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Developing Effective Metrics for the Lean Enterprise

Developing Effective Metrics for the Lean Enterprise. Rick Bohan Chagrin River Consulting www.chagrinriverconsulting.com Pete Accorti Talan Products www.talanproducts.com. Overview. About Talan Products Lean Goals Role of Metrics Why Talan Products Implemented Lean

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Developing Effective Metrics for the Lean Enterprise

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  1. Developing Effective Metrics for the Lean Enterprise Rick Bohan Chagrin River Consulting www.chagrinriverconsulting.com Pete Accorti Talan Products www.talanproducts.com

  2. Overview • About Talan Products • Lean Goals • Role of Metrics • Why Talan Products Implemented Lean • How Talan Got Started: Leadership Planning • How Talan Chose Its Metrics • Talan Products Metrics Today • Evolution of Talan’s Metrics R

  3. A Word or TwoAbout Talan Products • Full service, high volume metal stamping company specializing in progressive die stamping and aluminum extrustion supply and stamping • Founded in 1986,  ownership active in management • ISO 9001 certified vendor since 1998 • Innovative & progressively managed,  always striving for excellence • Numerous awards for excellence in manufacturing and quality • Inc 500, Inner City 100, Weatherhead 100 P

  4. Quick Review of Lean Goals • Reduce Variability • Reduce Delays • Reduce Inventories • Reduce Errors and Mistakes • Reduce All Forms of Waste • Improving Productivity • Improve Flow R

  5. Components of Lean Implementation • Lean Metrics • 5S Throughout the Plant • Visual Factory • Standardized Work • Total Productive Maintenance • Quick Die Change • Value Stream Mapping • Structured Team Problem Solving R

  6. The Role of Metrics • They help communicate what’s important • They drive conversation and action • Lean Tools are important, but measuring progress is essential R

  7. The Importance of Metrics “Tell me how you’re going to measure me…” “…I’ll tell you how I’m going to behave.” Talan Products Employee P

  8. Why Start with Metrics? Starting the discussion with Metrics sets the tone… Starting with Metrics gets the whole team involved and engaged early and at a high level… Starting with Metrics establishes baselines for performance… R

  9. The Role of Metrics(One Last Review) • How you choose the metrics is important • How you use the metrics is important, even more important than what metrics you choose. • There’s no “standard” set of metrics for lean. • Each company must choose its own metrics. • Each company must decide what it wants to see improve. R R

  10. Why Talan Products Implemented Lean “It’s the best framework we knew about for structuring a robust, on-going continuous improvement initiative.” P P

  11. How Talan Got Started: Leadership Planning • A Leadership Team of owners and managers was formed • The Leadership Team spent twelve hours choosing metrics • Collaborative process (e.g., brainstorming, polling, discussion and debate) is important. • Consultant was part of the collaborative process but the Leadership Team chose the metrics. P P

  12. How Talan ProductsChose Its Metrics • Brainstorming • “What do we need to get better at?” • “What measure will show us that we’re getting better?” • Polling • Narrow the list down • Discussion, Debate, Argument • This is essential. No passionate discussion means no passionate commitment • Selection • Consensus, not necessarily unanimity R

  13. First Selection of Metrics P

  14. Talan Metrics Today • Direct Labor vs. Budget • Direct Labor/Total Labor (%) • Indirect Labor vs. Budget • Indirect Material Costs vs. Budget • Controllable Costs vs. Budget • Budget Net vs. Actual Net • Inventory Turns • Raw Material • Finished Goods • Total • Inventory Cost P

  15. Talan Metrics Today • Availability Incidents • Material Not Available • Personnel Not Available • First Hit Bad • Incomplete Run • Equipment Not Available • Total • Scrap by Work Center (%) • Total Scrap Cost • Efficiency • Work Center Groups • Total P

  16. Talan Metrics Today • Customer Complaint Incidents • Customer PPM • Customer On-Time Ship • Supplier PPM • Supplier On-Time Delivery P

  17. How Talan’s Metrics Evolved • Steering Committee discussed metrics each month • Some metrics stayed the same • Some metrics were dropped • Some metrics were changed • Availability metrics tied together • “Availability” was clearly defined • Started using 12-month moving average to evaluate progress P

  18. How the Metrics Are Used Today • Reviewed second week of each month • “Drill down” into metrics that show declining or stagnant performance • New targets are set as we improve P

  19. Charting the Metrics

  20. Charting the Metrics12-Month Average

  21. Charting the Metrics

  22. Metrics Discussions = Operations Discussions • Discussing the metrics led to better understanding of what was actually happening • Defining metrics meant agreeing on processes, current and future state • Attention to metrics aided problem solving R

  23. In Summary • YOU must choose your own metrics. • The process you use to select your metrics is more important than the metrics you choose. • You must review, discuss, debate the metrics regularly and act on what they tell you. R

  24. Questions?

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