Toby Mankertz, Principal Business Transformation Advisor at Columbus, discusses how aligning purpose with metrics can drive operational efficiency, employee engagement, and profitability.
Post-pandemic manufacturing is struggling with broken supply chains, inflation, skills shortages, and tougher sustainability regulations combined with increased customer expectations.
Having a clear and unambiguous purpose statement has never been more important, and by aligning your production metrics to your purpose you can supercharge operational efficiency. Deloitte research shows that this makes businesses much more attractive for employees, with higher employee engagement and job satisfaction. And guess what? These businesses are also more profitable.
Aligning your metrics with your purpose
Best-in-class manufacturers know the effectiveness of manufacturing processes is driven by a clear understanding of the overall business purpose, coupled with proactive metrics which are designed to optimise process efficiency and minimise waste and re-work. A good mixture of both leading and lagging metrics are required to drive high quality and a high predictability of output.
Manufacturers who have not defined their metrics from their purpose tend to have more frequent production stops (maintenance outages, stock-outs), higher levels of re-work and defect rectification and lower levels of productivity and quality than purpose-driven manufacturers. Your people may be fulfilling your metrics, however the work required to deliver the metric may not be the most efficient way of managing production.
In driving towards higher efficiency, it is important to differentiate between what is value-add work and what is not value-add work. Typically, a very large percentage of work is from non-value-add failure demand; the capacity you lose from not getting the product right the first time. A key question is: “are your metrics tracking the achievement of purpose or are they merely tracking the achievement of activity?”
To differentiate between value-add and non-value-add, think of your customer. What steps or processes deliver value to the customer? Your customer in this case is both external and internal, e.g. are your warehouse team delivering parts on time and in-full to production or are they just fulfilling orders when possible? If it’s the latter, then what is the reason for this and how can we fix it? Identify problems throughout the value chain, make the necessary changes and introduce metrics which are going to sustain the new behaviours.
The problem: when measures define your purpose
Columbus was recently contracted to implement an ERP system into a specialised vehicle manufacturer, where their overarching production KPI was their ability to produce twenty-five vehicles per day.
From walking the floor and analysing production processes, it was apparent that there was an issue of poor process adherence and high levels of re-work. Twenty-five vehicles were, on average, produced per day, but at the cost of quality and consistency.
It was also clear that a new ERP system wouldn’t solve this issue, but conversely, low process consistency would be more likely to reduce the ERP project success. By delivering against the metric, processes were worked around rather than followed. As ERP systems are predicated on processes, organisations that work around processes tend to heavily customise their ERP systems to reflect their actual ways of working. These are complex and difficult to understand, leading to low user adoption, value realisation and in the long-run technical debt.
In this example the metric; 25 vehicles per day, had created an unwanted method; push vehicles out the door so that they could be reported as complete, which had defined their purpose for them; meet the production targets, manage the queues of re-work and keep the target happy.
By changing the purpose to “build vehicles right first time” the manufacturer was able to align their metrics to support their purpose. Twenty-five vehicles per day became “Measure the end-to-end time to build vehicles right first time” and “Measure the number of vehicles that are produced right first time”. This in turn changed their existing method to a more desirable one; “Find and act on causes of problems that are impacting our purpose”.
Adopt a systems-thinking approach
To shift organisational metrics effectively, businesses must rethink traditional management styles and adopt a systems-thinking approach. Instead of relying on rigid, top-down control, systems thinking focuses on how work flows through the system and how it impacts customers.
- Define purpose from the customer’s viewpoint: Start by gathering comprehensive customer insights through market research, feedback analysis, and advanced analytics tools. Then create or revisit a clear, customer-centric purpose statement that addresses specific unmet needs, aligning internal activities and metrics to this purpose while engaging employees in the process. Implement and monitor these changes, and be sure to regularly review and refine your metrics to reflect evolving customer preferences and market conditions.
- Analyse how value flows to differentiate useful vs. problematic work: Reducing unnecessary work leads to greater efficiency and better customer experiences, and happier employees. Examine manufacturing data and baseline what percentage of work is currently value-add and what percentage is failure demand work. Agree stretch targets for the change you want to see in these metrics. Value-adding work: Tasks that genuinely fulfil customer needs… whether those be internal or external. Failure work: Extra effort caused by mistakes, inefficiencies, or service shortcomings.
- Examine workflow to remove barriers: Analyse the manufacturing value chain to identify where both value-add and failure demand activity is most likely to occur. By mapping out how work moves through the system, inefficiencies, delays, and redundant steps can be identified and addressed.
- Develop new performance measures tied to purpose: Instead of focusing on isolated targets, organisations should implement measures that provide real-time feedback on whether they are achieving their core purpose: value delivery end-to-end.
- Pilot, learn, and improve: Trial new metrics on a small scale, gather insights, and refine them before implementing across the organisation. Don’t be afraid to fail, but adopt a fail-fast approach, limit your trials to small batch quantities or a smaller sub-BOM of an item of capital equipment.
- Involve leadership and staff in the process: Ensuring everyone understands the reasoning behind the new metrics helps create a culture of ongoing learning and improvement. Assess the rules and structures in place: internal policies, procedures, and performance measurements shape how employees behave. Many traditional targets and productivity measures unintentionally lead to poor outcomes by encouraging the wrong behaviours. In all business development it is important to engage key stakeholders, those who will be ambassadors in the process. Engaged employees are almost by definition happier and more productive.
- Engage organisational change management: Organisational change management helps embed these news ways of working. Leadership should act as ambassadors for the changes and be comfortable that it will take time for these to embed.
When measures define your purpose: So, what’s the solution?
Meanwhile, back at our specialized vehicle manufacturer, they were still producing vehicles that required a high-level of re-work. Effectively the business was drowning in failure demand activity.
By changing the purpose to “build vehicles right first time” the manufacturer was able to align their metrics to support their purpose. Twenty-five vehicles per day became “Measure the end-to-end time to build vehicles right first time” and “Measure the number of vehicles that are produced right first time”. This in turn changed their existing method to a more desirable one; “Find and act on causes of problems that are impacting our purpose”.
The case for purpose-driven manufacturing
The contrast between starting with business purpose versus starting with methods highlights a crucial insight for manufacturers; aligning operations with strategic goals leads to superior product quality and customer satisfaction. By adopting a systems-thinking approach, organisations can ensure that their manufacturing processes are not only efficient but also capable of delivering high-quality products that resonate with their customers’ needs.
Interested in finding out more about best-in-class manufacturing? Columbus’ new report ‘Mastering Manufacturing: How to harness the strategic trends for 2025’ goes into further detail about the strategic challenges manufacturers face in 2025 and the solutions available to become a master in manufacturing. Featuring exclusive insights from across the industry, we cover the key elements to help you get ahead in the sector.
You can read the report now by clicking here.
Toby Mankertz, Principal Business Transformation Advisor at Columbus
Toby is a Microsoft certified Principal Consultant with more than 25 years of experience delivering successful engineering and IT projects globally, always with a focus on outcomes. Toby is highly experienced in end-to-end Business Transformation delivery, particularly for IT business systems. He also has 20+ years of experience using Lean, Six-sigma, Prince 2 and Agile methodologies.
Reach out to Toby at [email protected].
For more articles like this, visit our Leadership channel.
