Are You Measuring the Right Stuff?

You’re committed to the journey toward world-class manufacturing performance. You’ve planned and strategized, trained and coached, racked up short-term gains and added even more metrics to the mix as you strive for competitive advantage. What’s missing from this picture?

Sometimes, senior manufacturing leadership makes the mistake of failing to take a step back for another look at all those metrics and related activity spirals. Do you really need time-consuming, complex yardsticks to tell you how well your organization is performing? And are you focusing everyone’s attention on the right targets in the first place? Michael Bremer, president of the Cumberland Group and co-author of Escape the Improvement Trap: Five Ingredients Missing in Most Improvement Recipes (CRC Press, Taylor & Francis Group), shared suggestions for enhancing — and potentially trimming — your lineup of performance metrics for improved organizational success.

“When what you want to happen isn’t taking place, the easiest thing to do is to add another metric,” Bremer said. “It’s the way many executives approach a problem. What you really need is deeper and more critical thinking about what you are trying to accomplish, and why.” He counseled that leadership needs to reevaluate metrics from time to time. The competitive environment has changed radically. Continually evolving global competition demands a fresh look at goals, strategies and related metrics.

Many manufacturing organizations use a blend of customer (delivery), cost (productivity), velocity (lead time and cycle times), people (development and skills) and quality metrics. Fewer do a good job of displaying this information so that people doing the work get fast, meaningful feedback, Bremer said.

He suggested several questions for testing the value of metrics:

1.      Is the information meaningful, generating numbers with a valid relationship to success?
2.      Is the information timely, enabling action to address problems?
3.      Does the organization focus on a critical few key indicators, or do numerous, burdensome metrics conflict with one another?
4.      Are the metrics easy to understand and calculate?

To gain a new perspective on operational metrics, ask whether current metrics will actually help the organization as a whole. Gain a broader perspective at a department level by asking, “How can the metrics we use in my department more effectively help my direct customers (typically an internal department) to serve their customers?” Another aspect of “True North” metrics is at the strategic level, according to Bremer. “Manufacturing organizations often get caught up in the excitement of cascading strategic metrics all the way down to the lowest level,” he said. “This is overkill! Senior leadership should own the policy deployment process — actions needed to improve the company’s competitive position — and they probably need to cascade one level down from senior leadership.” Then the work that needs to be done cascades throughout the organization via improvement activities.

What’s Missing?

As you continue to refine metrics, scrapping traditional yardsticks that no longer work well, take stock of what you need to introduce in your organization. “Probably the biggest thing that goes missing is a clear explanation of why goals and measures are important,” said Bremer. “Leaders need to help people understand the ‘why.’ If they understand, people typically step up and do the right thing.” In manufacturing, leaders must clearly define a value proposition that is real, meaningful and inspiring — rather than a bland, generic strategy — and then identify related metrics that can help to make it happen.

Another missing element is often people-related. Manufacturing companies that are highly effective at improving invest in their people. One way to invest in your associates is to show interest in them, building trust and credibility. As you explain organizational goals, encourage their participation and develop their skills and capabilities. Autoliv, O.C. Tanner and Cogent Power, for example, have taken a “leap of faith” and let go of control in their improvement journeys. Bremer noted that they do not tell people how to improve and measure performance, but instead let associates figure out the best way. He is developing a book for 2014 publication featuring these organizations.

As manufacturing leaders, you must define a clear purpose that inspires people’s passion to win, and then share accountability for making it happen with all stakeholders. Can you create a picture of success, identifying strategies and related measures that others can understand, adapt and use? A key factor in your organization’s success is setting the right targets, then nurturing buy-in and participation to meet those goals throughout the organization.