If you are a CEO of a manufacturing company with many value streams, it’s impractical to think that you have the time to review all the performance measures of every value stream in your company. Yet you need to know the operational impact of lean on your entire organization.

The traditional solution to this issue is to roll up or aggregate measures so the CEO sees just a few numbers to get a pulse of performance. However, rolling up value-stream measures doesn’t work because the aggregation of value stream measures really doesn’t mean anything. Each value stream is really a separate business unit with different products, customers, and operational issues. Because each value stream is an independent business unit, performance should be measured against future-state targets, which may be different for each value stream.

What I tell manufacturing CEOs and executive management teams is to focus on one measure: flow, as measured by inventory days or inventory turns. I believe this is the best indicator to let the CEO see the effectiveness of deploying and using lean practices, tools, and methods.

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