How do you measure up?

Early in my entrepreneurial career, my father tried to impress upon me the importance of good accounting disciplines. His words of advice — “you can’t improve what you don’t measure” — fell on relatively deaf ears most of those early years. I was too busy trying to bring in new business or trying to get things working. I saw the accounting function as something that was useful mostly to the bank and the tax man. With all of the more important tasks on my own plate, I ascribed to the wisdom of the classic Kenny Roger’s song, “The Gambler”: “There’ll be time enough for counting, when the dealing is done.”

I gradually developed an appreciation and understanding for my father’s advice, and I came to realize that it was not only true for the financial part of the business, it was true for every aspect and function of the business. Indeed, every manufacturer today recognizes the terms and concepts of Lean Manufacturing, Six Sigma, SPC or OEE. Every one of these systems or approaches is based on the premise that you have to measure the things that you want to improve in order to improve them. Being a late convert to my father’s long lingering words of advice, I’ve added some advice of my own: “Anecdotal measurement results in anecdotal improvement.”

Effective measurement is the key to improvement success, and the three keys to effective measurement are objective, method and tools.

There’s little sense measuring something purely for the sake of measuring. There needs to be a defined outcome objective — be it better quality, productivity or profit. The purpose for any measurement has to be the achievement of an identified desired positive outcome.  

The second key is the measurement method. Measurements should be granular, automatic and in real-time. If the only indication a company has for its financial performance is a year-end statement that is presented six months late, there is little opportunity to make any significant improvements in the next period, which by then is half over. Plus, there would be virtually no hints or indication where effective improvements could be made. More detailed and timely information is required, and it’s the same for productivity or product quality improvement objectives.

The third key is tools. Most people I speak with are in complete agreement with the first two keys. There are plenty of “yep, we get it” nods of affirmation, but I often sense a building tension as the dialogue progresses. “Yes, we know why we should be measuring, and we know what we should be measuring, but how can we do it effectively?” This is the point in the conversation where many manufacturers share their frustrations, and sometimes even stories of expensive failure.

I have three simple rules for tools. First, they have to be simple. If it’s too complex and only your IT person can figure it out, it’s not a good productivity measurement tool. The operator, or the person regularly performing the function, should understand what the tool is measuring and how it’s being done. We often think that we measure things for management’s sake, but the truth is we should be measuring things for the benefit of the operator, because he or she is the one most directly connected with the work being done, and the one most able to make positive changes to the outcome. Second, it has to be automatic. If it requires manual entries to be made, or adds steps to the process or secondary tasks for the operator, it slows production down and it makes the information less empirical and more subjective. And third, it has to be flexible, adaptable and work well with other readily available tools (such as spreadsheet programs). If the measurement tool is built into the IT system or machine control, then only the supplier of that device or program can make changes to it. The cost of the tool should not be mistaken for the value of the tool. The best tools are often the inexpensive ones, and the least effective tools are sometimes the really expensive ones. Choose your tools wisely — try them out and make sure the people that have to work with them like them, too. The better they like them, the better they’ll use them, the better the result will be.

Admittedly, these were all hard learned lessons for me, but fortunately, they were also lessons that I learned in time. This past January I embarked on another entrepreneurial adventure — launching FreePoint Technologies, a company that has developed products and tools specifically to help manufacturers measure and improve their productivity. This time, however, I will heed my father’s advice right from the start, because “you can’t improve, what you don’t measure.”

This column originally appeared in the November/December 2013 issue of Manufacturing AUTOMATION.