturing Cost As A Percentage Of Revenue’, ‘Net Operating Profit’, ‘Productivity In Revenue Per Employee’, and ‘Cash-To-Cash Cycle Time’, etc., are some of them.

Few more metrics that hold importance in manufacturing

  • Scrap rate
  • Cycle time
  • Demand forecasting
  • Inventory turns
  • Changeover time
  • Machine downtime rate
  • Inventory accuracy
  • Rework, etc.

QMS for manufacturing industries can help drive manufacturing quality

This list can still be expanded a bit further, depending on the need. But it should have given you a fair idea on what all metrics you should be measuring and monitoring in your manufacturing organization to make it a world-class manufacturing company that continuously strives for overall quality improvement.

Attaining higher quality levels has a tremendous effect throughout the organization, as everything is co-related. Reduced manufacturing cycle time improves order performance, which increases customer satisfaction, and in turn leads to more sales, reduction in cost of quality, as well as costs per unit of production excluding materials.

A good manufacturing quality management software such as BM QualityMaster can help your manufacturing organization drive higher manufacturing quality by executing the metric strategy, as well as all the quality initiatives from the top floor to the shop floor, to perfection. For any queries directed towards our in-house metric & quality experts, contact us here.

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Author

Sanjay Panjwani

I am Managing Director at BatchMaster Software India Pvt. Ltd., a leading vendor of ERP solutions in all the 7 continents. With over 30 years of presence in the ERP market & 1500+ customers situated all over the globe, BatchMaster is a mature organization of 200 plus employees.

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