The top 7 ways to measure continuous improvement.

The top 7 ways to measure continuous improvement.

Nov 24, 2025 | Operations

 

Continuous Improvement is a mindset, the improvements sought are on their own often tiny, seemingly irrelevant in isolation. The point is in the compounding of the improvements over time that delivers the improved outcome. Proclamations from the CEO, group ‘Love-ins’ and slogans on the lunchroom wall have no impact.

It is also true that not all improvements are easy to measure. How do you measure the culture that supports and feeds continuous improvement?

However, there are things you can measure that will be leading indicators of CI

  • Cycle time. Measuring the cycle time of processes, seeking to shorten them is always an indicator of improvement. Almost all improvement activities I have seen and been involved with use time as a measure of performance.
  • Product quality. A common problem with measuring quality is defining just what the term means. To me it is very simply compliance to specifications, which is generally easy to measure, once you have agreed the specs. The most common tool is a ‘Control chart’ that graphs the upper and lower limits of acceptable adherence to specifications. It can be used equally well to measure the tolerances on a machine output, to cycle times of any process, and responses to a lead generation program.
  • Customer satisfaction. Asking customers is a good place to start. There is plenty of research around that indicates that the degree of customer satisfaction an enterprise thinks they are delivering, and what the degree is when their customers are asked differs wildly. Independent surveys can be very informative, and tools like the net promoter score framework, can deliver the numbers sought by the corner office. To me the very best measures are the rate of return customers and lifetime customer value compared to industry peers.
  • Ratios. Driven by the strategic priorities, every business will have the opportunity to employ differing ratios that reflect the alignment with the strategic priority. For example, revenue/employee, right-first-time/installations, new customer revenue/total revenue, the list can go on. However, the catch is to have as few KPI’s as possible, cascaded through the organisation that enable the drivers of success to be made very visible. For example, a former client instigated a company wide KPI of Gross margin/employee. This KPI was used company wide, and within individual functions and work groups through the organisation. It focussed company wide attention on activities that drove revenue and the COGS.
  • Employee generated ideas. Have a formal process of encouraging, gathering, sorting, and acting on the ideas coming from the front line. It is always the case that those closest to the action see the opportunities better than those further up the line. Engage them in genuine process improvement, which as a huge side benefit. This sort of employee engagement builds a robust culture. A culture that measures, celebrates, and implements small ideas is the real engine of continuous improvement.
  • Employee satisfaction. The old wives saying ‘happy wife, Happy life’ applies equally to employees. Happy, motivated employees are perhaps the best way to ensure that customers are well treated, and therefore return, and are prepared to refer you.
  • Financial ROI. The last in this list, but most obvious and most often used. You make an investment, you want a return, and the accountants will deliver up a way to count it. Benefit divided by Cost of implementation. The challenge is putting some numbers around the benefit. At best these measures are appropriate in specific circumstances where there is some hard capex being made to improve one of the above parameters.

Header cartoon courtesy of GapingVoid.com

 

 

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How will a piece of rope fix your quality problems?

How will a piece of rope fix your quality problems?

Oct 8, 2025 | Analytics, Leadership, Operations

 

 

We have learned over time, led by Toyota, that ‘root cause analysis’ thereby seeing the root cause of problems is the road to continuous improvement.

At any time when there is a problem, do not let it get papered over, do not let the symptoms be treated, dig and dig until you understand the root cause and then fix it.

Often this is a challenging task, root causes by their nature are usually well hidden, and often ambiguous until there is a forensic examination. However, they are always there and rooting them out enables a compounding of improvements over time.

That analysis requires a cultural context in which to work, as it takes time, consumes resources, and is never completed, as there is always another problem to be analysed. That is the nature of problems, root out one bottleneck, and the blockage just moves to the next spot, previously hidden by the former one.

However, we also seem to look at a process from its beginning, setting out to define a hidden problem occurring inside the process.

Should we reverse the order, and look at the causes of success?

Why and how has Toyota managed to remake themselves from the crappy stuff carrying the lousy quality implications of ‘made in Japan’ from my childhood to an icon of quality, and in the process, driven change through manufacturing globally?

What is the root cause of their success?

My contention is that the root cause is a simple piece of rope.

The Andon cord.

Toyota put Andon cords through their factories, so that any person on the line could stop the line at any time when they saw a fault.

Not only were they empowered to stop the line, they were expected to do so any time a problem occurred that could not be fixed in the time allowed at that station in the line. When the line was stopped by a worker, the supervisor immediately went to the stoppage point with two objectives:

  • Solve the problem to ensure it would not be repeated, and that the problem got not one step closer to a customer.
  • To congratulate the worker for stopping the line so the problem could be fixed. This ensured there was not any reluctance to address a problem by such radical means as stopping a whole factory.

This is an extreme example of empowering the front line, making those who can see problems as they face them all the time, responsible for fixing them.

When introduced, this must have caused headaches, as the productivity would have plummeted. The number of cars produced dropped off a cliff, but those that got through would  be as good as they could be, and slowly, as problems were solved, productivity rose, quality rose, as over time Toyota became the benchmark for motor vehicle quality around the world.

All from a simple piece of rope, and the surrounding culture that delivered to those at the coal face, the responsibility to exercise their right to pull it.

What is the equivalent of the Toyota Andon cord in your business?

 

 

 

Who are your ‘square rooters’? & why does it matter?

Sep 3, 2025 | Leadership, Operations

Derek de Solla Price was a British physicist and scientific historian perhaps best known for his work on the Antikythera mechanism. After researching scientific papers and their authors, he proposed that in any field half the ground breaking work comes from the square root of the number of participants in the field.

In a company of 100 people, the real work of innovation and improvement is done by just 10. Similarly in a company of 10,000 people, the really key employees number 100.

More recent research indicates that the actual distribution is more skewed than Price hypothesised.

While the maths may remain consistent, the bigger the company the more invisible will be those few people who are the key to improvement.

If you are one of those key people buried in the bowels of a large enterprise not only must you do your regular job, but the extras you do also need to be noticed and the value of that extra effort understood.

If you are the leader of such a business, it is a key task for you to identify nurture and advance the few square rooters you are likely to have as employees. You may find they are the ones causing trouble, refusing to follow accepted but unspoken ‘rules’, questioning the status quo, and experimenting in ways that do not always work.

These square rooters are invaluable.

They are the source of innovation, improvement and long-term productivity.

How the OODA loop destroyed Detroit

How the OODA loop destroyed Detroit

Jun 25, 2025 | AI, Customers, Lean, Operations

 

 

The idea of the OODA loop is to get inside the decision cycle of your opposition. Once inside, you control the outcome in the absence of some externality.

Toyota used this idea to destroy Detroit.

The Andon cord placed the power of tactical decision making about quality right at the point where it was needed, with the workers on the production line.

By this means, quality problems were identified and fixed before they moved a further step towards the customer.

It also did something else.

By identifying and fixing problems at the source, the cycle of problem fixing was accelerated greatly. Not every problem can be fixed immediately at the line, but there are processes for escalation, from the front lines to the lowest level that is empowered to address the problem. That escalation involved suppliers when the problem was caused by a supplied part that was substandard.

By contrast, Detroit was driven from the top down, being run by spreadsheets (handwritten until the 90’s) by executives who may never have seen the inside of the factory.

A problem as it escalates up a chain of command has many opportunities to be buried, forgotten, miscommunicated, all of which will happen, driven by all sorts of human frailties and power games. The end result, the little problem in the factory compounds and becomes a big problem with customers, which costs a lot to address, and ruins reputations.

Toyota got well inside the time it took Detroit to respond to problems. While Detroit was escalating or hiding quality problems, Toyota was fixing them and moving on the next improvement.

They were inside the OODA loop of Detroit, and it destroyed the American car industry.

AI is now giving users an easy tool to get inside the decision cycle of their competition, while seeing the productivity benefits drop to their bottom line.

How are you going to deal with that?

 

 

 

 

A marketer’s guide to Operational Continuous Improvement measures.

A marketer’s guide to Operational Continuous Improvement measures.

Jun 12, 2025 | Lean, Management, Operations

Many owners of small manufacturing businesses, up to about 30 employees in my experience, have only a vague grasp of the measures and mechanics of continuous improvement. Having a stable process, then experimenting to do the small things better, every time you do them. The impact compounds. Lean Manufacturing and Six Sigma offer practical tools to boost performance, reduce costs, and improve your ability to serve customers.

Below are 9 key measures for continuous improvement. Pick the few that are most relevant to you and focus on them.

Overall Equipment Effectiveness (OEE)

OEE shows how effectively your equipment runs by combining machine availability, performance, and quality into one simple metric.

Inefficient or underperforming machines will quickly create bottlenecks in your operation. The whole chain can only go as fast as the slowest link, so identifying those bottlenecks and earmarking them for attention will improve overall effectiveness.

In these days of cheap digital sensors and data collection tools it is becoming easier and cheaper to instal machine sensors, downtime logs, and quality checks to monitor uptime, output rates, and defects.

Cycle Time

Cycle time measures the time it takes to complete a process, from start to finish. Shorter cycles mean more output without extra costs.

The measure can be applied to an individual part of the chain, or the whole chain, using a tool as simple as a stopwatch, or as complex as a SCADA system.

This measure is not to be confused with Takt time, which is a measure of the rate of demand.

First Pass Yield (FPY)

‘Get it right first time’ is a cliché that refers to first pass yield. It tells you how many products come out within specifications the first time, helping cut down on rework, scrap, and wasted effort. The principle of the measure is simple, but the trap is in making it too easy. A wide spread of acceptable specifications is more easily met than a narrow one, and will distort the measure, possibly giving you a wrong picture of quality performance.

There is a myriad of ways to check quality ‘at source’ i.e.: from random checks to sophisticated visual and digital mechanisms.

Lead Time

Lead time normally measures how fast you fulfill orders. It can also be usefully applied to parts of the supply process, such as the time taken to respond to queries, provide details, quotes, and many other points of customer interaction. Faster lead times mean happier customers, referrals and repeat business, and better cash flow. In a world that is accelerating at unprecedented rates, being quicker to respond is a powerful competitive advantage.

The easiest way to track lead times is to start automatically time-stamping everything, and tracking through spreadsheets, your CRM, or even by hand.

Reversing the focus of lead time, and measuring your suppliers lead times, and DIFOT (explained below) is also a powerful way of managing improvement in your operations, and therefore ability to serve customers.

Inventory Turnover

In simple terms, Inventory Turnover is how many times your inventory is sold and replaced over a specific period. It is calculated using the average inventory value in a period and your Cost of Goods Sold. The simple formula is COGS divided by Average inventory.

Accountants see inventory as an asset, that is how it is treated in the balance sheet. However, as inventory is a measure of how much cash you have tied up, immobile, it is to my mind a liability beyond a delicate balancing point that is necessary to serve customers. Too much inventory ties up cash and risks obsolescence, too little causes delays. Balance is key.

There are many inventory systems, all do the same thing. Monitor stock levels, keep track of the value, and usually flag repurchase time based on usage and nominated procurement lead times when fed sales forecasts.

Inventory turnover is often expressed as ‘Days cover’ in fast moving environments.  The formula is the same, the period is days.

Scrap, Rework and Waste Rates

Waste eats into profit. You expend time and resources to add to the scrap pile. Anything that reduces waste, scrap and rework will boost efficiency and margins.

Scrap is when you simply send a completed or partially completed item to the bin. Rework is when you invest further time and effort to turn a unit that could be scrapped into a saleable unit, and waste is the material left at the bottom of the ingredient bag, the leftover material after the templates have been stamped out. Each is different, each warrants attention.

As with the other measures, there are many ways of tracking these three ‘nasties’. Your accountant should be able to give you the numbers based on what is used to produce the inventory, and the difference is the place to start looking for the scrap and waste. Rework usually requires added time and labour which can be tracked.

Customer Complaints and Returns

Often the best source of problem identification is what your customers are telling you. A returned product can be a source of intelligence that enables you to track and pinpoint problems to be resolved before they escalate.

Keep records of customer feedback, returns, and service calls.

Equally, customer satisfaction is a useful measure, but challenging to build reliable data. Many enterprises use the Net Promoter Score method, alternatively monitoring social media feeds may deliver insight. However, when customers pay you their hard-earned money, they expect to be satisfied, just delivering what is expected is hardly reason for a party

Safety Incident Rate

Ensuring as far as possible the safety of employees is not only a moral responsibility, it is now a legal responsibility that in some jurisdictions has had the onus of proof reversed.

Factories can be dangerous, and removing as many of the sources of danger as is humanly possible is essential. Tracking safety incidents is a measure of how successful that effort has been.

Delivered In Full On Time. (DIFOT)

DIFOT is an overarching measure that pulls all the above together. Failure in your operational processes will make delivering in full on time challenging, if not impossible. It is one operational measure that should be on every KPI menu. As noted above, it is a very useful measure of the performance of your suppliers.

‘How to harness the power of real time feedback’

‘How to harness the power of real time feedback’

Oct 11, 2024 | Analytics, Operations

 

Real-Time Feedback is the objective of any effective performance management system.  We instinctively knew how to generate and leverage feedback as kids. Remember that cricket scoresheet a parent kept during a Saturday morning game? It could just as easily have been netball, hockey, soccer, or footie.

Every ball bowled was accounted for in real-time: a run, a wicket, who bowled the ball, and who was the batsman. This real-time recording enabled tactical choices at every ball. This is a ‘box score.’

By contrast, typical accounting systems look at what’s happened up to a point in time, often monthly, in arrears.

Translating real-time game results to a commercial context makes perfect sense. It enables decisions on a short-term basis that maximises outcomes.

Adapting to this change isn’t easy, as our accounting training, established processes, and regulatory systems are geared to historical data, not real-time. They use ‘standards’ and reporting templates that obscure real-time detail.

Successful businesses find ways to translate the outcomes of their actions into visible measures of real-time performance from which they can learn, iterate, and improve.

Following are six tactics you might consider implementing to improve your performance.

      • Break down your processes into their component parts, as far down as you can.
      • Identify the bottlenecks in those processes. These usually become obvious the further you break the processes down.
      • Choose the two or three key metrics that track performance of that part of the process, make them transparent via dashboards, and give the operators the power to adjust and improve.
      • Leverage technology to both do the measuring, and providing the real time feedback. This can be a simple as a digital display of unit movement down a production line, or sales orders received.
      • Start small, and build as the ‘performance bug’ bites those involved. Achieving this sense that there is a ‘performance bug’ around is a function of the leadership and resulting culture that is built.
      • Integrate the dashboards in a process I call ‘Nesting,’ so that each board builds on the ones that contribute to it. For example, a dashboard that reflects the units going past a specific point in a manufacturing process, build to one that reflects the output of that specific production line, which builds to a factory wide dashboard.

This is all easy to say, but very hard to do. However, if it was easy, everyone would be doing it

Header credit: Wikipedia. The scoresheet in the header is the scoresheet of Australia’s first innings in the Ashes test against England at the Gabba in 1994. Michael slater scored 176, mark Waugh 140, and Glenn McGrath did not disturb the scorers, shooting another duck. A perfect example of a ‘Box Score’.