There is an inflation of key performance indicators (KPIs) in industry. In my last posts I have explained how KPIs are often wrong, and why bad and fudged KPIs are a huge waste. Yet, you cannot really run a larger corporation without KPI. In this post I will finally give some advice on (1) what you need to do to measure good KPI, and (2) how to avoid fudged KPI.
Modern manufacturing works with a lot of performance measures, often called key performance indicators (KPIs). Unfortunately, they are rarely accurate, and often even intentionally misleading. In my previous post I described some examples of commonly manipulated KPIs. In this post I would like to explain the ugly consequences of incorrect or manipulated KPIs. In a final post I will also show some ways that you can reduce this negative effect. But first, how do bad KPIs (and hence most KPIs) hurt your company?
It was exactly 100 years ago today that Frederick Winslow Taylor died. He is considered the father of modern scientific management, the first management consultant, president of the ASME, and the first management guru. He invented and patented the first modern tool steel, designed new golf clubs, and optimized the growing of grass. He could swear like few others, but he also won the US Open tennis championships.
His work was already controversial when he died, but nobody doubts the enormous legacy he has left for industry. Without his achievements, there would be no modern manufacturing.
Statistical measurements, usually called key performance indicators (KPIs) are found on pretty much every shop floor and in every company. Many management decisions are made based on KPI. Unfortunately, these numbers often are not reliable at all.
Mark Twain popularized the phrase “Lies, damned lies, and statistics.” Winston Churchill famously said, “I only believe in statistics that I doctored myself.” Hence, both men were wary of trusting numbers. You should be too!
One popular and well-known concept of the Toyota Production System is the elimination of waste, in Japanese also called muda (無駄). It is one of the three evils of manufacturing systems, the others being unevenness (mura, 斑) and overburden (muri, 無理). In this post I would like to go through the details of waste with you. This includes the traditional seven types of waste – of which I am a big fan. For completeness sake I also included a lot more types of waste I have come across in industry. However, you have to decide yourself if these additional wastes are not themselves a waste.
Over Christmas I escaped the cold weather in Germany and relaxed on the warm beaches in Cuba. Of course, being a lean expert, I was also interested in the Cuban economy. As a communist economy (or more precisely, a socialist economy), it is based on centralized planning. In comparison, the capitalist system of the US (and most of the rest of the world) leaves most business decisions to individual entrepreneurs. This is somewhat similar to push and pull in manufacturing. Push systems also rely on centralized planning, while pull systems have their signal from inside the system to match the customer demand. As capitalism outperforms communism, pull usually outperforms push. Hence, in this post I would like to show you the shenanigans that happen in Cuba due to the effects of centralized planning. Warning: Lots of images ahead!
In my last posts I discussed the basics of CONWIP systems (Constant Work In Progress) and answered some frequently asked questions Part 1 and Part 2 on CONWIP. Overall, CONWIP is a pretty cool alternative to kanban, also establishing a pull system. It has some very valuable advantages, but it also comes with some disadvantages. In this final post of my series on CONWIP, I will shed light on some of these advantages and disadvantages, especially in comparison with kanban, but also with drum-buffer-rope.
In the last two posts I described the basics of a CONWIP system and started with the frequently asked questions on CONWIP, where CONWIP stands for Constant Work In Progress. However, there are some more frequently asked questions that are also important for CONWIP. These I will explain here. The next and final post of this series will discuss the advantages and disadvantages of CONWIP.