Metrics drive behaviour. In Business this is a truism and in our Lean Transformation we must accept this and address it if we are to be successful.
If your Metrics aren't balanced and aligned with a Lean Value Stream, your team members will not drive toward the right solutions and failure to transform to Lean Thinking will be assured.
Consider a situation where asset utilisation is a key metric for a site manager. This will drive an output / push strategy and any efforts to move toward lowering inventory and creating a pull system will be inhibited as the site manager protects his/her need to meet the asset utilisation target. There is a similar conflict where under-coverage is not accepted as a consequence of lowering the inventory 'water-level' when we start to lean out the value stream.
The extension of Lean into the Supplier base also suffers from the traditional way that Purchasing colleagues are measured, with cost-down on the invoice price being the key metric. This prevents moves to reduce value stream lead-time by using localised suppliers and lowering MOQs (Minimum Order Quantities), as full containers from half around the world provide the trump card in the price / unit measure.
So how do we tackle this issue? Through the development of balanced Lean Metrics based upon the ESQSCI model:
Employee engagement - No. of Implemented Kaizen per person per month
Safety - No. of 'Near Miss' resolutions per person per month
Quality - RTY (Rolled Throughput Yield)
Service Level - Dependent upon the industry but measures such as OSA (On-Shelf Availability); Requested Line Item Performance; Up-Time; On-Time in Full; etc.
Cost - Total Cost per Item (Product or Service)
Inventory - Total Inventory in the Value Stream
This should be combined with an overall Value-Stream Lead-Time metric which will not allow management decisions (capital investments, sourcing of suppliers, industrial footprint, etc.) that will increase the value stream lead time and an actively managed target to continuously reduce it.
The 'Carrot' that we use to enable the right behaviours in our teams is critical and getting those Metrics right is critical, with the final element being to ensure that all employees have ultimately the same metrics driving them all in the same direction!
"I aim to promote the global sharing of best practices in the application of Lean Thinking."