Managing performance on any scale requires some form of measurement. These measurements are often summarized into a single result that is commonly referred to as a metric. Many businesses use tools such as dashboards or scorecards to present a summary or combination of multiple metrics into a single report.
While these reports and charts can be impressive and are capable of presenting an overwhelming amount of data, we must keep in mind what we are measuring and why. Too many businesses are focused on outcome metrics without realizing that the true opportunity for performance improvement can be found at the process level itself.
The ability to measure and manage performance at the process level against a target condition is the strategy that we use to strive for successful outcomes. To put it simply, some metrics are too far removed from the process to be effective and as such cannot be translated into actionable terms to make a positive difference.
Overall Equipment Effectiveness or OEE is an excellent example of an outcome metric that expresses how effectively equipment is used over time as percentage. To demonstrate the difference between outcome and process level metrics, let’s take a deeper look at OEE. To be clear, OEE is an outcome metric. At the plant level, OEE represents an aggregate result of how effectively all of the equipment in the plant was used to produce quality parts at rate over the effective operating time. Breaking OEE down into the individual components of Availability, Performance, and Quality may help to improve our understanding of where improvements can be made, but still does not serve to provide a specific direction or focus.
At the process level, Overall Equipment Effectiveness is a more practical metric and can serve to improve the operation of a specific work cell where a specific part number is being manufactured. Clearly, it is more meaningful to equate Availability, Performance, and Quality to specific process level measurements. We can monitor and improve very specific process conditions in real time that have a direct impact on the resulting Overall Equipment Effectiveness. A process operating below the standard rate or producing non-conforming products or can immediately be rectified to reverse a potentially negative result.
This is not to say that process level metrics supersede outcome metrics. Rather, we need to understand the role that each of these metrics play in our quest to achieve excellence. Outcome metrics complement process level metrics and serve to confirm that “We are making a difference.” Indeed, it is welcome news to learn that process level improvements have translated into plant level improvements. In fact, as is the case with OEE, the process level and outcome metrics can be synonymous with a well executed implementation strategy.
I recommend using Overall Equipment Effectiveness throughout the organization as both a process level and an outcome level metric. The raw OEE data at the process level serves as a direct input to the higher level “outcome” metrics (shift, department, plant, company wide). As such, the results can be directly correlated to specific products and / or processes if necessary to create specific actionable steps.
So, you may be asking, “What are Killer Metrics?” Hint: To Measure ALL is to Manage NONE. Choose your metrics wisely.
Until Next Time – STAY lean!