Making improvements through the implementation of lean manufacturing and operations relies on the ability to measure performance. It is important to be able to measure both before and after any activities as this provides tangible evidence of the impact that these activities will have on the business. This article is a simple, beginners guide to performance measurement.

Making improvements through the implementation of lean manufacturing and operations relies on the ability to measure performance. It is important to be able to measure both before and after any activities as this provides tangible evidence of the impact that these activities will have on the business.

This article is a beginners guide to performance measurement

In effect measurement is important for:

• day to day control
• ensuring strategic alignment
• driving improvement
• best practice comparison
• setting of World Class targets

When analysing a business it is important to see things from multiple points of view and consideration needs to be given to:

• Shareholders
• Customers
• Operating effectiveness
• Employees and Environment

Getting performance measurement right first time is essential. Wrong measures drive you in wrong behavioural directions, too few measures give unbalanced approaches to company performance and too many measures confuse and stop real action.

Key performance measures must be simple, concise and effective. They must take a balanced view and are likely to include many of the following:

1. Shareholder considerations

• Sales growth %
• Profit/turnover %
• Value added per person
• Floor space utilisation
• Inventory turns

2. Customer considerations

• Delivery schedule achievement (delivery to promise)
• Order lead-times
• Time to market for new products
• Innovation: new products to product range %
• Complaints per order

3. Operational considerations

• Non right first time
• People productivity
• Overall Equipment Effectiveness
• Spoilage/scrap/waste
• Data accuracy
• Supplier: purchased materials value verses no of suppliers

4. Employee considerations

• Safety: accidents/employee
• Leavers/employee
• Training days per employee

Other Key measures for process improvement activities

• Not right first time (NRFT)
• Delivery schedule achievement (DSA)
• People productivity (PP)
• Stock turns (ST)
• Overall Equipment Effectiveness (OEE)
• Value added per person (VAPP)
• Floor space utilisation (FSU)

Of course measurement and benchmarking are not the be all and end all of process improvement. Actions are key to the success of the company concerned. It is important to measure the effect of any intervention or action, collate by sector within the business and to disseminate the results. World Class Targets need to be established with a view to continuous improvement.

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