Wrong Measures Send Wrong Signals

mixed-signalsCorporate management of a large multi-national company told its plants to become lean. So the plants began implementing lean by creating pull systems based on shipments from finished goods warehouses that were part of each plant.

Corporate conducted monthly operational performance reviews of each plant using Corporate’s reporting package, which included information such as machine utilization rates and adherence to production schedules (which were based on Corporate’s marketing forecasts.)

Guess what happened?

Corporate started questioning the plants as to why the plants’ machine utilization rates were not as high as in the past. Corporate marketing also questioned the plants as to why they were not meeting the forecasted production schedule.

As a result, plant management was very confused – they were supposed to implement lean, but when they did everything correctly and made good lean changes, the data Corporate management used to evaluate the plants was sending conflicting messages.

Senior managers – don’t do this to your company!  Change the data you use to measure performance. Make it focus on what is supposed to happen during a lean implementation. Stop using data based on traditional manufacturing assumptions!