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FELDER June 2021 FUBO TOUR LEADER
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Do you have facts – or just an opinion?

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Operations Excellence by Sepp Gmeiner
Sepp Gmeiner is a partner with Lignum Consulting. For feedback, questions and/or suggestions please email s.gmeiner@lignum-consulting.com
How do you know you are doing a good job?
This is not the first time I am writing about the importance of measurements. Only when we measure and document our performance, can we see how we are doing. Sports, and specifically professional sports, measure every possible detail. Besides the score of the game, secondary scores are also being kept, such as shots on goal, or even player based personal scores, such as batting average or career goals.
These measurements show us the differences and who is the best. During the current COVID-19 pandemic, I watch the daily published numbers, such as how many people tested positive and how many got vaccinated. I compare how different countries or provinces rate on a per capita basis. This allows me to understand how we are trending and if we are starting to improve.

If it is important, 
you measure it
This is also true for our work i
n our businesses. If you do 
not measure, you will recognize/feel drastic changes, but small changes of a few percentage points will not register in your casual observation.
For example, if you improve something by one per cent from one week to the next, it does not register. However, if this happens every week it will add up to 
a lot by the end of a year.
Only if you measure the outcome, can you see a trend through the statistical noise of the weekly up and downs.
If you have measurements in place, you see only how you are doing compared to your own past performance or towards your objectives. With this measurement you do not know how you are doing compared to your competitors or the best in class. So, you still do not know if you are doing comparatively well.
This compares to a golf player keeping track of strokes. As the people playing with him/her count their score the same way, they know throughout the game how they are doing compared to their own past and against their competitors. Additionally, as the golf course is rated, they know how they are doing against a top-class player.
We do not have this in our industry! We actually know very little about how we are doing in our industry. How well does a great company perform and what numbers do they achieve? Is an EBIT of nine per cent good or bad? Are the $200,000 sales per manufacturing employee making you a front runner or are you trailing the industry with this number? How do the KPI’s of the top 25 per cent performers differ from the bottom 25 per cent? How would we know? Maybe you have a friendly competitor that you do some benchmarking with, or your accounting firm has some industry data. We know how difficult it is to get reliable and recent data. It is not only financial information which could be compared. A productivity number within kitchen cabinet companies that I often track is the labour-hours per cabinet. Are you operating at four hours/cabinet or at three to three and a half hours/cabinet? I have not seen any who score under 1.7 hours/cabinet.
Other industries do much better at this. The film industry knows at the end of each week the box office results of any new releases. The consumer electronics industry knows weekly what and how much product has been sold. In the past, the (U.S.) store fixture association had excellent aggregate, financial performance data of their members, released to their members only. The machine industry shares some of their monthly sales numbers by category within their group. The CKCA has made some attempts, years ago, to compile statistics of their members, but at that time the sample size (small number of participating companies) did not provide a representative picture.
There are several critical factors which need to be considered:


Confidentiality: Information of an individual company needs to remain confidential. No-one can be able to access the individual data. Only the compiled statistical data is provided.


Consistent Measurement: All data is submitted using the same unit of measure and the same measuring stick.


Relevant:
The industry must drive the design of those measurements to maintain relevance to its participants. 


Periodic:
Dependent on what measures are picked, the data needs to be collected and processed (Annually, monthly weekly…). This provides visibility to trends.


Cost efficient:
The collection and processing of the data must be cost effective otherwise the participation will be limited.
There are different models practiced. Some collect data and share the data only with the companies who submitted suitable data. Others provide the reports at a highly discounted price to the participants and the copyrighted report at a significantly high price to non-participants.
We know access to such data has value.
What would you do differently if you had that information? In the reality of limited resources, you would focus on issues where you are behind the curve. You might want to take the foot off the gas pedal on scores where you are already ahead of the others. The fact is better information lets you make better decisions.
If the industry wants these numbers, the industry needs to take the initiative to get these numbers. Industry associations or industry clusters should or could take on the challenge. Perhaps, an initiative to create overall industry specific performance data will provide our rather fragmented secondary wood industry with valuable facts. Having the facts for an industry, or an industry with some statistical accuracy will also strengthen our industry leaders to speak more confidently on our behalf.
Think, what statistical information would help you; speak up with your industry colleagues at networking events. If the need for suitable statistical information is expressed by many of us, it will come.
If some work needs to be done, count me in.

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