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Copyright © 2012 Lean CEO.
From the Editor
Welcome to the Lean CEO newsletter!
This month's feature article is a compilation of articles by Michel Baudin on lean metrics.
Gemba Academy has been adding to its portfolio of over 230 lean training videos by also offering a series of free webinars. The next webinar is on May 23rd by frequent Lean CEO contributor Bob Emiliani, and is titled "The Leader's Role in Lean Success." More info.
Masaaki Imai, founder of the Kaizen Institute, is touring the U.S. next month. If you're in Washington, DC, Detroit, Indianapolis, or Seattle you might want to check out his speaking schedule. More info.
- Kevin Meyer
Metrics in Lean
Ever since childhood, we all want to know what grades we get on our report cards, and what these grades mean in terms of how well we are doing. We want to be evaluated based on parameters we understand and we can affect by our efforts.
A key issue in manufacturing is consistency as we go from a shop to an department to an entire plant and to the company as a whole. We don’t want to use parameters in terms of which which excellent local performance can aggregate to poor global performance. Once performance measures are identified, the next challenge is to use them as a basis for management decisions that are in the best interest of the company while being fair and nonthreatening to employees. In particular, actions taken to improve one aspect of performance must not degrade another. In addition to these issues, in a lean environment, we need to consider the impact of improvement projects, before and after they are carried out.
Measuring process compliance or results?
One possible approach to performance evaluation is to measure how closely our practice matches a standard of how things should be done. This is how you will be evaluated if you apply for the Malcolm Baldridge award or for ISO-900x certification. If matters little whether your outgoing quality is any good, as long as you follow the “right” processes. Iwao Kobayashi’s “20-keys” approach follows the same logic. The keys have names like “Cleaning and organizing,” or “Quick changeover,” and each key has 5 levels of achievement. By definition, a plant that is at level 5 in all 20 keys is excellent.
The advantage of process measures is that the corrective action for bad performance is always to bring the plant closer to compliance. But is it impossible for a plant to be at level 5 in all 20 keys and still chronically lose money? Don’t some of the keys matter more than others? The world would be simpler if a process existed such that compliance guaranteed excellence.
In fact, all the stakeholders in a factory care much more about the results it achieves than the processes by which it does. Most commonly used are the five dimensions of Quality, Cost, Delivery, Safety, and Morale. More generally, Harvard’s R. Kaplan has proposed a “balance scorecard” to measure multiple aspects of business performance, as opposed to just manufacturing performance.
A Tale of Two Transformations
By Michael K. Levine
There are many books that seek to explain Lean and Agile software that offer theory, techniques, and examples. Michael Levine’s first book, A Tale of Two Systems, is one of the best, synthesizing Lean manufacturing and product development with agile software concepts in an engaging business novel. However, there has been precious little practical guidance for those seeking to change existing organizations to become Lean and Agile, until now. Mr. Levine has followed the successful approach of A Tale of Two Systems, telling two simultaneous intertwined and contrasting stories, to bring organizational transformation to life.
This course is part of Gemba Academy's Complete Lean Package, which now has over 230 video modules and is used by over 1,000 companies worldwide. More information.
You can also view the recorded version of the latest webinar with Dan Markovitz on applying lean to personal productivity here.
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