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Frederick the Great stated that a general who tries to defend everything defends nothing. The same principle applies to business performance metrics: He who tries to measure everything measures nothing because it is impossible to focus effectively on “everything.”
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The Defense Acquisition University (DAU) reinforces this observation with the Rule of 5: “No more than 3–5 key performance metrics (KPM).” We have meanwhile heard of organizations that enforce this rule by telling managers who have five metrics that they must drop one if they wish to add another. This article contends that four key performance indicators (KPIs) are the minimum necessary to define completely the effectiveness of a lean supply chain. They are as follows:
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Comments
What! We made the soy container to big?
I am not saying that your solution is not the best one, but it seems to me your example assumes that the soy container only had one requirement. Is it possible that there were other requirements dictating the size of the soy container? Product quality and processing requirements are two that come to mind immediately. Please reconsider utilizing the words "simple", "improvement", and “lean” in the same sentence without some type of risk disclaimer. We have found that lean is not simple, nor is it risk free, especially when you take into account human and processing factors. We see it all the time where one does not consider the whole picture prior to declaring the "simple fix" victory.
Why is the soy container so big?
Gee, maybe its to allow for settling during shipment?
Missing the Point
I propose replacing Lean and Six Sigma with a new term that
encompasses both plus other good techniques and methods not in either. How
about “Common Since.”©™ Since, we
started using these Common practices, we have achieved much.
“Common Since” is a large tent. There is room in it for many
good practices, methods, techniques, and principles. There is room for TQM, Six
Sigma, Lean, Toyota Production System, 5-S’s, 5 W’s, Design of Experiments
(Fractional, Taguchi, Shannin). The jest of it is that the Theory of
Constraints 5 Steps, and the Thinking Process Cloud, Current Reality Tree,
Future Reality Tree, Transition Tree, etc be included with Deming’s 14 Points,
Deming Cycle P-D-C-A, System of Profound Knowledge, Operational Definitions, and
the 4 Tampering Funnel Rules. We should include TQM techniques 7 Tools of
Quality, 7 Management Tools of Quality, Six Sigma techniques and DMAIC all
should be included. We should include the Kano’s Delight and Taguchi’s Loss
Function.
There are many measurement maxims that you choose to
disregard in your minimalist approach in this article. “You cannot manage what
you do not measure.” The G-Q-M technique serves very well here. You can ignore
measurement but the result is most likely – Tampering. “Measure Twice, Cut
once.” This eliminates Rework that many of the afore-mentioned philosophies discuss.
The Basic 5 systems measures are: Size, People, Time, Cost, and
Quality (Defects). From those five measures you can derive almost any other TPM
imaginable. Measuring defects is akin to measuring Variances from Normal or
Requirements or Specs or whatever. The five cover process measures as well as
product measures. These five are simple to recall. They can be made more
complex by sub-levels of measures such as defining Time to include all sorts of
times such as schedule time and wall-clock time.
The reason people measure is to achieve some degree of
objective reality in their dealings with other people in the Village.
Perception is not reality; Never was and never will be. Perception is subject
to illusion and the illusion of reality is a false picture. Perception is
subject to manipulation of Misdirection or Slight-of-hand. The fact that the
phrase “Perception is reality” is so popular and decisions are based on it
accounts for so many business and political blunders.
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