Lean Government
Metrics Guide
NCEI
NATIONAL CENTER FOR
ENVIRONMENTAL INNOVATION
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This Lean Government Metrics Guide is a resource to help government agencies understand and
select metrics to support their implementation of Lean and Six Sigma—two powerful and proven
methods to improve organizational performance. Metrics are the cornerstone of successful Lean
and Six Sigma improvement efforts. When used effectively, metrics can be powerful
mechanisms for helping organizations to achieve, assess, and communicate results. While this
guide draws primarily on metrics experience from the U.S. Environmental Protection Agency
(EPA) and state environmental agencies, it also incorporates metrics and information collected
from other federal agencies.
This guide includes the following sections:
• Introduction to Metrics Used in Lean Government Efforts
• Lean Government Process Metrics
• Lean Government Organizational Metrics
• How to Select Lean Metrics
• Where to Find More Information
to in
Lean and Six Sigma place a strong emphasis on measuring, evaluating, and communicating
performance results. In this context, metrics enable organizations using Lean and Six Sigma to:
• Identify and target the right problems during Lean and Six Sigma events and projects
• Evaluate potential process improvements and select appropriate actions for
implementation
• Establish baselines for process performance and track progress over time
• Understand and communicate the results (outcomes) of Lean and Six Sigma efforts
• Inform and monitor efforts to deploy Lean and Six Sigma throughout an organization
This guide explores two major categories of metrics relevant to Lean and Six Sigma: process
metrics and organizational metrics. Process metrics address a specific process or program and
provide information on key attributes of the process such as time, cost, quality, outputs, and
process complexity. Organizational metrics address characteristics of the broader organization
or agency, providing information on the status of Lean deployment and morale.
It is important to remember that the Lean and Six Sigma metrics discussed in this guide should
ultimately support progress toward achieving the agency's mission. In the case of EPA and
many state environmental agencies, this means protecting human health and the environment. It
is often helpful to consider goals and objectives that may be outlined in the agency or program's
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strategic plan to ensure that Lean and Six Sigma metrics are aligned to measure and drive
progress toward the agency mission and desired outcomes. To select measures that matter, it is
first important to clarify how the targeted process or program is intended to advance the agency's
mission and objectives. Logic models provide simple but powerful tools for describing how
process or program activities produce outputs that (at least in theory) translate into desired short-
term, medium-term, and long-term outcomes.
The Lean government process and organizational metrics described in this guide are grouped
into the following subcategories.
Process Metrics
• Time: Time metrics evaluate the time to produce and deliver a product or service to
customers, the portion of time that is spent processing the product or idle time, whether
customers receive products or responses on time, and other time-related considerations.
• Cost: Cost metrics measure cost savings and the costs of products or processes, such as
the amount of full-time equivalent employees needed for a process.
• Quality: Quality metrics examine the quality of products or services, such as customer
satisfaction and whether documents are complete and accurate.
• Outputs: Output metrics track the production or activity of agency processes, such as the
number of permits issued.
• Process complexity: Process complexity metrics describe the complexity and nature of a
process, such as the number of handoffs and steps in the process.
Organizational Metrics
• Lean deployment: Lean deployment metrics measure the status of Lean implementation
at an agency, such as the number of Lean events or trainings conducted.
• Morale: Morale metrics pertain to employee satisfaction and staff retention, including
responses to staff surveys and turnover rate.
Table 1 lists examples of metrics that government agencies can use in Lean and Six Sigma
efforts. Each of these metrics is described later in this guide. The next section describes how to
think about identifying metrics that are most appropriate for your agency or organization.
Table 1 : Overview of Lean Government Metrics
PROCESS METRICS
Time Metrics
^ Lead Time
o Best and Worst Completion
Time
o Percent On-Time Delivery
Cost Metrics
Labor Savings
Cost Savings
Cost per Product
Quality Metrics
^ Customer Satisfaction
o Rework
^ Percent Complete and
Accurate
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PROCI§§ METRICS
Time Metrics
^ Processing Time
o Activity Ratio
o Value Added Time
o Non-Value Added Time
o Non-Value Added but
Necessary Time
^ Percent Value Added Time
Output Metrics
^ Production
o Backlog
o Work in Process
o Inventory
Cost Metrics
Lean Deployment
o Lean Events Conducted
o Lean Event Participation
o Lean Training
Quality Metrics
•=; Rolling First Pass Yield
Process Complexity Metrics
o Process Steps
o Value Added Process Steps
o Decisions
o Delays
o Handoffs
o Loops
c Black Holes
QRGMffllMWM, MifRICf
Morale Metrics
o Employee Satisfaction
o Turnover
Process metrics—metrics that address a specific process or program—enable agencies to
achieve, assess, and communicate compelling process improvement results. Lean government
process metrics support several objectives, including:
• Measuring wastes (non-value added activity) in processes (e.g., comparing processing
time or value-added time to the total time to produce a product, including idle time)
• Informing selection of specific process improvement actions
• Evaluating progress made to address those wastes and the benefits of Lean and Six Sigma
projects (e.g., cost savings, reductions in process steps, etc.)
• Assessing the overall performance of a process (e.g., customer satisfaction, percent of
products delivered on time, etc.)
Government agencies can use Lean process metrics to answer the following types of questions:
• Time metrics: How long does it take to produce a product or deliver a service? How
much of that time is processing time and how much is idle time?
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• Cost metrics: How much does the process cost to operate (e.g., the number of full time
equivalent employees)? What cost savings did the team identify in the Lean event?
• Quality metrics: How often does the process lead to mistakes (e.g., incomplete or
inaccurate forms) that require rework? How do customers view the process?
• Output metrics: How many products (e.g., permits) are completed or processed each
month or year? What backlogs exist in the process?
• Process complexity metrics: How many steps are in the process? How many times is a
document handed off between individuals, offices, or departments in the process?
It is important to note that some types of metrics will likely be of greater interest to certain
audiences, although all types are useful for understanding the varied dimensions that affect
process performance and outcomes. For example:
• Lead time, customer satisfaction, and other measures of product or service quality may be
of particular interest to key "customers," those who receive and/or benefit from the
process outputs and outcomes; and
• Other process metrics, such as those related to process complexity and efficiency, may be
of particular interest to internal audiences such as managers of the process.
Table 2 below presents a range of Lean government process metrics. The table provides a brief
description of each metric, an example of how the metric is used, and identifies whether one or
more environmental agencies have used the metric in Lean government efforts. A special
discussion of time metrics is included after Table 2, as several aspects of time metrics may be
particularly new to those who are not familiar with Lean.
Table 2: Definitions and Examples of Lean Government Process Metrics
METRIC
Time Metrics*
Lead Time
(a.k.a. Elapsed
Time)
Best and Worst
Completion
Time
Percent On-
Time Delivery
DESCRIPTION
Total time (from start to finish,
from the customer's perspective,
including waiting time) to develop
a product or deliver a service to a
customer. Typically expressed in
days.
Estimate of the shortest (best)
and longest (worst) time to
complete the process (lead time
is the average).
Note: Lead time is more relevant
to the customer.
Percent of time the
product/service is delivered on
time, from the customer's
perspective
EXAMPLE
Time between when a
permit application was
submitted (even if
incomplete) and when
customer receives a
permit
15 days vs. 350 days
45% of permits are
issued within 90 days of
receipt of application (as
promised to customer)
USED BY
ENVIRONMENTAL
AGENCIES?
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Processing
Time (a.k.a.
Cycle Time or
"Touch Time")
Activity Ratio (or
Process
Efficiency)
Value Added
Time
Non-Value
Added Time
Non-Value
Added but
Necessary Time
Percent Value
Added Time
Cost Metrics
Labor Savings
(or Freed
Capacity)
Time to complete a process or
process step, excluding wait time.
(Lead time > total processing time
> value added time)
Processing time divided by lead
time, expressed as a percentage
Processing time that adds value
from a customer's perspective
(i.e., when information and
materials are transformed into
products or services a customer
wants).1 Typically expressed in
minutes or hours.
Time that does not add value
from a customer's perspective
(i.e., when information and
materials are not transformed into
products or services a customer
wants). Typically expressed in
minutes or hours.
Time that does not add value
from a customer's perspective
(i.e., when information and
materials are not transformed into
products or services a customer
wants), but is still necessary due
to regulatory requirements.
Typically expressed in minutes or
hours.
Value added time divided by lead
time, expressed as a
percentage.2
Change in the number of full time
equivalent (FTE) employees
needed fora process (i.e., FTEs
that can be reassigned to other
tasks/positions because of
efficiency improvements).
• FTEs required = (Sum of
processing time [hours] X # of
occurrences/year) •*• 2,080 work
hours/year
1.5 days processing
time
1.5 days processing
time •*• 30 days lead time
= 5%
Actual time for
substantive review of a
permit (without
interruptions or delays)
Time for transport of the
document around the
office; waiting time for
someone to review the
document; unnecessary
approvals or signatures
Time required by law for
the public comment
period for a permit (this
is non-value added from
the perspective of the
facility)
4 hours value added
time •*• 30 days lead time
= 0.56% value added
(14 hours processing
time per permit
application x 300 permit
applications per year) •*•
2,080 hours per year = 2
FTEs required
5.5 FTEs for current
state (before Lean
event) - 2 FTEs for
Unknown
Unknown
Unknown
Unknown
Unknown
Unknown
1 Value added time is widely used in Lean manufacturing, but difficult to define in administrative contexts. Processing time is easier to measure
for office processes, so it can be used as a substitute.
2 Value added time is widely used in Lean manufacturing, but difficult to define in administrative contexts. Activity ratio (processing time
divided by lead time) can be used as a substitute for percent value added time.
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• Freed capacity = FTEs needed
for current state - FTEs
needed for future state
Cost Savings Dollar savings from Lean or Six
Sigma projects, such as:
• Dollar value of FTE savings
(e.g., from staff attrition and
avoided need to hire)
• Reductions in contractor costs
(after subtracting Lean
facilitator costs)
• Other office cost savings (e.g.,
energy/utility costs,
consolidating office space,
avoided costs such as not
needing a new IT system)
Cost per Labor, material, and overhead
Product costs to produce a product (or
service product)
Quality Metrics
Customer
Satisfaction
Rework
Percent
Complete and
Accurate (C&A)
Qualitative or quantitative results
from customer satisfaction
surveys (e.g., about a service or
product)
Percent of products or work in
process that needs to be redone
Percent of occurrences that work
in process (e.g., a permit
application) released to the next
step does not require a
downstream customer to make
corrections or request information
that should have been provided
initially. This is another way to
measure rework.
Rolling First Percent of occurrences that the
Pass Yield (or product or document passes
Rolling through the entire process without
Throughput needing rework. This is the
Yield) product of the C&A percentages
for each process step, expressed
as a percentage.
future state (after Lean
event) = 3.5 FTEs freed
capacity
Saved $3 million from
Lean events
Unknown
($500 labor + $500
material + $1000
overhead) •*• 100
products per month =
$20 per unit
Customer satisfaction
ratings improved from
4.2 to 7.8 out of 10
Percent of permit
applications that are not
complete and need to be
redone
30% of permit
applications received
are complete and
accurate
Unknown
Unknown
Unknown
30% C&A x 60% C&A x
90% C&A = 16% rolling
first pass yield
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Output Metrics
Production
Backlog
Work in Process
(WIP)
Inventory
Number of products or service
products produced
Number of products or service
products that have not been
started or entered the process
Amount of products or
transactions that are being
processed or waiting to be
processed
A supply of raw materials,
finished products, and/or
unfinished products in excess of
customer demand
Process Complexity Metrics
Process Steps
Value Added
Process Steps
Decisions
Delays
Handoffs
Loops
Total number of steps in a
process where a task or activity is
performed
Number of process steps that add
value from a customer's
perspective (i.e., steps where
information and materials are
transformed into products/
services a customer wants). This
number typically does not change
with Lean.
Number of points in process
where a choice is made about a
course of action
Number of points in process
where time is wasted by waiting
for something to occur
Number of times work is passed
from one entity to another
Number of times when there are
a series of steps that loop
backwards and repeat
themselves at least once
Number of permits
issued
A Lean project
eliminated a backlog of
300 permits.
49 permit applications
are in the process
Additional paper
supplies beyond that
needed for finished
products
A Lean event reduced
the number of process
steps from 55 to 12.
3 steps are value added
(e.g., they involve
substantive review of
permit conditions and
writing the permit).
Before the Lean event,
decisions were made at
4 points in the process.
The number of steps
with delays was reduced
from 22 to 12.
The process had 18
handoffs between
individuals before the
Lean event and 6 after
the event.
One of the loops
between the permit
reviewer and permit
writer was eliminated
with the new process.
Unknown
Unknown
Unknown
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METRIC DESCRIPTION
Black Holes j Number of extreme combinations
j of loops, delays, decisions, and
j handoffs from which no further
j progress is made or where years
i can pass before proceeding with
I the process
EXAMPLE
The Lean event
eliminated the "black
hole" in the process.
USED BY
ENVIRONMENTAL
AGENCIES?
Special Considerations about Time Metrics
Lean methods give special consideration to various aspects of process time. By examining how
time is spent within a process, one can find important clues that reveal waste (non-value-added
activity) and improvement opportunities. Keep in mind the following considerations about time
metrics:
• Lead time is greater than total processing time which is greater than value added time. A
common goal of Lean initiatives is to reduce lead time and total processing time to be
closer to the value added time.
• In some cases it may even make sense to increase value added time (e.g., to improve
quality) while simultaneously reducing overall lead time and processing time.
• In the manufacturing context, it is relatively easy to determine the portion of time that is
value added—when workers or machines physically transform the form, fit, or function
of the product in a way the customer is willing to pay for. In administrative processes, it
can be more difficult to delineate what portion of the time is truly value added, from the
customer's perspective. For example, only a portion of the time a staff person reviews a
permit application and drafts a permit is likely to be value added.
• Some Lean office publications suggest using "processing time" (also referred to as "touch
time") as an alternate metric to "value-added time," since processing time is easier to
measure. The activity ratio (ratio of processing time to lead time) then becomes the
substitute metric for the value added percentage (ratio of value added time to lead time).
Lean Government Organizational Metrics
Organizational metrics—metrics that address topics such as Lean deployment and morale at an
organizational level—help agencies to sustain and expand results that contribute to the agency's
ability to fulfill its mission. Lean government process metrics support a key objective:
• Inform and monitor efforts to deploy Lean and Six Sigma throughout an organization
Organizational metrics can help answer the following types of questions:
• Lean deployment metrics: How many Lean events have we completed this year? How
many employees have participated in Lean training classes?
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• Morale metrics: How satisfied are employees with the agency or office? What is the staff
turnover rate, and how does it compare to the average for government agencies?
Table 3 provides descriptions and examples of Lean government organizational metrics.
Table 3: Definitions and Examples of Lean Government Organizational Metrics
METRIC DESCRIPTION
Lean Deployment Metrics
Lean Events Number of Lean events
Conducted conducted (e.g., value stream
EXAMPLE
An agency conducted 5
kaizen events this year.
USED BY
ENVIRONMENTAL
AGENCIES?
Lean Event
Participation
Lean Training
Morale Metrics
Employee
Satisfaction
Turnover
mapping events, kaizen events,
etc.). Some organizations only
count implementation-oriented
events (e.g., kaizen events).
Number of employees who have
participated in Lean events. This
can be broken down further, such
as the number of employees that
have participated in:
• 1-5 Lean events
• 6-12 Lean events
• 13-25 Lean events
• More than 25 Lean events
Number of employees who have
undergone formal Lean and/or
Six Sigma training
Qualitative or quantitative results
from staff surveys
Percent of staff who leave the
agency over a certain time period
(e.g., month or year).
• Turnover = # of employees
leaving in a certain period •*•
total employed that period
It can also be useful to distinguish
between voluntary and
involuntary turnover.
100 employees
participated in Lean
events this year.
5 employees completed
Lean Six Sigma green
belt training; 50
employees attended a
"Lean 101" course.
70% of staff rated their
employment with the
agency as "good" or
"very good" in a survey.
Staff turnover was 14%
last year.
Unknown
Unknown
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to I .can
This guide presents a menu of options for Lean government metrics, including examples of
metrics that EPA and state environmental agencies have used in Lean and Six Sigma efforts.
Not all of these metrics may be relevant and useful for your agency or organization, however. It
is important to choose metrics that make sense for your agency, given your agency's overall
goals and objectives. Consider these guidelines when selecting metrics:
• Determine the purpose of the metrics. Measures can drive behavior and focus attention
in powerful ways. As a result, it is important to think about the behaviors that are likely
to be encouraged by use of specific metrics. In selecting metrics, consider questions such
as:
o What is the purpose of the metric? What aspects of the process are we trying to
improve? What wastes are we trying to eliminate? What behaviors are we trying to
reinforce?
o Who are the key audiences for the metric?
o How will we use the measurement data?
• Use just a few metrics. No more than a few metrics per category are needed. Having too
many metrics dilutes the focus of the improvement efforts and can create unnecessary
work.
• Use only the most appropriate metrics. Ask whether there is something important about
a targeted process related to each category of process metrics, and do not worry if the
answer is "no." Also consider which metrics would be useful to evaluate across the
agency, depending on the overall status and goals of the Lean or Six Sigma initiative.
• Focus on customers and agency leadership needs. While a range of metrics can show
improvements made during Lean events (e.g., reductions in the number of process steps),
only a few metrics matter to customers, including the time it takes to receive a service or
product (lead time) and the quality of the service or product. Make sure to include some
metrics that reflect key interests of customers, along with metrics that will resonate with
agency leadership and support the agency's strategic goals.
• Engage data users in the design of the metrics. It's important to engage people who are
familiar with the process in the design of metrics and the development of a system for
collecting and reporting performance data. Without consulting front-line employees,
agencies risk choosing metrics that are poorly understood, irrelevant, or inconsistently
used by the people who do the work.
A widely used framework for choosing metrics is the "SMART" model—metrics should be
Simple, Measurable, Actionable, Relevant, and Timely.3 This framework includes the following
considerations:
3 There are several variations on this model, which is consistent with the principles for performance measurement outlined in Peter Drucker's
1954 book, The Practice of Management. Alternate terms for the SMART mnemonic include: Specific, Meaningful, Attainable, Reliable, and
Time-bound.
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Simple: Make sure that metrics are transparent and simple enough to be easily understood
by everyone in the agency. Metrics should also be hard to fool or game (e.g., avoid
situations where people could show results even when nothing had actually changed).
Measurable: Select metrics for which you can relatively easily collect performance data;
don't rely on estimates or assumptions. In some cases, you may need to set up a system
for collecting input, such as a customer satisfaction or voice of employee survey.
Actionable: Metrics should provide information that managers and staff can use to take
actions to improve the agency's operations and outcomes.
Relevant: As is often stated, what you measure is what matters and gets managed. Select
metrics that support the agency's strategic objectives and that specifically relate to the
process or task at hand. For Lean efforts, this often means using metrics that correspond
to the seven "deadly wastes" targeted by Lean (defects, overproduction, transport,
motion, inventory, over processing, and idle time).
Timely: Consider the "just-in-time" model for metrics—provide the right information to
the right people when they need it for making decisions.
As mentioned earlier, this guide provides an introduction to metrics that government agencies
can use to implement and assess their Lean and Six Sigma initiatives. It is important to consider
what metrics make the most sense given each agency's specific goals and objectives. Lean and
Six Sigma books, articles, and training courses provide more information and guidance on
selecting and using metrics. While numerous Lean and Six Sigma publications describe metrics,
the following list of selected references include information on the use of metrics in
administrative or office contexts:
• Fabrizio, Tom and Don Tapping. SSfor the Office: Organizing the Workplace to
Eliminate Waste. New York: Productivity Press, 2006.
• Keyte, Beau and Drew Locher. The Complete Lean Enterprise: Value Stream Mapping
for Administrative and Office Processes. New York: Productivity Press, 2004.
• Martin, James William. Lean Six Sigma for the Office. Boca Raton: CRC Press, 2009.
• Martin, Karen. Kaizen Event Planner: Achieving Rapid Improvement in Office, Service,
and Technical Environments. New York: Productivity Press, 2007.
• Tapping, Don and Tom Shuker. Value Stream Management for the Lean Office: Eight
Steps to Planning, Mapping, and Sustaining Lean Improvements in Administrative Areas.
New York: Productivity Press, 2003.
EPA's Lean Government website (www.epa.gov/1 ean) has a variety of resources and information
on Lean and Six Sigma efforts at government agencies. For additional information and context
on the use of Lean metrics, see EPA's Lean in Government Starter Kit., which provides guidance
and resources on implementing Lean events at government agencies. EPA's Lean Government
website also has case studies and other publications describing results and lessons learned from
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EPA and state environmental agency Lean events. EPA is interested in the results, experiences,
and lessons learned from your agency's Lean and Six Sigma efforts.
EPA Lean Government Contact
To learn more about EPA's Lean Government Initiative and to share your ideas and
experiences, visit the EPA Lean website (www.epa.gov/lean) or contact:
Jamie Burnett
U.S. EPA, National Center for Environmental Innovation
(202) 566-2205
burnett. jam ie(S)epa. gov
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United States Environmental Protection Agency
www.epa.gov/lean
July 2009
EPA-100-R-09-005
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