Monday, December 5, 2011

Printing Industry Performance Metrics

A major contributor for improving a printing business is performance metrics. There are various methodologies and tools for measuring performance including Performance Benchmarks, Key Performance Indicators (KPI's), and Balance Score Cards (BSC).

This is not a new concept. Just do a Google search on the following quotes:

"What gets measured, gets managed" ... 2,780,000 Google results
"You can't manage what you don't measure" ... 170,000,000 Google results
"If you don't measure it, you can't improve it" ... 180,000,000 Google results

The performance of production can be measured by tracking spoilage, efficiency, productivity, and other measurements. Performance metrics are not limited to production. They can also be established for other areas such as order entry, invoicing, and inventory. Baselines and improvement goals should be established for each metric. Metrics can be at the company, department, cost center, or employee level.

The best implementation of performance metrics is one that is tied to incentive programs. Each employee and department should have incentive performance goals relevant to their area. The production incentive program could include efficiency, productivity, spoilage, quality, and profitability. The administrative areas could include average time to get orders into production, cost to process orders, quotes per estimator, and average time or days to invoice customers.

How you measure, collect, and present the information should be easy for employees to grasp. It's best to establish realistic short term goals as well as long term goals. The short terms goals make the long term goals seem more achievable and makes employees more optimistic. The following example Order to Production Throughput Metric is an excellent example of how to implement and present the information.

Example Order to Production Throughput Metric
 Example Order to Production Throughput Metric
Here are some performance metrics you may want to consider implementing in your business.

- Estimate/quote process time
- Number of customer complaints
- Orders per pre-production employee
- Sales per employee
- Sales, costs, and profits by product category
- Administrative cost per order
- Invoicing process time
- Administrative cost per invoice
- Spoilage hours and costs by reason
- Spoilage as a percentage of sales
- Direct and indirect expenses per employee
- Total and average value of invoices
- Receivables Days Outstanding

If you're interested in learning how Profectus' Printing Industry Business Consultants can improve your organization, contact Profectus for a FREE phone consultation at 1-888-868-8662.

About Profectus
Profectus printing industry business consultants are committed to helping printing and packaging organizations implement best business practices and maximize the value of their information technology investments. Profectus has been contributing to the success of small and large printing and packaging organizations throughout the United States and Canada since 1993. Our consultants provide expertise in management information systems, estimating, customer service, order entry, job planning, purchasing, inventory, production management, scheduling, cost accounting, invoicing, and other administrative practices.