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Measuring the Success of Lean
SME WORLD Bureau
Feb 2010
Feb 2010
As manufacturers adopt lean principles the process inevitably involves developing metrics for measuring their progress. If our company is on a lean journey, where are we on that road? How well are we doing? What should we measure? Are we measuring too little or too much? The data that can be collected in a manufacturing plant are almost endless, and the systems that companies use to assess where they stand run a wide and sometimes bewildering gamut.
"It is important that you keep a focus on strategy deployment and that measurements are linked throughout the organization, not just on the manufacturing floor but in accounts payable or other back-office processes, to the objectives of the company so that everybody is pulling in the same direction," says David Strothmann, director, Manufacturing Customer Value Network, SAP Americas.
Underlying the old truism that what gets measured gets done is the fact that measurements are used to influence behavior. Strothmann and other lean experts warn that it is all too easy to deploy metrics in a company that have the unintended consequence of driving anti-lean behavior. For example, says Strothmann, if a plant falls behind on overhead absorption for a quarter, "as a manager there is only one action you can take to improve that measurement, and that is to build more inventory, whether it is needed or not. The traditional measurements that manufacturing has been held to by finance tend to actively hurt their lean initiatives." This disconnect is helping to fuel the interest in lean accounting, says Strothmann, where companies look at value stream performance in a way that supports and promotes lean behavior.
Lonnie Wilson, a lean manufacturing consultant and author of "How to Implement Lean Manufacturing," says it is difficult, if not impossible, to assign a general lean score to companies because their operations and competitive situations differ markedly. He urges companies to adopt two primary yardsticks -- track their own efforts to see if they are making progress and compare their efforts to their competition. He notes, "In the end, the way you measure lean is the ways you changed your behavior to make your fundamental business a better money-making machine and a more secure place for your people to work."
Larry Anderson, co-chair of SME's Lean Certification Committee and a Shingo Prize examiner, agrees. "You can measure inventory turns and those kinds of things, but everything is relative. It is really the long-term sustainability of the business that tells you whether it is lean or not." When judging a facility, for example, Anderson looks through a variety of metrics such as revenue per employee or defects to determine if it is moving in the right direction. But, he adds, he also relies on shop-floor observations. "It is as much feel as anything. Is material flowing or are there points where the flow of material stops? Is there a sense that employees are engaged and that they have standard work that you can base improvements on, or is it helter-skelter?"
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