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Measurement of Continuous Improvement Activities

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  • #35169

    Dillon
    Participant

    Help from anyone appreciated…
    Has anyone who participates in this forum been involved with, developed, or come across a clean way of measuring continuous improvement impact, i.e. before and after in a quantitative measure?
    At my company, we do a very good job of documenting and commenting on the before and after but not really in a quantitative manner.  We are striving to show more quantitative measurements…
     
    Doug

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    #98178

    John J. McDonough
    Participant

    One thing I’ve seen that works, and I think a lot of companies do it …

    Run CI projects as DMAIC
    Assign a financial rep from the controllers department to each project.  Financial rep’s job is to measure the project savings in a credible fashion.
    Add ’em up.
    At the end of the day, the shareholders care about the dollars, and it’s the controllers’ responsibility to count the dollars.  Besides getting the metric, you pretty quickly learn to avoid projects that don’t have defensible results.
    –McD
     

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    #98182

    Malcolm T. Upton
    Participant

    What do you do for projects that have strategic impact, but the tie to dollars is fuzzy at best?
    For example, a company in an industry where only a few contracts a year are the norm. You improve the process for capturing new business. The year before improvement you pursued 3 contracts and got two. The year after improvement, due to changes in the market, there were 8 opportunities to pursue and you landed six. The assessment from the business development team is that the new process is much more likely to land business than the old process, but you simply don’t have the data to make a statistically defensible, or even financially tight case.
    If the only measure of success is financially defensible savings, this would never get past the gate into Define.

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    #98207

    Dillon
    Participant

    Thanks McD….appreciate the input!

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    #98242

    John J. McDonough
    Participant

    Malcolm,
    I agree that there needs to be an out for projects that have need to be done even if the value case is weak.  Besides strategically aligned projects, regulatory projects tend to fall into that category, too.  For those you can sometimes use some sort of “license to operate” sort of logic, but in my mind, that’s a bit of a stretch.
    However, I would suggest that the bar should be set higher for those types of projects.  One approach I’ve seen is to require a letter of support from fairly high in the corporation for any project that does not meet the value hurdle.  This helps filter out various pet projects that can take resources from truly valuable efforts.
    –McD
     

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    #98287

    Malcolm T. Upton
    Participant

    That certainly sounds reasonable.
    Other alternatives:
    Clearly tied to enabling other projects with $ attached (i.e. one of the projects identified in a Value Stream Mapping analysis)
    Senior leadership (Quality Council-style body) assesses projects based on judgement of the Effort/Benefit ratio. Not numeric, but done by a group who are responsible for the overall strategic direction of the company.
    I’m sure there are others.

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