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TYPES OF PERFORMANCE MEASUREMENTS

Performance measurements come in different types de­pending on their intended usage. Our premise is that their primary use is to assess the quality of a process. (Refer to commentary on process thinking later in this article). The most common types of measures are the following:

      Hit/miss

      Percent relative

      Continuous

      Rate of improvement

      Intermittent.

Hit/miss measures are directed toward consistency and reliability and focus our attention on whether goals were precisely achieved. An old Chinese philosopher once said, "When shooting an arrow it is equally unfor­tunate whether the arrow lands short of or beyond the intended target." In modern terms, I like to use the phrase, "Make a plan, and meet a plan" to drive home this point. Examples of a hit/miss measure are inven­tory accuracy and customer service performance.

Percent relative is important since it shows results relative to the objective. Numbers themselves are not nearly as vivid in describing a result as knowing, by per­centage, how close we are to achieving it. World-class companies define their goals as within plus or minus five percent of their ideal objective. Most measurements are converted to percent relative before communicating the results. For example, 98 percent inventory accuracy is really a percentage of correct counts (hits) divided by the total number of counts taken.

Continuous measurement drives process improve­ment by generating descriptive data surrounding the variable chosen for measurement. In most cases, data capture is technology-dependent. However, human analysis of the data is a main driver of improvement for quality-related problems. In some cases, process control equipment can be used to analyze AND take corrective action.

Rate of improvement measurements are the corner­stone of "continuous improvement" programs. How­ever, they are best applied once the process we are trying to improve has stabilized and become predictable. Us­ing statistical process control concepts, rate of improve­ment is best deployed when the process is consistently within the current control limits. From that point on­ward, rate of improvement is the measure of progress in tightening those control limits. The target level of im­provement is set by management.

Examples would be "lead time reduction of five per­cent per quarter" or "inventory turns improved by X turn per quarter."

Intermittent measures are a result of a mature perfor­mance measurement process. Measurements too often continue beyond their usefulness until people lose track of why the measure is performed and who cares about the result. Once an objective has been reached using one of the other measurement types, and if there is a signifi­cant cost in continuing the measurement, measurement should cease. However, the ability to resume the measure should be maintained. Consequently, whenever the pro­cess or problem that was originally improved or solved with the measurement is suspected of recurring, the mea­surement should be taken up again until the desired re­sult has been reachieved. In this way the measure is recognized as a tool, to be applied as needed, in the same way that a thermometer is no longer used once a patient's fever has broken.

To Be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 13


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