Monday, July 14, 2008

Measurement is Key to Lean Success

Aberdeen research studies have consistently reported that the majority of manufacturers
have begun some form of Lean initiative and are at various states along their Lean journey. Manufacturers are focusing on improving operational factors in an effort to garner profits to the organization while continuing to meet customer expectations. They also report that:

  • While most companies indicate that they are Lean to some degree, few are Best-in-Class: adequate measurement and control is one missing link.
  • Operational factors are among the top three reasons driving Lean Measurement and Control
  • Operational metrics are often misunderstood or misaligned with strategic goals

Going through a lean transformation requires change to occur in all areas of the business and without some basic metrics beings in place, it is difficult to know where you have been and how you are succeeding in your effort. Developing metrics also forces the organization to determine what it is they are really trying to achieve by going lean so it facilitates getting everyone on the same page from the outset.

These metrics need to be basic, straightforward and close enough to the operation that those involved can actually influence them. Things like cycle time, changeover time or WIP inventory are things that people can see, touch and affect. Things like ROI, P/E ratios and ship-on-time percents are difficult since people have a hard time relating what they do day-to-day with these results. What is important is that the metrics being used at the tactical level support and contribute to the results desired at the strategic level, so careful consideration must be made when developing the lean metrics to be used.

Lots of things can be measured in a lean effort, so pick the few that are critical to your success. I'd love to hear what metrics are being used in your lean effort, so please let me know.