LSS Vital Signs: 4 KPI’s to measure the health of your LSS program

heartStaying healthy is a constant cycle that if left unchecked can lead to serious issues later in life.  To stay ahead of these potential issues we often utilize preventive care.  In some respects there is little difference between our personal health and the health of the Lean Six Sigma (LSS) programs many of us manage.

While a LSS program is not likely to lead to life or death situations, having a solid plan to measure and manage your LSS program can be what determines whether or not your program lives or dies over the long term.  In this post I’ll share some of what I routinely prescribe to my clients in how best to manage the health of their LSS efforts.

Measure what matters.

There are countless metrics one could consider utilizing to measure the effectiveness of a LSS program. In general terms, all of these metrics fall into one of three categories that include 1) leading, 2) current state, and 3) lagging measures of performance.  To effectively take the “pulse” of your LSS program you need to monitor all three.

The challenge I find my clients facing is that with so many choices on what to measure they often times measure everything, which leads to confusion and disengagement.  There are no “perfect” metrics, but the four I have found that most accurately measure the LSS pulse are the following:

  1. Project queue
  2. Project starts
  3. Project cycle time
  4. Financial results

Projects are the lifeblood of LSS!

I’m a solid believer that projects are what matters most to the long term success of a LSS effort.   You can have great leadership, the best belts and champions, robust training and mentoring afterwards, but in the end if the projects used in the process don’t deliver results none of the aforementioned matters.

Building a “healthy” queue is one of the challenges many of my clients face.  What does it mean to have a healthy queue?  There are two elements to building a healthy queue.  The first is capturing opportunities that have a solid connection to what matters to the business (i.e. strategic and tactical plans, KPI’s, financial metrics, etc.).  The second element to establishing a healthy queue is ensuring there are enough resources to capitalize on the identified opportunities.

How you measure your queue can be as simple as monitoring the number of opportunities in the queue, but what does this number mean?  Is more better?  If we take a “lean” perspective on the queue we could consider all the opportunities as inventory, which is one of the classic forms of waste; not a good thing.  With this perspective in mind, keeping the “right” amount of inventory could be based on the demand (takt time) at which the opportunities are being consumed.

Another way to measure project queue is based on the age of the opportunities (i.e. average days, months, etc. in queue).  In most cases the longer an opportunity sits in the queue the more savings that is being lost by not capitalizing on the opportunity.

One final point to keep in mind in relation to the opportunity queue is that it’s also a great way to justify and determine your training strategy.  Often times I work with clients who simply decide they are going to train xx green belts without any thought to why they have decided xx is enough.

With a solid queue established, it becomes the “pull” for your training / coaching strategy.  For example, if you have 30 opportunities and want to capitalize on all of them you can then make an argument for training the right number of people to work on the projects to seize the opportunities.  Your queue ($ associated with each opportunity) also becomes your justification (ROI) for training and coaching expenses if you use external resources to do this work.  Justifying thousands for training and coaching is easy to do when you have millions in opportunities waiting to be seized!

Turning opportunity into action.

Having a healthy queue doesn’t mean much if we don’t turn opportunity into action!  A simple measure of performance is the number of projects that are started in a given time period.  Taking this a step further you could also consider cycle time to measure how long an opportunity takes to go from being put into the queue until it officially becomes a project and enters the define phase.

Speed matters.

A third vital sign to check the health of your LSS program is the speed at which projects move from define to control.  While faster doesn’t always lead to better, it’s still ideal to quickly move through the phases to get to the results at a pace that leads to sustainable performance.

In most cases with my clients we strive for a 4-6 month cycle time from define to control.  Shorter is great, but longer usually means we tried to do too much with a single project.  Aside from simply measuring the average cycle time you could also measure the percent of projects that are completed in less than 6 months.

Show me the money!

The final vital sign is honestly the only one your leadership will care about, which is the financial benefit realized by projects that have been completed.  There are a few ways to measure financial performance; the easiest is simply the total dollars as a result of finished projects within a given time period.

Another measure to consider is the average dollars per project, which by itself may not mean much, but what my clients have found this number helpful in is establishing targets for future performance (i.e. # belts active x avg $ / project = estimated $).

Keep it simple.

Far too often we LSS professionals want more graphs and charts, but this rarely leads to better results, so strive to keep it simple when taking the pulse of your LSS program.  My advice is to start with these four simple measures of performance.  If you have a healthy queue, capitalize on opportunities in the queue in a timely manner, move through the phases in less than 4-6 months, and deliver solid financial results you are highly likely to keep the health of your LSS program where it needs to be in order to deliver sustainable results.

Leave a Reply

Your email address will not be published.