It seems to often be the case that as your manufacturing operation grows, the measurement of the efficiency of your performance becomes ever harder. When sales orders go up work in progress (WIP) increases, when inventory builds turnaround diminishes-all to the detriment of grasping how efficient or profitable each process is. To a certain degree, enterprise resource planning software (ERP) has helped in providing a continuous status assessment via the input of real time data from all operation aspects. ERP software, for this reason, is a valuable tool for the continuous improvement necessary for the modern lean manufacturer.
However, some assessment of financial, behavioral, and core process performances should be made on an on-going basis to provide mutually supporting testimony to the total continuous improvement ERP efforts of the company. For this reason, lean metrics have been established to allow a company to measure, evaluate, and respond to their performance in such a way that it does not sacrifice quality to satisfy quantity objectives, or increase inventory levels to achieve machine efficiencies. Often, these metrics are a means to discover lean performance indicators (LPI) that tell the tale of ERP implementation effectiveness.
When we talk about lean manufacturing, we 're describing a process improvement discipline that evolved from solving manufacturing problems, and concentrates to a large degree on the benefits to be found in the speed of execution. Internal LPI metrics include reductions of WIP and an excess inventory that restricts the use of capital and has a negative impact on cash flow. It is certain that in a manufacturing environment, as backlogs and inventory build up and block workstations, floors and warehouse spaces, the resulting clutter and WIP tie up company capital.
External LPI metrics are those related to speed of execution and include faster time to market and increased customer satisfaction as work orders are completed more rapidly. However, these external lean metrics are often overlooked as they are somewhat less visible in the transactional process. That is to say, producing a faster time-to-market does not appear to have a physical connection to WIP flow. This is where much production performance efficiency data is lost. For example, it is a common mistake to take the difference between job sign-off points thinking they represent execution times when in fact, this data represents cycle time. In other words, direct measurements of separate delay and execution times are not captured. The absence of these measurements, then, does not allow for a true picture of actual time-to-market speed.
Whether internal or external metrics, whatever measures you use to assess lean performance, they will only work if employed within a system that establishes discipline and conducts regular reviews of the data. It is common to see measurement systems that have been abandoned by employees, or voluntary reporting charts that are constantly incomplete and lacking current data. In other words, once the decision is made to employ lean metric tools, the value of the information should be expressed in no uncertain terms to those responsible for its input. Only in this way can lean metrics be effective as a tool.