How Lean are you? Part 4

This is the fourth post in the How Lean are you? series.

Measuring leanness

Author, Chris HOHMANN

In previous posts of this series I explained the advantage and necessity to assess leanness on two dimensions, one being primarily depicting how familiar with Lean tools and concepts people in the organization are, the second to measure tangible results: performance.

In part 2 we have seen that “awareness” is tricky when it means “knowledgeable”, as good Lean awareness can lead to no tangible outcome. To avoid this potential mismatching, I will refer from now to “maturity” which in my definition means familiarity not only by knowing but also using.

The matrix therefore looks like this:

The question is how to put a figure next to each dimension in order to plot the organization’s leanness?

Lean maturity

For assessing Lean maturity one way is to define what principles, methods and tools as well as activities routinely or at least frequently done would characterize a Lean organization?

Doing this for a European-wide study in the automotive industry, we defined no less than 21 items for this list, ranging from basic 5S to cyclical materials supplier in production (Milk run, water spider, etc.), from kaizen workshops to Value Stream Mapping or Visual Management and Poka-Yoke error proofing to production levelling (heijunka).

Each of these items had to be ticked in either categories: not implemented, pilot, halfway, extensively, completely, giving a grade on a five-levels scale.

The more items ticked in the category of widest coverage, the higher the maturity.

This way may not be perfect, in regard to frequency, consistency and so on. Furthermore, this being done via a questionnaire, the answers may of course be biased, but as explained in a previous post, the accurate benchmark the participants expected as feedback invited them to answer as faithfully as possible.

The final grade for Lean maturity has to be a single number, so the 21 grades were used to compute a Lean deployment index, what I refer to as maturity.

Lean performance

In order to appraise performance vs. Lean maturity, we selected 7 measurable Key Performance Indicators (KPIs) that are common to any company and likely to be positively correlated to lean maturity: Raw material inventory, finished goods inventory, customer’s satisfaction, customers’ claim rate, OEE on bottleneck and pace of A product production (known as EPEI or Every Part Every Interval, which is a marker for production levelling).

As for maturity, the different items making Lean performance were used to compute a Value Stream Performance Index, which I refer to as “performance”.

Plotting onto the matrix

Now that each participating unit can provide data to compute a pair of coordinates, it’s easy to display them in the matrix.

The plots, about 150 of them, showed a nice scatter diagram with a positive linear correlation between maturity and performance, proving that the more lean-mature an organization is, the more performance it gets.

The beauty of this approach is that it is not sensitive to nature of activity or capital intensity, For instance, participants to this study had to be actors within automotive industry, but could be as dissimilar as OEMs, electric wire and harnesses provider, a tier two system maker or a stamping contractor as well as a plastic parts manufacturer. These activities use very different means, some of which extremely capital intensive, while others can operate with small facilities and simple equipment.

The indexes are common to any industrial company and therefore are welcome to compare very different companies.

About indexes

This approach has its biases. First of all it was designed for industry, so the metrics relate to manufacturing e.g. raw material inventories.

Another weakness is the dilution when computing the indexes, regardless how smart they’re calculated, they end up as some kind of averaging averages.

Yet, as every participant was assessed in the same way, the relative scores of all of them keep the result of great interest. As for any benchmarking, the most important is not to discuss the accuracy or reliability of the result but what can be done to improve the score.

>Next Post: how lean are you? part 5

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One thought on “How Lean are you? Part 4

  1. Pingback: How Lean are you? Part 4 | Chris HOHMANN | #lea...

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