How to Measure the right thing in the Inventory Planning Process Improvement – measuring | quality | cost
How to Measure the right thing in the Inventory Planning Process Improvement
If you try to measure everything, that could take a lot of work, and you might end up not knowing which numbers to focus on. Often measurements are self-contradictory too. You might be wanting to increase quality and reduce costs and be measuring both. But then which one do you give priority to? And of course, if you do get your costs down, you need to make sure it’s not affecting your quality or anything else important. Never measure or try to interpret just one number without context.
If your turnover has gone up, what about your profit? Maybe someone’s been cutting prices in order to sell more. And if your numbers employed have gone up, is that good or bad? It depends on your turnover. Even something like complaints may have gone up because you’re getting better at listening to your customers or doing some ambitious work. So never measure just one number. There’s something hard to resist about numbers.
When you hear that your local school is 5% worse than the one in the next neighborhood to you, immediately you feel unhappy. But actually, what does worse mean? And is 5% really significant? Was it just a blip when usually it’s better than other schools? And maybe your school is worse at one thing but they’re better in other ways that are more important. How do we know that the school down the road isn’t just better at playing the game so they’re getting a better score at the cost of areas that aren’t measured?
Another example was some of the country is trying to measure doctors. And they published a league table of scores, but it was discredited and then discontinued because some quite important factors weren’t in the scoring.
And also the weighting of the factors was debatable. And it was hard to take into account the affect of living in richer and poorer areas. And most importantly, the doctors who were prepared to take on the most difficult patients were getting lower scores despite being probably better.
So should we give up and ignore measurements?
Well, Without measurements we haven’t really got anything at all. But the thing is not to judge people from the measurements but to take measurements as a starting point, a start for asking why. Why has that doctor got a lower score? Why does that school get better results? This will tell us what’s really going on so that we can understand the causes of the scores and then decide whether they really matter.
And the best way to ask why is to first get a ratio. For example, infections per operation, days absent per pupil, accidents per passenger mile, errors per report, that kind of thing. And then compare that ratio either with similar people or departments or companies or with yourself at the same time last year. Comparing ratios is the only valid way to interpret statistics like this. 20 infections means nothing. 20 infections per hundred operations is better but still doesn’t tell you enough. When you find that everyone else has only 10 infections per hundred, now you’re getting somewhere. So it has to be ratios and then compare.