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Four Simple Key Performance Indicators for Continual Improvement
- Removal of all forms of waste, as opposed to just poor quality, delivers proven bottom line results in the language of money as proven by the Ford Motor Company in the first part of the 20th century
- Unprecedented wages for workers
- Enormous profits for investors ($2500 per dollar invested after 19 years, when Ford bought out his stockholders)
- Lower rather than higher prices for customers
- Industrial output resulting in not just the defeat of the Axis in the Second World War, but of the Central Powers in the First
- The biggest barrier to removal of waste is not lack of a technical solution, but failure to recognize the waste in the first place
1.Henry Ford's key performance indicators:
- Waste of the time of things (cycle time). Any time not spent on actual transformation of the product is waste.Inventory is proportional to cycle time.Cycle time accounting can force this waste to become visible, although any parts that are not actually having something done to them should attract the workforce's attention
- Waste of the time of people (motion inefficiency). People cannot be paid to walk, or bend over
- Waste of energy: often identifiable through a gap analysis like that described in ISO 50001. Wasted energy often hides in plain view, e.g. as light pollution over cities. Is the objective to light the streets, or the sky
2.The organization's existing CAPA process (required by ISO 9001 and IATF 16949) will handle any form of waste if we treat the waste as a gap (like poor quality) between the existing state and the desired or possible future state. Once the workforce and other relevant interested parties know Ford's four KPIs, they can initiate CAPA for any waste they discover. This is exactly how the Ford Motor Company achieved much of its success long ago and the same principles will work equally well today.
Overview of the webinar
Poor quality is only one of the Toyota production system's Seven Wastes, and it is also the only one that announces its presence. The other six are (1) asymptomatic, (2) often present 100% of the time because they do nothing to announce their presence, and (3) often more costly than poor quality. Brick laying, as practiced until the 20th century, wasted 63% of the workers' labor through waste motion. The biggest barrier to removal of waste (muda) is rarely lack of a technical solution but instead failure to identify it in the first place.
Henry Ford wrote that it is possible to waste exactly three things: time, material, and energy. Waste of time can be subdivided into time of things (cycle time, which is proportional to inventory, one of the Seven Wastes) and time of people (motion inefficiency, another of the Seven Wastes). All seven TPS wastes can in fact be expressed in these terms.
Once the workforce (and other relevant interested parties such as customers and suppliers) know how to recognize these four wastes on sight, or possibly with the aid of simple analytical techniques, they can initiate corrective and preventive action (CAPA) to remove the root causes of the waste. Off the shelf CAPA processes such as AIAG's Effective Problem Solving (CQI-20) and 8D (8 Disciplines) can be used for this purpose.
Who should attend?
- Manufacturing and Quality Management Professionals
- Quality Practitioners
- Executives Responsible for Profit and Loss
Why should you attend?
The Ford Motor Company achieved unprecedented bottom line results, including a 63% rate of return for investors, falling prices for customers, and rising wages for employees, with four key performance indicators (KPIs) as described by Henry Ford.
These KPIs can be learned in an hour (the duration of this session) and taught to any workforce in roughly the same amount of time. This positions the workforce, and other relevant interested parties, to identify waste that would otherwise hide in plain sight—possibly for decades.
These KPIs are as relevant today as they were 100 years ago because they encompass all seven Toyota production system wastes, and even more. They also support sustainability through their relationship to ISO 14001 and ISO 50001.
Faculty - Mr.William A. Levinson
William A. Levinson, P.E., is the principal of Levinson Productivity Systems, P.C. He is an ASQ Fellow, Certified Quality Engineer, Quality Auditor, Quality Manager, Reliability Engineer and Six Sigma Black Belt. He is also the author of several books on quality, productivity and management, of which the most recent is The Expanded and Annotated My Life and Work: Henry Ford's Universal Code for World-Class Success.