Month: April 2020

I just read about new research findings on how the KPI metrics used in the aerospace and defense (A&D) industry vary significantly in some respects with those tracked in all other industries. While traditional metrics such as net profit margin, workplace safety, and current capacity utilization are consistently seen as critical across all industrial markets, the A&D industry places much greater attention on manufacturing cycle time, on-time delivery, and the speed of new product introduction (NPI). 

This makes sense. In complex discrete manufacturing, a low volume production environment, the impact on cycle time and on-time delivery is acutely felt if targets are not met – especially when operating with a high backlog. These KPIs will have a big impact on NPI, so they should be managed with a similar focus. They are well aligned to make sure every product is always delivered with the right specifications, to each respective client, every time.

Then along came the coronavirus. I suspect production lines across the world are now focused on a different set of metrics, such as what percentage of my staff are healthy and able to show up for work today? More specifically, how is this pandemic impacting my suppliers, their staffing, and what parts or product components are now at risk? 

This scenario planning got me thinking. Those with a flexible approach to KPI tracking and the systems that can support an agile strategy will likely perform far better than the rest. With such a rapid change of operating environments, how well are your data gathering and metrics reporting capabilities keeping up?

The Dynamic Nature of What to Measure

As we try to make sense of the world we now live in, it has become painfully clear that a lot of things are changing quickly. Now is the time to adapt. Thoughts on optimizing a profit margin have shifted to how to keep businesses running and not run out of cash. 

It is in times of change where it can be helpful to take a step back and re-think how you define success. What is it that your company or business unit is trying to accomplish? How can this goal now be achieved, given the recent changes? What is your critical path to success, and what are the metrics you need to track to achieve that goal? 

These are great questions to ask now. I suspect they are being considered across the world. Those in the manufacturing industry must find a way to continue with production. How can you enforce the necessary safety and compliance standards while now working with fewer staff yet maintain the same level of product quality? What can be operated remotely? If customers can’t take delivery now, what sort of delays can be put in place to better align your cost of carry? What should be done today to best position for a ramp up when we are in a post-virus lockdown condition when production lines need to run at near capacity?  

The Emergence of New Metrics

Not only have our business conditions changed, but so too have expectations on what can be measured. This shift has been led by an explosion in the availability of highly granular data. 

We live in an “Industrial Internet of Things” world. Everything is now “smarter,” from the cars we drive to the systems we run to the factories we manage. Therefore, the choice and methodology of tracking KPIs must change also. This includes placing much greater of a focus on not only what has happened, but what will happen in the future based on data insights collected every day. 

The days of a decade passing between the conception of a new product and its delivery are long gone. So too have the days of setting up metrics at the start of running a business, and then assuming they don’t need to change. 

Innovation is being driven by advances in augmented reality, predictive analytics, and artificial intelligence, which has forever altered the mindset of A&D executives. Each of these new technologies unlocks new business opportunities – and new KPIs to be measured as part of achieving that vision.

KPI Systems Must Catch Up

As is the case during times of dynamic change – we know what we want, but sometimes the existing infrastructure can’t keep up with expectations. To an extent, this is happening with all the Industrial Transformation initiatives now in deployment. It is also the case with what KPIs are being measured and how that measurement is being achieved.

Read more about what is Industrial Transformation (IX)?

In order to move forward, manufacturers must consider that a whole new series of innovative KPIs are now needed to best manage our business. Only then can we achieve the full vision of smart manufacturing and Industry 4.0. 

As we enter the fifth week of California’s shelter-in-place program initiated by our state’s Governor, I have had much time to contemplate on how to best navigate the new era of history we are all now creating. Waking up and changing into jeans and a t-shirt before hosting my staff meetings is starting to seem normal. Another thought that is abundantly clear is to make the most of what we have and not to gamble on long shots – at least today. This philosophy is something I have taken to heart. It translates into a strategy today where you should “double down” on your existing technology and investments. 

It doesn’t matter if you are running a household, a charity, or a business – in times of uncertainty, risk management is critical. In the best of times, it is usually best to be prudent with important decisions. In challenging times of disruptive events such as the coronavirus, it is paramount to avoid taking unnecessary risks at all costs. Life is difficult enough while just trying to maintain the status quo!

For example, if you are running a manufacturing organization serving the aviation industry, now might not be a good time to consider venturing into a brand-new product line. Buyers, in times of uncertainty, tend to stick with existing suppliers or providers. Relationships already exist. Each side has earned the trust of the other, so a set of expectations has already been established during regular business conditions. This way, as conditions change, the mutually decided upon new path is much easier to find agreement on.

iBase-t’s Dedicated Focus on Existing Customers

My expectation is that our customers feel the same way. The best use of their time is to explore how best to leverage greater functionality, value, and capabilities from the iBase-t solution that is already in place. By doubling down on what you already have, the learning curve is minimal, and the relationship already exists. Instead, your precious time can be focused on identifying new opportunities. 

This was the rationale behind our launching Performance Plus, a program that I made available only to existing customers. We recognize times are tough, so we want to help. We are giving our customers up to 4 hours of our professional services time to work together and see what new performance or capability improvement might be possible with your existing technology investment. 

Now might be a great time to better understand how your operations are performing. Or, it might be a good time to do a “deep dive” on inventory turns, quality performance, or operational analytics to gain new insights that could lead to a few extra points on your bottom line in the future. This crisis we are in the middle of right now will pass. When it does, the rush will be on to ramp up quickly and effectively while maintaining some sort of social distancing as part of the process. 

New workflows might be needed, as well as the ability to operate remotely for the foreseeable future, in some instances. Most manufacturers already have some sort of operations management and analytics systems/technologies already installed – now could be the right time to double down and see what else can be done with this existing investment, including how operations can be managed to perform better by a skeleton staff. 

Have you already embraced a “double down” strategy on your existing IT or OT infrastructure? Do you have a couple of “aces in the hole,” so think now is the time to leverage what you have already? If so, please share your stories! 

As we all struggle to navigate the best path forward, one thing continues to resonate strongly. The common enemy right now has shifted to a virus that is causing a huge disruption across the world. Together, we can find a new course, and in the end, be better adapted to handle future disruptions as they will undoubtedly unfold.