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L E A N B e n c h m a r k i n g f o r C a n a d i a n M a n u f a c t u r e r s S R e p o r t o f Pe r f o r m a n c e B e n c h m a r k s

Table of Contents

Introduction 3

Profile of CME Survey Respondents 4

Respondents by Province 5

Company Size 5

Manufacturing Sectors 5

Manufacturing Sub-Sectors 6

Primary Activity 6

LEAN Implementation 7

Have you Implemented LEAN? 7

Have you Adopted 5S? 7

Have you Adopted an Internal “Pull” System with Kanban Signals? 8

Have you Conducted a Kaizen Blitz or Kaizen Event Program? 8

How Involved are Your Production Employees in the Improvement Process? 9

Have you Adopted Level Scheduling? 9

Do you use Real-Time Customer Data to Plan Production? 10

Observations – LEAN Implementation 11

LEAN Performance Benchmarks 11

Overall Defect Rates 13

Scrap Rate Due to Errors 14

Finished-Product First-Pass Quality Yield 15

Per Cent of Units Re-Worked 16

Per Cent of Units Delivered on Time 17

Per Cent of Orders Shipped in Full 18

Average Production Lead Time 19

Per Cent of Customers That Have Established a Continuous-

Replenishment or Just-in-Time or Kanban Delivery Model 20

Per Cent of Supplier Orders Received on Time 21

Per Cent of Suppliers Providing Just-in-Time

Kanban Delivery 22

Average Set-Up Time Between Jobs 23

Annual Inventory Turns – Materials 24

Annual Inventory Turns – Work in Progress 25

Annual Inventory Turns – Finished Goods 26

Annual Inventory Turns – Total Inventory 27

Project Improvements 28

S 1


S 3

LEAN BENCHMARKING FORCANADIAN MANUFACTURERS

Report of Performance Benchmarks

Introduction

C anada’s manufacturing and exporting industries are facing

unprecedented economic and competitiveness challenges. The rise

of newly industrializing economies like China, India, Brazil, Mexico and

Eastern Europe have opened new business opportunities for Canadian companies

but have also led to intense competitive pressures in domestic and international

markets alike. The rapid pace of technological change, more demanding

customers and stakeholders, the integration of global supply chains and

increasing competition for investment and product mandates all put a premium

on the ability of manufacturers in Canada and around the world to respond rapidly

to changing conditions, specialize and customize their products and services,

and innovate – all in order to create value in a world of rapid commoditization.

Globalization requires the adoption and effective execution of new value-adding

business strategies on the part of manufacturers, resource companies, and

globally traded service providers in Canada and around the world. The urgency

of change is even more pressing for Canadian companies facing severe cash-flow

constraints as a result of the short-term challenges of a rapidly appreciating

Canadian dollar, escalating commodity and energy costs, labour shortages and

the more recent weakness of key export markets in the United States.

These challenges make it more important than ever for Canadian manufacturers

and exporters to deliver what their customers value most and eliminate the

wasteful non-value-adding activities that erode competitiveness, inflate costs,

lower quality and lead to delays in delivering product and service to their

customers. These are the basic principles of LEAN enterprise.

LEAN is a methodology that can be applied to improve the effectiveness and

efficiency of any process. It has proved to be a powerful way for businesses to

boost productivity and generate cash flow by systematically focusing on customer

requirements while reducing unnecessary costs and delays. LEAN principles and

improvement techniques are being adopted by manufacturers and many other

organizations around the world in implementing business strategies, ensuring

operations and supply chain excellence, enhancing productivity and sustaining

their continuous improvement efforts.


S 4

Measurement is an essential requirement of any quality improvement process.

Benchmarking the adoption of LEAN practices in Canadian industry and LEAN

performance at an enterprise level will enable both a better understanding of

productivity trends among Canadian manufacturers and a better appreciation

of best practice in operations and supply chain management on a sector-by-sector

basis.

For those reasons, CME, Industry Canada and Rogers Industrial Media have

partnered to develop an effective and accessible benchmarking tool for Canadian

manufacturers and exporters.

The survey, conducted by CME and Rogers Industrial Media, is the first of its kind

in Canada. The analysis of the study was conducted by CME and Industry Canada

in February and March 2008. CME’s intention is to improve on the delivery and

analysis of this first survey in order to conduct regular benchmarking assessments

of LEAN performance. The tool will provide operational benchmarks that can be

used by individual companies to improve their productivity performance.

This report summarizes the results of the LEAN Benchmarking initiative. The

results will also be published in PLANT newspaper and CME’s 20/20 magazine.

Profile of CME Survey Respondents

The LEAN Benchmarking survey was conducted via the Rogers Industrial

Media database. A total of 413 companies responded to the survey. The

respondent profile includes only the details from those companies. It is not,

therefore, an accurate reflection of the geographical or sectoral distribution of

companies across Canada. However, the main purpose of the project is to identify

performance benchmarks at overall industry and sectoral levels. Best-in-class

performance is what counts – not statistical averages. The findings should

be interpreted with these caveats in mind.


S 5

Respondents by Province

Just over half of the surveyrespondents are based inOntario. The representation of western Canadian companies is also relativelyhigh (32 per cent of thetotal). Quebec companies are under-represented in thisstudy. The representation of companies from AtlanticCanada is very close to the actual distribution for theregion as a whole.

Company Size

Most of the companies that participated in the project are small and mid-sized enterprises. When analyzedon the basis of the number of employees, respondent distribution by company sizeis a close reflection of actualnumbers across Canada.

Manufacturing Sectors

The findings contain a relatively high proportion of transportation and defenceequipment, resource process-ing and metal fabricating, andmachinery and equipment manufacturers.

Province

Ontario 53%

Quebec 9%New Brunswick 2%

Nova Scotia 2%Newfoundland & Labrador 2%

British Columbia15%

Alberta8%

Saskatchewan2%

Manitoba7%

Number of Employees

50 - 9920%

0 - 4943%

200 - 2998%

500 + 7%

300 - 4995%

100 - 19917%

Industrial Equipment and Machinery 16%

Chemical 4%

Resources and Metals 35%

Transportation and Defence Equipment 24%

Forest Products and Printing 9%

Furniture and Related Product 3%

Plastics, Rubber Products 6%Textiles, Clothing,

Leather 1%

Food, Beverage or Tobacco Product 3%

Sectors

S

SS


S 6

Manufacturing Sub-Sectors

For the purposes of thisreport, survey results are analyzed on the sectoral leveldetailed in the previous chart.However, data is also availableon a sub-sector basis. Thedistribution of participants by sub-sector is summarizedin the accompanying chart.

Primary Activity

Companies also identifiedthemselves as either manufac-turers or suppliers to industry sectors.

AutomotiveAerospace & Defence

PrintingPaper

Wood Products

OtherNon-Metallic Mineral Product

Primary MetalsFabricated Metal Products

Petroleum ProductsChemical

PharmaceuticalsComputers, Electronic Products

Electrical Equipment, AppliancesMachinery

Food, BeverageTobacco Product

Textiles, Clothing, LeatherPlastics

Rubber ProductsFurniture and Related Product

0 5 10 15 20 25 30

Supplier 49%Manufacturer 51%

0 10 20 30 40 50 60

By sector Manufacturer Supplier

Forest Products and Printing 42% 58%Transportation and Defence Equipment 46% 54%Resources and Metals 56% 44%Chemical 30% 70%Industrial Equipment and Machinery 62% 38%Food, Beverage or Tobacco Product 30% 70%Textiles, Clothing, Leather 75% 25%Plastics, Rubber Products 27% 73%Furniture and Related Product 75% 25%

S

SS


S 7

Have you Implemented

LEAN?

One-quarter of all surveyrespondents report extensiveadoption of LEAN improve-ments in their business.Another 59 per cent indicatethat they have implementedsome LEAN techniques,while 16 per cent say thatthey have not adopted LEAN as an improvement methodology.

Have you Adopted 5S?

5S is a method for organizingand maintaining the work-place. It helps to eliminatewaste and improve flow andsafety . In total, 59% ofrespondents have implement-ed 5S to some extent.

0 10 20 30 40 50 60

Yes, extensively 25%Yes, somewhat 59%No 16%

By sector Yes, Yes, Noextensively somewhat

Forest Products and Printing 19% 73% 8%

Transportation and Defence Equipment 31% 52% 17%

Resources and Metals 22% 62% 16%

Chemical 42% 50% 8%

Industrial Equipment and Machinery 21% 58% 21%

Food, Beverage or Tobacco Product 27% 40% 33%

Textiles, Clothing, Leather 25% 75% 0%

Plastics, Rubber Products 41% 52% 7%

Furniture and Related Product 14% 86% 0%





Chemical 33% 17% 50%






0 10 20 30 40 50


S

SS

LEAN Implementation

Companies indicated the extent to which they have adopted improvements

based on LEAN principles or have implemented specific LEAN improvement

techniques.


S 8

Have you Adopted anInternal “Pull” SystemWith Kanban Signals?

Pull systems are an integral part of ensuring LEAN flow in material handling, production systems and supply chains. A relativelylow number of companiesreport they have adoptedthese systems on an extensivebasis.

Have you Conducted aKaizen Blitz or KaizenEvent Program?

Kaizen is a structured LEANtechnique used to reconfigureprocesses. A relatively low number of companies reportthat they have used thisapproach.











0 10 20 30 40 50






Chemical 0% 17% 83%






0 10 20 30 40 50


S

SS


S 9

How Involved are yourProduction Employees inthe ImprovementProcess?

Employee involvement is a critical condition for successfulLEAN implementation. Infact, most LEAN practitionerssay that if LEAN is not practiced by everyoneinvolved in an organization, it will be impossible to sustainimprovements if they aremade. While very few companies report that theiremployees are not involved intheir improvement efforts, arelatively low number indicateextensive involvement on thepart of their people.

Have you Adopted Level

Scheduling?

Level scheduling is a technique used to reduceuncertainty, risk, and variationin production planning –another important element of LEAN improvement.Again, the survey indicates a relatively low adoption rate.

By sector Not at all Some- Involved Verywhat involved

involved

Forest Products and Printing 11% 44% 39% 6%

Transportation and Defence

Equipment 2% 44% 27% 27%

Resources and Metals 5% 37% 35% 23%

Chemical 0% 14% 57% 29%

Industrial Equipment and

Machinery 6% 44% 28% 22%

Food, Beverage or Tobacco

Product 0% 50% 40% 10%

Textiles, Clothing, Leather 0% 50% 50% 0%

Plastics, Rubber Products 6% 22% 44% 28%

Furniture and Related Product 20% 40% 20% 20%











0 5 10 15 20 25 30 35 40

Somewhat involved 40%Involved 33%Very involved 21%

Not at all 6%

0 10 20 30 40 50


S

SS


S 10

Do you use Real-TimeCustomer Data to PlanProduction?

Only 20 per cent of all surveyrespondents use real-time customer data on a regular basis for production planningpurposes.











0 10 20 30 40 50

Yes, extensively 20%Yes, somewhat 38%No 42%S

SS


S 11

Observations – LEAN Implementation

More companies report that they are implementing improvements intheir business based on LEAN principles than are adopting structuredLEAN methodologies to deliver those results.

While there seems to be a higher LEAN implementation rate in the chemical, transportation equipment and plastics sectors, these industries do not stand out as adopters of LEAN techniques.

LEAN Performance Benchmarks

Companies were asked to provide data on a number of LEAN performance indicators, specifically their:

• Overall defect rate;• Scrap rate due to errors;• Finished product first-pass quality yield;• Rework rate;• On-time delivery rate;• Percentage of orders shipped in full;• Average production lead times;• Percentage of customers demanding just-in-time delivery;• Percentage of supplier orders received on time;• Percentage of suppliers providing just-in-time delivery;• Average set-up time between jobs;• Annual inventory turns for materials;• Annual work-in-progress turns;• Annual inventory turns for finished product; and,• Annual total inventory turns.

The following graphs and tables summarize the survey results for allrespondents, as well as by industry sector.

These results will allow manufacturers to benchmark their performanceagainst best-practice reported for their sector.

In order to facilitate comparisons, results are summarized as follows:

• Best practice;• Average performance; and,• Percentage of companies falling within five per cent,

10 per cent, and 20 per cent of best practice.

% of Companies

Best Average 0% >0%-4% 5%-9% 10%-19%

Overall 0% 5% 4% 61% 16% 14%

Forest Products and Printing 0.3% 5% 0% 67% 20% 13%

Transportation and Defence Equipment 0% 7% 4% 51% 21% 15%

Resources and Metals 0% 4% 4% 67% 12% 12%

Chemical 0% 4% 10% 50% 20% 10%

Industrial Equipment and Machinery 0% 5% 8% 54% 20% 10%

Food, Beverage or Tobacco Product 0.01% 3% 0% 89% 0% 0%

Textiles, Clothing, Leather 1% 6% 0% 33% 33% 34%

Plastics, Rubber Products 0.0001% 5% 0% 56% 17% 22%

Furniture and Related Product 2% 7% 0% 40% 40% 0%


0102030405060708090

100

%

Total Forest Products and Printing

Transportation and Defence Equipment

Resources and Metals

Chemical Industrial Equipment and Machinery

Food,Beverage or Tobacco Product

Textiles,Clothing,Leather

Plastics,RubberProducts

Furniture andRelated Product

Overall Defect Rates

S 13

Distribution of Responses


0102030405060708090

100

%

Forest Products and Printing

Industrial Equipment and Machinery



Chemical Food, Beverage or Tobacco Product

Textiles, Clothing, Leather

Plastics, Rubber Products

Furniture and Related Product

Total

Scrap Rate Due to Errors

% of Companies

Best Average 0% >0%-4% 5%-9% 10%-19%

Overall 0% 3% 8% 67% 12% 13%

Forest Products and Printing 0% 3% 6% 70% 12% 12%



Chemical 0% 3% 20% 40% 40% 0%


Food, Beverage or Tobacco Product 0% 1% 10% 80% 10% 0%


Plastics, Rubber Products 0.01% 4% 0% 58% 16% 26%

Furniture and Related Product 0.2% 1% 0% 100% 0% 0%

S 14



Finished-Product First-Pass Quality Yield









Total

0102030405060708090

100

%

% of Companies

Best Average 100% 90-99% 80-89%

Overall 100% 89% 10% 71% 8%

Forest Products and Printing 100% 86% 7% 53% 27%

Transportation and Defence Equipment 100% 90% 13% 69% 7%

Resources and Metals 100% 96% 13% 77% 7%

Chemical 100% 78% 29% 29% 14%

Industrial Equipment and Machinery 100% 87% 14% 67% 5%

Food, Beverage or Tobacco Product 100% 96% 20% 70% 0%

Textiles, Clothing, Leather 99% 96% 0% 100% 0%

Plastics, Rubber Products 100% 95% 15% 75% 5%

Furniture and Related Product 98% 93% 0% 80% 20%

S 15



Per Cent of Units Re-Worked









Total 0102030405060708090

100

%

% of Companies

Best Average 0% >0%-4% 5%-9% 10%-19%

Overall 0% 8% 9% 54% 17% 11%

Forest Products and Printing 0% 4% 7% 73% 7% 7%



Chemical 0% 1% 29% 57% 14% 0%


Food, Beverage or Tobacco Product 0% 1% 20% 70% 10% 0%


Plastics, Rubber Products 0% 7% 5% 58% 16% 11%

Furniture and Related Product 0.2% 6% 0% 60% 20% 0%

S 16



Per Cent of Units Delivered on Time





Chemical

Food, Beverage

or

Tobacco Product




Total

0102030405060708090

100

%

% of Companies

Best Average 100% 90-99% 80-89%

Overall 100% 88% 10% 58% 15%




Chemical 100% 85% 20% 50% 20%



Textiles, Clothing, Leather 99.9% 80% 0% 67% 0%



S 17



Per Cent of Orders Shipped in Full









Total 0

102030405060708090

100

%

% of Companies

Best Average 100% 90-99% 80-89%

Overall 100% 94% 32% 55% 8%




Chemical 100% 94% 40% 40% 10%



Textiles, Clothing, Leather 99.9% 96% 0% 100% 0%



S 18



Average Production Lead Time









Total

0102030405060708090

100

Day

s

Days % of Companies

Best Average 0 >0-4 5-9 10-19

Overall 0 8 9% 54% 17% 11%

Forest Products and Printing 0 4 7% 73% 7% 7%

Transportation and Defence Equipment 0 10 9% 44% 20% 13%

Resources and Metals 0 7 7% 61% 18% 9%

Chemical 0 1 29% 57% 14% 0%

Industrial Equipment and Machinery 0 14 5% 43% 20% 20%

Food, Beverage or Tobacco Product 0 1 20% 70% 10% 0%

Textiles, Clothing, Leather 1 32 0% 33% 0% 33%

Plastics, Rubber Products 0 7 5% 58% 16% 11%

Furniture and Related Product 0.2 6 0% 60% 20% 0%

S 19



Per Cent of Customers That Have Established a Continuous-Replenishment or Just-in-Time or Kanban Delivery Model









Total

0102030405060708090

100

%

% of Companies

Best Average 100% 90-99% 80-89%

Overall 100% 23% 8% 6% 1%




Chemical 100% 28% 20% 0% 0%






S 20



Per Cent of Supplier Orders Received on Time









Total 0

102030405060708090

100

%

% of Companies

Best Average 100% 90-99% 80-89%

Overall 100% 86% 5% 58% 18%




Chemical 100% 91% 20% 60% 0%






S 21



Per Cent of Suppliers Providing Just-in-Time Kanban Delivery









Total

0102030405060708090

100

%

% of Companies

Best Average 100% 90-99% 80-89%

Overall 100% 23% 3% 7% 6%




Chemical 90% 48% 0% 25% 0%






S 22



Average Set-Up Time Between Jobs









Total 0

102030405060708090

100

Ho

urs

Hours % of Companies

Best Average 0 >0-4 5-9 10-19

Overall 0 3 2% 83% 7% 4%

Forest Products and Printing 0.08 2 0% 93% 7% 0%



Chemical 5 2 0% 67% 33% 0%

Industrial Equipment and Machinery 0.01 5 0% 88% 0% 8%

Food, Beverage or Tobacco Product 0.1 1 0% 100% 0% 0%


Plastics, Rubber Products 0.25 2 0% 93% 7% 0%

Furniture and Related Product 0.03 0.7 0% 100% 0% 0%

S 23



Annual Inventory Turns - Materials









Total 0

255075

100125150175200225250275300325350375

Ann

ual T

urns

Annual Turns % of Companies

Best Average 100+ 75-99 50-74 25-49

Overall 300 26 6% 0% 3% 11%




Chemical 12 8 0% 0% 0% 0%





Furniture and Related Product 300 83 25% 0% 0% 0%

S 24



Annual Inventory Turns - Work in Progress









Total 0

255075

100125150175200225250275300325350375

An

nu

al T

urn

s


Best Average 100+ 75-99 50-74 25-49

Overall 365 43 14% 7% 9% 16%




Chemical 9 8 0% 0% 0% 0%



Textiles, Clothing, Leather - - - - - -



S 25



Annual Inventory Turns - Finished Goods









Total 0

255075

100125150175200225250275300325350375

An

nu

al T

urn

s


Best Average 100+ 75-99 50-74 25-49

Overall 300 38 9% 0% 9% 7%




Chemical 20 15 0% 0% 0% 0%






S 26



Annual Inventory Turns - Total Inventory









Total 0

255075

100125150175200225250275300325350375

An

nu

al T

urn

s


Best Average 100+ 75-99 50-74 25-49

Overall 250 26 8% 0% 8% 7%




Chemical 12 8 0% 0% 0% 0%






S 27



Project Improvements

A number of recommendations were also made by companies withrespect to how to improve future studies. Their suggestions are summarized below in four key recommendations that should be considered in the next LEAN Benchmarking initiative:

• Expand the survey to obtain improved representation in Quebec.

• Provide better explanations of LEAN terminology.

• Provide instructions to companies about how to calculate the performance indicators requested in the survey.

• Develop a survey that is more applicable to customized, small-batch or one-off projects and production.

S 28

Documents

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