President's Message

President’s Perspectives
Measurements: a cost or a revenue maker?

Alessandro Ferrero

I wonder if you share my feelings about industry’s view of metrology. Whenever I visit an industrial plant, I frequently find that metrologists in a Test & Measurement (T&M) department are confined to manage incoming inspections and final tests. They seem to be considered annoying people, whose main goal is to find out somebody else’s failure to meet a required product specification or a quality standard e.g. the ISO 90000 series of Standards. Not an asset in the production process and as just an undesirable, though necessary cost. These pessimistic thoughts have been verified by my friend Sergio Sartori, the former director of INGC. (INGC is one of the two former Italian National Metrology Institutes that have been recently merged with INRIM). He drew my attention to an article published in a Bulletin of the Collège Français de Métrologie.

This article reported a case study about a mid-sized European industry (with 20 M€ yearly sales), with a production rejection rate of about 4% of the sales (about 800 k€/year). Despite this, the estimated revenue is about 5% of sales (about 1 M€/year). The top management planned to increase the revenues by a further 10% (corresponding to 100 k€/year) by motivating the marketing and sales staff.

However, the T&M department provided an in-depth analysis of the production rejects and found out that the 70% of the total rejects were due to three main causes. The main reason was found to be an inaccurate description of what the customer needed. The acceptance/rejection rules were set incorrectly and more than half the rejects did meet the customers’ needs when the rules were set correctly. The second reason was related to the final acceptance test. It was totally based on the operator’s subjective experience, instead of on objective data (the measurement of some well defined physical characteristics of the product). After setting-up an acceptance test based on a new, objective measurement procedure, it was discovered that more than the 70% of the previously rejected products passed inspection. The third reason was due to the recommended tolerances that were set by the marketing department. They were mainly based on aesthetics, instead of on specifications of tolerances according to the customers’ true needs.

The T&M department submitted recommendations for new inspection rules, the manufacturer followed the recommendations and the net increase in revenues was about the 30% (320 k€/year) without decreasing the customers’ satisfaction and without increasing sales! This case study shows that a good T&M department is capable of not only repaying its own cost, but also generating a significant revenue, sometimes higher than the one attainable with a sales increase.

However, as I discussed with Sergio during one of the nice conversations we usually have when we meet, this result can be attained if a number of typical measurement issues are correctly dealt with by the T & M staff: What are the real customers’ needs? How have the most critical tolerances been set for the product, and how have they been tailored to the customers’ needs? Is the measurement procedure for testing the product specifications adequate to meet the goal, and has the target uncertainty been set adequately?

All these questions relate to measurement problems and have a great economic impact. They can’t be disregarded in any good industrial process, because if underestimated it might cause significantly lower incomes, that are nothing else than losses. Finding the correct answer, however, requires competent people, well trained in the I&M field and well motivated by the top management to take part into the top-level decision processes.

The I&M Society has been and is active in advancing knowledge and competence in this area, and its membership represents the most qualified competence in the I&M field. Together with my Season Greetings and my wishes for a Happy New Year, let me also wish that this incoming year brings more and more appreciation for metrology!

-Alessandro