Top Shops Executive Summary

2011 Executive Summary

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Executive Summary ALL T SHOPS he most effective way to measure a machine shop’s performance is to compare its key metrics with those achieved by the upper echelon of similar businesses. Modern Machine Shop magazine’s “Top Shops” benchmark- ing initiative enables shops to do that by examining optimal shopfloor practices as well as operational and business ap- proaches that define world-class competitiveness in discrete parts manufacturing. This 2011 Top Shops Executive Summary was generated from data collected in our inaugural Top Shops benchmarking survey. The comprehensive online survey was conducted early in 2010 in conjunction with the MPI Group. It was completed by 183 shops of various sizes and types, including job shops, contract shops and captive operations. The survey presented questions grouped in the following categories: machining tech- nology, human resources and employees, shopfloor practices, business strategy and environmental responsibility. A Top Shops benchmarking group was established after com- piling the survey data. This benchmarking group represents the top 20 percent of machining businesses determined by totaling the points assigned to select survey questions. What’s interesting is that this group of successful shops is nearly equally composed of small-, medium- and large-sized opera- tions. The 2011 Top Shops Executive Summary compares data provided by those in the benchmark group with data pro- vided by the rest of the shops that participated in the survey. TOP SHOPS OTHER SHOPS In general, the information presented here is encouraging. Surveyed shops noted improvements in a variety of impor- tant areas, suggesting that many are taking proactive strides to become more effective and efficient. This is supported by data that shows gross sales for all shops is expected to be 27 percent higher this year than in 2010 (based upon the median sample value for that question). Of course this also indicates that shops envision market conditions improving in 2011. In addition, shops are getting better with regard to spindle utilization, machine availability, setup time, scrap/rework, and first-article quality yield. Many say they will make larger invest- ments in new CNC equipment and tooling in 2011, too, signi- fying their intent to leverage the latest machining technologies to become more competitive. Shops continue to face challenges, however. One example is rising employee costs. All surveyed shops expect total employee costs (including wages, benefits and so on) to rise significantly in 2011. In 2010, employee costs represented 25 percent of total costs for surveyed shops. For 2011, these costs are expected to increase to 48 percent. The following pages focus on these and other noteworthy survey findings. Not only will this 2011 Top Shops Executive Summary serve as a baseline performance “report card” of sorts for shops, but the hard data provided will eliminate the need to rely on a gut feeling as the primary method of identify- ing and prioritizing improvement efforts. DEREK KORN Senior Editor Modern Machine Shop 2 2011 TOP SHOPS EXECUTIVE SUMMARY mmsonline.com/topshops

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