PMA’s Benchmarking Report Helps Manufacturers Assess Performance

Each year, Plante & Moran partners with the Precision Metalforming Association (PMA) to help companies assess their operational performance. The PMA 2006 Benchmarking Report for the metalforming industry analyzes more than 50 separate performance metrics in three areas relating to a company’s business: management measurements (e.g., training, safety, and profitability), quality measurements (e.g., rejections, delivery rates, cost of quality), and productivity measurements (set-up times, capacity rates, and value added).

Survey results were analyzed in various ways to identify meaningful trends, comparisons, and relationships. The analysis of the results includes the following:

• Comparison of the industry as a whole with certain industry segments (automotive, non-automotive)
• Benchmark performance of the most profitable companies to the entire industry
• Examination of the performance of the companies that had negative earnings
• Breakdown of individual measurements for high and low performance

The overall theme of the survey results indicates that operational excellence does not by itself equate to or correlate with increased profitability. While the most profitable companies usually perform better than average, they rarely perform at or above best-in-class levels. The key to performing at best-in-class levels is to know which performance metrics will help a company differentiate itself from competitors. This is a lesson from which not only metalformers but all manufacturing companies can learn.

Some of the most interesting observations made from the survey relate to profitability and include the following:

• The smallest companies participating in the survey reported the highest level of profitability
• For the first time in the last three years, union operations had a higher level of profitability than non-union operations
• Lower costs of quality were indicative of higher earnings
• Lower success rates on new quotes were associated with more profit
• Higher levels of productivity as measured by capacity utilization, sales per employee, and value added were associated with higher levels of profitability

Although the focus of PMA’s benchmarking report is to help metal formers manage, plan, and forecast their business decisions, many of the findings relate to all companies within the manufacturing industry. For information or to order a copy of the PMA 2006 Benchmarking Report, please contact Bob Dobrowsky at 216.274.6511.