I Leading vs. Lagging indicator metrics

a. Explain with examples Leading vs. Lagging

i. Most Business metrics are lagging indicators for what correlates to long-term success. Lagging means, behind the curve, cannot use to change directions very quickly.

1. On-time delivery

2. Customer Satisfaction

3. New Product Hit Rate

4. Repeat Sales

5. New Product % of Overall Sales

6. Net Promoter Score

7. First Pass Yield; Or Rolled-throughput Yield

8. Days Lost Time

9. Customer Returns/Credits

b. Drill down from common business metrics to "six sigma" metrics related. Six Sigma projects need to scope down closer to some leading indicators that are closer to the specific processes. Indicators where a fast course correction can be taken in order to preserve the higher level business metrics. Get closer to the inputs. Y=f(x). (Recommended Tools: Fishbone Diagram, Force Field Analysis)

i. % On-time Delivery – May be a function of yield or capacity constraints. (metrics not mutually exclusive) Y=f(x)

1. Turn-around Time or Throughput Time – The time it takes to produce 1 piece from order to delivery. (Not to be confused with Cycle Time, which is machine time only.)

2. % On-time Start

3. % Equipment Up-time

4. % In-process yields

5. Inventory Levels

6. Order Entry Error Rate

7. % Supplier Conformance (Logistics reliability, both incoming and outgoing)

ii. % First Pass Yield (or RTY) Y=f(x)

1. In-process Defect Rate (per unit)

2. Training effectiveness/Standard Work

3. % On-Time Preventative Maintenance

4. % Supplier Conformance (incoming quality)

5. Design Effectiveness

6. % Gauge R&R/ Measurement Systems

iii. Days Lost Time

1. Training Effectiveness/Standard Work

2. % Hazard Evaluation Rate

3. Job Hazard Risk Score

4. % On-Time Preventative Maintenance

Drill your project metrics down to the process level, (closer to the inputs), so as to measure leading indicators of success, rather than long-term lagging business indicators.