Receiving Order from Quote

Playbook Appendix

Article summary

Did you find this summary helpful?

Thank you for your feedback

Appendix – Metrics for a Healthy Company

Sales Process:

Main Concept	Metrics
Determine what your company goals are financially	Revenue per year, Ideally $125,000 per employee at the company.
Pick your main revenue centers and how much revenue can be attributed to each, per hour or per work center	Revenue per hour, Revenue per work center
Determine which problem that you can solve better than anyone else, and can also hit your company financial goals	Revenue per day
Build a sales process to repeatably find and sell customers with your problem

Main Concept	Metrics
Find customers with high odds to have the problem you are uniquely built to solve. This is your ideal customer profile.
Build a sales process to find opportunities, quote them, and email the customer in under 2 hours.	Quote turnaround time
Alert your sales team to follow up with the customer after 3 days if no signature has been received yet

Part Number and Planning:

Main Concept	Metrics
Every part should have a part number assigned to it for quick identification.	100% of parts
Every part should have text instruction on how to complete each critical process step	100% of parts
Each part number should have the ability to store general information such as a description, material type, and dimensions.

Main Concept	Metrics
Every part should have a unique part number, including one off type of parts, for identification and part performance tracking.	100% of parts
Every part should have text, pictures, videos, specs, and/or print references for instruction on how to complete every process step, regardless of criticality	100% of parts
Part number profile should be able to add custom fields to capture each piece of information used by various departments across your team in estimating, scheduling, invoicing, production, and quality.

Quoting:

Main Concept	Metrics
Company Financials are well understood	Revenue, Margin, & Invoice $ per customer
Understand the price driving factors of your shop	$ / Hr. each 'Work Center' raises your overhead cost (Electric, Gas, etc.)

Main Concept	Metrics
The A Shops vs. B Shops Story is observable and impactful in manufacturing	A Shops: Analyze job cost after running a job. If okay, continue to run. If not okay, reprice or fix the issue (ex: change lot size). This leads to the ability to invest in capital, systems, and people. B Shops: Pay little attention to margin and continue to repeat low margin jobs that tend to get filtered over from A Shops that reject this low margin work. This leads to more stress, inability to invest in the team, and competition for the lowest paid labor.
Quoting information utilized across the enterprise; capacity planning, scheduling, part planning, etc.	Quoting is so important in metal finishing, that it is typically reserved for the most senior, and most experienced personnel. The problem here is that they are always the busiest people in the company, and this can cause terrible delays in quoting. Running your company with software that removes tribal knowledge from "one employee" and puts the information in front of the entire team!

Main Concept

Metrics

The A Shops vs. B Shops Story is observable and impactful in manufacturing

A Shops: Analyze job cost after running a job. If okay, continue to run. If not okay, reprice or fix the issue (ex: change lot size). This leads to the ability to invest in capital, systems, and people.

B Shops: Pay little attention to margin and continue to repeat low margin jobs that tend to get filtered over from A Shops that reject this low margin work. This leads to more stress, inability to invest in the team, and competition for the lowest paid labor.

Quoting information utilized across the enterprise; capacity planning, scheduling, part planning, etc.

Quoting is so important in metal finishing, that it is typically reserved for the most senior, and most experienced personnel. The problem here is that they are always the busiest people in the company, and this can cause terrible delays in quoting.

Running your company with software that removes tribal knowledge from "one employee" and puts the information in front of the entire team!

Operator Systems:

Main Concept	Metrics
Communication, operator instructions	Rework caused by lack of instructions
Training speed	Time to onboard new employee
Data collection, forms of data collection	Percentage accuracy on required data, audit passing

Main Concept
Form factors (workboards, super nodes, dashboards, scanner line, watchtower, specs)
Training, speed of comfortability, ease of use
Data visibility, Data entry, Data integrity (required data, spec limits)

Inventory:

Main Concept	Metrics
Know how much inventory you have on hand at any given time	1 source-of-truth document that is regularly updated (excel, etc.)
Know if you can start and finish a job with the available inventory	Stock out rate < 10%
Consuming the inventory before it is obsolete or has expired	Reduce as much as possible or risk throwing away money.
Inventory is stored in designated area(s)	Clearly marked, clean, and organized area

Main Concept	Metrics
Efficient use of cash flow	Multiple Inventory turns per year
Tracking vendor performance	Vendor on time delivery is > 80%
Real-time tracking of consumed inventory	Controlled Inventory practices. Items are checked in and out of inventory noting depletion when returned.
Demand Forecasting	Predictive inventory usage on quoted work and recurring orders

Scheduling and Capacity Planning

Main Concept	Metrics
A structured order of your current jobs needing to be processed (spreadsheets, whiteboards, clipboards, etc.)	Time to create and maintain: 2 to 5 hours per day
Communicate the schedule to the production floor.	Communicate the schedule within an hour of any updates.

Main Concept	Metrics
Understand your total capacity in terms of time. Station uptime How much work can you complete? Understand time to process per job or part number.	Accurate estimated production output.
Create a schedule to maximize production output (e.g., grouping similar colors, thicknesses, etc. to limit changeovers).	> 85% station efficiency (parts ran / estimated output at 100% efficiency)
Ability to create a prioritized list and adjust the schedule on the fly from anywhere and instantly relay that change to the production floor (expedites, color changes, rework, downtime, breaks, etc.)	Time to create and maintain: < 1 hour per day
Accurate lead times	Lead times within a day of estimate.

Finding Parts and Information:

Main Concept
Every customer should be able to call and get an answer for what parts they have in your shop right now. Have a system in place. Each working part should hold all necessary/associated order information.
Show your shop’s efficiency by offering customer information available at any moment.
Have a "source of truth" and know the impacts if you do not.

Main Concept	Metrics
Have an ERP system in place. This will turn frustration into simplicity for you when a customer calls looking for order information. Having this will result in all information stored in one place with ease of access. (Notes #1 & #2)	100% of Orders.
Have a place in your system to get an overview of your shop! Watch Tower - those with granted access can see your shop visually on a screen – each order in process, parts being moved, employees time spent, work order notes etc. Customer Portal - If you so choose, grant your customer full trust by offering them a place to see their live data information – you choose which data is available to them. (Note #3)	100% of Orders.
Every shop should have a source of truth at a minimum, but bring success through choosing the best one. Know your limitations for your source of truth (Note #4)	One source of truth.

Notes:

Purchase order/ part data and storage of it - Example that having an ERP system will change the way your shop works : Your customers 18'' rim is seeing this treatment, they want 100 of them done by the 10^th of the month and they are using the same shipper as their last order from two months back.
With all info in 1 place: customer and purchase order info, part process info, note/specific instructions w the order, schedule with ease, schedule delivery, track parts, see operator efficiency, on time order accuracy
Customer Portal - Choose whether you want them to see their purchase order, the work order data, where the parts are currently, what you quoted them on their orders, when they should expect an invoice, etc. With one link, they can follow up on a large order they sent a month ago to see the partial amounts that have been completed and are in delivery, those that still need to be worked, and those that were already completed, shipped, and invoiced for.
Know success you will find from using a plant operating system that is specific to job shops: takes chaos factor out of each question asked throughout chapter, being able to always be ahead (know what parts to schedule, inventory needed, personnel to work). Other impacts listed in book.

Certifications and Specifications:

Main Concept	Metrics
For every part (if applicable) the entire team should know what spec it is running to.	100%
Should be able to produce a certification in less than 5 minutes.	< 5 minutes
Certs should be stored digitally rather than having physical copies.	100%
Should be able to send copies of certifications digitally to customers.	True/False
Should be able to store production processing details digitally.	100% of jobs
Have a systematized process for controlling specification revisions and supersessions.	True/False

Main Concept	Metrics
For every part (if applicable) the entire team should know the spec and all processing parameters of that spec.	100%
Should be able to generate a certification with detailed production information for a part in less than 30 seconds	< 30 seconds
Should be able to reference any historical certifications in seconds.	< 10 seconds
Customers can access their certification docs anytime via a portal.	True/False
Should be able to 100% digitally collect, store, access production processing data as set by a specification, or other process control parameters.	100% of jobs
Have a systematized process for controlling specification revisions and supersessions with automated communication to operations.	True/False

Reporting and Analytics:

Main Concept	Metrics
Are we profitable as a company?	Year-Over-Year Financials
Are our customers coming back?	Volume of work by customer
Are we frequently understaffed / overstaffed, or running out of inventory / have too much unused inventory?	Backlog of Work / lead time

Main Concept	Metrics
What PARTS of our business are profitable? Overall view plus granular breakdown of profitability by customer, industry, process, part type, GL breakdown, etc...	Daily / Weekly / Monthly financial outlook, with visibility on variables
Customer retention plus relationships with specific customer-service related metrics. Example: we lose 50% of business revenue from customers when on-time delivery for the customer drops below 60%.	Volume by customer in addition to % of on-time jobs & rework by customer / process / part type, etc.
Granular Production Management – how much $ in work is on the floor, how much inventory will be consumed, volume by customer vs. Margin, etc.	Full visibility on backlog by customer, process, resource utilization, etc.

Quality and QMS:

Main Concept
Track all Rework & Quality Issues
Identify critical processes and implement controls to ensure consistency and adherence to quality standards.
Establish procedures for identifying, documenting, and addressing non-conformances, including corrective and preventive actions.

Main Concept
Understand the true cause cost of Rework and all Quality Issues (COPQ)
Integrated System linking Quality Issues to Production Data for Accurate Reporting: A system for collecting and analyzing data related to quality performance, including key metrics and indicators.

Shipping and Receiving:

Main Concept	Metrics
Need to tag/label incoming parts in your shop to be sure they are processed and shipped correctly.	100% accuracy labeling the correct parts.
Communication system for the parts that are received.	Low percentage of missed parts.
Communication system for parts that are ready to ship.	Low percentage of missed parts.

Main Concept	Metrics
Ability to communicate receiving notes to the production team/admin team in real time.	Timely communication. No dual inspection needed.
Ability to receive and track part locations in real time using a digital cloud-based system so it can be accessed from anywhere.	Zero lost or unaccounted for parts.
Ability to link quote information to parts received.	No dual entry.
Zero dual entry between receiving and shipping.	No dual entry.
Ability to link production data to parts that are being shipped (specs/certs, weights, etc.).	Automatically pull production data with zero manual entry.
Ability to instantly notify customers with packing information when their parts are ready to ship.	Customer communication satisfaction. Customer trust by eliminating unnecessary communications.

Invoicing:

Main Concept	Metrics
Create and send invoices for every order.	100% invoice rate
Track and follow-up on any overdue invoices	Overdue invoices < 50%
Centralized pricing and invoicing	Use an accounting software
Someone knowledgeable in accounting AND the production doing invoicing

Main Concept	Metrics
Invoice Automation/ Digital Invoicing Process	Ability to create an invoice in less than 5 minutes
Multiple people able to create invoices	At least 2 people in the shop should be able to easily and knowledgably create invoices.
Efficient single data entry system	Once an order is entered into an ERP system, that same information should not need to be entered into another system to generate an invoice. Helps eliminate mistakes
Charge late fees	Charge a 1-2% monthly interest rate for invoices that are late

Maintenance:

Main Concept	Metrics
Understand the preventative maintenance required on your equipment.	95% accuracy
If you use a dip tank or solution to coat parts, understand the correct chemistry needed.	< 15% Rework
Have a maintenance routine or schedule.	> 80% Uptime

Main Concept	Metrics
Have step-by-step maintenance plans with instructions to ensure consistent processes.	100% accuracy and 100% consistency
Log completed maintenance/chemistry data and track values over time (e.g., pH levels, temperatures, replacement parts, etc.)	< 5% Rework Minimize costs with ideal coating thickness

Customer Service:

Main Concept	Metrics
Answer the phone when called.	FCR > 30%
Respond to customer email inquiries.	Within 24 hours
Deliver on expectations	Parts are in spec & on time delivery
Customer facing personnel have necessary information available to them	Seasoned employee
Deliver on metrics as outlined in other chapters of the playbook

Main Concept	Metrics
Answer the phone and resolve the issue while on the phone.	FCR > 70%
Respond to customer email inquiries.	Within 2 hours
Ability for customer self service
Customer facing staff has the necessary information and empowerment to resolve issue	Recurring training Information is not siloed
Software aided customer relationship management system	CRM/ERP

Succession Planning:

Main Concept
Owners should outline their EBITDA – a measure of company profitability used by investors which is helpful for the comparison of one company to another in the same line of business
With technology, job shops can identify whether jobs are profitable and start charging accordingly, boosting business value
Operational efficiency can indicate areas of opportunity for growth and can be measured by many factors – time to process a work order, labor costs, and rework impacts. Shortcuts help (finding information with ease, automatically notifying customers, job costing, etc.)

Main Concept
Streamline Office Admin – Hiring & Training, Quoting & Order Entry, Scheduling, Shipping, & Invoicing.
Streamline Production – Maximize efficiency by going digital and removing paper from the floor. Get clear job instructions for the operators with easy access. Managing rework – cut costs and track which employees are causing reworks so you can train or place them somewhere else.
Maximize Profits w/Job Shop Data and Job Cost Insights – Job shops come across a wide range of parts/jobs, very important to understand job metrics including time to process and cost to process jobs.

Common Roadblocks:

Main Concept
Understand the time that is wasted today. Distinguish between Value-Added time and Non-Value-Added Time.
Identify and try to fix all operations that are repeated (dual data entry, repeating instructions, etc.)
Ask an expert to provide you with a complimentary ROI analysis for upgrading your system, or have an audit done on your system – so you can quantify the benefits of upgrading.

Main Concept
Implement a system that automates tedious work (job status, cert generation, quoting, etc.)
Provide your customers with real-time information on part status & shipping status, so they do not have to ask.
Create real-time operations and business analytics, to take the legwork out of understanding your business (e.g., what parts are on quality hold, what is my expected revenue this month, what is my dock-to-dock time for each process, etc.).

Evaluating ERP Solutions:

Main Concept:	Metrics
You should have access to your data in real time. This includes margins, where parts are on the floor, scheduling, etc.	24/7
Have all your workflows condensed to two systems. This includes quoting, order entry, production, certifications, shipping, invoicing, and reporting.	1-2 systems
Traceability. You should confidently and quickly be able to see how long something took, who performed an operation, information on historical jobs, which measurements were out of spec, etc.	<5 minutes

Main Concept	Metrics
Operate with a web-based system that allows for automatically calculated margins, production dashboards, scheduling with real-time data, etc. You should be able to have instant access to your plant from your couch at home. With this access is the information needed to consistently make good decisions.	24/7 access and real-time data.
You should be able to stay in one system for your entire workflow. Starting with the quote until you see the final numbers in reporting, it should all be in one. This prevents double entry, losing data, digging through multiple systems, trying to map information system to system, etc. Once you create a quote for a part number, it should be seamless to bring that part onto an order and all the way through shipping and invoicing.	1 system
You should have immediate traceability on a quote, part transfer, time in tank, thickness measurement, etc. Also, if someone calls about a job from a year ago, it should take less than one minute to pull open that job and find what they are asking about.	<1 minute

Main Concept

Metrics

Operate with a web-based system that allows for automatically calculated margins, production dashboards, scheduling with real-time data, etc. You should be able to have instant access to your plant from your couch at home. With this access is the information needed to consistently make good decisions.

24/7 access and real-time data.

You should be able to stay in one system for your entire workflow. Starting with the quote until you see the final numbers in reporting, it should all be in one.

This prevents double entry, losing data, digging through multiple systems, trying to map information system to system, etc.
Once you create a quote for a part number, it should be seamless to bring that part onto an order and all the way through shipping and invoicing.

1 system

You should have immediate traceability on a quote, part transfer, time in tank, thickness measurement, etc. Also, if someone calls about a job from a year ago, it should take less than one minute to pull open that job and find what they are asking about.

<1 minute

Launching the Rocket:

Launch Action	Subpar Execution	Ideal Execution
Pick a project champion	Select a Front Office person who does not understand your manufacturing process	Pick a person who knows Operations, and is committed to the success of your enterprise
Onboarding	Delegate to someone who is not tied directly to the profitability of your company	Set up a twice-weekly meeting with the person onboarding your company with the Owner of the company, to avoid delays and poor execution
Project Review	Wait for your solution provider to give you status reports	The Owner/Manager should set up a review cadence of the project at the outset
Historical Information	Due to difficulty, team forgoes the opportunity to pull part histories into their system	Ask your solution provider to find ways to import your historical information into your new system
Operator Interaction	Build out your company in your new system and avoid showing it to the team on the floor until its “ready”	Involve your operators from day 1. Invite them to onsite training. Get their opinion right away.
Training	Learn as you go	Ask your provider for complete team training prior to the start of the project

Main Concept
Identify a great leader as your champion of this project, someone who understands the plant floor operations but also loves the challenge of profit improvement.
Identify and spend time with thought leaders from the team on the floor, so they understand why you are making this change.

Main Concept
Spend years building a great rapport with your operators, so they not only trust your decisions, but they embrace the changes you wish to make.
Schedule a weekly review cadence of your project, so you as the owner/manager know that the implementation is delivering expected results and is proceeding to plan

Was this article helpful?

Table of contents

Appendix – Metrics for a Healthy Company