"How Do Your Measurements Stack Up to Lean?"

Frances Kennedy, Lisa Owens-Jackson, Laurie Burney, and Michael Schoon

Strategic Finance

May 2007, pp. 33-41

Many authors have argued that traditional measures often do not align well with Lean principles. It is often proposed that strategic performance charts should be completely redesigned in Lean enterprises. While this article agrees with that in the ideal, it is recognized that a complete redesign is not always feasible, such as when a Lean manufacturing company is part of a larger company with standard reporting of measures.

This article presents several useful generic forms to assess the value of a specific metric, in the context of how the metric's attributes relate to the following principles of Lean:

• Customer value
• Value stream
• Flow and pull
• Empowerment
• Perfection

The first form to assess the metric focuses on the technical attributes of the metric. This refers to "its ability to enhance the understanding of the phenomena being considered and to provide relevant information for strategic decisions." Some of the questions asked are:

• Does the measure relate to customer service?
• Is it a functional or process-oriented measure?
• Does the measure promote a smooth workflow?
• Who uses this measurement information?
• Does the measure change between periods?

The second form to assess the metric focuses on the behavioral attributes of the metric. This refers to "whether management accounting measures motivate employee actions that are consistent with strategic objectives." Some of the questions asked are:

• How does the measure relate to the business's strategic goals?
• Where does the measure focus attention?
• How does the measure relate to employee output?
• What individual behavior does the measure motivate?
• How well is the measurement goal communicated?

The third form to assess the metric focuses on the cultural attributes of the metric. This refers to "the beliefs and values embedded in a measure, and measures are symbols that represent mind-sets held by members of organizations." Some of the questions asked are:

• How does the measure reflect value as defined from the customer's viewpoint?
• Does the measure encourage continuous improvement at the value-stream level?
• Does this measure encourage one-piece flow through the production cell?
• Does the measure provide adequate information to the people making decisions?
• Does the measure promote the elimination of unnecessary steps or waste?

Back to top of page