ASP, The Art and Science of Practice: Taking the Measure of Lean: Efficiency and Effectiveness

Abstract

Part I: As a long-time (29 years and counting) researcher and writer about lean, I gave no thought to addressing lean efficiency and effectiveness until data began to show trouble in lean land. I saw that big, “best-managed” companies had mixed, long-term lean results, most of which were not good. The main measure of merit in my “leanness” research is the common one, inventory—a measure that is visible and countable in lean action zones and is readily available up the hierarchy as a standard, audited metric for publicly traded companies. Despite that, I have found the inventory metric to be subject to misunderstanding and misuse. In this two-part paper, I address the merits, uses, and abuses of this metric in terms of lean efficiency and lean effectiveness. With exceptions, inventory works well as a dominant, gratifying lean result and as a low-level indicator of lean efficiency. However, examples from five companies show inventory to be equivocal as an upper-management-level marker of lean effectiveness. Part II: In part I of this two-part paper, I stated that lean's dominant purpose should be seen as cycle-time (wait-time) reduction, which—counted in units of inventory, its close relative—is visually prominent and easily measured at low (efficiency) levels and high (effectiveness) levels in the hierarchy. Part II continues with observations on lean's strategic value; additional cautions about uses of inventory trends at the executive level; examination of lean metrics in retailing, wholesaling, and services; and lean's relationship to quality and other elements of continuous-process improvement. More data from my “leanness studies” offer support for my observations.

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