Here's a quick sampling of creative ways companies have applied the key financial and operational numbers that determine their success.
- Monitoring profitability. Web Industries converts roll and film material on slitting and spooling machines. Rob Zicaro, a team leader in Web's Framingham, Mass., plant, reports how he and his coworkers watch a critical number day in and day out: "Each machine crew gets what we call a road map at the beginning of the month. It shows sales projections for each team along with our largest customers and other information. Every day, each team member does production reports measuring what we call revenue per labor-hour. That's our critical number. We know that we have to be at $50 revenue per labor-hour to make money. Any time of day you can take out your calculator and figure out if you're making money or not. The reports then go into our information systems and are added to the road maps, so it's an ongoing tally every day. You can tell how close you are to the projection, how many work days are left, what's the revenue per labor-hour average for the team's month to date."
- Challenging employees to increase operating efficiency. In R.R. Donnelley & Sons Co.'s Lancaster, Pa., printing plants, the financial objective is to increase economic value added (EVA). In the pressrooms that translates into boosting press efficiency. (Press efficiency is a measure of throughput that incorporates quality.) One year, the Gravure pressroom played a series of three-month games: the goal was to bump efficiency up by so much over the prior year's levels and thereby win a modest bonus. Production supervisor Jim Burrows explains the effect: "Let's say that the schedule allowed eight hours for make-ready on a job. In the past, the press crews felt that, as long as they were done in eight hours, they had done a good job. Now they began thinking about ways to do it faster - by bringing out the cylinders ahead of time, for example. People also came to understand the importance of press speed. If they run the press at 25,000 impressions an hour, maybe they can get the job done on schedule. If they figure out how to bump that up to 30,000 impressions an hour, they can cut hours off the job. That creates extra capacity for us, and it allows us to get started on the next job that much sooner."
Published on: Jan 21, 2000