Canadian Plastics

Managers, behold a proven tool to boost profits

By Cindy Macdonald   



A new manufacturing intelligence software with a novel approach to measuring key business metrics has already increased profitability at eight plastics companies. The eight firms took part in a pilot ...

A new manufacturing intelligence software with a novel approach to measuring key business metrics has already increased profitability at eight plastics companies. The eight firms took part in a pilot project, and have seen profits rise by 20 to 80 percent, according to Faris Shammas, executive director, Ontario, with the Canadian Plastics Industry Association.

The Profitability Dash software from pVelocity (1) shifts the focus of manufacturers from traditional cost-based accounting measurement to “profit velocity”, a measure of the number of dollars per unit of time.

“[With The Profitability Dash] companies can understand where their real costs are,” says Shammas.

“It gives processors a greater appreciation of which products are truly profitable”, he adds. For example, a processor may find commodity products are actually more profitable than so-called “high-margin” products.

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At Accord Plastics, a custom manufacturer of profile extrusions, using The Profitability Dash produced a 68% improvement in earnings. The ability to measure against targets allowed decentralization within the plant and the introduction of new product lines previously thought unprofitable.

“We have created a dramatically different pricing formula that is making us much more competitive,” says Robert Ciancio, CEO of Accord. “We are in the process of changing the incentive system to create linkages between performance and key outcomes, and we are shortening the results time-frame.”

The Profitability Dash is a four-part suite of integrated intelligence tools that works either as a stand-alone product or as a “bolt-on” to Enterprise Resource Planning (ERP) systems. The four components are: enterprise scorecard reporting, sales forecasting, product and customer profitability analysis, manufacturing footprint analysis.

In a non-plastics pilot project conducted with the input of NRC’s IRAP program, a printing roller company evaluated the software in concert with lean manufacturing processes. Jay Perry of NRC comments: “Historically, the slickest way to address productivity improvement is through lean manufacturing. My frustration with lean manufacturing has always been that it did not give me the process metrics that I needed … Enter the missing link. What I really excites me about this software is that is gives me new intelligence.”

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