Lean reporting & control

© BMA Inc. 2009. All rights reserved.

Lean reporting & control

Performance Measurements


Lean Performance Measurements• Measurements that motivate

people to lean improvement.

• Measurements that provide excellent operational control.

• Measurements that reflect the business strategy of the company at every level.

• Measurements that are lean themselves & can be gathered and reported simply and easily.


Use Measures for Learning and Problem Solving

• Concerned with results and the process of getting those results

• Responsibility oriented, derives from role

• Reveals problems, so that they can be fixed and kept from recurring

• Feedback loops to drive problem solving, measure improvement and foster learning

• Focus on checking the process, control of resources and development of people; results derived from adhering to process standards

• Results oriented

• Top-down control; authority oriented

• Hides problems

• One shot image of success in reaching target—no feedback

• Focus on control of resources, people and results

Lean UseTraditional Use


Customer Value is Deployed and Managed Continuously

Customer Needs

Strategy Changes

Technology Changes

Stakeholder Needs

Value Stream Measurements

Cell Level Measurements

Hoshin Strategy Deployment

Sales & Operations Planning


Cell Measurements

Value Stream Measurements

Plant Measurements

Three Levels of Performance Measurements

Enable the cell teams to monitor and control their own production activities.

Guide the continuous improvement team in their “pursuit of perfection” activities.

Enable senior managers of the company to monitor the achievement of strategic goals & initiate strategy changes.


“Starter Set” of Performance Measurements for Lean Mfg.

Increase Cash Flow

Increase sales & market share

Continuous improvement culture

Provide Customer value

Sales Growth

Cash Flow from Operations

Inventory Days

On-Time Delivery

Customer satisfaction

Sales per Employee

Sales per Person

On-Time Delivery

Dock-to-Dock Time

First Time Through

Average Cost per Unit

Day-by-the-Hour Production

WIP-to-SWIP

First Time Through

Operational Equipment Effectiveness

STRATEGICISSUES

STRATEGICMEASURES

VALUE STREAM MEASURES

CELL/PROCESS MEASURES


Performance Measurement Linkage ChartOrder Fulfillment Value Stream


Performance Measurement Linkage Chart

This picture shows a linkage chart developed during an actual kaizen; post-it notes are used on paper. This makes repositioning and changing chart components flexible and easy.


Plant or Division Measurements

Sales Growth Cash Flow from Operations

Are we generating enough cash? Inventory Days

General indicator of lean improvement On-Time Delivery

Measurement of control and meeting customer delivery needs

Customer Satisfaction Direct feedback from the customers

Sales per Employee Overall productivity


Typical Production Value Stream Performance Measurements• Sales per Person

– Productivity of everyone in the value streams

• On-Time Shipment– Can we ship on-time?– Are our processes under

control?

• Dock-to-Dock Days– Rate of material flow through

the value stream– Raw material, WIP, finished

goods

• First Time Thru– Quality & standardized work

for the entire value stream

• Average Cost per Unit– Are we reducing costs and

making improvement?

• Supporting measurements– Safety cross– Cross training matrix– Continuous improvement

projects


Value Stream Continuous Improvement Board

Sales or Units per Person

On-Time Shipment

First Time Through

Dock-to-Dock Days

Average Cost

Pareto Chart

(or other analysis)

Pareto Chart

(or other analysis)

Pareto Chart

(or other analysis)

Pareto Chart

(or other analysis)

Pareto Chart

(or other analysis)

ProductivityProcessControl Quality

MaterialFlow Cost

Improvement Projects





Current Value

Stream Map

Future Value

Stream Map

Value Stream Income

Statement

BOX SCORE

Transition Plan


Value Stream Performance Measurements Board

Hoshin

KaizenAction Plan

BusinessOpportunityCharts

Value Stream Maps


Value Stream Board“Business Opportunity Chart”

Four Charts in OnePerformance Measurement, Pareto Chart, Data, Action Plan


Value Stream Performance Measurements Board


Value Stream Continuous Improvement

• The primary purpose of the weekly reporting is to guide the value stream manager and his/her team towards continuous improvement.

• Tools– Value stream performance measurement

boards– Value stream income statement– Box Score– Pareto charts– Continuous improvement projects


Typical Cell Performance Measurements• Day-by-the-Hour

– Focus on making to takt time– Linearity of production

• First Time Thru– Focus on making perfect

quality without scrap or rework

– Focus on standardized work• WIP-to-SWIP

– Work-in-process inventory compared to standard work-in-process inventory

– Focus on consistency of flow– Focus on the pull process

• Operational Equipment Effectiveness– Focus on machines making to

takt time– Bottleneck operations

• Supporting measures or reporting– Safety cross– 5S audit– Cross-Training matrix– Daily improvement

projects


Support Measurements

• In addition to the primary measurements many companies also collect some supporting information at the cell.

– Safety Cross– Cross-Training Chart– 5S Audit or Self-Audit– Number of Continuous Improvement Projects

Completed


The Key to Effective Cell Performance Measurement

Managers and support people frequently visiting the cells and solving problems.

The focus must be on the value-creating processes.Making what the customers want, on-time & perfect quality.


Cell Measurement Board


Cell Measurement Cube


Cell Measurement Board


Example Day-by-the-Hour Board


How Do Performance Measurements Apply in Support & Administration?

Administrative Process Measures

•Productivity of the process

•On-Time Delivery (to internal customers

•Rate of Flow of information through process

•First Time Thru of the process

•Average Cost per Unit

We use similar measurement methods in the office & administrative processes.

Administrative Cell Measures

• Day-by-the-Hour

• First Time Thru

• WIP-to-SWIP of the cell

• Operational Equipment Effectiveness of machines in the cell

Sales/Marketing Value Streams Measurements

Increase Sales & Market Share

Increase Cash Flow & Reduce

Debt

Create Culture of Continuous Improvement

Maintain Stable & Educated Workforce

STRATEGIES

Sales Growth

STRATEGICMEASUREMENTS

Increase Sales & Profitability

VALUE STREAMGOALS

VALUE STREAMMEASUREMENTS

Sales Growth

Cash from Operations

Inventory Days or Turns

Customer Satisfaction

Sales per Employee

Suggestions per Person

% People Engaged in

Improvement

Annual Employee

Survey

Increase Number of Customer

Match Sales to Value Stream Capabilities

Improve Productivity

Collect Cash Quickly

Increase CI Project

Participation

Provide Advancement for Employees

Eliminate Accidents &

Injuries


Order to Cash Days

Profitability of Order Fulfillment

Value Streams

Value Stream Cost per Sales $

Accounts Receivable Days

# People on Improvement

Teams

Cross Training per Person

Number of Accidents &

Injuries

Sales/Marketing Value Stream: Quote ProcessVALUE STREAM

MEASUREMENTS

Sales Growth


Order to Cash Days


Value Streams

Value Stream Cost per Sales $

Accounts Receivable Days


Teams


Quote Success Rate %

Financial Contribution of

the Orders

First Time Through%

Average Quote Response Time

PROCESSMEASUREMENTSCELL GOALS

CELL CRITICAL SUCCESS FACTORS

Understand Customer Value

Meet or Exceed Customer

Expectations

Fast & Effective Processes

Obtain orders matching

capacity & mix

Eliminate waste

Increase quote success by

understanding needs

Maximum market price based on value

Provide quotes quickly & to

customer format

Effective visual management

Standardized work for quote processes

Eliminate variability

Linearity of Sales Orders

Track Improvement

Projects

5S Audit

Cross Training Chart

Widespread Cross Training

Increase CI Project

Involvement

Increase Training &

Cross Training

Empowered continuous

improvement

Strategic and NPD Value Streams Measurements

Increase Sales & Market Share

Increase Cash Flow & Reduce

Debt

Create Culture of Continuous Improvement

Maintain Stable & Educated Workforce

STRATEGIES

Sales Growth

STRATEGICMEASUREMENTS

Introduce High Value Products

VALUE STREAMGOALS

VALUE STREAMMEASUREMENTS

Sales from New Products

Cash from Operations

Inventory Days or Turns


Sales per Employee

Suggestions per Person

% People Engaged in

Improvement

Annual Employee

Survey

Short & Reliable Product Design

Processes

Match Products to Value Stream

Capabilities

Improve Productivity

Create Unique & Innovative Products

Increase CI Project

Participation

Provide Advancement for Employees

Eliminate Accidents &

Injuries

On-Time Design Projects

Customer Satisfaction with

New Products


Value Streams

Value Stream Cost per New

Product Sales $

Number of Patents &

Innovations


Teams


Number of Accidents &

Injuries


Watlow Controls, Winona MNDoug Kuchta, Value Stream Manager

Value Stream Measurement Boards


Wrap up: the lean performance measurements “challenge:”• Replace the traditional cost accounting

measurements with performance measurements that are designed to motivate and monitor lean behavior.

• Develop a set of measurements throughout the organization that thoroughly reflect the company’s strategy and goals.

• As people work to improve the measurement results, they will be actively working to achieve the company’s strategic goals.

Documents

Lean reporting & control