Industrial Assessment

To remain competitive manufacturers must constantly work on improving performance on speed, quality and costs. Because such organizations are often complex, it is difficult to identify and align the best way to do so. The Industrial Assessment tool of Philips Engineering Solutions quickly pinpoints production stumbling blocks that best help achieving business goals.

The improvement challenge

Production challenges come in many forms, for example:

• Operational expenditures are high
• Productivity is low
• Not achieving the desired improvement or innovation speed
• Too high cost of non-quality

Whatever the issues, the challenge in initiating lasting improvement is often the same: pinpointing the precise actions and road map that will lead you to the desired results. 

Broad performance snapshot

The Industrial Assessment tool was developed in the 1990s to deliver a broad, complete and in-depth ‘snapshot’ of performance at Philips industrial sites. Today, it is used to evaluate production performance – including its relationship with areas such as procurement, innovation and sales – at organizations worldwide. The resulting analysis:

• Delivers a 360-degree performance scorecard
• Shows where cost is added
• Gives insights into its root causes and drivers.

This prioritizes production strengths and weaknesses, and provides clear, actionable options for addressing problem areas in:

• Quality
• Labor
• Capital
• Material expenses

3 x 3 analysis

The three key stages of the Industrial Assessment are:

1. Core analysis
2. Cost modeling
3. Root-cause analysis

These stages follow executively, digging deeper at each stage. Crucial insights can often become evident early on as input at each stage is gathered in three different ways; data analysis, employee interviews and expert observations.

Although the tool is standardized and universal, the application is not. The tool is tailored to each organization using the experience of the consultants of Philips Engineering Solutions, and its own proprietary expertise.

Rapid, close and collaborative

The Operations Manager is the ‘owner’ of the Industrial Assessment, including its findings and conclusions. The assessment is prepared by a small team made up of external consultants and internal experts selected in consultation with the manager. All three assessment stages – including the relevant data review, interviews, and observations – are conducted jointly as well. This ensures that no relevant stones are left unturned, creates ownership and provides valuable crosschecks in confirming findings. Generally, the on-site assessment takes 2 to 4 days.

Stage 1: Core analysis – the big picture

In this stage, the four major performance indicators of an organization are appraised and their relevance determined:

• Efficiency: which part of direct labor brings added value versus bringing added cost?
• Quality: which percentage of product is first-time-right?
• Flexibility: what part of product throughput time is being processed?
• Innovation: how quick does the organization ‘learn’?

The attention paid to each of these will vary according to its relative importance within the organization. For instance, in high-tech operations, where innovation is key, efficiency (and thus direct labor allocation) is often less critical.

Stage 2: Cost model – where’s the waste?

This step hones in on the three key business aspects that – together – form the total of cost:

1. Material
2. Capital
3. Labor

The result is a quantified overview of where each adds value, and where it adds cost or waste. State-of-the-art facilities can add great value, but if you’re not making optimal use of your infrastructure – its waste.

Capable labor can boost productivity, but if some of that labor is dedicated to repairs or line rejects, it is waste as well. Stage 2 lets us quantify the amount of added value and waste within an organization’s manufacturing expenses.

Stage 3: Root-cause analysis – find the magnifiers

Typically, there are numerous action points – or combinations of them – that organizations can take to optimize performance. In the last stage of the Industrial Assessment, we define the magnifiers – the specific ones that would deliver the biggest wins and improvements.

This provides the last piece of input necessary to present the client’s Operations Manager with:

1. A performance picture
2. A prioritized overview of actions and options available for productivity improvement

We also quantify the financial results each action will deliver.

Industrial Assessment in action

Thanks to the Industrial Assessment tool, a leader in plastic processing has been continuously improving their manufacturing performance for years. They initially used it to benchmark and refine best practices across their European production facilities. The result was a 10% reduction of waste in total manufacturing expenses. Ongoing improvement processes have continued delivering reductions annually ever since. This quantifiable success enabled the company to create buy-in with suppliers to undergo assessments as well, with the resulting benefits evenly shared.

Rethinking your business – together

In developing, expanding and refining the Industrial Assessment tool, Philips Engineering Solutions has acquired insight and experience in identifying and eliminating waste in all areas of industrial production. Would you like more information on how we could use it to help improve the efficiency of your business? Feel free to contact us.

Jos Hens
Senior Consultant OPEX & Industrialization
Philips Engineering Solutions, Industry Consulting

Ruud Driesen
Senior Consultant
Philips Engineering Solutions, Industry Consulting

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Services in operations management:
Operational excellence Industrialization Supply chain management