How Do We Measure the Success of Lean Transformation?

How do you measure the success of Lean Transformations? How do you measure the success of Lean Transformations? Is it necessary to achieve financial gains to deem a Lean Transformation truly successful, or is an increase in employee satisfaction sufficient? Can a Lean Transformation be considered unsuccessful if customer satisfaction does not improve? Can we talk about a Lean Transformation that does not impact Key Performance Indicators (KPIs)? Is it enough to consider a Lean Transformation successful when KPIs change positively?

Behind all these challenging questions lies how we view the journeys of Lean Transformation.

• If we perceive this process as an implementation project with a clear beginning and end, weighing the resources allocated to consultancy or the internal organization for Lean Transformation on one side and the contributions to the company at the end of this process on the other side (as if there is an end to the Lean Journey), it can be seen as a balancing act.

Evaluation is certainly necessary, but what matters is how you evaluate it, based on which criteria, and what you understand from Lean Transformation.

Don’t Listen to Those Who Say Lean is Not for Us!

If you see the beginning of Lean Transformation as an implementation project with a clear start and end, do not listen to those who approach this with the most primitive and subjective view! Ask them how they can prove their claims to those who cannot quantify the success or failure of Lean Transformation. It’s full of people who say that there are stories of failure, but they can’t prove it scientifically. I have shared the proving article in my previous articles. To the article from here you can reach us again.

On the basis of which arguments can we prove that Lean is successful in automotive and unsuccessful in other sectors? Those who make this claim are either ignoring the arguments made in the articles I’ve been sharing for weeks now, or are influenced by misinformation coming from mid- and upper-level employees or those who have experienced similar stories of failure.

In conclusion, please remember that every Lean Transformation story is a unique journey, and you are the hero of each story. Do not forget that the origin of this system, which the whole world admires today, Toyota, came from the textile sector to where it is now based on fundamental principles. Lean can be applied to any field independently when its basic principles are taken into account.

Do Not Cling Only to Kaizen Gains

Neither a transformation with high financial gain from kaizens is successful nor a process with modest kaizen gains should be declared unsuccessful. While calculating gains is seen as the most objective approach, it is not sufficient alone. This approach can either elevate Lean Transformation to the skies or reduce it to a failure story where the gains are sacrificed to expenses due to the resources allocated to it and the inflationary environment.

Clutching onto “inflated” kaizen gains and satisfying yourself unilaterally with success stories can undermine the perception of Lean Transformation within the organization, reducing trust and diminishing the change and transformation to the point of “how much money did we make from kaizen?”

Due to this seemingly objective but subjective approach, Lean Transformations cannot be condemned solely to purely “money” based evaluations without cross-checks, making it a valuable journey that cannot be left to purely financial assessments.

Hold on to KPIs – Key Performance Indicators

You may have saved labor, time and waste with Kaizen Gains, but in an environment where Kaizens do not impact financial results, key performance indicators can be your lifesaver.

For example, you may have gained 320 man*hours/year with a completed kaizen study; however, if that person continues to work in that cost center; this kaizen will not make sense in terms of cost accounting. Many kaizens like this one are perceived as efforts that financial accounting laughs at, even though they are in essence impressive with their gains. In such cases, the way to convince senior management of the success of Lean Transformation is to identify the right metrics and to provide the relevant levels with the ability to read these metrics.

A Lean Transformation that you follow by digitizing processes with the right metrics will strengthen your hand. Although there are those who say “How will I digitize every process?”, it is not very difficult to digitize every process directly or indirectly.

• f you want to measure the gains of 5S: Set improvement in 5S audit scores as a KPI, track the number of actions related to 5S in external audits.
• Do you want to measure the effectiveness of Maintenance Management? Determine MTTR and MTBF, Track % of breakdown in OEE, Track Oil consumption.
• If you want to measure the performance of the Sales Team: Measure sales forecast compliance, track changes in production plans, evaluate order cancellations.

Examples like these can be extended. The important thing is for you to embark on the journey by determining the right KPIs that cross-check without focusing solely on financial gain.

Try Lean Cost Accounting

As the transformation progresses and the work matures, there may be situations where kaizen gains and KPIs are not sufficient. In such cases, tracking costs through a method that considers costs on a value stream basis can be a suitable method to both clearly see the effects of kaizen gains in financial results and evaluate them with KPIs. For this, you need a data table determined according to effective and lean cost accounting. To create this table, you need value stream maps to analyze value streams determined by product groups. In a matured business, a significant part of the value streams should have been removed. In summary, first Value Stream Mapping, then Value Stream Costing...

Conclusion

Perhaps one of the most important factors that leads us to failure in Lean Transformation is believing in subjective success stories that are not objective and cannot be quantified, relying on hearsay information. Another factor is getting irritated by those who calculate exaggerated kaizen gains under the name of quantification. Without setting the right goals with a purpose and aligning these goals with our strategy, proving whether Lean Transformation is successful or not seems difficult.

If you ask, “What is the solution?”

Calculating gains with a cost symbolization that everyone can understand through kaizen gains, tracking developments with correct and purposeful KPIs, and writing success stories that can measure all of these with a correct cost accounting approach…

This is the most effective and reliable way to scientifically prove the benefits of Lean Transformation and objectively see development and change.