Description
A performance, in performing arts, generally comprises an event in which a performer or group of performers behave in a particular way for another group of people, the audience. Choral music and ballet are examples.
Performance Benchmarking Report prepared for: Sample Company City, State
April 5, 2007
Copyright 2007 MMTC
Table of Contents
1. Productivity and Profitability 2. Global Competitiveness 3. Performance Measures 3.1 General Business 3.2 Quality 3.3 Timeliness 3.4 Utilization 3.5 Working Conditions and Employee Commitment 3.6 Addressing Weaknesses 4. Practices 4.1 Order-to-Cash Cycle 4.2 Cost Profile 4.3 People, Skills and Technology 4.4 Marketing 5. Yes/No and Categorical Questions 5.1 Yes/No Questions 5.2 Pricing, Quality Certification, and Costing 6. Profile of the Comparison Group 6.1 Industry Breakdown 6.2 Geographic Distribution 6.3 Profile of Business Characteristics 6.4 Yes/No Characteristics Appendix 1: Distribution of Comparison Group Values Performance Measures Appendix 2: Distribution of Comparison Group Values Practices Appendix 3: Formulas
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3 4 6 7 7 8 8 9 10 12 13 14 15 16 17 17 18 20 20 21 22 22
23 25 28
1. Productivity and Profitability
Throughout this report, we display your facility's performance on many metrics. The comparison is done metric-by-metric, since no company is best at everything. That said, two metrics in this report are most critical. The first is Value-Added per Full-Time-Equivalent Employee (FTE). Value-added is defined as sales less the cost of inputs (material, parts, supplies, services and energy) purchased from other firms. It measures the market value of the work done at your location. Dividing value-added by FTEs turns it into your output per employee, a fundamental measure of labor productivity. Achieving and maintaining high labor productivity is absolutely critical for North American, Western European, and Japanese manufacturers. Plants in these high-wage regions will never win the global competition with extremely low-wage producers unless they focus on business areas in which they can attain high output per worker. But it's also clear that high labor productivity is not sufficient for sustainable success. If high productivity comes at very high cost -- due to high labor costs or large capital equipment requirements -- then profitability suffers. Thus the second critical metric is our Global Competitiveness Index. This index is an indicator of how your cost-to-output ratio compares against what we view as the global benchmark: the North American landed cost for a low-wage Asian country producer.
Value
Percentile (100 = Best in Group)
Your Value-Added per FTE
$ 69,926 124.5%
46 28
Your Cost-to-Output Ratio Compared to Global Benchmark
Together these metrics summarize your global competitive risk. The more you compete, or expect to compete, against low-wage offshore companies that are willing to accept thin profit margins, the more critical it is that you reduce your costs. See Section 3.1 and Appendix 1 for more data on Value-Added per FTE. See Section 2 for a fuller discussion of our Global Competitiveness Index, and for an analysis of how much you can reduce your Index value through various improvement tactics.
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2. Global Competitiveness
We compute your Global Competitiveness Index by estimating how your costs compare with the North American landed cost of products manufactured offshore. Our assumptions about the relative costs of offshore producers are: 1. Production worker wage rates are roughly 10% of wages in the typical North American plant. 2. Labor productivity (output per labor hour) is 25% that of the typical North American plant. 3. Costs for purchased material, parts and energy are 90% those for the typical North American plant. 4. Waste rates (scrap, rework, rejects) run roughly five times higher for the typical offshore facility. 5. Freight, duty and taxes -- combined with extra logistics costs -- add roughly 12% to the offshore cost. Our research indicates that, in most industries, about 15% of small and medium-sized North American manufacturers are already lower-cost than the landed cost of the benchmark offshore competitor. Another 15% would beat the offshore landed cost benchmark if they were successfully to implement the Thorough Improvement program (Scenario 8, below). Consistent with assumption 5, we add 12% to your costs in comparing you against the global benchmark if your plant is located outside of North America . Further, non-North American plants would fail to gain relative to other offshore producers in case of a devaluation of the dollar (i.e., they show no improvement in Scenario 9, below).
Global Cost Benchmark = 100
Your Cost Relative to Global Benchmark
124.5 % 117.6 % 120.2 % 123.8 % 124.4 %
Cost Cutting Scenario
Base Case -- Your Current Costs Relative to Typical Offshore Producer Scenario 1: You Achieve a 10% Reduction in Material Cost Scenario 2: You Achieve a 10% Increase in Labor Productivity Scenario 3: You Achieve a 10% Reduction in Fringe Benefits Scenario 4: You Achieve a 10% Reduction in Energy Costs Scenario 5: You Achieve a 25% Reduction in Waste (Scrap and Rework) Scenario 6: You Achieve a 25% Reduction in Inventory Scenario 7: You Achieve a 10% Increase in Output with Your Current Capital Stock Scenario 8: Thorough Improvement (Mat'l,Prod'ty,Energy,Waste,Inventory,Output) Scenario 9: The Dollar is Devalued by 10% Relative to World Currencies
123.1 % 124.3 % 124.5 % 112.1 %
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For most companies, labor and material dominate total costs, so it is not surprising that raising labor productivity getting the same output with fewer labor-hours - and reducing the amount or cost of material in the product have the biggest impact. But this should not blind companies from paying attention to other types of waste: Capital costs. Especially for facilities that have a lot of expensive new equipment, keeping that equipment busy is very important. Inventory. Not only does carrying excessive inventory stocks result in carrying costs and lost floorspace that competitors do not have to shoulder, but it also ties up cash that could instead be invested in increasing labor productivity and designing out material cost. Quality spills. Scrap, rework, and customer rejects/returns, like excessive inventory, tie up your cash and your people's time on sorting and firefighting, rather than freeing it up to focus on productivity and material. In addition, it is likely that, in the next few years (and perhaps much sooner), the US dollar will depreciate by 10% or more against competitor-country currencies. If so, instead of only about 15% of North American manufacturers having lower costs than the estimated landed cost of their offshore competitors, roughly 30% would beat that benchmark. If the dollar fell by 10% AND manufacturers implemented the Thorough Improvement program, then just over 50% could beat it. Finally, not all competition is on the basis of cost. Many manufacturers win orders for at least part of their product line based also on features, performance, brand reputation, and/or after-sale service. As you attack costs, some of the savings should be applied not just to winning new orders through lower quotes, but also to increasing the proportion of your sales that are won on more than cost alone. This may require investments in design (which could also pay off in reducing the cost of material in the product), engineering, marketing, sales, distribution, and service.
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3. Performance Measures
This section reports on what we call Performance Measures. These are the metrics for which it is clear whether higher or lower values constitute better performance. For On-Time Delivery Rate, for example, higher values are clearly better, and 100% on time is best. For Customer Reject Rate, low values are preferred, and zero rejects is best. This is not to say, of course, that every company should strive to attain these "best" values, regardless of the impact of doing so on their profits. Your strengths as presented below are the five metrics on which you scored the best relative to your comparison group, and for which you achieved a ranking at least in the top half. (That is, if you rank in the top half of your comparison group on only three metrics, then only those three will be reported as strengths.) Weaknesses are the five metrics on which you scored the worst relative to others, and on which you rank in the bottom half. In the graphs that follow, the length of each bar indicates your percentile ranking, ranging from 0 (worst in the group) to 100 (best in the group). That is, the longer the bar, the higher your ranking. The actual value you reported for each measure, as well as the values that constitute the cut-offs for the top tenth, top quarter, etc., appear in Appendix 1. Descriptive information about the plants you are compared against is in Section 6, Profile of the Comparison Group.
Strengths
Weaknesses
Lost Days due to Accidents Pct Sales Growth, 2 Years Days of Raw Inventory Health Coverage Rate On-Time Percent
0 10 20 30 40 50 60 70 80 90100
Running Hrs as % of Available Employee Turnover Running Hrs as a % of Total Inventory Turns Value-Added per Sq Ft
0 10 20 30 40 50 60 70 80 90100
Percentile
Percentile
The rest of this section is organized as follows: 3.1 General Business 3.2 Quality 3.3 Timeliness 3.4 Utilization 3.5 Working Conditions and Employee Committment 3.6 Addressing Weaknesses.
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3.1
General Business
Measures of your company's General Business performance include several indicators of your labor and capital productivity; your recent sales growth; and your gross profit rate.
1. Percent Change in Sales, Past 2 Years
2. Gross Profit Rate - Sales Less Cost of Goods Sold as a % of Sales
3. Value-Added Per FTE
4. Annual Value-Added per Dollar in Machinery Value
5. Value-Added per Dollar of Capital and Labor Expense
6. Value-Added per Square Foot of Production Floorspace
0 10 20 30 40 50 60 70 80 90 100
Percentile
3.2 Quality
Measures of your shop's Quality performance include the percent of units scrapped, and the percent of units you shipped that were rejected by the customer for quality reasons.
7. Scrap Rate Due to Errors
8. Percent of Units Reworked
9. Percent of Units Shipped Bad or Rejected
10. Percent of Units Made Right the First Time
0
10
20
30
40
50
60
70
80
90 100
Percentile
7
3.3 Timeliness
Measures of your company's Timeliness performance include inventory turnover, your and your suppliers' on-time delivery, and job bumping.
11. Inventory Turns (Cost-of-Goods-Sold/Total Inventory)
12. Days of Raw Material/Parts Inventory
13. For Shops Holding Finished Goods, Days of Finished Goods Inventory
14. Percent On-Time Deliveries to Your Customers
15. Percent of Supplier Shipments Delivered to You on Time
16. Percent of Jobs Causing Other Scheduled Jobs to be Bumped
0 10 20 30 40 50 60 70 80 90 100
Percentile
3.4 Utilization
Measures of your shop's machine Utilization performance include average running hours per machine, and downtime due to setups.
17. Available (Manned) Hrs as a % of Hrs in a Year, Avg Per Machine
18. Running Hrs as a % of Available Hrs, Regular-Use Machines
19. Running Hrs as a % of Hours in a Year, Regular-Use Machines
20. Setup Hours as a % of Available (Manned) Machine Hours
0
10
20
30
40
50
60
70
80
90 100
Percentile
8
3.5 Working Conditions and Employee Commitment
A committed, stable workforce is critical to achieving improved performance and to building on successes. Analysis of our own and others' data makes clear that low employee turnover and low shop employee absenteeism are critical to high productivity levels and growth, and that both of them are predicted by having above-average wage rates, a health plan with substantial employer participation in premium payments, and a safe workplace.
21. Employee Turnover Rate 22. Average Hourly Wage, Shop Employees 23. Pct of Shop Workers Covered by Your Health Plan 24. Days Absent as Pct of Total Scheduled Work Days, Shop Workers 25. Work Days Lost Due to Accidents per 100 FTEs, Past Year
0 10 20 30 40 50 60 Percentile 70 80 90 100
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3.6 Addressing Weaknesses
This section presents a brief analysis of up to five "Weaknesses": those metrics on which your performance looks worst relative to the other shops in your comparison group. Of course, this selection of your five worst metrics is somewhat arbitrary and uninformed. Our analysis of past Benchmarking data confirms what common sense tells us -- virtually no companies are "good" across the board, and trying to achieve the Top Tenth on every metric is a prescription for bankruptcy. Metrics on which you score poorly are worthy of attention if: 1) the cost to fix the problem is less than the payoff to doing so, and 2) customers will effectively pay you for better performance, or drop you if you don't achieve it. With that in mind, we offer a brief discussion of your "bottom five" performance metrics: possible causes, connections and prescriptions. If this section contains only three weaknesses (i.e., you had only three or fewer metrics on which you were in the bottom half of the group), the next page may be blank.
Running Hrs as a % of Available Hrs, Regular-Use Machines
The best measure of your machine utilization is how many hours they run in a year. But once you determine the level of manning appropriate to your order book, you also need to look at how many of those manned, or available, hours your machines are running. The goal is to attack the drivers of downtime, including: long or unnecessary setups, unreliable supplier delivery, poor housekeeping and tool management, inadequate preventive maintenance, incapable machines, and poor breakdown prediction.
Employee Turnover Rate
Calculated as the ratio of W2s to average headcount during the 12-month reporting period, employee turnover is an highly useful measure of employee commitment and attachment. Our research shows that companies with lower rates of turnover have higher productivity. Academic literature traces this effect to the fact that low-turnover companies hold on to their best, most experienced employees. Factors that help companies achieve lower employee turnover include higher wages, better employee health insurance coverage, and better working conditions, including a lower accident rate.
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Running Hrs as a % of Hours in a Year, Regular-Use Machines
The best measure of your machine utilization is how many hours they run in a year – your running time as a percent of 365 days x 24 hours. Especially for newer, more expensive machinery, high running time is essential if fixed costs per unit are to be kept manageable. Steps include two- or three-shift, or even three-crew, operation; fuller manning on more shifts; and an assault on all the causes of downtime, including: long or unnecessary setups, unreliable supplier delivery, poor housekeeping and tool management, inadequate preventive maintenance, incapable machines, and poor breakdown prediction.
Inventory Turns (Cost-of-Goods-Sold/Total Inventory)
Low turns may result from excessive raw, finished, or in-process inventory stocks. You should examine your percentile position on each of these to determine the culprit(s). Low raw turns (i.e., high days) usually signal poor demand forecasting or suppliers that are unwilling to deliver small lots frequently. Low finished goods turns (high days) often result from excessive stockpiling to insure the ability to fill rush orders; where possible, consider instead stocking standard components but assembling to order. Finally, high work-in-process (WIP) often reflects bottlenecks that result in long waits between processing or assembly steps. Poor routings, bad line balancing, and frequent but unanticipated machine failures are common culprits. Many companies have attacked high WIP by changing shop layout to cells, and by making inventory costs visible by replacing warehousing with floor stock.
Value-Added per Square Foot of Production Floorspace
Value-added, which is defined as sales less the cost of inputs (materials, parts, services, and energy) purchased from the outside, measures the market value of work done inside the company. Value-added per square foot of production floorspace measures whether your factory floorspace -part of your fixed costs -- is being used effectively to produce income. A low value on this measure -- especially if you score fairly well on value-added per FTE, and on value-added per dollar of equipment -- is worthy of attention even if your site is not particularly space-constrained. It may indicate that you are struggling with a poor layout, putting significant labor time into merely moving product around. Or, it may indicate that a large share of floorspace is devoted to storing inventory. In either case, your shop would probably benefit from a disciplined application of "lean production" techniques.
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4. Practices
Where Performance Measures are goals, or ends, Practices are means to those ends. They are metrics on which it is useful to know where your company stands compared to others in the comparison group. It is not necessarily good to rank very high or very low if doing so is not required to achieve your goals. Practices include metrics that summarize your marketing and sales activities, your use of PCs and other keyboarded devices, and your HR investments. The bars in the charts in this section are drawn relative to the median, or typical, firm. Bars that extend far to the left show that your value is near the minimum for the group; bars extending to the right indicate that your value is unusually large. You should look for your "outliers" and think carefully about what might be driving those aspects of your business that make you unusual. Note that having no bar at all for a particular metric implies either that your value is the median, or that you did not provide the data necessary to calculate it. Please see Appendix 2 to see your own value, and the range of values for your comparison group, for each Practice metric. This section is organized as follows: 4.1 Order-to-Cash Cycle 4.2 Cost Profile 4.3 People, Skills and Technology 4.4 Marketing
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4.1 Order-to-Cash Cycle
Time is money. Manufacturers are appropriately increasing their focus on factory time compression, via lean production approaches and similar techniques. Yet Manufacturing Lead Time is often a small part of total Order-to-Cash time. Pre-production steps, involving everything from when the order is placed until test parts have been run and approved, can take months. And customers have an interest in extending Receivables for as long as possible. The bar chart below indicates how the components of your Order-to-Cash Cycle compare with those reported by others in your comparison group. Bear in mind, however, that some group members do mostly repeat orders with trivial pre-production requirements. Others must do all-new design and order all-new tooling with each order. And, of course, manufacturing lead times will vary with product complexity.
Your Percentile Relative to the Median 0 50 100
26. Pre-Production Lead Time (Days from Order to Release to Production) 27. Days Manufacturing Lead Time, Typical Order 28. Days Spent in Finished Goods Inventory, Typical Order 29. Order-to-Delivery Days (Pre-Prod'n + Mfg + Fin'd Goods), Typical Order 30. Average Days of Receivables 31. Days Order-to-Cash Lead Time, Typical Order
Lowest in the Group
Median for the Group
Highest in the Group
In fact, how your lead times compare with the group isn't really the point. What matters is that you recognize the potential cash flow benefits of reducing your order-to-cash cycle. If your Pre-Production Lead Times are significant, you might want to consider whether orders are unnecessarily queued before they even get to the shop floor.
Your Data
26. Pre-Production Lead Time (Days from Order to Release to Production) 27. Days Manufacturing Lead Time, Typical Order 28. Days Spent in Finished Goods Inventory, Typical Order 29. Order-to-Delivery Days (Pre-Prod'n + Mfg + Fin'd Goods), Typical Order 30. Average Days of Receivables 31. Days Order-to-Cash Lead Time, Typical Order 84.0 10.0 5.0 99.0 46.6 145.6
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4.2 Cost Profile
This section illustrates whether your material costs, purchased services, and labor costs -- calculated as a percent of sales -- are typical among firms in your comparison group. Note that having high labor costs as a percent of sales, for example, does not necessarily imply that those costs are too high. Rather, it might merely reflect that you do less subcontracting than typical for the group. If so, it would follow that your purchased services as a percent of sales would be correspondingly low.
Your Percentile Relative to the Median 0 50 100
32. Purchased Material and Parts Costs as a Percent of Sales 33. Pct of Purchases that come from Suppliers Located within 250 Miles 34. Purchased Services as a Percent of Sales 35. Labor Costs (Payroll, Temps, Benefits) as a % of Sales 36. Shop Payroll as a Percent of Sales 37. Non-Factory Labor Costs (Payroll Plus Benefits) as a Percent of Sales 38. Benefits as a Percent of Labor Costs 39. Temporary or Contract Labor Costs as a % of Total Labor Costs 40. Energy & Utility Costs as a Percent of Sales 41. Energy Costs per Dollar Value-Added 42. Consumables and Packaging Costs per Dollar Value-Added 43. Premium Freight Costs as a Percent of Sales
Lowest in the Group
Median for the Group
Highest in the Group
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4.3 People, Skills and Technology
Technology use is closely tied to how you manage your workforce. A highly capital- and technology-intensive factory requires highly skilled and well-trained employees.
Your Percentile Relative to the Median 0 44. Dollar Value of Machinery Per FTE 45. Number of Design/Shop Keyboards and Keypads per Employee 46. For Shops Doing Design, % of Design Hours on CAD Terminals 47. Percent of Employees Using a Computer at Least Weekly 48. Percent of Shop Floor Workers Participating in Work Teams 49. Incentive or Bonus Pay as a % of Shop Employee Payroll 50. Average Cost of Health Coverage per Year, per Covered Shop Worker 51. Inspection Labor Hours as a % of Total Shop Labor Hours 52. Pct of Shop Workers Trained in Statistical Quality, Past 3 Years 53. Pct of Shop Workers Trained in Technical Areas, Past 3 Years 54. Training Tuition and Fees per Employee 55. Training Tuition and Fees per Shop Employee 56. Spending on Information Technology as a Percent of Sales 57. Pct of Sales Accounted for by Orders Received Over the Internet 58. Pct of Material and Subcontracting Purchased Over the Internet 50 100
Lowest in the Group
Median for the Group
Highest in the Group
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4.4
Marketing
Your Percentile Relative to the Median 0 50 100
59. Percent of Sales from Products not Made 3 Years Ago
60. Percent of Sales to Customers not Served 3 Years Ago
61. Percent of Sales to Industries not Served 3 Years Ago
62. Percent of Sales Exported Beyond U.S.
63. Percent of Sales for Which You Designed the Part or Assembly
Lowest in the Group
Median for the Group
Highest in the Group
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5. Yes/No and Categorical Questions
In contrast to the Practices included earlier in this report, there are some "On/Off" actions that your company either does or does not undertake. These Yes/No Questions include whether or not you use EDI, CAD/CAM, and statistical analysis. If you are not doing some of these, but most companies in the comparison group are, that should be food for thought. This section also reports on any questions for which you were asked to select from three or more categories, such as the extent to which you have changed your prices.
5.1 Yes/No Questions
Question Number
Q. 56
Question Do business electronically (send/receive PO's, quotes, invoices, releases)? Ordering and/or scheduling integrated with EDI or internet? In past year, used CAD to generate machine instructions (CAD/CAM)? In past year, sent/received CAD data to/from suppliers/customers? In past year, regularly did statistical quality analysis on parts/machines? In past year, routinely analyzed quality data with computers or data collection devices? Majority of shop employees belong to a union?
Percent Yes
93.8%
Your Answer
Yes
Q. 57 Q. 96 Q. 97 Q. 107 Q. 108
17.9% 72.7% 82.8% 73.5% 57.4%
No Yes Yes No No
5.8%
No
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5.2 Pricing, Quality Certification and Costing
Question Number Q. 26
Not at all -- able to raise prices Held the line -- no change A little bit: 0.1 - 2.49% Somewhat: 2.50 - 4.99% Significantly: 5.0 - 9.99% A great deal: 10% or more
Pricing Over the past year, how much have you had to reduce prices?
Percent of Comparison Group
20% 28% 32% 12% 5% 3%
Your Answer: Not at all -- able to raise prices Question Number Q. 109
Quality Certification What is plant's ISO 9001:2000 certification status? Not seeking certification Certified Seeking certification 21% 72% 7%
Percent of Comparison Group
Your Answer: Certified Q. 110
What is plant's ISO 14001:1996 certification status? Certified Seeking certification Not seeking certification 3% 3% 94%
Your Answer: Not seeking certification Q. 111
What is plant's ISO 14001:2004 certification status? Certified Seeking certification Not seeking certification 6% 6% 88%
Your Answer: Not seeking certification Q. 112
What is plant's TS16949 certification status? Certified Seeking certification Not seeking certification 15% 19% 66%
Your Answer: Not seeking certification Q. 113
Other industry- or function-specific ISO standard? Certified Seeking certification Not seeking certification 31% 3% 66%
Your Answer: Not seeking certification
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Question Number Q. 49
Costing For cost estimating, how are estimates of direct material expense computed? Calculated Separately for Each Job For Some Jobs, Adjust Rates or Add Special Mark-Up Always Included in Usual Hourly Billing Rates
Percent of Comparison Group
93% 4% 3%
Your Answer: Calculated Separately for Each Job Q. 50
For cost estimating, how are estimates of tooling costs computed? Calculated Separately for Each Job For Some Jobs, Adjust Rates or Add Special Mark-Up Always Included in Usual Hourly Billing Rates 79% 17% 5%
Your Answer: Calculated Separately for Each Job Q. 51
For cost estimating, how are estimates of design/engineering labor computed? Calculated Separately for Each Job For Some Jobs, Adjust Rates or Add Special Mark-Up Always Included in Usual Hourly Billing Rates 29% 30% 41%
Your Answer: For Some Jobs, Adjust Rates or Add Special Mark-Up Q. 52
For cost estimating, how are estimates of factory indirect labor computed? Calculated Separately for Each Job For Some Jobs, Adjust Rates or Add Special Mark-Up Always Included in Usual Hourly Billing Rates 18% 14% 68%
Your Answer: Always Included in Usual Hourly Billing Rates Q. 53
For cost estimating, how are estimates of order processing costs computed? Calculated Separately for Each Job For Some Jobs, Adjust Rates or Add Special Mark-Up Always Included in Usual Hourly Billing Rates 11% 5% 84%
Your Answer: Calculated Separately for Each Job Q. 54
For cost estimating, how are estimates of inventory holding costs computed? Calculated Separately for Each Job For Some Jobs, Adjust Rates or Add Special Mark-Up Always Included in Usual Hourly Billing Rates 14% 41% 45%
Your Answer: For Some Jobs, Adjust Rates or Add Special Mark-Up
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6. Profile of the Comparison Group
This report is only as good as the fit between your company and the other shops in the comparison group. In this Profile of the Comparison Group section, we describe the group in terms of industry, sales, customer base, average product price, and order type.
6.1
Industry Breakdown
Industry Breakdown of Your Comparison Group (Total Group Size = 69 Plants)
Apparel and Other Cut-and-Sew Wood Products (Including Furniture) Commercial Sheetfed Printing Plastic and Rubber Products Casting and Other Primary Metal Processing Metal Forming and Fabrication Screws, Nuts, Bolts, Washers and Screw Machine Products Metals Services Large, Powered Industrial Machinery ("Machine Tools") Other Industrial Machines and Assemblies Tooling and Machined Parts Computer and Electronics Parts and Assemblies Other Electrical Assemblies Automotive and Heavy Truck Aircraft and Aerospace Instruments (Including Medical Devices) Consumer and Commercial Products Food Processing Chemicals, Resins and Compounds Industries Not Included Above
0 (0.0 %) 0 (0.0 %) 0 (0.0 %) 0 (0.0 %) 3 (4.3 %) 48 (69.6 %) 4 (5.8 %) 0 (0.0 %) 0 (0.0 %) 0 (0.0 %) 7 (10.1 %) 0 (0.0 %) 3 (4.3 %) 0 (0.0 %) 2 (2.9 %) 2 (2.9 %) 0 (0.0 %) 0 (0.0 %) 0 (0.0 %) 0 (0.0 %)
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6.2 Geographic Distribution
Number (and Percent) of Comparison Group Members Located in: US - Michigan US -Other Great Lakes US - Northeast US - South US - Plains US - West Canada Mexico, Latin America, or Caribbean Western Europe Eastern Europe, Turkey and Caucasus Australia, Japan, New Zealand Hong Kong, S. Korea, Singapore, Taiwan Other Asia and the Pacific Africa
14 24 14 4 1 8 2 0 0 1 0 0 1 0
( 20.3 % ) ( 34.8 % ) ( 20.3 % ) ( 5.8 % ) ( 1.4 % ) ( 11.6 % ) ( 2.9 % ) ( 0.0 % ) ( 0.0 % ) ( 1.4 % ) ( 0.0 % ) ( 0.0 % ) ( 1.4 % ) ( 0.0 % )
US - Michigan
US -Other Great Lakes
Other Asia E. Europe Canada US - West US - Plains US - South US - Northeast
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6.3 Profile of Business Characteristics
Distribution of Comparison Group Values
25% Said At Least
Annual Sales ($000) Average Unit or Piece Price Typical Units Per Order Pct of Sales from One-Off Items (Dies, Prototypes, Etc.) Percent of Sales from Short-Term/Job Shop Orders Percent of Sales from Long-Term Jobs Run Regularly Percent of Sales from Make-to-Stock Work Pct of Shop Labor Time Spent Doing Assembly, Packaging, Etc. Percent of Sales to the Auto Industry Percent of Sales to Aircraft/Aerospace Industry Percent of Sales to the Communications/Electronics Industry Percent of Sales to Final Consumers, Wholesalers, or Retailers Percent of Sales that are Military/Defense-Related Number of Distinct Part Numbers Accounting for 80% of Your Sales $ 22,344 $ 15.00 17,000 10.0% 12.0% 95.0% 5.0% 28.0% 40.0% 5.0% 10.0% 1.0% 2.0% 300
Median
$ 15,000 $ 2.14 2,000 5.0% 5.0% 87.0% 0.0% 15.0% 5.0% 0.0% 0.0% 0.0% 0.0% 100
25% Said At or Below
$ 7,823 $ 0.75 250 0.0% 0.0% 70.0% 0.0% 8.0% 0.0% 0.0% 0.0% 0.0% 0.0% 38
Your Value
$ 11,400
1.0% 1.0% 97.0% 1.0% 10.0% 2.0% 0.0% 0.0% 0.0% 0.0% 176
6.4
Yes/No Characteristics
Question Service business (do quick-turnaround work on parts/material your customer provides)? Is company owner-managed? Is this the only plant in the company? 22
Question Number
Q. 61 Q. 116 Q. 117
Percent Yes
0.0% 64.2% 76.5%
Your Answer
No Yes Yes
Appendix 1: Distribution of Comparison Group Values on Performance Measures
Measure
1. Percent Change in Sales, Past 2 Years Your Value: 50.0% 2. Gross Profit Rate - Sales Less Cost of Goods Sold as a % of Sales Your Value: 18.7% 3. Value-Added Per FTE Your Value: $69,926 $ 13.13 $ 3.37 $ 1.71 $ 0.98 $ 0.76
Top 10%
81.4%
Top 25% 50.0%
Median 33.0%
Bottom 25%
14.9%
Bottom 10%
1.2%
35.4%
30.2%
22.3%
15.2%
11.0%
$ 110,313
$ 92,332
$ 71,578
$ 55,650
$ 48,068
4. Annual Value-Added per Dollar in Machinery Value Your Value: 5. Value-Added per Dollar of Capital and Labor Expense Your Value: 6. Value-Added per Square Foot of Production Floorspace Your Value: $71 7. Scrap Rate Due to Errors Your Value: 8. Percent of Units Reworked
$ 1.79
$ 1.59
$ 1.38
$ 1.20
$ 1.01
$ 345
$ 184
$ 128
$ 73
$ 50
0.100%
0.400%
1.000%
2.000%
3.620%
0.005% Your Value: 9. Percent of Units Shipped Bad or Rejected Your Value: 0.412 % 10. Percent of Units Made Right the First Time Your Value: 11. Inventory Turns (Cost-of-Goods-Sold/Total Inventory) Your Value: 5.7 12. Days of Raw Material/Parts Inventory Your Value: 26.6 13. For Shops Holding Finished Goods, Days of Finished Goods Inventory Your Value: 21.1
0.200%
1.000%
2.000%
4.000%
0.004%
0.047%
0.160%
1.000%
2.000%
99.342%
98.993%
97.400%
95.000%
91.000%
15.2
8.9
7.5
5.8
4.0
13.7
21.3
32.7
50.9
89.8
3.9
6.8
12.7
21.1
28.4
23
Measure
14. Percent On-Time Deliveries to Your Customers Your Value: 95.8% 15. Percent of Supplier Shipments Delivered to You on Time Your Value: 87.0% 16. Percent of Jobs Causing Other Scheduled Jobs to be Bumped Your Value: 17. Available (Manned) Hrs as a % of Hrs in a Year, Avg Per Machine Your Value: 46.6% 18. Running Hrs as a % of Available Hrs, Regular-Use Machines Your Value: 23.2% 19. Running Hrs as a % of Hours in a Year, Regular-Use Machines Your Value: 10.8% 20. Setup Hours as a % of Available (Manned) Machine Hours Your Value: 21. Employee Turnover Rate Your Value: 42.4%
Top 10%
99.2%
Top 25% 98.0%
Median 95.2%
Bottom 25%
86.0%
Bottom 10%
78.9%
98.0%
95.0%
90.0%
80.0%
75.0%
1.5%
2.8%
6.3%
14.7%
48.9%
60.8%
41.7%
28.8%
21.7%
16.2%
83.3%
78.3%
65.1%
50.0%
27.6%
33.4%
24.4%
17.6%
11.2%
7.6%
1.0%
3.6%
8.3%
13.2%
21.3%
6.1% 22. Average Hourly Wage, Shop Employees Your Value: $13.73 23. Pct of Shop Workers Covered by Your Health Plan Your Value: 85.4% 24. Days Absent as Pct of Total Scheduled Work Days, Shop Workers Your Value: 25. Work Days Lost Due to Accidents per 100 FTEs, Past Year Your Value: 0.0
13.5%
23.5%
40.0%
59.5%
$ 17.44
$ 15.83
$ 14.20
$ 12.23
$ 11.15
100.0%
95.6%
83.3%
70.0%
60.0%
0.5%
1.0%
2.0%
3.0%
5.0%
0.0
0.0
3.1
19.6
133.7
24
Appendix 2: Distribution of Comparison Group Values on Practices
Measure
26. Pre-Production Lead Time (Days from Order to Release to Production) Your Value: 84.0 27. Days Manufacturing Lead Time, Typical Order Your Value: 10.0 28. Days Spent in Finished Goods Inventory, Typical Order Your Value: 5.0 29. Order-to-Delivery Days (Pre-Prod'n + Mfg + Fin'd Goods), Typical Order Your Value: 99.0 30. Average Days of Receivables Your Value: 46.6 229.2 178.1 128.4 102.7 84.0
Highest 10%
120.0
Highest 25%
84.0
Median 40.0
Lowest 25%
14.0
Lowest 10%
6.0
45.0
30.0
15.0
10.0
3.0
55.0
30.0
10.0
3.0
1.0
180.0
125.0
78.0
50.0
29.0
67.6
60.1
49.0
39.4
34.0
31. Days Order-to-Cash Lead Time, Typical Order Your Value: 145.6 32. Purchased Material and Parts Costs as a Percent of Sales Your Value: 53.4% 33. Pct of Purchases that come from Suppliers Located within 250 Miles Your Value: 95% 34. Purchased Services as a Percent of Sales Your Value: 4.4% 35. Labor Costs (Payroll, Temps, Benefits) as a % of Sales Your Value: 33.0% 36. Shop Payroll as a Percent of Sales Your Value: 11.8% 37. Non-Factory Labor Costs (Payroll Plus Benefits) as a Percent of Sales Your Value: 10.6% 38. Benefits as a Percent of Labor Costs Your Value: 16.4%
66.8%
48.0%
40.3%
28.1%
17.9%
95%
90%
75%
25%
10%
21.4%
13.6%
8.2%
4.4%
3.1%
44.1%
40.2%
32.7%
25.5%
20.6%
25.0%
20.2%
15.7%
10.6%
7.1%
14.3%
10.9%
7.7%
4.6%
2.2%
24.0%
18.9%
13.8%
9.8%
6.6%
25
Measure
39. Temporary or Contract Labor Costs as a % of Total Labor Costs Your Value: 11.5% 40. Energy & Utility Costs as a Percent of Sales Your Value: 1.02% 41. Energy Costs per Dollar Value-Added Your Value:
Highest 10%
11.2%
Highest 25%
6.4%
Median 2.0%
Lowest 25%
0.0%
Lowest 10%
0.0%
2.59%
1.67%
1.20%
0.88%
0.60%
$ 0.07 $0.02 $ 0.14
$ 0.04
$ 0.02
$ 0.02
$ 0.01
42. Consumables and Packaging Costs per Dollar Value-Added Your Value: $0.10 43. Premium Freight Costs as a Percent of Sales Your Value: 44. Dollar Value of Machinery Per FTE
$ 0.07
$ 0.03
$ 0.02
$ 0.01
0.423%
0.171%
0.051%
0.009%
0.000%
$ 106,618 Your Value: 45. Number of Design/Shop Keyboards and Keypads per Employee Your Value: 0.203 46. For Shops Doing Design, % of Design Hours on CAD Terminals Your Value: 100.0 % 47. Percent of Employees Using a Computer at Least Weekly Your Value: 100.0 % 48. Percent of Shop Floor Workers Participating in Work Teams Your Value: 0.0% 49. Incentive or Bonus Pay as a % of Shop Employee Payroll Your Value: 0.0% 50. Average Cost of Health Coverage per Year, per Covered Shop Worker Your Value: $5,343 51. Inspection Labor Hours as a % of Total Shop Labor Hours Your Value: 52. Pct of Shop Workers Trained in Statistical Quality, Past 3 Years Your Value: 5% 53. Pct of Shop Workers Trained in Technical Areas, Past 3 Years Your Value: 0.0% 54. Training Tuition and Fees per Employee Your Value: $508 0.778
$ 74,608
$ 43,628
$ 27,799
$ 9,690
0.588
0.320
0.167
0.069
100.0%
100.0%
90.0%
30.0%
8.0%
100.0%
100.0%
83.3%
40.8%
24.0%
78.5%
13.3%
0.0%
0.0%
0.0%
10.0%
5.0%
0.9%
0.0%
0.0%
$ 6,879
$ 5,786
$ 4,750
$ 3,312
$ 2,321
16.4%
10.0%
8.1%
5.2%
2.4%
100%
40%
5%
0%
0%
100.0%
70.0%
20.0%
5.0%
0.0%
$ 625
$ 294
$ 162
$ 93
$ 33
26
Measure
55. Training Tuition and Fees per Shop Employee Your Value: $183 56. Spending on Information Technology as a Percent of Sales Your Value: 1.4% 57. Pct of Sales Accounted for by Orders Received Over the Internet Your Value: 60.0% 58. Pct of Material and Subcontracting Purchased Over the Internet Your Value: 50.0% 59. Percent of Sales from Products not Made 3 Years Ago Your Value: 17.0% 60. Percent of Sales to Customers not Served 3 Years Ago Your Value: 5.8% 61. Percent of Sales to Industries not Served 3 Years Ago Your Value: 0.0% 62. Percent of Sales Exported Beyond U.S. Your Value: 0.0% 63. Percent of Sales for Which You Designed the Part or Assembly Your Value: 0%
Highest 10%
$ 694
Highest 25%
$ 286
Median $ 147
Lowest 25%
$ 71
Lowest 10%
$ 20
1.0%
0.7%
0.3%
0.2%
0.1%
85.0%
40.0%
1.0%
0.0%
0.0%
50.0%
10.0%
2.0%
0.0%
0.0%
52.0%
35.0%
17.0%
9.0%
2.0%
33.0%
25.0%
10.0%
4.0%
0.0%
20.0%
10.0%
1.0%
0.0%
0.0%
34.0%
15.0%
2.0%
0.0%
0.0%
85%
8%
0%
0%
0%
27
Appendix 3: Formulas
Measure
***Cost of Goods Sold (referred to as "COGS" in some of the formulas below) 1. Percent Change in Sales, Past 2 Years 2. Gross Profit Rate - Sales Less Cost of Goods Sold as a % of Sales 3. Value-Added Per FTE 4. Annual Value-Added per Dollar in Machinery Value 5. Value-Added per Dollar of Capital and Labor Expense 6. Value-Added per Square Foot of Production Floorspace 7. Scrap Rate Due to Errors 8. Percent of Units Reworked 9. Percent of Units Shipped Bad or Rejected 10. Percent of Units Made Right the First Time 11. Inventory Turns (Cost-of-Goods-Sold/Total Inventory) 12. Days of Raw Material/Parts Inventory 13. For Shops Holding Finished Goods, Days of Finished Goods Inventory 14. Percent On-Time Deliveries to Your Customers 15. Percent of Supplier Shipments Delivered to You on Time 16. Percent of Jobs Causing Other Scheduled Jobs to be Bumped
Formula
Q27+Q28+Q33+Q35+Q37+Q41+(Q45/100)*Q44+ Q46+Q66-Q65) (Q24 - Q25)/Q25 * 100 (Q24-COGS***)/Q24*100 (Q24-(Q37+Q41+Q42+Q44)) / (Q73-Q76+Q76*(Q77/40)) (Q24-(Q37+Q41+Q42+Q44))/Q47 (Q24-(Q37+Q41+Q42+Q44)) / ((Q47+Q65)/10 + Q30+Q35+Q36+Q33+Q34) (Q24-(Q37+Q41+Q42+Q44)) / Q98 Q104 Q105 Q106 100-(Q104+Q105+Q106) COGS***/Q65 365*Q62/Q37 365*Q64/Q24 Q68 Q70 Q72 / Q71 * 100
28
Measure
17. Available (Manned) Hrs as a % of Hrs in a Year, Avg Per Machine 18. Running Hrs as a % of Available Hrs, Regular-Use Machines 19. Running Hrs as a % of Hours in a Year, Regular-Use Machines 20. Setup Hours as a % of Available (Manned) Machine Hours 21. Employee Turnover Rate 22. Average Hourly Wage, Shop Employees 23. Pct of Shop Workers Covered by Your Health Plan 24. Days Absent as Pct of Total Scheduled Work Days, Shop Workers 25. Work Days Lost Due to Accidents per 100 FTEs, Past Year 26. Pre-Production Lead Time (Days from Order to Release to Production) 27. Days Manufacturing Lead Time, Typical Order 28. Days Spent in Finished Goods Inventory, Typical Order 29. Order-to-Delivery Days (Pre-Prod'n + Mfg + Fin'd Goods), Typical Order 30. Average Days of Receivables 31. Days Order-to-Cash Lead Time, Typical Order 32. Purchased Material and Parts Costs as a Percent of Sales 33. Pct of Purchases that come from Suppliers Located within 250 Miles 34. Purchased Services as a Percent of Sales 35. Labor Costs (Payroll, Temps, Benefits) as a % of Sales 36. Shop Payroll as a Percent of Sales Q101/(Q99*8760)*100 Q102/Q101*100 Q102/(Q99*8760)*100 Q103/Q101 * 100
Formula
(Q75-(Q73-Q74))/(Q73-Q74) * 100 Q31 Q85/Q76 * 100 Q78 Q89*100/(Q76*Q77/40) Q91 Q92 Q93 Q92+Q91+Q93 (Q48/Q24) * 365 Q91+Q92+ Q93 + (Q48/Q24 *365) Q37/Q24*100 Q38 Q43/Q24 * 100 (Q33+Q34+Q35+Q36+Q30)/Q24 * 100 Q27/Q24 * 100
29
Measure
37. Non-Factory Labor Costs (Payroll Plus Benefits) as a Percent of Sales 38. Benefits as a Percent of Labor Costs 39. Temporary or Contract Labor Costs as a % of Total Labor Costs 40. Energy & Utility Costs as a Percent of Sales 41. Energy Costs per Dollar Value-Added 42. Consumables and Packaging Costs per Dollar Value-Added 43. Premium Freight Costs as a Percent of Sales 44. Dollar Value of Machinery Per FTE 45. Number of Design/Shop Keyboards and Keypads per Employee 46. For Shops Doing Design, % of Design Hours on CAD Terminals 47. Percent of Employees Using a Computer at Least Weekly 48. Percent of Shop Floor Workers Participating in Work Teams 49. Incentive or Bonus Pay as a % of Shop Employee Payroll 50. Average Cost of Health Coverage per Year, per Covered Shop Worker 51. Inspection Labor Hours as a % of Total Shop Labor Hours 52. Pct of Shop Workers Trained in Statistical Quality, Past 3 Years 53. Pct of Shop Workers Trained in Technical Areas, Past 3 Years 54. Training Tuition and Fees per Employee 55. Training Tuition and Fees per Shop Employee 56. Spending on Information Technology as a Percent of Sales (Q29+Q34+Q36)/Q24 * 100
Formula
(Q33+Q34)/(Q30+Q33+Q34+Q35+Q36) * 100 (Q35+Q36) / (Q30+Q35+Q36+Q33+Q34) *100 Q44/Q24*100 Q44 / (Q24-Q37-Q43-Q44) Q40 / (Q24-Q37-Q43-Q44) Q69/Q24 *100 Q47 / (Q73-Q76+Q76*(Q77/40)) Q60/Q73 Q95 Q90 Q84 / Q76 * 100 Q32 Q86 / Q85 Q81 Q114 Q115 Q87 / Q73 Q87*Q88 / (Q76*100) Q55/Q24 * 100
30
Measure
57. Pct of Sales Accounted for by Orders Received Over the Internet 58. Pct of Material and Subcontracting Purchased Over the Internet 59. Percent of Sales from Products not Made 3 Years Ago 60. Percent of Sales to Customers not Served 3 Years Ago 61. Percent of Sales to Industries not Served 3 Years Ago 62. Percent of Sales Exported Beyond U.S. 63. Percent of Sales for Which You Designed the Part or Assembly Q58 Q59 Q20 Q21 Q22 Q23 Q94
Formula
31
doc_753464155.pdf
A performance, in performing arts, generally comprises an event in which a performer or group of performers behave in a particular way for another group of people, the audience. Choral music and ballet are examples.
Performance Benchmarking Report prepared for: Sample Company City, State
April 5, 2007
Copyright 2007 MMTC
Table of Contents
1. Productivity and Profitability 2. Global Competitiveness 3. Performance Measures 3.1 General Business 3.2 Quality 3.3 Timeliness 3.4 Utilization 3.5 Working Conditions and Employee Commitment 3.6 Addressing Weaknesses 4. Practices 4.1 Order-to-Cash Cycle 4.2 Cost Profile 4.3 People, Skills and Technology 4.4 Marketing 5. Yes/No and Categorical Questions 5.1 Yes/No Questions 5.2 Pricing, Quality Certification, and Costing 6. Profile of the Comparison Group 6.1 Industry Breakdown 6.2 Geographic Distribution 6.3 Profile of Business Characteristics 6.4 Yes/No Characteristics Appendix 1: Distribution of Comparison Group Values Performance Measures Appendix 2: Distribution of Comparison Group Values Practices Appendix 3: Formulas
2
3 4 6 7 7 8 8 9 10 12 13 14 15 16 17 17 18 20 20 21 22 22
23 25 28
1. Productivity and Profitability
Throughout this report, we display your facility's performance on many metrics. The comparison is done metric-by-metric, since no company is best at everything. That said, two metrics in this report are most critical. The first is Value-Added per Full-Time-Equivalent Employee (FTE). Value-added is defined as sales less the cost of inputs (material, parts, supplies, services and energy) purchased from other firms. It measures the market value of the work done at your location. Dividing value-added by FTEs turns it into your output per employee, a fundamental measure of labor productivity. Achieving and maintaining high labor productivity is absolutely critical for North American, Western European, and Japanese manufacturers. Plants in these high-wage regions will never win the global competition with extremely low-wage producers unless they focus on business areas in which they can attain high output per worker. But it's also clear that high labor productivity is not sufficient for sustainable success. If high productivity comes at very high cost -- due to high labor costs or large capital equipment requirements -- then profitability suffers. Thus the second critical metric is our Global Competitiveness Index. This index is an indicator of how your cost-to-output ratio compares against what we view as the global benchmark: the North American landed cost for a low-wage Asian country producer.
Value
Percentile (100 = Best in Group)
Your Value-Added per FTE
$ 69,926 124.5%
46 28
Your Cost-to-Output Ratio Compared to Global Benchmark
Together these metrics summarize your global competitive risk. The more you compete, or expect to compete, against low-wage offshore companies that are willing to accept thin profit margins, the more critical it is that you reduce your costs. See Section 3.1 and Appendix 1 for more data on Value-Added per FTE. See Section 2 for a fuller discussion of our Global Competitiveness Index, and for an analysis of how much you can reduce your Index value through various improvement tactics.
3
2. Global Competitiveness
We compute your Global Competitiveness Index by estimating how your costs compare with the North American landed cost of products manufactured offshore. Our assumptions about the relative costs of offshore producers are: 1. Production worker wage rates are roughly 10% of wages in the typical North American plant. 2. Labor productivity (output per labor hour) is 25% that of the typical North American plant. 3. Costs for purchased material, parts and energy are 90% those for the typical North American plant. 4. Waste rates (scrap, rework, rejects) run roughly five times higher for the typical offshore facility. 5. Freight, duty and taxes -- combined with extra logistics costs -- add roughly 12% to the offshore cost. Our research indicates that, in most industries, about 15% of small and medium-sized North American manufacturers are already lower-cost than the landed cost of the benchmark offshore competitor. Another 15% would beat the offshore landed cost benchmark if they were successfully to implement the Thorough Improvement program (Scenario 8, below). Consistent with assumption 5, we add 12% to your costs in comparing you against the global benchmark if your plant is located outside of North America . Further, non-North American plants would fail to gain relative to other offshore producers in case of a devaluation of the dollar (i.e., they show no improvement in Scenario 9, below).
Global Cost Benchmark = 100
Your Cost Relative to Global Benchmark
124.5 % 117.6 % 120.2 % 123.8 % 124.4 %
Cost Cutting Scenario
Base Case -- Your Current Costs Relative to Typical Offshore Producer Scenario 1: You Achieve a 10% Reduction in Material Cost Scenario 2: You Achieve a 10% Increase in Labor Productivity Scenario 3: You Achieve a 10% Reduction in Fringe Benefits Scenario 4: You Achieve a 10% Reduction in Energy Costs Scenario 5: You Achieve a 25% Reduction in Waste (Scrap and Rework) Scenario 6: You Achieve a 25% Reduction in Inventory Scenario 7: You Achieve a 10% Increase in Output with Your Current Capital Stock Scenario 8: Thorough Improvement (Mat'l,Prod'ty,Energy,Waste,Inventory,Output) Scenario 9: The Dollar is Devalued by 10% Relative to World Currencies
123.1 % 124.3 % 124.5 % 112.1 %
4
For most companies, labor and material dominate total costs, so it is not surprising that raising labor productivity getting the same output with fewer labor-hours - and reducing the amount or cost of material in the product have the biggest impact. But this should not blind companies from paying attention to other types of waste: Capital costs. Especially for facilities that have a lot of expensive new equipment, keeping that equipment busy is very important. Inventory. Not only does carrying excessive inventory stocks result in carrying costs and lost floorspace that competitors do not have to shoulder, but it also ties up cash that could instead be invested in increasing labor productivity and designing out material cost. Quality spills. Scrap, rework, and customer rejects/returns, like excessive inventory, tie up your cash and your people's time on sorting and firefighting, rather than freeing it up to focus on productivity and material. In addition, it is likely that, in the next few years (and perhaps much sooner), the US dollar will depreciate by 10% or more against competitor-country currencies. If so, instead of only about 15% of North American manufacturers having lower costs than the estimated landed cost of their offshore competitors, roughly 30% would beat that benchmark. If the dollar fell by 10% AND manufacturers implemented the Thorough Improvement program, then just over 50% could beat it. Finally, not all competition is on the basis of cost. Many manufacturers win orders for at least part of their product line based also on features, performance, brand reputation, and/or after-sale service. As you attack costs, some of the savings should be applied not just to winning new orders through lower quotes, but also to increasing the proportion of your sales that are won on more than cost alone. This may require investments in design (which could also pay off in reducing the cost of material in the product), engineering, marketing, sales, distribution, and service.
5
3. Performance Measures
This section reports on what we call Performance Measures. These are the metrics for which it is clear whether higher or lower values constitute better performance. For On-Time Delivery Rate, for example, higher values are clearly better, and 100% on time is best. For Customer Reject Rate, low values are preferred, and zero rejects is best. This is not to say, of course, that every company should strive to attain these "best" values, regardless of the impact of doing so on their profits. Your strengths as presented below are the five metrics on which you scored the best relative to your comparison group, and for which you achieved a ranking at least in the top half. (That is, if you rank in the top half of your comparison group on only three metrics, then only those three will be reported as strengths.) Weaknesses are the five metrics on which you scored the worst relative to others, and on which you rank in the bottom half. In the graphs that follow, the length of each bar indicates your percentile ranking, ranging from 0 (worst in the group) to 100 (best in the group). That is, the longer the bar, the higher your ranking. The actual value you reported for each measure, as well as the values that constitute the cut-offs for the top tenth, top quarter, etc., appear in Appendix 1. Descriptive information about the plants you are compared against is in Section 6, Profile of the Comparison Group.
Strengths
Weaknesses
Lost Days due to Accidents Pct Sales Growth, 2 Years Days of Raw Inventory Health Coverage Rate On-Time Percent
0 10 20 30 40 50 60 70 80 90100
Running Hrs as % of Available Employee Turnover Running Hrs as a % of Total Inventory Turns Value-Added per Sq Ft
0 10 20 30 40 50 60 70 80 90100
Percentile
Percentile
The rest of this section is organized as follows: 3.1 General Business 3.2 Quality 3.3 Timeliness 3.4 Utilization 3.5 Working Conditions and Employee Committment 3.6 Addressing Weaknesses.
6
3.1
General Business
Measures of your company's General Business performance include several indicators of your labor and capital productivity; your recent sales growth; and your gross profit rate.
1. Percent Change in Sales, Past 2 Years
2. Gross Profit Rate - Sales Less Cost of Goods Sold as a % of Sales
3. Value-Added Per FTE
4. Annual Value-Added per Dollar in Machinery Value
5. Value-Added per Dollar of Capital and Labor Expense
6. Value-Added per Square Foot of Production Floorspace
0 10 20 30 40 50 60 70 80 90 100
Percentile
3.2 Quality
Measures of your shop's Quality performance include the percent of units scrapped, and the percent of units you shipped that were rejected by the customer for quality reasons.
7. Scrap Rate Due to Errors
8. Percent of Units Reworked
9. Percent of Units Shipped Bad or Rejected
10. Percent of Units Made Right the First Time
0
10
20
30
40
50
60
70
80
90 100
Percentile
7
3.3 Timeliness
Measures of your company's Timeliness performance include inventory turnover, your and your suppliers' on-time delivery, and job bumping.
11. Inventory Turns (Cost-of-Goods-Sold/Total Inventory)
12. Days of Raw Material/Parts Inventory
13. For Shops Holding Finished Goods, Days of Finished Goods Inventory
14. Percent On-Time Deliveries to Your Customers
15. Percent of Supplier Shipments Delivered to You on Time
16. Percent of Jobs Causing Other Scheduled Jobs to be Bumped
0 10 20 30 40 50 60 70 80 90 100
Percentile
3.4 Utilization
Measures of your shop's machine Utilization performance include average running hours per machine, and downtime due to setups.
17. Available (Manned) Hrs as a % of Hrs in a Year, Avg Per Machine
18. Running Hrs as a % of Available Hrs, Regular-Use Machines
19. Running Hrs as a % of Hours in a Year, Regular-Use Machines
20. Setup Hours as a % of Available (Manned) Machine Hours
0
10
20
30
40
50
60
70
80
90 100
Percentile
8
3.5 Working Conditions and Employee Commitment
A committed, stable workforce is critical to achieving improved performance and to building on successes. Analysis of our own and others' data makes clear that low employee turnover and low shop employee absenteeism are critical to high productivity levels and growth, and that both of them are predicted by having above-average wage rates, a health plan with substantial employer participation in premium payments, and a safe workplace.
21. Employee Turnover Rate 22. Average Hourly Wage, Shop Employees 23. Pct of Shop Workers Covered by Your Health Plan 24. Days Absent as Pct of Total Scheduled Work Days, Shop Workers 25. Work Days Lost Due to Accidents per 100 FTEs, Past Year
0 10 20 30 40 50 60 Percentile 70 80 90 100
9
3.6 Addressing Weaknesses
This section presents a brief analysis of up to five "Weaknesses": those metrics on which your performance looks worst relative to the other shops in your comparison group. Of course, this selection of your five worst metrics is somewhat arbitrary and uninformed. Our analysis of past Benchmarking data confirms what common sense tells us -- virtually no companies are "good" across the board, and trying to achieve the Top Tenth on every metric is a prescription for bankruptcy. Metrics on which you score poorly are worthy of attention if: 1) the cost to fix the problem is less than the payoff to doing so, and 2) customers will effectively pay you for better performance, or drop you if you don't achieve it. With that in mind, we offer a brief discussion of your "bottom five" performance metrics: possible causes, connections and prescriptions. If this section contains only three weaknesses (i.e., you had only three or fewer metrics on which you were in the bottom half of the group), the next page may be blank.
Running Hrs as a % of Available Hrs, Regular-Use Machines
The best measure of your machine utilization is how many hours they run in a year. But once you determine the level of manning appropriate to your order book, you also need to look at how many of those manned, or available, hours your machines are running. The goal is to attack the drivers of downtime, including: long or unnecessary setups, unreliable supplier delivery, poor housekeeping and tool management, inadequate preventive maintenance, incapable machines, and poor breakdown prediction.
Employee Turnover Rate
Calculated as the ratio of W2s to average headcount during the 12-month reporting period, employee turnover is an highly useful measure of employee commitment and attachment. Our research shows that companies with lower rates of turnover have higher productivity. Academic literature traces this effect to the fact that low-turnover companies hold on to their best, most experienced employees. Factors that help companies achieve lower employee turnover include higher wages, better employee health insurance coverage, and better working conditions, including a lower accident rate.
10
Running Hrs as a % of Hours in a Year, Regular-Use Machines
The best measure of your machine utilization is how many hours they run in a year – your running time as a percent of 365 days x 24 hours. Especially for newer, more expensive machinery, high running time is essential if fixed costs per unit are to be kept manageable. Steps include two- or three-shift, or even three-crew, operation; fuller manning on more shifts; and an assault on all the causes of downtime, including: long or unnecessary setups, unreliable supplier delivery, poor housekeeping and tool management, inadequate preventive maintenance, incapable machines, and poor breakdown prediction.
Inventory Turns (Cost-of-Goods-Sold/Total Inventory)
Low turns may result from excessive raw, finished, or in-process inventory stocks. You should examine your percentile position on each of these to determine the culprit(s). Low raw turns (i.e., high days) usually signal poor demand forecasting or suppliers that are unwilling to deliver small lots frequently. Low finished goods turns (high days) often result from excessive stockpiling to insure the ability to fill rush orders; where possible, consider instead stocking standard components but assembling to order. Finally, high work-in-process (WIP) often reflects bottlenecks that result in long waits between processing or assembly steps. Poor routings, bad line balancing, and frequent but unanticipated machine failures are common culprits. Many companies have attacked high WIP by changing shop layout to cells, and by making inventory costs visible by replacing warehousing with floor stock.
Value-Added per Square Foot of Production Floorspace
Value-added, which is defined as sales less the cost of inputs (materials, parts, services, and energy) purchased from the outside, measures the market value of work done inside the company. Value-added per square foot of production floorspace measures whether your factory floorspace -part of your fixed costs -- is being used effectively to produce income. A low value on this measure -- especially if you score fairly well on value-added per FTE, and on value-added per dollar of equipment -- is worthy of attention even if your site is not particularly space-constrained. It may indicate that you are struggling with a poor layout, putting significant labor time into merely moving product around. Or, it may indicate that a large share of floorspace is devoted to storing inventory. In either case, your shop would probably benefit from a disciplined application of "lean production" techniques.
11
4. Practices
Where Performance Measures are goals, or ends, Practices are means to those ends. They are metrics on which it is useful to know where your company stands compared to others in the comparison group. It is not necessarily good to rank very high or very low if doing so is not required to achieve your goals. Practices include metrics that summarize your marketing and sales activities, your use of PCs and other keyboarded devices, and your HR investments. The bars in the charts in this section are drawn relative to the median, or typical, firm. Bars that extend far to the left show that your value is near the minimum for the group; bars extending to the right indicate that your value is unusually large. You should look for your "outliers" and think carefully about what might be driving those aspects of your business that make you unusual. Note that having no bar at all for a particular metric implies either that your value is the median, or that you did not provide the data necessary to calculate it. Please see Appendix 2 to see your own value, and the range of values for your comparison group, for each Practice metric. This section is organized as follows: 4.1 Order-to-Cash Cycle 4.2 Cost Profile 4.3 People, Skills and Technology 4.4 Marketing
12
4.1 Order-to-Cash Cycle
Time is money. Manufacturers are appropriately increasing their focus on factory time compression, via lean production approaches and similar techniques. Yet Manufacturing Lead Time is often a small part of total Order-to-Cash time. Pre-production steps, involving everything from when the order is placed until test parts have been run and approved, can take months. And customers have an interest in extending Receivables for as long as possible. The bar chart below indicates how the components of your Order-to-Cash Cycle compare with those reported by others in your comparison group. Bear in mind, however, that some group members do mostly repeat orders with trivial pre-production requirements. Others must do all-new design and order all-new tooling with each order. And, of course, manufacturing lead times will vary with product complexity.
Your Percentile Relative to the Median 0 50 100
26. Pre-Production Lead Time (Days from Order to Release to Production) 27. Days Manufacturing Lead Time, Typical Order 28. Days Spent in Finished Goods Inventory, Typical Order 29. Order-to-Delivery Days (Pre-Prod'n + Mfg + Fin'd Goods), Typical Order 30. Average Days of Receivables 31. Days Order-to-Cash Lead Time, Typical Order
Lowest in the Group
Median for the Group
Highest in the Group
In fact, how your lead times compare with the group isn't really the point. What matters is that you recognize the potential cash flow benefits of reducing your order-to-cash cycle. If your Pre-Production Lead Times are significant, you might want to consider whether orders are unnecessarily queued before they even get to the shop floor.
Your Data
26. Pre-Production Lead Time (Days from Order to Release to Production) 27. Days Manufacturing Lead Time, Typical Order 28. Days Spent in Finished Goods Inventory, Typical Order 29. Order-to-Delivery Days (Pre-Prod'n + Mfg + Fin'd Goods), Typical Order 30. Average Days of Receivables 31. Days Order-to-Cash Lead Time, Typical Order 84.0 10.0 5.0 99.0 46.6 145.6
13
4.2 Cost Profile
This section illustrates whether your material costs, purchased services, and labor costs -- calculated as a percent of sales -- are typical among firms in your comparison group. Note that having high labor costs as a percent of sales, for example, does not necessarily imply that those costs are too high. Rather, it might merely reflect that you do less subcontracting than typical for the group. If so, it would follow that your purchased services as a percent of sales would be correspondingly low.
Your Percentile Relative to the Median 0 50 100
32. Purchased Material and Parts Costs as a Percent of Sales 33. Pct of Purchases that come from Suppliers Located within 250 Miles 34. Purchased Services as a Percent of Sales 35. Labor Costs (Payroll, Temps, Benefits) as a % of Sales 36. Shop Payroll as a Percent of Sales 37. Non-Factory Labor Costs (Payroll Plus Benefits) as a Percent of Sales 38. Benefits as a Percent of Labor Costs 39. Temporary or Contract Labor Costs as a % of Total Labor Costs 40. Energy & Utility Costs as a Percent of Sales 41. Energy Costs per Dollar Value-Added 42. Consumables and Packaging Costs per Dollar Value-Added 43. Premium Freight Costs as a Percent of Sales
Lowest in the Group
Median for the Group
Highest in the Group
14
4.3 People, Skills and Technology
Technology use is closely tied to how you manage your workforce. A highly capital- and technology-intensive factory requires highly skilled and well-trained employees.
Your Percentile Relative to the Median 0 44. Dollar Value of Machinery Per FTE 45. Number of Design/Shop Keyboards and Keypads per Employee 46. For Shops Doing Design, % of Design Hours on CAD Terminals 47. Percent of Employees Using a Computer at Least Weekly 48. Percent of Shop Floor Workers Participating in Work Teams 49. Incentive or Bonus Pay as a % of Shop Employee Payroll 50. Average Cost of Health Coverage per Year, per Covered Shop Worker 51. Inspection Labor Hours as a % of Total Shop Labor Hours 52. Pct of Shop Workers Trained in Statistical Quality, Past 3 Years 53. Pct of Shop Workers Trained in Technical Areas, Past 3 Years 54. Training Tuition and Fees per Employee 55. Training Tuition and Fees per Shop Employee 56. Spending on Information Technology as a Percent of Sales 57. Pct of Sales Accounted for by Orders Received Over the Internet 58. Pct of Material and Subcontracting Purchased Over the Internet 50 100
Lowest in the Group
Median for the Group
Highest in the Group
15
4.4
Marketing
Your Percentile Relative to the Median 0 50 100
59. Percent of Sales from Products not Made 3 Years Ago
60. Percent of Sales to Customers not Served 3 Years Ago
61. Percent of Sales to Industries not Served 3 Years Ago
62. Percent of Sales Exported Beyond U.S.
63. Percent of Sales for Which You Designed the Part or Assembly
Lowest in the Group
Median for the Group
Highest in the Group
16
5. Yes/No and Categorical Questions
In contrast to the Practices included earlier in this report, there are some "On/Off" actions that your company either does or does not undertake. These Yes/No Questions include whether or not you use EDI, CAD/CAM, and statistical analysis. If you are not doing some of these, but most companies in the comparison group are, that should be food for thought. This section also reports on any questions for which you were asked to select from three or more categories, such as the extent to which you have changed your prices.
5.1 Yes/No Questions
Question Number
Q. 56
Question Do business electronically (send/receive PO's, quotes, invoices, releases)? Ordering and/or scheduling integrated with EDI or internet? In past year, used CAD to generate machine instructions (CAD/CAM)? In past year, sent/received CAD data to/from suppliers/customers? In past year, regularly did statistical quality analysis on parts/machines? In past year, routinely analyzed quality data with computers or data collection devices? Majority of shop employees belong to a union?
Percent Yes
93.8%
Your Answer
Yes
Q. 57 Q. 96 Q. 97 Q. 107 Q. 108
17.9% 72.7% 82.8% 73.5% 57.4%
No Yes Yes No No
5.8%
No
17
5.2 Pricing, Quality Certification and Costing
Question Number Q. 26
Not at all -- able to raise prices Held the line -- no change A little bit: 0.1 - 2.49% Somewhat: 2.50 - 4.99% Significantly: 5.0 - 9.99% A great deal: 10% or more
Pricing Over the past year, how much have you had to reduce prices?
Percent of Comparison Group
20% 28% 32% 12% 5% 3%
Your Answer: Not at all -- able to raise prices Question Number Q. 109
Quality Certification What is plant's ISO 9001:2000 certification status? Not seeking certification Certified Seeking certification 21% 72% 7%
Percent of Comparison Group
Your Answer: Certified Q. 110
What is plant's ISO 14001:1996 certification status? Certified Seeking certification Not seeking certification 3% 3% 94%
Your Answer: Not seeking certification Q. 111
What is plant's ISO 14001:2004 certification status? Certified Seeking certification Not seeking certification 6% 6% 88%
Your Answer: Not seeking certification Q. 112
What is plant's TS16949 certification status? Certified Seeking certification Not seeking certification 15% 19% 66%
Your Answer: Not seeking certification Q. 113
Other industry- or function-specific ISO standard? Certified Seeking certification Not seeking certification 31% 3% 66%
Your Answer: Not seeking certification
18
Question Number Q. 49
Costing For cost estimating, how are estimates of direct material expense computed? Calculated Separately for Each Job For Some Jobs, Adjust Rates or Add Special Mark-Up Always Included in Usual Hourly Billing Rates
Percent of Comparison Group
93% 4% 3%
Your Answer: Calculated Separately for Each Job Q. 50
For cost estimating, how are estimates of tooling costs computed? Calculated Separately for Each Job For Some Jobs, Adjust Rates or Add Special Mark-Up Always Included in Usual Hourly Billing Rates 79% 17% 5%
Your Answer: Calculated Separately for Each Job Q. 51
For cost estimating, how are estimates of design/engineering labor computed? Calculated Separately for Each Job For Some Jobs, Adjust Rates or Add Special Mark-Up Always Included in Usual Hourly Billing Rates 29% 30% 41%
Your Answer: For Some Jobs, Adjust Rates or Add Special Mark-Up Q. 52
For cost estimating, how are estimates of factory indirect labor computed? Calculated Separately for Each Job For Some Jobs, Adjust Rates or Add Special Mark-Up Always Included in Usual Hourly Billing Rates 18% 14% 68%
Your Answer: Always Included in Usual Hourly Billing Rates Q. 53
For cost estimating, how are estimates of order processing costs computed? Calculated Separately for Each Job For Some Jobs, Adjust Rates or Add Special Mark-Up Always Included in Usual Hourly Billing Rates 11% 5% 84%
Your Answer: Calculated Separately for Each Job Q. 54
For cost estimating, how are estimates of inventory holding costs computed? Calculated Separately for Each Job For Some Jobs, Adjust Rates or Add Special Mark-Up Always Included in Usual Hourly Billing Rates 14% 41% 45%
Your Answer: For Some Jobs, Adjust Rates or Add Special Mark-Up
19
6. Profile of the Comparison Group
This report is only as good as the fit between your company and the other shops in the comparison group. In this Profile of the Comparison Group section, we describe the group in terms of industry, sales, customer base, average product price, and order type.
6.1
Industry Breakdown
Industry Breakdown of Your Comparison Group (Total Group Size = 69 Plants)
Apparel and Other Cut-and-Sew Wood Products (Including Furniture) Commercial Sheetfed Printing Plastic and Rubber Products Casting and Other Primary Metal Processing Metal Forming and Fabrication Screws, Nuts, Bolts, Washers and Screw Machine Products Metals Services Large, Powered Industrial Machinery ("Machine Tools") Other Industrial Machines and Assemblies Tooling and Machined Parts Computer and Electronics Parts and Assemblies Other Electrical Assemblies Automotive and Heavy Truck Aircraft and Aerospace Instruments (Including Medical Devices) Consumer and Commercial Products Food Processing Chemicals, Resins and Compounds Industries Not Included Above
0 (0.0 %) 0 (0.0 %) 0 (0.0 %) 0 (0.0 %) 3 (4.3 %) 48 (69.6 %) 4 (5.8 %) 0 (0.0 %) 0 (0.0 %) 0 (0.0 %) 7 (10.1 %) 0 (0.0 %) 3 (4.3 %) 0 (0.0 %) 2 (2.9 %) 2 (2.9 %) 0 (0.0 %) 0 (0.0 %) 0 (0.0 %) 0 (0.0 %)
20
6.2 Geographic Distribution
Number (and Percent) of Comparison Group Members Located in: US - Michigan US -Other Great Lakes US - Northeast US - South US - Plains US - West Canada Mexico, Latin America, or Caribbean Western Europe Eastern Europe, Turkey and Caucasus Australia, Japan, New Zealand Hong Kong, S. Korea, Singapore, Taiwan Other Asia and the Pacific Africa
14 24 14 4 1 8 2 0 0 1 0 0 1 0
( 20.3 % ) ( 34.8 % ) ( 20.3 % ) ( 5.8 % ) ( 1.4 % ) ( 11.6 % ) ( 2.9 % ) ( 0.0 % ) ( 0.0 % ) ( 1.4 % ) ( 0.0 % ) ( 0.0 % ) ( 1.4 % ) ( 0.0 % )
US - Michigan
US -Other Great Lakes
Other Asia E. Europe Canada US - West US - Plains US - South US - Northeast
21
6.3 Profile of Business Characteristics
Distribution of Comparison Group Values
25% Said At Least
Annual Sales ($000) Average Unit or Piece Price Typical Units Per Order Pct of Sales from One-Off Items (Dies, Prototypes, Etc.) Percent of Sales from Short-Term/Job Shop Orders Percent of Sales from Long-Term Jobs Run Regularly Percent of Sales from Make-to-Stock Work Pct of Shop Labor Time Spent Doing Assembly, Packaging, Etc. Percent of Sales to the Auto Industry Percent of Sales to Aircraft/Aerospace Industry Percent of Sales to the Communications/Electronics Industry Percent of Sales to Final Consumers, Wholesalers, or Retailers Percent of Sales that are Military/Defense-Related Number of Distinct Part Numbers Accounting for 80% of Your Sales $ 22,344 $ 15.00 17,000 10.0% 12.0% 95.0% 5.0% 28.0% 40.0% 5.0% 10.0% 1.0% 2.0% 300
Median
$ 15,000 $ 2.14 2,000 5.0% 5.0% 87.0% 0.0% 15.0% 5.0% 0.0% 0.0% 0.0% 0.0% 100
25% Said At or Below
$ 7,823 $ 0.75 250 0.0% 0.0% 70.0% 0.0% 8.0% 0.0% 0.0% 0.0% 0.0% 0.0% 38
Your Value
$ 11,400
1.0% 1.0% 97.0% 1.0% 10.0% 2.0% 0.0% 0.0% 0.0% 0.0% 176
6.4
Yes/No Characteristics
Question Service business (do quick-turnaround work on parts/material your customer provides)? Is company owner-managed? Is this the only plant in the company? 22
Question Number
Q. 61 Q. 116 Q. 117
Percent Yes
0.0% 64.2% 76.5%
Your Answer
No Yes Yes
Appendix 1: Distribution of Comparison Group Values on Performance Measures
Measure
1. Percent Change in Sales, Past 2 Years Your Value: 50.0% 2. Gross Profit Rate - Sales Less Cost of Goods Sold as a % of Sales Your Value: 18.7% 3. Value-Added Per FTE Your Value: $69,926 $ 13.13 $ 3.37 $ 1.71 $ 0.98 $ 0.76
Top 10%
81.4%
Top 25% 50.0%
Median 33.0%
Bottom 25%
14.9%
Bottom 10%
1.2%
35.4%
30.2%
22.3%
15.2%
11.0%
$ 110,313
$ 92,332
$ 71,578
$ 55,650
$ 48,068
4. Annual Value-Added per Dollar in Machinery Value Your Value: 5. Value-Added per Dollar of Capital and Labor Expense Your Value: 6. Value-Added per Square Foot of Production Floorspace Your Value: $71 7. Scrap Rate Due to Errors Your Value: 8. Percent of Units Reworked
$ 1.79
$ 1.59
$ 1.38
$ 1.20
$ 1.01
$ 345
$ 184
$ 128
$ 73
$ 50
0.100%
0.400%
1.000%
2.000%
3.620%
0.005% Your Value: 9. Percent of Units Shipped Bad or Rejected Your Value: 0.412 % 10. Percent of Units Made Right the First Time Your Value: 11. Inventory Turns (Cost-of-Goods-Sold/Total Inventory) Your Value: 5.7 12. Days of Raw Material/Parts Inventory Your Value: 26.6 13. For Shops Holding Finished Goods, Days of Finished Goods Inventory Your Value: 21.1
0.200%
1.000%
2.000%
4.000%
0.004%
0.047%
0.160%
1.000%
2.000%
99.342%
98.993%
97.400%
95.000%
91.000%
15.2
8.9
7.5
5.8
4.0
13.7
21.3
32.7
50.9
89.8
3.9
6.8
12.7
21.1
28.4
23
Measure
14. Percent On-Time Deliveries to Your Customers Your Value: 95.8% 15. Percent of Supplier Shipments Delivered to You on Time Your Value: 87.0% 16. Percent of Jobs Causing Other Scheduled Jobs to be Bumped Your Value: 17. Available (Manned) Hrs as a % of Hrs in a Year, Avg Per Machine Your Value: 46.6% 18. Running Hrs as a % of Available Hrs, Regular-Use Machines Your Value: 23.2% 19. Running Hrs as a % of Hours in a Year, Regular-Use Machines Your Value: 10.8% 20. Setup Hours as a % of Available (Manned) Machine Hours Your Value: 21. Employee Turnover Rate Your Value: 42.4%
Top 10%
99.2%
Top 25% 98.0%
Median 95.2%
Bottom 25%
86.0%
Bottom 10%
78.9%
98.0%
95.0%
90.0%
80.0%
75.0%
1.5%
2.8%
6.3%
14.7%
48.9%
60.8%
41.7%
28.8%
21.7%
16.2%
83.3%
78.3%
65.1%
50.0%
27.6%
33.4%
24.4%
17.6%
11.2%
7.6%
1.0%
3.6%
8.3%
13.2%
21.3%
6.1% 22. Average Hourly Wage, Shop Employees Your Value: $13.73 23. Pct of Shop Workers Covered by Your Health Plan Your Value: 85.4% 24. Days Absent as Pct of Total Scheduled Work Days, Shop Workers Your Value: 25. Work Days Lost Due to Accidents per 100 FTEs, Past Year Your Value: 0.0
13.5%
23.5%
40.0%
59.5%
$ 17.44
$ 15.83
$ 14.20
$ 12.23
$ 11.15
100.0%
95.6%
83.3%
70.0%
60.0%
0.5%
1.0%
2.0%
3.0%
5.0%
0.0
0.0
3.1
19.6
133.7
24
Appendix 2: Distribution of Comparison Group Values on Practices
Measure
26. Pre-Production Lead Time (Days from Order to Release to Production) Your Value: 84.0 27. Days Manufacturing Lead Time, Typical Order Your Value: 10.0 28. Days Spent in Finished Goods Inventory, Typical Order Your Value: 5.0 29. Order-to-Delivery Days (Pre-Prod'n + Mfg + Fin'd Goods), Typical Order Your Value: 99.0 30. Average Days of Receivables Your Value: 46.6 229.2 178.1 128.4 102.7 84.0
Highest 10%
120.0
Highest 25%
84.0
Median 40.0
Lowest 25%
14.0
Lowest 10%
6.0
45.0
30.0
15.0
10.0
3.0
55.0
30.0
10.0
3.0
1.0
180.0
125.0
78.0
50.0
29.0
67.6
60.1
49.0
39.4
34.0
31. Days Order-to-Cash Lead Time, Typical Order Your Value: 145.6 32. Purchased Material and Parts Costs as a Percent of Sales Your Value: 53.4% 33. Pct of Purchases that come from Suppliers Located within 250 Miles Your Value: 95% 34. Purchased Services as a Percent of Sales Your Value: 4.4% 35. Labor Costs (Payroll, Temps, Benefits) as a % of Sales Your Value: 33.0% 36. Shop Payroll as a Percent of Sales Your Value: 11.8% 37. Non-Factory Labor Costs (Payroll Plus Benefits) as a Percent of Sales Your Value: 10.6% 38. Benefits as a Percent of Labor Costs Your Value: 16.4%
66.8%
48.0%
40.3%
28.1%
17.9%
95%
90%
75%
25%
10%
21.4%
13.6%
8.2%
4.4%
3.1%
44.1%
40.2%
32.7%
25.5%
20.6%
25.0%
20.2%
15.7%
10.6%
7.1%
14.3%
10.9%
7.7%
4.6%
2.2%
24.0%
18.9%
13.8%
9.8%
6.6%
25
Measure
39. Temporary or Contract Labor Costs as a % of Total Labor Costs Your Value: 11.5% 40. Energy & Utility Costs as a Percent of Sales Your Value: 1.02% 41. Energy Costs per Dollar Value-Added Your Value:
Highest 10%
11.2%
Highest 25%
6.4%
Median 2.0%
Lowest 25%
0.0%
Lowest 10%
0.0%
2.59%
1.67%
1.20%
0.88%
0.60%
$ 0.07 $0.02 $ 0.14
$ 0.04
$ 0.02
$ 0.02
$ 0.01
42. Consumables and Packaging Costs per Dollar Value-Added Your Value: $0.10 43. Premium Freight Costs as a Percent of Sales Your Value: 44. Dollar Value of Machinery Per FTE
$ 0.07
$ 0.03
$ 0.02
$ 0.01
0.423%
0.171%
0.051%
0.009%
0.000%
$ 106,618 Your Value: 45. Number of Design/Shop Keyboards and Keypads per Employee Your Value: 0.203 46. For Shops Doing Design, % of Design Hours on CAD Terminals Your Value: 100.0 % 47. Percent of Employees Using a Computer at Least Weekly Your Value: 100.0 % 48. Percent of Shop Floor Workers Participating in Work Teams Your Value: 0.0% 49. Incentive or Bonus Pay as a % of Shop Employee Payroll Your Value: 0.0% 50. Average Cost of Health Coverage per Year, per Covered Shop Worker Your Value: $5,343 51. Inspection Labor Hours as a % of Total Shop Labor Hours Your Value: 52. Pct of Shop Workers Trained in Statistical Quality, Past 3 Years Your Value: 5% 53. Pct of Shop Workers Trained in Technical Areas, Past 3 Years Your Value: 0.0% 54. Training Tuition and Fees per Employee Your Value: $508 0.778
$ 74,608
$ 43,628
$ 27,799
$ 9,690
0.588
0.320
0.167
0.069
100.0%
100.0%
90.0%
30.0%
8.0%
100.0%
100.0%
83.3%
40.8%
24.0%
78.5%
13.3%
0.0%
0.0%
0.0%
10.0%
5.0%
0.9%
0.0%
0.0%
$ 6,879
$ 5,786
$ 4,750
$ 3,312
$ 2,321
16.4%
10.0%
8.1%
5.2%
2.4%
100%
40%
5%
0%
0%
100.0%
70.0%
20.0%
5.0%
0.0%
$ 625
$ 294
$ 162
$ 93
$ 33
26
Measure
55. Training Tuition and Fees per Shop Employee Your Value: $183 56. Spending on Information Technology as a Percent of Sales Your Value: 1.4% 57. Pct of Sales Accounted for by Orders Received Over the Internet Your Value: 60.0% 58. Pct of Material and Subcontracting Purchased Over the Internet Your Value: 50.0% 59. Percent of Sales from Products not Made 3 Years Ago Your Value: 17.0% 60. Percent of Sales to Customers not Served 3 Years Ago Your Value: 5.8% 61. Percent of Sales to Industries not Served 3 Years Ago Your Value: 0.0% 62. Percent of Sales Exported Beyond U.S. Your Value: 0.0% 63. Percent of Sales for Which You Designed the Part or Assembly Your Value: 0%
Highest 10%
$ 694
Highest 25%
$ 286
Median $ 147
Lowest 25%
$ 71
Lowest 10%
$ 20
1.0%
0.7%
0.3%
0.2%
0.1%
85.0%
40.0%
1.0%
0.0%
0.0%
50.0%
10.0%
2.0%
0.0%
0.0%
52.0%
35.0%
17.0%
9.0%
2.0%
33.0%
25.0%
10.0%
4.0%
0.0%
20.0%
10.0%
1.0%
0.0%
0.0%
34.0%
15.0%
2.0%
0.0%
0.0%
85%
8%
0%
0%
0%
27
Appendix 3: Formulas
Measure
***Cost of Goods Sold (referred to as "COGS" in some of the formulas below) 1. Percent Change in Sales, Past 2 Years 2. Gross Profit Rate - Sales Less Cost of Goods Sold as a % of Sales 3. Value-Added Per FTE 4. Annual Value-Added per Dollar in Machinery Value 5. Value-Added per Dollar of Capital and Labor Expense 6. Value-Added per Square Foot of Production Floorspace 7. Scrap Rate Due to Errors 8. Percent of Units Reworked 9. Percent of Units Shipped Bad or Rejected 10. Percent of Units Made Right the First Time 11. Inventory Turns (Cost-of-Goods-Sold/Total Inventory) 12. Days of Raw Material/Parts Inventory 13. For Shops Holding Finished Goods, Days of Finished Goods Inventory 14. Percent On-Time Deliveries to Your Customers 15. Percent of Supplier Shipments Delivered to You on Time 16. Percent of Jobs Causing Other Scheduled Jobs to be Bumped
Formula
Q27+Q28+Q33+Q35+Q37+Q41+(Q45/100)*Q44+ Q46+Q66-Q65) (Q24 - Q25)/Q25 * 100 (Q24-COGS***)/Q24*100 (Q24-(Q37+Q41+Q42+Q44)) / (Q73-Q76+Q76*(Q77/40)) (Q24-(Q37+Q41+Q42+Q44))/Q47 (Q24-(Q37+Q41+Q42+Q44)) / ((Q47+Q65)/10 + Q30+Q35+Q36+Q33+Q34) (Q24-(Q37+Q41+Q42+Q44)) / Q98 Q104 Q105 Q106 100-(Q104+Q105+Q106) COGS***/Q65 365*Q62/Q37 365*Q64/Q24 Q68 Q70 Q72 / Q71 * 100
28
Measure
17. Available (Manned) Hrs as a % of Hrs in a Year, Avg Per Machine 18. Running Hrs as a % of Available Hrs, Regular-Use Machines 19. Running Hrs as a % of Hours in a Year, Regular-Use Machines 20. Setup Hours as a % of Available (Manned) Machine Hours 21. Employee Turnover Rate 22. Average Hourly Wage, Shop Employees 23. Pct of Shop Workers Covered by Your Health Plan 24. Days Absent as Pct of Total Scheduled Work Days, Shop Workers 25. Work Days Lost Due to Accidents per 100 FTEs, Past Year 26. Pre-Production Lead Time (Days from Order to Release to Production) 27. Days Manufacturing Lead Time, Typical Order 28. Days Spent in Finished Goods Inventory, Typical Order 29. Order-to-Delivery Days (Pre-Prod'n + Mfg + Fin'd Goods), Typical Order 30. Average Days of Receivables 31. Days Order-to-Cash Lead Time, Typical Order 32. Purchased Material and Parts Costs as a Percent of Sales 33. Pct of Purchases that come from Suppliers Located within 250 Miles 34. Purchased Services as a Percent of Sales 35. Labor Costs (Payroll, Temps, Benefits) as a % of Sales 36. Shop Payroll as a Percent of Sales Q101/(Q99*8760)*100 Q102/Q101*100 Q102/(Q99*8760)*100 Q103/Q101 * 100
Formula
(Q75-(Q73-Q74))/(Q73-Q74) * 100 Q31 Q85/Q76 * 100 Q78 Q89*100/(Q76*Q77/40) Q91 Q92 Q93 Q92+Q91+Q93 (Q48/Q24) * 365 Q91+Q92+ Q93 + (Q48/Q24 *365) Q37/Q24*100 Q38 Q43/Q24 * 100 (Q33+Q34+Q35+Q36+Q30)/Q24 * 100 Q27/Q24 * 100
29
Measure
37. Non-Factory Labor Costs (Payroll Plus Benefits) as a Percent of Sales 38. Benefits as a Percent of Labor Costs 39. Temporary or Contract Labor Costs as a % of Total Labor Costs 40. Energy & Utility Costs as a Percent of Sales 41. Energy Costs per Dollar Value-Added 42. Consumables and Packaging Costs per Dollar Value-Added 43. Premium Freight Costs as a Percent of Sales 44. Dollar Value of Machinery Per FTE 45. Number of Design/Shop Keyboards and Keypads per Employee 46. For Shops Doing Design, % of Design Hours on CAD Terminals 47. Percent of Employees Using a Computer at Least Weekly 48. Percent of Shop Floor Workers Participating in Work Teams 49. Incentive or Bonus Pay as a % of Shop Employee Payroll 50. Average Cost of Health Coverage per Year, per Covered Shop Worker 51. Inspection Labor Hours as a % of Total Shop Labor Hours 52. Pct of Shop Workers Trained in Statistical Quality, Past 3 Years 53. Pct of Shop Workers Trained in Technical Areas, Past 3 Years 54. Training Tuition and Fees per Employee 55. Training Tuition and Fees per Shop Employee 56. Spending on Information Technology as a Percent of Sales (Q29+Q34+Q36)/Q24 * 100
Formula
(Q33+Q34)/(Q30+Q33+Q34+Q35+Q36) * 100 (Q35+Q36) / (Q30+Q35+Q36+Q33+Q34) *100 Q44/Q24*100 Q44 / (Q24-Q37-Q43-Q44) Q40 / (Q24-Q37-Q43-Q44) Q69/Q24 *100 Q47 / (Q73-Q76+Q76*(Q77/40)) Q60/Q73 Q95 Q90 Q84 / Q76 * 100 Q32 Q86 / Q85 Q81 Q114 Q115 Q87 / Q73 Q87*Q88 / (Q76*100) Q55/Q24 * 100
30
Measure
57. Pct of Sales Accounted for by Orders Received Over the Internet 58. Pct of Material and Subcontracting Purchased Over the Internet 59. Percent of Sales from Products not Made 3 Years Ago 60. Percent of Sales to Customers not Served 3 Years Ago 61. Percent of Sales to Industries not Served 3 Years Ago 62. Percent of Sales Exported Beyond U.S. 63. Percent of Sales for Which You Designed the Part or Assembly Q58 Q59 Q20 Q21 Q22 Q23 Q94
Formula
31
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