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What do best-in-class manufacturers do differently?
By Staff -- Manufacturing Business Technology, 8/1/2006 12:00:00 AM
Manufacturers invariably focus on three dimensions of performance: quality, price, and delivery. Nearly all performance measurements fall into one of these categories. The recently released Manufacturing Performance Management Benchmark Report from Boston-based AberdeenGroup says best-in-class operations are much more likely to outperform their competitors in complete and on-time shipments, and schedule compliance. However, this achievement often was at the expense of increased inventory levels.
While Aberdeen notes the difficulty of comparing industries—and even companies—on cost and other parameters, based on performance-improvement practices, best-in-class companies reduced manufacturing costs 13 percent on average, as compared to a disappointing 4 percent for all other respondents (see table). For manufacturing cycle times, better performers reduced cycle time by 16 percent, and average lead times were significantly shorter.
As to scheduling compliance, the better performers are either approaching or have reached a plateau where smaller incremental improvements prove significant.
The impact of performance-improvement efforts
| KPI | Best in class | All other respondents | ||||
| Before | After | % improvement | Before | After | % improvement | |
| 1 Measured as a percent of total revenue Source: AberdeenGroup |
||||||
| Manufacturing costs 1 | 46% | 40% | 13% | 55% | 53% | 4% |
| Complete and on-time shipments | 87% | 97% | 11% | 73% | 82% | 12% |
| Schedule compliance | 81% | 94% | 16% | 66% | 77% | 17% |
| Manufacturing cycle time (days) | 25 | 21 | 16% | 30 | 26 | 13% |
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