There are about as many ways to measure the bottom line as there are companies that routinely watch the bottom line! But the value of a truly effective productivity measure simply cannot be understated. Particularly in the manufacturing industry, what happens on the shop floor is often conflated with supply chain issues, and in many instances, cost saving measures that generate a lot of real value to the company get lost in the calculation. If you really want to know how to measure your productivity, you need to make sure your company is looking at efficiency and utilization.
Of course efficiency on a plant floor can mean how well the raw materials are utilized during the production process. It’s easy to understand labor costs, wasted materials and offline equipment as it hits your bottom line. But too many industry leaders track productivity as solely a function of sales dollars minus the manufacturing production costs. This is a big mistake, because it isn’t the right way to think about productivity. For one thing, sales dollars are affected by factors outside of the control of the plant and may have little to nothing to do with the manufacturing process and more to do with the promotions running that quarter. But the biggest reason to ignore that formula is because of cost reductions.
What if you installed a static mixer that reduced your use of polymer solutions by 25%? How would that figure into your productivity? What about a mixer that reduced or eliminated downtime due to sludge buildup because of its innovative design? These kinds of innovations are not always captured in the bottom line because they are not as visible as wasted raw materials sitting on a factory floor.
Remember, you aren’t just figuring up costs – you’re also figuring value. Komax products deliver that value (which leads to a reduction in costs) consistently and efficiently.