Lean On Me: KPIs that Support Lean Six Sigma Efforts
I just got back from the Logistics and Supply Chain Forum in Miami. It’s a great event that pairs up companies and vendors that are looking to jointly solve supply chain and logistics problems. While I’m hesitant to use the term “speed dating”, the format allows attendees to have 1:1 conversations with over 25 supply chain practitioners in two days. And there’s a lot we can learn from each other.
I had the opportunity to meet with the Vice President of Sourcing & Supply for Sealy Corporation. As the world’s largest maker of bedding products, chances are you spend 1/3 of your life on one of their beds (although I can’t remember when I actually got 8 hours of sleep in one night…)
A few years back, I visited a Sealy plant in the Southeast and frankly was stunned by the extent Lean methodology had permeated the facility. First of all, there was practically *zero* inventory. Really. Raw material for assembling mattresses and box springs would arrive the day it was needed and it would move through the facility at a pre-determined cadence. Supporting the concept of TAKT time, each activity is predetermined to take a specified amount of time. For example, the station where fabric is stapled to the underside of the box spring should take 1 minute 46 seconds. And there’s a sign on the machine reminding the operator that that’s how long it should take. And workers are measured on maintaining that cadence.
A Lean focus requires driving waste and non-value-added time out of your operations. Sometimes easier said than done, because in today’s siloed organizations, optimizing one part of a supply chain often results in pushing inefficiencies upstream or downstream in the process (Lean practitioners call it “who moved the muda”) So how do you effectively measure performance?
I did some work a couple years ago mapping the 7 forms of muda (waste) to specific metrics that finance and operations can track. That’s a bit of the science part. Balancing these metrics is where the art comes into play.
The Seven forms of Muda are below:
- Number & cost of Transportation process steps
- Cycle time of transportation process steps
- Unnecessary transfers
- Process bottlenecks (#/time)
- Time-outs (#/time)
- Wait times between events (#/time)
- Cycle time between goods completion and ship to customer
- Duplicate transactions (#/$)
- Defect PPM (#/$/%)
- Errors handled (#/$)
- SLA violations (#/$)
- Rule violations (#/$)
- Overstock (#/$)
- False demand triggers (#/$)
- At-risk / Obsolete Inventory (# SKUs/$)
- Unnecessary activity in a human/task part of the process
- Unnecessary transaction approvals (#/$)
- Rework activities (#/$)
Now these are just a start, so please post your comments with Lean-based KPIs. In a later post, we’ll go beyond Muda to cover Mura (Unevenness / Unnecessary variation) and Muri (Overburden / Over doing).
And although there’s been a number of versions of “Lean on Me” over the years, sometimes you just can’t beat the original by Bill Withers.