OCTOBER 2021CONSTRUCTIONBUSINESSREVIEW.COM9levels. They might not look like it on the surface, but these are two of the most common conflicting key performance indicators that impact maximizing the profitability of an organization. Instead of solving the conflict, the siloed organization might continue to conduct their portion of the business and march on in their separate ways. As a result, additional contributions garnered from collaboration are left untapped. A solution is right in front of both teams. Consider production which is focused on maximizing tons per hour. Then consider a commercial enterprise which strives to maximize the contributions per ton. If we simply multiply these two together, the volume (which is the tons in this example)cancel out. What remains is a contributions per hour. Why not build all strategies to maximize the contributions per hour, and have one key performance indicator for the enterprise, both production and commercial, to rally around?Why not build a collaborative rallying cry in all market conditions, to optimize the business to maximize the contributions per hour?To solve this within the production side, it is a two-phase approach in most cases. In conjunction with measuring a production unit's effectiveness, typically measured in OverallEquipmentEffectiveness(OEE), the objective is to understand what impacts the bottleneck production unit's run rates by way of its product portfolio. The objective is to narrow the evaluation of the product portfolio,enough to establish granularity in attributes that are commercially offered. Materialistically, features such as width, length, composition, composition, color, finish, etc. The segregation of the product portfolio should be grouped, yet not so narrow that one does not have enough data to correctly reflect the accuracy and dependability of the run rates. From the commercial side, the contributions per unit-of-volume is now broken down with the same level of granularity as the production team. From here, one will find the product of the two for the applicable groupings of the product portfolio.Now there is a list of the contributions per unit-of-time, for the desired granularity of the product portfolio. One cannow prioritize the product portfolio, while expanding the conversation logically with indirect influencers like customer's bill of materials, future business opportunities, or product portfolioimpacts on OEE availability losses. Visually, a XY scatter plot can be created that has contributions per unit-of-volume on the Y-axis, and unit-of-volume per unit-of-time on the X-axis. This provides a simplified product portfolio matrix to align and collaboratively make decisions based upon where the product falls. For example, those in the top left should be prioritized to find ways to drive projects, pushing the data point to the right by being produced faster. Whereas, those on the bottom right, are strategized to push up by either scrutinizing the sales price or reducing the production costs. Regardless, there is now a collaborative performance indicator and a simplified matrix view that the enterprise can rally around. Shifting towards a holistic and non-conflicting performance indicator is not for the faint of heart. It takes confidence, strategy, and intensive communications to get through the barriers of the initial doubters and siloed organizations. Yet when they see the logic, the biggest doubters become the loudest promoters, aligning the entire business to strive in one direction with a single key performance indicator.
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