Measuring Lean Systems 350

This class covers the metrics for measuring lean systems.

  • Difficulty Advanced

  • Format Online

  • Number of Lessons 15

  • Language English


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Course Outline
  • Objectives
  • Lean Metrics
  • Measures of Waste
  • Takt Time and Cycle Time
  • Overall Equipment Effectiveness
  • Lead Time
  • Inventory Turns
  • Changeover Time
  • Quality
  • Tools to Measure Quality
  • First Pass Yield and Rework
  • Financial Impact
  • Balanced Scorecard: Customer and Financial Sections
  • Balanced Scorecard: Process and Learning Sections
  • Summary
  • Describe the role of metrics in lean.
  • Describe tools for measuring waste.
  • Describe takt time and cycle time.
  • Describe overall equipment effectiveness.
  • Describe lead time.
  • Describe inventory turns.
  • Describe tools for reducing changeover time.
  • Describe tools for setting quality standards.
  • List tools for measuring quality.
  • Describe first pass yield and rework.
  • Define cash flow.
  • Describe the customer and financial sections of the balanced scorecard.
  • Describe the process and learning sections of the balanced scorecard.
Vocabulary Term

80/20 rule

The belief that 80 percent of errors in a system are caused by only 20 percent of the inputs. Also known as the Pareto principle.

affinity diagram

A tool used to organize different data or ideas into categories. Affinity diagrams are sometimes used in brainstorming.

annual cost of goods sold

The total costs involved in making a product or service. Annual cost of goods sold usally includes labor and materials.


The element of OEE that measures downtime losses from equiopment failures and adjustments as a percentage of scheduled time.

average value of inventories

The normal or expected dollar value of inventory over a period of time.

balanced scorecard

A tool used to track information that is not covered in traditional financial reporting systems, such as safety, people, quality, delivery, and cost. With a balanced scorecard, these areas are measured and evaluated to determine how well the business is performing and to identify areas for improvement.

buffer stock

Goods held, usually at the downstream end of a facility or process, to protect the customer from starvation in the event of an abrupt increase in short-term demand that exceeds short-term production capacity.

cash flow

The amount of money left over after expenses are paid.

cause and effect diagram

A fishbone-shaped diagram used to identify the cause of a specific problem.

changeover time

The time required to tear down the setup for the current product type, prepare for next product type, and successfully produce the first good part.

check sheet

A visual tool for tracking data and making decisions by placing tic marks into different cells to create a graphical representation of the data being tracked.

CNC machine

Computer numerical control machine. A machine that uses numerical data to control tools.

continuous improvement

The efforts by an organization to constantly measure the effectiveness of its processes and strive to meet more difficult objectives to satisfy customers.

control chart

A chart used to show trends in data over a period of time. Points are plotted on the chart and connected by a line to show an upward or downward trend.


The amount of money needed to produce something.

critical to quality

Specific, measurable characteristics of a product or process that are identified by customers as necessary for their satisfaction.

current state value stream map

A visual tool that documents the current condition of a manufacturing environment. A current state value stream map captures all of the details of manufacturing processes just as they exist at the moment the map is produced, including any flaws or errors.

customer card

The part of the balanced scorecard that tracks the ability of the company to satisfy both internal and external customers by providing high quality goods and services and effective delivery.


The journey of a part or process from the beginning to the end of a work unit.

cycle time

The elapsed clock time from the beginning to the end of a process. A focus on lean seeks to reduce cycle time as much as possible.

data bin

An individual trend within a series of ranges.

external customer

An outside organization or individual that receives a product or service from the company.

external step

An element in the changeover of a machine that can be performed when the machine is running.

financial card

The part of the balanced scorecard that covers financial information in a manner that it becomes an equal part of an integrated system. The financial card also tracks information not found on a traditional report, such as risk assessment and cost-benefit data.

finished goods

Items a facility has completed that await shipment.

first pass yield

The number of units produced in the first run that do not require rework.

first-time quality

A lean metric that indicates to what extent parts are manufactured correctly the first time without need for inspection, rework, or replacement.

fishbone diagram

Also known as a cause and effect diagram. A fishbone-shaped diagram used to identify the cause of a specific problem.


A device for holding objects in place and clamping them to machines or operating surfaces so that they can be machined or assembled.

flow chart

A visual representation of the steps required to manufacture a product.

force field analysis

A visual tool for looking at all the forces for and against a decision. In essence, force field analysis is a specialized method of weighing pros and cons.


A visual graph that shows the frequency of a range of variables.


The part of a balanced scorecard that includes actions that must be taken in order to meet the objective.


The value or independent variable entered into a function.

internal customer

A department or individual within the company that relies on others to satisfy the external customer. For any cell, the next cell in a process is always the internal customer.

internal step

An Element in the changeover of a maching that can only be performed when the machine is stopped.

interrelationship diagram

A visual tool that helps a team identify the cause-and-effect relationships among critical issues. Interrelationship diagrams distinguish between issues that serve as causes and those that are outcomes.


Materials (and information) present along a value stream between processing steps.

inventory turns

A measure of how quickly materials are moving through a facility or through an entire value stream, calculated by dividing some measure of cost of goods by the amount of inventory on hand.

Ishikawa diagram

Also known as a cause and effect diagram. A fishbone-shaped diagram used to identify the cause of a specific problem.

lead time

The time it takes one piece to move all the way through a process or value stream, from start to finish.

learning card

The part of a balanced scorecard that tracks the development of the company's employees and of the company itself. Learning covers areas such as employee communication, motivation, and skill.

line balancing

Adjusting processes so that all tasks performed in a cell are performed within the same amount of time. For example, if the first step takes 60 seconds, the second and third steps should also take 60 seconds or less.

matrix diagram

A visual tool that shows the relationship between two, three or four groups of information. Matrix diagrams also can give information about the relationship, such as its strength, the roles played by various individuals or measurements.


The part of a balanced scorecard that includes metrics for achieving an objective.


Any form of measurement. Metrics are important in lean because everything that can be measured can be improved.


Unevenness in an operation.


Overburdening of equipment or operators by requiring them to run at a higher or harder pace with more force and effort for a longer period of time than equipment designs and appropriate workforce management allow.


The part of a balanced scorecard that tracks the company's primary objectives, such as profitable growth.

operational performance

A measure of a company's performance in the areas of effectiveness, efficiency, and environmental responsibility. Cycle time, productivity, waste reduction, and regulatory compliance all describe operational performance.


The end result or dependent variable of a function.

overall equipment effectiveness

A total productive maintenance measure of how effectively equipment is being used.

Pareto chart

A vertical bar chart used to signify the importance of one or more groups of data in relation to one or more other groups of data.

Pareto principle

The belief that 80 percent of errors in a system are caused by only 20 percent of the inputs. Also known as the 80/20 rule.

performance rate

The element of OEE that measures operating speed losses--running at speeds lower than design speed and stopppages lasting a few seconds.

problem statement

A phrase or sentence used on a cause and effect diagram to explain the issue.

process card

The part of a balanced scorecard that tracks internal processes crucial to the company's core business.

product changeover

The process of switching a machine from making one type of part to another.


Conformance to a set of standards or specifications. A product has quality if it meets or exceeds standards, but is defective if it does not meet standards.

quality rate

The element of OEE that expresses losses due to scrap and rework as a percentage of total parts run.

queue time

Also known as wait time. The amount of time that work is waiting to be worked on. Wait time is always considered waste, regardless of the cause for the wait, and it should be eliminated.

raw materials

Goods in a facility that have not yet been processed.


Income that a company receives from normal business activities such as sales.


Work that is done to fix a defective part.

safety stock

Goods held at any point (raw materials, WIP, or finished goods) to prevent downstream customers from being starved by upstream process capability issues.

scatter diagram

A diagram in which clustering points indicate whether the increase or decrease in one variable is related to an increase or decrease in another variable.

setup reduction

The process of reducing the amount of time needed to changeover a process from the last part for the previous product to the first good part for the next product.

single minute exchange of dies

A process for changing production equipment from one part number to another in as little time as possible. SMED refers to the target of reducing changeover times to a single digit, or less than 10 minutes.

takt time

The rate at which the customer requires a part to be produced. Cycle time should always be adjusted until it meets takt time.


The part of a balanced scorecard that contains the specific target values for the measures.

value stream map

A sophisticated flow charting method that uses symbols, metrics, and arrows to help visualize processes and track performance. This method helps determine which steps of a process add value and which do not.

wait time

Also know as queue time. The amount of time that work is waiting to be worked on. Wait time is always considered waste, regardless of the cause for the wait, and it should be eliminated.

work in process

Items of work between processing steps. In lean systems, standardized work-in-process is the minimum number of parts (including units in machines) needed to keep a cell or process flowing smoothly.