How much money does your company normally spend measuring? Do your employees think about the purpose of each measurement they make? Do you effectively use these measurements to manage your business? How many measurements do you really need? These are the questions we should be asking when looking at our measurement systems.
Performance measurement, as a lean concept, is often one of the last things we focus our training efforts on during the lean journey. While much of the essence of this concept is addressed through many of the other lean tools, the philosophy behind lean performance measurement is all too often put on the back burner while we are learning to do 5S (sort, set in order, shine, standardize and sustain), creating pull systems and conducting kaizen events.
In each and every phase of the lean journey, you learn how to measure things and you put metrics in place as a part of the learning experience. But, until you specifically address performance measurement as a concept, you do not necessarily begin thinking about tying all of your efforts together into a cohesive system.
However, a major stumbling block awaits those who never learn about measurements from the lean perspective. So, along those lines we should ask a few questions. What do you measure? Is it important? Is it really important? How do you know it’s important? And what is so lean about performance measurements anyway?
Anyone who has ever participated in a lean transformation can tell you that lots of things get measured. Every kaizen event (those five-day lean efforts to effect positive change) produces before and after metrics to show success. What is measured is often left up to the kaizen team, and these teams will decide to measure what is important to them. And that is fantastic! The employees who work within the value stream must know how they are doing on an ongoing basis to truly understand if they are successful at the individual level.
But this is typically the point where the wheels fall off the bus for many companies. Instead of keeping these low level metrics at the level where the process operates, too often all of the measurements captured at this low level are reported up through the system to a central reporting point; many times it is a giant measurements/metrics board on a wall or an intranet site. The questions then begin to come. Why are you doing this? What is it all telling you? Which one of these numbers is really important?
If each and every number is not being used at the top level of the company or facility to manage your strategic business plan, it is non-value-added at that level. Plain and simple. Think about all those numbers from the customers’ point of view. Do you think customers care how much time and effort went into collecting all of that data? Of course not. What they care about is how much cost did the effort add to the product or service they are buying.
In a lean world, any process or task that adds no value, from the customer’s point of view, is waste. Measuring things that adds no value is considered excess processing, if you want to classify it as one of the eight wastes of lean. The question then is why are you measuring it in the first place? Is there a problem? A defect? Variation that you are trying to eliminate?
If the reason for the measurement is to identify a defect (which is a lean waste) so it can be eliminated, then focus on eliminating the defect. And after the defect has been eliminated and the process has stabilized, regularly review the measurement to see if you can quit measuring. What a unique idea. Quit measuring something. Unfortunately many organizations don’t remember this, and over time the things that are measured grow to out-of-control proportions. In some cases, more time is spent measuring than actually running the process.
When you measure, there must be a reason for the measurement. More importantly, the measurement should tie into the company’s overall strategy for success. Starting at the top of the organization, your key performance indicators (KPIs) are the measurements that set the stage for everything else you measure. Ensure that the KPIs are just that, indicators. They should not be goals or objectives; they should be metrics that show how the company is performing-good or bad. And there should only be a few vital measurements that are used at this level.
The remaining metrics used throughout the organization should tie into the KPIs, or should show individual progress or success. From a lean perspective, the goal is to tie some of these metrics at each level into the key indicators at the level above and ultimately into the KPIs. The other things you measure at these lower levels should then show the progress of the team or individual. But, these additional measurements should be held to a minimum since they are, in a lean world, excess or unnecessary processing. This is where many organizations begin to lose control. Once you start measuring something, it sticks. Then you measure something else. And then another, until you are measuring much more than can cost effectively be used to explain the success or failure of the company.
So, think before you measure. Make your measurements count. Since each measurement costs you money, make certain that the measurements you choose are giving you a return on your investment.
This article is based upon a new book, by Mark A. Nash and Sheila R. Poling, to be released later this year by Productivity Press. The book is tentatively titled, “The Tape Measure: Choosing the Right Measures for Your Organization.”