ASP, The Art and Science of Practice: Taking the Measure of Lean: Efficiency and Effectiveness

Part I: As a long-time (29 years and counting) researcher and writer about lean, I gave no thought to addressing lean efficiency and effectiveness until data began to show trouble in lean land. I saw that big, “best-managed” companies had mixed, long-term lean results, most of which were not good. The main measure of merit in my “leanness” research is the common one, inventory---a measure that is visible and countable in lean action zones and is readily available up the hierarchy as a standard, audited metric for publicly traded companies. Despite that, I have found the inventory metric to be subject to misunderstanding and misuse. In this two-part paper, I address the merits, uses, and abuses of this metric in terms of lean efficiency and lean effectiveness. With exceptions, inventory works well as a dominant, gratifying lean result and as a low-level indicator of lean efficiency. However, examples from five companies show inventory to be equivocal as an upper-management-level marker of lean effectiveness. Part II: In part I of this two-part paper, I stated that lean's dominant purpose should be seen as cycle-time (wait-time) reduction, which---counted in units of inventory, its close relative---is visually prominent and easily measured at low (efficiency) levels and high (effectiveness) levels in the hierarchy. Part II continues with observations on lean's strategic value; additional cautions about uses of inventory trends at the executive level; examination of lean metrics in retailing, wholesaling, and services; and lean's relationship to quality and other elements of continuous-process improvement. More data from my “leanness studies” offer support for my observations.