Weight loss is one of the most common New Year’s resolutions – but waistlines aren’t the only thing getting lean at the beginning of the year. The early months of the fiscal year are also a great time to implement new, clean, and efficient business strategies by cutting unnecessary financial weight. One of the ways to do this is through lean manufacturing – or “lean production.”

As the name implies, lean manufacturing is a systematic approach to eliminating waste and increasing efficiency. In the lean manufacturing framework, the goal of any business is to eliminate “Muda” (waste) and “Mura” (waste caused by uneven workloads) without sacrificing the value of your product or service. Think about it like this: Anything that doesn’t contribute value to the product or service your company offers is, according to a “lean” approach, wasteful.

What are Lean Manufacturing KPIs

A Skinny History of Lean Manufacturing

You can trace and the ideas behind lean manufacturing to before the 19th century, when Benjamin Franklin outlined some of the basic goals that lean production seeks to achieve. “A penny saved is two pence clear. A pin a-day is a groat a-year. Save and have,” Franklin said. While Franklin’s vernacular may seem outdated, few business principles are more relevant than the simple phrase, “save and have.” In many ways, this is the heart of lean manufacturing.

In 1911, Frederick Winslow Taylor – who is known as the father of scientific management – translated Franklin’s original thoughts into more specific, business-related terms. According to Taylor, smart business owners seek to improve the efficiency of production. “Whenever a workman proposes an improvement,” Taylor said, “it should be the policy of the management to make a careful analysis of the new method.” Taking this idea a step further, Taylor went on to say that if a worker proposes a superior method, management should adopt it.

Not long after, auto manufacturer Henry Ford wrote “My Life and Work,” where he outlined the DFM (Design for Manufacture) model. Simply put, the DFM concept emphasized the importance of standardization, along with the danger of redundant components – a form of waste.

In 1934, Kiichiro Toyoda (the founder of Toyota Motor Corporation) found similar ways to eliminate waste through the JIT (just-in-time) method. According to JIT, quality control is one of the most important elements of lean production. When an abnormality or problem arises, production should stop so workers can fix the issue and identify what caused it. Finally, the JIT process requires a countermeasure to ensure that problems are never repeated.

lean manufacturing kpis

Lean Manufacturing KPIs (Key Performance Indicators)

The goal of a key performance indicator is to provide tangible guideposts to measure success. If you don’t know what success looks like, how will you know when you’ve reached a goal – or even failed? If your organization is striving to eliminate waste, lean manufacturing KPIs aren’t just important, they’re necessary. Here are a few ideas to get you started:

  • Overall Equipment Effectiveness (OEE) – OEE is term coined in the 1960s. OEE measures the efficiency of manufacturing operations. Sub-metrics of OEE include time scheduled for operation, the actual available time, the time it takes to execute an operation, and the quality of the final product.
  • First Time Through Yield (FTT) – FTT measures efficiency, quality, and skill. To calculate FTT, simply subtract the number of defective units from the total number of units produced, then divide by the total number of units produced.
  • Production Target & Volume – This KPI refers to one of your organization’s most tangible goals: the actual number of units produced. A speedometer-style graph is one of the best ways to track this data point.
  • Capacity Utilization – This KPI refers to the percentage of used capacity versus the available manufacturing capacity. For many manufacturers, supply and demand typically force capacity utilization to 70%, 80%, or even up to 100%.

Read next: How To Build and Use Dashboards in Manufacturing

Lean Manufacturing KPIs

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Empower Lean Manufacturing with Dashboards

A dashboard is a visual tool that lets organizations collect, display, understand, deploy, and use information. The purpose of a dashboard is to help workers, stakeholders, and management make data-driven decisions without getting bogged down in endless spreadsheets and outdated reports. With a lean manufacturing dashboard, both executives and “boots on the ground” are empowered to explore and analyze data. With this information, your organization can begin to identify core issues and take the first steps toward solving them.

More ways a dashboard can help your lean manufacturing strategy:

  • Instant access to important data anywhere, at any time
  • Real-time information about your lean production KPIs
  • Increased transparency and accountability for every member of your team
  • Connecting related data from different sources to identify areas for optimization

One of the most important aspects of a dashboard are “drilldowns.” Simply put, a data drilldown allows you to dig deeper into top-level data, gaining an even more detailed view of core information and related metrics. In complex operations, such as lean production, every component of the process will involve different metrics, and every worker involved in those stages may need slightly different sets of data. With drilldowns, dashboards use high-level metrics to guide workers and stakeholders to the more detailed and granular data that concern their roles in the organization.

Lean Manufacturing Creates a Tangible ROI

Like most business initiatives, lean manufacturing is aimed at one thing: a strong return on your investment (ROI). Efficiency should lead to a healthier bottom line, and showing that progress to project stakeholders is paramount. A dashboard allows you to easily identify areas of improvement in your manufacturing plan, fix them, and track your success.

After Sleep Innovations, a U.S. based mattress manufacturing company, was acquired by Sun Capital and experienced rapid growth, company stakeholders realized they needed a dashboard solution that was comprehensive enough to integrate multiple data structures. And like any dashboard initiative, finding a dashboard service that was simple and easy to use was imperative.

That’s when Sleep Innovations decided to implement data visualization software. After training their team, Sleep Innovations gained the knowledge and experience they needed to launch a successful dashboard initiative. By creating a dashboard initiative and sticking to it, Sleep Innovations reduced waste and increase efficiency to the tune of $1 million per year. Today, Sleep Innovations uses data visualization through dashboards as their primary tool to discuss production and quality control and visualize the metrics that allowed them to optimize their manufacturing.

Embrace Data and Lean Manufacturing

Embrace Data and Lean Manufacturing

The beginning of a New Year isn’t just the right time to think about slimming your waistline or personal expenditures; it’s an ideal opportunity to evaluate business and manufacturing processes. A well-executed dashboard is an essential part of the lean manufacturing philosophy. Just like personal New Year’s resolutions, lean manufacturing initiatives aren’t always easy to achieve; they require hard work, dedication, and most importantly, a plan. With the right data and the right tools to display it, creating a lean business improvement strategy is more than a New Year’s resolution, though – it can be a reality.

Inspired to go lean? Click here to learn more about manufacturing dashboards, and to interact with live manufacturing dashboard examples!

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Carol Senn Account Executive

Carol Senn, one of the newest members of the iDashboards family, is responsible for new business growth. Prior to iDashboards, Carol worked for one of the world’s leading IT research and advisory companies as well as a global technology solutions company. When she's not obsessing over dashboards, you can find her scouring cookbooks for inspiration or planning her next trip.


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