I recently received the following question from Petri, a reader of LSS Academy.
The issue I wanted to contact you about was if LSSA has ever done work on measuring lean success? I am not sure if there are any tools which are used in this area, or if “Lean companies” have i.e. key KPI’s which are used to track this?
I know that there are auditing systems which measure the level of how far 5S is implemented etc, but I am interested in broader measures.
I find the topic of KPI’s with most successful companies fascinating, and was wondering if there is reference material one could learn from?
Your thoughts on this would be appreciated.
This is a great question and one I wanted to put some thought into. I am a believer that you must measure it to improve it. With this said, here are some of my personal thoughts on the matter.
The Wrong Measurements
First of all, I believe many companies get caught measuring the wrong things.
For example, some feel like they can measure the success of their continuous improvement initiative by tracking the number of people trained or certified.
Please don’t get me wrong, I think it’s good to measure these things. But to think that the number of people trained or certified equates to guaranteed success is a gigantic fallacy.
In fact, this type of behavior is the definition of an activity based program.
It’s about one thing: Results
The opposite of activity based programs are results driven programs whereby things like quick wins and bottom line impact rule the day.
But how can one go about measuring this? Is there a magic scorecard we can all download? Unfortunately, at least as far as I know, the answer is no.
With this said, here are some ideas I have for excellent indicators of the health and vitality of a lean or six sigma initiative.
1. Number of improvement initiatives complete (higher is better)
I’d track this monthly and count any documented (even a one page summary) improvement as an initiative.
2. Average time to complete improvement initiatives (lower is better)
I’d also track this monthly. I despise long, drawn out projects that take ages to complete. If an improvement initiative cannot be done is less than 4 months I say it’s over scoped.
Further, the reason I am such an advocate of kaizen events is the speed at which they are done. When done properly, these quick events become contagious and begin to spread throughout an organization like wild fire.
3. Number of improvement suggestions submitted (higher is better)
Tracked monthly, this metric simply allows an organization to measure how motivated the work force is to make improvements.
4. Number of improvement suggestions implemented (higher is better)
The reason most suggestion box initiatives fail is simple. The employees submit ideas and never hear back from management so they stop suggesting things! So, in order to combat this, management should make it clear how many suggestions – as well as what the suggestion was – were implemented. And for the suggestions that were not implemented a clear and honest explanation with the employee should occur.
5. Sales per Employee (higher is better)
In the end, finishing projects and offering suggestions are great… but if you are in a for profit business one thing is clear – cash is king.
We lean and six sigma bloggers can wax poetic about respecting people and all the rest of it… but if an organization is not profitable the doors will be shut… simple as that.
With this said, my favorite productivity metric is sales per employee. Of course some will think I’m advocating cutting heads in order to drive this metric up. I’m not. I am, however, interested in making sure all employees understand whether the business is making money and whether things are trending up or down.
What metrics do you use?
These are just a few ideas I have for how to measure the success of a lean of six sigma initiative. I’m sure I’ve missed a plethora of metrics so if you know of any I missed please share in the comments section below.