The great Green Bay Packers football coach Vince Lombardi once said “Perfection is not attainable, but, if we chase perfection, we can catch EXCELLENCE.” That is the core concept of Performance Driven Management: Continuous improvement and the measurement of that improvement.
I am sure you have heard of the saying “What Gets Measured Gets Done.” The goal of Performance Driven Management is more than just this. Performance Driven Management focuses on continuous improvement by measuring results, analyzing the feedback to improve performance and repeating those results continuously and institutionalizing the process.
In order to track performance, most businesses use Key Performance Indicators (KPI’s) or metrics that measure important statics or variables of a business and its industry. Those KPI’s or metrics usually center around a process, service or function within a production line that track a critical time, quality, turnover, placement or some similar operating result.
Performance Driven Management is more than just tracking key variables, KPI’s or metrics, it is a management and team philosophy on how to operate, monitor operating performance and continuously improve performance of operations and function within a production line or even activities outside of manufacturing.
The first thing that needs to be considered in Performance Driven Management is to really determine “What to Measure?” Some examples of this would be:
- Safety – Zero recordable instances of loss time due to work place injury
- Quality Performance – Customer Complaints, Waste
- Delivery/Customer Service – Customer Complaints
- Cost Performance – Inventory levels, productivity (line efficiency)
This is commonly known as SQDC. SQDC focuses on cascading metrics that analyze strategic or organizational perspectives as well as tactical or individual perspectives. These cascading metrics will look to analyze:
- Scorecard/Strategic Plans
- Facility or Business Units
- Area/Value Stream Tools
- Individual Performance
Most SQDC’s are time sequenced, visual and streamlined. An example of a SQDC measurement card is below:
|
|
Efficiency % |
Waste % |
Weight Control |
Consumer Complaints |
Recordable Accidents |
LTA’s |
|
Goal |
95% |
3% |
1% |
5 |
1 |
0 |
|
Current Week |
95.62 |
.97 |
.56 |
1 |
0 |
0 |
|
Y/Ago |
94.40 |
1.8 |
.78 |
1 |
0 |
0 |
|
MTD |
95.79 |
1.1 |
1.02 |
6 |
0 |
0 |
|
YTD |
94.59 |
1.3 |
.82 |
2 |
4 |
0 |
There are many ways to set up measurements and metrics around SQDC’s. Each business is different. Determining what processes to measure and how to measure those processes is the key to gaining efficiencies with Performance Driven Management.
Measurement alone is not enough. Someone within your organization needs to champion the cause for SQDC’s and ultimately drive performance and execution of Performance Driven Management. One of the ways to do this is through a daily management approach or Daily Management System (DMS).
Ideally, a DMS requires:
- Management to be on the floor daily (Walk Around Management)
- Key issues preventing attainment of target performance levels are well understood
- Everyone is involved in problem solving and key activities are clearly identified and assigned
- Daily performance metrics are being clearly communicated and summarized relative to established goals: SQDC’s
- Local (area) metrics are linked back to overall plant or office performance.
DMS focuses on tracking performance metrics on a defined basis. The frequency of measurement is determined by the performance of the process and overall need to track performance. Most DMS’s track daily results, at a minimum. Depending on the situation and circumstances, performance metrics may be tracked on a shift by shift, hourly or possibly a production cycle basis.
In a future post we will discuss the use of Daily Management (DM) Boards, DM Board review process and the steps to implement an overall process for a Daily Management System.
To learn more about this article, please contact the LEAN Accountants of McKonly and Asbury, LLP.
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