Can You Metric Your Way to Lean?
You get what you measure! How many times have we heard that? If you measure
pieces per labor hour in individual departments you get overproduction. If you
measure variations from budget you get people trying to increase their budgets
or cutting costs even for beneficial expenditures. If you measure quarterly earn-
ings you get companies cutting all spending at the end of the quarter to make
earnings look good. These are all true statements. Narrowly measure a very
specific aspect of the business, and beat them up if they miss the numbers in the
short term and you get managers directing energy to making the numbers look
good, even at the cost of long-term improvement.
From a lean manufacturing perspective there are many good books on “lean
metrics.” What are the right measures to drive lean improvements? In terms of
our discussion of power, the lean metric discussion is about reward and coer-
cive power. How can we pressure people through measures and contingent
rewards or punishments to do the right thing?
We’ve been in the training and consulting game for many years, and the issue
of the correct lean metrics always comes up. We always encourage a company
Chapter 20. Leading the Change 449TIP
Use a Set of Metrics as Indicators of Progress
and Problems
Let’s face it, any large company is driven by metrics. There are
certain metrics that get driven up top and are seen as measures of
the health of the business. If these are traditional measures of labor
cost variance, indirect to direct cost ratios, and such, all of the
talk about lean can be for naught. We are talking one thing and
measuring another. So the set of measures reviewed at the top
should be broadened. The simple policy is to measure the Big
Five in metrics: Quality, Cost, Delivery, Safety, and Morale
(QCDSM). If all of these are measured, trends are tracked relative
to targets, and top management responds to deviations from
plan, you’ll be well on your way to supporting lean. The key is to
not get out of balance. For example, if only cost is taken seriously,
managers will quickly focus only on it. And if only labor costs
are tracked they will get even more out of balance. Use multiple
indicators of the business and treat them as just that—indicators.
When the indicator suggests a problem, go and see to investigate
what the real problem is. Then, develop true countermeasures to
solve the true problem.