Checking Your Lean Progress Discussion on Metrics

After the webinar Jeff Hajek and I gave we posted the video and slides from our talk on "Checking Your Lean Progress". This started a conversation on metrics that I wanted to share with you and get your thoughts on.

Don Fitchett from Business Industrial Network asks:

Do you think if the metrics you mention in your powerpoint focused a little on dollars, success would be more likely? Like instead of or in addition to % of/ # of kaizen per year, the metric indicate $s saved per year with Kaizens? True Downtime Cost, etc. Money is the bottom line, Lean initiatives need more upfront ties to money (bottom line)

To which I respond:

Well, I am not sure everything good needs to be tracked financially. I have seen many a company try to do so but many improvements might not easily be found on the P&L. In the beginning large events might be but the goal is many many tiny activities daily. Those are likely harder to track. It has been my experience that those who truly understand the benefits of lean are not concerned with tracking the finance like that because they know it will come as a result of the improvements. That is typically why they apply this thinking. Those that want to tack cost savings are generally only looking at the result and not the process to achieve it. These executives are typically not aware of the power of lean thinking and have to substantiate it with cost savings. Again I say not everything good or worth doing is found on the P&L.

Don replies:

I hear you Tim, but think you missed my point. While there are people like you and me who have blind faith, or understand the logic behind Lean and/or seen the profitability in past Lean initiatives, my point is it is easier to keep the masses (all employees, exp and new, operator and excutive) on board if you have KPIs proving to those non-believers or those who would otherwise start to lose faith, the success of their Lean efforts. the same reasons we use OEE/TEEP, but dollars and cents will be a more universal and easier understood KPI for the layman or new to Lean program/facility. that is my point. I am not advocating assigning dollar value to every little aspect of plant wide/corporate wide Lean initiatives, just those areas where it is easily (even automatically) applied. (like with Kaizens savings, raw material usage savings, etc.) Hope this clarifies.

Some Thoughts from Jeff Hajek: 

Dollars and cents is a great metric, if it is accurate and indisputable. It is a horrible metric if it is fluffy or if it is debatable. If a kaizen takes $27,308 in average inventory off a shelf, it saved money that can be directly traced (easily) to a working capital change. But if the same kaizen also freed up a person who joins a resource team, how much was actually saved? We know intuitively that it is a good thing, but unless something else happens, there is no savings. And that ‘something else’ likely also has a person wanting to track the financial impact. So, where does the money show up on the KPI? There is also the complication of the cumulative effect of many different factors on dollars, as well as the delay between activity and actual impact. And then you get into the debate about cost avoidance vs. hard saving. How do you address the dollar savings of floorspace when you own a building? Do you credit it with the cost of rent avoided, or just the cost of overhead, which in itself is an average/estimate? Finally, I once had a VP tell an audience that if all the cost changes he heard in kaizen report-outs were true, that it would be a billion dollar company with a 80% profit margin and 4 employees. He was a Lean zealot, but also understood the issue with reporting savings. But not all people are like him. If a metric is confusing or debatable, it is worse than having no metric at all. That is why I prefer something like # of kaizens vs trying to create a $ number that people won’t trust anyway.

Don concludes:

Wow Tim, a great discussion we are having here. (And I thank you for that.:>) You last reply is a perfect example of the mentality that has kept TDC (True Downtime Cost) from catching on in our industry all these years. Reminds me of the challenges Lean had catching on in our US industry. I am one of the few who believe our computing power and monitoring technology have reached a point we can accurately calc and monitor TDC (IE: more cost metrics) The same you said about tracking cost savings/avoidance can be said about calculating and tracking OEE. But at the end of the day, both are just a benchmarks that's usefulness is only as good as its consistency in calculating and who's trustworthiness is only as good as the company's leadership/culture. The trust of metrics/KPI/benchmarks vary from facility to facility based on those two factors.

What are your thoughts on Lean metrics especially those financial measures?

Guest Post: Benefits and Value of Continued Learning and Training

Today's post is written by Tim Hoff from American Trainco, who specializes in maintenance training.  Tim shares 11 benefits of continued learning and training in our workforce that I think we all will find valuable. 

Offering continuing education opportunities for employees has several benefits for employers. One of them is that a workforce that is well-trained provides an important productivity enhancement. This creates more dedication within the employees who value education benefits.

Specialized training increases value
Employees with specialized training provide more value to the company. They realize that specialized training makes them more valuable to the company and more marketable. Education benefits that include tuition reimbursement show that the company is making a future investment in their employees.

Company sponsored continued training results in employee retention
Another advantage to companies that provide continued training opportunities is increased employee loyalty. Studies have shown that up to 61% of employees who are provided with specialized training benefits remain with the company for five years or longer. This is a strong reason to empower employees with additional educational benefits.

Continued training improves performance
It is a proven fact that companies that invest in the continued training and proficiency of their employees enjoy improved performance, lower attrition rates and a greater overall return on their investment. One organization designed a training program for their IT department that reduced their rate of attrition from 20 percent to 10 percent in just three years.

Tribal knowledge is not a sustainable continuing training option
In addition to continuing training programs for existing employees, it is important to invest in initial training programs for new employees on an ongoing basis. Many organizations invest in the initial training of the startup personnel and then rely on tribal knowledge from then on. Relying on on-the-job training via tribal knowledge to train new employees can cause a break down in understanding proper business systems.

Current trends indicate a huge need for continued training
In "The New American Workplace", authors James O'Toole and Edward E. Lawler III highlight several trends to show that organizations must focus on continual learning and associated job training. These trends have to do with the following issues:

• Rapid changes in technology
• The exportation of jobs 
• Downsizing, deficiency in formal education
• Global competition 
• The aging workforce. 

Some companies leave continued training up to the individual
Despite the fact that many organizations focus on training, individual development for specific job responsibilities still tends to be neglected. Additionally, many companies feel that career development is an individual responsibility rather than a company responsibility. Not all employers feel responsible to provide development opportunities.

During bad economies continued training budgets get cut
When economic times are difficult, continued training and development becomes a prime target for the necessary budget cuts. Nevertheless, O'Toole and Lawler emphasize a social and moral responsibility for organizations to develop employees beyond their current job and to provide opportunities to learn and grow.

Knowledge based societies require continuous training
Since we have shifted to a knowledge-based economy, the need for continuing training is greater than ever before. Trends in the business world such as rapid advances in technology, changing definitions of competencies relating to leadership and global competition are all fueling the need to create specialized continuous learning programs. The numerous advantages that come from continuous learning and the expansion of human capital knowledge and increased business performance create an urgency for companies to provide budgets for this.

A strong project management solution is very helpful in overseeing training programs
HR is the most likely division of the company to take the key leadership role in putting continuous training programs into action and oversee them. They can oversee the focus, strategy, design and implementation of the training and development programs that their respective organizations need to provide. In some instances, in-house training programs can be created. In other cases, budgets need to be put in place to outsource the training. Either way, a strong project management system is critical in overseeing the continued training agenda of the company.

Intellectual capital is the competitive advantage
Other trends stress the importance of training and development. Intellectual capital is now a critical factor for competitive advantage in today's competitive world. The development of training programs and associated partnerships for knowledge sharing are essential to the competitive viability of cutting edge organizations.

The investment is worth the return
Continued training is clearly essential for maintaining the investment an organization has made in the development and/or deployment of any new systems. Institutionalizing a continued education program enables organizations to improve project management practices resulting in better execution and significantly increased profits. The organizations that recognize the benefits and value of providing continuing training opportunities to employees will be better able to compete in a rapidly changing world.

About the Author: Tim Hoff works for American Trainco in various roles including marketing, writing and assuring that training instruction is of the highest quality. A market leader within the training industry Trainco provides various training courses (electrical safety, HVAC, plant management, etc.) across North America.

Lean Quote: Quality Defined, More Than Standards

On Fridays I will post a Lean related Quote. Throughout our lifetimes many people touch our lives and leave us with words of wisdom. These can both be a source of new learning and also a point to pause and reflect upon lessons we have learned. Within Lean active learning is an important aspect on this journey because without learning we can not improve.

"The problem of quality management is not what people don't know about it. The problem is what they think they do know." — Philip Crosby

"Quality" means different things to different people. We use the term but the concept and vocabulary of quality is elusive. If you ask someone to define the word "quality", you may get a variety of answers.

Manufacturing-based definitions are concerned primarily with engineering and manufacturing practices and use the universal definition of “conformance to requirements.” Requirements, or specifications, are established design, and any deviation implies a reduction in quality. In service industries, customer satisfaction is often the primary measure.

Excellence in quality is not necessarily in the eye of the beholder but rather in the standards set by the organization. This approach has serious weaknesses. The consumer’s perception of quality is equated with conformance and hence is internally focused. Emphasis on reliability in design and manufacturing tends to address cost reduction as the objective, and cost reduction is perceived in a limited way–invest in design and manufacturing improvement until these incremental costs equal the costs of non-quality such as rework or scrap.

Quality is important to businesses but can be quite hard to define. The meaning of quality differs depending upon circumstances and perceptions. For example, quality is a different concept when focusing on tangible products versus the perception of a quality service. Quality is built in to the very fiber of the organization.

Meet-up: Gemba Tale's Mark Hamel

Today, I am proud to introduce a good friend Mark Hamel. He is the author of Kaizen Event Fieldbook and blogger at Gemba Tales. Mark lives only a few miles away so he has been a great resource on my Lean Journey and someone I can confide in when the journey gets challenging.


The goal of Meet-up is provide you an opportunity to meet some other influential voices in the Lean community. I have asked the following series of questions to which he has responded:

Who are you and what do you do?
My name is Mark Hamel and I am a lean transformation consultant, author, blogger, and eternal learner.

How and when did you learn Lean?
I really can’t say that I have “learn[ed] lean,” it’s more that I am learning lean. My lean journey began in 1994 while in industry. I was leading a cost-reduction task force for the Ensign-Bickford Company and knew that the typical cost-cutting projects were not going to be sustainable. I made sure that my team included a forward thinker, whose wife just happened to be a product line manager at the then lean powerhouse, Wiremold. After, finagling a visit to our company by Wiremold’s CEO, Art Byrne, our senior leadership decided to commit. I ended up becoming the company KPO (later plant manager, product center director, etc.) and thus began my on the job training. Years later, we won the Shingo Prize.

How and why did you start blogging or writing about Lean?
I began to write the book, Kaizen Event Fieldbook, largely as a way to capture what I believed to be the standard work around effective kaizen events. It was in response to witnessing folks struggle in event planning, execution, and follow through. Of course, I couldn’t help but getting into the underlying principles (the necessary thinking), lean leadership, strategy, KPO development, daily kaizen, etc. It was an honor to win a 2010 Shingo Research and Professional Publication Award for the work. I began blogging at Gemba Tales because I was told that that was what authors do. I anticipated that blogging would be an absolute chore. While it is challenging to balance work, life, and blogging, I have found it to be extremely rewarding. I truly enjoy the opportunity to write new content and interact with fellow lean thinkers, including other lean bloggers.

What does Lean mean to you?
Lean means deeply developing and engaging the workforce, at all levels, to continuously serve the customers and other stakeholders. It’s about making things easier, better, faster, and cheaper for the stakeholders, by genuinely and thoughtfully applying lean principles, systems, and tools.

What is the biggest myth or misconception of Lean?
I believe that the biggest myth/misconception is the narrow view of lean as being simply a toolset that is deployed by specialists to opportunistically reduce costs. Unfortunately, lean can be “used” this way, but it is a sterile, non-sustainable bastardization of a holistic business system…and it often treats people as a commodity.

What is your current Lean passion, project, or initiative?
I am working on a second book. It is a reference book that I would have loved to have had early on in my lean career. As my co-author and I get closer to publication, I’ll share the subject.

Daily Lean Tips Edition #32

For my Facebook fans you already know about this great feature. But for those of you that are not connected to A Lean Journey on Facebook or Twitter I post daily a feature I call Lean Tips.  It is meant to be advice, things I learned from experience, and some knowledge tidbits about Lean to help you along your journey.  Another great reason to like A Lean Journey on Facebook.

Click this link for A Lean Journey's Facebook Page Notes Feed.

Here is the next addition of tips from the Facebook page:

Lean Tip #466 - Talk to Your Employees about Your Mission

From time to time, you need to talk with your employees about your mission and the plans for the future of the business. When you communicate your goals with your employees, they will know about the changes that you’re planning to make in the upcoming coming months/years. This will better let them know what their roles and contributions to the growth of the business are.

Lean Tip #467 - Always Maintain a Positive Attitude

Positive attitude has power in more ways than one. As a business leader, you should exude optimism which will help your staff avoid patterns of negativity. When the economic climate is unstable, businesses will face continual challenges. If you are not optimistic about your ways of conducting business, it can negatively affect the mindset and productivity of those who work for you.

Lean Tip #468 - Be Approachable and Listen to Your Staff

Leaders are approachable. Your business will neither grow nor become successful if you have a bunch of people who are unhappy or disgruntled. Your leadership style should be such that people should be able to talk to you freely about their work issues. Inculcating good listening skills is mandatory to becoming a good leader. A good listener will convey empathy and show they are genuinely interested. Leaders will want to find out what’s behind the conversation.

Lean Tip #469 - Appreciate and Compliment Good Work

Recognize and encourage talent. Take time out to compliment and praise your team and staff if they have achieved something remarkable. More than incentives and certificates, these things matter. They will be motivated to have a higher level of performance. It will also cultivate a positive mindset and work culture.

Lean Tip #470 - Share Responsibility by Holding Yourself Accountable

When your staff or team fall short of their performance, ask yourself a few questions such as “Where have I gone wrong?” “What could I have done differently to deliver a positive outcome?” and so on. When you are passionate and enthusiastic about what you do, you would be willing to take the responsibility of failure. If your employees love and respect you, they will be more than willing to share your sorrows and failures.

Lean Tip #471 - Focus on result-oriented activities.

Pareto’s law states that 80% of the outputs result from 20% of the inputs. This means that 20% of our actions result in 80% of the results. We must find the 20% that is creating the 80% of our desired outcomes and focus solely on those activities.

Lean Tip #472 - Make the work visual

One of the problems with working in an office as opposed to a factory environment is that work becomes less visual. One of the lean principles we use is visual management, and you can do that a few different ways.

Lean Tip #473 - Keep a project list – and focus on it at least an hour a day.

We all have a lot of projects that we’d like to work on – projects that aren’t really essential to what we’re doing, but would go a long way towards making life or work easier once they’re complete.

Lean Tip #474 - Never, never ever multi-task!

It will decrease your effectiveness and make you feel overwhelmed. It is bad for your mental health, in particular your creative being. You don't need to multi-task anyway if you are using a personal productivity system.

Lean Tip #475 – Want to be productive in the office learn to prioritize all interruptions.

In a perfect world, every phone call or meeting would be properly scheduled in advance - but we all know this doesn’t happen. However, most of the time you can decide on when to actually have the conversation. Within the first two minutes of the phone call or meeting, make a decision as to whether it is an urgent issue or if you need to schedule a meeting for a later date and time.

Lean Tip #476 – Save your inbox by SORTING your email and getting rid of what you don’t need.

First things first, it’s time to get rid of all of the messages that are old and obsolete. Be aggressive in this step. Don’t keep messages that you know will never be returned. If there are attachments that need to be saved or printed, do so now. Get rid of as much as you can.

Lean Tip #477 - STRAIGTHEN the inbox, as in "a place for everything and everything in its place."

Find a place for all of your e-mails. The easiest and most obvious way is to create folders based on tasks or other buckets of work where emails can be neatly filed for future use. Put e-mails you need to act on in the proper folder. The goal is to remove as much from your inbox as possible.

Lean Tip #478 - E-mail 5S SHINE is to get rid of e-mails and prevent them coming back.

Since we’re talking about computer applications, there really isn’t the necessary cleaning activities that would be required in a physical workspace. Shine in 5S is cleaning to prevent future cleaning. E-mail 5S shine is to get rid of e-mails and prevent them coming back. Block spammers who make it into your inbox to prevent repeat offenders. Unsubscribe to newsgroups or other e-mail marketing rather than deleting them. Don’t reply to informational e-mails with "Thanks" and certainly don't CC everyone.

Lean Tip #479 - STANDARDIZE how you handle e-mail.

This step is critically important as you will need to set rules for yourself to keep your e-mail account clean. Some rules you may consider:

• Set a maximum number of e-mails in your inbox and once that number is exceeded, complete another sorting and sifting cycle.
• Check e-mail at certain times of day rather than playing whack-a-mole with every new "you've got mail".
• Spend a set amount of time on e-mail checking.
• Agree to limit who is Carbon Copied (CC) so that extra inbox material is not created.

The key is to set rules for yourself to keep things organized.

Lean Tip #480 – SUSTAIN your inbox by auditing to ensure you are following the rules.

The final step in the process is setting up a quick audit process to make certain your rules are being followed and your account is staying in good shape. In the beginning, this audit may need to be more frequent to force the discipline to adhere. Overtime, it will become a learned way of working and you will be the envy of all your coworkers.

Checking Your Lean Progress Replayed

Jeff Hajek  and I joined up once agan to discuss ways to measure the progress of your Lean journey. We covered how to evaluate Lean training, continuous improvement culture, Lean leadership, and more.



If you would like to review the slides from this webinar you can find them below:

Checking Progress On Your Lean Journey

View more presentations from Tim McMahon.

I hope you enjoy this webinar.  You can check out some others Jeff and I have done together here.

Lean Quote: Want Something New Try Something New

On Fridays I will post a Lean related Quote. Throughout our lifetimes many people touch our lives and leave us with words of wisdom. These can both be a source of new learning and also a point to pause and reflect upon lessons we have learned. Within Lean active learning is an important aspect on this journey because without learning we can not improve.

"If you want something you've never had, you must be willing to do something you've never done." — Thomas Jefferson

Culture can be defined as the sum of individuals' work habits within an organization. Culture is often invisible to the members within the group because it is "the way we do things around here." One implication of culture as a collection of habits and practices is that it has incredible inertia and momentum. Cultural inertia is like a body in motion tending to stay in motion in the same direction unless acted on by an external force.

When it comes to habits David Mann tells the story of Smokey the Bear's campfire rules. Douse the fire with water, stir the coals and turn them over, then douse again. Not following the rules of Smokey the Bear you risk the fire restarting itself from the live embers that remain. Cultural habits are very much the same way.

A simple model for improvement could include unhook, change, and re-hook. Where the 3 steps of the process are defined:

Unhook – is the process of learning to change the activities in an organization. Create a situation whereby change is allowed to occur.
Change – this is where the actual improvement is implemented.
Re-hook – is about sustaining the new system by making new connections. Use techniques like standard work, visual control, and visits to the Gemba build new ways of doing things.

Without unhooking the old system we leave live embers that can be restarted at the first sign of difficulty. Change is hard and there will be challenges. To be successful and ensure the old fire doesn't restart we must learn to improve. When you face a new problem in your new system don't break the rules or revert back to old thinking. Use your Lean thinking to solve this new problem and improve your system. And whatever you do don't run two systems in parallel. Sometimes in an attempt to be cautious we are really just confusing the situation. Be brave and embrace the change if you want to improve.