MESA to map metrics framework that links financial and operations performance

The manufacturing execution system (MES) market has has shown steady growth, yet while there is a wealth of evidence for the strong link between production and enterprise performance, there is no clear consensus on key performance indicators (KPI) that link the two.

The Manufacturing Enterprise Solutions Association (MESA International) says it's on deck to remedy that. MESA promotes the exchange of best practices, strategies, and innovation in managing manufacturing operations and quality, and in achieving excellence in plant-floor execution.

"There's a lot happening with MES, but the KPIs are immature," says John Moore, eQuality program manager for KLA-Tencor, an MES user and MESA member. "How do we measure things? I find there is a lot of variation."

KLA-Tencor makes systems that monitor the quality of microchips in the semiconductor industry. Moore is participating in a MESA metrics research study to determine execution systems' impact on business KPIs, and create a metrics framework for proving the connection between production performance and business performance. The project is being managed by Boston-based Industry Directions under the aegis of Julie Fraser, principal analyst, MESA member, and member of the organization's metrics committee.

The study will document universal areas where MES enables improved production performance, and subsequently, how MES performance information drives management decisions that result in improved enterprise performance.

"Companies have a hard time justifying the purchase of operational systems," says Fraser. "They want to understand what drives their performance. This project is an attempt to drill down and understand the relationship between operations and financial performance.

"Most manufacturers realize their financial performance relies on production being efficient and effective," Fraser continues. "They measure a lot of things on the floor, but once they see the financial performance, they find they don't have the data they need to properly measure their production performance. That comes from clear plant performance metrics."

The study also seeks to create a model based on survey findings for the link between financial and operational performance. The initial phase is cross-industry to determine key metrics that distinguish both process and discrete industry performance, and which metrics really matter. The long-term hope is to use the initial phase as a base for follow-on vertical-industry studies.

"This is an opportunity to learn from others," says Moore. "The need is to establish best practices, and how are they benchmarked. Obviously this study is broad in scope, but if we can start with a few metrics, over time we can build them all out."

Editor's note: The online metrics survey, available now at www.MESA.org or www.industrydirections.com, is open to manufacturing and production companies.