Without Data, You're Just Another Opinion

Without data, youre just another opinion. That says it all. To continuously improve our processes, we need to first learn how to capture and then apply statistical data to our situation analysis. This action is a primary requisite to effective problem solving. Slide 2-3 presents an overview of a management by facts system.Lesson Learned: The more that people use real time data to perform situation analysis and to establish and track corrective actions, the more comfortable and effective they become at interpreting and applying data-on-the-run. It is my contention that exceptional leaders make quick and quality decisions because they have mastered the skill of interpreting data-on-the-run. When a leader says, That doesnt sound right to me. What about .. . . .? He has put to use, what I call, the test of reasonableness and this ability separates the exceptional leaders from the pack. To develop the ability to apply the test of reasonableness, a leader must first become an expert at interpreting data-on-the-run.Measurement - Management - Success

Slide 2-4 identifies why and how performance measurement creates a foundation for successful continuous improvement programs. An important benefit of performance measurement is the value it brings to customer relations. When sales people visit their customers, they are often subjected to customer com-plaints about the poor delivery of spare parts. Many times, because a customer has had a recent and unpleasant experience in obtaining a critical part, his/her perception of the service is not reality.Lesson Learned: Since the first time a salesman brought me back inaccurate information from a customer about our poor on-time delivery performance, I have always provided my sales people with a summary of our on-time shipment record for each customer to be visited. This provides the salesperson with the facts about our delivery performance and is the best remedy for converting customer perception into realityPerformance Recognition and Reward.

Most gurus agree that to increase employee participation and contribution to company success, leaders should set a high priority on employee recognition and reward. In slide 2-5 we have listed five opportunities to recognize and reward individuals and teams.Lesson Learned: Companies that initiate employee recognition and reward programs and fail have not put in place the performance measurement system required to authenticate and sustain their program.The Measurement Flow Chart

For a performance measurement system to be successful, it must be focused on the critical processes that determine the efficiency and effectiveness of the companys total product/service delivery chain. In slide 2-6, we take a systematic tour of the business to determine what measurements are required. This where and what survey is an important step toward establishing a balanced scorecard.Lesson Learned: The balanced scorecard is an excellent method for establishing support between key activities. The graphic in slide 2-6 presents an example of a starting point for developing a balanced scorecard. Each of the activities are reviewed and evaluated to determine which is crucial to achieving the companys critical success factors. Performance measurements are then established at all key process interaction points.The Organizational Mind Set

Slide 2-10 is self explanatory however, let me emphasize that establishing a performance measurement mindset is the responsibility of management.Lesson Learned:We hear and read a lot about business culture. Most of the information is far too deep and complicated to serve any true purpose. To me, there is a culture that should be adopted and its great in its simplicityThere is no status quo!Everyone in the organization can relate to it and should be able to understand that if youre not winning - youre losing!About the AuthorBill Gawis the founder of Business Basics, LLC and a "been there, done that" lean enterprise advocate. He is the developer of six training packages and seven training modules published to help individuals and companies reach their full growth and earning potentials. To review details of his popular Lean Manufacturing Workshop-in-a-Boxl, simply click on the below link:Lean Manufacturing DIY WorkshopFor knowledge and implementation know-how you'll not find inthe books at Amazon.com... neither in the APICS Librarynor the Harvard Business School Press,simply click on:http://bbasicsllc.comBusiness Basics, LLC6003 Dassia Way, Oceanside, CA 92056West Coast: 760-945-5596 2001-2013 Business Basics, LLC

Manufacturing Performance Matrix

Slide 2-7 presents four key business functions and five relevant performance measurements for each function that would create a balanced scorecard in a manufacturing company. In our case study company, the balanced scorecard was created to measure engineering, operations, finance and sales/service performance. Each function then created its own balanced scorecard to assure that the goals of the top level balanced scorecard were achieved.Lesson Learned: The above approach to the balanced scorecard was very effective in making positive things happen in a difficult manufacturing work environment. Starting with the companys strategic, critical success factors, we converted them into strategic objectives for each of our four key business functions. Then we worked with each function to develop meaningful performance measurements that would support not only the companys critical success factors but also the strategic objectives of each business function.An index was then developed that converted each of the functional performance measurements into a common metric that could be aggregated at each level of the balanced scorecard. Now, each group had visibility and understanding of how each function was progressing. The end result was an overall aggregate performance measurement of the total company. As long as each of the measurements move in the right direction, our CEO could rest assured that positive bottom line results would follow.Tracking and Recording Performace

Slide 2-8 displays a very important kaizen tool - the performance measurement bar graph. The methodology for structuring the performance measurement graph should be standardized. This makes the learning process much easier and a complete company wide roll-out ofthe balanced scorecardpossible.Lesson Learned:Monthly data may be OK for financial reporting but itstoo little-too latefor implementing effective corrective action.An effective approach to graphing performance measurements is what I call therolling-ten-periodsmethod. This method will satisfy even Baldrige Award auditors because it produces a three-year trend of historical performance data.A review of the bar graph shows we are tracking data as a weekly average. At the far left of the graph, is the current goal and to its right is ourbest-to-dateperformance. To its right are ten variable time periods. When the graph is initiated, all ten-periods are weeks. When we run out of time periods, we roll up the first four or five weeks into a monthly time period. Eventually, we will roll up monthly data into a quarterly period and then the quarterly data into a yearly period. Try it, youll like it!This type of performance measurement lends itself to team recognition and rewards. As annotated on the graph, each of the time period measurements can be used to create relevant team and individual recognition and rewards.

6-Steps to a Effective Balanced Scorecard

Slide 2-9 presents six importantmust dosthat are the backbone ofthe balanced scorecard. Keeping it simple is important to gaining the necessary commitments to performance measurements. There is no better way to get people to commit to the implementation of Kaizen Based Lean Manufacturing than to design and execute an effective performance measurement process that includesthe balanced scorecard.Lesson Learned:Establishing measurements comes fairly natural to me but to many people it is a difficult exercise. First, start by studying the process that you want to measure, review all current data collected and finally select the data that will best represent the process. (In some processes it requires establishing a new data collection task to get relevant data.) Next, select the best type of chart (bar graph, line graph, pie chart, skills diamond, etc.) to communicate the status of the process being measured. Data can be plotted manually or by using computer programs like Excel, PowerPoint or Lotus. Dont let the challenge of developing performance measurements stop you from establishing crucial process monitoring. Remember, without data, you are just another opinion!

The Organization Mindset

Slide 2-10 is self explanatory however, let me emphasize that establishing a performance measurement mindset is the responsibility of management.Lesson Learned:We hear and read a lot about business culture. Most of the information is far too deep and complicated to serve any true purpose. To me, there is a culture that should be adopted and its great in its simplicityThere is no status quo!Everyone in the organization can relate to it and should be able to understand that if youre not winning - youre losing!

A "Been There, Done That" Story

Lesson Learned:Be careful how you present your measurement data. In slide 2-15, I show an example of a manually updated graph that displayed the number of engines that werein-the-hospitalwaiting for parts. I was materials manager at this company and responsible for parts availability. We created this line graph to track our progress as we attacked the relevant parts problems. The red line represented the average number of enginesin-the-hospitalat the end of each week. Our goal was to drive the trend line to below the red line within the next four weeks.

As you can see by slide 2-16, we did not succeed. I thought the line going off the graph and onto the door and then onto the wall was acrack-up. My boss, however, did not share in my humor and the incident led to a huge personality conflict that ended in my resignation from the company. (Not a bad decision on my part as my next job took me from the winter of Wisconsin to the sun of CaliforniaYahoo!)Lesson Learned:Dont get too cute with your methods for displaying perform-ance measurements.About the AuthorBill Gawis the founder of Business Basics, LLC and a "been there, done that" lean enterprise advocate. He is the developer of six training packages and seven training modules published to help individuals and companies reach their full growth and earning potentials. To review details of his popular Performance Management Tutorial, simply click on the below link:Performance Management and the Balanced ScorecardFor knowledge and implementation know-how you'll not find inthe books at Amazon.com... neither in the APICS Librarynor the Harvard Business School Press,simply click on:http://bbasicsllc.comBusiness Basics, LLC6003 Dassia Way, Oceanside, CA 92056West Coast: 760-945-5596 2001-2013 Business Basics, LLC