Lessons Learned from IW's Best Plants Conference: Choosing Metrics for Lean

IndustryWeek's annual Best Plants conference concluded less than two weeks ago in Cleveland. It was accompanied by great spring weather, a Cleveland Cavaliers playoff win, and a wealth of presentations and networking events aimed at helping manufacturers do their jobs better. During the next several weeks, IW will share some of the sights and sounds of the conference, including these observations:

It's a dilemma that many manufacturers struggle with: which metrics to measure. That struggle was addressed by George "Rick" Bohan and Pete Accorti in their conference presentation "Developing Effective Metrics for the Lean Enterprise." Attendees hoping to simply jot down a list of metrics to follow were sorely disappointed as Bohan, principal of Chagrin River Consulting, emphasized that no standard set of metrics for lean exists. Each company must determine its own set of metrics based on what it would like to see occur.

"Metrics should be creating talk, debate and dialog about how we can do it better," he said.

Accorti, president of Cleveland-based metal stamping firm Talan Products (it employs 60 people), shared the process his company used to select its metrics. It began, he said, with the leadership team going offsite to collaborate on the selection process. That team included among others the plant manager, owner and a representative from quality.

"It was a very theoretical discussion for guys whose work is very tangible," Accorti said.

Determining the metrics was a collaborative process that included brainstorming questions such as "What do we need to get better at?" It included polling to narrow down the list of possible metrics. It included a lot of discussion and debate before ultimately making a selection.

Bohan, a consultant, was part of the collaborative process, but it was the leadership team that ultimately selected the metrics. Indeed, Bohan said he argued against certain metrics that Talan Products ultimately chose. Accorti estimated it took Talan Products about 12 hours to choose it metrics, with those hours split up over several days.

What are the metrics Talan Products uses today? They include direct labor versus budget, indirect material costs versus budget, inventory turns, controllable costs versus budget, an efficiency metric, a homegrown availability metric, scrap costs by work center, customer on-time ship, supplier on-time delivery, and several others. Bohan repeatedly emphasized that Talan Products' metrics (or any company's metrics) are not the ideal metrics for every company. "You must choose your own metrics," he said.

Ultimately, Talan Products' metrics have flexed over time, with some dropping out, others changing and some remaining the same. The company also has begun using a 12-month moving average to gauge progress against its metrics.

Accorti said the metrics are reviewed in the second week of each month, with stagnant or declining metrics receiving additional scrutiny. And as the company improves, new targets are set. Both Bohan and Accorti note that discussions about the metrics drive a better understanding of what is occurring and aid in problem-solving.