strategic foundation
In my previous white paper, I outlined the essential steps required to set up a data-driven reporting system. You need to systematically define the categories for measurement and then develop a vision statement, objectives, measures, and strategy for each category. While establishing these fundamental steps will dramatically increase the effectiveness of a metrics system, additional tools are needed to make the system work. The system is based on tables and graphs to communicate problems. It relies on the discipline of management and staff to effectively drive continuous improvement. The essential elements to implement this visual reporting and management system are described in this white paper.
Metric reporting system
One of the outputs of the Four Panel work sessions is a list of measures. But each of the measures needs a reporting system, that is, a set of graphs, that includes these four elements;
- Demonstrate performance changes over time and compare performance against targets (Trend graph)
- Clearly illustrate current issues and their relative severity (Pareto chart)
- Show historical problem trends and the relative severity of past problems (Payer matrix)
- Record actions that have been taken and report the effectiveness of those actions. (Action Log)
These requirements can be easily met through a single one page report. A simple Excel spreadsheet makes it relatively easy to track and graph data. stick to the data in the form that everyone is most likely to understand.
trend charts
Sometimes known as run charts, trend charts are used to show changes in performance over time. Run charts are used to provide a visual indicator of performance. Since there will always be some variation in the results, showing them over time makes it easier to see and understand how actions are changing the results and how we are performing relative to the goal.
Resist the temptation to set time periods too short for individual data points on the trend chart. Short time frames can make it hard to see real trends. Occasionally it is acceptable to use time periods as short as a week, but monthly buckets are generally preferred.
When setting up trend charts, be sure to clearly include and label the target performance. Place an arrow labeled GOOD and indicate the direction in which you want the results to move.
To make your trend charts the best they can be, be sure to follow these guidelines:
- Label the chart with a short but descriptive title.
- Label the Y axis with the units used. Label the X axis with the time periods.
- Do not pile data at the top or bottom. Use most of the available range, but be mindful of future movement. Do not include impossible numbers (i.e. 110% on time delivery)
- Do not change the scale of the chart once it is set. These same reports will be used month after month. Changing the scales tends to confuse and make interpretations difficult.
- Use one table per measure. Don’t add superfluous data or try to combine related measures on a single chart.
Pareto charts
A Pareto chart is a special form of a bar chart that orders items from highest to lowest (occurrence, time, cost, etc.). It is the visual manifestation of the Pareto Principle that states that when several factors affect a situation, 20% of the factors will represent 80% of the problems.
Pareto charts are valuable because they help us quickly identify the vital few factors to focus on to maximize our overall results. They break big problems into smaller parts and help direct our limited resources.
Pareto charts always present data from largest to smallest. If a bar chart does not present data in this format, then it is not a Pareto chart. The data on which Pareto charts are built can generally be classified in a number of ways. For example, should quality data be ordered by number of occurrences, by total cost, or by customer impact? Choose carefully, the way you decide will affect the actions that will be taken along the way.
payment matrix
The Paynter Matrix is a tool that illustrates the effectiveness of corrective and containment actions. It allows us to track the cumulative effect of our corrective actions on the results. It uses the same data as Pareto charts, but adds a time element by displaying data from previous time periods.
It is a matrix with categories in the leftmost column with a time series in the subsequent columns. When corrective actions are implemented for a particular category, the action is noted in the time series. When corrective action is effective, there will be a corresponding improvement in results.
Action Log
The action log is a tool to record and track the actions that are required. It provides clarity on what needs to be done, a mechanism for regular review of actions and their status, defines responsibility for actions, and provides a certain date for completion. The action record is the tool that connects the metrics system with the continuous improvement process.
Establishing disciplinary measures and conducting reviews
Data-driven reporting systems are of no use if we don’t follow them and establish the discipline to use them. In my visits to the plants it is common to find measurement systems that have been abandoned; the charts are posted on bulletin boards, but the data is out of date. It only serves as a reminder of another failed attempt to improve our operations.
Establishing the basis and charts for a measurement system is quite easy. Most companies and experienced managers can define the vision, objectives, measures, and strategy in a few days. Within a couple of weeks, charts and spreadsheets can be set up and put in place. But this effort is worthless if the tools are not used once implemented.
If you want your measurement system to overcome trends and truly become a tool that drives improvement, here are some tips to make your data-driven reporting system more successful:
- Get buy-in from facility managers as you develop the system. Don’t develop it in a vacuum and don’t force it down your throat. Participation in the process is the key to success.
- Follow up. This is important. Travel to the manufacturing facility and review the results face to face. Don’t fall into the trap of just following up over the phone, or worse, just reviewing emailed reports. Visiting the plant to review the results will emphasize their importance and dramatically improve results.
- Hold operations team accountable for results. Performance on the metrics should be reflected in bonuses, performance reviews, or other performance-based rewards. However, this only works when the installation team agrees to the performance targets. They cannot be held accountable (or rewarded) for performance on metrics that cannot be achieved or those that are not under their direct control.
- Make the metrics clear and easy to understand. A clear definition of exactly what data to collect and how to calculate the results will help prevent manipulation. When employees can see how their individual actions improve results, they will respond positively.
- Insist that local management include first-line supervisors and hourly associates in reviews. The more they understand the measures and why they are important, the sooner the improvements will be made. Hourly associates should be regularly asked to present results and action steps to the management team; it can help break down barriers and establish open communications.
- Always require that action plans, improvement teams, work cells, or other proven problem-solving methodologies be used to resolve problems once they are identified. This system can help drive improvements at your facility, but only if you use it as a tool to drive continuous improvement.
Use a scorecard to summarize and report back to management
It is not uncommon for these systems to have 20 to 25 individual measurements. To see trends that may occur between measurements, and to quickly report facility results back to executive teams, it is necessary to consolidate the results into a single report; commonly known as scorecard.
The data for the scorecard comes directly from the trend chart. Monthly results from the trend chart are inserted into the corresponding cells of the scorecard and are color-coded; green: the results of the month and the year are on track; yellow: the results for the month are on track, but not for the year; red: results are not on track for the month or year. The whole system is very visual. Trend charts and Pareto charts show the results in a visual format. This visual orientation continues with the dashboard. In addition to the color coding of the results, the categories themselves are color coded.
- people – yellow
- safety-green
- Quality – purple
- Responsiveness – blue
- Cost / Finance – red
These tools, combined with the discipline required to use them, the proper application of lean manufacturing techniques, problem solving methodologies, and error correction methodologies can greatly increase the speed of change within your operations. It is not magic, it requires a lot of work and a willingness to change, but the results can be spectacular.