Top 10 metrics for successful smart factory operations
Manufacturing global details the top 10 most valuable analytical metrics smart factories need to have in order to drive growth.
Analytics — a crucial element for driving smart factory growth. Currently within the industry 68% of manufacturers have smart factory projects underway. Leading this transformation is the discrete manufacturing sector, with plans to transition to smart factories by 2024. In the next five years manufacturers plan to launch 40% more factories, increasing investments in the transformation.
However, with this progression only 14% of manufacturers say they are succeeding with their smart factory projects. This is where analytics comes into play. In order to develop a successful smart factory, the transformation needs to be built on a foundation of analytics to drive greater accuracy, clarity and precision.
The power of metrics provides smart factories with end-to-end visibility of operations, as well as keeping factories focused on core goals and changing customer needs.
The most valuable analytical metrics smart factories need to be harnessing in order to build a successful smart factory includes:
Carrying cost
One of the most challenging costs to capture for inventory management. These costs include: put away labour, storage costs, obsolescence costs, logistics costs, fulfilment costs and how much working capital is allocated to inventory.
Customer satisfaction
Measure via period audits for customer satisfaction, this metric needs to be designed for end-to-end manufacturing performance. Delivery times should be factored into this metric.
Demand Forecasting
A must have, to ensure all systems for supply chain planning, procurement, production scheduling and fulfilment are synchronised. This metric also indicates the variation between real-time demand and what is forecasted at factory level.
Fill Rate
An effective metric to measure the level of collaboration between a manufacturers supply chain operations, planning and production. Fill rate effectiveness as a percentage of orders directly reflect the success of supply chains.
Gross contribution margins (GCM)
Essential for measuring the financial outcomes of manufacturing decisions, smart factories should track GCM performance levels by product, region and production factory.
SEE ALSO:
- 10 manufacturers providing COVID-19 pandemic support
- Top 10 automotive manufacturers
- Top 10 Cloud Tools for Manufacturers
- Read the latest issue of Manufacturing Global here
Inventory turnover
This metric defines how many times a plant’s inventory is used to build salable products and replenish in a certain timeframe. Inventory turnover is frequently calculated using the sales by average inventory factoring for specific periods, or by dividing cost of goods sold by the average inventory level for a specific period.
Order cycle
The total time it takes from order placement, to receiving an order. This metric highlights how unified a production team is working. Smart factories can use this to quantify the contribution of inventory management, supply chain, manufacturing, and fulfillment performance levels.
Order, picking, packing and shipment
In order to measure how effective an inventory management system is, as well as how well it is integrated into the fulfilment system is, smart factories need to measure their order, picking, packing and shipment operations.
Perfect performance
This metric is the measurement of how effective a factory is at delivering accurate and damage free orders to customers, before the due date.
Supplier quality
To determine how effective the integration of inventory management, quality, and compliance systems are, as well as how effectively they can isolate supplier quality problems before they impact production, a supplier quality index is required.
For more information on manufacturing topics — please take a look at the latest edition of Manufacturing Global.
