“What gets measured gets managed.”
There’s some debate about who originally said that. Many people credit the quote to management guru Peter Drucker. Others say they can trace the quote back to William Thomson, a Scottish physicist.
Regardless, the debate over who said it isn’t as important as the efficacy of the idea itself. Whoever initially said those five words was absolutely correct. Take Six Sigma, as an example.
Six Sigma is designed to change processes and systems, and can create massive, multi-faceted changes to all levels of an organization. Due to its wide-sweeping nature, organizations need to know what they’re trying to measure to see progress. Once they pinpoint a target area, they need to find the metric most likely to provide that data.
These metrics can vary by industry, company size, process type, etc. There are no right or wrong forms of measurement—they all report exactly the type of data they’re supposed to. That’s why an organization needs to be hyper-specific about the data they’re hoping to collect. Here are five types of metrics commonly measured with Six Sigma implementation:
Organizations interested in tracking the length of time required to produce a product or service have a slew of metrics to which they can refer.
By measuring things like lead time (the total time it takes to develop a product and get it into the customer’s hands), the best and worse completion times for a process, or (depending on industry) on-time deliveries, companies can get a better understanding of how Six Sigma has impacted the time their employees invest in the business.
Cost is the bottom line in many organizations, and it can be measured by tracking things like labor savings or cost per product (including labor, materials and overhead) before and after Six Sigma implementation.
Efficiently producing a product or economically delivering a service doesn’t mean much without quality. Organizations can measure quality by keeping an eye on customer satisfaction, the amount of rework required to create something of value, or the percent of products considered both complete and accurate at the end of a production cycle.
Output, in many industries, is a good indicator of organizational health. It can be tracked by measuring the production backlog (specifically, whether or not it’s growing or shrinking), unfinished products in inventory, and finished products ahead of customer demand.
Six Sigma is, ultimately, a process-oriented ideology. Two metrics are commonly used to measure the effectiveness of a process. The first is called Rolled Throughput Yield, and it measures how frequently a process will complete all of its required steps without any failures. The higher, the better, obviously.
The second metric is Defects per Million Opportunities (DPMO). Of every million products created, DPMO will measure how many are flawed or defective.
Remember, measurement alone isn’t enough. It’s about what gets measured, because in the immortal words of Peter Drucker (or William Thomson, or whoever else), “What gets measured gets managed.”