GLC Knowledge Series

Importance of Measurables
in Manufacturing Industries

You cannot improve what you cannot measure. This is the foundational principle behind every transformation GLC undertakes on the shop floor.

The Business Case

Why Measurement is
Non-Negotiable

01 Our survival depends on growing the business
02 Business growth is largely determined by customer satisfaction
03 Customer satisfaction is governed by Quality, Price and Delivery
04 Quality, Price and Delivery are controlled by the quality of our processes
05 Quality of our processes is greatly limited by variation
06 Process variation leads to increase in defects, cost and cycle time

If you can't measure it, you can't improve it.

The Real Enemy

The gap between actual and expectation
is the enemy — not the competitor

📉
Gap in Quantity
Output falls short of planned production. The machine is capable. The system is losing capacity somewhere between potential and actual.
🔍
Gap in Quality
Defects, rework and rejections. Each defect is double the cost — once to make wrong, once to correct. The root cause is always variation in process activity.
⏱
Gap in Time / Delivery
Late delivery. Expediting. Customer dissatisfaction. Time gaps are information flow failures made visible at the shipping dock.

All the gaps lead to a gap in cost — which leads to a gap in profit.
The competitor is not taking your profit. Your own process gaps are.

Root Cause

Variation in Process Activities
is the Root of All Gaps

Sources of Variation — The 4M
  • Man — inconsistent method, skill gap, fatigue, distraction
  • Machine — wear, incorrect settings, poor maintenance
  • Material — incoming variation, wrong specification, storage conditions
  • Method — no standard, multiple methods in use, undocumented changes
What Measurables Do
  • Make variation visible — you can see the signal in the data
  • Separate common cause from special cause variation
  • Give operators the target to aim for — not just a task to perform
  • Create accountability without blame — the number speaks, not the supervisor
  • Enable improvement to be proved — before and after is a number, not an opinion

Standardization is the key pillar of manufacturing excellence.
Standardized activities produce consistent output. Vice versa is always true.

Capacity Leakage

Production Planning Must Consider
Plant Capacity — Not Actual Production

The plan is made against theoretical capacity. The leaks between capacity and output are where your profit disappears. Each leak has a name — and a cost.

100%
Plant Capacity — the designed and available maximum
Baseline
96%
Performance Issue — speed loss, minor stoppages, operator loading gaps
−4%
91%
Quality Issue — rework, rejects, first pass yield loss
−5%
86%
Downtime and Other Issues — breakdown, changeover, unplanned stops
−5%

The Improvement System

Measurable → Standardize → Monitor → Improve
The Essence of Manufacturing Excellence

STEP 01
Measurable
Establish the baseline. Know what the actual is before claiming any target.
STEP 02
Standardize
Remove variation. Define the one correct method. Document it. Train to it.
STEP 03
Monitor & Control
Verify adherence in real time. Hourly, not daily. Actual vs planned — always visible.
STEP 04
Improve
Close the gap systematically. Prove improvement with data. Then standardize the new state.

Real time is the finest of Monitor and Control — the closer to the event, the lower the cost of correction.

GLC Principle

Production Planning Surfaces
the Hidden Factory

Input Raw Material / Customer Order 100
Factory A Primary Process Line 85
Factory C The Hidden Factory — Rework 50 in → 35 out
Factory B Final Process Line 85
Scrap Unrecoverable loss at both lines −15 + −15
Definition
The Hidden Factory is the work above and beyond what is necessary to produce one unit of output.
Every rework loop is a factory inside your factory — consuming space, labor, machines and material. It does not appear in the plan. It does not appear in the schedule. But it consumes 20-40% of actual capacity in most operations we assess. Production planning makes it visible. Only then can it be eliminated.

The True Cost of Gaps

What We Measure is Only
the Tip of the Iceberg

Above the surface — what accounting sees
Scrap Rework and sorting Rejects Maintenance and service
Below the surface — what accounting misses
Expediting cost Excess inventory carrying Lost customer loyalty Opportunity cost — sales > capacity Additional labour hours Longer cycle times Quality engineering overhead Inspection — material, equipment, labour Supplier control cost Warranty claims

Accounting does not capture all costs.

What Management Sees

The scrap report. The rework log. The maintenance bill. These are real — but they are the smallest part of the total loss.

What Is Actually Happening

Expediting is burning planner hours. Excess inventory is tying up working capital. Late deliveries are damaging customer loyalty. None of these show up in the quality report.

The GLC Approach

We map information flow first — because information flow failure creates every item on both lists. Fix the flow, and the iceberg shrinks from the bottom up.

The Cost of Waiting

Hourly Qty, First Time Right, On Time Delivery
Are Management Expectations — Taken Lightly

Prevention Cost
Standardize the method. Train to the standard. Build the measurement system. Prevent the defect from occurring.
×1
Correction Cost
Detect the defect before it reaches the customer. Rework, sort, re-inspect. Ten times the prevention cost.
×10
Failure Cost
Defect reaches customer. Warranty, returns, lost loyalty, regulatory action. One hundred times the prevention cost.
×100
The 1 — 10 — 100 Rule of Quality Cost
Real Client Result — Tannery, South India

OEE — The Master Measurable
Before and After GLC Intervention

March 2017 — Before Improvement
TFSLow
SplittingLow
ShavingLow
Rizzi SettingLow
YCM SettingLow
BuffingLow
Spray — BottleneckLowest → Output of Industry
January 2018 — After Improvement
TFSImproved
SplittingImproved
ShavingImproved
Rizzi SettingImproved
YCM SettingImproved
BuffingImproved
Spray — BottleneckLifted → Line output lifted

The output of the lowest OEE station is the output of the entire industry.
You do not improve the average. You lift the floor.

The Eight Wastes

Only Humans Can Address
the Seven Deadly Wastes

W01
Defects
Making it wrong the first time. Scrap, rework, inspection — all consuming capacity that should be building value.
W02
Waiting
Machine waiting for operator. Operator waiting for material. Supervisor waiting for information. All paid time producing nothing.
W03
Rework / Re-do
Every re- is a hidden factory. Re-process, re-inspect, re-pack, re-deliver. Double the work for the same unit.
W04
Over / Under — Early / Late Production
Making more than needed, earlier than needed. Or missing the plan entirely. Both destroy flow and create inventory.
W05
Equipment Downtime
Unplanned breakdowns. Slow deterioration. The machine was available — but not ready. Maintenance information failure at root.
W06
Storage / Inventory
Every item in WIP is waiting. Waiting is time. Time is money. Inventory hides every other waste underneath it.
W07
Inspection
Inspection does not add value — it finds value already destroyed. Build quality in. Remove the need for inspection.
W8

Untapped Human Potential — The Eighth Waste

The operator on the shop floor is the domain expert. Their knowledge, their ideas, their experience — unused. This is the most expensive waste in any operation. Only humans can address the first seven wastes. Only humans can eliminate the eighth.

GLC Assessment

Ready to Make Your
Process Waste Visible?

GLC begins every engagement with an Information Flow Assessment — mapping where data is delayed, distorted or absent. We make the invisible visible before we touch the shop floor.

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