Self-Assessment Tool for Finishers

Product finishing is an energy and environmentally intensive manufacturing service. Yet, to our knowledge, there are no measures of operational efficiency for energy, environment or manufacturing. There is no scale to determine how well individual companies are doing over time or relative to other finishers.

In part, this is due to a wide-spread belief that each finisher is unique and cannot be compared to other finishers. It is a fairly complex problem to figure out how to collect and analyze data that would allow companies to compare themselves with others in the industry. Issues like proprietary concerns and confidentiality have to be addressed in order to get companies to provide the information necessary to make performance comparisons possible.

For an industry that is heavily influenced by changes in environmental regulations and energy markets, monitoring performance relative to others ought to be a priority. Otherwise, finishers may assume too much and end up playing catch-up every year. ITI's surveys have found that companies have a consistently inflated opinion of how well they perform relative to others in their industry. Half of all metal fabricators surveyed rated themselves in the top 10 pct on measures like quality and productivity.

Now, product finishers have a source of information to use for evaluating their industry performance. The Performance Benchmarking Service of ITI (Industrial Technology Institute) in Ann Arbor, Michigan, with the help of a National Institute of Standards and Technology (NIST) project, surveyed the product finishing industry. The results of the survey are the subject of another article. Through this Products Finishing article we want to bring to large numbers of metal finishers a convenient, confidential way to self-evaluate their operations in the energy, environment and manufacturing areas using the following 16-question EEM Self-Assessment Tool for Metal Product Finishers.

As a product finisher, do you know your company's strengths and weaknesses? Do you know how much you spend on energy per month, or on waste treatment and disposal? More importantly, are there areas where you think you lag behind your competition? Understanding which areas positively and negatively impact your productivity and profitability helps with improvement.

The EEM Self Assessment Tool for Metal Product Finishers is self-contained. You provide the answers and the answer key provides your status among metal finishers in the three critical areas of your business: energy efficiency, environmental management and manufacturing performance. Even if you know your business well, you can still use this self-assessment tool to compare and track your company's performance changes over time.

The EEM Self-Assessment Quiz. Product finishing companies from all regions of the country completed an extensive survey covering all aspects of their business operations. The data are updated regularly as new questionnaires are completed. All company names and identifying data are strictly confidential to ensure the data is accurate.

The finishing industry is well represented, with more than 100 respondents used to develop the tool. Seventy-eight pct of companies participating in the survey were product finishers. Twenty-two pct of the companies were primarily metal coaters. Of the product finishers, most engaged in a wide variety of plating processes: 60 pct plated primarily chrome and cadmium; 38 pct plated primarily nickel, copper and trivalent chrome; and 15 pct plated primarily tin, zinc and/or aluminum. Only two pct plated precious metals.

Circle one answer for each question. The Answer and Evaluation key follow. Information is provided with the questions to explain why they were selected.

Manufacturing Performance

1. Percent Change in Sales over Past Two Years.

Sales have been increasing throughout in the product finishing industry. Sales growth is often a requirement for improved margins. Percentage change in sales equals 1994 sales, minus 1992 sales, divided by 1992 sales. Where do you stand? Circle only one.

(A) 68% or more
(B) 41 - 67%
(C) 21 - 40%
(D) 3 - 20%
(E) Less than 3%

2. Training, Tuition and Fees per Employee.

Money invested in employee training can result in savings in the future, due to increased worker efficiency and productivity. To determine how many employees you have, use your average for the year (not year end counts) and convert part-time and contract labor to full-time equivalents. Training dollars include all in-house training costs and any employee tuition and fees for external training. How much do you spend annually?

(A) $501 or more
(B) $221 - $500
(C) $75 - $220
(D) $28 - $74
(E) Less than $28

3. Value-Added per Employee.

This is the single most important measure of worker productivity. It represents the value of the work that is performed at your shop by you, your employees and equipment. Companies with higher value-added also have higher profit margins. To determine your purchased materials costs, include the cost of purchased materials, parts and services (including utilities and phone) in the past year. Do not include payments to agencies for temporary workers, shop labor costs, or any rent, depreciation, interest or capital costs. Your value is:

(A) $77,395 or more
(B) $60,706 - $77,394
(C) $47,100 - $60,705
(D) $35,126 - $47,099
(E) Less than $35,126

4. Percent of Parts Reworked.

The need to rework parts can significantly eat into your profits. No company is without rework; some just have less rework than others. How does your company compare?

(A) 0.35% or less
(B) 0.36 - 1%
(C) 1.1 - 3%
(D) 3.1 - 5%
(E) More than 5%

5. Percent of Lots or Jobs

Rejected by Customers for Quality Reasons.

When customers reject lots, your company loses more than just time and money, it loses credibility. Percentage lots rejected equals lots rejected, divided by total lots produced, times 100. What is your lot reject rate?

(A) 0.05% or less
(B) 0.06 - 0.5%
(C) 0.51 - 1%,
(D) 1.1 - 2%,
(E) More than 2%

6. Percent of On-Time Deliveries to Your Customers.

With sales growing as quickly as they are in the product finishing industry, on-time delivery has become increasingly problematic for many companies. On-time deliveries are those made within the customer's specified on-time window. How did you do?

(A) 99% or more
(B) 96 - 98.9%
(C) 90 - 95.9%
(D) 80 - 89.9%
(E) Less than 80%

7. Percent of Jobs Expedited. How often do you bump scheduled jobs in order to make up for delays? Better scheduling and tracking of your jobs can reduce the need for expediting, saving you and your customers headaches. What percentage of jobs do you have to expedite?

(A) 3.2% or less
(B) 3.3 - 7.5%
(C) 7.6 - 15%
(D) 15.1 - 33%
(E) More than 33%

Energy and Environmental Performance

8. Annual Natural Gas Use (ccf) per Sq Ft of Production Area.

Natural gas is primarily used for space heating in the product finishing industry. Regional variation is expected, but if your company's gas use is unusually high, you may have some opportunity for savings. Divide your total annual gas consumption in ccf by production area sq ft. Your value is:

(A) 4 ccf or less
(B) 5 - 20 ccf
(C) 21 - 93 ccf
(D) 94 - 204 ccf
(E) 204+ ccf

9. Total Annual Electricity Use in Kilowatt Hours per $100,000 in Sales.

Companies that use electricity in their processes, such as anodizers, rank relatively high on energy usage. However, a high use rate that cannot be easily explained may indicate reduction in electricity use is possible. Divide your total sales by $100,000 to get per $100,000 units, next divide annual electricity use (kWh) by that per $100K unit figure. Your value is:

(A) 1 kWh or less
(B) 1.1 - 2 kWh
(C) 2.1 - 4 kWh
(D) 4.1 - 5 kWh
(E) 5+ kWh

10. Total Annual Energy Costs as a Percent of Sales.

Energy costs can have a significant impact on your net. Might your company benefit from greater energy efficiency? Divide your total costs for energy (gas and electric) by your total sales times 100. Your percent value is:

(A) 2.08% or less
(B) 2.09 - 3.24%
(C) 3.25 - 5.36%
(D) 5.37 - 6.73%
(E) 6.73%

11. Cubic Yards of Solid Sludge Generated per $100,000 in Sales.

Companies can reduce their sludge volume by modifying their processes. The total cubic yards of sludge of each company is adjusted so it does not include the water left in the sludge, which controls the variation in the percent of sludge that is solid. Obtain this value by taking percent of sludge, multiply into total sludge generated, divide the result by the total sales, finally divide by 100,000. Your value is:

(A) 0 yards
(B) 0.01 - 0.40 yds
(C) 0.41 - 2.22 yds
(D) 2.23 - 5.30 yds
(E) 5.30+ yds

12. Gallons of Water Used per $100,000 in Sales.

The costs associated with water use (especially utility and sewage bills) are often overlooked. Your value is:

(A) 36,108 gal or less
(B) 36,109 - 97,222 gal
(C) 97,223 - 213,020 gal
(D) 213,021 - 427,000 gal
(E) 427, 000+ gal

13. Gallons of Solvents Used per $100,000 in Sales.

Solvents are halogenated, non-halogenated, mineral spirits and ter-
penes. Decreasing solvent use is one key method of reducing disposal costs. Is your company using more solvents than the industry average? Your value is:

(A) 18 gal or less
(B) 19 - 99 gal
(C) 100 - 588 gal
(D) 589 - 2,689 gal
(E) 2,689+ gal

14. Hazardous Waste Disposal Costs per $100,000 in Sales.

Reducing the amount of waste generated by implementing process changes and pollution prevention strategies makes long-term business sense.

(A) $0
(B) $1 - $135
(C) $136 - $545
(D) $546 - $1,167
(E) $1,167+

15. Total Direct Environmental Costs as a Percent of Sales.

Reducing the amount of hazardous waste generated reduces disposal and environmental compliance costs. Direct environmental costs include total waste disposal costs (hazardous and non-hazardous); on-site waste treatment costs, including an estimate of labor and materials as well as depreciation of waste treatment equipment; and labor and service costs associated with environmental compliance, such as regulatory fees, lab costs, legal fees, and compliance-related labor costs.

(A) 0.9% or less
(B) 0.1 - 2%
(C) 2.1 - 3.9% (D) 4 - 7.5%
(E) More than 7.5%

16. Does Your Company Have a Formal Waste Reduction Program?

(A) Yes (B) No

Use the answer key to translate your answers into an overall rating relative to other companies. Give yourself the indicated number of points relative to your answer.

1.Percent change in sales
(A) 8 (B) 6 (C) 4 (D) 2 (E) 0

2.Training, tuition, and fees per employee
(A) 4 (B) 3 (C) 2 (D)1 (E) 0

3.Value-added per employee
(A) 8 (B) 6 (C) 4 (D) 2 (E) 0

4.Percent of parts reworked
(A) 4 (B) 3 (C) 2 (D) 1 (E) 0

5.Percent of customer rejects
(A) 4 (B) 3 (C) 2 (D) 1 (E) 0

6.Percent of on-time deliveries

(A) 4 (B) 3 (C) 2 (D) 1 (E) 0

7.Percent of jobs expedited
(A) 4 (B) 3 (C) 2 (D) 1 (E) 0

Add scores for questions 1 through 7 to get your

manufacturing score:_______Points

8.Natural gas use per sq ft of production area
(A) 4 (B) 3 (C)2 (D) 1 (E) 0

9.Annual electricity use per $100,000 sales
(A) 4 (B) 3 (C) 2 (D)1 (E) 0

10.Total annual energy costs as a percent of sales
(A) 4 (B) 3 (C) 2 (D) 1 (E) 0

11.Solid sludge generated per $100,000 in sales
(A) 4 (B) 3 (C) 2 (D) 1 (E) 0

12.Water used per $100,000 in sales

(A) 4 (B) 3 (C) 2 (D) 1 (E) 0

13.Solvents used per $100,000 in sales
(A) 4 (B) 3 (C) 2 (D)1 (E) 0

14.Hazardous waste disposal costs per $100,000

in sales
(A) 4 (B) 3 (C) 2 (D) 1 (E) 0

15.Direct environmental costs as a percent of sales
(A) 4 (B) 3 (C) 2 (D) 1 (E) 0

16.Does your company have a formal waste

reduction program? (A) 2 (B) 0

Energy and Environment Score:______ Points

Manufacturing Score:______ Points

Total EEM Score: ______Points

Performance Evaluation: How Well is your Company Performing?

Please note that each measure is sorted independently from the others. No one company scores well on every section covered. The purpose of this EEM Self Assessment is not to provide a detailed inventory of all of your company's processes, but to give you an idea of where you stand in relation to other product finishing companies.

Manufacturing Score Evaluation. Your total score for questions 1 through 7 was:

27+ points. Excellent. Yours is one of the leading companies in the field. You will want to review the areas where you scored low, but overall your shop is effective and efficient.

16-26 points. Good Job. Though you scored poorly on a few questions, your performance is above the industry average on most measures. Keep your eyes open for improvement opportunities that can make the difference between a good company and an excellent one.

0-15 points. Room for Improvement. You are probably doing things the same way you have for years. A plant-wide analysis could help you determine where changes are most needed. Investing some time and money into improvements can greatly increase your profit margin and ensure that your company stays competitive into the next century.

Energy and Environment Score Evaluation. If your total score for questions 8 through 16 was:

24+ points. Excellent. Yours is one of the leading companies in the field. You will want to review areas where you scored low.

10-23 points. Good Job. Even though you may have scored poorly on a few questions, your performance is above the industry average on most measures. Yet you need to address those issues to go from being good to excellent.

0-9 points. Room for Improvement. Your operations require more energy efficiency as well as increased environmental awareness. A plant-wide analysis could help you determine where changes in your operations are most needed.

Overall Score Evaluation. If your grand total for questions 1 through 16 was:

51+ points. You are an industry leader! Maintain that house of quality culture!

26-50 points. You are better than the average firm! Can easily excel through continuous improvement!

0-25 points. You lag! Many opportunities to improve, re-engineer and perform!

Where to go from here?

Now that you have completed the test, what to do? If you are an industry leader, you should maintain that lead. If certain aspects of your operations require improvements, you can start to plan those changes. Consider this self-test as a first-step towards a preventive maintenance procedure or the start of a business improvement process.

To learn more about detailed benchmarking evaluation services or manufacturing technical assistance provided by the NIST Manufacturing Extension Partnership, you can contact any of the 60 manufacturing extension centers operated by local organizations under the NIST/MEP program. For access information to the nearest center call 800-637-4634. The EEM Self-Assessment Tool for Product Finishers is actually a concise version of a much larger, extensively detailed PBSTM benchmark service available to companies on request. For information, simply call 1-800-292-4484 ext. 4650. PF