Value Velocity or How Do I Know Lean Is Working?
Is lean working? How does my lean program compare to our competitor's program? How lean is our industry? What stocks to buy? What stocks to sell? What's more important ? cutting cost or cycle time? Inventory is good ? isn't it? These are all questions heard every day, in a swarm of different ways, in every industry and in every boardroom across the nation. And the leader asking the question does not need a ninety-minute presentation to substantiate a "gut-feel" answer.
The first response by mid-management to the question is to look at cycle times, "Yeah, sure lean has worked! The cycle times have come down from 63 days to 45!" Immediately that person's detractor will chime in, "No, but we're producing the wrong product; it's sitting in the outlet!" or even worse, "We're spending tons of overtime to do it, Harry!" So the leader then asks to see the data on cycle times, margin mix, sales figures, inventories, and overtime. Two weeks later, the data is presented and the discussion has just begun. At the end of the quarter, somebody mentions a fulfillment metric and by the end of the year the leader is looking at pages of data with frequently contradictory insinuations and implications.
The next response is to look at expenditure but everyone knows that simple expenditure is too simple a metric with too many variables to supply the meaning the leader is looking for. Suppliers are competing and the company may be reaping the benefit of a price war, or inbound consumables inventory may be consumed, showing an inaccurate impact on the bottom line. Lastly the headcount may have been reduced, which has an immediate impact upon the bottom lin ...