Because most annual reports are public information, and senior executives all know the structure of the financial information in these reports. Reliability improvements in plants and corporations affect two distinct areas in the Statement of Income statements found in annual reports. At the very top of the Statement of Income is Sales. As the reliability of a corporation s plants improves, there is a measurable increase in the production of goods. When production increases, sales can increase, provided there is sufficient market for the goods produced.
Reliability affects the production of goods in three distinct ways.
First, if a plant is more reliable, it will be able to produce goods during a greater portion of each day, month, or year. This result is called availability and is expressed as a percentage by dividing hours available to produce by total hours available. All plants have an inherent capacity to produce at a certain run rate. With improvements in reliability, a plant will be able to run at a higher rate against its sustained rate. The calculation of rate is expressed in terms of the unit of finished product, in pounds, gallons, tons, or whatever measure is used for tracking production.