Develop Performance Metrics

Performance metrics are used to determine and quantity improvement in processes. To develop performance metrics, it is important to collect data pertaining to critical work processes, understand the desired results and the development of realistic measurements to be used to quantify the process improvements. The goal of lean is to help in comparing performance levels with the benchmarks or established standards. In order to successfully develop project metric, it is it advisable to first define the project metrics. These include the goals, objectives, and project benchmarks. For example, if the process is to produce four inch rods. The upper limits and lower limit must be set probably 4m plus or minus 0.5m. Any deviation bellows 3.5m or beyond 4.5metres shall be considered out of control (Nicoletti, 2013). Process should always be within control. Collecting data is mainly to help in quantifying process improvement and not reduce products variability. The most commonly used metrics include speed, time, quality, quantity. In lean, both primary and secondary metrics must be defined.

Process metrics such as primary metrics must define the overall project goals such as improving time or process efficiency.

The primary metrics are used to measure and conjure the benchmark level ad improvement level. The benchmarked level is the target level. Primary metrics include time metrics such as Lead-time, processing time or Value added time (Found & Harrison, 2012). Costs metrics include total process cost, Cost per transaction, Cost savings and labor costs Finally, Quality metrics such as Customer satisfaction, Defect rate, and Rework time are

used.

Those secondary metrics such as quality or deviation are used to capture and validate the process outcomes including the process variation (Stone, 2012). The secondary metrics are used to measure and compare the baseline targets with the actual data. This will determine if there is an improvement after the process was improved. Finally, the company can also use the consequential metrics. These are the metrics used to validate or quantify the deviations data are collected before and after the process impairment to determine if there any changes in the values (Corbett, 2011)

Right metrics for quantifying the process improvement are mainly determined by the company’s data collection efforts and capacity. Metrics can be developed easily by analysing the whole process and keeping data to be reviewed for deviations. While most companies currently use the balance scorecard. The process improvement goals are always to make an improvement on the secondary metrics. For example, primary metrics may include improving process and analyse the changes in the process after first improvement. A company may start by registering changes in the other metrics. The balanced score card is used to develop primary metrics which is mostly associated with target production volume, targeted production duration or quality.

References
Corbett, L. (2011). Lean Six Sigma: the contribution to business excellence. Lean Six Sigma Journal,2(2), 118-131. http://dx.doi.org/10.1108/20401461111135019
Corbett, L. (2011). Lean Six Sigma: the contribution to business excellence. Lean Six Sigma Journal,2(2), 118-131. http://dx.doi.org/10.1108/20401461111135019
Found, P., & Harrison, R. (2012). Understanding the lean voice of the customer. Lean Six Sigma Journal, 3(3), 251-267. http://dx.doi.org/10.1108/20401461211282736