How to Measure

Part 2 of a five-part series on performance measurement.
by Glenn Felix

Measure twice, cut once – advice every good carpenter learns early on and takes to heart. It’s a saying with applications that go far beyond the building industry. In any business, how we measure is just as important as what we measure. Unfocused measurement is a waste of resources and a burden to management. Focused measurement, generating useful data, consolidated into a simple, easy-to-understand measurement platform, is the foundation for improved performance. It guides people who want to do truly good work toward the right outcomes by providing them feedback on their improvement journey.  

To accomplish this goal, you’ll need to answer three key questions.

• Who is your measurement audience?
• What metrics will they find most useful?
• What is the best and simplest way to provide this information?

Measurement Audiences
At a typical food manufacturing company, the audience for measurement might include any or all of the following four groups:

• Senior Management — CEO, COO, CFO . . .
• Middle Management — VP Ops, production, maintenance, QA and other major function managers.
• Front Line Supervision, including leads or operators . . . those who direct the actions of line workers.
• Line Workers — production, warehousing, maintenance, QA, sanitation, etc.

Metrics They Need to See
Each of these audiences has unique informational needs, and the tool described below can meet all of them. The first step is to ensure that everyone is on the same page with respect to the organization’s overall mission. The next priority is to identify the top seven to 10 critical performance metrics all of the measurement audiences can influence as they work to create a prosperous organization and a continuous improvement work culture.  Recalling our multi-factor equation from part one of this series:

Metrics on one page might include regular updates on the amount and quality of output being produced and on the use and consumption of key resources.  In the next article in this series, we’ll explore this aspect of the process in greater detail. Other measures might include output per labor hour, per raw materials consumed, per energy and water consumed, quality measures, safety and many others.  There are many possible metrics, but the objective of this process is to find the handful of key measures over which your core audiences have the most influence.

How Best to Consolidate and Share Metrics
A number of years ago, through much trial and error, the Oregon Productivity Center at Oregon State University created a measurement platform called “The Objectives Matrix” that accomplishes this goal very elegantly.  It has grown and evolved significantly over the years in the course of its implementation within hundreds of organizations.  

The matrix’s advantage is that it gathers all key metrics onto one page and generates one number that summarizes the overall results of day-to-day operations and improvement efforts.  But it does more than that.  Fundamentally, the matrix serves as a forum for:

• Defining all key metrics for an operation: for the whole company, a department, a fresh-pack season.
• Communicating current performance levels for each measure.  Where are we now? What performance levels are we generally experiencing?
• Targeting future possibilities.  If we run to capability, optimizing everything under our control, what is the potential?  This is perhaps the most important step to matrix development: imagining the future.
• Prioritizing the metrics that define organizational success. Which is the most important?  The second most important?  And so on.  The Objectives Matrix allows users to account for and objectively weigh tradeoffs between competing measures.

Initially, the Objectives Matrix looks dauntingly complex: a maze of words, numbers, rows, columns, labels, circles and boxes. In reality, this seemingly-complicated format is quite simple. It takes only about 15 minutes of study to master.  Once you’ve got the fundamentals down, you can create one matrix for your fresh-pack season, another matrix for packaging, another for warehouse and distribution, and people familiar with how the fresh-season matrix works will intuitively grasp the priorities and possibilities the matrix reveals in packaging and warehousing. Every matrix works the same. It’s all just columns and rows and a bit of second-grade math.

The matrix is described on the page opposite.  Despite its relative simplicity, it’s a lot to catch up with in one reading.  And there are a number of scoring details, targeting factors, weighting considerations and other possible measures to grasp.  But it all boils down to:

• What’s important?
• How are we doing?
• What are the possibilities -- the whys, hows and now whats?

Drop me a line if you have questions or want to explore possibilities.

Next month we’ll explore ideas for what to measure in food processing operations.