Vous êtes sur la page 1sur 36

AberdeenGroup

The Manufacturing Performance Management Strategies Benchmark Report


The Cornerstone of Long-Term Manufacturing Success

January 2005

Sponsored by

The Manufacturing Performance Management Strategies Benchmark Report

Executive Summary
Over the last 20 years, manufacturers have searched for ways to improve their top and bottom lines in the face of global competition and increasing customer service expectations. Billions of dollars have been spent on employing manufacturing performance management strategies and IT solutions to improve manufacturing operations and financial performance. While most manufacturers have benefited, the best performers have had more dramatic improvements (Figure 1) and in some cases redefined their market. Figure 1: Likelihood of Significantly Better Performance than the Competition
Best-in-Class
70% 60% 50% 40% 30% 20% 10% 0%

Industry Average

Laggard

Manufacturing Throughput cycle time

Schedule compliance

Return on assets

Inventory turns - all forms

Source: AberdeenGroup, December 2004

The Manufacturing Performance Management Strategies Benchmark Study finds that far too many manufacturers are still focused on the symptoms of their performance challenges, struggle to get the data to drive their performance improvement programs ahead, and use few commercial IT solutions to support their efforts. The better performers, on the other hand, have moved past these issues and are focused on improving their manufacturing capabilities that deliver market differentiation through a combination of extended manufacturing processes, service-oriented improvement programs, and commercial technology to speed improvement and maximize manufacturing performance.

Recommendations for Action


Focus on delivering superior customer service along with cost reduction Use performance analysis solutions to accelerate the pace of continuous improvement Extend manufacturing processes into logistics and customer service Take a balanced approach to delivering integrated, closed loop performance management processes supported by flexible IT solutions Drive manufacturing responsiveness as close to real-time as possible

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup i

The Manufacturing Performance Management Strategies Benchmark Report

Table of Contents
Executive Summary .............................................................................................. i Recommendations for Action.......................................................................... i Chapter One: Issue at Hand.................................................................................1 Chapter Two: Key Business Value Findings .........................................................3 Challenges and Responses........................................................................... 4 Making the Move to To-Order and Better Performance............................... 6 Lean Leads, But Most Companies Use Multiple Improvement Methodologies7 Manufacturing Performance Management Framework.................................. 7 Chapter Three: Implications & Analysis............................................................. 10 Process and Organization Practices Need To Be Value Chain Oriented ..... 11 Key Capabilities........................................................................................... 12 The Importance of Effective Key Performance Indicators (KPI)................... 13 Technological Implications ........................................................................... 13 Pressures, Actions, Capabilities, Enablers (PACE)...................................... 16 Chapter Four: Recommendations for Action ...................................................... 18 Laggard Steps to Success........................................................................... 18 Industry Average Steps to Success ............................................................. 19 Best in Class Next Steps ............................................................................. 20 Featured Sponsors............................................................................................. 21 Sponsor Directory .............................................................................................. 24 Author Profile ..................................................................................................... 25 Appendix A: Research Methodology .................................................................. 26 KPI Frequency Effectiveness Definition ................................................ 28 Appendix B: Related Aberdeen Research & Tools ............................................. 29 About AberdeenGroup ...................................................................................... 30

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup

The Manufacturing Peformance Management Strategies Benchmark Report

Figures
Figure 1: Likelihood of Significantly Better Performance than the Competition ..... i Figure 2: Pressures Driving Manufacturers to Implement Manufacturing Performance Management Programs........................................................................................1 Figure 3: Manufacturing Performance Management Practice Attainment ............2 Figure 4: Likelihood of Significantly Better Performance than the Competition ....3 Figure 5: Manufacturing Performance Management Strategic Actions.................4 Figure 6: The Aberdeen Manufacturing Performance Management Framework ..8 Figure 7: Aberdeen Manufacturing Performance Management Framework Key Capability Importance Performance Category................................................. 12 Figure 8: Percentage of Respondents with Effective KPI Programs................... 13 Figure 9: Percentage of Enterprises that Reported Above Average/Dramatically Better than Industry Performance................................................................................. 14 Figure 10: IT Investment Priorities ..................................................................... 15 Figure 11: Current IT Solution Deployment ........................................................ 16

Tables
Table 1: Manufacturing Performance Management Challenges and Responses .5 Table 2: Manufacturing Style Deployed ................................................................6 Table 3: Manufacturing Performance Management Competitive Framework ..... 11 Table 4: PACE (Pressures, Actions, Capabilities, Enablers)............................... 17 Table 5: PACE Framework Explanation.............................................................. 27 Table 6: Relationship between PACE and Competitive Framework ................... 28 Table 7: Competitive Framework........................................................................ 28

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup

The Manufacturing Performance Management Strategies Benchmark Report

Chapter One: Issue at Hand


Key Takeaways

Improve or perish Best in Class performers are better masters of their destiny Perseverance pays off

espite an improving global economy and manufacturing productivity at all-time high levels, manufacturers are besieged by more demanding customers and a global economy that is constantly driving product prices lower and customer services expectations higher (Figure 2). There seems to be no escape from this phenomenon from tier 1, 2 and 3 automotive suppliers facing mandated cost reductions to consumer manufacturers selling to the large retailers. Outsourcing or moving manufacturing to low-cost regions may not be practical or only provide benefits that quickly get eroded by fast following competition. To stay ahead of their Competitive Framework customers, leading manufacturers have turned to manufacturKey ing performance management strategies and supporting IT solutions that maximize current operations performance of The Aberdeen Competitive Framework defines and foster continuous improvement of that performance. enterprises as falling into one of the three following Figure 2: Pressures Driving Manufacturers to Implement levels of practices and Manufacturing Performance Management Programs performance:
70% 60% 50% 40% 30% 20% 10% 0% Lower Improve Shorter Complete product return-on- order lead and onprices investment times time shipments Best-in-Class Average/Laggard
Source: AberdeenGroup, December 2004

Laggards (20%) practices that are significantly behind the average of the industry Industry Norm (60%) practices that represent the average or norm Best in Class (20%) practices that are the best currently being employed and significantly superior to the industry norm

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 1

The Manufacturing Performance Management Strategies Benchmark Report

Manufacturers are more focused than ever on profitable growth and increasingly leery of taking little to no margin business, as they have seen the long term effect. With little customer loyalty, meeting reduced price targets may guarantee only this years business and hurt the company financially. For example, the automotive market is strewn with the carcasses of tier suppliers that produced themselves out of business because they entered into contracts and could not keep ahead of the mandated cost reductions. PACE Key For more detailed description see Appendix A
Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities, and enablers (PACE) that indicate corporate behavior in specific business processes. These terms are defined as follows:

Pressures external forces that impact an organizations market position, competitiveness, or business operations Actions the strategic approaches that an organization takes in response to industry pressures

Enterprises that have mastered what Aberdeen describes in the manufacturing performance management competitive framework as best-in-class practices are less influenced by pricing pressure than the rest of their peers because they are able to manufacture more cost effectively. Conversely, best-in-class enterprises are more influenced by pressures that when addressed lead to long term financial and operational success: releasing trapped capital and service based competitiveness.

There are also disproportional numbers of manufacturing performance improvement Capabilities the business process initiatives that have produced little or no recompetencies required to execute sults. Methodologies and technologies are not corporate strategy enough to guarantee success. As described in Enablers the key functionality of Aberdeens PACE methodology, there needs technology solutions required to to be a clear linkage between the business support the organizations enabling pressures, strategic actions, and required capabilities and technology enablers. Enterbusiness practices prises that want to attain or maintain differentiated market positions should plan for a long term commitment to their manufacturing performance management program (Figure 3). Figure 3: Manufacturing Performance Management Practice Attainment
60% 50% 40% 30% 20% 10% 0%

Laggard

Industry Average No Activity Early

Best-in-Class Mature

Source: AberdeenGroup, December 2004

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 2

The Manufacturing Performance Management Strategies Benchmark Report

Chapter Two: Key Business Value Findings


Key Takeaways Best-in-class/mature manufacturers focus on customer differentiating strategies that deliver greater results Best-in-class manufacturers place a high premium on manufacturing performance management flexibility Manufacturing performance management programs are a key enabler for moving from to-stock to to-order Manufacturers need a framework to balance all of the elements required for manufacturing performance management success

anufacturing has long been the center of attention for performance improvement because of its impact on total cost and service performance. There are many known cases of success, from the Toyotas to the Dells, and not so well known companies such as HON Industries or Pella Windows. The research findings show that enterprises with best-in-class operations and performance improvement practices were significantly more likely to outperform the competition in all seven manufacturing key performance indicators (KPIs) that were evaluated in this study (Figure 4). Figure 4: Likelihood of Significantly Better Performance than the Competition
Best-in-Class
70% 60% 50% 40% 30% 20% 10% 0% Manufacturing Throughput cycle time Schedule compliance Return on assets Inventory turns finished product Inventory turns raw material & wip

Industry Average

Laggard

Source: AberdeenGroup, December 2004

There is a considerable difference in the individual strategic actions that Best in Class enterprises deploy versus Industry Average and Laggard (Figure 5). Best-in-classenterprises focus more on the strategic actions that provide competitive differentiation lead time, flexibility, and agility. Besides cost reduction, Industry Average and Laggard

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 3

The Manufacturing Performance Management Strategies Benchmark Report

enterprises focus more on inventory reduction while important; inventory reduction is an internally focused benefit. Figure 5: Manufacturing Performance Management Strategic Actions
80% 70% 60% 50% 40% 30% 20% 10% 0% Reduce Reduce manufacturing lead manufacturing costs time Improve manufacturing flexibility/agility

Best-in-Class Industry Average Laggard

Source: AberdeenGroup, December 2004

Best-in-class enterprises which typically have more mature manufacturing performance management programs have already made considerable progress driving out inventory and improving manufacturing reliability. Getting past these hurdles allows enterprises to focus on reducing lead time and improving agility and flexibility. Manufacturers should view themselves within the context of their manufacturing performance management program maturity and expect to change their strategies from gain control to competitive differentiation as they evolve from early stage to more mature programs. The quantitative results from the benchmark study validate that best-in-class and more mature manufacturing performance management programs not only help companies achieve above-average performance, but they also produce better improvement results. For example: Best-in-class manufacturers generate 6% to 12% greater cost reduction Best-in-class manufacturers have 30% to 50% greater finished goods inventory turn improvement Mature manufacturers have 20% to 50% greater manufacturing cycle time reduction Mature manufacturers have 25% to 40% greater complete and on-time shipment improvement

Challenges and Responses


Getting the most from manufacturing has been the focus of many enterprises over the last 20 years. It is the center of competitiveness for operationally excellent enterprises and a number of philosophies and techniques have been applied to improve manufacturing performance from the early days of computer integrated manufacturing to the theory of con-

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 4

The Manufacturing Performance Management Strategies Benchmark Report

straints, lean manufacturing, and Six Sigma. Yet, the results have been widely mixed with strategies, tactics, and technology equally conspiring for success of failure. Standing in the way of implementing or enhancing manufacturing performance management strategies, according to survey respondents, is collecting the required data and significant cultural change (Table 1). Without the right strategy, data collection can be cumbersome, nonproductive, and in conflict with the performance improvement methodology it is supporting. Inefficient and ineffective data collection is the reason that many manufacturing performance management programs are stopped. Manufacturers need to build data collection into the process via automation if possible. For example, a boat manufacturer uses RFID on its boats to understand the position of the boat in the factory and it manufacturing status. Others have placed barcodes on kanban totes, other mobile assets, or the work itself that were automatically read as they passed specific locations on the floor. Cultural change is also critical to manufacturing performance management success. Bestin-class manufacturers embrace change and worry that too much structure in their program will slow down the change. Industry average and laggard manufacturers struggle to garner top management commitment and show financial justification both are critical to getting manufacturing performance management programs started and maintaining their continuity. This same paradigm holds true for the maturity of the manufacturing performance program the more mature the program, the more ingrained the support from management and the more cultural willingness to change. Table 1: Manufacturing Performance Management Challenges and Responses Challenges
1. Data collection

% Selected
59%

Responses to Challenges
1. A method to measure the business impact of manufacturing performance management initiatives 2. Simple and automated data collection 3. Engage/gain commitment of top management 4. Have a methodology to determine value 5. Introduce change gradually 6. Performance management methodology and IT solution that can keep pace with my changing manufacturing processes

% Selected
53%

2. Significant culture change 3. Top management commitment 4. No financial justification 5. Available IT solutions do not meet our requirements 6. Manufacturing processes are constantly changing

57% 50% 38% 30% 29%

52% 46% 44% 33% 29%

Source: AberdeenGroup, December 2004

Responses to the challenges companies face were strikingly different between best-inclass companies and the rest of the respondents. Best-in-class manufacturers placed the
All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 5

The Manufacturing Performance Management Strategies Benchmark Report

most emphasis on improvement methodologies and IT solutions that can keep up with their pace of change, while the other manufacturers rated it last. This lack of focus on ensuring methodologies and technology are flexible enough to keep up with changing manufacturing processes is the reason that many implementations of manufacturing performance management IT solutions fail to take hold for the long term. While highly functional, these programs are perceived as stifling continuous improvement and innovation, deemed as constraining, not enabling and summarily ripped out. Laggards were not at all worried about having their performance management solutions keep up with the pace of manufacturing change, which is disconcerting. Instead, they wanted simple and automated data collection, which is integral to solving their issues of engaging top management and measuring business impact. Without the data, it is hard to build a case to move forward with performance improvement initiatives with the more investment-conservative management that permeates laggard organizations.

Making the Move to To-Order and Better Performance


As part of the analysis, Aberdeen wanted to see what impact manufacturing style had on the use of manufacturing performance management programs and vice-versa (Table 2). Table 2: Manufacturing Style Deployed Manufacturing Style
Repetitive or rate based manufacturing, to stock products, high volume production, medium order lead times (weeks), limited number of SKUs (max 000's) or minimal difference SKU to SKU To-order manufacturing, low to medium volume (max 0000's), long order lead times (months), complex product built through common processes To-order manufacturing/final assembly, high volume production (00000+'s), short order lead times (days), high number of SKU's/products configured to customer requirements

Percent Respondents
23%

42%

35%

Source: AberdeenGroup, December 2004

Manufacturing performance management programs are a key enabler in helping manufacturers move from to-stock to to-order manufacturing style. As manufacturers went from No Activity to Early to Mature involvement with manufacturing performance management programs, there was a steady decline in the number of repetitive/rate-based, to-stock manufacturers. Manufacturers with greater than two year involvement in a manufacturing performance management programs were 87% more likely to be toorder. Aberdeen believes that since mature manufacturers are more focused on improving lead time and flexibility/agility, they are able to reduce manufacturing lead times to be within order lead time and stop making product to forecast. The research also conclusively points to the value of moving to a to-order manufacturing style. Manufacturers that were operating with one of the two to-order manufacturing styles represented 91% of the best-in-class performers.

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 6

The Manufacturing Performance Management Strategies Benchmark Report

Lean Leads, But Most Companies Use Multiple Improvement Methodologies


At the core of the manufacturing performance management program is an improvement methodology. The findings point to a number of methodologies being deployed. Manufacturers seeking to implement plant-, division-, or corporate-wide manufacturing performance management programs must be prepared to address the variability and applicability of improvement methodologies being employed in their companies today. Almost 80% of the companies that were active with manufacturing performance management programs said they use some form of Lean. While Lean is prevalent, most manufacturers also use a number of other techniques either in parallel or in conjunction with their Lean methodology deployment as each methodology has its own strengths and weaknesses. For example, there is a growing trend to combine Six Sigma with Lean as they are complementary. Lean focuses on elimination of waste and Six Sigma focuses on elimination of variability. Surprisingly, MRP emerged as the second most prevalent improvement methodology and this includes the best-in-class performers and mature manufacturers who are using it more than anyone else. Despite the downplay of MRP by the technology and consulting communities, there are a number of companies rated class A manufacturers that have put in place well run MRP-based processes. Aberdeen research shows that while the improvement methodology is important, the overarching goals of the manufacturing performance improvement program are paramount. Aberdeens analysis of two manufacturers drives home this point. The goal of the first manufacturer was to reduce raw material, work-in-process, and finished goods inventory by 80%. The second manufacturer wanted to be able to reliably build and ship orders in several days as opposed to the industry norm of six to twelve weeks. Both succeeded in meeting their goals. However, the second manufacturer was able to use its superior manufacturing speed and reliability to create competitive differentiation. It grew its business by ten times over six years. The first manufacturer had marginal growth and was eventually bought by a competitor.

Manufacturing Performance Management Framework


Manufacturers in search of world class performance have been introduced to many methodologies and technologies over the last 20 years. For example, there have been a lot of conflicting opinions on whether it is more important to improve execution or planning. Aberdeen research concludes that the best performing companies are competent in planning, execution and more. To help manufacturing executives understand the key elements required as part of an effective manufacturing performance management strategy, Aberdeen has created the Aberdeen Manufacturing Performance Management Framework (Figure 6).

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 7

The Manufacturing Performance Management Strategies Benchmark Report

Figure 6: The Aberdeen Manufacturing Performance Management Framework

Plan Control (Plan vs Actual Analysis/ (Scheduling, Sequencing, Load Leveling) Alerting/Replanning) Analysis (Effectiveness/ Improvement)

Execute (Instruction/Inspection/ Status)


Source: AberdeenGroup, December 2004

For many seasoned manufacturing executives, the Aberdeen Manufacturing Performance Management Framework will look quite familiar. It is loosely based upon the work of Walter Shewhart, W. Edwards Deming, and others. It represents a closed-loop management approach for effectively running and improving manufacturing performance. At any point in time manufacturing executives will be leveraging one or all of the areas to improve the effectiveness of their manufacturing operations. However, the goal is to achieve long term balance across all four areas in a virtuous cycle that allows manufacturing performance management programs to best organize, produce and improve manufacturing performance. The framework is broken down into four major areas: Plan The strategies, processes, and supporting IT solutions that help manufacturers determine the optimal sequence or load level manufacturing operation to reliably meet or exceed the combination of customer service, throughput, and financial goals of the enterprise. Planning should include all manufacturing resources equipment, materials, workforce, tools, suppliers, etc. and relevant demand information orders, forecasts, inventory, etc. Planning should be daily or more frequently based upon the sales and operations plan and the events of the business. Planning capabilities are critical to

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 8

The Manufacturing Performance Management Strategies Benchmark Report

organize orders to ensure a feasible schedule, arbitrate scare resources, and take advantage of sequence and changeover trade-offs to improve operations and financial performance. Execute - The strategies, processes, and supporting IT solutions that help manufacturers provide the work force and plant automation systems with the information required to meet the schedule requirements, including work instructions, testing requirements, equipment and kanban status, supplier replenishments, inventory status, etc. As manufacturing occurs, execution tracks the progress and genealogy of the materials and work. Execution capabilities are critical to synchronize all resources and track their performance. Control The strategies, processes, and supporting IT solutions that measure actual versus plan performance in real-time and predict performance deviations, alert the workforce of actual or anticipated deviations, and proactively correct the deviations if possible. The goal of control is to fix deviations as they occur and before the shipment schedule is impacted. Strong execution capabilities are critical for effective control and a tight linkage to scheduling (not necessarily planning) is necessary to understand the impact of deviations and instantly make critical adjustment to manufacturing. Analysis The strategies, processes, and supporting IT solutions that help manufacturers understand the complex operations and financial performance relationships required to improve the effectiveness of the operation. There are two aspects of analysis: 1) performance analysis, which tends to be real time, and 2) historical and predictive analysis, which models and simulates the performance of the operations to allow changes in the operations, demand, etc. to be evaluated before being introduced into production. Analysis capabilities are critical for supporting and accelerating continuous improvement programs.

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 9

The Manufacturing Performance Management Strategies Benchmark Report

Chapter Three: Implications & Analysis


Key Takeaways Process and organization practices need to be value chain oriented Best-in-class manufacturers take a balanced approach to employing all four Manufacturing Performance Management capabilities: plan, execute, control, and analysis. IT solutions that enable real-time closed loop planning, execution and control are critical to producing superior results Packaged applications have not really penetrated manufacturing performance management

anufacturing performance management program success can be tied to the ability to execute the practices described in the Manufacturing Performance Management Competitive Framework, shown in Table 3. The results of the benchmark study show that there is a direct relation to the practices described in the Manufacturing Performance Management Competitive Framework in five key categories: (1) process (the ability to integrate manufacturing effectively into the supply chain); (2) organization (customer value focus/philosophy, level of collaboration among stakeholders); (3) knowledge (real-time visibility and understanding of performance); (4) technology (enabling the closed loop performance management process); and (5) performance measurement (metrics with frequency that promotes customer focused performance and continuous improvement). Survey respondents fell into one of three categories Laggard, Industry Average, or Best in Class based on their characteristics. Best in Class enterprises extend manufacturing into the supply chain, ensure that organization structure and goals are consistent with creating differentiated value for the customer, and leverage technology to provide proactive knowledge to enable the workforce to effectively run the operation and improve its performance. Laggard enterprises by contrast treat manufacturing processes and organization as a set of stand alone entities, and do little with technology to enable performance knowledge to be proactively placed in the hands of those that can ensure effective operations and improve performance.

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 10

The Manufacturing Performance Management Strategies Benchmark Report

Table 3: Manufacturing Performance Management Competitive Framework Laggards Process


Non integrated set of manufacturing functions

Industry Average
Whole of manufacturing integrated into a single process Manufacturing organized as a single function, with regular coordination between the functional departments within manufacturing Performance change known immediately after has occurred, local corrective action undertaken, communication to downstream functions

Best in Class
Inbound and outbound processes integrated with manufacturing process Manufacturing organization integrated with customer service/delivery organizations, coordination across manufacturing, customer service and logistics Performance change anticipated before it occurs, corrective action undertaken in time to keep to schedule or minimize impact, downstream operations included in corrective action Integrated planning, execution and analysis solution that constantly monitors performance in real time, providing feedback when disruptions occur or are anticipated Focus is customer responsiveness: cycle time, flexibility, throughput and resource effectiveness

Organization

Fragmented functional departments within manufacturing with little interaction between departments

Knowledge

Performance change known well after the fact, not in time for any corrective action and not communicated to downstream functions

Technology

Manual/spreadsheet planning & analysis, paper based execution, nothing to support control just reporting

Separate and loosely coupled planning, execution and analysis solutions, current performance versus goals/plan display on shop floor

Performance Measurement

Focus is unit cost and asset utilization at the departmental level

Focus is on time shipment and total cost

Source: AberdeenGroup, December 2004

Process and Organization Practices Need To Be Value Chain Oriented


The best performing enterprises integrate inbound and outbound logistics as part of the manufacturing process to shorten order lead times, improve responsiveness, and drive out inventory. The true performers are able to build-to-order a wide range of products with lead times that are a fraction of their competition, yet carry inventory that is consumed in hours or even minutes. For instance, many suppliers to electronics and industrial buildAll print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 11

The Manufacturing Performance Management Strategies Benchmark Report

to-order companies have been integrated into core manufacturing planning and execution processes. These suppliers are expected to act as if they were within the four walls of the plant, reacting in minutes or several hours at worst to material requests and delivering product right to the point of consumption on the production line. The best performing enterprises ensure that the manufacturing organization is integrated with customer service and coordinated with the rest of the supply chain operations. Bestin-class manufacturers have recognized that traditional hand-off management approaches (e.g. from customer service to manufacturing or from manufacturing to distribution or transportation) do not foster an integrated, high-performing customer focused manufacturing operation. There are many times when due to unforeseen circumstances, performance issues arise in manufacturing, customer service or the rest of the supply chain where if the organizations worked together trade-offs could be made between the organizations to ensure on-time delivery or minimize delivery delays.

Key Capabilities
All manufacturers cited that they most wanted to Streamline operations and take out non value added costs and Identify and eliminate or optimize throughput through bottleneck operations. But the story is completely different for the next set of priorities. Bestin-class manufacturers valued Minimizing lot size, improving operational and workforce flexibility, and just-in-time manufacturing, which is consistent with their customer focused differentiation strategy. Conversely, industry average and laggard manufacturers place more emphasis on addressing manufacturing deviations as they occur, which is akin to a doctor focusing on the symptom and not the illness. Evaluating capability importance from the Aberdeen Manufacturing Performance Management Framework also shows divergent strategies (Figure 7). Best-in-class manufacturers take a more balanced approach to employing all four key capabilities, while their peers are much more focused on the planning element. Its time to end the debate on which capability planning or execution is the most critical. The answer is they both are and so is control and analysis. Figure 7: Aberdeen Manufacturing Performance Management Framework Key Capability Importance Performance Category
100% 80% 60% 40% 20% 0% Planning Execution Control Analysis
Source: AberdeenGroup, December 2004

Best-in-Class
Industry Average
Laggard

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 12

The Manufacturing Performance Management Strategies Benchmark Report

Best-in-class and more mature programs place much more emphasis on analysis capabilities, which are critical to support continuous improvement methodologies like Lean and Theory of Constraints. One of the biggest challenges cited by manufacturers was determining the best improvement opportunities and the right solutions for those opportunities. Many manufacturers struggle to get away from the squeaky wheel syndrome where the person or the organization with the greatest clout gets the most improvement focus rather than the areas that will produce the greatest performance improvements. As manufacturers get deeper into their manufacturing performance management programs, the low hanging fruit improvement opportunities disappear. Manufacturers are left with unraveling the complex relationships that are inhibiting performance improvement. One large industrial manufacturer expressed frustration over the inability to get past conflicting opinions on the best way to solve their scheduling reliability problem. It had no way to model and evaluate the two alternatives one from production planning, the other from manufacturing engineering to determine the benefits and risks of each suggested solution.

The Importance of Effective Key Performance Indicators (KPI)


Aberdeen evaluated not only what key performance indicators (KPIs) were used, but how often, and determined that best-in-class enterprises do a much better job of implementing effective KPIs as part of their manufacturing performance management programs (Figure 8). Most enterprises measure performance. The problem is that the frequency of measurement is too slow to impact performance and hence ineffective (see Appendix A for an explanation of KPI Frequency Effectiveness). KPIs are also important not only for short term performance, but to provide performance insight for continuous improvement programs. Figure 8: Percentage of Respondents with Effective KPI Programs
90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Best-in-Class Industry Average Laggard

Product quality

Complete and Schedule on time compliance shipment

Throughput Manufacturing cost

Source: AberdeenGroup, December 2004

Technological Implications
IT solutions that enable real-time closed loop planning, execution and control are critical to producing superior results (Figure 9). The value of these integrated capabilities is the

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 13

The Manufacturing Performance Management Strategies Benchmark Report

ability to react to all kinds of changes as they occur orders and material, equipment and workforce availability and seamlessly flow the responses to the parties that can effect the change. Without real-time manufacturing status, orders in todays highly capacity constrained plants cannot be directly released to the shop floor with any degree of reliability. Integrated real-time information also allows deviations to be detected in upstream manufacturing processes and possibly corrected before the shipment schedule gets impacted. Simply integrating a planning solution to an execution solution will not create a real time control solution. The same can be said for integrating an event management solution with either planning or execution solutions. The reasons are that the integration needs to be more than operational status for the solution to be effective and work in the long-term. The models, rules, and policies, operational constraints, base data, and so on need to be continually synchronized and maintained. Figure 9: Percentage of Enterprises that Reported Above Average/Dramatically Better than Industry Performance
70% 60% 50% 40% 30% 20% 10% 0% Complete & on- Finished product time shipment inventory turns Manufacturing Cycle time Manufacturing Cost

Integrated planning, execution and analysis solution that constantly monitors performance in real time, providing feedback when disruptions occur or are anticipated Separate and loosely coupled planning, execution and analysis solutions, current performance versus goals/plan display on shop floor

Manual/spreadsheet planning & analysis, paper based execution, nothing to support control just reporting

Source: AberdeenGroup, December 2004

The importance of analytical solutions such as business intelligence and simulation have been available for years, they are still not well understood in manufacturing. Aberdeen recommends that manufacturers reconsider their priorities for this extremely important capability. The basis of effective performance improvement is to understand what the most important areas to be improved are. As manufacturers go beyond the early stage low hanging fruit improvements, the subsequent opportunities are not so obvious. Methodologies such as Six Sigma are fact based and require hard analysis to determine where to place scarce resources to get the greatest return. Continuous improvement cycle time, like manufacturing cycle-time, needs to be reduced to gain or maintain competitive advantage. Reducing the risk involved with change is an important corollary issue. Much of the improvement effort is tied-up in validating the proposed solutions. Manufacturers need to leverage solutions that allow them to simulate the operations, introduce changes, and determine their impact operationally and financially before being adopted. The same is true with respect to risk. The proposed improvement needs to be evaluated from an operational robustness perspective. For example, Aberdeen has seen the zealous quest to

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 14

The Manufacturing Performance Management Strategies Benchmark Report

take out all inventory result in operational instability and poor on time shipment performance. Manufacturers have had to add back inventory and tear out recent capital expenditures to improve reliability. This could be avoided if line design solutions that modeled the operation and understood operational variability were deployed during the improvement analysis phase. As in the June 2004 Lean Strategies Benchmark Study, planning leads the IT investment strategies for the next 12 24 months (Figure 10). Enterprises that focus on Lean or similar methodologies that minimize buffer inventory have found that schedule reliability has become an issue and that simplified approaches to sequencing/load leveling production do not solve the problem. Best-in-class manufacturers IT investment strategies are consistent with their balanced approach to the Aberdeen Manufacturing Performance Management Framework. However, industry average and laggard manufacturers are mistakenly downplaying execution investment. Execution is the key to empowering the workforce with the right information at the right time, and collecting the data is particularly critical for control and analysis capabilities. Figure 10: IT Investment Priorities
60% 50% 40% 30% 20% 10% 0% Planning Execution Control Analysis
Source: AberdeenGroup, December 2004

Best-in-Class Industry Average Laggard

The use of packaged applications in support of manufacturing performance management programs is not as pervasive as commonly believed (Figure 11). There are several reasons for this: First, detail and ease of use matter in manufacturing, and ERP solutions have historically done a poor job on both fronts. They have traditionally struggled to accurately model manufacturing operations and to provide effective user interface and machine integration. Second, solution flexibility is critical for long term use. Many of the specialist solutions of the early 90s were highly functional but not easy to change. As new improvement methodologies like Lean came along, both the ERP based and older specialist solutions were viewed as cumbersome and not value added. Hence they were ripped out during process simplification exercises. Third, with very few exceptions, realtime integration across planning, execution, and control has been a custom effort for manufacturers as vendors delivered either planning, execution, or planning loosely coupled to execution and seldom with any form of closed-loop control capability.

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 15

The Manufacturing Performance Management Strategies Benchmark Report

Figure 11: Current IT Solution Deployment


40% 30% 20% 10% 0% Custom developed None ERP ERP plus Specialist vendor other solutions

Source: AberdeenGroup, December 2004

IT investment for the next 12 24 months will still be heavily driven by custom solutions although the role of packaged applications ERP and specialist vendors will increase. Tremendous inertia still exists within best-in-class manufacturers to continue to custom develop their IT solutions. Aberdeen does not believe that custom in this case means code level investment, because few manufacturers carry the required IT resources. Instead, custom means a heavy reliance on spreadsheets and more of a portfolio assembly of individual best-in-class planning, execution, control, and analysis solutions. Because of the complexity of managing portfolio integration of multiple best-in-class solutions, best-in-class manufacturers are using portal technology to provide a common look and feel for manufacturing personnel across the various solutions. Integrated manufacturing performance management solutions have seen a resurgence over the last several years as a new set of vendors along with existing vendors have developed solutions that support methodologies such as Lean and do a much better job at modeling manufacturing operations, supporting product tracking and problem resolution, and providing performance analysis. However, there is a divergence in which type of packaged application vendor to use. Best-in-class manufacturers and larger manufacturers have the most interest in specialist vendors because they have more internal resources to support these projects, do not see integration as an issue, and place more emphasis on solution value than vendor viability. On the other hand, laggard and smaller manufacturers are much more ERP focused as they are more conservative, solution cost focused and shy away from integrating multiple solutions.

Pressures, Actions, Capabilities, Enablers (PACE)


Throughout this benchmark study, we have shown that there is a clear relationship between the pressures companies identify and the actions they take, and their subsequent competitive performance. All enterprises should examine their prioritized PACE selections and determine whether there are valuable perspectives to be gained from comparison with the PACE priorities of best-in-class companies (Table 4).

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 16

The Manufacturing Performance Management Strategies Benchmark Report

Table 4: PACE (Pressures, Actions, Capabilities, Enablers) Priorities


1

Prioritized Pressures
Customers demanding/competitors driving product prices lower Meet increasing demand with the same set of assets and people Improve returnon-investedcapital/assets

Actions
Reduce manufacturing costs

Capabilities
Streamline operations and take out non value added costs Identify and eliminate or optimize throughput through bottleneck operations Build to order with materials/components delivered for that order Minimize dwell time and provide suppliers with upstream visibility Address manufacturing deviations as they occur Minimize lot size, provide multiple production paths and increase workforce flexibility

Enablers
Solution that helps identify and eliminate non value added activities (waste)

Improve throughput

IT-enabled solutions that can help design the supply chain based on Lean principles and load level the building and delivery of orders Solution that supports pull based manufacturing and supplier replenishment

Reduce raw material, WIP and finished goods inventory Reduce manufacturing lead time Improve schedule compliance Improve manufacturing flexibility/agility

Customer demanding shorter order lead times Customer demanding complete and ontime shipments High demand volatility

Solution that finds the fastest path through production gives supplier early warning demand signals Solution that in real-time reports and corrects schedule deviations Solution that can dynamically route orders through the factory taking into account equipment and workforce capabilities

Source: AberdeenGroup, December 2004

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 17

The Manufacturing Performance Management Strategies Benchmark Report

Chapter Four: Recommendations for Action


Key Takeaways Find the value, consolidate and stabilize operations, and pick up the improvement pace Move continuous improvement from a cost reduction focus to focus on superior customer service and throughput Move to manufacturing processes that react and adjust in seconds and minutes

he findings presented in chapters one through three demonstrate that best performing manufacturers have fundamentally different philosophies about the value drivers of manufacturing and the role that manufacturing performance management strategies and technologies play in enabling those philosophies. Best-in-class enterprises have made the shift from cost reduction to superior customer service as the primary focus with cost reduction a natural by-product. These enterprises use manufacturing performance management strategies and technologies in a balanced way to extend manufacturing into the supply chain, make it more responsive to customer demand and accelerate the rate of change to keep ahead of the competition. Finally, best-in-class manufacturers are fully committed and put in the time to transform the manufacturing organization and culture to one of change and the search for better performance. There should be no surprise that best-in-class manufacturers stand to benefit from the increasing demands of customers and not be their victims. Because manufacturers are at various stages with their manufacturing performance management strategies and technologies, Aberdeen has developed a set of recommendations based upon the competitive framework categories.

Laggard Steps to Success


1. Pick an improvement methodology, demonstrate and promote success by focusing on easily identified and remedied problems (excess inventory and elimination of simple bottlenecks), and establish a performance improvement culture. Many manufacturers mistakenly evaluate their performance from todays perspective, not where they or their competition will be 2 years from now. Even maximizing current performance will not be good enough, especially if it is cost focused. Global sourcing will make such attitudes fatal for laggard manufacturers that do not adopt continuous improvement strategies and technologies. For example, the real news with China based sourcing is not low price, thats always been there. It is the dramatically improving product sophistication and quality. 2. Establish a set of measures and improvement goals for the number of improvements efforts underway and time required to go from improvement concept to results.

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 18

The Manufacturing Performance Management Strategies Benchmark Report

Performance improvement cycle time is similar to manufacturing cycle time it must to be continuously reduced. American-based automotive manufacturers are an illustration of not keeping manufacturing performance improvement pace with their Japanese counterparts in areas such as assembly line flexibility. The Japanese manufacturers have been able to produce a wider array of products with a smaller asset base, improving the time to market and lowering costs and required investment. 3. Leverage manufacturing performance management analysis solutions to model current manufacturing conditions, identify performance improvement opportunities and evaluate their robustness. These solutions help address the related issues of top management buy-in, financial justification, and risk mitigation that keep more conservative manufacturers from either adopting or accelerating the deployment of manufacturing performance management strategies. 4. Establish an end-to-end manufacturing process, organization and supporting metrics, and leverage manufacturing performance execution and control solutions to help synchronize the operation and measure performance. Manufacturers need to eliminate the disjointed manufacturing operations, organizations and metrics that have lead to excess inventory and poor financial and operational performance. To support new behavior, manufacturers need to implement execution solutions that provide the manufacturing floor with the information required to build the right product at the right time, provide current performance status and identify deviations as they occur for immediate corrective action. A well implemented execution and control solution will also provide much of the base data required to support the continuous improvement program.

Industry Average Steps to Success


1. Move continuous improvement from a cost reduction to focus on superior customer service and throughput This may sound heretical to some, but a focus on shorter lead times, complete and on-time shipment, and product quality actually drive more meaningful cost reduction. An example of this change in philosophy is set-ups/change-overs. A cost driven approach would be to minimize the number of set-ups/change-overs, which will reduce costs, but not improve manufacturing responsiveness. A superior customer service focus reduces set up/change-over time which improves cost, manufacturing responsiveness and throughput. 2. Extend manufacturing into customer service and logistics processes. As part of the strategy to focus on superior customer service, manufacturing can dramatically impact overall order cycle time and delivery reliability when it is integrated into customer service and logistics processes. Examples include assembly that is sequenced for end-of-line shipment or customer service with direct access to the manufacturing schedule. 3. Implement manufacturing performance management planning solutions to improve reliability and responsiveness.
All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 19

The Manufacturing Performance Management Strategies Benchmark Report

As manufacturing performance management programs eliminate inventory and obvious bottlenecks, manufacturers find that despite attempts to further simplify, scheduling complexity does not go away and schedule compliance degrades with a solution capable of modeling the complexity. In addition, quick and reliable what if schedule change analysis becomes critical as manufacturers compress delivery date quoting cycle time or minimize the impact of material shortages.

Best in Class Next Steps


1. Focus the improvement program to find/drive the manufacturing competitive differentiation inflection point The best of the best focus on establishing or maintaining a customer-perceived performance gap between itself and the competition. The goal is not to be simply better, but to be the supplier of choice through differentiated capabilities for example, through a combination of superior order (manufacturing related) lead times, flexibility to change orders once committed, and cost,. A desirable performance gap is typically anywhere from 25% to 200% better performance than the competition. It normally requires step wise improvements in manufacturing processes, organization and supporting solutions to achieve such a gap. Step wise change is best supported by analysis solutions that understand manufacturing dynamics so they can identify whether the new performance goals can be met and that the operation will run reliably. 2. Move to manufacturing that reacts and adjusts in seconds and minutes As order lead times move to hours and product diversity expands, manufacturers need to establish processes and supporting automation capable of reacting in minutes or even seconds. Manufacturers need to be able to produce as close to a unit of one as possible and have solutions that can use real-time closed loop integration to react to new orders and operation deviations as they occur, limiting human intervention in the decision making process to extra-ordinary situations. Given their emphasis on real-time performance and an embedded culture of continuous change, best-in-class manufacturers should put a high priority on the integration across the four key capabilities planning, execution, control and analysis. They should also insist on the solutions ability to be changed by the workforce as opposed to an IT staff. 3. Integrate suppliers and inbound logistics into manufacturing operations Supplier and inbound logistics lead-times can become the largest impediment to improving overall manufacturing responsiveness and reliability. Manufacturing processes and IT solutions should be extended into suppliers and logistics operations. Extension allows suppliers to better react to changing demand or kit and deliver directly to the production line hourly for example. Extension into inbound logistics provides manufacturing with greater visibility of incoming shipments, allowing the materials to be committed before they reach the plant or react to delayed inbound shipments before production is materially impacted.

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 20

The Manufacturing Performance Management Strategies Benchmark Report

Featured Sponsors
.

Brooks Software, a division of Brooks Automation, provides real-time applications that support enterprise-wide initiatives for greater efficiency and productivity in collaborative, complex manufacturing. Brooks Sense Decide Respond manufacturing software solutions are the foundation for enterprise initiatives in supply chain execution, closed loop automation, lean manufacturing and enterprise performance management. Installed in many of the Fortune 500 manufacturers, Brooks Software delivers competitive advantage to aerospace & defense, automotive, high tech, life sciences and semiconductor manufacturers worldwide. For more information, visit www.brookssoftware.com.

MAPICS is a leading global solutions provider focused exclusively on manufacturing. Building on more than 25 years of industry experience and proven success, MAPICS helps manufacturers be world class by gaining market share, operating at peak efficiency and exceeding customer expectations. MAPICS solutions include software-extended ERP, CRM and supply chain management-and professional services. The solutions are implemented on the two industry-leading technology platforms - Microsoft and IBM. Headquartered in Atlanta, MAPICS has implemented solutions in more than 10,000 customer sites in more than 70 countries. For more information, visit www.mapics.com

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 21

The Manufacturing Performance Management Strategies Benchmark Report

Pelion Systems is the market leader in Manufacturing Process Optimization (MPO) software products. At Pelion Systems, Manufacturing Excellence isnt a journey, its a destination. From the shop floor to the top floor, we provide MPO software and services for companies to rapidly achieve and sustain manufacturing performance management excellence through optimal shop floor control and extension to suppliers and customers. As manufacturers adopt Demand-Driven Manufacturing strategies, such as Lean, Six Sigma, and Flow, to reduce cycle time, liberate working capital, improve productivity, and grow profit margins; they turn to Pelion for technology to jumpstart implementation, provide powerful factory optimization, and enable global rollout. By mapping to your unique operating environment, Pelion MPO analyzes existing shop floor configurations and processes for immediate results while enabling rapid "what-if" models for future factory and process improvements. Pelion MPO implements immediately without operational disruption while managing the entire Manufacturing Transformation Lifecycle from new product engineering to customer delivery to sustain superior pull-based operations results. With Pelion, leading manufacturers are able to achieve their manufacturing performance goals, differentiate themselves with superior customer responsiveness, and attain market leadership by optimizing operations and extending their supply network to include suppliers, customers and outsourced service providers in their business transformation. Pelion MPO integrates easily with existing ERP and MRP systems to optimize operations and provide rapid return on investment. Based in Lafayette, Colorado, Pelion has sales and marketing offices in Chicago, Detroit and Austin.

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 22

The Manufacturing Performance Management Strategies Benchmark Report

Rockwell Automation, Inc. (NYSE: ROK) is a leading global provider of industrial automation, power, control and information solutions that help customers meet their manufacturing productivity objectives. Rockwell Automation provides clients worldwide with everything from integrated engineering and support solutions on multi-vendor platforms, to software and MRO asset management services, to integration of shop-floor data to the top floor for more effective enterprise-resource management.

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 23

The Manufacturing Performance Management Strategies Benchmark Report

Sponsor Directory
Brooks Automation, Inc. 15 Elizabeth Drive Chelmsford, MA 01824 U.S.A. Phone: 978.262.2400 Fax: 978.262.2500 www.brooks.com MAPICS 1000 Windward Concourse Pkwy Suite 100 Alpharetta, GA 30005 Ph: 678.319.8000 Fx: 678.319.8368 http://www.mapics.com/ info@mapics.com Pelion Systems, Inc. 1455 Dixon Avenue, Suite 300 Lafayette, Colorado 80026-2789 Phone: 720.890.2800 Fax: 720.890.1211 Toll-free: 877.669.4324 email: info@pelionsystems.com Rockwell Automation US Bank Center 777 East Wisconsin Avenue Suite 1400 Milwaukee, Wisconsin 53202 USA Phone: 414.212.5200 www.rockwell.com

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 24

The Manufacturing Performance Management Strategies Benchmark Report

Author Profile
Chris Jones Senior Vice President Research AberdeenGroup, Inc.
Chris Jones is Senior Vice President of Research and has 23 years experience as an executive in the enterprise applications and supply chain markets. Prior to Aberdeen, Mr. Jones was Executive Vice President of Marketing and Corporate Development for SynQuest, Inc. SynQuest was a leading provider of financially optimized supply chain planning solutions for enterprises with complex supply chains. At SynQuest, Mr. Jones was responsible for corporate marketing, company strategy, product strategy, business development, funding programs, and mergers and acquisitions. Prior to SynQuest, he was Vice President and Research Director at Gartner Group and responsible for Gartners ERP Service and co-founded Gartners Integrated Logistics Strategies Service. Mr. Jones spent the formative years of his career with Kraft General Foods in various operations, strategy, and technology management positions. Mr. Jones has a Bachelor of Science in Electrical Engineering from Lehigh University.

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 25

The Manufacturing Performance Management Strategies Benchmark Report

Appendix A: Research Methodology


etween October and November 2004, AberdeenGroup in conjunction with Industry Week surveyed the manufacturing performance management strategies, procedures, experiences, and intentions of more than 175 enterprises in industrial equipment, metals and metals products, automotive, aerospace and defense, and other industries. Responding manufacturing, quality, finance, and logistics/supply chain executives completed an online survey that included questions designed to determine the following: The pressures causing enterprises to adopt manufacturing performance management strategies and their strategic actions for achieving performance improvement results The structure and effectiveness of existing manufacturing performance management strategies and supporting IT solutions Current and planned use of automation to aid these activities The benefits, if any, that have been derived from manufacturing performance management initiatives

Aberdeen supplemented this online survey effort with telephone interviews with select survey respondents, gathering additional information on manufacturing performance management experiences, and results. The study aimed to identify emerging best practices for manufacturing performance management and provide a framework by which readers could assess their own manufacturing performance management capabilities. Responding enterprises included the following: Job title/function: The research sample included respondents with the following job titles: Manufacturing (52%); Quality (12%); Finance (10%); Logistics/Supply Chain (9%); Product Development (5%); and all other (13%). Industry: The research sample included respondents predominantly from manufacturing industries. Industrial equipment manufacturers represented 20% of the sample, and metals and metals products manufacturers accounted for 20% of respondents. Automotive manufacturers totaled 10% of respondents. Aerospace and defense accounted for 9% of the sample. Other sectors responding included consumer durables consumer, packaged goods, electronics and medical equipment manufacturers for example. Geography: Nearly all study respondents were from North America, including 90% from the U.S. alone. Remaining respondents were from the Asia-Pacific region and Europe. Company size: About 18% of respondents were from large enterprises (annual revenues above US$1 billion); 16% were from midsize enterprises (annual revenues be-

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 26

The Manufacturing Performance Management Strategies Benchmark Report

tween $250 million and $1 billion); and 66% of respondents were from small businesses (annual revenues below $250 million). Solution providers recognized as sponsors had no substantive influence on the direction of the Manufacturing Performance Management Strategies Benchmark Report. Their sponsorship has made it possible for Aberdeen Group to make these findings available to readers at no charge. Table 5: PACE Framework Explanation PACE Key
Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities, and enablers (PACE) that indicate corporate behavior in specific business processes. These terms are defined as follows:

Pressures external forces that impact an organizations market position, competitiveness, or business operations (e.g., economic, political and regulatory, technology, changing customer preferences, competitive) Actions the strategic approaches that an organization takes in response to industry pressures (e.g., align the corporate business model to leverage industry opportunities, such as product/service strategy, target markets, financial strategy, go-tomarket, and sales strategy) Capabilities the business process competencies required to execute corporate strategy (e.g., skilled people, brand, market positioning, viable products/services, ecosystem partners, financing) Enablers the key functionality of technology solutions required to support the organizations enabling business practices (e.g., development platform, applications, network connectivity, user interface, training and support, partner interfaces, data cleansing, and management)

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 27

The Manufacturing Performance Management Strategies Benchmark Report

Table 6: Relationship between PACE and Competitive Framework PACE and Competitive Framework How They Interact Aberdeen research indicates that companies that identify the most impactful pressures and take the most transformational and effective actions are most likely to achieve superior performance. The level of competitive performance that a company achieves is strongly determined by the PACE choices that they make and how well they execute. Table 7: Competitive Framework Competitive Framework Key
The Aberdeen Competitive Framework defines enterprises as falling into one of the three following levels of manufacturing performance management practices and performance:

Laggards (20%) Manufacturing Performance Management practices that are significantly behind the average of the industry, and result in below average performance Industry Norm (60%) Manufacturing Performance Management practices that represent the average or norm, and result in average industry performance. Best in Class (20%) Manufacturing Performance Management practices that are the best currently being employed and significantly superior to the industry norm, and result in the top industry performance.

KPI Frequency Effectiveness Definition Aberdeen defines KPI effectiveness by examining the frequency of measurement. KPIs with measurement frequencies that allow the users of those KPIs to be able to impact performance immediately or before problems actually occur are called Managing. This is typically within the day, daily, weekly, or in some instances monthly. Fast moving manufacturing may require performance measured to the minute. KPI measurement frequency that is significantly after the fact and can impact only long term performance is called Reporting.

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 28

The Manufacturing Performance Management Strategies Benchmark Report

Appendix B: Related Aberdeen Research & Tools


Related Aberdeen research that forms a companion or reference to this report include: Lean Strategies Benchmark Report (June 2004) Outsourced Manufacturing Strategies Benchmark Report (September 2004)

Information on these and any other Aberdeen publications can be found at www.aberdeen.com

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 29

The Manufacturing Performance Management Strategies Benchmark Report

About

Our Mission
To be the trusted advisor and business value research destination of choice for the Global Business Executive.

Our Approach
Aberdeen delivers unbiased, primary research that helps enterprises derive tangible business value from technology-enabled solutions. Through continuous benchmarking and analysis of value chain practices, Aberdeen offers a unique mix of research, tools, and services to help Global Business Executives accomplish the following: IMPROVE the financial and competitive position of their business now PRIORITIZE operational improvement areas to drive immediate, tangible value to their business LEVERAGE information technology for tangible business value.

Aberdeen also offers selected solution providers fact-based tools and services to empower and equip them to accomplish the following: CREATE DEMAND, by reaching the right level of executives in companies where their solutions can deliver differentiated results ACCELERATE SALES, by accessing executive decision-makers who need a solution and arming the sales team with fact-based differentiation around business impact EXPAND CUSTOMERS, by fortifying their value proposition with independent fact-based research and demonstrating installed base proof points

Our History of Integrity


Aberdeen was founded in 1988 to conduct fact-based, unbiased research that delivers tangible value to executives trying to advance their businesses with technology-enabled solutions. Aberdeen's integrity has always been and always will be beyond reproach. We provide independent research and analysis of the dynamics underlying specific technologyenabled business strategies, market trends, and technology solutions. While some reports or portions of reports may be underwritten by corporate sponsors, Aberdeen's research findings are never influenced by any of these sponsors.

All print and electronic rights are the property of AberdeenGroup 2004. AberdeenGroup 30

The Manufacturing Performance Management Strategies Benchmark Report

AberdeenGroup, Inc. 260 Franklin Street, Suite 1700 Boston, Massachusetts 02110-3112 USA Telephone: 617 723 7890 Fax: 617 723 7897 www.aberdeen.com 2004 AberdeenGroup, Inc. All rights reserved Month 2004

Founded in 1988, AberdeenGroup is the technologydriven research destination of choice for the global business executive. AberdeenGroup has over 100,000 research members in over 36 countries around the world that both participate in and direct the most comprehensive technology-driven value chain research in the market. Through its continued fact-based research, benchmarking, and actionable analysis, AberdeenGroup offers global business and technology executives a unique mix of actionable research, KPIs, tools, and services.

The information contained in this publication has been obtained from sources Aberdeen believes to be reliable, but is not guaranteed by Aberdeen. Aberdeen publications reflect the analysts judgment at the time and are subject to change without notice. The trademarks and registered trademarks of the corporations mentioned in this publication are the property of their respective holders.

THIS DOCUMENT IS FOR ELECTRONIC DELIVERY ONLY


The following acts are strictly prohibited: Reproduction for Sale Posting on a Web Site Transmittal via the Internet
Copyright 2004 Aberdeen Group, Inc. Boston, Massachusetts

Terms and Conditions


Upon receipt of this electronic report, it is understood that the user will and must fully comply with the terms of purchase as stipulated in the Purchase Agreement signed by the user or by an authorized representative of the users organization. This publication is protected by United States copyright laws and international treaties. Unless otherwise noted in the Purchase Agreement, the entire contents of this publication are copyrighted by Aberdeen Group, Inc., and may not be reproduced, stored in another retrieval system, posted on a Web site, or transmitted in any form or by any means without prior written consent of the publisher. Unauthorized reproduction or distribution of this publication, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent necessary to protect the rights of the publisher. The trademarks and registered trademarks of the corporations mentioned in this publication are the property of their respective holders. All information contained in this report is current as of publication date. Information contained in this publication has been obtained from sources Aberdeen believes to be reliable, but is not warranted by the publisher. Opinions reflect judgment at the time of publication and are subject to change without notice.

Usage Tips
Report viewing in this PDF format offers several benefits: Table of Contents: A dynamic Table of Contents (TOC) helps you navigate through the report. Simply select "Show Bookmarks" from the "Windows" menu, or click on the bookmark icon (fourth icon from the left on the standard toolbar) to access this feature. The TOC is both expandable and collapsible; simply click on the plus sign to the left of the chapter titles listed in the TOC. This feature enables you to change your view of the TOC, depending on whether you would rather see an overview of the report or focus on any given chapter in greater depth. Scroll Bar: Another online navigation feature can be accessed from the scroll bar to the right of your document window. By dragging the scroll bar, you can easily navigate through the entire document page by page. If you continue to press the mouse button while dragging the scroll bar, Acrobat Reader will list each page number as you scroll. This feature is helpful if you are searching for a specific page reference. Text-Based Searching: The PDF format also offers online text-based searching capabilities. This can be a great asset if you are searching for references to a specific type of technology or any other elements within the report. Reader Guide: To further explore the benefits of the PDF file format, please consult the Reader Guide available from the Help menu.

Vous aimerez peut-être aussi