Measuring Production

Measuring Production

By Diane M. Calabrese / Published August 2018

Counting the ways in “How Do I Love Thee?,” Elizabeth Barrett Browning focused on the many facets of her good feelings. She enumerated. She did not analyze.

Gestalt method is fine for poets writing about affairs of the heart. For producers of goods and services, however, an examination of particulars must be part of evaluating the how much and how many.

Balancing the rate of production and the quality of product is at the core of any manufacturing process. A manufacturer must ensure that quality always takes priority over speed. So, too, a distributor must ascertain that service calls are more than a list to check off, and contractors need to verify the good outcome of each project completed.

“Quality control is taken for granted every day,” says Gregg Brodsky, senior western sales manager at Alkota Cleaning Systems Inc. in Alcester, SD. “It needs to be instilled through proper training, tracking, and measuring by employees as well as the finished product.”

The factors that contribute to production interact on a weakest link principle. If one of the elements in a workflow scheme is not performing optimally, the entire production process suffers. Elements include personnel.

“All employees, whether indirectly or directly involved in production, need to understand quality control is a concoction of all facets of producing your widget,” explains Brodsky. “From the way the phone is answered, the bathrooms, and cleanliness of carpets and floors in the offices, to every department in engineering, drafting, and marketing, to the creation of your product and the means whereby that sales promotes your livelihood through controlled and monitored marketing, this is true.”

There are good reasons for measuring production. First and foremost, analysis of measures can be used to inform business planning. Brodsky provides an illustration of how measures can be used. “Standards and expectations can be set into motion by involving and educating the employee as to their job description and their potentials,” he says.

The activity of measuring and analyzing demands employee engagement. In turn, that engagement fortifies the company. “An individual cannot achieve expectations if the desired outcome is not clearly understood,” says Brodsky. “An individual without a personal and company goal creates their own goal and becomes less productive.”

Take the time to assess and compare and evaluate employees. “A business plan is simple,” says Brodsky. “Educate through training, tracking, and measuring their individual performance, and your employees create a healthy work environment that produces a quality product that earns a loyal following.”

Measuring production begins with a commitment to do it in a meaningful way. “Quantity will always fail when you measure production by pure number of units produced,” says Brodsky. “A simple way to measure performance—not quality—is total revenue divided by employees.”

A strong business will be able to assume quality is the starting point and is consistent throughout. Therefore, using a measure of revenue per employee provides a way to figure out whether efficiency is lagging.

Maintaining the leanest and most productive roster of employees—and personnel assignments—requires frequent recalibration. ‘Optimal’ for one economic climate may change in another. Moreover, a company does not want to become so lean that every employee is saturated with tasks to the point it precludes capitalizing on new opportunities.

“There is a threshold of no return when you get above a certain sales dollar level per employee,” says Brodsky. “This is a number that each individual company will have to determine. What is the point of regression?”

No company need go it alone in developing methods to measure production. There are consultants who work across industries providing advice. There is also industry-specific help.

  Take advantage of involvement with professional organizations such as CETA, says Brodsky. “There are no trade secrets, but a great competitor makes you better only if you pay attention to detail by day,” he explains. “The devil is in the details.”

  To get an idea just how much detail some analyses recommend, have a look at “A Quick Introduction to Manufacturing Process Development” resource from the Iowa Department of Education (see www.educateiowa.gov/sites/files/ed/documents/Production_process_Development.pdf).

The process development document presents a highly-detailed method for assessing what an employee must know to accomplish a particular job function and how to determine whether employees are accomplishing that task. The expectation that an employee be able to propose changes to products and processes (one of five key activities) is coupled with nine points to consider (performance indicators) to determine whether the employee is competent in that activity.

There are much simpler ways to measure competence (and productivity). But the process document may be a way for very large companies to evaluate employee performance in a manner that can be construed only as entirely neutral.

Part of the Whole

The U.S. Bureau of Labor Statistics (BLS) is interested in how the many parts of the economy fit together in the whole. How is the country doing? In April (last month for which statistics are available as we write), industrial production rose 0.7 percent according to BLS. That was the third consecutive monthly increase.

A BLS primer (FAQs) on productivity (www.bls.gov/lpc/faqs.htm#P01) serves as a streamlined introduction to the how and why of measures of production. In the United States, labor costs account for more than 60 percent of the value of output produced in nonfarm settings.

The BLS does not categorize workers in a setting. In a manufacturing plant, machine operators, administrative workers, and management positions are all combined to measure the productivity of the plant. The rationale BLS uses to combine workers applies to individual businesses. It is that although certain workers are required to have hands on the machines or computer controls that make the product, the product will not be made without the entire array of workers at the business.

In other words, there may be good reason for evaluating sales personnel at a business by considering sales per individual. When measuring the production of a business, looking at revenue per employee across all employees is a better way to get a baseline for adjustments. If an administrative position is added, does the measure go up or down, for instance?

A contractor, distributor, or manufacturer must decide which forms of compensation to include in measures. Will it just be wages, or wages and benefits? And which benefits will be included?

For all the easily quantifiable measures of production, there are many elusive factors that become apparent only when something goes wrong. A distributor may have a long-term employee who handles calls, emails, and texts with ease and grace. Everything hums along in the service center and in sales because that employee is tamping down rough encounters and encouraging more interaction.

No one takes much notice because it all looks easy. Then, the first-contact employee leaves and a replacement steps in who lacks interest in follow-through and pleasant conversation. Soon there are fewer calls for service and fewer inquiries about new equipment and ancillaries. Production suffers because a link in the workflow arrangement weakens. (Contractors and manufacturers confront the same risk.)

Measuring production is a way for a business to gauge its sustainability and potential for growth. It’s also a way for the business to present a picture of its strength to creditors and grant makers.

Many federal dollars are being awarded in support of efforts to refine manufacturing processes. Among the many dollars available are those from the U.S. Department of Energy through its Clean Energy Smart Manufacturing Innovation Institute (CESMII). On May 31, 2018, CEMSII announced its first awards.

CEMSII is part of Manufacturing USA (www.manufacturingusa.com). The industry, government, and academic partners that form Manufacturing USA are committed to a manufacturing future for the United States. And the public and private partners in the group see innovation, collaboration, and education as crucial components of U.S. competitiveness in manufacturing.

The CEMSII awards announced in May focused on proposals for increasing the implementation of smart manufacturing, which is safer, more efficient—in speed of production and energy consumption—and reduces waste. One award went to Virginia Tech in Blacksburg, VA.

The Virginia Tech project aims to find a way to optimize recovery from raw material (amount of raw material in product) and quality of product (elimination of reworking). An industrial facility specializing in lightweight metals engineering and manufacturing is the test site. Success would mean reduced energy requirements, less waste, and as a corollary, less impact on the environment.

Measuring production in terms of the employees required to make the product or provide the service provides guidance for developing a more effective business plan. Measuring production in terms of energy consumed in the process or waste generated in the process is becoming increasingly necessary.

Customers in some areas want to know that a company uses the most environmentally friendly methods—does the most with the least energy, raw materials, water, and waste. Taking the time to measure not only production, but production as a function of energy use or waste generated, and so on, results in information that can be used to promote a business as well as improve it.