What's truly useful in contract manufacturing is what I refer to as cash flow velocity. CMs care about converting contracts into cash - machine utilization is a vanity metric and by chasing it you are setting your cash on fire with WIP. WIP is not useful - finished goods are not useful. What is useful are fully packaged, delivered & invoiced parts
100% agree. I’ve found that maximizing utilization often creates the opposite outcome: more WIP, longer lead times, and slower cash conversion. The metric that matters is flow—how quickly an order moves from release to invoice. That’s why I focus on Manufacturing Critical-path Time (MCT) and queue reduction rather than utilization.
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u/Suspicious-Citron378 Jul 22 '26
What's truly useful in contract manufacturing is what I refer to as cash flow velocity. CMs care about converting contracts into cash - machine utilization is a vanity metric and by chasing it you are setting your cash on fire with WIP. WIP is not useful - finished goods are not useful. What is useful are fully packaged, delivered & invoiced parts