How important is it to report cost savings for every improvement event?

How important is it to report cost savings for every individual improvement event?

Let me start by telling you a little story.

I once had a vice president of operations who, while talking to a group of leaders from the company, said something to the effect that if all of our kaizen activity over the previous several years had actually delivered on what project teams said they had, we would be a billion-dollar company operating out of a garage with four employees.

At the time, the company, as I recall, was doing maybe three or four hundred million out of several large facilities with about 1000 people. It had a rigorous, full kaizen calendar, and the teams were reporting amazing gains each and every time.

His comments were tongue in cheek, but the point was that there was an overemphasis on reporting gains from kaizen activity. Now I should point out that this guy was a pretty strong supporter of Lean. He wasn’t belittling the progress or complaining. On the contrary, he was trying to increase faith in the process.

He understood focusing on every little individual gain sometimes makes the company lose sight of the big picture. Lean is a long journey.

Sometimes learning and pushing people out of comfort zone is important, but doesn’t yield easily quantifiable gains. But it does still make the company, and its team members, better.

So my message is to track savings, but not at the expense of credibility. People must have some inherent faith in the system.  To do that, they have to believe that doing the right thing will yield good results down the road.

Think of it like good communication. Do you need a cost analysis every time you give leaders give an update to their teams? Of course not.  We’ve come to accept certain things as good business practices.

Now, to be clear, I’m not saying you shouldn’t announce gains during the report out of the project.  We do want to celebrate wins. I’m just saying that focusing too heavily on the immediate savings can inflate how people report and undermine confidence in any numbers that come from a report out.

There’s also the issue of timing.

On the Friday of a project week, things are still gelling, and training might still be going on, and the bugs are getting worked out. It can be hard to know exactly what was accomplished.

This is a really tricky answer, though.  We are looking at facts and data vs. faith. Continuous improvement requires using quantifiable information to make decisions. At the end if a kaizen week, though, all those facts and the data may not yet be available. So, there is a need to rely a bit on faith that the right activities will result in desired results. In my mind, I reconcile it because we will be tracking the overall performance of the organization, so reporting with a bit of optimism isn’t without checks and balances. 

It’s not that I’m saying don’t manage based on numbers at the front line.  You should. I just mean don’t get overly focused on each individual kaizen project. Be OK with focusing on the improvement activity and not as much on forcing a team to immediately come up with some numbers to report.

And definitely keep doing report outs. Focusing on the process and letting people know what is going on, and patting teams on the back for good effort is important.