NE Process Industry Productivity Benchmark th March 2010

Companies Involved

Benchmark Process Word Models Performance “Change” Since 2006 Personal Interviews

Sectors Covered

Areas Investigated Unit Cost Energy Cost OEE Quality Performance Engineering Productivity Safety Performance OTIF Stock Turns Supplier OTIF

Orientation !

Outputs Word Model Pie Chart Performance … Box and Whisker Plot Median Upper Quartile Lower Quartile Minimum Maximum

Unit Cost Performance AUnit cost is not used as a metric by the business to improve the total cost of manufacture. BUnit cost is calculated and tracked by Accounts department but not widely available or used. CManagement track unit cost and use the metric to align all departments. Emphasis is on achieving the correct balance between cost and plant performance. DAll employees understand the concept of Unit Cost and are actively involved in activities that are focused on total control of manufacture.

Unit Cost Performance

Energy Cost Performance AThe company has informal systems to monitor energy usage. Ad hoc monitoring occurs usually in response to high / low values often flagged up by Accounts Group. BThe company actively manages its energy usages and takes steps to minimise losses at all levels of manufacture. CThe company can demonstrate an ‘Energy Balance’ approach to the use of energy with usages fully identified and measured. DThe company works both with Suppliers and Customers to reduce the overall environmental impact of the Supply Chain by optimising energy usage and recycling materials. Evidence of shop floor led teams leading energy reduction activities.

Energy Performance

OEE Performance AThere is limited formal monitoring of the key plant performance against “Best Achieved” BThere is formal monitoring of the key plant performance metrics but the information is not widely circulated or briefed within the plant. CThe formal data is monitored and circulated within the plant and is used by management to identify opportunities to take the business forward in line with the business strategy. DThe data is generated and owned by the shop floor teams, displayed at their workstations and used by them to improve plant performance and eliminate defects in line with the business strategy.

OEE Performance

Quality Performance ANo formal systems are used to monitor supplied quality rate. Ad-hoc monitoring occurs usually in response to customer issues. BThere is a formal quality procedure is used for monitoring quality. CA quality system with regular external auditing is used for capturing issues and uses internal management review and action plans. DThe business uses an appropriate quality system with regular external auditing as part of its business strategy. The operation uses appropriate tools with work groups capturing and using data and information to improve performance.

Quality Performance

Safety Performance 2009/2008

Engineering Productivity Positives –Measurement and control –Alliance and Gain share contracts –In-house Teams –Commitment to improve Negatives –Getting worse –Poor investment at planning stage –Poor quality leadership and supervision – Skills shortage (still)

Others OTIF Stock Turn Supplier OTIF –80% uptake. –Little differentiation –Low in Speciality and Pharma Sector –NPIs skew data –20% uptake –Improves when measured

Engagement with the Public Sector 70% productivity support 40% energy support + Engagement leads to Improvement! - Resource …

Overall Performance

Conclusions - Strengths Technical competence Tough cost control Improvement orientation Resource Management Uptake of NEPA and ERE support

Technical competence Tough cost control Improvement orientation Resource Management Uptake of NEPA and ERE support Wide variation in performance Pressure at White Collar level Shallow understanding of processes No common understanding of best in class performance No measurement of supplier performance Conclusions - Weakness

Technical competence Tough cost control Improvement orientation Resource Management Uptake of NEPA and ERE support Wide variation in performance Pressure at White Collar level Shallow understanding of processes No common understanding of best in class performance No measurement of supplier performance MAS NE Resource Efficiency & Productivity NEPIC Manufacturing Team Best practice and collaborative work £60 million inward investment into the region Conclusions - Opportunities

Technical competence Improvement orientation Tough cost control Resource Management Uptake of NEPA and ERE support Wide variation in performance Pressure at White Collar level Shallow understanding of processes No common understanding of best in class performance No measurement of supplier performance MAS NE Resource Efficiency & Productivity NEPIC Manufacturing Team Best practice and collaborative work £60 million inward investment into the region Low cost economies Lack of investment/Payback Dis-integration of process industry in the region Limited understanding of the value of a CI culture Conclusions - Threats

Next Steps Workshops …