Measuring Operational Performance Through Metrics


By Joe Gudenburr, President, G.A. Braun Inc. —

Business metrics, or a quantifiable measure that tracks, monitors and assesses the success or failure of business processes are an invaluable tool to any facility. However, with regard to the processing environment in a laundry, many facilities do not use metrics, or make limited use of the powerful information that is at their fingertips.

Senior managers in a laundry facility know how many pounds they process, if their volume is up or down and if their expenses are tracking in accordance with the volumetric changes.  However, many simply aren’t able to drill down into the process beyond that level to truly harvest the wealth of information available to them, or they may have missed the mark on educating their workforce on the use of metrics in measuring operational performance.

Often, commercial objectives dominate existing reward and incentive programs. Operational priorities and their associated metrics tend to go unrecognized or they take a back seat to order fulfillment and revenue growth. This is not to say that these areas are not vital, but too often topline growth does not result in a bottom line return encompassing operational health, business discipline, and synergistic corporate culture.

One reason this happens is because organizational leadership has failed to take time to observe, measure all aspects of the business and understand the true costs associated with supporting commercial growth.  Over time, this usually results in what looked to be exciting growth turning out to be unsustainable or, worse yet, unprofitable.

Laundry Business Metrics

In the laundry business, we tend to speak in terms of therms per hundred weight, pounds per operator hour, and gallons per pound. Metrics measure the business that we operate. They tell part of the story, pertaining to a business’ operational condition. More importantly, they provide a framework from which performance can be measured, improvement opportunities can be defined, and investments can be justified. It is unthinkable to run a business without metrics or measurements upon which to base critical business, personnel, and investment decisions.

I am aware of a number of plants that have truly embraced the use of metrics, empowered their work force to make decisions based on metrics and are in a growth mode due to the disciplined practices they have put in place. However, there are still operators who do not have a well-defined set of metrics in place from which to manage their business. So how do you make metrics work for you?

First, simply observe the operational environment around you. Take notes on practices that are working well and the areas that seem to be out of control. Evaluate performance measurement protocols and take notice where those measures are lacking. This exercise will act as a framework for defining the next steps that you will want to take in transitioning the operating environment from a reactive one, to one that is proactive and highly efficient.

Next, the management team needs to determine what key process variables are to be measured for each business process. In order to bring structure to the daily dynamic environment, it is beneficial to have a discrete set of performance measures that allow managers to quickly gain an understanding of how their various processes are operating. This real-time snapshot empowers those at the ground level to make educated and timely decisions which impact client satisfaction, product quality, and the bottom line financially.

Identifying Key Variables

When key variables are identified for business processes, owners and senior managers can make strategic decisions based on accurate current and historic performance information. Through this exercise operators can determine where the various departments or processes have overlapping, and divergent priorities. A balance must be established across the business.

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If a business process is efficient, clients will be satisfied, and strategic objectives achieved.  Consider a circle with business processes outlined on its perimeter.  At the top is Sales & Repeat Business continuing around the circle are Order Processing, Scheduling and Manufacturing, Delivery and Project Execution, Service and Support and Customer Feedback / Satisfaction.  This visual tool can be used to empower all levels and departments within an organization to understand the importance of synergistic business metrics.

This simple circle can be tailored to any business but it acts as a great starting point for helping an organization’s team members to visualize where they fit into the process. It also allows them to visualize that everyone is working together to attain a common goal.

Once a business process is laid out around the circle you can begin defining key operating metrics. Many plants measure various aspects of the operation, but not all members of the organization are aware of the performance measures, or more importantly how their job impacts these measures – and the circle as a whole. When this lack of communication or knowledge exists, employees are limited in their ability to contribute to the process of continuous improvement.

What are the right metrics?  How many metrics are enough? And conversely, how many are too much?

Typically each functional area can determine its performance level through a handful of metrics.  As metrics are established, it is management’s responsibility to tie incentives and strategic objectives to common shared metrics and department-specific objectives. By doing so, management establishes a precedent that no-one area of the business is more important than another; and an expectation that all employees within the organization must work together to achieve success.

Even though metrics can be an important component in a facility’s success or failure, metrics and the visualization of this synchronization process is often overlooked. However, when the power of metrics is harnessed, a facility with sustainable results ensues.

 

About the Author

Joe 2016Joe Gudenburr is the President of G. A. Braun, Inc. In this role, he has the responsibility for all P&L, operational, sales, and R&D /technology development initiatives that take place within the company. On an annual basis, he visits well over 100 operating facilities around the world (hospital OPL’s, prisons, industrial plants, cruise ships, and large co-op/central processing sites), which affords him the opportunity to see where the industries’ operators are doing an exceptional job and where they have challenges that can be turned into opportunities for improvement. Joe has been an active member of various industry associations since joining Braun, and has been an author for various industry publications and holds multiple patents for technologies developed.

 

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