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Leading Indicators vs. Lagging Indicators in Manufacturing

A manufacturing process must continually be monitored and improved upon in order to remain competitive in today’s manufacturing environment. To understand and predict performance, manufacturers rely on leading indicators and lagging indicators that can help plan for future events and authenticate previous efforts.

Each organization must determine the right balance of leading and lagging indicators to generate the most effective metrics for that manufacturing operation. Here’s more information about leading indicators versus lagging indicators in manufacturing:

Leading Indicators Vs. Lagging Indicators

A leading indicator is used to predict future events. It’s a measurement of behavior, which is a precursor of results. Behavior could include operator experience. Making adjustments that will improve leading indicators can help to prevent unwanted issues and undesired results.

Lagging indicators are the results after the manufacturing process is complete. They confirm or reinforce established trends. The lagging indicator that often gets the most attention is profitability.

Leading Indicators Are Getting Attention

With Big Data and the increasing reliance on predictive analytics, leading indicators are beginning to get more deserved attention.

Steve Silverman, Director of the Office of Compliance at the FDA’s Center for Devices and Radiological Health was asked in this interview whether the FDA seems to be shifting its focus from the “lagging indicators”, like recalls and other adverse events, to “leading indicators” related to quality and manufacturing to improve product quality and safety. His response:

I think that is definitively the case. We will never get away from lagging indicators. And lagging indicators have value; they serve an important role. Being aware of the causes of recalls, trends with respect to recalls, and the results of inspections, are critical mechanisms to understand and react to problems that may have developed in the marketplace. But that is not the only approach that we can or should apply. It is equally important to understand what are the predictors of quality outcomes – what are the practices that manufacturers undertake when they are implementing quality correctly, which create a high likelihood of a quality product that serves its intended use.

As Silverman noted, we’ll never get away from lagging indicators, but a new focus has been put on leading indicators given that there is more access to data. Manufacturers that want to stay ahead of the curve, obtain top notch talent, and remain competitive must utilize the data that is accessible to them and optimize the process as needed.

AirFree® Fluid Dispensers Are Reliable

Manufacturers that use an AirFree® fluid dispenser for the assembly of their products have some proven leading indicators they can rely on; the ability to establish one dispense program globally (since they are not run by compressed air, which varies significantly from plant to plant and country to country), operator training with 24×7 support, remote monitoring of processes by managers, electronic documentation of the dispense and closed loop verification of the dispensing process.

Conversely, many lagging indicators show up when a pneumatic system is used; product variability, an increase in CAR (corrective action reports) and product failure during inspection, or worse at the end user.

For more information about lead indicators versus lagging indicators in manufacturing, contact Fishman Corporation.