KPI Keys to Success

KPI Keys to Success

Struggling to stay competitive in today’s ever-evolving business world?

Product availability and dependable distribution are critical components your team needs to master. If your team isn’t aligned with your mission, setting attainable goals, or delivering in-demand products, it’s time to press pause. Having a quality product won’t get your company very far if it doesn’t get to your customer. With decades of experience working with manufacturing industry leaders, we’ve established that the best practice you can adopt is to assess your key performance indicators (KPIs) every three to six months to ensure your methods are useful and complete. Read on for a refresher to pass along to your team if it’s about that time to reevaluate progress and meet goals before 2021 ends.

KPIs measure key activities within a company to ensure it is operating with optimum success.

It is important to distinguish between a performance metric (which also measures activity), and a KPI.  A performance metric can be used to measure a variety of activities ranging from the number of staff meetings employees attend, to the amount of product that is available to meet customers’ needs. A key performance indicator measures activity that is critical to the success or failure of a company. While measuring the number of staff meetings employees attend won’t make or break the company, tracking the amount of product available for customers is a key indicator of a company’s ability to successfully compete in the marketplace.

KPIs are typically limited in number because they track only critical business aspects.

A company may have three or four KPIs; each department may also have three or four. If a KPI is put in place, management must commit to having someone log the activity and monitor the activity. Management must also define a clear course of action it will follow once the results of the KPI are known. In addition to evaluating critical activity, a KPI must:

  • Be realistic – a KPI to eliminate downtime is not realistic. An effective KPI would be “to reduce downtime by 5% through scheduled maintenance days”
  • Be specific to meet goals: “delivered on time” is not specific. A better KPI is “to complete delivery within three days of receiving the customer’s order”
  • Be quantifiable, such as tracking the rate of returned product
  • Highlight areas where increased efficiency/decrease in use of resources can be achieved
  • Illustrate the progress toward attaining a goal by presenting data in a chart or graph
  • Help identify seasonal trends

Implementing and tracking key performance indicators provides management with reliable data to streamline decision-making.

KPIs encourage a team effort by promoting inter-departmental cooperation and offer clarity for workers in terms of performance expectations. Individual departments will have key performance indicators that further the company goal of providing superior service by reducing the lead time. A KPI for the manufacturing division might be to track the cycle time, while the distribution division might track the on-time and complete shipping rates, and the customer service department might track the rate of returned products.

Here is an example of a good manufacturing facility KPI:

Company goal: To provide superior customer service through quick delivery.

Key performance indicator: Lead time

Definition: Lead time is the length of time it takes from the beginning of the
manufacturing process to the time the final product is delivered to the customer.

How it will be measured: Tracking the customer waiting time, which is the length of
time between when a customer places an order and the customer receives the product.

Target: To reduce lead time by 2 percent.

Implementing KPIs can increase the entire organization’s efficiency and production capability.

An added benefit? KPIs can generate a positive attitude among team members by letting individuals know how they contribute to a company’s overall success. Taking simple, cohesive steps like these can reenergize your team and ensure all departments are synchronized in their daily, monthly, and quarterly objectives. For more ideas to help your business thrive in these challenging times, contact our Manufacturing Services Group today. Whatever the size of your venture, we can help you meet your goals, now and for the future.

Marijuana Legalization Creates a Haze of Confusion for Healthcare Industry

Marijuana Legalization Creates a Haze of Confusion

A new bill legalizing recreational marijuana makes New York the 16th state to do so, and while advocates are praising the move, some employers are lost in a cloud of confusion. The bill makes it legal to possess small amounts of marijuana, launches programs to help communities that bore the brunt of the national and state drug war, and will eventually allow marijuana sales to people over the age of 21. So what does this mean for the healthcare industry as a whole, and how can organizations navigate the complexities that accompany this new legislation? Here’s what you need to know.

New Yorkers can smoke cannabis in public wherever smoking tobacco is allowed, though localities and a new state agency could create regulations to further control public cannabis use. Cannabis use, however, is not permitted in schools, workplaces, or inside a car. But, the cannabis confusion and concern don’t end with this new set of rules. A National Institute on Drug Abuse study found that employees who tested positive for cannabis had 85% more injuries, 55% more industrial accidents, and 75% higher absenteeism rates. With life or death stakes in the healthcare industry, it is not hard to see why employers choose to offer a safer work environment through effective drug and alcohol testing.

As it is now illegal to discriminate against someone for legal use of cannabis, refusing to employ someone merely because of the presence of cannabis in a drug test result could expose the employer to a discrimination claim even if the employer’s decision was unrelated to the applicant’s cannabis use. The new cannabis law amends NYS Labor Law 201-d, and according to the Business Council of New York State, the new law does not prohibit testing for marijuana. Employers remain free to test both applicants and employees under the law. However, for employers who are not required to do pre-employment testing, doing so may provide more risk than reward. Because recreational use of marijuana is now legal, employers can no longer discipline or discharge an employee simply for having marijuana in his or her system while at work, as may be revealed by a drug test. The law requires that, before taking adverse employment action against an employee for marijuana use, an employer must show that the employee manifested “specific articulable symptoms” of marijuana impairment. A positive test for marijuana will not be sufficient to establish impairment under the law. A positive test, however, may still have value in supporting an employer’s determination that symptoms exhibited by an employee were related to marijuana use by confirming that the employee used marijuana. While there have been some indications that the National Council of State Boards of Nursing is moving toward providing individual state boards with more nuanced guidance to cases involving positive THC tests in nurses, one that takes into account a number of circumstances beyond the test results, the intent of state boards of nursing and employers will by definition remain one of erring on the side of patient safety. And while nurses who have been dismissed by hospitals for positive THC tests have begun to win cases against their employers, it remains an incredibly complex issue.

Employers can fire someone who is working while impaired by marijuana, according to New York’s medical marijuana law, but proving impairment can be complicated. “Employers are allowed to prohibit marijuana use at work and allowed to prohibit employees from reporting to work impaired,” said Geoffrey Mort, a member of the New York State Bar Association’s Cannabis Law Committee. While companies with federal contracts and grants, as well as federal agencies, must have a drug use policy that’s enforced, enforcement is difficult because unlike testing for alcohol or other substances, marijuana shows up on drug tests long after its impairing effects subside. The window for testing positive for cannabis is anywhere from three days to seven days (or longer) for urine and saliva testing and up to 90 days for the more sensitive hair testing. Employers should take caution when disciplining employees because The Americans with Disabilities Act (ACA) protects those who take medication for a disability, and because of how long THC stays in the system, it may be challenging to prove an employee was under the influence of marijuana on the job. Employers must ensure they engage in an “interactive dialogue” and consider any reasonable accommodations before taking adverse actions against an employee for reasons related to medical or recreational marijuana. Even in the face of a positive drug test, employers cannot and should not automatically terminate the employee, but should first consider whether the employee is a certified user. If the employee is a certified user, employers must engage in an interactive dialogue to determine whether it must accommodate. While employers do not have to accommodate employees who cannot adequately perform their job functions or are excessively absent due to the use of medical marijuana, employers also cannot automatically terminate an employee who is a marijuana user if he/she tests positive for drug use.

Now is an important time for New York healthcare organizations to reconsider company policies and procedures relating to pre-employment drug testing as well as establishing impairment signals for employers to identify. If reasonable suspicion occurs on the job, the employer should explain to an employee what has been observed and a policy should outline how suspected impairment will be dealt with. Generally speaking, managers and supervisors should be trained to observe impairment signals and employees should be educated about the company marijuana-use policy and the repercussions for failed tests, including random, post-accident, or reasonable suspicion tests.

Marijuana sales won’t start until New York sets up regulations and a proposed cannabis board, however, possession and use are now legal. Assembly Majority Leader Crystal Peoples-Stokes has estimated it could take 18 months to two years for sales to begin. Lawmakers estimate the legislation will eventually bring in $300 million a year to cover the state’s cost of regulating and enforcing the program, with the remainder divided among schools, drug treatment and prevention programs, and a fund for investing in job skills, adult education, and other services in targeted communities. A regulated adult-use market would create 76,000 jobs by 2027, according to MPG’s market analysis that was prepared for the New York Medical Cannabis Industry Association. Still feeling like you’re in a fog of confusion? You’re not alone. This is a complex issue that requires legal expertise and a lot of consideration from management and HR professionals alike. Please feel free to contact our dedicated RBT team to discuss your manufacturing company needs. Additionally, if you have HR questions, please reach out to our wholly-owned subsidiary Visions HR, to connect with HR professional Janet Giannetta.

Sources: NYT, LoHud, SHRM, BCNYS, AJN

Marijuana Legalization Creates a Haze of Confusion for Construction Industry

Marijuana Legalization Creates a Haze of Confusion

Governor Andrew Cuomo signed a bill legalizing recreational marijuana last week, making New York the 16th state to do so. The bill makes it legal to possess small amounts of marijuana, launches programs to help communities that bore the brunt of the national and state drug war, and will eventually allow marijuana sales to people over the age of 21. So what does this mean for the construction industry as a whole, and how can companies navigate the complexities that accompany this new legislation? Here’s what you need to know.

New Yorkers can smoke cannabis in public wherever smoking tobacco is allowed, though localities and a new state agency could create regulations to further control public cannabis use. Cannabis use, however, is not permitted in schools, workplaces, or inside a car. But, the cannabis confusion and concern don’t end with this new set of rules. A National Institute on Drug Abuse study found that employees who tested positive for cannabis had 85% more injuries, 55% more industrial accidents, and 75% higher absenteeism rates. Until recently, challenges to employee terminations for testing positive for marijuana were almost always dismissed and justified under employers’ drug-free workplace policies. The following categories of construction workers can be tested under the new law:

Employers can fire someone who is working while impaired by marijuana, according to New York’s medical marijuana law, but proving impairment can be complicated. “Employers are allowed to prohibit marijuana use at work and allowed to prohibit employees from reporting to work impaired,” said Geoffrey Mort, a member of the New York State Bar Association’s Cannabis Law Committee. Regardless of any state or local laws, it is still prohibited for commercial truck drivers to operate a motor vehicle under the influence because of federally imposed DOT drug testing requirements. According to Overdrive, the DOT has confirmed multiple times that its stance on marijuana use has not changed and won’t until action is taken on the federal level. While companies with federal contracts and grants, as well as federal agencies, must have a drug use policy that’s enforced, enforcement is difficult because unlike testing for alcohol or other substances, marijuana shows up on drug tests long after its impairing effects subside. Employers should take caution when disciplining employees because The Americans with Disabilities Act (ACA) protects those who take medication for a disability, and because of how long THC stays in the system, it may be challenging to prove an employee was under the influence of marijuana on the job. Employers must ensure they engage in an “interactive dialogue” and consider any reasonable accommodations before taking adverse actions against an employee for reasons related to medical or recreational marijuana. Even in the face of a positive drug test, employers cannot and should not automatically terminate the employee, but should first consider whether the employee is a certified user. If the employee is a certified user, employers must engage in an interactive dialogue to determine whether it must accommodate. While employers do not have to accommodate employees who cannot adequately perform their job functions or are excessively absent due to use of medical marijuana, employers also cannot automatically terminate an employee who is a medical marijuana user if he/she tests positive for drug use.

As it is now illegal to discriminate against someone for legal use of cannabis, refusing to employ someone merely because of the presence of cannabis in a drug test result could expose the employer to a discrimination claim even if the employer’s decision was unrelated to the applicant’s cannabis use. The new cannabis law amends NYS Labor Law 201-d, and according to the Business Council of New York State, the new law does not prohibit testing for marijuana. Employers remain free to test both applicants and employees under the law. However, for employers who are not required to do pre-employment testing, doing so may provide more risk than reward. Because recreational use of marijuana is now legal, employers can no longer discipline or discharge an employee simply for having marijuana in his or her system while at work, as may be revealed by a drug test. The law requires that, before taking adverse employment action against an employee for marijuana use, an employer must show that the employee manifested “specific articulable symptoms” of marijuana impairment. A positive test for marijuana will not be sufficient to establish impairment under the law. A positive test, however, may still have value in supporting an employer’s determination that symptoms exhibited by an employee were related to marijuana use by confirming that the employee used marijuana.

Now is an important time for New York contractors to reconsider company’s policies and procedures relating to pre-employment drug testing as well as establishing impairment signals for employers to identify. If reasonable suspicion occurs on the job, the employer should explain to an employee what has been observed and a policy should outline how suspected impairment will be dealt with. Generally speaking, managers and supervisors should be trained to observe impairment signals and employees should be educated about the company marijuana-use policy and the repercussions for failed tests, including random, post-accident, or reasonable suspicion tests. While marijuana legalization poses a broad variety of challenges for employers, changes are especially complicated for both construction employers and owners of construction projects who are subject to absolute liability for gravity-related worksite injuries under the “Scaffold Law” which exists only in New York. Even before marijuana was officially legalized in New York, The AGC NYS assembled a group of more than 30 organizations calling on the Legislature to address their concerns surrounding the “Scaffold Law” because existing case law makes clear that the impairment of a worker does not create a defense for a construction employer or project owner. The group argues that without major updates to the “Scaffold Law,” the industry will face a negative safety impact, even higher construction costs, and further degradation of a construction liability insurance market that is already on life support. The group is urging the Governor and Legislature to introduce a comparative liability standard to replace absolute liability generally, or at a minimum where the injured worker was impaired by cannabis or another substance. You can learn more about this industry effort, here.

Marijuana sales won’t start until New York sets up regulations and a proposed cannabis board, however, possession and use are now legal. Assembly Majority Leader Crystal Peoples-Stokes has estimated it could take 18 months to two years for sales to begin. Lawmakers estimate the legislation will eventually bring in $300 million a year to cover the state’s cost of regulating and enforcing the program, with the remainder divided among schools, drug treatment and prevention programs, and a fund for investing in job skills, adult education, and other services in targeted communities. A regulated adult-use market would create 76,000 jobs by 2027, according to MPG’s market analysis that was prepared for the New York Medical Cannabis Industry Association. Still feeling like you’re in a fog of confusion? You’re not alone. This is a complex issue that requires legal expertise and a lot of consideration from management and HR professionals alike. Please feel free to contact our dedicated RBT team to discuss your construction company needs. Additionally, if you have HR questions, please reach out to our wholly-owned subsidiary Visions HR, to connect with HR professional Janet Giannetta.

Sources: Construction Business Owner, NYT, LoHud, Truckers Report , SHRM, BCNYS

APPLY NOW: $1 Million in COVID Recovery Funding Now Open

APPLY NOW: $1 Million in COVID Recovery Funding Now Open

Four centers within the New York Manufacturing Extension Partnership (NY MEP) network have launched competitive grant programs that will help manufacturers solve challenges created by COVID-19, emerge from the crisis more resilient and adaptable, and prepare for future emergencies. The NY MEP is a network of organizations that provide growth and innovation services to small and mid-sized manufacturers in every corner of the state to help them create and retain jobs, increase profits, and save time and money. Supported through a combination of federal and state funding, the NY MEP is overseen by Empire State Development’s Division of Science, Technology, and Innovation (NYSTAR). In 2019, the NY MEP created or retained 5,275 manufacturing jobs and generated $992 million in company cost savings, new investments, and increased or retained sales. Combined, the four programs which are open to companies in all regions of New York will award nearly $1 million to manufacturing and technology companies in New York State. The programs include:

  • Personal Protective Equipment Fund, led by ITAC
  • Supply Chain Grant Program, led by the Center for Economic Growth (CEG)
  • Next Generation Grant Program, led by the Manufacturing & Technology Enterprise Center (MTEC)
  • Manufacturing Reimagined Fund, led by FuzeHub

The Personal Protective Equipment Fund, managed by ITAC, the New York City regional NY MEP center, will award a total of $250,000 to companies in two phases:

  1. Phase 1 focuses on companies extending the lifespan of personal protective equipment (PPE)
  2. Phase 2 will support the scaling needs of PPE manufacturers across New York, selected manufacturers will receive a maximum $10,000 grant

The Supply Chain Grant Program, managed by CEG, the Capital Region’s NY MEP center, will award a total of $200,000 toward projects that help manufacturers address business challenges caused by pandemic-related supply chain disruptions. Up to 20 manufacturers with facilities in New York will receive a maximum $10,000 grant, which will help recipients take steps to optimize their supply chains, explore new markets and products, identify new customers and implement processes to become more competitive. Funding may be used to offset the costs of consultants, engineering assistance, implementation, training, and project-related materials.

The Next Generation Grant Program, managed by MTEC, the Mid-Hudson regional NY MEP center, will award a total of $350,000 to companies that need help optimizing their operations for the post-pandemic era. Recipients will receive up to $10,000 in services to ensure they are operating safely, effectively, and efficiently in a virtual business environment. MTEC and its partners will help identify ways to improve operations as well as opportunities to introduce new technologies or processes. The program’s areas of focus are lean manufacturing, cybersecurity, quality, and engineering.

The Manufacturing Reimagined Fund, managed by FuzeHub, the statewide NY MEP center, will award a total of $170,000 toward projects that align with COVID-related recovery efforts. Recipients will receive a maximum of $10,000 in technical assistance from a NYSTAR Innovation Network organization. Eligible projects will help manufacturers manage challenges created by COVID-19, emerge from the crisis more resilient and adaptable, and prepare for future emergencies. To qualify, applicants must attend one of FuzeHub’s “Manufacturing Reimagined” workshops or webinars.

The four grant programs are part of NY MEP’s larger COVID Recovery Initiative. Learn more here.   At RBT, our Manufacturing Services Group works with businesses in diverse industries including building materials, food processing, specialty sporting goods, commercial lighting, health, beauty, pharmaceuticals, and more. Whatever the size of your venture, we can help you meet your goals, now and for the future. Contact us today to connect and schedule an appointment.

Source: NY MEP

ROI Renting Vs Buying Equipment

ROI Renting vs Buying Equipment

While 2021 brings continued economic uncertainty, it’s always a good idea to use a new calendar year as an opportunity to reevaluate business plans. What’s working and what’s not? For manufacturing professionals, this can be a literal consideration: what equipment is running efficiently and what’s nearing the end of its useful life? Aging, worn machinery is costing you valuable time and money that’s preventing you from being competitive. Determining the return on investment for buying versus renting equipment requires a deeper dive into your company’s cash flow and your intentions.

Buying New

Some people have personal biases when it comes to purchasing items. Think of other investments you’ve made. Are you a staunch advocate of homeownership over renting property? Maybe you’re always trying to dissuade your friend from leasing the latest and greatest model car because they won’t acquire any equity and it won’t be their own asset. Try not to let feelings about leasing bleed into your business model because buying won’t always equal profitability. To determine if it’s time to buy, you need to assess the performance of what you’re currently relying on. Track the machine’s cycle time and uptime (when the machine is producing revenue) as well as any downtime required for regular or unscheduled maintenance. This data will help you to determine if new equipment will produce the ROI required to rationalize the purchase. Your manufacturing company has needs unique to your products and services. In some circumstances, buying is the way to go, as leased assets don’t qualify for 100% first-year bonus depreciation.

Opting to Rent

If you opt to rent or lease your equipment, you’ll get brand new machinery operating at maximum output and efficiency. You may also be able to shop outside of your budget, opening opportunities to test-drive cutting edge technology before committing to a major purchase. Consider the long-term usage of the equipment and how much profit it will generate in its lifespan. For example, if you’re only using the equipment to fulfill a two-year contract and you don’t see other profitable opportunities, maybe it’s better to lease that piece for two years rather than make a huge long-term investment to fulfill a temporary need. Let’s talk tax benefits. While annual deduction limits may apply, generally speaking, payments for leases will be tax-deductible and qualify as “ordinary and necessary” business expenses. But as with any contract you’re tied to, you must read the fine print and make sure your business plan is aligned with the terms and conditions. It’s never fun to sign off on a big expense, only to be surprised by an early-termination fee you weren’t aware of.

We wish there was a straightforward, clear “winner” in your decision, but as is standard in business, the most economical choice is going to depend on the circumstances surrounding the machinery. In some situations, purchasing machinery and acquiring an asset you know is going to build your business equity is the best decision. In other situations, you will find leasing is the right move, so you can test out a high-tech item without the risk of purchasing an expensive machine that’s bound to become obsolete when the latest model rolls out. Our best advice is to consult a professional to weigh the pros and cons carefully before committing to a big financial decision. Our team is always just a phone call away to answer questions unique to your company’s situation.

Source: Accounting Freedom

Are You In Control of Your Inventory?

Taking Inventory with Scanner

While much of 2020 feels like a bad dream, it turns out we can all learn a lot from the hectic hunt for the last toilet paper roll in Hudson Valley. We know, your house is stocked up for the rest of the year, and you likely don’t want to relive the nightmarish shopping experience you had at the start of the pandemic. But hear us out, because we think there’s a lesson about inventory management hiding somewhere deep at the back of the shelf, and we want to help you find it. After all, how much money could you be saving by avoiding an inventory headache and getting a better handle on your manufacturing supply? Instead of coming up short or getting bogged down and tying up valuable cash flow, there’s got to be a better way. It’s time to consider the 80/20 rule, find the value in tracking, and embrace emerging technology.

80/20 Rule

As a general rule, 80% of your profits come from 20% of your stock. Make sure you are not prioritizing the wrong inventory by reevaluating what you have. Controlling excess inventory levels will ultimately help your operation maintain better cash flow through these challenging economic times. To do so, you should understand the complete sales lifecycle of items you sell on a weekly and monthly basis. Categorizing your inventory into priority groups can help you understand which items you need to order more frequently and which are important to your business but may cost more and move more slowly. By following this rule, industries handling rapidly changing products can avoid overstocking raw materials and excessive levels of scrap.

Track, Track, and Track Some More

Accountants have this tendency to make a list, check it twice, and then check some more before we are satisfied. Adopting this mentality may initially feel tedious, but trust me – the financial savings will be worth it. Inventory information tracking should include SKUs, barcode data, suppliers, countries of origin, and lot numbers. Tracking the fluctuating cost of each item over time is also critical to ensure you are aware of factors that can impact your bottom line. As history (and the pandemic) has taught us, scarcity and seasonality can have a huge impact on production. Maintain sensitivity to the supply chain by tracking information, making that information accessible to your team, and keeping sufficient levels of essential materials in stock. Identifying a pattern will come in handy during the next unforeseeable inventory disruption.

Time for Tech

Adopting inventory management software is one of the most important things you can do to stay proactive. In RBT’s previous Manufacturing Thought Leadership article, we discussed the Internet of Things or, IoT. If you’re not comfortable with this concept, it’s time to recognize the power of interconnected smart devices! Forbes estimates that the adoption of IoT in the retail sector will reach 71% by 2021. Manufacturers can leverage IoT-tracked inventory information and AI technology to optimize lead times. By comparing new data with an organization’s procurement records, inventory levels, and sales history, AI bots can predict supply shortfalls. Translation: a tech investment today can mean huge financial savings tomorrow.