xiii
Lean Metrics
Introduction
To effectively measure your success with 5S, you need to establish a list of critical
shop oor metrics that can be measured and quantied. On the production oor,
these metrics are often called key performance indicators (KPIs). 5S is a powerful
improvement tool that can have a profound impact on reducing lead times,
increasing output, improving productivity, and affecting many other types of KPI.
In some cases, the change is dramatic. We recommend the following Lean metrics
become part of measuring your overall Lean journey:
◾ Productivity
◾ Quality
◾ Inventory
◾ Floor Space
◾ Travel Distance
◾ Throughput Time
Productivity
Productivity is measured in a variety of different ways. Productivity is improved
when products are manufactured with less effort. This reduction in effort is
essentially the reduction of waste. 5S is put in place to reduce or eliminate all
of the steps and time associated with searching for items in an unorganized
work area. Once you have reduced or eliminated the time spent searching for
tools and parts, walking long distances, and sifting through endless piles of
paperwork, there is more time in the day that can be allocated and focused
on performing work. And, in this case, it is the value-added work of making
products that should be maximized for higher productivity. 5S essentially
clears the “smoke” of confusion in the work area and then provides a work
environment that harnesses value-added work.
xiv ◾ Lean Metrics
Now, the same number of people before 5S can produce more work in the
same amount of time: Fewer steps + Same number of people = Higher produc-
tivity. In most cases, we have seen a minimum of 15% increase in overall output
from a work area the day after the proper implementation of 5S. However,
wehave also witnessed output increases between 30% and 50%.
Quality
Improvements to quality are more of a secondary benet of 5S. The 5S imple-
mentations have an impact on internal quality, such as that of rework, defects,
scrap, and rework labor, simply by providing a work area with better focus.
Every time a worker leaves his or her work area to search for necessities,
the worker loses focus; as this happens over time, mistakes can be made.
How many times does your dentist get up and walk around the dental ofce
looking for all of his or her tools? Is the dentist searching through unorganized
cabinets? No, critical tools and information are readily available so the dentist
can focus on the work. This focus not only reduces mistakes but also increases
the capacity of the dental ofce. Better organization always equates to better
focus and quality.
Inventory
A lot of money is tied up in parts, material, and supplies, which is why
inventory is reduced and measured as part of your 5S journey. The concept of
5Salone does not have such an impact on inventory like other Lean concepts
such as kanban and cell manufacturing, but as you organize the work area,
any 5Simplementation team can be setting the foundation for future inventory
reduction projects.
As the work area is being organized, questions may arise about how to
organize shop supplies. There may be challenges for the team in creating home
locations for excessive quantities of inventory. Should the company buy such
high quantities? Does the inventory take up too much shelf space and hence
valuable oor space?
Inventory ties up money, contributes to clutter, takes up oor space, and
often are some of the most common physical obstacles in the company. Workers
spend time shifting material and inventory around just to locate what they need.
Timeis lost by dealing with excessive inventory just to get to the items required
to perform their work. As you are organizing the work area, you should be con-
sidering how you may ultimately start reducing inventory levels to help create a
more visual workplace.
Lean Metrics ◾ xv
Floor Space
Floor space comes at a premium, and you need to start looking at the poor
use of oor space as hurting the company’s ability to grow. Floor space should
be used to perform value-added work that creates revenue for the company.
Itshould not be used to store junk or act as a collector of unneeded items.
Renting, leasing, or buying a manufacturing building is one of the highest over-
head costs. The production oor is in place to serve one purpose: to build
products. Although the factory is used for other items, such as holding inventory,
shipping, receiving, maintenance, and so on, the production oor should be
effectively utilized for value-added work. Value-added work involves the act of
building products or the steps needed to change t, form, or function of the
product you intend to sell. Production lines, equipment, and machines all pro-
duce a salable product, and the oor space needed to perform this work should
be properly used.
As a company becomes less organized and unneeded items begin to accu-
mulate, more space becomes used for non-value-added items. This creates an
increase in waste. Over time, items such as workbenches, garbage cans, chairs,
unused equipment, tools, and tables tend to pile up, and valuable production
space simply disappears. Rather than reduce waste and improve oor space use,
the general approach is to add. Add building space, racks, and shelves, and you
want to change your perception of space: better use, fewer non-value-added
items, less waste, and less stuff.
5S is a powerful Lean tool that can improve the overall use of oor space in
the company. The examples in this playbook illustrate that.
Travel Distance
Here is the best way to view travel distance: The farther there is to go, the longer
it is going to take. Long production processes can create a lot of waste and can
reduce overall performance. Plus, longer-than-needed processes take up oor
space. There are two ways to look at travel distance: the distance people walk
and the distance inventory (product) is transported.
Travel distance is connected to overall lead times in a process and the entire
factory. When work in progress (WIP) is created above required quantities,
ittakes up valuable oor space and increases the distances that the production
line needs. As travel distance increases, oor space becomes improperly used,
workers walk farther distances, and lead times are increased. Wait time between
processes also increases, and there is added lead time to maneuver inventory.
When work areas are designed incorrectly, they can create a lot of walking
for workers, and as they become cluttered, more time is needed to nd essential
items for work.
xvi ◾ Lean Metrics
As waste is reduced through 5S, the travel distance of product and workers
decreases, making travel distance a good Lean metric.
Throughput Time
Sometimes used in conjunction with measuring travel distance reduction,
throughput time is the time it takes the product to ow in the production process.
Throughput time has a direct impact on delivery; the longer it takes product to
move through the plant, the longer it takes to be delivered. Of course, many
variables can extend product lead time, so it is wise to simplify the metric by
measuring the time when process 1 grabs raw material to the time it is packaged
and ready for shipment. Longer production lines require more workstations,
workers, tools, conveyors, supplies, and material, which results in additional cost
and WIP as well as extended lead times. A physical reduction in distance equates
to less throughput time, allowing an organization to promise more competitive,
yet reasonable, delivery dates. As the waste of motion and transportation are
reduced through concepts like 5S, overall throughput time is reduced with it.
Improving these key Lean metrics and using them as a measurement of
your success will have a profound impact on the overall nancial success
and long-term growth of the company. One could look at these Lean metrics
simply as process metrics because they can be measured at the shop oor level.
Production workers need to work in an efcient environment to be successful
contributors to optimal cost, quality, and delivery. Each Lean metric improved
complements another, and another, and so on. As you become more experienced
as a Lean practitioner, your understanding of how these metrics relate to each
other will become second nature.
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