Business Intelligence Ecosystem Research in
Fabricated Metal Product Manufacturing Industry
Background Research Paper
Team Members:
Estia Nyopieh
Yan Ren
Project Sponsor: Frank Coker
Team Affiliate: Brian LeBlanc
University of Washington
Information School
IMT 595 | Winter 2012
Instructor: Mike Crandall
February 11, 2012
1 Abstract
Survival and growth are keys to the success of any business. One way to realize this is by knowing
how to use financial data to do predictive analytics based on key indicators that matter to the business.
The goal of this research project is to develop financial benchmarking in the Fabricated Metal Product
Manufacturing (FMPM) vertical market for small business owners in North America. To help achieve the
goal, this paper seeks to understand the key concept of benchmarking, to be familiar with FMPM project
environment, to identify methodology and best practices applicable to FMPM and to recognize financial
dashboard and benchmarking that exist in the manufacturing industry.
2 Introduction
Thousands of businesses, in every possible sector of the economy, are currently engaged in
benchmarking activities. One of the dominant trends in every modern business is the pursuit of
continuous improvement through performance assessment and analysis. This trend has resulted in an
explosion of technique, trainings, books and web sites to assist businesses in their pursuit of excellence.
“Benchmarking is one of the most effective tools that have evolved to meet the challenges of performance
measurement and improvement (Beck, Bik, & Dziegielewski, 2006).”
2.1 What is a benchmark and benchmarking?
Businessdictory.com defines a benchmark as “a standard, or a set of standards, used as a point of
reference for evaluating performance or level of quality (Businessdictionary.com, 2012).” Benchmarks
may be drawn from a firm’s own experience, from the experience of other firms in the industry, or from
legal requirements such as environmental regulations. The Glossary of Manufacturing defines
benchmarks as “quantitative measures of performance achieved by others, extolled as desirable targets it
should aspire (Glossary of Manufacturing, 2012).”
Benchmarking on the other hand, is a “process to compare one’s performance within similar group
for particular criteria or indicator against the standard measurement (AMA, 2005).” This group can be of
the same business size, function and location. The Glossary of Manufacturing defines benchmarking as a
“means of enhancing a company’s current performance in some particular sphere, that is, to find another
company who is doing better that itself, study it to identify how the conduct of its operations is different
or better and duplicate it (Glossary of Manufacturing, 2012).”
2.2 What is Financial Benchmarking?
Financial benchmarking is a process of performing a financial analysis and comparing the results in
an effort to assess one’s business overall competitiveness and productivity (Wikipedia, 2012a). Some of
the more useful financial benchmarks are “gross, operating and net profit margins; sales and profitability
trends; inventory, accounts receivable, and accounts payable turnover; salary and compensation data;
revenue per employee; cost per employee; marketing expenses as a percent of revenue; and revenue to
fixed assets ratio (Open Forum, 2012).” Cambridge Dictionaries Online defines financial benchmark as “a
financial information about a company’s profits, costs, share price, etc., which is compared with other
companies to measure its performance (Cambridge Dictionaries Online, 2012).”
2.3 Objective and Importance of Benchmarking
A famous American professional baseball player and manager born 1925, Yogi Berra once quote “If
you don’t know where you’re going, you might not get there” (Thinkexist.com, 2011). APQC states that
benchmarking is a must for any business that wants to survive and thrive in an increasingly competitive
marketplace and knowing where you as a business owner stand are the first step in getting better (APQC,
2012). Generally the objectives of benchmarking are to:
(1) Determine what and where improvements are called for
(2) Analyze how other organizations achieve their high performance levels
(3) Use this information to improve performance.
(4) Compare key performance indicator (KPI).
(5) Identify and understand the reasons for differences in performance.
(6) Share best practices and new ideas.
(7) Review progress and ensure continuous improvement
(8) Reduce cost1
Further understanding of why benchmarking should be considered and used by companies is
by comparing the differences between companies who do benchmarking versus who do not do
benchmarking. There are 16 important reasons why one should benchmark and it is categorized
in 5 benefit areas to what benchmark can provide, as listed in the following table (Camp, 1989):
WITHOUT BENCHMARKING
WITH BENCHMARKING
Benefit Area 1 : Defining customer requirements
1. Based on history or gut feel
Market reality
2. Perception
Objective evaluation
3. Low fit
High conformance
Benefit Area 2 : Establishing effective goals and objectives
4. Lacking external focus
Credible, unarguable
5. Reactive
Proactive
6. Lagging industry
Industry leading
Benefit Area 3 : Developing true measures of productivity
7. Pursuing pet projects
Solving real problems
8. Strengths and weaknesses not understood
Understanding outputs
9. Route of least resistance
Based on best industry practices
Benefit Area 4 : Becoming competitive
10. Internally focused
Concrete understanding of competition
11. Evolutionary change
New ideas of proven practices and technology
12. Low commitment
High commitment
Benefit Area 5 : Industry best practices
13. Not invented here
Proactive search for change
14. Few solutions
Many options
15. Average of industry progress
Business practice breakthrough
16. Frantic catch-up activity
Superior performance
1
Objective 1 to 3 is from (Businessdictionary.com, 2012)
Objective 4 to 7 is from (Glossary of Manufacturing, 2012)
Objective 8 is from (Global Information Partners, n.d.)
3 Project Environment
3.1 Fabricated Metal Product Manufacturing (FMPM) Industry
According to the North American Industry Classification System (NAICS), industries involved in
Fabricated Metal Product Manufacturing (Code: 332) “transform(s) metal into intermediate or end
products, other than machinery, computers and electronics, and metal furniture, or treat metals and metal
formed products fabricated elsewhere. Important fabricated metal processes are forging, stamping,
bending, forming, and machining, used to shape individual pieces of metal; and other processes, such as
welding and assembling, used to join separate parts together. Establishments in this subsector may use
one of these processes or a combination of these processes (U.S. Census Bureau, 2012a).”
In the United States, the fabricated metal product manufacturing industry includes about 55,000
companies with about $285 billion in combined annual revenue (First Research, 2012). The industry as a
whole is fragmented: the largest 50 companies account for about 20 percent of revenue. But concentration
can be high in industry segments such as boiler, cutlery, metal can, and spring manufacturing.
Geographically, this industry is more centralized on the East Coast and Midwest of America, as Ohio,
Illinois, etc. (Refer to Appendix 8.1 Appendix - Value of shipments per capita ($) in 2007.) Globally, the
fabricated metal product manufacturing industry generates about $1.5 trillion in annual revenue. Top
producers include the US, China, Japan, Germany, Italy, and Canada. In terms of small Fabricated Metal
Product Manufacturing business (with less than 300 employees), in North America, there are over
100,000 companies in this industry (Hoovers, 2012).
Major segments of the fabricated metal parts industry include architectural and structural products;
forging and stamping; machining; cutlery, tools, and kitchenware; boilers, tanks, and containers; hardware;
springs and wires; coating, plating, and polishing; and valve and pipe manufacturing. Companies
manufacture mainly simple metal parts used by industrial customers, such as those making autos,
airplanes, machinery, appliances, and computers. Some companies make simple finished products like
metal cans, tools, plumbing fixtures, and structural steel members. Most companies operate a single
manufacturing facility.
In terms of finance, companies often have high receivables and large inventories of raw materials
and semi-finished product. The specialized nature of some products and their high engineering content
can allow high profit margins, but other products may be commodities with low margins. Companies
often have large capital investments in plant and equipment.
The biggest challenge for this industry in United States is the high demand dependence on other
manufacturing activity. Demand is heavily driven by US manufacturing levels, especially for equipment
and machinery. US production of fabricated metal products dropped more than 15 percent during the
recession of the late 2000s. A greater reliance on low-cost overseas manufacture has cut the market for
US metal products. Other challenges include fluctuating raw materials costs, higher risks of concentration
on niche products, and alternative materials replacing metals.
3.2 Top Players in FMPM Industry
Below is the list of the large companies in terms of market share in the Fabricated Metal Product
Manufacturing industry. The NAICS is the specific industry code the company is in and the Share is
compared within the market in the Market column. See Appendix 8.2 Appendix - Big Companies in
FMPM Industry for a more exhausted list.
Company
Siemens
Rexam
Vale
Pumpkin Masters
Gillette
Hyde Group
Assa Abloy
CIMC
Novelis
DC Safety Systems
ITW
NAICS
332111
332115
332117
332211
332211
332212
332212
332313
332431
332439
332722
Market
Top Gearbox Makers Worldwide, 2007
Top Cap and Closure Maker, 2009
Leading Nickel powder Makers, 2009
Pumpkin Carving Kit Market, 2009
Top Razor Blade Maker, 2009
Market for Paint and Drywall Hand Tools
Top Lock Makers Worldwide, 2008
Top Shipping Container Makers Worldwide, 2010
Aluminum Can Market in North America, 2010
Automotive First Aid Kit Market in North America
Top Industrial Fastener Maker Worldwide, 2009
Share
35%
9%
90%
87%
70%
47%
13%
56%
35%
85%
5%
Tyco International
Sturm, Ruger & Co.
Liberty Safe
332911
332994
332999
Top Valve Makers Worldwide, 2009
6%
Top Gun Makers, 2008
18%
Top Premium Home and Gun Safe Leaders in North 32%
America, 2009
In addition, there is more information related to this industry about influential people (Appendix
8.3); industrial publications (Appendix 8.4), and software vendors (Appendix 8.5).
3.3 Small Business
People use the criteria, such as the number of workers employed by a business, annual receipts, and
the nature of the any relationships with affiliates, to define small business. In terms, of size, the definition
of "small" also varies by country and by industry. In the European Union, a small business is defined as
having fewer than 50 employees (European Commission). The U.S. Small Business Administration (SBA)
established size standards for all for-profit economic activities as they are described under the North
American Industry Classification System (NAICS) Identifying Industry Codes (Small Business
Administration). For manufacturing industries, small business is generally defined as 500 or fewer
employees. For subsector 332, Fabricated Metal Product Manufacturing, most industries defined small
business as 500 or fewer employees. Metal Heat Treating (332811), Enameled Iron and Metal Sanitary
Ware Manufacturing (332998), and Ball and Roller Bearing Manufacturing (332991) allow 750
employees; Metal Can Manufacturing (332431), Small Arms Ammunition Manufacturing (332992), and
Small Arms Manufacturing (332994) permit up to 1,000 employees; Ammunition Manufacturing (332993)
can have up to 1,500 employees as small businesses.
A small business can be started at a very low cost and on a part-time basis. Adapting to change is
crucial in business and particularly small business; not being tied to any bureaucratic inertia, it is typically
easier to respond to the marketplace quickly. Small business proprietors tend to be intimate with their
customers and clients which results in greater accountability and maturity. Independence is another
advantage of owning a small business. Freedom to operate independently is a reward for small business
owners. Small business owners have the satisfaction of making their own decisions within the constraints
imposed by economic and other environmental factors.
Small businesses often face a variety of problems related to their size. A frequent cause of
bankruptcy is undercapitalization. This is often a result of poor planning rather than economic conditions
- it is common rule of thumb that the entrepreneur should have access to a sum of money at least equal to
the projected revenue for the first year of business in addition to his anticipated expenses. For example, if
the prospective owner thinks that he will generate $100,000 in revenues in the first year with $150,000 in
start-up expenses, then he should have no less than $250,000 available. Failure to provide this level of
funding for the company could leave the owner liable for all of the company's debt should he end up in
bankruptcy court, under the theory of undercapitalization.
Another problem for many small businesses is termed the 'Entrepreneurial Myth' or E-Myth. The
mythic assumption is that an expert in a given technical field will also be expert at running that kind of
business. Additional business management skills are needed to keep a business running smoothly. Still
another problem for many small businesses is the capacity of much larger businesses to influence or
sometimes determine their chances for success (Wikipedia, 2012b).
4 Methodology
4.1 Benchmarking Process in and out of FMPM vertical market
Successful benchmarking exercises are the result of choosing carefully the right methodology
(Leonard & Zairi, 1994). Benchmarking itself is a process and like many other processes, relies upon the
first steps being correctly executed (Hutton & Zairi, 1995). If the basic planning stage is erroneous all
subsequent steps will be more difficult, more expensive and ultimately less successful (Hutton & Zairi,
1995). Consequently, this leads to poor results, or results that improve the performance of a process that
has no significant impact on the overall competitive status of the organization (Hutton & Zairi, 1995).
The Xerox benchmarking methodology is comprised of five stages of planning, analyzing,
interrogation, action and scrutiny; with 10 steps is the best known and perhaps most widely use one
(Leonard & Zairi, 1994). Xerox is a business that manufactures and sells a wide variety of office and
production equipment (Wikipedia, 2012c) which has seven business foci used for benchmarking purposes
(Leonard & Zairi, 1994). Based on the methodology score (Leonard & Zairi, 1994), four out of the seven
business foci are applicable to the FMPM business environment. They are the strategic, operational,
customer and process business foci. Therefore, it is relevant to apply Xerox benchmarking methodology
within the FMPM industry context.
The five phases involving ten steps in Xerox benchmarking methodology are as follows (Camp,
1989)
Phase 1: Plan
1. Identify what is to be benchmarked
2. Identify comparative companies
3. Determine data collection method
Phase 2: Analyze
4. Determine current performance ‘gap’
5. Project future performance levels
Phase 3: Integrate
6. Communicate benchmarking findings and gain acceptance
7. Establish functional goals
Phase 4: Action
8. Develop action plans
9. Implement specific actions and monitor progress
10. Recalibrate benchmarks
Phase 5: Scrutiny / Maturity
 Leadership position attained
 Practices fully integrated into processes
4.2 Common Pitfalls in Benchmarking
There are common best practices that can help make the benchmarking process a success. It is
important to be aware, however, that, a lack of understanding of the benchmarking process itself and the
lack of understanding of the objectives of benchmarking often leads to poor execution (Hutton & Zairi,
1995). Common pitfalls during benchmarking process are as follows (Global Information Partners, n.d.)








Not enough data
Too much detail
Only one source of data
Data collection is too large and complex
Rigid models don’t enable a true comparison with the business organization
Benchmarking don’t take into account the business organization specifics and internal
challenges
The business organization’s philosophy was not taken into consideration
Too expensive
4.3 Tools, methodology and considerations to develop financial benchmarks
4.3.1 Tools
The common tool used to develop the financial benchmark is the financial statement which
includes the income statements and balance sheets. The income statement conveys information regarding
income streams and expenses over a period of time such as yearly, half-yearly, and quarterly (Rich, 1999).
The balance sheet relays information regarding a company’s assets, liabilities, and owner’s equity at any
given time, typically the last day of company’s fiscal year (Rich, 1999). The usage of this tool as
something common is proven when some examples from literature states “the financial analysis
publications is made possible through over one million financial statements (Industry Norms and Key
Business Ratio, 2012)” and “the performance data is derived from latest available IRS figures on U.S. and
international companies, and tracks 50 operating and financial factors in nearly 200 industries (Troy,
2012)”.
4.3.2 Methodology
The prescription for developing the FMPM industry financial benchmarks in this project is to base it
on the vertical market. Vertical market is defined as “a group of companies that serve each other’s
specialized needs and that do not serve a broader market. It has limited market, tightly focused on a single
niche and meeting the needs of one specific industry (Investopedia, 2012).” Vertical analysis is a method
of analyzing financial statement in which you can compose individual line items to a baseline item such
as net sales from the income statement, total assets from the asset section of the balance sheet, and total
liabilities and owner’s equity in the liabilities and owner’s equity section of the balance sheet (Rich,
1999). Therefore the methodology which can be applied to develop financial benchmark for FMPM
industry is as follows (Rich, 1999):
Step 1: Collect financial statement in similar business size and industry
Step 2: Compare trends in the relative performance of any financial statement line items
over time (3 years) and identify positive or negative trends and irregularities
Step 3: Perform financial ratio analysis
Step 4: Determine key indicators and values which impact the organization
4.3.3 Considerations
Ratio analysis can provide the business managers and investors with tremendous helpful information
regarding company performance trends. However, there are a number of factors that should be considered
when employing ratio analysis during the process of developing financial benchmark. Below are some of
the issues to consider (Rich, 1999):

Trends over time are often more insightful than one-time values. A high or low one-time
value may be the result of an unusual event not likely to reoccur whereas a trend is often
more indicative of an event that is likely to repeat in the future.



When comparing ratios with other companies, you will generally realize more accurate and
insightful results when comparing companies of similar size2 and in similar industries.
Financial ratios are in large part dependent on the reliability of the information found in the
financial statement. If this information is misleading or inaccurate, the analysis results will
likely also be incorrect.
Financial ratios are dependent upon the particular accounting principles used by the
company. Although most companies adhere to generally accepted accounting principles, the
manner in which these firms report financial performance can vary greatly. (for example:
some companies prefer to account inventory on a last-in, first-out (LIFO) basis while others
prefer a first-in, first-out (FIFO) accounting. In an inflationary period, a given inventory
would likely have a larger value when the company uses FIFO instead of LIFO inventory
methods even though the same type and volume of inventory are present. Both accounting
methods are acceptable but can give seemingly very different inventory perspectives. It is
thus important to check financial statement footnotes when comparing companies to account
for differences in accounting methods)
5 Existing Financial Benchmark and Dashboard
5.1 Industrial Associations
5.2 There are many professional associations in the Fabricated Metal
Product Manufacturing industry and its sub industries. Below are the
most related associations we have found. (Refer to 8.6 Appendix Influential People
The influential people in the FMPM industry are as follows:
i)
Board of Directors of the Association
2
Referring to section 3.2 on small size definition, this project will use the financial statements from all sources
regardless of how companies define a small business. In general there is less difference between companies at 100
employees and companies at 500 then there is between 10 and 50 employees. Most importantly, basic information
will be collected from various sources and will be combined to create a general picture. Various definition of small
size need to be kept in mind so any unusual differences can be explained.
An association is generally the body who secure group opinion and action on the common problems
of the industry. An association addresses any questions, policies and techniques that may be involved in
those problems; to advance the lawful common purposes of its members and to promote and safeguard the
industry as a whole. Therefore, the elected board of directors of an association in FMPM industry is seen
as the influential people who are entrusted by the voting members to do everything necessary and proper
for the accomplishment of the industry to operate with superior economy, efficiency, safety and regard for
the environment. In addition, the board directors are mostly the top managers of the companies in this
industry.
Association
FMA
FMA
FMA
PMA
PMA
PMA
ii)
Board of Directors
Dave Barber
Burke Doar
Carlos Rodriquez-Borjas
Patrick Thompson
William Adler
Jody Fledderman
Role in Association
Chairman
1st Vice Chairman
2nd Vice Chairman
Board Chair
1st Vice Chairman
2nd Vice Chairman
Company
The Wilmington Grill Co.
TRUMPF Inc.
Feralloy Corp.
Trans-Matic Manufacturing Co.
Stripmatic Products, Inc
Batesville Tool & Die, Inc
The financial consultant who gives talk during association conference / meeting
A consultant is commonly known as an expert or a specialist in a particular field who gives
professional advice. One of the benefits of being a member of an association is to gain knowledge about
FMPM industry. There are many trainings and events being organized on financial performance of the
companies. Therefore, the consultants who are invited to give the trainings are seen as an influential
people.
For example, Bob Dobrowsky, from Plante & Moran, PLLC in Cleveland, OH, has more than 20
years of experience working with privately held companies, primarily in the manufacturing, distribution
and service industries. Bob authors the annual PMA Benchmarking Study and has been active in PMA for
the last 12 years . With his extensive experience in the field, one would trust him as a knowledgeable
consultant.
5.3 Appendix - Industrial Publications
We have found some magazines and websites which always publish subject knowledge and industry
news to the audience. Below are some examples of the publiers.
Publication
American Fasterner Journal
Metal Center News
Metal Construction News
Metal Finishing.com
METAL WEB NEWS
MetalForming Magazine
Modern Machine Shop
National Metal Finishing Resource Center
Nuts Bolts & Thingamajigs
Steel Business Briefing
Thefabricator.com
Tooling & Production Magazine
Valve Magazine
Vehicle Services Pros.com
Website
http://www.fastenerjournal.com/
http://www.metalcenternews.com/
http://www.metalhomedigest.com/Default.aspx?PublicationID=2
http://www.metalfinishing.com/
http://www.metalwebnews.com/news.html
http://www.metalformingmagazine.com/
http://www.mmsonline.com/articles
http://www.nmfrc.org/
http://www.nutsandboltsfoundation.org/
http://www.steelbb.com/us/
http://www.thefabricator.com
http://dev.toolingandproduction.com/home.php
http://www.valvemagazine.com/
http://www.vehicleservicepros.com/
5.4 Appendix - Software Vendor in FMPM Industry
The following list is 7 software vendors that are related to the FMPM industry . The filter is based on
applications selected that are MRP software, financial accounting, supply chain management, asset
management and business intelligence. Also the filter takes into account the size of the business (small to
medium) in terms of revenue that is between $1 million to $5 million.
i)
ii)
iii)
iv)
v)
vi)
vii)
Eci M1
EnterpriseIQ
Henning Visual EstiTrack ERP
Intuitive ERP
Made2Manage ERP
Microsoft Dynamics GP
SAP Business One - Manufacturing
Appendix – Full List of Industrial Associations.) The rank is rated by the association’s specialty
(NAICS code), and the members’ geographic range (Region).
Rank
1
Association
Acronym
Fabricators
& FMA
Manufacturers
Association
Precision Metalforming PMA
Association
1
Website
http://www.fmanet.org/mem
bers/codb.cfm
http://www.pma.org/home/
Specialty
332
Region
Mainly
North
America
(Worldwide)
47% 332, North America
17% 333
Fabricators & Manufacturers Association (FMA) is the closest associations to our targeted research
objective, the Fabricated Metal Product Manufacturing industry in North America (FMA, 2012). It has
2000 companies and individual members in United States, Canada and Mexico, and 40 other countries. It
also provides financial analysis data in the areas of liquidity, profitability, asset management, debt
management, operational benchmarking, as well as value proposition and marketing effectiveness. For
example, they have the indicator, Days in Account Receivable, which is compared among different sizes
of companies. However, their sample is very small, as the results provide comparisons for only 50
participating companies.
Below is a list of associations’ benchmark related publications and their prices for members and
non-members.
Association
Member
Price
2011 Financial Ratios & Operational Benchmarking $ 150.00
Survey
Benchmarking Best Practices in Maintenance $ 45.00
Management - Book
Dashboard
Member
Free
Benchmarking Report
$ 250.00
NonMember
$ 350.00
$ 200.00
PMA
Benchmarking Supplement - EBIT (Earnings Before $ 75.00
Interest and Taxes)
Financial Analysis Report
$ 250.00
PMA
Benchmarking Supplement - Operations
$ 200.00
FMA
FMA
NTMA
PMA
PMA
Product
$ 75.00
$ 50.00
$ 750.00
$ 750.00
PMPA
Yearly Business Forecast Report
$ 295.00
$ 395.00
5.5 Professional Financial Data Providers
Besides the professional associations, there are a lot of financial organizations providing all kinds of
financial benchmarking for many industries. Some of them are free via UW Business School library and
databases. For example, Almanac of Business and Industrial Financial Ratios (Reference Book) provides
precise benchmark for evaluating an individual company’s financial performance. The Annual Statement
Studies (Database) provided by RMA (Risk Management Association) has annual comparative composite
financial data with industry norms (ratios and probability cash flow measures) (Risk Management
Association).
Organization
Accessibility
Fintel
Purchased
RMA (Risk Management Association) Annual Statement Studies
Library Free
Industry Norms and Key Business Ratios (INKBR)
Library Free
Almanac of Business and Industrial Financial Ratios (ABIFR)
Library Free
Integra
Partly Library Free
ValuSource IRS Corporate Ratios
$ 225.00
Bizminer
$ 99.00
Among the first five “free” sources, we compared their financial benchmark data. Table below
shows a brief result. (Refer to 8.7 Appendix – Comparison among FMPM Financial Benchmarking for
full comparison.) The Type of Data row shows that most benchmarks have both absolute mean values and
percentage value (to Net Sales for example). Some benchmarks divide companies by assets size and give
out different benchmark data (See Separate Data by Size row, Y – Yes, N – No). Most benchmarks have
more than one year’s data, except Integra. All organizations give out the number of companies used in
their benchmarks (the number in the table is the most recent sample size). INKBR uses the SIC (U.S.
Census Bureau, 2012b) industry classification system, and others use the new NAICS code. But some of
them aggregate the data at Fabricated Metal Product Manufacturing level, and some of them aggregate the
data at the sub-industry level, such as the 6-digit NAICS level. (See 332 Level and Sub-level rows).
The financial data presented are alike in most benchmarks. Most of them include the basic
information for a financial statement. For example, they all have the benchmark for Net Sales, Gross
Margin, Inventory, as well as radios like Quick Ratio and Current Ratio. But not all benchmarks have the
exact same data. For example, INKBR does not have Inventory Turnover as the other benchmarks do.
Another thing needs to point out is for financial ratios, RMA and INKBR both provide median figures,
with upper and lower quartiles. Other benchmarks just have mean value.
Type
FINTEL
Type of Data
#, %
Separate Data By Assets
Size
N
Year(s)
Number
of
All
companies
Classification System
Aggregated Level
sub-level
Indicator
Net Sales
Gross Margin
Inventory
Total
Equity
(Net
Worth)
Inventory Turnover
Quick Ratio
Current Ratio
RMA
INKBR
ABIFR
Integra
%, some #
#, %
some #, some %
%
Y
N
Y
2006, 2007, 7/2006-6/2007,
2007, 2008, 2008, 2009, 2008, 2009, 7/2007-6/2008,
2009, 2010
2010, 2011
2010
7/2008-6/2009
Y
21005
NAICS
Y
45603
NAICS
Y
4736
NAICS
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
2010
869
SIC
Y
Y
85742
NAICS
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
In this preliminary research, there is not much data about the break-down of the inventory
benchmarks, such as raw material, work-in-process, and finished goods. The closest is the PMA
benchmark report in 2008 where raw material inventory turnover and total material turnover benchmark
data is obtainable. However as explained previously, the data from associations is not freely available.
Therefore, this data gap could be filled through interviews with associations or by conducting a survey
with FMPM companies to develop the inventory benchmarks.
6 Conclusion
Based on this research on the Fabricated Metal Product Manufacturing industry, the next step is to
find out what are the most important indicators and the values of indicators in the most recent three years.
The result of this research will be used as a financial benchmark for the small Fabricated Metal Product
Manufacturing industry in North America.
7 References
AMA. (2005). American Medical Association. Retrieved from Why Benchmark is so important?
:
http://www.osconseil.com/whitepapers/Why%20Benchmarks%20are%20so%20importan
t.pdf
APQC. (2012). American Productivity and Quality Center. Retrieved from http://www.apqc.org/
Beck, R., Bik, T., & Dziegielewski, B. (2006). Introduction to Financial Benchmarking. MTAC
Publisher.
Retrieved
Jan
16,
2012,
from
http://mtac.isws.illinois.edu/mtacdocs/pubs/MTACTR06-06.pdf
Businessdictionary.com.
(2012).
Benchmark
Definition.
http://www.businessdictionary.com/definition/benchmark.html
Retrieved
from
Cambridge Dictionaries Online. (2012). Financial Benchmark Definition. Retrieved from
http://dictionary.cambridge.org/dictionary/business-english/financialbenchmark?q=financial+benchmark
Camp, R. C. (1989). Benchmarking : The search for industry best practices that lead to superior
performance. Milwaukee, Wisconsin, USA: ASQC Quality Press.
European Commission. (n.d.). Small and medium-sized enterprises (SMEs). Retrieved from
European
Commission
Enterprise
and
Industry:
http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/smedefinition/index_en.htm
First Research. (2012, Feb). First Research Industry Profile - Fabricated Metal Product
Manufacturing. Retrieved from First Research: http://www.firstresearch.com/
FMA. (2012). Fabricators & Manufacturers Association, International. Retrieved from
http://www.fmanet.org/
Global
Information
Partners.
(n.d.).
Retrieved
from
http://www.osconseil.com/whitepapers/Why%20Benchmarks%20are%20so%20importan
t.pdf
Global Information Partners. (n.d.). Why Benchmarks Are So Important. Retrieved from
http://www.osconseil.com/whitepapers/Why%20Benchmarks%20are%20so%20importan
t.pdf
Glossary of Manufacturing. (2012). Retrieved from http://www.glossaryofmanufacturing.com/
Hoovers. (2012, Feb). Retrieved from Hoovers: http://www.hoovers.com/
Hutton, R., & Zairi, M. (1995). Effective benchmarking through a prioritization methodology.
Total Quality Management, 6(4).
Industry Norms and Key Business Ratio. (2012). Retrieved Feb 3, 2012
Investopedia. (2012). Definition of 'Vertical Market'. Retrieved Feb 11, 2012
Leonard, P., & Zairi, M. (1994). Practical benchmarking: The complete guide. London:
Chapman & Hall.
Open Forum. (2012). Financial benchmarking : How do you compare to your competitors.
Retrieved from http://www.openforum.com/idea-hub/topics/money/article/financialbenchmarking-how-do-you-compare-to-your-competitors-1
PMA.
(2012). Benchmarking, Best-in-Class and Profitability.
http://www.pma.org/meetings/event_details.asp?id=458
Retrieved
from
Rich, G. (1999). Winning business : how to use financial analysis and benchmarking to outscore
your competition. Houston, Texax, USA: Gulf Publishing Company.
Risk
Management
Association.
(n.d.).
http://www.statementstudies.org/
Retrieved
from
eStatement
Studies:
Small Business Administration. (n.d.). U. S. Small Business Administration Table of Small
Business Size Standards Matched to North American Industry Classification System
Codes.
Retrieved
from
SBA.GOV:
http://www.sba.gov/sites/default/files/Size_Standards_Table.pdf
Software Advice. (2012). Manufacturing Software - 12 software products match your needs.
Retrieved
Feb
11,
2012,
from
http://www.softwareadvice.com/manufacturing/compare/?refine=true&industry_id=8&m
odule[]=174&module[]=173&module[]=175&module[]=177&module[]=180&segment=
185&size=81&deployment_id_hidden=&deployment_id=&Submit=Filter+Results
Thinkexist.com.
(2011).
Retrieved
Jan
27,
2012,
http://thinkexist.com/quotation/if_you_don-t_know_where_you_are_goingyou_might/150197.html
from
Troy, L. (2012). Almanac of Business and Industrial Financial Ratios. (C. Arritola, & C. Zwirek,
Eds.) Chicago, Illiois, USA: CCH.
U.S. Census Bureau. (2012a, Feb). 2007 NAICS Definition. Retrieved from U.S. Census Bureau:
http://www.bls.gov/iag/tgs/iag332.htm
U.S. Census Bureau. (2012b, Feb). Standard Industrial Classification (SIC) System. Retrieved
from U.S. Census Bureau: http://www.census.gov/epcd/www/sic.html
U.S.
Census
Bureau.
(2012c,
Feb).
http://www.census.gov/econ/industry/geo/g332.htm
Wikipedia.
(2012a).
Benchmark.
Retrieved
http://en.wikipedia.org/wiki/Benchmarking
Wikipedia.
(2012b,
Feb).
Small
http://en.wikipedia.org/wiki/Small_business
Jan
Business.
Retrieved
29,
2012,
Retrieved
from
from
from
Wikipedia. (2012c). Xerox : Current products. Retrieved
http://en.wikipedia.org/wiki/Xerox#Current_products
Feb
2,
2012,
from
8 Appendices
8.1 Appendix - Value of shipments per capita ($) in 2007
Data retrieved from (U.S. Census Bureau, 2012c)
8.2 Appendix - Big Companies in FMPM Industry
Company
Novelis
Alcoa
Wise Alloys
DC Safety Systems
Vale
Hyde Group
Pumpkin Masters
Rexam
AptarGroup
Berry Plastics
Siemens
Hansen
Bosch Rexroth
Sturm, Ruger & Co.
Smith & Wesson
Remington Arms
ITW
Precision Castparts
Alcoa
Assa Abloy
Ingersoll-Rand
Black & Decker
Liberty Safe
NAICS
332431
332431
332431
332439
332117
332212
332211
332115
332115
332115
332111
332111
332111
332994
332994
332994
332722
332722
332722
332212
332212
332212
332999
Gillette
Schick
CIMC
Singamas
CXIC
Tyco International
Emerson
Flowserve
332211
332211
332313
332313
332313
332911
332911
332911
Market
Share
Aluminum Can Market in North America, 2010
35%
Aluminum Can Market in North America, 2011
28%
Aluminum Can Market in North America, 2012
27%
Automotive First Aid Kit Market in North Americca
85%
Leading Nickel powder Makers, 2009
90%
Market for Paint and Drywall Hand Tools
47%
Pumpkin Carving Kit Market, 2009
87%
Top Cap and Closure Maker, 2009
9%
Top Cap and Closure Maker, 2010
5%
Top Cap and Closure Maker, 2011
5%
Top Gearbox Makers Worldwide, 2007
35%
Top Gearbox Makers Worldwide, 2008
25%
Top Gearbox Makers Worldwide, 2009
12%
Top Gun Makers, 2008
18%
Top Gun Makers, 2009
17%
Top Gun Makers, 2010
15%
Top Industrial Fastener Maker Worldwide, 2009
5%
Top Industrial Fastener Maker Worldwide, 2010
3%
Top Industrial Fastener Maker Worldwide, 2011
2%
Top Lock Makers Worldwide, 2008
13%
Top Lock Makers Worldwide, 2009
8%
Top Lock Makers Worldwide, 2010
3%
Top Premium Home and Gun Safe Leaders in North 32%
America, 2009
Top Razor Blade Maker, 2009
70%
Top Razor Blade Maker, 2010
20%
Top Shipping Container Makers Worldwide, 2010
56%
Top Shipping Container Makers Worldwide, 2011
26%
Top Shipping Container Makers Worldwide, 2012
8%
Top Valve Makers Worldwide, 2009
6%
Top Valve Makers Worldwide, 2010
3%
Top Valve Makers Worldwide, 2011
2%
8.3 Appendix - Influential People
The influential people in the FMPM industry are as follows:
iii)
Board of Directors of the Association
An association is generally the body who secure group opinion and action on the common problems
of the industry. An association addresses any questions, policies and techniques that may be involved in
those problems; to advance the lawful common purposes of its members and to promote and safeguard the
industry as a whole. Therefore, the elected board of directors of an association in FMPM industry is seen
as the influential people who are entrusted by the voting members to do everything necessary and proper
for the accomplishment of the industry to operate with superior economy, efficiency, safety and regard for
the environment. In addition, the board directors are mostly the top managers of the companies in this
industry.
Association
FMA
FMA
FMA
PMA
PMA
PMA
iv)
Board of Directors
Dave Barber
Burke Doar
Carlos Rodriquez-Borjas
Patrick Thompson
William Adler
Jody Fledderman
Role in Association
Chairman
1st Vice Chairman
2nd Vice Chairman
Board Chair
1st Vice Chairman
2nd Vice Chairman
Company
The Wilmington Grill Co.
TRUMPF Inc.
Feralloy Corp.
Trans-Matic Manufacturing Co.
Stripmatic Products, Inc
Batesville Tool & Die, Inc
The financial consultant who gives talk during association conference / meeting
A consultant is commonly known as an expert or a specialist in a particular field who gives
professional advice. One of the benefits of being a member of an association is to gain knowledge about
FMPM industry. There are many trainings and events being organized on financial performance of the
companies. Therefore, the consultants who are invited to give the trainings are seen as an influential
people.
For example, Bob Dobrowsky, from Plante & Moran, PLLC in Cleveland, OH, has more than 20
years of experience working with privately held companies, primarily in the manufacturing, distribution
and service industries. Bob authors the annual PMA Benchmarking Study and has been active in PMA for
the last 12 years (PMA, 2012). With his extensive experience in the field, one would trust him as a
knowledgeable consultant.
8.4 Appendix - Industrial Publications
We have found some magazines and websites which always publish subject knowledge and industry
news to the audience. Below are some examples of the publiers.
Publication
American Fasterner Journal
Metal Center News
Metal Construction News
Metal Finishing.com
METAL WEB NEWS
MetalForming Magazine
Modern Machine Shop
National Metal Finishing Resource Center
Nuts Bolts & Thingamajigs
Steel Business Briefing
Thefabricator.com
Tooling & Production Magazine
Valve Magazine
Vehicle Services Pros.com
Website
http://www.fastenerjournal.com/
http://www.metalcenternews.com/
http://www.metalhomedigest.com/Default.aspx?PublicationID=2
http://www.metalfinishing.com/
http://www.metalwebnews.com/news.html
http://www.metalformingmagazine.com/
http://www.mmsonline.com/articles
http://www.nmfrc.org/
http://www.nutsandboltsfoundation.org/
http://www.steelbb.com/us/
http://www.thefabricator.com
http://dev.toolingandproduction.com/home.php
http://www.valvemagazine.com/
http://www.vehicleservicepros.com/
8.5 Appendix - Software Vendor in FMPM Industry
The following list is 7 software vendors that are related to the FMPM industry (Software Advice,
2012). The filter is based on applications selected that are MRP software, financial accounting, supply
chain management, asset management and business intelligence. Also the filter takes into account the size
of the business (small to medium) in terms of revenue that is between $1 million to $5 million.
viii)
ix)
x)
xi)
xii)
xiii)
xiv)
Eci M1
EnterpriseIQ
Henning Visual EstiTrack ERP
Intuitive ERP
Made2Manage ERP
Microsoft Dynamics GP
SAP Business One - Manufacturing
8.6 Appendix – Full List of Industrial Associations
Rank3
Association
Acronym
Website
1
Fabricators & Manufacturers Association
FMA
1
2
PMA
AEPMA
AGA
AHMA
http://www.galvanizeit.org/
http://www.ahma.org/
AKTI
AMM
CMA
FIA
HTI
MBMA
MCA
NAAMM
http://www.akti.org/news
http://www.amm.com/
http://www.cookware.org/
http://www.forging.org/
http://www.hti.org/
http://www.mbma.com/
http://www.metalconstruction.org/
http://www.naamm.org/
NASF
http://www.nasf.org/
NCCA
NOMMA
http://www.coilcoating.org/
http://www.nomma.org/
2
2
2
Precision Metalforming Association
American Edged Products Manufacturers
Association
American Galvanizers Association
American
hardware
Manufactures
Association
American Knife and Tool Institute
American Metal Market
Cookware Manufactures Association
Forging Industry Association
Hand Tools Institute
Metal Building Manufactures Association
Metal Construction Association
National Association of Architectural
Metal Manufactures
National Association For Surface
Finishing
National Coil Coating Association
National ornamental & Miscellaneous
Metals Association
FMG Publications
Precision Machined Products Association
Steel Framing Alliance
http://www.fmanet.org/members/co
db.cfm
http://www.pma.org/home/
http://www.aepma.org/
FMG
PMPA
SFA
2
Steel Framing Industry Association
SFIA
2
2
Spring Manufacturers Institute
SMI
Steel Tank Instituted / Steel plate STI/SPFA
Fabricators Association
http://www.shootingindustry.com/
http://www.pmpa.org/
http://www.steelframing.org/index.
php
http://www.steelframingassociation.
org/
http://www.smihq.org/
http://www.steeltank.com
2
2
2
2
2
2
2
2
2
2
2
2
2
3
Rank Legend:
1. Close Industry, Close Region
2. Sub Industry, Close Region
3. Close/sub Industry, Related Region
4. Related Industry, Close Region
5. Related Industry, Related Region
Rank3
Association
Acronym
Website
2
Valve Manufacturers Association of
America
Valve World
Wire Fabricators Association
Valve Manufacturers Association of
America
Central Fabricators Association
Canadian hardware and housewares
Manufactures Association
Canadian Knifemaker's Guild
Forging
Defense
Manufacturing
Consortium
Indiana Fabricators Association
VMA
http://www.vma.org/
VW
WFA
WMA
http://www.valve-world.net/
http://www.wirefabricators.org/
http://www.vma.org/
CFA
CHHMA
http://www.centralfabricators.org/
http://www.chhma.ca/Public/Home.
aspx
http://www.ckg.org/
http://fdmc.ati.org/
2
2
2
3
3
3
3
3
3
3
3
3
3
3
3
4
4
4
4
4
4
4
4
4
4
4
4
4
CKG
FDMC
IFA
Northwest
Ironworkers
Employers
Association
Oregon Precision Metal Fabricators
Association
Pacific Northwest Steel Fabricators
Association
Southern Association of Steel Fabricators
American Iron and Steel Institute
American Institute of Steel Construction
NIEA
http://www.indianafabricatorsassoci
ation.org/
http://www.imfmetal.org/
http://www.metalframingmfg.org/in
dex.cfm
http://www.ironemployers.com/fabr
icators.htm
http://www.ironemployers.com/
OPMFA
http://www.opmfa.org/
PNSFA
http://www.pnsfa.org/
SASF
AAC
AISC
American Mold Builders Association
Association
for
Manufacturing
Technology
American Welding Society
Coated Abrasives Fabricators Association
Foil & Specialty Effects Association
Gasket Fabricators Association
Manufacturer and Business Association
AMBA
AMT
http://www.sasfonline.com/
http://www.steel.org/
http://www.aisc.org/content.aspx?id
=4862
http://www.amba.org/
http://www.amtonline.org/
International Metalworkers' Federation
IMF
Metal
Framing
Manufacturers MFMA
Association
Northwest Fabricators Association
NFA
AWS
CAFA
FSEA
GFA
MBA
USA
National Association of Manufacturers
NAM
National
Fastener
Distributors NFDA
Association
National
Tooling
and
Machining NTMA
Association
Sheet Metal and Air Conditioning SMACNA
Contractors' National Association
http://www.aws.org/w/a/index.html
http://198.171.210.43/
http://www.fsea.com/
http://www.gasketfab.com/
http://www.mbausa.org/
http://www.nam.org/
http://www.nfda-fastener.org/
http://www.ntma.org/
http://www.smacna.org/
Rank3
Association
Acronym
Website
4
5
The Aluminum Association
The Canadian Institute of Steel
Construction
Canadian Steel Producers Association
Canadian
Tooling
&
Machining
Association
Equipment & Metal Manufacturing
Association
International Council of Sheet metal
Presswork Association
International
Surface
Fabricators
Association
Manufacturers Association of Florida
TAA
CISC
http://www.aluminum.org/
http://www.cisc-icca.ca/
CSPA
CTMA
http://canadiansteel.ca/
http://www.ctma.com/
EMMA
http://www.emmatristate.org/
ICOSPA
http://www.icospa.com/
ISFA
http://www.isfanow.org/
MAF
Navy Metalworking Center
Sheet Metal Workers International
Association
Tooling and Manufacturing Association
World Steel Association
NMC
SMWIA
http://maf.officialbuyersguide.net/S
earchResult.asp?cid=12
http://www.ncemt.ctc.com/
http://www.smwia.org
TMA
WSA
http://www.tmanet.com/
http://www.worldsteel.org/
5
5
5
5
5
5
5
5
5
5
8.7 Appendix – Comparison among FMPM Financial Benchmarking
Type
Type of Data
Separate by Size
Year(s)
FINTEL
#, %
N
2007, 2008,
2009, 2010
RMA
%, some #
Y
2008, 2009,
2010, 2011
INKBR
#, %
N
2006, 2007,
2008, 2009,
2010
ABIFR
some #, some %
Y
7/2006-6/2007,
7/2007-6/2008,
7/2008-6/2009
Integra
%
Y
2010
Number of All companies
Classification System
Aggregated Level
sub-level
Income Statement
Net Sales
Other Portfolio Income
Royalties
Rent Income
Interest Income
Income Taxes
Gross Profit (Margin) (Before
Income Tax)
Operating Income (Profit) (EBIT)
EBITDA
Other Income
Net Income Before Taxes (EBT)
Profit Before Taxes
Net Income (Profit) (Profit
Margin) (After Taxes)
Other Receipts
Total Receipts
Average Total Receipts
Expense Profile
Cost Of Goods Sold
Material Cost
Direct Labor Cost
Manufacturing Overhead
Operating Expenses
Salaries/Wages
Employee Benefits
Depreciation & Amortization (&
Depletion)
Interest Expense (Paid)
Rent
21005
NAICS
Y
4736
NAICS
Y
869
SIC
Y
Y
85742
NAICS
45603
NAICS
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Bad Debt
Advertising/Marketing
Officers' Compensation
Other Operating Expenses
Other Expenses
Pensions and Other Deferred
Comp.
Taxes Paid
Operating Margin
Operating
Margin
Before
Officers' Comp.
Balance Sheet
Assets
Cash and Cash Equivalents
Working Capital
Accounts (Trade) Receivable
Net Receivables
Notes Receivable
Inventory
Prepaid Expenses
Other Current Assets
Total Current Assets
(Net) Property, Plant and
Equipment
Fixed Assets (PP&E)
Intangible Assets
Long-Term Investments
Other Non-Current Assets
Total Non-Current Assets
Total Assets
Liabilities & Net Worth
Accounts (Trade) Payable
Income Taxes Payable
Short-Term Notes Payable
Bank Loans
Notes and Loans Payable
Line of Credit Drawn
Current Maturities of LT Debt
Other Current Liabilities
Total Current Liabilities
Long Term Debt
Long-Term Notes Payable
Total Long-Term Liabilities
Deferred Taxes
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Deferred Credits
Other Non-Curr. (Long Term)
Liabilities
Other Liabilities
Total Liabilities
Total Equity (Net Worth)
Ratios
Receivables
Receivables Turnover (Days
Account Receivable)
Collection Period
Sales / Receivables
Net Profit + DDA / Curr Mat
LTD
Inventory
Inventory Turnover (Cost of Sales
/ Inventory)
Sales / Inventory
Inventory / Working Capital
Cash Flow
Total Receipts / Cash Flow
Cost of Goods / Cash Flow
Account Payable / Sales
Liabilities
Quick Ratio
Current Ratio
Current Liabilities / Net Worth
Current Liabilities / Inventory
Total Liabilities / Net Worth
(Debt / Worth)
Debt Ratio
Current Liabilities / Working
Capital
Cash Flow / Total Debt
Interest Coverage
Coverage Ratio
EBIT / Interest
Assets
Total Asset Turnover
Current Assets / Working Capital
% Profit before Taxes / Tangible
Net Worth
% Profit before Taxes / Total
Assets
Fixed Assets / Net Worth (Fixed /
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Worth)
Sales / Total Assets
Sales / Net Fixed Assets
Sales / Net Worth
Assets / Sales
Expenses, Sales, Profitability
Cost of Sales / Payables
% Depr, Depl, Amort / Sales
% Officers', Directors', Owners'
Comp / Sales
(Net) Sales / Working Capital
Ratio
Working Capital / (Net) Sales
Accounts Payable / Sales
EBITDA / Sales
Capital Expenditures / Sales
Investment
Return on (Total) Assets
Pre-Tax Return on Assets
Return on Equity Before Income
Taxes
Return on Equity After Income
Taxes
Return on Investment
Return on Sales
Pre-Tax Return on Sales
Return on Net Worth
Pre-Tax Return on Net Worth
Employee
Sales per Employee
Profit per Employee
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y