Recently a group of local financial executives discussed the art of developing effective business performance measures. Participants agreed many key metrics used today are irrelevant in helping guide their business. Poorly chosen metrics waste corporate resources by diverting attention from important issues to less important or, worse yet, irrelevant ones. The group decided businesses should have a process in place to determine what metrics will be most effective. The following 6 step approach will help you create the best metrics for your business.

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Many companies focus on the tactics of continuous improvement and are often disappointed with their lackluster results. They look at top line growth and see anemic improvement, and instead of bottom line profitability they see little or no growth. Because company value is often based on top line and bottom line growth as well as cash flow, a steep positive improvement curve helps rapidly increase your business’s value.

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Lean has a longer and more colorful history than most of us think, with many Lean concepts predating Womack and Jones’s books on the subject. In fact, according to my research, many of the Lean concepts have been around for over 2500 years, and date back to ancient China. In the twentieth century, Henry Ford discussed ideas that we’d now describe as Lean, such as waste, teams, developing the people in his plants, and more. In fact, Ford’s work was one of the sources (along with US supermarkets and Japanese samurai) that Toyota looked to when they developed their Toyota Production System.

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In this article Rick highlights 3 dimensions of Lean CFOs should be familiar with.

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“You can’t sell out of an empty wagon,” is a favorite saying among salespeople, meaning that you have to have inventory (usually lots of it) to quickly serve your customers. But it just isn’t true! In fact, if you have a successful Just In Time (JIT) supply chain management process, often the less inventory you have, the better you can service your customers.

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